O M I CP (NYSE:OMM)
Historical Stock Chart
From Jun 2019 to Jun 2024
OMI Corporation (NYSE: OMM):
Highlights
First quarter Net Income was $50.9 million or $0.82 basic and diluted
Earnings Per Share (“EPS”).
The first quarter gain on disposal of a product carrier was $16.1
million or $0.26 basic and diluted EPS.
Teekay Shipping Corporation ("Teekay"), A/S Dampskibsselskabet TORM
("TORM") and a company jointly owned by Teekay and TORM entered into a
definitive agreement to acquire the Company for cash of $29.25 per
share. Under the terms of the agreement, OMI will be permitted to pay
a dividend at a rate of $0.15 per share per quarter, pro rated from
April 1 to the closing of the tender offer, up to a maximum of $0.15
per share in the aggregate. Our 8-K filed with the Securities and
Exchange Commission on April 20, 2007 provides a description of the
proposed transaction.
Two vessels were sold in February 2007, one, the product carrier
mentioned above and the other, a vessel sold and leased back in
February 2007. The gain of approximately $19.5 million will be
amortized over the three year lease.
We currently have approximately $694.9 million in contracted revenue,
including $580.3 million in time charter revenue contracts (not
including any potential profit sharing) for the period from April 2007
through May 2012 and $114.6 million in synthetic time charter revenue
from April 2007 through September 2009.
During the first quarter, we repurchased $62,500,000 face amount of
our 2.875% Convertible Notes.
During the first quarter, the Board of Directors (“BOD”)
declared a quarterly dividend of $0.15 per share, which was paid in
March.
During the first quarter, we repurchased and retired 540,000 shares
aggregating $11.2 million.
OMI Corporation (NYSE: OMM), a major international tanker owner
and operator today reported Net Income of $50,878,000 or $0.82 basic and
diluted EPS for the first quarter ended March 31, 2007, which included
the gain on the disposal of a vessel of $16,112,000 or $0.26 basic and
diluted EPS and loss on early extinguishment of notes of $1,540,000 or
$0.02 basic and diluted EPS, compared to Net Income of $63,563,000 or
$0.89 basic and diluted EPS for the first quarter ended March 31, 2006.
Revenue of $171,764,000 for the first quarter ended March 31, 2007
decreased $21,428,000 or 11% compared to revenue of $193,192,000 for the
first quarter ended March 31, 2006. Revenue decreased in the first
quarter of 2007 as a result of decreases in spot rates in both the
Suezmax and product carrier fleets and lower revenue from vessels that
began new time charter contracts in 2006 that were previously operating
in the spot market at higher rates.
RECENT ACTIVITIES AND FIRST QUARTER HIGHLIGHTS
-- OMI to Be Acquired by Teekay and TORM
-- Teekay Shipping Corporation ("Teekay"), A/S
Dampskibsselskabet TORM ("TORM") and a company jointly
owned by Teekay and TORM entered into a definitive
agreement to acquire the Company for cash of $29.25 per
share. Under the terms of the agreement, OMI will be
permitted to pay a dividend at a rate of $0.15 per share
per quarter, pro rated from April 1 to the closing of the
tender offer, up to a maximum of $0.15 per share in the
aggregate. Our 8-K filed with the Securities and Exchange
Commission on April 20, 2007 provides a description of the
proposed transaction.
-- Disposition of Vessels:
-- In February 2007, we sold 2 vessels, for an aggregate sales
price of approximately $91 million. Both vessels (described
below) were held for sale at December 31, 2006.
(1) The GANGES (renamed KING ERNEST), was sold in February
2007 and chartered back; the gain on sale of
approximately $19.5 million was deferred and is being
amortized over the three year charter period. The vessel
is operating in the Libra Pool.
(2) The ASHLEY (renamed KING ERIC), was sold in February
2007 and a gain of approximately $16.1 million was
recognized. The vessel is operating in the Libra Pool.
-- In March 2007, the sale of the SEINE, previously announced,
was canceled with no penalties to either party to the
transaction.
-- Vessel Spot Performance:
Daily TCE Rates
Vessels on
For the Three Months Ended March 31,
Percent
Spot
2007
2006
Change
Crude Oil Fleet
$ 50,328
$ 57,770
-13%
Clean Fleet
$ 31,314
$ 35,316
-11%
-- In the first quarter of 2007, the average TCE rates for
our crude (Suezmax) fleet and clean (product carrier)
fleet were lower than average TCE rates for first quarter
of 2006 (see Market Overview section).
-- Financial:
(Note: For more detailed information refer to the Liquidity and
Capital Expenditures section.)
-- In the first quarter of 2007, we repurchased 540,000 shares
at an average price of $20.77 per share aggregating $11.2
million. We currently have 61,984,900 shares outstanding.
-- During the first quarter of 2007, we repurchased
$62,500,000 of our 2.875% Convertible Notes for $62,248,000
and recorded a loss of approximately $1,540,000 primarily
from the write off of unamortized finance fees and
discount.
-- In February 2007, the BOD increased the quarterly dividend
by 7% and declared a dividend of $0.15 per share to
shareholders of record on March 19, 2007. The dividend of
$9.3 million was paid on March 28, 2007. Total dividends of
$0.29 per share (including the $8.8 million or $0.14 per
share paid on January 8, 2007) have been paid in the first
quarter of 2007. When the March dividend was paid, the
conversion ratio and conversion price for our 2.875%
Convertible Notes ($81,851,000 currently outstanding, net
of $405,000 unamortized discount) were adjusted, as per the
agreement, because the dividend threshold of $0.28 per
share was reached. The conversion ratio increased from
32.7842 to 32.7989 for each $1,000 bond, and the conversion
price decreased from $30.50 to $30.49 per share, which is
12% above our stock price of $26.86 per share on
March 31, 2007. The conversion ratio and conversion price
will change upon the payment of the pro rated dividend
mentioned above.
MARKET OVERVIEW
Suezmax Tanker Overview
The tanker market continued at a very profitable level in the first
quarter of 2007, notwithstanding an increase in the world tanker fleet.
The average spot TCE rate for Suezmax tankers in the West Africa to U.S.
trade was marginally higher than the preceding quarter, but below the
rate prevailing in the same period of last year. Tanker freight rates
have been adversely affected by the cuts in OPEC oil production, and
have been supported by world oil demand growth, weather delays in the
Bosporous and delays due to a labor strike in a French Mediterranean
Port. Freight rates in the crude oil tanker market are at profitable
levels thus far in the second quarter of 2007.
The average OPEC oil production in the first quarter of 2007 totaled
about 28.7 million barrels per day (“b/d”),
about 0.6 million b/d lower compared to the preceding quarter and 1.0
million b/d below the level prevailing in the same quarter of last year.
Most of the decrease was from the long haul Middle East. This was due to
OPEC’s agreement to cut its oil production by
1.2 million b/d beginning November 1, 2006, and an additional 0.5
million b/d from February 1, 2007, in an attempt to reverse a decrease
in oil prices.
World oil demand in the first quarter of 2007 was about 1.2 million b/d
higher than the preceding quarter and averaged 1.1 million b/d higher
compared to the same period of last year.
Total preliminary commercial crude oil and petroleum products
inventories in the United States, Western Europe and Japan at the end of
March 2007 were about 24 million barrels, or 1.1%, below the year
earlier level, but 2.1% above the average of the last five years. At the
same time, crude oil inventories were 1.6% lower and petroleum products
inventories were 4.3% higher than the average of the last five years,
respectively.
The world tanker fleet totaled 350.2 million dwt at the end of the first
quarter of 2007, up by about 4.9 million dwt or 1.4% from the year-end
2006 level. The total tanker fleet includes 46.8 million dwt Suezmaxes,
excluding shuttle and U.S. flag Suezmaxes, up by 2.4% from the year-end
2006 level.
The tanker orderbook totaled about 133.4 million dwt, or 38.1% of the
existing fleet at the end of March 2007. Approximately 24.1 million dwt
are for delivery in 2007, 36.3 million dwt in 2008, 49.5 million dwt in
2009, and most of the balance in 2010. The tanker orderbook includes 129
Suezmaxes of about 20.4 million dwt or 43.6% of the existing
internationally trading Suezmax tanker fleet. Nineteen Suezmaxes are for
delivery in 2007, 23 in 2008, 65 in 2009 and the balance in 2010.
At the end of March 2007, approximately 34.3 million dwt or 9.8% of the
total tanker fleet was 20 or more years old, including 12.3 million dwt
or 3.5% of the fleet which was 25 or more years old. Furthermore, eight
Suezmaxes were 20 or more years old, including one which was 25 or more
years old. Tanker sales for scrap totaled about 0.9 million dwt in the
first quarter of 2007.
The EU adopted tanker regulations which commenced on October 21, 2003.
In response to the EU regulations, the IMO adopted new strict tanker
regulations which commenced on April 5, 2005. At the end of March 2007,
there were about 89.7 million dwt of tankers or 25.6% of the total
tanker fleet which will be affected by these regulations.
Product Tanker Overview
Freight rates in the product tanker market continued at high levels in
the first quarter of 2007, and the average spot TCE for handysize
product tankers in the Caribbean was higher than the preceding quarter
rate and the rate prevailing in the same period of last year. The
product tanker market strength was the result of continuous growth in
the demand for oil and shortage of refinery capacity in consuming areas,
notwithstanding an increase of the world product tanker fleet. Freight
rates in the product tanker market have continued at high levels thus
far in the second quarter of 2007.
The world product tanker fleet, (which ranges from small 10,000 dwt
product carriers to larger than 100,000 dwt for coated Aframax tankers)
totaled about 83.6 million dwt at the end of March 2007, up by about
0.5% from the year-end 2006 level. The total product tanker fleet
includes about 46.2 million dwt handysize and handymax product tankers,
up by 1.1% from the year-end 2006 level.
The product tanker orderbook for delivery over the next few years
totaled about 43.3 million dwt, or about 51.8% of the existing product
tanker fleet at the end of March 2007. Approximately 10.3 million dwt
are for delivery in 2007, 13.8 million dwt in 2008, 15.0 million dwt in
2009 and most of the balance in 2010. At the end of March 2007,
approximately 14.6 million dwt or 17.5% of the existing flee was 20 or
more years old.
The orderbook for handysize and handymax product tankers at the end of
March 2007 totaled about 15.3 million dwt or 33.1% of the existing
handysize and handymax product tanker fleet. Approximately 4.9 million
dwt are for delivery in 2007, 5.4 million dwt in 2008, 3.6 million dwt
in 2009 and most of the balance in 2010.
Total preliminary commercial inventories of oil products in the United
States, Western Europe and Japan at the end of March 2007 were 25
million barrels or 1.9% higher than the same time a year ago, and 4.3%
above the average of the last five years. At the same time, inventories
of gasoline, the seasonal product, in these areas were marginally lower
than last year and the last five years average.
FLEET SUMMARY
Our fleet is concentrated into two vessel types: Suezmax tankers (“crude”
vessels), which generally carry crude oil from areas of oil production
to refinery areas, and product carriers (“clean”
vessels), which generally carry refined petroleum products (such as
gasoline and aviation fuel) from refineries to distribution areas. At
March 31, 2007, our fleet comprised 45 vessels, excluding the vessels
contributed by participants to our wholly owned Gemini and Libra Pools.
We charter-in 10 vessels, 6 Suezmax tankers and 4 product carriers (See
Exhibit 1 for OMI’s Fleet Report by vessel).
The following table includes wholly owned and chartered-in vessels at
March 31, 2007 and revenue days for the first quarter:
Total
Number
Number
Number of
Number
Total
Number
of
of
Vessels
of
Number
of
Vessels
Revenue
Chartered-
Revenue
of
Revenue
Owned
Days
In
Days
Vessels
Days
Suezmaxes - Spot (a),(b)
4
357
3
270
7
627
Suezmaxes - TC (c)
3
268
3
270
6
538
Product Carriers - Spot (d)
-
80
2
136
2
216
Product Carriers - TC
28
2,474
2
180
30
2,654
Total
35
3,179
10
856
45
4,035
(a) Excludes 9 vessels owned by other pool participants that 7
operate in the Gemini Pool and 2 in the Libra Pool
(b) We have 3.75 synthetic time charters which reduce our
exposure to the spot market for 338 days included with time
charter revenue.
(c) Two of the owned Suezmaxes (ADAIR and INGEBORG) on time
charter are part of the Gemini Pool.
(d) Two vessels were sold in February 2007, one was leased back.
FINANCIAL INFORMATION
The following table summarizes the Company’s
results of operations for the three months ended March 31, 2007 compared
to the three months ended March 31, 2006:
RESULTS OF OPERATIONS
(In thousands, except per share data)
For the Three Months Ended March 31,
2007
2006
Voyage and time charter revenue
$
170,662
$
192,480
Voyage expense
30,127
35,937
Time charter equivalent revenue
140,535
156,543
Other revenue
1,102
712
Vessel expense
22,918
22,063
Charter hire expense:
Pool charter hire expense
34,813
25,834
Non-pool charter hire expense
17,958
9,284
Depreciation and amortization
14,185
16,690
General and administrative expense
9,307
8,067
Gain on disposal of vessel (1)
(16,112)
-
Operating income
58,568
75,317
Loss on extinguishment of notes
(1,540)
-
Interest expense
(8,655)
(12,207)
Interest income
2,403
397
Other (2)
102
56
Net income
$
50,878
$
63,563
Basic earnings per common share
$
0.82
$
0.89
Diluted earnings per common share
$
0.82
$
0.89
Weighted average shares outstanding-basic
62,017
71,150
Weighted average shares outstanding-diluted
62,049
71,206
(1) The Gain on disposal of vessels of $16,112,000 for the
three months ended March 31, 2007 resulted from the sale of a
product carrier in February.
(2) Other includes a realized gain on freight forward
agreements of $765,000 and unrealized loss of $690,000 for the
three months ended March 31, 2007, and a realized gain of $270,000
and unrealized loss of $227,000 for the three months ended March
31, 2006.
Time Charter Equivalent Revenue (“TCE”)
OMI operates vessels on voyage (or “spot”)
charters and on time charters (“TC”).
TCE revenue comprises revenue from vessels operating on time charters
and voyage revenue less voyage expenses from vessels operating in the
spot market. TCE revenue is used to measure and analyze fluctuations
between financial periods and as a method of equating TCE revenue
generated from a voyage charter to time charter revenue. Time charter
revenue is earned by vessels under contract for a specific period of
time with duration usually greater than one year.
At March 31, 2007 our fleet tonnage operates on time charters and spot
charters as follows:
-- 66% of our fleet tonnage (or 36 vessels, 6 Suezmax vessels and
30 product carriers) operated on time charters (see Contracted
Time Charter Revenue section):
(a) 63% of our tonnage on TC (or 21 vessels, 4 Suezmax vessels
and 17 product carriers) operated on fixed rate time
charters, and
(b) 37% of our tonnage on TC (or 15 vessels, 2 Suezmax vessels
and 13 product carriers) operated on time charters with
profit sharing arrangements, giving us the ability to
benefit from strong spot markets. Our time charters with
profit sharing arrangements have a floor rate. If earnings
exceed that rate, we share in the profit above that rate
equally. This enables us to benefit from strong tanker
markets while protecting our downside.
-- 34% of our fleet tonnage (or 9 vessels, 7 Suezmax vessels and 2
product carriers) operated in the spot market.
Revenue generated by time charters gives the Company the ability to
cover certain fixed charges (vessel expenses and charter hire expenses
for vessels on time charter, consolidated general and administrative
expenses and interest expense).
We currently have the equivalent of 3.75 Suezmax synthetic time charters
(“STC”) which
reduces our exposure to the spot market for Suezmaxes from 7 to 3.25
vessels. Synthetic time charters are similar to time charters, as they
mitigate the risk associated with the spot market.
Three Months Ended March 31, 2007 vs. Three Months Ended March 31,
2006
The Company earned TCE revenue of $140,535,000 for the three months
ended March 31, 2007 and $156,543,000 for the three months ended March
31, 2006, which is a reduction of $16,008,000 or 10%.
The following table illustrates the TCE revenue fluctuation for the
three months ended March 31, 2007 compared to the three months ended
March 31, 2006:
TCE Revenue
For the Three Months Ended March 31,
Increase
Increase
(Decrease)
(Decrease)
Increase
Daily TCE
Operating
2007
2006
(Decrease)
Rate
Days
TCE Revenue for
Vessels on Spot Charters:
(In thousands)
Crude Oil Fleet
$
46,248
$
92,307
$
(46,059)
-13%
(679)
Clean Fleet
11,273
15,855
(4,582)
-11%
(89)
Total
$
57,521
$
108,162
$
(50,641)
(768)
TCE Revenue for
Vessels on Time Charters:
Crude Oil Fleet
$
32,105
$
5,484
$
26,621
23%
692
Clean Fleet
50,909
42,897
8,012
6%
288
Total
$
83,014
$
48,381
$
34,633
980
Total
$
140,535
$
156,543
$
(16,008)
212
During the three months ended March 31, 2007, TCE revenue decreased by
$16,008,000. The decrease was attributed to less revenue earned by
vessels operating on spot charters, which decreased by $50,641,000
offset by increases of $34,633,000 for vessels operating on time
charters. Aside from changes in rates earned by vessels which operated
on spot and time charters in both 2006 and 2007, we began operating more
of our vessels on fixed rate contracts, as mentioned above (some with
profit sharing arrangements), that previously were operating at higher
rates in the spot market.
During the three months ended March 31, 2007, the majority of our TCE
revenue (59%) or $83,014,000 was earned by vessels operating on time
charters, compared to the three months ended March 31, 2006, during
which the majority of our TCE revenue (69%) or $108,162,000 was earned
by vessels operating on spot charters.
The decrease of $50,641,000 in TCE revenue for vessels operating on spot
charters was due to a decrease of $46,059,000 in the crude fleet and
$4,582,000 in the clean fleet. The decrease in TCE revenue was primarily
due to 768 less operating days from vessels previously operating on spot
charters and lower TCE rates for vessels on spot charters in both the
first quarter of 2007 and 2006 due to the following:
6 Suezmax vessels previously operating on spot charters at an average
daily rate of $57,770 for 536 days in the first quarter of 2006 began
operating on time charter contracts at a lower average rate of $33,691
per day.
3.75 Suezmax vessels previously operating on spot charters at an
average daily TCE rate of $57,770 in the first quarter of 2006, were
subject to STC contracts with an average daily TCE rate of $41,337 in
first quarter of 2007.
A 13% decrease in average daily spot TCE rates in 2007 for 3.25
Suezmax vessels owned by OMI and for the 7 pool member vessels
(Gemini) that operated in both 2007 and 2006 first quarters and 11%
decrease in average daily spot TCE rates for 2 product carrier vessels
chartered-in and 2 pool member (Libra) vessels compared to the first
quarter of 2006 (see Market Overview section for explanations of rate
fluctuations).
Note: The number of operating days did not change for 2 Suezmax vessels
and 2 product carrier vessels that were sold and chartered back (3 in
2006 and 1 in 2007), that began operating in the Gemini and Libra pools;
however, charter hire expense increased. (See operating expenses.)
The increase of $34,633,000 in TCE revenue for vessels on time charters
offsetting the above decreases for vessels operating on spot charters
was due to an increase of $26,621,000 in the crude fleet and $8,012,000
in the clean fleet. The increase in TCE revenue was primarily due to 980
additional operating days from vessels previously operating on spot
charters, mentioned above, and higher TCE rates for vessels on time
charters in both periods due to the following:
As mentioned above, the primary increase in Suezmax TCE revenue is the
result of additional operating days, 536 more days from 6 Suezmax
vessels on time charters in 2007, previously on spot in 2006, and 338
more days equivalent to 3.75 Suezmax vessels operating on STCs in
2007, that are included with contracted time charter revenue.
5 newbuilding product carrier vessels delivered in 2006 increased TCE
revenue in the first quarter of 2007 resulting in 304 more operating
days at an average daily rate of $19,686 per day.
Increases in time charter rates in the first quarter of 2007 compared
to the first quarter of 2006, (23% increase in the crude fleet and 6%
in the clean fleet), which resulted primary from higher rates
negotiated for new or renewed charters that expired in 2006. The clean
fleet increase includes additional profit sharing of $1,575,000 from 2
vessels earning profit sharing for the first time in 2007.
Increases in TCE revenue were partially offset by 90 fewer operating
days from a product carrier vessel that was sold in September 2006.
Note: For detailed information of fluctuations by vessel type, see
Breakdown by Fleet sections.
Operating Expenses
Vessel expenses increased $855,000 for the three months ended March 31,
2007 compared to the three months ended March 31, 2006. Increases in
vessel expenses during the first quarter of 2007 were primarily
attributable to the 5 vessels acquired in the clean fleet during 2006
offset by decreases in vessel expense for vessels sold; 4 Suezmax
vessels in 2006 and 5 product carriers (3 in 2006 and 2 in 2007).
Additionally, the clean fleet’s average daily
vessel expense was approximately 2% higher in the three months ended
March 31, 2007 than our expected daily rate for 2007 of $6,400 per day
and 15% higher compared to the first quarter of 2006. Although the crude
fleet’s vessel expenses decreased overall
because of vessel sales in 2006, the average daily vessel expense was
approximately 6% higher in the three months ended March 31, 2007 than
our expected daily rate for 2007 of $7,200 per day and 25% higher
compared to the first quarter of 2006. Our 2007 expected average daily
vessel expenses for our crude and clean fleets are based on an
annualized daily rate. The clean and crude fleet’s
2% and 6% increase, respectively, above our expected daily vessel
expenses in 2007 was primarily a result of timing of purchasing stores
and supplies and miscellaneous expenses. The increase of 15% and 25%
over the 2006 period, for the clean and crude fleet’s
daily vessel expense, respectively, include the previously mentioned
timing differences and increases made to crew, stores items and
miscellaneous expenses to continue to maintain our vessels, crew needs
and to better serve our customers’
requirements.
Charter hire expense, other than relating to pool vessels, increased
$8,674,000 for the three months ended March 31, 2007 compared to the
three months ended March 31, 2006. Increases in charter hire expense
were primarily the result of chartering in 5 additional vessels in 2006
(the OTTAWA, TAMAR, CAPE BANTRY, HS ALCINA and KING EDWARD) and 1 in
2007 (the KING ERNEST). Increases in pool charter hire expense of
$8,979,000 for the three months ended March 31, 2007 were attributable
primarily to increases in pool charter hire expense in the Gemini Pool
resulting from 2 vessels that were added to the pool in 2006 and from 2
vessels that began in the Libra product carrier pool, one which started
in February 2007 and one in 2006 (see Note below for discussion of
Gemini and Libra).
Note: Gemini Tankers LLC ("Gemini"), a wholly owned subsidiary of
OMI, began operating in December 2003. Gemini is a pool for double hull
Suezmax vessels. As of March 31, 2007, there were 16 Suezmax
vessels (9 from OMI and 7 from other pool members) operating in the
Gemini pool. Libra Shipping LLC (“Libra”)
is also a wholly owned subsidiary of OMI that began operating in
November 2006. Libra is a pool for double hull product carrier vessels.
As of March 31, 2007, there were 4 product carriers (2 from OMI and 2
from another pool member) operating in the Libra pool. The
earnings of the pools are allocated to the pool members using an agreed
upon formula. The gross revenues of Gemini and Libra are
reflected in OMI’s consolidated revenues, and
the charter hire expense for the other participants’
vessels are included in OMI’s consolidated
charter hire expense.
Depreciation and amortization expense decreased $2,505,000 for the three
months ended March 31, 2007 compared to the three months ended March 31,
2006. The decrease in depreciation expense was primarily due to the
disposal of 11 vessels, 9 in 2006 (4 Suezmax vessels and 5 product
carriers) and 2 product carriers in 2007. Decreases in depreciation
expense were partially offset by additional expense for 5 product
carriers acquired in 2006.
General and administrative expense increased $1,240,000 for the three
months ended March 31, 2007 compared to the three months ended March 31,
2006. The increase for the three months ended March 31, 2007 was in line
with our 2007 expectation and is primarily higher than the 2006 period
as a result of higher compensation and employee benefits expense,
including increases in non-cash expense from amortization of restricted
stock awards from 2006 grants, in addition to other corporate expenses.
LIQUIDITY AND CAPITAL EXPENDITURES
At March 31, 2007, we had Cash and cash equivalents of $143,556,000 and
Marketable securities (short-term auction bonds) of $77,325,000. During
the three months ended March 31, 2007, we received net proceeds of
$88,813,000 from the disposal of 2 vessels, repaid $65,850,000 in debt
($62,248,000 of which were unscheduled repayments for early
extinguishment of convertible notes) and spent $12,289,000 for capital
expenditures, primarily for the initial payments for 2 newbuildings
under construction. We also paid cash dividends of $18,050,000 and
bought back $11,215,000 of the Company’s
common stock.
Our debt to total capitalization ratio (debt and stockholders’
equity) at March 31, 2007 was 38% and net debt (total debt less cash,
cash equivalents and marketable securities) to total net capitalization
(total capitalization less cash, cash equivalents and marketable
securities) was 26%. As of April 23, 2007, we have approximately
$672,022,000 in available liquidity (including cash, cash equivalents,
marketable securities and undrawn lines of credit).
2007 Capital Expenditures Projected
for Vessels Under Construction Contracts
As of March 31, 2007, we have contracts to build two handysize (ice
class 1A) product carriers with a shipyard, estimated to be delivered in
the first quarter of 2009. The aggregate contract cost for the vessels
is $91,300,000. The initial payment of $9,130,000 was made in January
2007. The remaining installments and final payments are scheduled as
follows; an additional $9,130,000 in June 2007, $13,695,000 in 2008 and
$59,345,000 in 2009.
Contracted Time Charter Revenue
The contracted TC revenue schedule below does not include any estimates
for profit sharing in the future periods; however, actual profit sharing
for 3 vessels aggregating approximately $4.2 million earned during the
three months ended March 31, 2007 is included. We have reduced future
contracted revenue for any estimated off-hire days relating to drydocks.
The following table reflects our current contracted time charter revenue
through 2012, including synthetic time charter contracts:
2007
2008
2009
2010-2012
(In millions)
TC Revenue
$ 315.7
$ 251.2
$ 136.8
$ 74.0
Number of Vessels(a)
33
21
10
(b)
Vessels with Profit Sharing (a)
13
9
4
-
Vessels related to synthetic TC's
3.75
3.5
-
-
(a) Number of vessels at the end of each year assuming
no additional extensions or new charters.
(b) The remaining charters expire as follows: 8
charters, 2 with profit sharing, will expire in 2010 and 2
charters with profit sharing will expire in 2012.
In accordance with U.S. GAAP, we recognize profit sharing, if any, for
each vessel with a profit sharing provision in the time charter contract
when the minimum threshold is met, which is the minimum charter hire
revenue. Historically, we have recognized profit sharing on or about the
anniversary of each time charter contract. The table below reflects the
number of vessels for which we recorded profit sharing in the first
quarter of 2007 and the number of contracts for which we expect to
record profit sharing in future periods, by quarter:
2007
2008
2009
2010
First Quarter
3
3
1
0
Second Quarter
7
6
6
3
Third Quarter
4
4
2
1
Fourth Quarter
1
0
0
0
15
13
9
4
ABOUT OMI
OMI is a leading seaborne transporter of crude oil and refined petroleum
products operating in the international shipping markets. We believe our
modern fleet of 45 vessels of approximately 3.5 million dwt, is the
youngest large fleet of tankers in the world, with an average age at
March 31, 2007 of approximately 4.3 years [see
Note (1)], which is significantly lower than
the industry average. Our customers include many of the world’s
largest commercial and government owned oil companies and oil trading
companies.
OMI trades on the New York Stock Exchange under the symbol “OMM.”
Note (1): All averages referring to vessel age in this release
are weighted averages based on dwt and are calculated as of March 31,
2007. Dwt, expressed in metric tons, each of which is equivalent
to 1,000 kilograms, refers to the total weight a vessel can carry when
loaded to a particular load line.
OTHER FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
The following are OMI’s Condensed
Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006:
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31,
December 31,
(In thousands)
2007
2006
Cash, cash equivalents and
marketable securities
$
220,881
$
183,311
Vessels held for sale
-
53,181
Other current assets
68,334
68,157
Vessels and other property-net
1,239,854
1,250,608
Construction in progress (newbuildings)
9,251
-
Other assets
30,886
34,115
Total assets
$
1,569,206
$
1,589,372
Current portion of long-term debt (1)
$
20,311
$
20,286
Other current liabilities
97,842
96,690
Long-term debt (1)
508,143
573,964
Other liabilities
76,251
57,154
Total stockholders' equity
866,659
841,278
Total liabilities and stockholders' equity
$
1,569,206
$
1,589,372
(1) As of March 31, 2007, the available undrawn balance
under credit facilities was $463,214,000.
CONDENSED CONSOLIDATED CASH FLOWS
The following are OMI’s Condensed
Consolidated Cash Flows for the three months ended March 31, 2007 and
2006:
CONDENSED CONSOLIDATED CASH FLOWS
For the Three Months
Ended March 31,
(In thousands)
2007
2006
Change
Provided (used) by:
Operating Activities
$
56,161
$
91,360
$
(35,199)
Investing Activities
25,899
(13,524)
39,423
Financing Activities
(95,115)
(26,706)
(68,409)
Net (Decrease) Increase in Cash and Cash Equivalents
(13,055)
51,130
(64,185)
Cash and Cash Equivalents at the Beginning of the Year
156,611
42,297
114,314
Cash and Cash Equivalents at the End of the Period
$
143,556
$
93,427
$
50,129
RESULTS BY FLEET
The following discussion of Operating Income includes TCE revenue less
vessel expense, charter hire expense and depreciation and amortization,
General and administrative (“G & A”)
expenses allocated to vessels and gain/loss on disposal of vessels for
the crude and clean segments.
Crude Fleet -
Operating Income decreased $26,408,000 for the three months ended March
31, 2007 compared to the three months ended March 31, 2006. The net
decrease in Operating Income during the three months ended March 31,
2007 was primarily due to (1) a decrease in TCE revenue of $19,438,000
from lower revenue earned for vessels on spot that began operating on
fixed rate time charters at lower rates and a 13% decrease in the
average daily TCE rates for vessels on spot compared to the 2006 period
(see Market Overview and TCE section), (2) $6,476,000 higher non-Gemini
charter hire expense relating to 2 vessels that were chartered-in during
April and August 2006 and (3) $3,850,000 higher Gemini pool charter hire
expense relating to 2 vessels added to the pool in 2006. Decreases in
TCE revenue were offset partially by a 23% increase in average daily TCE
rates for time chartered vessels for new time charters that began in
2006 and $1,242,000 lower vessel expenses and $1,868,000 lower
depreciation and amortization expenses relating to vessels sold.
The following table illustrates the crude fleet Operating Income by
vessel type, Average Daily TCE, Number of TCE Revenue Days, Average
Daily Vessel Expense and Average Number of Vessels Operated by the crude
oil fleet for the three months ended March 31, 2007 compared to the
three months ended March 31, 2006:
BREAKDOWN BY FLEET
(In Thousands, Except Daily Rates & Expenses, Number of Vessels and
Number of Days)
For the Three Months Ended March 31,
CRUDE FLEET:
2007
2006
Suezmaxes - On Spot and Time Charter:
TCE Revenue (1)
Suezmaxes - On Spot (2)
$
46,248
$
92,307
Suezmaxes - On Time Charter (2)
32,105
5,484
Total TCE Revenue
78,353
97,791
Vessel Expense
4,808
6,050
Charter Hire Expense:
Gemini Pool Charter Hire Expense
29,684
25,834
Charter Hire Expense
15,692
9,216
Depreciation and Amortization
4,569
6,437
G&A Allocated to Vessels
2,056
2,302
Operating Income
$
21,544
$
47,952
Suezmaxes - On Spot:
Average Daily TCE
$
50,328
$
57,770
Number of OMI TCE Revenue Days
289
1,148
Number of Pool Member TCE Revenue Days
630
450
Suezmaxes - On Time Charter:
Average Daily TCE
$
36,633
$
29,835
Number of TCE Revenue Days
876
184
Suezmaxes - On Spot and Time Charter:
Average Daily Vessel Expense
$
7,632
$
6,111
Average Daily Charter Hire Expense, Excluding Pool
$
29,059
$
25,600
Average Number of Wholly Owned Vessels
7.0
11.0
Average Number of Time Chartered-In Vessels
6.0
4.0
Average Number of Pool Member Vessels
7.0
5.0
Note: Number of operating or TCE revenue days used to compute
Average Daily TCE includes waiting days and is reduced only for
the days the vessels are out of service due to drydock. Average
Daily Vessel Expenses are computed using the number of days in the
period which OMI owned the vessel.
(1) Consistent with general practice in the tanker
shipping industry, we use TCE revenue (defined as voyage and time
charter revenues less voyage expenses) as a measure of equating
revenue generated from a voyage charter to revenue generated from
a time charter. TCE revenue, a non-GAAP measure, provides
additional meaningful information in conjunction with Revenues,
the most directly comparable GAAP measure because it assists us in
making operating decisions about the deployment of our vessels and
their performance. Voyage expenses comprise all expenses
relating to particular voyages, including bunker fuel expenses,
port fees, canal tolls and brokerage commissions. Under
time-charter contracts the charterer pays the voyage expenses
(except brokerage commissions), whereas under voyage charter
contracts the shipowner pays the voyage expenses. TCE
Revenue and Expenses includes revenue and expense generated by the
Gemini Suezmax Pool. As of March 31, 2007, the Suezmax pool
included 9 Suezmaxes from OMI and 7 Suezmaxes owned by the other
pool members. As of March 31, 2006, the Suezmax pool
included 13 Suezmaxes from OMI and 5 Suezmaxes owned by the other
pool members. Includes the synthetic time charter revenues. The
portion of contracted synthetic TC revenue related to vessels on
spot is reflected as time charter revenue for Suezmaxes in the
above table.
(2) Includes the synthetic time charter revenues. The
portion of contracted synthetic TC revenue related to vessels on
spot is reflected as time charter revenue for Suezmaxes in the
above table.
Clean Fleet -
Operating Income increased $11,699,000 for the three months ended March
31, 2007 compared to the three months ended March 31, 2006. The increase
in Operating Income in the 2007 was primarily attributable to (1) the
$16,112,000 gain on disposal of a vessel in February and (2) increase of
$3,430,000 in TCE revenue from the additional operating days resulting
from 5 vessels acquired in 2006 and $1,575,000 additional profit sharing
in 2007, offset by decreases from 1 vessel sold in 2006. Increase in
Operating income were partially offset by (1) an 11% decrease in average
daily TCE spot rates in 2007 (see Market overview and TCE section), (2)
increases in vessel expense of $1,985,000, (3) increases in charter hire
expense of $4,314,000 relating to 2 vessels in the Libra pool 1 that
started in November 2006 and the other in February 2007 and (4)
increases in charter hire expense of $2,198,000 for non-pool charter
hire relating to 4 vessels sold and chartered back (2 bareboat charters
and 2 time charters) 3 in 2006 and 1 in February 2007.
The following table illustrates the clean fleet Operating Income by
vessel type, Average Daily TCE, Number of TCE Revenue Days, Average
Daily Vessel Expense and Average Number of Vessels operated by the clean
fleet for the three months ended March 31, 2007 compared to the three
months ended March 31, 2006:
BREAKDOWN BY FLEET
(In Thousands, Except Daily Rates & Expenses, Number of Vessels and
Number of Days)
For the Three Months Ended March 31,
CLEAN FLEET:
2007
2006
Products - On Time and Spot Charter:
TCE Revenue: (1)
Products - On Time Charter (2)
$
50,909
$
42,897
Products - On Spot
11,273
15,855
Total TCE Revenue
62,182
58,752
Vessel Expense
18,109
16,124
Charter Hire Expense:
Libra Pool Charter Hire Expense
4,314
-
Charter Hire Expense
2,266
68
Depreciation and Amortization
9,246
10,094
G&A Allocated to Vessels
1,490
1,296
Gain on Disposal of Vessels
(16,112)
-
Operating Income
$
42,869
$
31,170
Products - On Time Charter:
Average Daily TCE
$
19,184
$
18,131
Number of TCE Revenue Days
2,654
2,366
Products - On Spot:
Average Daily TCE
$
31,314
$
35,316
Number of TCE Revenue Days
216
449
Number of Pool Member TCE Revenue Days
144
-
Products - On Time and Spot Charter:
Average Daily Vessel Expense
$
6,516
$
5,681
Average Daily Charter Hire Expense, Excluding Pool
$
7,148
$
6,800
Average Number of Wholly Owned Vessels
28.9
31.3
Average Number of Bareboat Chartered-In Vessels
2.0
0.1
Average Number of Time Chartered-In Vessels
1.5
-
Average Number of Pool Member Vessels
1.6
-
Note: Number of Operating or TCE Revenue Days used to
compute Average Daily TCE includes waiting days and is reduced
only for the days the vessels are out of service due to drydock.
Average Daily Vessel Expenses are computed using the number of
days in the period which OMI owned the vessel.
(1) Consistent with general practice in the tanker
shipping industry, we use TCE revenue (defined as voyage and time
charter revenues less voyage expenses) as a measure of equating
revenue generated from a voyage charter to revenue generated from
a time charter. TCE revenue, a non-GAAP measure, provides
additional meaningful information in conjunction with Revenues,
the most directly comparable GAAP measure because it assists us in
making operating decisions about the deployment of our vessels and
their performance. Voyage expenses comprise all expenses
relating to particular voyages, including bunker fuel expenses,
port fees, canal tolls and brokerage commissions. Under
time-charter contracts the charterer pays the voyage expenses
(except brokerage commissions), whereas under voyage charter
contracts the shipowner pays the voyage expenses. TCE Revenue and
Expenses includes revenue and expense generated by the Libra
product carrier pool. As of March 31, 2007, the Libra pool
included 2 of OMI’s product carriers
(beginning in November 2006 and February 2007) and 2 product
carriers (beginning in December 2006 and February 2007) owned by
another pool member.
(2) During the three months ended March 31, 2007, OMI
recognized profit sharing revenue of approximately $4,201,000
compared to $2,626,000 for the three months ended March 31, 2006.
EXHIBIT 1
FLEET REPORT
Our fleet currently comprises 45 wholly owned and chartered–in
vessels aggregating approximately 3.5 million dwt. Additionally, the
Company has 2 product carriers under construction with 2009 delivery
dates. The Company’s fleet below comprises 7
owned and 6 chartered-in Suezmaxes and 28 owned and 4 chartered-in
product carriers (not including pool members vessels operating in the
Gemini and Libra Pools):
Type of
Year
Charter
Name of Vessel
Vessel
Built
Dwt
Expiration
CRUDE OIL FLEET:
Wholly-Owned:
ARLENE
Suezmax
2003
165,293
SPOT
INGEBORG
Suezmax
2003
165,293
Aug-09
DELAWARE
Suezmax
2002
159,452
May-12
(P)
DAKOTA
Suezmax
2002
159,435
SPOT
ADAIR
Suezmax
2003
159,199
Aug-09
ANGELICA
Suezmax
2004
159,106
SPOT
JANET
Suezmax
2004
159,100
SPOT
1,126,878
Time chartered-in and expiration of charter: (1)
HS ALCINA (June 2011)
Suezmax
2001
160,183
SPOT
CAPE BANTRY (May 2011)
Suezmax
2000
159,999
SPOT
CAPE BASTIA (June 2012)
Suezmax
2005
159,156
Mar-09
CAPE BONNY (Sept. 2012)
Suezmax
2005
159,062
May-10
OLIVER JACOB (June 2010)
Suezmax
1999
157,327
SPOT
MAX JACOB (Dec. 2009)
Suezmax
2000
157,327
May-12
(P)
953,054
Total Crude Oil Fleet
2,079,932
CLEAN FLEET:
Wholly-Owned:
NECHES
Handymax
2000
47,052
Oct-10
SAN JACINTO
Handymax
2002
47,038
Apr-08
MOSELLE
Handymax
2003
47,037
Feb-09
GUADALUPE
Handymax
2000
47,037
Apr-08
AMAZON
Handymax
2002
47,037
Apr-08
THAMES
Handymax
2005
47,036
Oct-07
ROSETTA
Handymax
2003
47,015
Mar-09
PLATTE
Handymax
2006
46,955
Jun-09
LAUREN
Handymax
2005
46,955
Dec-07
(P)
JEANETTE
Handymax
2004
46,955
Feb-08
(P)
HORIZON
Handymax
2004
46,955
Dec-08
KANSAS
Handymax
2006
46,922
Apr-09
(P)
REPUBLICAN
Handymax
2006
46,893
May-09
(P)
WABASH
Handymax
2006
46,893
Mar-08
(P)
BRAZOS
Handymax
2005
46,889
Dec-08
ORONTES
Handysize
2002
37,383
May-10
OHIO
Handysize
2001
37,278
May-10
GARONNE
Handysize
2004
37,278
Apr-09
(P)
LOIRE
Handysize
2004
37,106
Feb-09
(P)
FOX
Handysize
2005
37,006
May-10
(P)
RHINE
Handysize
2006
36,993
Sep-08
(P)
TEVERE
Handysize
2005
36,990
Jul-10
(P)
SAONE
Handysize
2004
36,986
Jul-09
(P)
TRINITY
Handysize
2000
35,834
Mar-10
MADISON
Handysize
2000
35,828
Mar-10
RHONE
Handysize
2000
35,775
May-07
(P)
CHARENTE
Handysize
2001
35,751
Sep-08
(P)
SEINE
Handysize
1999
35,407
Aug-08
1,180,284
Time chartered-in and expiration of charter: (2)
KING EDWARD (Nov. 2009)
Handysize
2004
37,384
SPOT
KING ERNEST (Feb. 2010)
Handysize
2004
37,178
SPOT
74,562
Bareboat chartered-in and charter expiration: (3)
TAMAR (July 2010)
Panamax
2003
70,362
Jul-08
OTTAWA (April 2010)
Panamax
2003
70,297
Apr-08
140,659
Total Clean Fleet
1,395,505
Total Fleet
3,475,437
Vessels Under Construction
Type of
Est.
Delivery
Charter
Contracts (CIP):
Vessel
Date
Dwt
Expiration
To be named
Handysize
Jan. 2009
37,000
n/a
To be named
Handysize
Mar. 2009
37,000
n/a
Total CIP
74,000
Total Fleet with CIP
3,549,437
(P): Time charters with profit sharing.
(1) The charter hire expense for HS ALCINA is based on
the vessels earnings in the Gemini Pool (Spot Market). The
average charter hire expense (net of the amortized gain for the
vessels that were sold and leased-back) is approximately $28,300
per day.
(2) The average charter hire expense (net of the
amortized gain for the vessels that were sold and leased-back) is
approximately $8,300 per day.
(3) The average charter hire expense (net of the
amortized gain for the vessels that were sold and leased-back) is
approximately $5,500 per day.
FORWARD-LOOKING INFORMATION
This release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended, and is intended to
be covered by the safe harbor provided for under these sections.
Wherever we use the words “believes,”
“estimates,” “expects,”
“plans,” “anticipates”
and similar expressions identify forward-looking statements. Our
forward-looking statements sometimes may include, without limitation:
statements regarding our proposed merger, management’s
current views with respect to certain future events and performance,
estimates of future earnings and cash flows and the sensitivity of
earnings and cash flows to charter rates; estimates of when vessels may
be chartered by customers; estimates of when laws, regulations or
commercial decisions may remove older vessels from markets or enhance
the value or earnings of double hulled vessels; estimates relating to
expectations in world economic activity, growth in the demand for crude
oil and petroleum products and their affect upon tanker markets;
estimates of time charter and time charter equivalent rates being
achieved by our vessels, estimates of capital requirements and the
sources of the funding and other factors discussed in OMI’s
filings to the SEC from time to time.
Where we express an expectation or belief as to future events or
results, such expectation or belief is expressed in good faith and
believed to have a reasonable basis. However, there can be no assurance
that our forward-looking statements will be achieved and our
forward-looking statements are subject to risks, uncertainties, and
other factors, which could cause actual results to differ materially
from future results expressed, projected, or implied by those
forward-looking statements. Such risks include, but are not limited to,
the inability to complete the proposed merger with a subsidiary of
Teekay Shipping Corporation and A/S Dampskibsselkabet TORM due to the
failure to satisfy conditions to completion of the proposed merger,
risks that the proposed merger disrupts current plans and operations and
the potential difficulties in employee retention as a result of the
proposed merger; supply of tankers, demand for their use, world economic
activity, breakdown of vessels and resultant time out of service as well
as repair cost, availability and cost of insurance, governmental
regulation, customer preferences and availability, claims, demurrage,
the affect on rates of future voyages and cost of financing.
All subsequent written and oral forward-looking statements attributable
to persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements. We disclaim any intent or
obligation to update publicly any forward-looking statements, whether as
a result of new information, future events or otherwise, except as may
be required under applicable securities laws.