TEN operates a fleet of seventeen tankers (including one chartered-in Aframax) comprising 1,536,000 DWT with an average age of 8.9 years, which TEN believes is much younger than the world's tanker tonnage. Additionally, TEN will take delivery of ten new buildings, including a newly contracted Aframax to be delivered in the second quarter of 2003. With these ten new buildings (four Suezmaxes, two Aframaxes, and four Panamaxes), the average pro-forma age of the fleet reduces to 6.4 years in March 2004. The resulting fleet of27 vessels with DWT 2,680,000 includes 16 new buildings (1997-2004) with DWT 1,981,000. Consistent with the company's strategy to offer its customers a young and growing fleet, TEN will seek additional attractive opportunities to contract for new vessels and to dispose of older ships.
Except for the addition of a new Aframax in mid-March 2002, the fleet was the same for the first quarter of 2002 and 2001. However, the chartering environment was much different. TEN's net revenues declined $2.37 million or 8.1% reflecting the much less robust charter market during the first quarter of 2002 as compared with the exceptional levels of the first quarter of 2001. Nevertheless, the company believes that its revenues receded much less than most tanker operations reflecting the company's strategy of employing a significant portion of its vessels under longer-term charters or contracts and
the composition of its fleet. Voyage expenses rose $2.23 million reflecting more ships on spot charters and operating costs were up $0.72 million due to higher insurance rates and repair expenses. Depreciation and amortization costs were flat while management and overhead costs declined. Reduced debt and lower interest rates resulted in much lower financial costs in the first quarter of 2002 as compared with the first three months of 2001. Considering the challenging environment, the operating results of the first quarter of 2002 were gratifying.
The second quarter of 2002 will also present hurdles. The normal seasonal pattern of reduced tanker demand in the spring and summer could be more pronounced due to OPEC production policies. As a result TEN intends to accelerate its special surveys and dry dockings for selected vessels in order to position them for employment in the fall and winter. This will reduce second quarter revenues and earnings, but is expected to be offset by benefits later in the year.
The economic outlook for 2002 is somewhat more robust than a year earlier when both the U.S. and Japan were poised for recession. Today, the U.S. is experiencing a modest recovery fueled by consumer and government spending as well as inventory replenishment. This, in turn, has sparked a rebound in the exports oriented emerging economies. Europe appears stable with a hint of stronger growth. However, Japan remains depressed which weighs heavily on the world economy.
Petroleum demand has been tempered by this relatively slow pace of economic growth and high oil prices. Recent forecasts suggest oil consumption will eke out a gain of less than one percent for all of 2002. The oil tanker industry's supply/demand is in tenuous balance. Greater than usual scrappage in late 2001 and early 2002 has held capacity expansion in check despite growing new building deliveries. Assuming the tragic turmoil in the Middle East abates and other global hot spots do not interrupt the recovery in the
world economy, we expect a pickup in oil consumption and production by the fall of 2002. This should restimulate chartering and support firmer pricing. However, potential offsets may include rising finance costs, very high bunker prices, sharply higher insurance rates, and generally rising operating costs. Well-managed tanker operators should navigate to moderate but below average profitability during 2002.
Management and the Board of Directors of TEN are optimistic about the longer-term prospects for the oil tanker industry and the company. TEN's confidence is reflected in the dynamics of its fleet expansion and renewal initiatives. During March, the company successfully completed a public offering of its common shares in the United States providing an expanded equity base, a much broader ownership universe and the liquidity of a dual listing in Oslo and on the New York Stock Exchange. TEN's progress and the
enhanced liquidity of its stock should lead to added shareholder value. As previously announced, TEN will hold its annual general meeting of shareholders in Athens on May 30, 2002.
Today at 10:00 A.M. Eastern Time, TEN will host a conference call to review first quarter results as well as management's outlook for the business. The call, which will be hosted by TEN's senior management team, may contain information beyond what is included in the earnings press release.
To participate in the call from the United States and Canada, please dial (888) 542-8785 approximately five minutes prior to the start time. To participate in the call outside the United States, please dial (706) 634-1746 five minutes prior to the start time. The conference ID is 4235106. Two hours after the completion of the conference call, a
digital recording of the call will be available for seven days, and can be accessed by dialing (800) 642-1687 inside the United States and Canada and (706) 645-9291 outside the United States and entering the conference ID 4235106.
The call, which will be simultaneously broadcast live over the Internet, can be accessed at http://www.videonewswire.com/event.asp?id=5422.
Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the Internet broadcast. The online archive of the broadcast will be available within one hour of the live call.
ABOUT TSAKOS ENERGY NAVIGATION
TEN operates a fleet of seventeen tankers (including one chartered-in Aframax) comprising 1,536,000 DWT with an average age of 8.9 years, which TEN believes is significantly younger than the industry average. Additionally, TEN will take delivery of ten new buildings commencing June 2002 (four Suezmaxes, two Aframaxes, and four Panamaxes) reducing the pro-forma average age to 6.4 years in March 2004. The resulting fleet of 27 vessels with DWT 2,680,000 includes 16 new buildings (1997-2004) with DWT 1,981,000. Consistent with the company's strategy to offer its customers a young and growing fleet, TEN will seek additional attractive opportunities to contract for new vessels and to dispose of older ships.
Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. TEN undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.