Business Context and Reporting Period
This Form 6-K filing by Nordic American Tanker Shipping Limited (NAT) covers the month of July 2010 and includes a shareholder letter dated July 2, 2010. The Company operates a fleet of Suezmax tankers, consisting of 16 trading vessels and 4 newbuildings (two scheduled for delivery in 2010 and two in 2011). The Company is incorporated in Bermuda and files annual reports on Form 20-F.
Key Financial Metrics and Market Data
- Fleet Composition: 20 total vessels (16 trading, 4 newbuildings), grown from 14 vessels as of January 1, 2009.
- Market Rates: The average spot market rate for Suezmax tankers in Q2 2010 was $34,430 per day (Imarex Tanker Index), compared to $34,983 per day in Q1 2010.
- Dividend Policy: The Company maintains a full dividend payout policy. The 52nd consecutive quarterly dividend is expected to be paid on or about September 2, 2010.
- Capital Structure: The Company states it has ample financial resources to expand its fleet to 22 vessels or more without issuing new equity. No plans to issue new shares are currently in place.
- Financial Statements: Specific revenue, profit, cash flow, margin, debt, and liquidity figures for the period are not provided in this filing text.
Material Changes and Operational Updates
- Fleet Growth: The fleet has expanded by 6 vessels since the beginning of 2009.
- Market Conditions: Spot tanker market rates have been volatile in the first six months of 2010. Second-hand Suezmax vessel prices and newbuilding contract prices have increased year-to-date.
- Acquisition Strategy: Recent acquisitions are intended to be accretive, allowing for higher dividends and earnings per share post-financing.
Guidance, Outlook, and Risks
- Outlook: Management expects continued volatility in spot rates but does not attempt to predict future rates. The Company believes its business model and strong balance sheet provide significant upside potential with limited downside.
- Dividend Announcement: The Q2 2010 dividend report is expected to be announced on August 6, 2010.
- Risks and Contingencies: Forward-looking statements are subject to uncertainties including global economic strength, fluctuations in charter rates and vessel values, OPEC production levels, bunker prices, drydocking costs, regulatory changes, political conditions, and potential vessel breakdowns or off-hire instances.
Key Facts for Investor Verification
- Verify the exact amount of the 52nd quarterly dividend when announced on August 6, 2010.
- Confirm the delivery dates and financing terms for the two newbuildings scheduled for 2010.
- Review the Company's most recent Form 20-F or 10-Q for specific revenue, net income, and debt figures not included in this press release.
- Monitor the Imarex Tanker Index for continued volatility in Suezmax spot rates.