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Long-term charters help boost Sovcomflot earnings

Sovcomflot (SCF) reports that it is benefitting from immunity to falling LNG and offshore rates thanks to long-term charter agreements, while its crude fleet rides the buoyant tanker spot market.

SCF recorded strong net earnings of $82.5m in Q3, up 81% on the comparable 2014 result of $45.5m, while for the first three quarters of 2015 the net result reached $298.8m, up a whopping 174% versus $109.1m in the first nine months of 2014.

While tanker operating profits were predictably high, reaching $190.0m in the nine-month period or a 70.9% increase, TCE revenues in transportation of LNG increased 67.5% to $100m over the first nine months, bringing revenues up 75.3% to 62.4m during the period. 

“The Group’s LNG carrier fleet is engaged under long-term charters to oil and gas majors, meaning it has no exposure to the current slump in LNG spot market rates,” clarified SCF in a statement.

The group has taken delivery of two new 170,200 cu m LNG carriers, SCF Melampus and SCF Mitre, in 2015.

Meanwhile nine-month TCE revenues from offshore development were $169.6m, a marginal increase over the $165.7m booked in 2014. “Operating profit remained flat compared with the nine-month 2014, despite the sharp decline in global oil prices. SCF has benefitted from the long-term nature of its charter arrangements for both shuttle tankers and its ice-breaking supply vessels,” the group said.

“Sovcomflot is satisfied with a strong set of third quarter results, which in turn have contributed to a very positive operating and financial performance for the nine months of 2015 results,” commented ceo Sergey Frank. “This has been possible through a combination of positive underlying tanker market conditions, and the Group’s proven business model that continues to serve us well.”

“Whilst the geopolitical and economic outlook remains especially difficult to predict,” he added, “we remain optimistic about the prospects for further tanker market growth during the final quarter of this year, with the outlook for both crude and oil product tankers in 2016-2017 looking positive, based on favourable supply-demand fundamentals across most tanker market segments.”

Posted 17 November 2015

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