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Oil Sails From Russia to Asia Faster on Smaller Ships
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by Sharon Cho
10:01 PM CET
February 26, 2015
Oil Tanker at Kozmino Port
An oil tanker is docked at a pier at Kozmino port in the Russian Far East. Source: Kyodo via AP Images
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(Bloomberg) -- With supertankers booked solid carrying cheap crude, smaller vessels are taking advantage of the opportunity by hauling record volumes of Russian oil to Asia.
Aframax ships that ply the route between the Russian port of Kozmino and North Asia in three days, compared with journeys of a month for supertankers from the Middle East, are carrying the most ever East Siberian Pacific Ocean Pipeline oil to China, South Korea and Japan. The demand has pushed ESPO’s price to the highest since July versus benchmark Dubai crude, according to industry consultant KBC Energy Economics.
Oil buyers are hiring 30 percent more Aframax tankers compared with last year’s average, potentially benefiting owners including Mitsubishi Corp., Hin Leong Trading Ltd. and Sinokor Merchant Marine Co. The glut that drove global prices down by about half lifted demand for stockpiling at sea in the biggest vessels, pushing their rates in December to the highest for any month since January 2010, and more than double those for the smaller ships.
“Russia is sending more and more crude to Asia at the expense of Europe, while interest in offshore storage has returned and freight rates have increased,” Ehsan Ul-Haq, a senior market consultant at KBC in Walton-on-Thames, England, said by phone.
ESPO Premium
Stronger demand for Russian crude helped ESPO fetch as much as $3.50 a barrel more than the benchmark Dubai grade for cargoes loading in March, according to data compiled by Bloomberg, up from a $2 premium in January.
A total of 26 cargoes of ESPO crude, or a record 615,000 barrels per day, are scheduled to be shipped in March, according to a loading schedule obtained by Bloomberg. That’s 30 percent more than a monthly average of 20 loadings last year, data show.
An Aframax sailing from Kozmino to Japan’s Chiba port was fixed at a rate of 90 cents a barrel this month, little changed from what it cost in October, according to Seatown Shipbroking Pte.
The price for hiring a supertanker from the Arabian Gulf to Japan surged to a five-year high of $2.38 a barrel in December, compared with $1.34 in June, before the collapse in oil prices began, data compiled by Bloomberg show. The rate has averaged $2.20 this year.
Front-month futures for Brent, the benchmark for more than half the world’s crude, averaged $5.56 a barrel below six-month contracts during January, compared with a $2.77 premium in June, data compiled by Bloomberg show. They were at a $3.89 discount at 12:54 p.m. London time. This market structure, known as contango, may make it worthwhile for traders to store oil and petroleum products to sell later.
Time Charters
Vitol Group, Koch Industries Inc., Royal Dutch Shell Plc and Trafigura Beheer BV have booked tankers that could be used to store crude at sea for one-year charters, according to reports from shipbrokers including Optima.
As many as 35 tankers were booked for time charters with capacity to store as much as 66 million barrels of oil, according to three shipping reports compiled by Bloomberg on Feb. 7. More than half of the vessels were fully fixed for periods of six months to two years.
Spokesmen at Sinokor Merchant Marine, Hin Leong and Mitsubishi, shipping and trading companies that operate vessels on the Kozmino-to-Northeast Asia route, declined to comment on the tanker market.
Siberian Pipe
Russia built the ESPO pipeline, a 3,000-mile link from the Siberian town of Taishet to Kozmino on its east coast to supply more crude to Asia as demand from traditional markets in Europe slowed. The port loaded its first cargo in 2009, while the pipe was completed in 2012.
“Asia is the only market that is witnessing any increases in oil demand,” said Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul. “With Russia and OPEC producers both eyeing the Far East, the price war has begun for bigger market share and we’re likely to see more and more of it.”
Russia boosted sales of its crude to China, Japan and South Korea by 25 percent last year, increasing its portion of shipments to 8.7 percent from 7.2 percent in 2013, according to government data compiled by Bloomberg.
The proximity of the Kozmino port to Asia presents ESPO with a benefit versus Middle East crude, which takes about a month to arrive in the Far East.
Storage interest wanes
The crash in crude prices ignited a race to fix tankers for floating storage in early 2015 but activity in this corner of the market is starting to subside, according to an analyst at Clarkson Capital Markets.
It is widely believed at least 20 VLCCs have been fixed for floating storage.
It is widely believed at least 20 VLCCs have been fixed for floating storage.
In a recent client briefing Omar Nokta noted interest has waned in recent weeks, which leads him to believe that the crude tanker segment will exhibit “its normal seasonal pressures” during the second and third quarters of this year.
“At the start of 2015 we felt spot rates could remain strong despite the likely softer spring and summer months due to tighter vessel supply brought on by floating storage [but] this is shifting,” the forecaster said.
While crude prices are well below levels seen in 2014 the analyst noted that the most recent rally has compressed contango along the first six months of the futures curve to an average of just $0.75 per barrel per month, versus $1.20 at the peak.
“We estimate the break-even storage cost at roughly $1.00/bbl per month, making the use of VLCCs for storage uneconomical,” Nokta continued.
Nokta pointed out that the future still looks “quite favourable”, however, but believes day rates for tonnage trading in the spot market will experience “higher highs and higher lows” than previously anticipated.
Today, VLCCs trading in the spot market were commanding $54,400 per day, which is slightly higher than Tuesday’s average but represents a decline of nearly 10% week-on-week.
Nokta acknowledged that day rates have slipped quite a bit when compared to highs seen a few weeks back but argued that they are still relatively strong.
Earlier in the day analysts at Pareto Securities and other firms were quick to point out that it’s not uncommon for activity to slow in the week leading up to New Year celebrations in China.
“We remain bullish on the crude tanker markets for 2015 [however] and emphasize that the storage-story could very well come into play again soon driven spring maintenance at refineries and filled-up land-based storage,” they added.
Forecasters at Platou believe the market's appetite for floating storage will continue to fluctuate in the near-term but are still optimistic about the future of the tanker segment.
"Since tanker freight rates are the marginal cost of storage, interest for tankers is likely to continue fluctuating with the oil contango in the near term,” they told clients.
“Strong fundamentals of low fleet growth and high oil trade are key reasons to still be optimistic for tanker freight rates regardless of floating storage, in our view.”
Spot market stand-off
Fearnleys claims the start of the March loading programme has been “very slow”, which will likely come as a surprise to many industry observers.
“We are about to go into the Lunar new year festivities in the East and many had thought a lot of stems should have been covered prior to it but this has not been the case [thus far],” the firm told clients Wednesday.
Fearnleys noted that day rates plunged sharply at the start of the week, which prompted a brief flurry of fixtures, but said the gap between what charterers are willing to pay and what owners are asking for “has widened sharply”.
“We therefore have a ‘stand-off’ situation for the time being, the famous game of ‘who-blinks-first’ is being heavily played, and resilience from both sides being tested,” it added.
10-Q out
So far, in the first quarter of 2015, the Euronav VLCC fleet operated in the Tankers International pool has earned on average USD 59,400 per day and 53% of the available days have been fixed. Euronav's Suezmaxes trading on the spot market have earned on average USD 40,300 per day and 69% of the available spot days have been fixed.
Report of Foreign Issuer (6-k)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of January 2015
Commission File Number: 001-36810
EURONAV NV
De Gerlachekaai 20
2000 Antwerpen
Belgium
011-32-3-247-4411
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ].
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ].
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto as Exhibit 99.1 is a copy of the press release of Euronav NV (the "Company"), dated January 28, 2015, announcing the closing of the Company's initial public offering and the full exercise of the underwriters' overallotment option.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EURONAV NV
(Registrant)
Dated: January 29, 2015
By:
/s/ Hugo De Stoop
Hugo De Stoop
Chief Financial Officer
EXHIBIT 99.1
EURONAV NV ANNOUNCES CLOSING OF ITS INITIAL
PUBLIC OFFERING AND FULL EXERCISE OF
OVERALLOTMENT OPTION
ANTWERP, Belgium, 28 January 2015 - Euronav NV (the "Company") announces today the closing of its initial public offering of 18,699,000 common shares at a public offering price of USD 12.25 per share for gross proceeds of USD 229,062,750. This includes the exercise in full by the underwriters of their overallotment option.
The Company's ordinary shares offered in the United States trade on the New York Stock Exchange under the ticker symbol "EURN".
The Company, in accordance with article 15 of the law of 2 May 2007, confirms the following overview:
Before
Current
Total subscribed capital (USD)
142,440,546.45
162,764,713.94
Total number of ordinary shares in issue (with voting rights)*
131,050,666
149,749,666
Total number of outstanding convertible bonds maturing 31 January 2015
250
250
* of which 1,750,000 shares are treasury shares
The impact on the Company's capital of additional conversions of convertible instruments is set out in detail in the board report dated 15 December 2013, which is available from the investors' section on our website www.euronav.com.
Deutsche Bank Securities Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC acted as joint book-running managers and as representatives of the underwriters for the initial public offering in the United States. DNB Markets, Inc., Evercore Group L.L.C. and Skandinaviska Enskilda Banken AB (publ) acted as senior managers. ABN AMRO Securities (USA) LLC, Clarkson Capital Markets LLC, KBC Securities USA, Inc., Scotia Capital (USA) Inc. and RMK Maritime LLP acted as co-managers.
The Company was advised by Seward & Kissel LLP on matters related to United States and Marshall Islands law and by Argo Law on matters related to Belgian law. The underwriters were advised by Morgan, Lewis & Bockius LLP.
This press release does not constitute an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
This communication is not for publication or distribution, directly or indirectly, in or into any state or jurisdiction into which doing so would be unlawful. The distribution of this communication may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes, should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions.
Euronav NV assumes no responsibility in the event there is a violation by any person of such restrictions.
Forward-Looking Statements
This press release contains "forward-looking statements". Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", "projects", "forecasts", "may", "should" and similar expressions are forward-looking statements. These statements are not historical facts but instead represent only the Company's belief regarding future results, many of which, by their nature are inherently uncertain and outside of the Company's control. Actual results may differ, possibly materially, from those anticipated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect future results, see the discussion in the Company's registration statements, as amended, under the heading "Risk Factors". The Company does not assume any obligation to update the information contained in this press release.
Financial Calendar
Thursday, 12 February 2015 Announcement of fourth quarter results 2014
Friday, 27 March 2015 Announcement of final year results 2014
Tuesday, 31 March 2015 Annual report 2014 available on website
Thursday, 30 April 2015 Announcement of first quarter results 2015
Thursday, 30 July 2015 Announcement of second quarter results 2015
Thursday, 27 August 2015 Announcement of final half year results 2015
Monday, 31 August 2015 Half year report 2015 available on website
Thursday, 29 October 2015 Announcement of third quarter results 2015
Thursday, 28 January 2016 Announcement of fourth quarter results 2015
EURONAV NV ANNOUNCES CLOSING OF ITS INITIAL PUBLIC OFFERING AND FULL EXERCISE OF OVERALLOTMENT OPTION
ANTWERP, Belgium, 28 January 2015 - Euronav NV (the “Company”) announces today the closing of its initial public offering of 18,699,000 common shares at a public offering price of USD 12.25 per share for gross proceeds of USD 229,062,750. This includes the exercise in full by the underwriters of their overallotment option.
Revolutionary Concepts Inc. Announces Early Q1 Revenue
Jan 16, 2015 (eTeligis.com via COMTEX) -- CHARLOTTE, NC, United States, via ETELIGIS INC., 01/16/2015 - - Revolutionary Concepts Inc., (OTC Pink: REVO) (PINKSHEETS: REVO), a publicly traded company that holds patents for mobile security and remote surveillance technology is excited to announce early income and revenue recognition for the first month of the first quarter 2015. Income from a series of transactions recorded this month have a cash value that may well exceed one million dollars.
Solomon RC Ali, Sr. VP, states "The Company has initiated a new business plan with a great deal of focus on the current patent portfolios and the activities of our subsidiary. It is our intent to explore as many revenue channels as possible as we determine the best scenarios to enhance the financial statements of our Company. Royalties from the current licensing agreements will be an immediate game changer but that is not what will keep the company relevant. Our focus on debt reduction and joint venture activities will help us make the leap from being a security company to a global technology company."
About Revolutionary Concepts Inc.
REVO is primary business is the design and development of the "EyeTalk" Communicator technology, a mobile video, remote smart camera security technology. The system is designed to provide nationwide protection and monitoring of homes and businesses against multiple threats including robbery, fire, theft, burglary and other intrusions through mobile phones, wireless video and remote smart camera security technology. REVO holds patented and patent pending applications that utilize the technology in medical/healthcare, sporting events, child monitoring and several other key areas. For more information visit www.revolutionaryconceptsinc.com.
Safe Harbor Statement - There are matters discussed in this media information that are forward looking statements within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. Such statements are only forecasts and actual events or results may differ materially from those discussed. For a discussion of important factors which could cause actual results to differ from the forward looking statements, refer to Revolutionary Concepts Inc.'s most recent annual report and accounts and other SEC filings. The company undertakes no obligation to update publicly, or revise, forward looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
Hey, Carter,You still alive ???
And from about????