SFL poised to profit from tanker recovery

The John Fredriksen-controlled company recorded charter revenues for the quarter of $157m, down on $160m in the previous quarter but up on $154m in the same period last year.

Of charter revenues earned in the quarter, 51% were from the offshore sector, 29% from tankers, 9% from bulkers and 11% from container ships.

The fixed rate charter backlog for the SFL fleet was around $4.7bn at the end of June, with an average charter term of 5.1 years, excluding purchase options.

Three 1999-built VLCCs chartered to Fredriksen's Frontline have agreements in place to be sold and are expected to be delivered to their new owners in the fourth quarter. SFL will receive compensation for the early termination of the charters, for which Frontline booked a $56.2m impairment in its second quarter results. SFL expects cash proceeds of $77.5m from the sales, including $10.5m up front from Frontline and $48m in 7.25% amortising notes over similar terms to the charters.

SFL sees improved prospects for the tanker market in the second half the year and believes it is well positioned to reap the benefits of an upturn through its policy of reducing the financial leverage of its crude tankers in recent years.