SCF reports strong start to 2019 as conventional tanker markets improve
PAO Sovcomflot (SCF Group), a world leader in energy shipping and offshore services to the oil and gas industry, reported strong results for the first quarter. Gross revenues were recorded at $410.7 million, up 18.9% on the same period last year. EBITDA was $206.8 million, up 62.5% from $127.3 million. Profits came in at $70.1 million, an increased from a lost of $16.1 million in the first quarter of 2018.
Korolev Prospect and Vernadsky Prospect were delivered in the quarter. They are the fourth and fifth vessels in a pioneering ‘Green Funnel’ series of six LNG-fuelled 114,000 DWT Aframax tankers ordered by Sovcomflot. Compliant with new international conventions on emission controls, applicable from 2020, the tankers also conform fully with environmental and safety standards for ships operating in ECA-controlled areas (including the Baltic and North Sea basins). Additionally, in March, the Group celebrated the 10th anniversary of the start of LNG shipments from the Sakhalin-2 project.
Gagarin Prospect and Lomonosov Prospect, the world’s first LNG-fuelled Aframax tankers, received Green Award certificates, a quality mark for vessels that significantly surpass Convention requirements related to environmental protection.
The company’s green efforts haven’t gone unnoticed as it received the annual Marine Money ‘Deal of the Year’ award, in the category Green Ship Finance – West. The publication recognised Sovcomflot’s $252 million seven-year credit agreement, with a consortium of foreign banks, to finance the construction of a series of the world’s first large-capacity LNG-fuelled tankers.
Sergey Frank, President and CEO of PAO Sovcomflot said: “Sovcomflot started 2019 with a strong Q1 performance, boosted by a return to profitability in our conventional crude and product tanker markets following an upswing in the first months of 2019. Profits from our crude fleet in particular increased 53 per cent year-on-year compared to Q1 2018.
“Although spot market rates for conventional tankers have yet to reach their historic averages, they have come off the low levels witnessed in the 2017-Q3 2018 period and, whilst we remain cautious for Q2 2019, we believe that a sustainable market recovery in the conventional tanker markets appears likely towards the end of 2019 and through 2020.
“Despite cautious optimism about conventional tankers, it is our industrial fleet working in the Offshore and Gas sectors where Sovcomflot specialises in delivering safety-focused operations, with high quality assets, under long-term contracts that remains central to Group strategy going forward. We have a number of such projects delivering in the next two years, and a pipeline of opportunities that we are looking to develop over the next five year window that will further increase Sovcomflot’s participation in these core strategic sectors.”
Igor Tonkovidov, Executive Vice-President, Chief Operating & Chief Technical Officer of PAO Sovcomflot said: “During the period, the Group took further steps to reduce its environmental footprint by increasing the use of LNG as primary fuel on two more Aframax tankers. The move represents a significant commitment by the Group to improve the environmental profile of oil transportation and is part of our ‘Green Funnel’ project developed in collaboration with Shell.”
Nikolay Kolesnikov, Executive Vice President and CFO of PAO Sovcomflot said: “With a stable balance sheet and positive cash-flow during the first quarter, supported by good earnings visibility, Sovcomflot is well positioned to continue with the implementation of its strategy and fulfilling the evolving needs of our clients. Sovcomflot’s contracted capex is fully funded, and the company maintains access to international and domestic sources of long-term capital.”
For more information visit www.sovcomflot.ru
20th May 2019
