Rahul Sengupta Kyle Samani Neha Gaddampages.stern.nyu.edu/~iag/presentations/2009-2010/TNP.pdfNeha...
Transcript of Rahul Sengupta Kyle Samani Neha Gaddampages.stern.nyu.edu/~iag/presentations/2009-2010/TNP.pdfNeha...
Rahul Sengupta Avinash Nagaraja
Kyle SamaniNeha Gaddam
Agenda
Thesis Industry Overview Our Company Macroeconomic Catalysts Valuation Summary Q&A
Thesis
Diverse portfolio of modern tankers Stable future contracts Worldwide increased demand and production of
energy resources High dividend yield
Investment Philosophy
"Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell”
- John M. Templeton
Industry Overview
How oil is transported Pipelines Ships Trains Trucks
Pipelines
Oil Reserves Worldwide
Shipping
Deliver goods from point A to point B
Value is based on: Type of Ship Age of Ship Long Haul Short Haul
Our Company
Transport crude oil and petroleum products worldwide
Major clientele include major national and independent oil companies
Versatile fleet of modern crude and product tankers with strong ice class capabilities
Our Fleet Diversity
48 Tankers in service 23 Crude oil carriers: 3 VLCC (Very Large Crude Carrier) 10 Suezmax 10 Aframax
25 Product carriers: 3 Aframax LR 7 Panamax 6 Handymax MR 8 Handysize 1 LNG (Liquefied Natural Gas)
4 more Aframax vessels under construction
VLCC
Most effective way of transporting large volume of oil over long distances
Capacity: 2 million barrels
Panamax
Can transit the Panama Canal fully loaded
Capacity: 0.5 million barrels
Ice Class
23 ships in our fleet are ice class rated
Increased oil demand in winter in the Northern Hemisphere
New Regulations
New Regulations
Double Hull Requirements
International Marine Organization “All single hulled oil
tankers must be decomissioned by 2010”
18% of tankers still single hulled
Tsakos advantage Entire fleet is double
hulled
Risks
Calibration of supply and demand Prolonged lower oil production Piracy Higher operating costs
Map of Operations
Our Fleet Age
One of the youngest fleets in the industry Average age of our fleet: 6.3 years Average age of industry: 9.8 years
Tankers usually scrapped after 20-30 years
Them
Us
Types of Contracts
Time charter Vessel leased for a specific amount of time Few months to several years
Payment 30% on fixed rate 70% on variable rate
Predictable cash flows
Spot charter Single voyage Payment based on market rates Either on a $/tonne or on a lump sum basis
Higher profit margins
Operational Costs
Vessel Costs Includes: Crew, maintenance, insurance, etc. Between $8,500 – $9,500/day
Voyage Costs Includes: Fuel costs, port and canal fees, etc. Fuel accounts for 59% of voyage cost
Who Pays What?
Time charter Charterer bears voyage costs Short term contracts – Tsakos bears vessel costs Long term contracts – Charterer bears vessel costs “Rental car”
Spot charter Tsakos bears all costs “Taxi”
Tsakos’ Contracts
2/3 of fleet on time charters Most due to expire between 2011-2013 Just re-signed a 2 year extension on a Suezmax
(Decathlon)
1/3 of fleet on spot charters Single voyage
Above average fleet utilization: 97.1% 59% of 2010 days are booked
Fleet Utilization
Our Customers
Tsakos Group Affiliation
Technical management by Tsakos Shipping 87 vessels under
management One of the largest
tanker managers in the world
Economies of scale Procuring supplies Underwriting insurance
Macroeconomic Catalysts
Future oil consumption Location of oil wells Emerging markets
Do I See China?
China is on a materials rampage
Buying up as much resources as possible Nigerian Oil Well Bid Kazak Oil Fields
And India?
75% of crude oil is imported $61.72 billion worth of crude oil
Cars, Cars, Cars!
Today
Tomorrow
Oil Production and Consumption
Oil Consumption by Region
Baltic Dry Index
Compiled daily by the Baltic Exchange Tracks international shipping prices of dry bulk
cargoes Accurate barometer of future global trade
Baltic Dry Index and TNP
Baltic Dry Index
Baltic Dry Index
TNP Stock Performance
Relative Valuation
CompanyMarket
CapP/E Revenue/Ship
($ Millions) ROE
Tsakos Energy Navigation
550M 5.02 12.07 11.91%
Hornbeck Offshore Services
726.85M 7.85 10.42 13.91%
General Maritime Corporation 445.13M 10.45 16.39 11.82%
Overseas ShipholdingGroup 1,110M 5.94 12.05 12.2%
Ship Revenue
0
2
4
6
8
10
12
14
16
18
Taskos Energy Navigation
Hornbeck Offshore Services
General Maritime Corporation
Overseas Shipholding Group
Reve
nue/
Ship
($
Mill
ions
)
Revenue per Ship
Dividends
Company Dividend Yield (%)
Tsakos Energy Navigation 7.05
Teekay Corp. 5.09
Overseas Shipholding Group 4.23
Diana Shipping None
Hornbeck Offshore Services None
Next Ex-Dividend date: October 20th, 2009
Dividend Yield
Book Value/Share
Price/Book Value per Share
Summary
Fleet Diverse portfolio to meet our customers’ needs Modern ships – complies with new regulations
Long term stability High fleet utilization Generated a net profit every year since inception Economies of scale arising from our relationship with Tsakos
Shipping Macroeconomic catalysts
Increased demand for oil transportation by sea Financials
Great dividend yield
Q & A
Questions?