Press release from Nordic American Tankers Limited (NYSE: NAT).
(Thomson Reuters ONE) -
Hamilton, Bermuda, December 12, 2014
Below is a press release that was issued by Nordic American Offshore Ltd.
(NYSE:NAO) earlier today, containing a letter to the NAO shareholders from the
Chairman of NAO.
NAT owns 19.2% of the shares in NAO.
*************
Press release from Nordic American Offshore Ltd. (NYSE:NAO) - Letter to
Shareholders from the Chairman.
Hamilton, Bermuda, December 12, 2014
Dear Shareholder,
As the year draws to a close, I would like to share with you some reflections on
the state of our business and in particular how Nordic American Offshore (NAO)
differentiates itself from the competition.
NAO is essentially based on the same business model as Nordic American Tankers
Limited (NYSE:NAT) in its industry, with a modern and cost effective homogenous
fleet, a strong balance sheet and a quarterly dividend pay-out policy. We at NAO
have a cash break-even level of about $12,000 per day per ship, which is
considered low. NAT owns 19.2% of the shares in NAO which became stocklisted on
NYSE June 12, 2014.
The last few months have seen significant changes in the price of oil, spurring
confusion among some investors who have fled from oil-related securities. By
doing so, many of them have, in my opinion, "thrown out the baby with the bath
water."
Most industry observers were surprised by the rapid decline of the price of oil
- but it is important for investors to understand why such a shift happened. Our
view is that there is no systemic problem in the oil market. Demand remains
healthy and is growing. Oversupply of oil is one important issue, but supply can
be controlled. Therefore, we must consider the situation in the context of
geopolitics. Who gains and who loses from a low oil price? Why would OPEC choose
to maintain high production?
The low price of oil brings with it severe economic pressure for countries like
Russia, Iran and Venezuela, all of whom have sensitive relations with the United
States. I do not wish to speculate, but it seems clear that the current
situation is a geopolitical issue. It is also a fair assumption that political
accords may indirectly trigger or encourage production cuts, thus bringing up
the price of oil. After all, the price of oil stayed high for several years
until the last few months, suggesting a market generally in balance.
NAO as a company is not directly exposed to the price of oil to a significant
extent. We are not an oil company. We do not own oil fields or sell oil. We are
a Platform Supply Vessel (PSV) company. We service offshore oil installations
including oil rigs as necessary parts of their operations. In our main market,
the North Sea, existing production accounts for about 80% or so of the work
handled by our type of vessel. Existing production in the North Sea is by and
large unaffected by movements in the oil price. Startup costs are sunk costs and
production breakeven costs are still below the current oil price.
The area that is affected is exploration work. With a low oil price the
motivation to seek and develop new fields is reduced. This impacts the remaining
20% of the work typically carried out by our type of vessel. Not all the work
will be stopped, and the first vessels to become idle in this market should be
the older, smaller and lower specification vessels. NAO has an advanced fleet of
top quality vessels in particular from a specification and fuel consumption
viewpoint, which keeps NAO competitive in a challenging market.
I believe a useful analogy is to the car servicing and repair business. An
economic downturn often slows new car sales. However, the automobile service
departments still remain busy keeping existing cars running. The situation must
be truly dire before people stop maintaining their vehicles. Just as cars are a
necessity for moving around, our PSVs are a necessity for oil production, and in
our case that existing production is not going away.
NAO has no debt. Next year, we will take delivery of four newbuildings, boosting
earnings and dividend capacity by 67%. This growth is already built in - the
proceeds from our June 2014 IPO along with our credit facility make this growth
possible using very modest leverage. Compared with some of our competitors, NAO
is resistant to volatile markets because of our low cash break-even costs. We
are able to generate more cashflow from our vessels in any given scenario
because we have minimal interest costs.
Of our current six vessel fleet - three are on long term charters with an
average duration of two years before options. The income from these three
vessels alone can cover all the costs of the six vessel fleet, thereby
safeguarding the company's financial position.
As a rule, I do not comment on the stock price, but I feel it is important to
say, both as a NAO shareholder directly and indirectly as the largest
shareholder of NAT, which in turn, has a substantial stake in NAO, that I am not
worried about NAO's long-term prospects. Investors should rest assured that the
management team is working hard to safeguard our ability to pay quarterly
dividends - we are better positioned than our competitors. This may seem a bold
claim, but we have the strongest balance sheet and the most modern PSV fleet in
the industry.
I would like to close by saying that even if rates remain low well into next
year, we still expect to be able to pay a dividend. NAO is in this business for
the long haul and I am hopeful that by this time next year, the global issues
raised in this letter may have been resolved, setting the stage for a strong
performance by NAO. It is clear that oil will remain the main energy form for
many decades to come.
I wish you all the best for the Holiday Season, and as always can be reached at
Herbjorn.hansson(at)scandicamerican.com. Please also visit our web-site:
www.nao.bm
Herbjorn Hansson
Nordic American Offshore Ltd.
Executive Chairman
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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," "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 PSV
market, as a result of changes in the general market conditions of the oil and
natural gas industry which influence charter hire rates and vessel values,
demand in platform supply vessels, our operating expenses, including bunker
prices, dry docking and insurance costs, governmental rules and regulations or
actions taken by regulatory authorities as well as potential liability from
pending or future litigation, general domestic and international political
conditions, potential disruption of shipping routes due to accidents or
political events, the availability of financing and refinancing, vessel
breakdowns and instances of off-hire and other important factors described from
time to time in the reports filed by the Company with the Securities and
Exchange Commission.
Contacts:
Jacob Ellefsen, Manager, IR and Research
Nordic American Offshore Ltd.
Tel: +33 678 631 959 or + 377 93 25 89 07
Tor-Øyvind Bjørkli, Chief Executive Officer
Nordic American Offshore Ltd.
Tel: +47 21 99 24 81 or +47 90 62 70 14
Herbjørn Hansson, Executive Chairman
Nordic American Offshore Ltd.
Tel: +1 866 805 9504 or + 47 901 46 291
Web-site: www.nao.bm
Press release (PDF):
http://hugin.info/201/R/1879576/662754.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Nordic American Tankers Limited via GlobeNewswire
[HUG#1879576]
Unternehmensinformation / Kurzprofil:
Datum: 12.12.2014 - 13:01 Uhr
Sprache: Deutsch
News-ID 359127
Anzahl Zeichen: 10892
contact information:
Town:
Hamilton
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 150 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Press release from Nordic American Tankers Limited (NYSE: NAT)."
steht unter der journalistisch-redaktionellen Verantwortung von
Nordic American Tankers Limited (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
