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Going to run soon ... imo
At least this stock reflects the real economy sinking like a big NAT vessel unlike the infinite printing presses of the Fed that keep on sending the markets to record highs. I guess NAT not on the Fed’s Santa list of buying stocks
38k shares at 3.50 just someone bought
Oil down 4% today. That’s all.
Let me know when the company printing presses stop so I can start accumulating. $3.31 down -3.22% while the rest of the market going north. Bulk rates going up snd share price going south
Lot of 100 shares. Run anytime soon:)
How you know that?
$NAT CEO continues to sell shares so much dilution here price can’t get going. Like I said before this is not the Federal Reserve
Ha ha ha... this going to fly soon bro... 100 prints like crazy here...
When the CEO stops the Share Printing machines $NAT will run fast. On watch
Nordic American Tankers: A Taste Of Peak Oil Demand And It's Not Nice
Mar. 31, 2021
Summary
Nordic American Tankers reduced their dividends done to the bare-bones early in 2021 following a very rough end to 2020.
During the fourth quarter of 2020 they saw their earnings and operating cash flow turn negative.
Whilst this downturn is due to the oil market rebalancing, the bigger implication is that it provides an insight into their medium to long-term future.
One day oil production will peak and thus demand for oil tankers will terminally decline and likely cause significant financial pain since the industry lacks the ability to coordinate.
Whilst they might make a suitable short-term contrarian rebound investment, given the cloudy long-term outlook, I believe that a neutral rating is appropriate.
Introduction
Since last discussing Nordic American Tankers (NAT), they have reduced their dividends once again and thus suppressed their yield down to a low 2.50%. Even though they seem superior to other oil tanker companies they could not defy the worst industry-wide downturn in over two decades, as my previous article discussed. A follow-up analysis is provided within this article that now includes their subsequently released financial results for the fourth quarter of 2020, which provide insights into their medium to long-term future.
Executive Summary & Ratings
Since many readers are likely short on time, the table below provides a very brief executive summary and ratings for the primary criteria that was assessed. This Google Document provides a list of all my equivalent ratings as well as more information regarding my rating system. The following section provides a detailed analysis for those readers who are wishing to dig deeper into their situation.
*There are significant short and medium-term uncertainties for the broader oil and gas industry, however, in the long-term they will certainly face a decline as the world moves away from fossil fuels.
Detailed Analysis
.
Instead of simply assessing dividend coverage through earnings per share, I prefer to utilize free cash flow since it provides the toughest criteria and best captures the true impact on their financial position. The extent that these two results differ will depend upon the company in question and often comes down to the spread between their depreciation and amortization to capital expenditure.
On the surface 2020 appears to have been a blockbuster year with operating cash flow of $111m surging well above the $53m generated during 2019, but alas this only tells half the story. Their time during 2020 saw two extremes, earlier in the year they generated boatloads of cash as the historical oil oversupply lead to a massive demand for floating storage. Whereas later in 2020 they saw a severe downturn as oil production was reduced and thus demand for oil tankers plunged. During the first nine months of 2020 they generated $125m of operating cash flow, thereby meaning that they burnt $14m of cash just to operate during the fourth quarter of 2020.
This very rough quarter was not simply limited to their cash flow performance since it clearly translated over to their accrual-based earnings, as the financial statement extract included below displays. It can be seen that their operating income for the fourth quarter of 2020 was a loss of $22m versus a profit of $21m during the equivalent time of 2019.
It was of little surprise that they reduced their dividends to the near barebones following this painful end to an otherwise profitable year. Although they will one day see a recovery, sadly the timing is impractical to ascertain given the high underlying volatility of daily oil tanker charter rates that underpin their industry, as was further discussed in my previously linked article.
Whilst this downturn is already less than ideal, it should only prove temporary as the oil market normalizes following the historically unprecedented Covid-19 inspired crash of 2020. This means that the bigger implication from this downturn is actually catching a glimpse of their possible medium to long-term future once the world passes peak oil demand and thus causes seaborne oil trade to enter a terminal decline. Although the exact timing of peak oil demand remains unknown, it certainly is coming and could easily eventuate this decade, as per the graph included below.
Admittedly oil tanker companies may be spared some of the initial pain as the higher-cost oil producers in North America face the majority of the early supply reductions. Although given the overall terminal decline, the oil producers in the Middle East and elsewhere will still be forced to slash their production and thus reduce seaborne oil trade.
There is no OPEC cartel for oil tanker companies to coordinate the retirement of vessels and thus it stands to reason that the industry will fight itself with an ‘everyone for themselves’ attitude to keep their vessels in service in order to capture more of the remaining market. This will naturally force the weakest companies out of the market first, which is essentially the basic idea underpinning how market-based economies function.
It should also be remembered that once reaching this point where oil demand has peaked, it will be continuously declining and thus presenting a scary reality that the downturn for oil tankers will be permanent. Instead of having the occasional bad quarters that they currently face, it would likely flip the other way whereby they have the occasional good quarter that is separated by far more bad quarters. The final and most important aspect to remember with any investment is that even though they might survive, it does not necessarily mean that they will provide a suitable investment versus other options.
Following their very rough fourth quarter of 2020, their net debt increased to $299m versus its previous level of $272m at the end of the third quarter. If nothing else, at least they have retained a sizeable cash balance that should help ensure that their liquidity remains strong and thus provides a buffer to help them remain a going concern despite seeing negative earnings.
Whilst one quarter of negative operating cash flow is already undesirable, if this were to last for a prolonged period of time then their net debt could easily spiral quickly out of control. If they were to continue burning cash at the same rate as the fourth quarter of 2020 at $14m per quarter, this would equal negative operating cash flow of $56m per annum and once including even modest capital expenditure, it would see them burn upwards of $75m of cash and thus increase their net debt by approximately 25%.
Their highly volatile earnings also complicates assessing their leverage since it too varies significantly. It was no surprise that their financial metrics all deteriorated during the fourth quarter of 2020 following their weakening earnings and increasing net debt, as primarily evidenced by their net debt-to-EBITDA increasing to 2.59 versus its previous result of only 1.32 and interest coverage dropping from 4.17 to only 2.59.
Due to the continued volatility in their earnings and thus their financial metrics, their leverage was once again rated as high since their net debt has increased slightly. If this downturn continues during 2021 then their leverage will almost certainly soar to very high levels, which would prove dangerous if they fail to maintain strong liquidity.
When looking further into the medium to long-term, once they reach the point whereby their demand has peaked the combination of permanently reduced earnings could possibly threaten their ability to remain a going concern, especially when their net debt likely increases in tandem. At least at the moment, this downturn should only prove temporary as it relates to the oil market rebalancing and not necessarily a structural permanent change.
Thankfully their previously mentioned sizeable cash balance has helped ensure that their liquidity has remained strong with a current ratio of 2.51 and most importantly, they have a cash ratio of 1.46. When looking further into the medium to long-term, they could easily see this strong liquidity drained once they reach the point of continuously shrinking demand since a continued cash burn would eventually deplete their currently sizeable cash balance. The extent that this endangers their ability to remain a going concern will not be known until this point is reached but realistically, it presents a very concerning prospect.
Conclusion
On one hand, they have sufficient financial strength to help them traverse this current temporary downturn but when looking into the medium to long-term, this may not necessarily be the case once they see continuously shrinking demand. Whilst they might make a suitable short-term contrarian rebound investment at the moment, given the cloudy long-term outlook, I believe that a neutral rating is appropriate.
Sold my average share price $3.24 earlier at $3.30 because there is massive dilution going on here. Will be back when $NAT CEO turns off his massive share printing machine this is not the Federal Reserve
$NAT CEOon CNBC right now saying they will make $millions more in profits upcoming quarters because of higher and increasing Oil prices headed towards $100. bulk rates astronomical now
$buy buy $buy...add in appropriate small increments...bouncing around the 50 day moving average consolidation for now as the corrupted hedge funds and Big Banks want this juicy one as low as they can get it for loading purposes.
Container Shipping Costs Soar From $1500 to $9000 Due to Suez Canal Blockage
Mish
Mar 28, 2021
Shipping costs have soared since the Ever Given got stuck sideways in the Suez Canal on Tuesday. Germany is harder hit than the US.
Efforts to Dislodge the Ever Given Intensify
The ship's names is Ever Given but the logo reads EverGreen.
Image is from CNN Efforts to dislodge stranded Suez Canal container ship intensify as backlog grows
Major Macroeconomic Shock to Europe
This strange-looking accident constitutes a major macroeconomic shock for Europe. Germany reminded us yesterday that 9% of its export go through the Suez canal, and a much bigger proportion of its chemical trade. As we saw at the beginning of the pandemic, industrial supply chains are sensitive, even to small disturbances in transportation infrastructure. And this is a big disturbance.
Hundreds of ships are stuck. Some are now re-routed to the pre-Suez route around South Africa. That's an extra 10 days of travel. What makes the situation worse is that air transport cannot take up the slack, while demand for Asia-made products is high. FAZ has done the math on container shipping costs - which have gone up from a previous $1500 to $9000. Oil prices has already risen by 6% since the ship stranded. The share prices of shipping companies has fallen.
Even by the standards of modern container ships, the Ever Given is huge. 400m long, it is one of the world's largest. Dutch rescue teams will eventually get it unstuck, but it will take a while until the Suez Canal can be used again, and the backlog of ships clears. The accident will have damaged the canal's infrastructure, which also needs to be repaired before normal operations can resume.
This will be a V-shaped shock no doubt, but coming at a time like this, it is the last thing the trade-dependent European economy needs. Sacks of rice no longer fall over in modern China. But containers that travel from Malaysia do - kind of.
The above view from Eurointelligence.
What Might Help the Free the 300 Ship Blockage in the Suez Canal
For background information, conflicting time estimates on when the blockage may be fixed, and details of the Ever Given, please see Why a Full Moon Might Help the Free the 300 Ship Blockage in the Suez Canal
Mish
* * $NAT Video Chart 03-26-2021 * *
Link to Video - click here to watch the technical chart video
Tanker stocks surge as Suez blockage hoists freight rates
Mar. 26, 2021 1:51 PM ETNordic American Tankers Limited (NAT)
By: Carl Surran, SA News Editor
Tanker stocks are extending their gains thanks to the continued blockage of the Suez Canal, as the chaos is expected to raise transportation rates.
Gainers are led by Nordic American Tankers (NAT +14.2%), where a board member also bought 50K shares at $3.69 each.
Also: TK +11.9%, FRO +6.8%, DHT +5.3%, TNK +5.2%, EURN +4.2%, DSSI +3.8%, STNG +2.9%.
Freight rates have jumped 20% for large LR2 oil product tankers traveling from the Mediterranean in mid-April, as vessel supply continues to decline, according to Bloomberg, citing Torm A/S, one of the world's largest owners of oil product tankers.
The TC1 shipping index benchmark for LR2 vessels from the Middle East to Japan has climbed by a third since last week to WS 137.5, thanks to a slim number LR2 vessels in the region available to load before April 12.
At least four LR2 tankers that might have been headed towards Suez from the Atlantic basin are now likely evaluating a passage around the Cape of Good Hope, Braemar ACM says.
The Suez blockage could cause a significant impact on the market for liquefied natural gas, potentially delaying delivery to Europe of ~1M metric tons of LNG if the blockage lasts for two weeks.
Strong Democrat Stock Here. Now that Biden is in office, a vast majority of oil and oil transport stocks will be going back up relatively fast. Four year chart is proof. Now we are going back to overseas middle east oil, Nordic American Tankers are going to be very busy once again. In 2017 when Trump took over, transport stocks dropped because that administration stepped away from overseas oil, we focused on the pipeline out of Canada, and all these dropped... NAT up 8%, I expect it to be back up above $6.00 pretty fast over the next 2 to 6 weeks.
Clarkson's
https://fearnpulse.com/
Suezmax
This week has seen a number of Suezmax fix and/or appraise Aframax stems in North West Europe and the Mediterranean basin. This may hold vessels away from West Africa and provide some short-term stability. In the pre-Covid era, any tightening of the UKC/MED list would have almost certainly firmed Td20, but slap bang in the middle of this pandemic, all it can manage to do is maintain rates. There are some positive signs in the USG where Aframax have firmed and may drag Suezmax into the game, but any benefit from these crossover scenarios is likely to remain highly regionalized. West Africa East trades 130 x WS59 with MEG/East on modern trying to move on from WS55. Td23 has shown some signs of resistance with most owners holding for WS20 S/S.
https://www.hellenicshippingnews.com/tanker-market-rates-24-09-2020/
Nordic American Tankers Ltd (NYSE: NAT) – Comments on the market – Founder, Chairman & CEO is buying stock again
March 1, 2021
Dear Shareholders and Investors,
We released our 2020 numbers last Friday, February 26, 2021. 2020 was a good year.
We achieved excellent results for three quarters, whilst the fourth quarter was weak.
At this time we clearly see a positive turn in the market for the NAT Suezmaxes. Last week we concluded a spot contract at about
USD 20,000 a day and another spot contract at about USD 15,000 a day. A week ago the comparable number was about USD 4,000 a day. Operating costs are covered at USD 8000/day.
I would also like to advise you that today I have bought 50,000 shares at USD 3.13.
My son, Alexander Hansson and I are among the largest shareholders of NAT.
Sincerely,
Herbjorn Hansson
Founder, Chairman & CEO
Nordic American Tankers Ltd.
These charter rates need to start going up big time again--so NAT can begin to show a REAL distribution rate. Boasting about always paying a dividend does not cut it when you lose so much on the principal.
Nordic American Tankers Ltd (NYSE: NAT) – The Full Year 2020 & the 4th quarter – 2020 was a good year. NAT is a dividend company. Good market prospects
February 26, 2021
Dear Shareholders and Investors,
Highlights:
The following main elements in our business stand out at this time:
During 2020 we distributed $67.2 million in cash dividends and repaid our existing loans with a gross amount of $75.5 million.
The first half of 2020 was a strong period for NAT
The third quarter of 2020 came out positively with a timecharter equivalent of about $25,000 per day per ship
The fourth quarter of 2020 was weak
We undertook planned technical maintenance of our ships during softer market periods of 2020
At the time of this report the market has improved and we believe that we are close to a significant positive turnaround
The full year 2020 produced a net income of $50 million or an earning per share (EPS) of $0.34. This is an improvement of about $60 million in 2020 compared to 2019, which produced an EPS of -$0.07.
We see strong oil demand, in particular from Asia for 2021. This is good for us. Oil will be required to improve standard of living for millions of people worldwide.
In the final quarter of 2020 we concluded the financing of the two newbuilding suezmaxes, which we ordered in September 2020. This financing offers us pre-delivery funding for the last two pre-delivery instalments of the newbuildings, if required.
In December 2020, we expanded our senior secured loan with our existing lender in Texas with $30 million, as a liquidity reserve. Accordingly, our long term liabilities as per December 31, 2020 stood at $335.5 million.
During 2020, 11 of our vessels were taken through scheduled drydockings. The majority of these dockings were conducted during the second half of the year. For 2021, we have 4 vessels due for scheduled drydockings and our fleet is as such ready for a recovery.
Our top quality fleet as evidenced by “vettings” undertaken by the oil companies performed technically well last year.
The reduced oil production from OPEC+ during the fourth quarter of 2020 affected our earnings. The average time charter equivalent (TCE) for our trading fleet during the fourth quarter of 2020 was $8,700 per day per ship.
We see that the market is finely balanced and there are clear signs we are going into a stronger market.
Cash dividends are a priority for NAT. In 2020 we paid $67.2 million or 45 cents per share in cash dividends.
We announce our 94th consecutive quarterly dividend. The dividend for 4Q2020 is 2 cents ($0.02) per share, payable on March 31, 2021, to shareholders of record March 12, 2021. With improved earnings, higher dividends can be expected.
As communicated earlier, the Covid-19 situation has not impacted us to a significant extent.
Detailed financial information for the full year 2020, the third and fourth quarter of 2020 and for other periods is included later in this report.
Sincerely,
Herbjorn Hansson
Founder, Chairman & CEO
Nordic American Tankers Ltd. www.nat.bm
NAT After Hours: Last | 9:11 AM EST
3.70
Volume
330,163
Big time trading volume. At first blush, looks like a breakout.
This baby is cranking. Wished I’d bought more.
It's moving good, news must be brewing.
No idea but I’m loving my recent buy. Wahoooo
NAT needs to show that they have financial ability to INCREASE the dividend.
If they can, there will be more investors like you willing to buy in.
GLTU
Bought in today at the suggestion of a friend. Helluva dividend.
Clarkson's Report:
https://www.nat.bm/wp-content/uploads/2021/02/Weekly-freight-rates-210205.pdf
https://fearnpulse.com/
Suezmax
An armada of Eastern ballasters appears to have sealed the fate of West Africa and the MEG, at least as far as the third decade of February is concerned . The obvious effect is that TD20 will trade down to the low W50's whilst a Wafr/East run will be lucky to hold onto high W50's/low W60's tops. However, it's not all doom and gloom as was highlighted in the Caribs last night. The prompt nature of the USG and Caribbean market has afforded it some insulation from the marauding ballasters. An East Coast Mexico/TA run was booked at 145kt x W50, which highlights that pockets of opportunity do remain, however bleak the macro picture looks. MEG/EAST will correct down to low/mid W50's on modern and TD23 will follow this trend finding a home at low/mid teens
-------
https://www.hellenicshippingnews.com/weekly-tanker-time-charter-estimates-february-03-2021/
Weekly Tanker Time Charter Estimates, February 03 2021
in Report / Analysis,Weekly Tanker Time Charter Estimates 03/02/2021
On the crude side, the period market has picked up this week with some short-term fixtures reported but rate levels remain low. The average for a VLCC for one-year remains at $27,500/pdpr.
The clean market has been quiet with little enquiry in the LR2 and LR1 sectors. The MRs have experienced some activity in the west, rates for one year hover around $12,250/pdpr.
Oil prices moved up to the highest levels in a year earlier this week based on improving sentiment and market fundamentals.
Euro, have the tanker rates moved up recently?
Thanks in advance for any reply.
It may be because NAT is heavily shorted.
https://www.nakedshortreport.com/company/NAT
Squeeze?
They must know something.
Blackrock released statement of ownership with 8.4 million shares, 5-6% of Nat'capital
That's absolutely great
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