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Webber Research Expands Platform with Addition of LNG Industry Veteran Kamran Javed
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Webber Research & Advisory Co-Founder Highlighted Among The 30 Leaders Driving Energy Transition In Shipping
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Webber Research: 2023 ESG Scorecard
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New for 2023: Company Specific Model Displays
New for 2023: Sector Specific ESG Rankings
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Tankers: Moving From OPEC Trade, To Global COVID Relapse Hedge
Tanker Q120 Preview & Storage Update
- Thesis (EURN, DHT, FRO, ASC, etc) …………………Pages 1-2
- Floating Storage Scenario Analysis………………….Pages 2-5
- Tanker Rates Reactions & Implications ……………..Page 5
- Multi-Factor Supply/Demand Model……………….. Pages 6-7
- Crude Inventory & Production Cuts………………….Pages 7-9
- Valuations……………………………………………….. Pages 10-11
- Earnings Estimates……………………………………..Page 12
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Contango, COVID, & Floating Storage To Dominate Q1 Earnings: As with our Barge Preview from last week, we expect the majority of this earnings season to revolve around the simultaneous COVID+OPEC supply & demand shocks to global energy markets, which have driven down global oil demand by ~15-30mbd, introduced negative crude pricing for certain landlocked geographies, and reinforced the notion of systemic, structural and economically driven floating storage. The result: our tanker rate charts look more like seismograph readings (page 5) and our tanker group is poised to throw off record cash flow in Q2 & Q3 (and potentially longer). We believe the long tanker trade is gradually transitioning from a shorter-term OPEC trade, into a longer-term COVID-19 global relapse hedge. We believe tanker dynamics from the remainder of 2020 and 2021 will be defined by the depth and duration of the floating storage dynamics – which we believe will be increasingly driven by the shape and pace of a global economic reopening vs any remaining OPEC/policy maneuvers. Now that crisis level production levels are now more defined, we believe tanker rates and equities will have a strong negative correlation to the success of any semi-synchronized economic reopening. Hence, Long Tankers = Long An Extended And Asymmetrical Global Reopening.
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Tankers: Floating Storage Scenario Analysis & Utilization Impact
Our 3-Stage Approach To Tankers For the Remainder Of 2020
- Our 3-Stage Approach To The Remainder Of 2020 Pages 1-2
- Floating Storage Scenario Analysis – Impact On Utilization Pages 2-3
- Storage Arbitrage, Inventories, & Rate Reactions Pages 4-7
- Multi-Factor Crude Tanker Utilization Model Pages 8-9
- Updated Tanker NAVs, Valuation Metrics, & Estimates Pages 9-10
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Depth Of Floating Storage Build Key For Tanker Equities In Q220. Amid the double black swan start to the year (OPEC supply shock/pricing war coupled with demand destruction from the COVID-19 response), tanker equities have (generally) acted as a hedge against the rest of the energy tape, as the prospect of significant structural and arb-driven floating storage has supported tanker earnings well above seasonal trends (page 4). While increasing OPEC & Russian crude production battle to replace US exports (the degree to which remains in question) – the market mechanism for finding that new global production balance should ultimately result in saturated land based storage and a ramp in floating storage (already ~100mb), and narrower tanker capacity, providing a significant tailwind for tanker cash flows. From an equity perspective, we think about Tanker stocks (FRO, EURN, DHT, ASC, etc.) in 3 stages….(Pages 1-2)
What Would Robust Floating Storage Mean For Tanker Rates & Utilization In Q2/Q3? We ran a multi-factor scenario analysis based on our updated crude tanker utilization model, flexed for different levels of incremental daily crude production moving into floating storage over the next 2-3 quarters. At the low end of the range…(Pages 2-8)
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