Nordic American Tankers (NYSE: NAT) – The 3Q2018 report – Optimism in the tanker market. Increased rates for the NAT vessels

Hamilton Bermuda, November 12, 2018


  • As we had expected, the first half of this year saw the bottom of the tanker market. Our predictions that freight rates for our vessels would rise during the second half of 2018 proved correct.
  • At this time spot contract indexes for two out of five suezmax routes for our one million barrel tankers are above $50,000 per day, compared with the first 9 months of 2018, when the freight indexes showed about $6,000 per day.  This is a good illustration of the volatility in freight rates and the potential for earnings in the tanker industry when the tanker market turns.  We believe there could be much more to come. 
  • We declared $0.01 per share in dividend for the 3rd quarter on November 1, 2018. This is a reflection of the low market and the subsequent low cash flow during the third quarter of 2018. This is our 85th consecutive quarterly dividend distribution, a record unparalleled in the tanker industry.  We assure shareholders of our commitment to pay dividends going forward.  
  • The time charter equivalent for our vessels during 3Q2018 was $12,000 per day per ship.  In 2Q2018 it was $10,500 per day per vessel. Going forward, much higher rates can be expected.
  • During the third quarter we took delivery of two of our three newbuildings, while the third vessel was delivered to us on October 25, 2018. All three vessels were delivered from a top yard in South Korea, on time and on budget. The adjustments to the fleet have reduced the average age of our fleet.
  • NAT Net Loss for 3Q2018 (after depreciation, G&A and finance charges) came in at -$38M, including a non-recurring charge of $12.7M. Net Loss for 2Q2018 was -$27.2M. NAT Net Operating Loss for 3Q2018 came in at -$15.3M against -$17.5 in 2Q2018. A better reflection of the performance for the quarter, the Adjusted Net Operating Earnings*, came in at $2.1M for 3Q2018, against $0.8M in 2Q 2018.
  • Our Net Debt** at the end of 3Q2018 stood at about $313M for the fleet, equaling about $13.0M per vessel, which is attractive. Our net debt per vessel is among the lowest among publicly traded tanker companies and we will work to secure a financial structure in which NAT has no net debt as was the case earlier. 
  • Later in this report we have included financial information for 3Q2018 and for other periods. 

  * Adjusted Net Operating Earnings (Loss) represents Net Operating Earnings or Loss before depreciation, impairment, disposal of vessels (gain/loss) and non-cash administrative charges.
   Please see later in this announcement for a reconciliation of Net Operating Earnings (Loss) to Adjusted Net Operating
   Earnings (Loss)
** Net Debt is long term debt, less net working capital and deposit paid for newbuilding, divided by 24 vessels.

Our Fleet

We have sold 8 suezmax vessels during the summer of 2018. Two of these vessels were delivered to their new owners at the end 2Q2018 and the remaining 6 were delivered to their respective owners during 3Q2018. The Net Loss from sale of vessels was limited to $-1.6M in 3Q2018. Our fleet at the time of this report consist of 25 vessels.

Now NAT has 10 vessels built between 2010 and 2018, 13 vessels built from 2000 through 2009 and 2 vessels built in the late 1990s. The average age of our fleet has come down to about 11 years.

The above developments are several of many important steps to renew and grow the NAT fleet in the years to come. In a capital intensive industry like ours, timing and financing are the key issues.

The inspections of our ships by oil companies (“vetting”) continue to reflect the excellent quality of our fleet. 


Our Net Debt at 3Q2018 after delivery of two of our three new additions to the fleet stood at $13.0M per vessel which is among the lowest in the industry. **

The Company decided not to pursue a bond offering earlier this year as it was not considered in the best interest of NAT. The decision was well received. The Back-stop facility with its associated terms, has been cancelled. The costs associated with the establishment of the Back-stop facility, paid last year, has consequently been expensed in full this quarter (no cash-effect).

Important uncertainty has been removed with the strong tanker market.

As in the past, it is an objective to keep debt low. We wish to come back to the financial position about 10 years ago when NAT did not have any net debt.

For 3Q2018 a cash dividend of $0.01 per share has been declared. NAT has a policy to maximize dividend payments. Payment of the dividend is expected to be on or about December 7, 2018, to shareholders of record on November 21, 2018.  

In an improved tanker market, higher dividends can be expected.

World Economy and the Tanker Market

The world economy is enjoying its strongest upswing since 2010. What is good for the world economy and world trade is positive for the crude oil tanker business. Recent macroeconomic data are giving further positive signals for the world economy and consequently for NAT business. Major oil companies and large oil traders are important for the tanker industry.  Uncertain political developments may in fact be good.

The world Suezmax fleet (excluding shuttle, product and Jones Act tankers) counts 497 vessels at the end of 3Q2018. For the remainder of 2018 we expect 11 vessels, and in 2019 and 2020 we see 20 and 7 vessels for delivery, respectively.  
20 vessels have been disposed during 2018, compared to 17 vessels in 2017.  

The supply of tanker tonnage is inelastic in the short-term. When there are too many ships in an area, rates tend to go down. When there is scarcity of ships, rates tend to go up. Short-term spot tanker rates are volatile.

Corporate Governance/Conflict of Interests

It is vital to ensure that there is no conflict of interests among shareholders, management, affiliates and related parties. Interests must be aligned. From time to time in the shipping industry, we see that questionable transactions take place which are not in harmony with sound corporate governance principles, both as to transparency and related party aspects. We have zero tolerance for corruption.


The NAT strategy is built on expanding and maintaining a homogenous and top quality fleet, leveraging on our industry network and close customer relationships.

A strong balance sheet, combined with a homogenous fleet and economies of scale are giving a low cash break-even level.

The NAT strategy is effective in both a strong tanker market and in a weak one. In an improved market, higher dividends can be expected and vice versa.

Our dividend policy should continue to enable us to pay a higher dividend in a strong tanker market that we see now.

Our fleet of 25 more or less identical vessels is a special feature of NAT that is particularly valuable to our customers.  

NAT is firmly committed to protecting its underlying earnings and dividend potential. We shall safeguard and further strengthen this position in a deliberate, predictable and transparent way.

* * * * *


Matters discussed in this press release may constitute forward-looking statements.  The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties.  Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.  We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand in the tanker market, as a result of changes in OPEC’s petroleum production levels and worldwide oil consumption and storage, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission, including the prospectus and related prospectus supplement, our Annual Report on Form 20-F, and our reports on Form 6-K.


Gary J. Wolfe
Seward & Kissel LLP
New York, USA
Tel: +1 212 574 1223

Bjørn Giæver, CFO
Nordic American Tankers Limited
Tel: +1 888 755 8391 or +47 91 35 00 91

Herbjørn Hansson, Chairman & CEO
Nordic American Tankers Limited
Tel: +1 866 805 9504 or +47 90 14 62 91

3rd Quarter 2018 Result