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Offshore, Gas Businesses Help SCF Stay Afloat

SCF Russian shipping company PAO Sovcomflot (SCF Group) recorded a net income of USD 15.2 million in the first half of 2017, a 90.8 percent drop from USD 166 million posted in the same period a year earlier. 

As explained, a strong performance from the offshore and gas divisions provided a relief against the deteriorating conditions witnessed in the conventional tanker markets, which were most noticeable in the second quarter of 2017. This balance of revenue sources helped gross revenue for the six months ended June 30, 2017, increase by 4.4 percent to USD 710.2 million from USD 680.3 million seen in 1H 2016.

“The first half of 2017 was very challenging for global tanker markets, with spot freight rates in all market segments nearing their historic lows. This has impacted severely upon the profitability of those owners focused solely on conventional shipping,” Sergey FrankPresident and CEO of PAO Sovcomflot, commented.

“During the first half of 2017, the benefit of the group’s growing commitment to its specialised offshore and fixed income gas transportation businesses clearly demonstrated its worth. Despite the turbulent conditions seen in conventional markets, SCF Group has continued to demonstrate resilience whilst remaining able to position itself to take advantage of the future upswing in these markets when it comes,” Frank added.

During the first half of the year, the group took delivery of the world’s first ice breaking LNG carrier, Christophe de Margerie. The vessel completed its first commercial voyage, transporting liquefied natural gas (LNG) through the Northern Sea Route (NSR) from Norway to South Korea.

Additionally, the group took delivery of two icebreaking platform supply vessels, Gennadiy Nevelskoy and Stepan Makarov, and placed the first ever orders for LNG-fuelled Aframax tankers, to provide a step reduction in shipping emissions.

On July 21, the group signed an agreement for the construction of a fourth in a series of Arctic shuttle tankers to service the Novy Port project, under a long-term time-charter with Gazprom Neft. The vessel is due for delivery in October 2019.

In March, the company raised a USD 174 million, 15-year credit facility from Sberbank to refinance two Arctic shuttle tankers, Mikhail Ulyanov and Kirill Lavrov, servicing the Prirazlomnoye project.

The group’s subsidiary, SCF Capital, issued USD 150 million of unsecured Senior Notes in April, which mature on June 16, 2023. These were consolidated and form a single series with the SCF’s existing Eurobonds. The issue was 3.8 times over-subscribed and attracted significant international as well as domestic demand. Priced at USD 102.8, the Senior Notes had a yield of 4.85 per cent, representing the lowest-ever achieved for a global shipping company rated below investment grade.

“In the first half of 2017, the group raised USD 341 million in debt capital, including a highly successful tap of our 2016 Eurobond issue. The latter was heavily oversubscribed, with one of the lowest yields seen for a global shipping company. It attracted significant international as well as domestic demand. The proceeds for the new capital raised were used to retire the remainder of our maturing USD 800 million debut Eurobonds, issued in 2010. Overall, the total debt capital raised by Sovcomflot during the period 2016 to 2017 is USD 1.6 billion,” Nikolay Kolesnikov, Executive Vice President, Chief Financial Officer, noted.

As of June 30, 2017, the group’s fleet comprised 149 vessels with a combined deadweight of approximately 13.1 million tons. At the end of the 1H, the group had six vessels under construction, scheduled for delivery from September 2017 to February 2019, comprising two multifunctional ice breaking (MIB) standby vessels and four ice-class, LNG-fueled Aframax crude oil tankers.

The Original Posted by world Maritime News