weathering the perfect storm
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Weathering The Perfect Storm. Magnus Fyhr. Jefferies Tanker Index. What’s In Store For 2005?. Strong Global Economic Growth Global Oil Demand Growing At 2%+ Stricter Regulations Against Single Hulls Increasing Competition For Shipyard Capacity - PowerPoint PPT PresentationTRANSCRIPT
Weathering The Perfect Storm
Magnus Fyhr
Jefferies Tanker Index
`
0
300
600
900
1200
2000 2001 2002 2003 2004 2005
$0
$40,000
$80,000
$120,000
$160,000
1/21/2005 2/4/2005 2/18/2005 3/4/2005 3/18/2005
VLCC Suezmax Aframax
What’s In Store For 2005?
• Strong Global Economic Growth
• Global Oil Demand Growing At 2%+
• Stricter Regulations Against Single Hulls
• Increasing Competition For Shipyard Capacity
• Investor Concerns Center On Rate Volatility & Orderbook
• Risk/Reward Remains Attractive
Jefferies Charter Rate Assumptions`
$55,440
$38,829
$23,293
$52,433
$96,055
$65,000
$55,000
$0
$25,000
$50,000
$75,000
$100,000
$125,000
2000 2001 2002 2003 2004 2005E 2006E
TCE Rates
$45,506
$33,865
$19,765
$41,648
$74,975
$50,000
$40,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
2000 2001 2002 2003 2004 2005E 2006E
TCE Rates
$33,698$31,095
$19,377
$34,213
$49,592
$38,000
$30,000
$0
$15,000
$30,000
$45,000
$60,000
$75,000
2000 2001 2002 2003 2004 2005E 2006E
TCE Rates
$18,682
$24,778
$13,915
$21,868
$28,978$25,000
$22,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
2000 2001 2002 2003 2004 2005E 2006E
TCE Rates
VLCC Charter Rates (2000-2006E) Suezmax Charter Rates (2000-2006E)
Aframax Charter Rates (2000-2006E) MR Product Charter Rates (2000-2006E)
The “Rodney Dangerfield” of the Energy Sector …
• Low P/E’s reflect volatility
• Capital intensive with historically poor returns
• Fragmented industry
• Tanker shares have historically been valued on NAV
13.0x
11.2x
9.5x
7.6x
5.0x
8.0x
11.0x
14.0x
Offsho
re Dril
lers
Oil Ser
vices
Onsho
re Dril
lers
Tankers
EV/2005E EBITDA
… Is Finally Getting Some Respect
• Shipping stocks showing up on investor radar screens
• Trading volumes increasing
• Increasing number of publicly traded shipping companies
• Group market cap now above $20 billion
$1.7 $1.8 $2.2 $2.0 $2.0
$4.1 $4.1$5.0
$9.5
$20.5
$0.0
$8.0
$16.0
$24.0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Market Cap (Billions)
Yield Stocks Are Trading At Premium
0.0x
5.0x
10.0x
15.0x
ATB NAT VLCCF SFL TNP GMR TK OMM OSG
EV/2005E EBITDA
Average: 10.6x
Average: 7.0x
Full Dividend Payout Low Dividend PayoutPartial Dividend Payout
Average: 6.7x
Asset Values Are Firming Despite Volatility
5.96.5
8.07.3
0.0
2.5
5.0
7.5
10.0
Spot 1 Yr. T /C 3 Yr. T /C 5 Yr. Avg.
Years EBITDA Payback On VLCC Newbuild
$50.0
$75.0
$100.0
$125.0
$150.0
2000 2001 2002 2003 2004 2005
VLCC Newbuild VLCC Secondhand 5 Yrs.
Millions
$0
$25,000
$50,000
$75,000
$100,000
2000 2001 2002 2003 2004 2005
TCE
$0
$70,000
$140,000
$210,000
$280,000
2000 2001 2002 2003 2004 2005
TCE
VLCC Sale Prices (2000-2005)
VLCC 1 Yr. T/C Rates (2000-2005) VLCC Spot Charter Rates (2000-2005)