Hafnia Tankers Ltd.: Product Tanker Market Weakened Further

The product tanker market contributed to an operating profit for the six months ended June 30, 2017 of $14.8 million and net profit of $2.3 million. The book value of the fleet, including newbuilds and remaining capex, as of June 30, 2017 was $1,093.4 million. As of June 30, 2017, we had $64.9 million in cash and $576.4 million of bank debt. Hafnia’s share of the remaining capex for the newbuilds was $35.2 million. As of June 30, 2017, we had a firm term sheet from a first-class bank to fund the newbuilds, and in combination with our cash balance the newbuild program was fully financed. We have no debt maturities before January 2022.

The overall product tanker market weakened further during the second quarter of 2017, reflecting the ongoing imbalance between supply and demand of tonnage. High inventories and reduced trading activity did not support any additional increase of freight rates, however we did see the start of reduced oil inventories by the end of Q2, which in combination with a reduced orderbook, as well as growing oil consumption, are needed for an improved market. Gross earnings during the first half of 2017 were c.$14,650 per LR1 vessel, $14,700 per MR vessel and $13,175 per SR vessel.

As of June 30, 2017 Hafnia’s fleet consisted of 37 owned vessels and five chartered-in vessels. Vista Shipping, of which Hafnia Tankers has a 50% ownership, has two LR1 newbuilds on order, with expected deliveries in Q1 2019. Commercial management of our product tankers is organized under Hafnia Management. The three divisions – LR1, MR, and SR, have 111 vessels under management including forward commitments.