On July 31 and in direct continuation of its prior charter, the Company has been successful in re-fixing the 2003-built panamax product tanker Maya for a period of twelve months for a minimum rate that is expected to generate gross revenues of over $5.5 million.
FLEET STRATEGY & OUTLOOK
The vessel supply situation in the crude market continued to provide a lid to any material rate appreciation that the current world oil demand would have triggered and for another quarter the tanker industry fell victim of its prior and on occasions, uncontrollable, lust for newbuildings. For products market, weak demand in Europe and slow growth in the U.S. economy failed to strengthen rates. On a positive note however, the supply situation seems to be recalibrating towards some equilibrium with the tanker orderbook, this quarter, down to 12% of the fleet (13% in Q1 2012) compared to 27% at the end of 2009. With world economies, driven by China and India with annual GDP growths in the 8.0-9.0% range compared to 1.5% in the US, on the rebound, oil consumption levels at record highs coupled with political tensions around the world, the tanker market downturn may well come to an end sooner than expected.
TEN, due to its size, fleet diversification and modernity, extended client reach and experience in managing cycles, has rode another difficult quarter with fewer bruises then one would had anticipated. With over $221 million in cash and investments reserves at times when liquidity is scarce for most the Company continued to operate in a "business-as-usual" mode and used this time not only to further solidify its exposure with major international end-users but also to expand its chartering horizons further afield with equally pristine names. Its exposure in LNG and shuttle tankers has allowed for such latitude.
Cost containment will continue to feature highly on the agenda going forward and the close to 10.0% drop in quarter-over-quarter daily operating expenses, without jeopardizing the safety of our people on board, provides a sample of our intentions and capability.
In terms of growth, management is currently exploring various opportunities in LNG, shuttle tankers and other mainstream offshore markets while keeping a close eye on developments with conventional tankers which to some degree is entwined to developments in the shipping banking sector. The placement of a state-of-the-art tri-fuel LNG newbuilding order (and an option for an additional vessel) entrenches the Company deeper into this close-knit and high barriers-to-entry market, and management believes that TEN can leverage this modest exposure to its long term advantage.
"Following our tested corporate strategy, TEN has managed to absorb the pressures of the tanker markets while navigating the Company closer to profitability," stated Mr. Nikolas P. Tsakos, President and Chief Executive Officer of TEN. "As mentioned in the past, high utilization, cost control, cash generation and a healthy balance sheet are the cornerstones of our business model. We continue to be alert of market developments and remain optimistic that the Company is well positioned to benefit when the market turns," Mr. Tsakos concluded.
As previously announced, today at 10:00 a.m. Eastern Time, TEN will host a conference call to review the results as well as management's outlook for the business. The call, which will be hosted by TEN's senior management, may contain information beyond what is included in this earnings press release.
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