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The Rig Market
By Ben Padilla
Editor’s Note: The rig market has been extraordinarily strong in recent times and has been the catalyst for a whirlwind of financing. Here we take some time to look at the market, its drivers, the major players, common financing arrangements, and how the market varies by region. Enjoy.
Oil Market Background
It’s likely that many of our readers in the offshore and tanker sectors have already seen the recently published report from the US National Petroleum Council. For those who haven’t, the report is basically an outlook through 2030 for global oil and gas supply and demand. It’s also pretty certain that the offshore sector in particular is quite happy and not surprised with the conclusion of the report: although oil is a non-renewable source of energy, practically speaking the world is not running out of oil; it’s simply facing a sustained period of tight supply that will make meeting projected energy demand very challenging. Figure 1 illustrates the uncertainty of current oil reserves being able to sustain future demand as well as the projected impact that new discoveries will have on the overall supply of oil. Part of the challenge facing the oil majors is that many of the potential reserves that could meet the future surge in demand lie in unconventional areas, such as the Canadian Oil Sands and harsh arctic environments. Continue Reading
Checking the Load Lines for Corporate Communications
By Carleen Lyden-Kluss, President, Morgan Marketing & Communications
Much as if the Titanic had managed a last-minute turn before the iceberg, the value of corporate communications is slowly being accepted by the maritime industry. While OPA 90 mandated the need for transparency following in the wake of the largest public relations fiasco yet known, the need to communicate openly and directly has been reinforced to publicly traded companies through their compliance with Sarbanes- Oxley and Reg. FD.
But what are the elements of corporate communications, and how can their effectiveness be measured? Both qualitative and quantitative information is now becoming available.
Corporate communications is the umbrella term for a myriad of disciplines and techniques used to transfer information to desired target audiences. Its reach extends from media relations to financial communications, employee and government relations, and crisis management. Used effectively, communications can be a highly leveragable tool in the C-suite’s tool belt. Continue Reading
The Rustless Wonder
By Jens Alers, Atlantic Marine LP, Member of the Schulte Group, Hamilton, Bermuda
In January of this year I travelled to India. Together with two of my most senior shipmasters, on home leave from the fleet at that time, I visited the Qutab Minar Fortress in India’s capital Delhi. Moments after walking through the front gate of this ancient fortress, I saw the most fascinating metal object that I have ever seen – the Rustless Wonder of India.
This iron pillar has withstood corrosion for over 1,600 years. Because it simply does not rust, despite its full exposure to the elements since the 4th century, it is an object of perennial interest and curiosity. As such, it continues to attract the attention of archaeologists and scientists, as well as the odd visiting shipmanager, all of whom want to unfold the secret behind its strength. Continue Reading
Storm Preparation – Is a Tanker Market Downturn Coming, and if so Which Listed Tanker Company is Best Prepared?
By Ian Sadler
Editor’s Note: There are market analysts and there are equity analysts, and there are a lot of people in the shipping industry who are floored that with all their understanding of the business they weren’t able to make any money on shipping stocks during the boom period of the last few years. In this article a tanker sector analyst makes his bet on which tanker equities might be able to weather a tanker market storm. The views expressed in the article are strictly the author’s own and do not represent investment advice nor do they reflect any endorsement by Marine Money or Arrow. That said what is presented constitutes what we have found to be a very useful profile of the publicly listed tanker sector, as well as a thought provoking and insightful market commentary.
Why Might a Tanker Market Downturn be a Consideration?
The tanker orderbook looms over the tanker market like a colossus. Now at the end of a frenetic phase of ordering that peaked in 2006 (84MnDwt ordered)1, the orderbook (153MnDwt) is equivalent to an ominously massive 41% of the trading fleet (376MnDwt)2. In normal circumstances 20% is considered very high. The outsized orderbook has pushed planning for a downturn towards the top of the agenda. Grey clouds over the world economy have further focused the minds of owners looking to batten down the hatches with the credit crunch threatening to unbalance the world economic equilibrium and sustained high oil prices threatening to derail crude oil demand growth.3 Steam has been coming out from under the bonnet/hood of the tanker market since the seasonal 4Q rate spike failed to materialise in 20064. Both rates and stock prices have performed poorly for this sector so far during 2007. The good news stories are almost all coming from the dry market and consequently tankers are beginning to look like the poor relation to their twin titan. Continue Reading
Is M&A the Right Approach to Growth in Container Shipping?
By Charles de Trenck, Head of Regional Transport, Citigroup Investment Research
I was asked to write on M&A in container shipping. However I unfortunately cannot comment on current specific M&A activities. But I can review the main issues in perspective. The following is a quick thought piece.
M&A in container shipping always has been a tough slog to be sure. Maersk took years to integrate SeaLand, both before and after the official acquisition. NOL also took several years to fully integrate APL, a company ultimately bigger than itself. Failure to properly integrate acquisitions for mid-sized carriers can also lead to the buyer becoming an acquisition target. Continue Reading
A Different Kind of Merger: Private Equity & Leasing
By Matt McCleery
They always start with a singular dot.
Followed by another dot..
Then a few more dots…..
And then, through the simple act of connecting these dots, sometimes something very powerful emerges – a trend.
Since human beings, all of whom ultimately have bosses, take comfort following the consummated acts of others, trends gather momentum and so, as they say in the cool and shadowy canyons of Wall Street, the trend is your friend.
And so it has come to pass that a new trend in ship financing has emerged in recent months: a blurring of the line between leasing equity and private equity. Continue Reading
People, Places & Prices – 09/27/2007
Marine Money Singapore Conference Draws Record Ship Finance Crowd for Asia
Marine Money along with its official partners Fortis Bank and the Pareto group as well as its corporate sponsors played host for two days in Singapore to an audience in excess of 450 shipping and ship finance professionals. The event, which was officially part of Singapore’s weeklong celebration of the entire shipping industry, reflected the growing significance of the region and Singapore specifically in the future of ship finance. Continue Reading
Market Commentary – 09/27/2007
Let the Professionals Speak
Much has been written by journalists recently about the credit crunch that resulted from the subprime mess. Assumptions have been made; conclusions have been drawn and theses postulated. But we here at MarineMoney wanted to know what it means to our everyday livelihood. So, on Tuesday, we sent out a survey entitled, “Shipping Finance and the Credit Crunch of 2007″ to test the pulse of the market place. In this extremely short period, we received a highly representative sample of 82 responses. Many of the responses were as we expected but there were also a number of surprises. For convenience we have included the results later in this issue for you to peruse and summarize here the key takeaways. Continue Reading
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