Scorpio Tankers Inc. Capital Link Webinar Series Presentation - January 26, 2022
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Scorpio Tankers Inc. Capital Link Webinar Series Presentation January 26, 2022
Disclaimer and Forward-looking Statements
This presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking
statements reflect Scorpio Tankers Inc.’s (“Scorpio’s”) current views with respect to future events and financial performance. The words “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,”
“potential,” “may,” “should,” “expect” and similar expressions identify forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in Scorpio’s records and other data available from third parties.
Although Scorpio believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or
impossible to predict and are beyond Scorpio’s control, Scorpio cannot assure you that it will achieve or accomplish these expectations, beliefs, projections or future financial performance.
Risks and uncertainties include, but are not limited to, the failure of counterparties to fully perform their contracts with Scorpio, the strength of world economies and currencies, general market conditions,
including fluctuations in charter hire rates and vessel values, changes in demand in the tanker vessel markets, changes in Scorpio’s operating expenses, including bunker prices, drydocking and insurance
costs, the fuel efficiency of our vessels, the market for Scorpio's vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in
such financing arrangements, changes in governmental and environmental rules and regulations or actions taken by regulatory authorities including those that may limit the commercial useful lives of tankers,
potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors
described from time to time in the reports Scorpio files with, or furnishes to, the Securities and Exchange Commission, or the Commission, and the New York Stock Exchange, or NYSE. Scorpio undertakes no
obligation to update or revise any forward-looking statements. These forward-looking statements are not guarantees of Scorpio's future performance, and actual results and future developments may vary
materially from those projected in the forward-looking statements
This presentation describes time charter equivalent revenue, or TCE revenue, which is not a measure prepared in accordance with IFRS (i.e. a "Non-IFRS" measure). TCE revenue is presented here because
we believe that it provides investors with a means of evaluating and understanding how the Company's management evaluates the Company's operating performance. This Non-IFRS measure should not be
considered in isolation from, as a substitute for, or superior to financial measures prepared in accordance with IFRS.
The Company believes that the presentation of TCE revenue is useful to investors because it facilitates the comparability and the evaluation of companies in the Company’s industry. In addition, the Company
believes that TCE revenue is useful in evaluating its operating performance compared to that of other companies in the Company’s industry. The Company’s definition of TCE revenue may not be the same as
reported by other companies in the shipping industry or other industries. See appendix for a reconciliation of TCE revenue to revenue, please see the Appendix of this presentation.
Unless otherwise indicated, information contained in this presentation concerning Scorpio’s industry and the market in which it operates, including its general expectations about its industry, market position,
market opportunity and market size, is based on data from various sources including internal data and estimates as well as third party sources widely available to the public such as independent industry
publications, government publications, reports by market research firms or other published independent sources. Internal data and estimates are based upon this information as well as information obtained
from trade and business organizations and other contacts in the markets in which Scorpio operates and management’s understanding of industry conditions. This information, data and estimates involve a
number of assumptions and limitations, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed above. You are cautioned not to give undue weight
to such information, data and estimates. While Scorpio believes the market and industry information included in this presentation to be generally reliable, it has not independently verified any third-party
information or verified that more recent information is not available.
2
Scorpio Tankers at a Glance
Key Facts Fleet Overview
Largest Product Tanker Fleet in the World
• Scorpio Tankers Inc. (“Scorpio”) is the world’s largest product with 131 Vessels on the Water
tanker owner, providing marine transportation of refined 14x 63x
petroleum products (gasoline, diesel, jet fuel and naphtha) to
a diversified blue-chip customer base Handymax MR
(25,000 – 39,999 dwt) (40,000 – 59,999 dwt)
• NYSE-listed with compliant governance
• The Company’s fleet consists of 131 wholly owned, finance 12x 42x
leased or bareboat chartered-in tankers
LR1 LR2
• Vessels employed in well-established Scorpio pools with a (60,000 – 79,999 dwt) (80,000 – 120,000 dwt)
strong track record of outperforming the market
Average Age of Fleet:
• Headquartered in Monaco, Scorpio is incorporated in the 6.0 Years
Marshall Islands and is not subject to US income tax
Attractive Mix of
• Diversified blue-chip customer base Modern MR and LR Vessels
Scrubber Fitted Vessels:
98 vessels1
91% of Fleet Built at
Leading Korean Shipyards2
1) As of November 10, 2021
2) Includes Tankers built at Hyundai’s Vinashin yard in Vietnam 3
Investment Highlights
• 131 wholly owned, finance leased or bareboat chartered-in tankers on the water with an average age of 6.0 years
The Largest & Most Modern
Product Tanker Fleet in the • 98 product tanker vessels equipped with exhaust gas scrubbers
World
• Vessels trading within one of the world’s largest product tanker platforms with a strong track record
• Cash and cash equivalents of $228.9 million as of November 10, 2021
Strong Liquidity Position
• Pro forma liquidity of $308.8 million after the closing of committed financing and financing under discussion
Limited Capex Going Forward • Since 2018, the Company completed $445.8 million in capex payments for drydock, ballast water treatment systems and scrubbers
• Remaining capex for FY-21 is $12.8 million
• $1,000/day increase in average daily rates would generate ~$48 million of incremental annualized cash flow(1)
Scorpio Has Significant
Operating Leverage • An increase in average daily rates from $20,000 to $25,000 (25%) translates to an increase in annualized cash flow from $419 million to
$658 million, a 57% increase in net cash flow
• Refinery closures and additions are expected to increase seaborne volumes of refined products and ton miles
Favorable Long Term
• Limited newbuilding orders drives lowest orderbook as a percentage of fleet ever recorded
Supply/Demand Fundamentals
• Favorable supply/demand environment with demand to outstrip growth in 2022
1) Based on utilization of 131 vessels and utilization of 365 days per year 4
Largest & Most Modern Product Tanker Fleet in the World
• World’s largest and youngest product tanker fleet, including the leading owner in the MR and LR2 product tanker segments
• While a significant portion of the global MR and LR fleets are older than 15 years of age, the Scorpio fleet has an average age of 6.0 years
Largest & Most Modern Product Tanker Fleet Average Age vs. Worldwide Fleet
(# of Ships)
16
HM MR LR1 Total Average Age 15.2
150
Scorpio Tankers Active Fleet
131 14
12.2
120
12
42 10.8
10 9.4
90
82
12 78
6 8
7.1
13 66
22 5.8
60 9 14 6 5.5 5.7
53
50
5
63 13 10
4
9 28
30 43
54 41 3
34 9 2
12.8
31
14 10.8 12.6
8.6 10.2 9.1
6.0 6
11 2 5 16 0
0
Scorpio BW/Hafnia TORM COSCO International SCF Group A.P. Moller
Seaways
Handymax MR LR1 LR2
Source: Clarksons Shipping Intelligence, January 2022
Note: Figures do not include newbuild vessels on order. 5Scrubber Fuel Savings
• As of November 10, 2021 the Company has 98 vessels currently installed with exhaust gas cleaning systems (“scrubbers”)
Scorpio Scrubber Fleet Scorpio TCE Savings Annual Cash Flow Benefit
(Vessels installed with scrubbers) ($/day) (Millions $USD)
80
$2,509 $102.6
70
$2,091
60 $77.0
$1,867
50
50
41
40 $51.3
30
20
10 7
0
LR2 LR1 MR $100 $150 $200
LR2 LR1 MR
Vessel Type Assumes VLSFO - HFSO Spread of $150 / MT VLSFO - HFSO Spread of ($/MT)
6Liquidity
Pro Forma Liquidity
• As of November 10, 2021, the Company had $228.9 million in
unrestricted cash and cash equivalents. Millions $USD
$400.0
• The Company raised $5.1 million from vessel refinancing's
between November 10 and December 13, 2021
• In December, the Company signed a transaction with Ocean Yield $308.8
ASA involving the sale leaseback of two LR2 product tankers. The $300.0 $27.9
transaction is expected to close in December and increase liquidity $5.1
$28.9
by $27.9 million. $228.9 $18.0
• The Company is also in discussions with financial institutions to $200.0
further increase liquidity by up to $28.9 million in connection with
the refinancing of four vessels.
• In addition to the above, the Company has $18.0 million of
additional liquidity available (after the repayment of existing debt) $100.0
which are expected to occur at varying points in the future as
several of these financings are tied to scrubber installations on the
Company’s vessels.
$0.0
Cash and cash Scrubber Financing Under Liqudity Raised New Ocean Yield Pro Forma
equivalents as of Financing Discussion from Refinancing SLB Transaction Liqudity
November 10, Since Nov 10,
2021 2021
Company’s press release from Dec 13, 2021 7Limited Capex & Upcoming Maturities Have Been Refinanced
• Since 2018, the Company completed $445.8 million in capex payments for drydock, ballast water treatment systems and scrubbers
• Remaining capex for FY-21 is $12.8 million
• The Company has $18 million of committed scrubber financing that has yet to be drawn
Company CapEx (Drydock, BWTS & Scrubber Installations) Debt Repayment Schedule
Millions $USD Millions $USD
$250.0
$160.0
$146.0
$204.0 $140.0
$200.0
$172.1 $120.0
$69.7
$150.0 $100.0
$78.4
$80.0 $72.7 $74.5
$70.8
$100.0 $204.0
$60.0
$172.1
$60.9
$55.8
$40.0 $76.3 $74.5
$50.0 $72.7 $70.8
$12.8 $38.9
$26.7
$20.0
$43.0 $38.9
$26.7 $17.5
$0.0 $0.0
FY-18 FY-19 FY-20 FY-21 FY-22 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22
Payments Made Remaining Payments Remaining Principal Payments Convertible Bond Total
8Potential Cash Flow Generation
Potential Annual Cash Flow Generation Excluding Debt Repayment Potential Annual Cash Flow Generation Including Debt Repayment
Millions $USD Millions $USD
$2,500 $2,500
$2,000 $2,000
$1,500 $1,500
$1,095
$856
$1,376
$617
$1,137
$1,000 $1,000 $378
$898
$139
$658
$419
$281
$500 $500
$537 $537
$0 $0
OPEX, Cash $20,000 $25,000 $30,000 $35,000 $40,000 OPEX, Cash Principal $20,000 $25,000 $30,000 $35,000 $40,000
G&A & Interest G&A & Repayment
Interest
TCE Rate ($/day) (1) TCE Rate ($/day) (1)
(1) TCE Rate reflects a market TCE Rate for a non-scrubber ECO vessel.
Note: Annual revenue calculated as TCE Rate x 365 days x number of vessels. Based on 131 vessels and assumes vessel cash breakeven of $17,100 per day and debt repayment of $280.7 million from Q4-21 through Q3-22
9Asset Values Have Increased Significantly Over the Last Year
MR & LR2 Tanker Asset Values Historical MR & LR2 Tanker Asset Values
MR 5 Yr LR2 5 Yr
MR 5 Yr LR2 5 Yr
$50.0 $60
$47.5
$43.0
$50
$40.0
$35.0
$40
$30.0
$30.0 $29.0
$27.5
$30
$20.0
$20
$10.0
$10
$0.0 $0
Jan-21 Dec-21 Jan-22 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22
Source: Clarksons Research Intelligence, January 2022 10Oil Demand by End Use
Global Crude Oil Demand by End Use (mb/d)
103.7
100.0
4.7
4.9
90.7 11.4
11.1 4.9
10.9 13.1
12.9
12.7 14.8
13.7
4.3
4.2 13.0 2.0
1.9
7.1
6.7 3.9
1.8
3.5
44.6 46.3
40.0
2019 2020 2025
Road Aviation Rail/waterways Marine bunkers Petrochemicals Other industry Resid/Comm/Agr Electricity generation
Source: OPEC World Oil Outlook 2021 11Oil Demand Expected to Exceed Pre-Covid Levels in 2022
Global Crude Oil Demand (mb/d)
105.0
101.6 101.8
100.5
99.7 99.9
100.0
98.1 98.0
97.3
96.2
95.0
95.0
93.5
92.4 92.5
90.9
89.7
90.0
88.4
85.0
80.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1-22 Q2-22 Q3-22 Q4-22
Source: Energy Aspects, January 2022 12Jet Fuel Demand Narrows Gap to Pre Covid Levels
Global Jet Fuel Demand (mb/d) (1)
9.0 Jet Demand Forecasted
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Jan-20 May-20 Sep-20 Jan-21 May-21 Sep-21 Jan-22 May-22 Sep-22
1) Energy Aspects, January 2022
13Refined Product Demand to Exceed Pre-Covid Levels in 2022
Refined Product Demand (mb/d)
70.2 71.4
69.1 69.9
68.7
67.4 66.8
66.2
63.4 64.3
62.1 62.5
60.1 61.1
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1H-22 2H-22
Diesel Gasoline Jet Fuel Naphtha
Source: Energy Aspects, January 2021 14Significant Draws in Refined Product Inventory Since Jan 2021
North America, Europe & OECD Asia Inventories - Gasoline & Distillate
(Million barrels)
1100
1,051 1,055 1,057 1,057
1,048
1,013 1,015 1,017 1,011
999 1,003 1,006
1000 983
966 968 972 969 962
938 937
904
900 881 876
800
700
600
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21
Source: IEA, JODI, Xinhua, Energy Aspects January 2022 15Refined Product Inventories Approach Historically Low Levels
North America, Europe & OECD Asia Inventories - Gasoline & Distillate
(Million barrels)
1,100
1,050
1,000
950
900
850
800
Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 May-20 Nov-20 May-21 Nov-21
Source: IEA, JODI, Xinhua, Energy Aspects January 2022 16Global Refining Capacity Additions
Global Refining Capacity Additions (mb/d)
3.0
2.5
2.0
1.7
1.6 1.6 1.6
1.5 1.4
1.3 1.3 1.3
1.2 1.2 1.2
1.1 1.1
1.0 1.0
1.0 0.9 0.9 0.9
0.8 0.8
0.7
0.5 0.5
0.5 0.4 0.4
0.3 0.3 0.3
0.2
0.0 0.0
0.0
-0.5
-0.7
-1.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Refinery closures outweighed new capacity in 2021, leading to a drop in global capacity for the first time in 30 years
Source: BP Statistical Review, IEA & Platts January 2022
See appendix for a detailed list of 2021-2022 refinery closures
17Impact of Closing Australia’s Kwinana & Altona Refinery
Australia Refining Capacity
• BP announced that they are closing their 146 kb/d Kwinana refinery in
Australia at the end of 2020 Refinery Owner Capacity (kb/d) Status
Altona Exxon Mobil 90 Closing
• In February 2021 Exxon Mobil announced that they will be closing Geelong Viva Energy 120 Active
their Altona Refinery
Lytton Ampol 128 Active
• Australia already imports more than 50% of it’s refined product Kwinana BP 146 Closing
demand and imports have continued to increase since 2015 Total Refining Capacity 484
• To replace the lost production from the Kwinana and Altona refineries,
Australia Refined Product Imports (kb/d) (1)
Australia will need to import an additional 236 kb of refined product
per day or 86 million barrels of refined product per year
Product Imports Kwinana Altona
900
815 815
• Assuming the lost production is replaced by imports from Saudi 800
90
Arabia and Singapore it would: 700
146
579
• 600 549 564
Require an additional 23 MRs or 11 LR1/LR2s per year 499 507
500
(kb/d)
• Increase seaborne refined product ton mile demand by 2.1% (2) 400
300
200
100
-
2015 2016 2017 2018 2019 Kwinana Altona Post
Closure Closure
1) JODI, Aug 2021
2) Clarksons Shipping Intelligence, February 2021 (estimates seaborne trade of 2995.20 million ton miles for refined products in 2021) 18Australia’s Product Imports Increase as Refinery Output Declines
Australia Refinery Output (k/bd) (1) Australia Product Imports (k/bd)(1)
800 900
Refinery Output Product Imports
819
800
700 682
657
628 708
700 686
604 661
600 640 636
633
613
596
515 600
503 550 556
500 479 469 459
420 500
408
400 428 434
366
400 383
342
293
300
263
250 300
200
200
100
100
0 0
2011 2013 2015 2017 2019 Q1-21 Q3-21 Nov-21 2011 2013 2015 2017 2019 Q1-21 Q3-21 Nov-21
1) JODI, January 2022 19Orderbook as % of Fleet at Historical Low
Orderbook as a % of Fleet
19.0% Product Tanker 10K+ Orderbook % Fleet 5 Yr Avg 10 Yr Avg
14.0%
9.0%
5.6%
4.0%
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22
Source: Clarksons Research Intelligence, January 2022 20Number of Product Tankers on Order is at a 20 Year Low
Product Tanker Vessels on Order
(# of Vessels)
MR LR1 LR2
800
760
738
700 126
118 641
600 100
139
140
500
446 115 447
386 55 59
400 375
343 352 353
336 42
103 93 73
37 43 70 78
300 107 13
232 86 77 228 233 34
480 495 59 217 221 223
24 426 28 20
200 164 24 49 55 54 169
51 36 156
20 295 40 27 20 41 131
20 288 289
237 248 8 51
100 213 223 216 3 44
189 1
157 164 139 149
124 128 120 102 86
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: Clarksons Research Intelligence, January 2022 21Product Tanker Scrapping at 20 Year High
Product Tanker Scrapping
(# of Vessels)
MR LR1 LR2
50 48
42 9
40 4
36 4
35
9 5
7
30
7
24 24
22
20 3
20 3 14 6
3 2 16 5 16 35
3
13 29 2 13
8 12 12
4 1 24
10 9 9 9 4
7 8 1 0 17 6
6 6 16 15 16
4 14
3 0 1 7 4 12
9 3 10
2 8 8
1 5 5 6 2
4 3 3
0 0
1 2 2
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Clarksons Research Intelligence, January 2022 22Seaborne Product Exports to Outpace Supply in 2022
Seaborne Exports vs Product Tanker Fleet Growth
Product Tanker Net Fleet Growth Seaborne Refined Products Exports
10.0%
7.4% 5.9% 5.7%
6.3%
5.7%
5.0% 4.9% 4.8%
4.5% 4.2%
4.0%
2.6% 2.0%
1.6% 1.9% 1.3%
1.1% 2.5% 1.3%
0.0% -0.3%
-1.0%
-5.0% -5.0%
-10.0%
-12.0%
-15.0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022e 2023e 2024e
Clarksons Shipping Intelligence, January 2022
Note: Supply slippage on scheduled newbuilding deliveries of 20% for 2022-2024, Scrapping assumptions for 2022-2024 is the 10-year average of 1.85 million dwt per year. 23Significant % of the Fleet Turning 15 Years & Older
Fleet Age Profile Today Fleet Age Profile 2025 (1)
(# of Vessels) (# of Vessels)
HM/MR LR1/LR2
HM/MR LR1/LR2
1,000 999
1,000
845
800 776 307
800
282 687
197
619
600 136
600 560 558
160
135
403 177
400
400
110
692
579 267
563
36 245 551
459
200 73 423
139 200 383
293
43 231
172
96
0
-
Vessels on 0-4 5-9 10-14 15-19 20 & Older
0-4 5-9 10-14 15-19 20 & Older
Order
Age (Years) Age (Years)
1) Only includes newbuildings on order and does not assume any scrapping
Source: Clarksons Research Intelligence, January 2022 24Increasing Environmental Regulations to Benefit Modern Vessels
• The EU has put pressure on the IMO to accelerate it’s 2030 GHG emission targets and may implement its own ETS by 2023
• It’s unclear how the timeline of these plans will accelerate, but the focus on reducing GHG emissions in the shipping sector is clear
• Modern fuel-efficient vessels will benefit given their lower GHG emissions while older less efficient vessels may undergo retrofits or be scrapped
• Scorpio is well positioned for future regulation as it operates the largest and youngest fleet of scale with an average age of 6.0 years
Scorpio Fleet ECO vs Non-ECO Worldwide Fleet ECO vs Non-ECO
ECO Non-ECO ECO Non ECO
80%
100% 100% 100% 100% 75%
57%
52%
48%
43%
25%
20%
0% 0% 0% 0%
HM MR LR1 LR2 HM MR LR1 LR2
Source: Clarksons Shipping Intelligence, January 2022
Note: ECO defined as vessels built in 2012 and later. 25Long Term Fundamentals
Refined Product Demand Expected to Continue to Recover through 2022
• Refined product ton mile demand is estimated to increase 9.3% and 5.7% in 2022, respectively (1)
Refining Capacity Closures & Expansions Expected to Increase Product Exports & Ton Miles
• Older and less efficient refineries face a wave of closures due to weak refining margins, tightening environmental rules and overseas competition, prompting
some owners to opt to converting to import terminals or biofuels production facilities
• At the same time, over 1 million barrels of complex refining capacity will come online in the Middle East in 2022
Limited Newbuilding Orders & Aging Fleet Extends Limited Fleet Growth
• Limited newbuilding orders have kept the current orderbook at all-time lows
• Including newbuilding deliveries, a significant portion of the product tanker fleet will turn 15 years old over the next three years
Environmental Regulations to Benefit Modern Vessels
• The EU has put pressure on the IMO to accelerate it’s 2030 GHG emission targets and may implement its own ETS system by 2023
• While it’s unclear how the timeline of these plans will accelerate, the focus on reducing GHG emissions in the shipping sector is clear and modern fuel
efficient vessels will be in the best position to benefit from increasing regulation
1) Clarksons Shipping Intelligence, January 2022
Note: GHG = green house gas emissions , ETS = emission trading systems 26Appendix
27Product Tanker Demand Drivers
Increased Volumes Voyage Distance Product Tanker
(Seaborne Trading Activity Demand
Exports) (Ton Mile Demand)
• Oil consumption • Dislocation • Arbitrage opportunities
growth between refinery from price volatility
and consumer
• Refinery margins • Low inventory levels
• Refining capacity
• Refinery expansions have • Growing regional
throughput moved closer to the imbalances from crude
well head and slates, product grades
further away from and refining capacity
the consumer
28Product Tankers in the Oil Supply Chain
• Crude Tankers provide the marine transportation of the crude oil to the refineries.
• Product Tankers provide the marine transportation of the refined products to areas of demand.
• Structural demand drivers in the product tanker industry:
• US has emerged as a refined products powerhouse, becoming the worlds largest product exporter
• Changes in refinery locations, expansion of refining capacity in Asia and Middle East as well as a reduction in OECD refining capacity (Europe &
Australia).
• Changes in consumption demand growth in Latin America, Africa, and non-China/Japan Asia and lack of corresponding growth in refining capacity
• Balance of trade: needs of each particular region- gasoline/diesel trade between U.S./Europe is a prime example of this given significantly different
diesel penetration rates for light vehicles
• Europe imports surplus diesel from the United States, and exports surplus gasoline to the United States.
Exploration & Crude Transportation Refining Products Terminalling &
Production Transportation Distribution
Refined products are moved from Terminals are located closer to
Oil production includes drilling, Crude oil is transported to the Refineries convert the crude oil into
the refinery to the end users via transportation hubs and are the final
extraction, and recovery of oil refinery for processing by crude a wide range of consumable
product tankers, railcars, pipelines staging point for the refined fuel
from underground. tankers, rail cars, and pipelines. products.
and trucks. before the point of sale.
29What is in a Barrel of Crude Oil?
Source: Valero & EIA, December 2019
30Product & Crude Tankers
Tankers
“Dirty” “Clean”
Crude Products
Vessel VLCC Suezmax Aframax Panamax Handysize LR2 LR1 Hmx/MR Handysize
(200,000 + (120,000 - (80,000 - (60,000 - (< 60,000 (80,000- (60,000- (25,000- (Product Tanker Specifications
IMO Classes I, II, & III
IMO Class I Chemical
IMO Class I refers to the transportation of the most hazardous,
Tankers
very acidic, chemicals. The tanks can be stainless steel, epoxy or
marine-line coated.
IMO Class II Chemical &
Product Tankers IMO Class II carries Veg & Palm Oils, Caustic Soda. These tanks
tend to be coated with Epoxy or Stainless steel.
IMO Class III Product Tankers
Typically carry refined either light, refined oil “clean” products or
“dirty” heavy crude or refined oils.
• Product tankers have coated tanks, typically epoxy, making them easy to clean and preventing
cargo contamination and hull corrosion.
• IMO II & III tankers have at least 6 segregations and 12 tanks, i.e. 2 tanks can have a common line
for discharge.
• Oil majors and traders have strict requirements for the transportation of chemicals, FOSFA cargoes
(vegetable oils and chemicals), and refined products.
• Tanks must be completely cleaned before a new product is loaded to prevent contamination.
32Design Features on Scorpio Product Tankers
33Scrubber Fuel Savings
Consumption figures below assume that:
• Scrubbers do not operate during any port activities
• Each voyage has a load and discharge port in an ECA, i.e. scrubber does not operate in
ECA waters
Annual ECO Vessel Fuel Consumption (MT/year) (1)
Sailing (Ballast & Laden) MR LR1 LR2
Non ECA 4,641 5,072 6,019
Waiting/Idle
Non ECA 153 272 347
Less
Additional Consumption for Scrubber -252 -257 -261
Total Non ECA Consumption (MT) 4,542 5,087 6,105
MGO-HSFO Spread ($/MT) $200 $200 $200
Annual Scrubber Savings $908,400 $1,017,450 $1,220,940
Scrubber TCE Savings ($/day) $2,489 $2,788 $3,345
Every $100 change in fuel spread equates to TCE savings
$1,244 $1,394 $1,673
of ($/day)
(1) Based on average Scorpio ECO vessel consumption in 2018. 34Global Refinery Closures Accelerate
Announced Refinery Closures
• Global oil refining is being reconfigured and will have Operator Location Capacity (kbd) Timing
a significant change on future global trade patterns MPC Martinez, CA(USA) 161 2020
• Older refineries have faced a wave of closures due to: MPC Gallup, NM (USA) 26 2020
PBF Paulsboro, NJ (USA) 170 2020
• Lower efficiencies HFC Cheyenne, WY (USA) 52 2020
• Weak refining margins
Shell Convent, LA (USA) 211 2020
Phillips 66 Rodeo, CA (USA)* 120 2020
• Tightening environmental rules/regulation Freepoint/ArcLight
PDVSA
St Croix (US Virgin Islands)
Isla (Curacao)
200
335
2021
2021
• Overseas competition North Atlantic Come by Chance, Canada 135 2021
Exxon Mobil Slagentangen, Norway 120 2021
• This has prompted some owners to opt for closure or Ineos Grangemouth, Scotland 90 2020
converting plants for storage or biofuels production Total Granpuits, France* 101 2021
• After closing, the lost production in these regions is Gunvor Group
Neste
Antwerp, Belgium
Naantali, Finland
110
55
2021
2021
likely to be replaced through imports
Livorno Livorno, Italy 84 2022
• At the same time, the Middle East is adding over 1 Galp Port Refinery, Portugal 110 2021
million barrels of complex and export oriented refining Shell Tabangao, Philippines 110 2020
capacity over the next 12 months Refining NZ Marsden Point, New Zealand 40/ 135 2022
BP Kwinana Beach, Australia 146 2020
• Jazan (400 kb/d) and Al Zhour (615 kb/d) Exxon Mobil Altona, Australia 90 2021
Cosmo Oil Osaka, Japan 115 2021
Shell Pulau Bukom, Singapore ** 200 2021
* Conversion ** Output Reduction
35Potential Cash Flow Generation Per Share
Potential Annual Cash Flow Generation Excluding Debt Repayment Potential Annual Cash Flow Generation Including Debt Repayment
Millions $USD Millions $USD
$40.0
$40.0
$30.0
$30.0
$18.8
$23.6 $14.7
$20.0 $20.0
$19.5 $10.6
$15.4 $6.5
$11.3 $2.4
$7.2
$4.8
$10.0 $10.0
$9.2 $9.2
$0.0 $0.0
OPEX, Cash $20,000 $25,000 $30,000 $35,000 $40,000 OPEX, Cash Principal $20,000 $25,000 $30,000 $35,000 $40,000
G&A & Interest G&A & Repayment
Interest
TCE Rate ($/day) (1) TCE Rate ($/day) (1)
(1) TCE Rate reflects a market TCE Rate for a non-scrubber ECO vessel.
Note: Annual revenue calculated as TCE Rate x 365 days x number of vessels. Based on 117 vessels and assumes vessel cash breakeven of $17,100 per day and debt repayment of $288 million in 2022 less $28 million for scheduled
principal payments related to vessels that are held for sale.
36www.scorpiotankers.com
You can also read
