The accusations of financial irregularities was thought to stem from OSG’s pre-bankruptcy tax problems. According to US media reports, action could be taken by the SEC against alleged financial reporting violations and securities fraud claimed to have occurred four years ago when OSG was under previous management.
Meanwhile, the company’s TCE revenues for 2Q16 were $215.7 mill, a decrease of $19.5 mill, compared with 2Q15, primarily driven by lower daily rates earned by the International flag fleet.
TCE revenues for the first half of 2016 were $452.6 mill, a drop of $4.2 mill, compared with 1H15.
Operating income for 2Q16 was $67.1 mill, a decrease of $25.2 mill, compared with the same period of 2015, primarily driven by the decline in TCE revenues and an increase in depreciation and amortisation expenses.
Operating income for 1H16 was $153.3 mill, a decrease of $16.6 mill, compared with 1H15.
Net income for 2Q16 was $29.9 mill, compared with $58.4 mill in 2Q15. The decrease reflects the impact of lower TCE revenues, increases in depreciation and amortisation expenses, and a higher non-cash deferred tax provision, partially offset by lower interest expense.
Net income for 1H16 was $80.6 mill, compared with $101.3 mill in the first half of 2015.
Adjusted EBITDA was $110.1 mill for the quarter, a decrease of $20.1 mill, compared with 2Q15, driven by lower daily rates earned by the international flag fleet. For 1H16, adjusted EBITDA was $239.6 mill, a decrease of $4.3 mill, compared with 1H15.
“I am pleased to report strong second quarter and first half results,” said Capt Ian Blackley, OSG’s president and CEO. “In our international business, spot rates have softened this summer, as global inventories have climbed, but we believe the fundamentals remain positive. In our domestic business, we face the challenges of a decline in US crude production, high inventory levels and the delivery of newbuild tonnage, but the sustained lower oil price environment is also driving record US gasoline consumption.”
“We continue to make good progress towards separating our international and domestic businesses. By creating two independent public companies, with an increased ability to focus on their own business, we believe each will be better positioned to enhance shareholder value. At the same time, the cash generated by our 79 vessel fleet gives us flexibility to further strengthen our balance sheet and consider additional opportunities to create value for our shareholders,” he concluded.
Examining the results, OSG said that TCE revenues for the international crude tankers segment were $66.5 mill for the quarter, down 14% compared with 2Q15. This decrease resulted from a softening in daily spot rates across all vessel classes in this segment, with the VLCC spot rate declining to $47,000 per day in the second quarter, down 7% from the same period in 2015.
The Aframax spot rate was $23,500 per day, down a third from 2Q15; and the Panamax blended rate was $20,500 per day, comparable to same period in 2015.
For 1H16, TCE revenues for this segment were $153.9 mill, an increase of $10.1 mill, compared with 1H15.
As for the international product carriers segment, TCE revenues were $34.4 mill for the quarter, down 19%, compared with 2Q15. This decrease was primarily due to lower average daily blended rates earned by the MRs. Also contributing was a 109-day decrease in revenue days resulting primarily from the sale of an older vessel in July, 2015.
These decreases were partially offset by the LR1 blended rate increasing to around $21,300 per day in 2Q16, up 10% from the comparable 2015 period.
TCE revenues were $71.8 mill for 1H16, a decrease of $14.1 mill, compared with the first half of 2015.
The US flag segment saw TCE revenues fall 1% to $114.7 mill for the quarter. The drop was primarily due to a decline in Jones Act spot market revenue related to incremental coastwise voyage opportunities that were available to the ATBs principally employed in Delaware Bay lightering in 2Q15, but not in 2Q16.
This decrease was largely offset by Delaware Bay lightering volumes more than doubling to 180,000 barrels per day during the quarter from the comparable 2015 period, as the pricing spread between Brent and West Texas Intermediate narrowed making it more attractive for US Northeast refineries to import crude oil, as well as a 76-day increase in revenue days resulting from fewer drydock and repair days.
TCE revenues for the US flag segment were $227 mill for 1H16, essentially the same as reported in 1H15.