Oil charters, strong tanker demand boost OMIÆs first-quarter net income
OMI Corp., a major ocean tanker owner and operator, reported net income of $75.8 million for the first quarter of 2005, a 34 percent increase over the net income of $56.4 million for the first quarter of 2004. The figure for 2005 was the highest net income for any first quarter since OMI's start-up in 1998.
The company's first quarter revenue also increased 34 percent to $171.4 million from $128.0 million.
'The tanker market was strong in the first quarter ' notwithstanding an increase in the world tanker fleet,' OMI said in a statement. 'The average time charter equivalent for Suezmax tankers in the West Africa to U.S. trade, though lower than the peak preceding quarter rate and the rate prevailing in the same period of last year, was very profitable,' reflecting 'the second-highest level for this period since at least 1990. This was the result of strong world oil demand due to the improving world economic activity, especially in the United States, China and Southeast Asia, as well as colder-than-normal weather in the Northern Hemisphere and the decline of the U.S. dollar.'
OMI pointed out the same factors as being responsible for increasing strength in the product tanker market.
In the first quarter the time charter equivalent (TCE) rate for OMI's Suezmax fleet was $60,316 per day, down 3 percent from $62,285 for the first quarter of 2004
There will be an 'expected seasonal decrease' in overall oil demand in the second quarter, and then a strong second half of the year, OMI predicted. Factors affecting the second six months of 2005 include a shortage of U.S. refinery capacity, Western Europe and Asia, possible disruptions due to political instability in short-haul producers Venezuela and Nigeria, and the phase-out of single-hull tankers without segregated ballast by the end of 2005, OMI said.
OMI noted it has taken delivery of two 47,000-deadweight-ton product carriers, the 'Brazos' and the 'Lauren,' in January and March. The company paid cash for both ships, which are operating in the spot market. In January, OMI agreed to time charter two new Suezmax ships for seven years upon their delivery in the second and third quarters.
Also in January, OMI sold its last two non-double-hull vessels, the 'Tandjung Ayu' and 'Bandar Ayu,' for a gain of about $2.9 million. Those ships were operating on time charters due to expire in mid-2005
OMI said its vessel expenses in the first quarter of 2005 increased 29 percent, mostly due to operating costs for ship supplies and crews.
In the first quarter, 'oil majors have moved into the time charter market in a substantial manner. We are benefiting from this with new time charters and extensions,' said Craig H. Stevenson Jr., chairman and chief executive officer of OMI Corp., which is based in Stamford, Conn.