US-based oil tanker company Overseas Shipholding Group (OSG) had a challenging start of the year reporting a slashed net income of USD 5.4 million for the quarter ended March 31, 2017, compared to USD 50.7 million a year earlier.
However, net income for the prior year period included income from discontinued operations from International Seaways (INSW) of USD 59.4 million.
OSG split its business into two independent publicly traded companies through the spin-off of its then wholly owned subsidiary INSW on November 30, 2016. OSG retained the U.S. Flag business and INSW holds entities and other assets and liabilities that formed OSG’s former International Flag business.
During the first quarter of this year, the company’s shipping revenues were also affected by lower charter rates reaching USD 108.1 million, a decrease of 6.1% from USD 115.1 million in the prior year quarter.
Time charter equivalent (TCE) revenues for the quarter were USD 102.3 million, down 8.8% compared to the same period in 2016, OSG said in its quarterly report, while the tanker owner’s adjusted EBITDA was USD 36.2 million, dropping by 11.2% from last year’s USD 40.7 million.
“We had a solid first quarter to start 2017 despite ongoing challenging market conditions. Although we experienced lower charter rates, our ability to attain high utilization rates throughout the first quarter helped drive revenue,” Sam Norton, OSG’s President and CEO said.
“Our diverse operating platform, which includes shuttle tankers in the U.S. Gulf Coast, the only licensed operator of lightering vessels in the Delaware Bay, and the only operator of tankers in the Maritime Security Program (“MSP”), provides stability against market volatility affecting other areas of our business. Additionally, we are starting to see results of efforts to be more efficient with general and administrative costs. This helped reduce expenses which drove higher operating income, ” he added.
Pursuant to a final decree and order of the bankruptcy court, OSG said that it has closed its bankruptcy case.
OSG has 24 vessels in its fleet, comprising eight ATBs, two lightering ATBs, three shuttle tankers, nine MR tankers, and two non-Jones Act MR tankers.