Tsakos Energy Navigation Ltd. (TNP) Tops Q1 EPS by 9c

Tsakos Energy Navigation Ltd. (NYSE: TNP) reported Q1 EPS of $0.19, $0.09 better than the analyst estimate of $0.10. Revenue for the quarter came in at $91.3 million versus the consensus estimate of $87.87 million.

Expansion Strategy & Outlook:

The first quarter 2014 exhibited signs of the levels that crude cargo spot rates may reach when market fundamentals are favorable. Albeit for a limited period, this spike highlighted the significant impact that a substantial crude carrying capacity may have on the bottom line of shipping companies with significant involvement in that space. The diversity and versatility of TEN's fleet enabled the Company to take advantage of this market strength as 12 out of the 26 product tankers in our fleet were engaged in crude operations resulting in 33 vessels in total (out of 48 on the water today) carrying crude.

This exposure to the crude sector will further increase through the introduction of two modern suezmax tankers the Company has agreed to acquire for $121 million en bloc from affiliated companies and are expected to join our fleet in the second and third quarter of this year. These vessels are the 2013-built Eurovision and 2012-built Euro, sister vessels to our 2011-built Dimitris P and Spyros K which are fixed for a remaining period of nine and eight years respectively to a major Far Eastern operator on base rate contracts with profit sharing provisions. Technical management of the newly acquired vessels will continue to be done by Tsakos Columbia Shipmanagement in order to ensure a seamless transfer.

In terms of employment, the Euro comes with an attractive charter to a major US oil concern until November 2015 while the Eurovision is currently trading in the spot market.

The Company's operational capability, financial capacity and overall track record has created opportunities for the formation of additional strategic alliances with major end-users similar to the ones established with Statoil of Norway. In this market environment, particularly now with the shrinkage of the wider tanker peer group, we feel confident that further such partnerships will be made in the near future.

Despite the spot market subsequently recalibrating to more moderate levels, we feel that the crude markets will continue to present improving opportunities for those with modern and versatile tonnage. Market fundamentals and the orderbook in particular (10.4% of the crude fleet) are in much better balance coupled with sustained firm demand from China and India. This demand, driven by urbanization and the building of strategic and commercial oil reserves in those two countries, is at very favorable levels.

Looking ahead, management will continue to assess market conditions and trading patterns and employ vessels, particularly those operating spot, in the most optimal trading routes available.

Asset trading has been an integral part of our business strategy and operations. In this context, the divestment of assets, particularly of vessels aged above the fleet average, will be explored thoroughly as management will endeavor not only to maintain the young age profile of its fleet, but also to generate capital gains. On that front, we remain alert to take advantage of market opportunities and continue to evaluate various prospects and proposals.

Cash flow generation and earnings visibility will continue to be the cornerstone of our operations and the current mix of contracts with secured employment and profit sharing provisions along with spot or spot related business will be maintained. As of May 15, 2014 the Company has contracted about 57%, 36% and 23% of the remaining 2014, 2015 and 2016 available days respectively, in secured employment fixtures. This translates to approximately $823 million in secured gross forward minimum revenues, $364 million of which expected over the next three years.

For earnings history and earnings-related data on Tsakos Energy Navigation Ltd. (TNP) click here.

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