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NAT resisting 'gigantomania' despite continued tanker strength

NAT resisting 'gigantomania' despite continued tanker strength
Nordic American Tankers (NAT) has no plans to drastic changes to its fleet size, even as tanker rates remain high in the second quarter.

"We are resisting the temptation to make large fleet acquisitions," chairman and ceo Herbjørn Hansson said in a letter to shareholders.

"Those who have followed the NAT story for some time, know we prefer to grow in a considered and deliberate way. We see that some other players, both public and private, have suffered as a result of what I like to call gigantomania. Our approach to risk management is to take one step at a time, always considering the many pitfalls of large and complicated transactions."

Hansson stated that he expects second quarter rates to be generally at the same level as the first quarter, where the company made a $30m profit thanks to high suezmax earnings.

NAT's strategy of holding back some of its recent cashflow leaves it in a position to finance two newbuilds - due to be delivered in 2016 and 2017 - without going to the equity markets.

"The company is in an excellent position to grow the fleet. The two newbuildings will not require further equity from the capital markets. Based on our strategy, NAT has the financial capacity to increase the fleet beyond 24 units, by a ship or two, without issuing stock," said Hansson.

The letter also stated that a cooperation with ExxonMobil has been extended by a year, a freight agreement that NAT believes is mutually beneficial for the two parties.