In recent weeks, as the global oil market went into a price shock, stocks of oil tanker companies continued to climb.
And business is better than ever, according to the observations of the founder and head of Nordic American Tankers.
“We are making a lot of money at this time, improving our balance sheet tremendously, and I have never seen such a strong market,” Herbjørn Hansson, CEO of the Bermuda-based tanker company, said in a television interview.
“And I’ve been around for a little while,” he said.
At the end of 2019, Nordic was the third largest player in the global tanker market.
There has been a collapse of crude prices globally because of a glut in the global supply of oil as well as a significantly reduced demand for oil amid the global coronavirus pandemic which has reduced demand for energy. On Monday, for the first time in its history, the US West Texas Intermediate futures fell into negative territory, after the May contract traded in the red as low as $37 per barrel.
That means that oil producers were in effect ending up paying purchaser for taking out barrels of oil that were in their hands due to an acute shortage of storage for oil. For companies like Nordic, who transport the liquid in bulk, that development was a boon.
Hansson said nearly $70,000 per day can be charged by Nordic for ship usage because of the current condition of the market. Nordic’s client list includes large oil companies such as Exxon, Mobil and British Petroleum.
According to FactSet data, it has been predicted that the first quarter revenues of Nordic will come in at $88.5 million which will be a 65 per cent growth compared ot the same period a year ago.
“We don’t speculate in oil. We speculate in carrying oil and that’s a different story. And my point is that I prioritize dividends,” he said. “We have a strong market, and this is the strongest market I’ve seen in my lifetime and I’ve been around for quite a while.”
In about the last one month, the stock price of Nordic, that has a market capitalization of $861 million, more than doubled.
There was a 19 per cent spike in the shares of the company year-to-date at $5.85 which was much better than its competitors in the industry.
Last year, the global tanker industry segment was led by Euronav and Frontline and each had almost twice the market value as that of Nordic.
Hansson said that the current focus of the company is to reducing its debt pile and has set objectives of becoming a dominant player in the world in the segment.
“We were debt free a few years ago and there’s no doubt in my mind we will be debt free again,” he said. “We will have the strongest balance sheet in the industry, we will have the best dividend in the industry and we have a strong market in front of us.”
(Adapted from CNBC.com)