Proportionate EBITDA (a non-IFRS measure) for the same period was $106.1 mill, compared with $185 mill in 1Q16.
The average daily TCE for Euronav’s VLCCs operating on spot in the TI pool in 1Q17 was $40,528, compared with $60,638 in 1Q16, while the average timecharter rates over the same period were $41,147 and $40,847, respectively.
The Suezmax spot rates averaged $24,000 per day in 1Q17 as against $38,386 per day in 1Q16, while the average daily timecharter rates were $23,880 and $32,251, respectively.
Euronav took delivery of two VLCCs (acquired as resales), ‘Ardeche’ and ‘Aquitaine’ from Hyundai Samho on 12th January and 20th January, respectively.
CEO, Paddy Rodgers, said: “Q1 2017 was a confirmation of our thesis: short term challenges but a positive medium structure building for the tanker sector. Asset prices look to be bottoming out in our view confirmed by emerging buying interest from industrial players.
“However, short term outlook retains a cautious tone with nearly a quarter of the large tanker order book scheduled for delivery during Q2 2017 and newbuilding contract activity picking up short term, albeit only in the VLCC sector.
“Euronav retains substantial balance sheet capability and fixed income visibility to navigate through a period of lower freight rates and/or to take advantage of expansion opportunities. The duration of the challenging freight rate environment will be entirely dependent on the number of additional orders to build new ships that are not needed by the market,” he said.
Euronav’s outlook prognosis was that continued robust demand for crude coupled with a positive dynamic of increased tonne/miles driven by US crude exports of shale oil compensated nicely for the OPEC/nonOPEC agreement on production cuts.
Less positive however, was the return of VLCC newbuilding orders in the first quarter. This implies a lower for longer tanker freight market given the already high concentration of new tanker capacity due for delivery primarily in 2017 but also in 2018. This is likely to generate challenging freight rate conditions during the remainder of 2017.
The company said that it remained confident about the medium term prospects for the business and the tanker sector generally. With the lowest leverage in the large tanker sector and access to over $620 mill of liquidity, Euronav is well positioned to navigate the cycle – to be strategically opportunistic whilst remaining exposed to any potential upside from an improved freight rate environment.
Thus far during the second quarter of 2017, the Euronav VLCC fleet operating in the Tankers International Pool had earned about $32,000 per day and 42% of the available days had been fixed.
Euronav’s Suezmax fleet trading on the spot market earned around $22,000 per day on average with 47% of the available days fixed.