ATHENS - Performance Shipping Inc. (NASDAQ: PSHG), a global shipping company specializing in the ownership of tanker vessels, has secured a new charter agreement with Aramco (TADAWUL:2222) Trading Fujairah FZE for its Aframax tanker, the M/T Briolette. The time charter contract, which began on Monday, is set at a daily rate of $41,000 over a 24-month period, with the option to extend by 30 days.
The deal is expected to generate approximately $28.7 million in gross revenue for the minimum scheduled period. This contract follows the expiry of a previous two-year charter with Aramco, offering a $8,500 increase in the daily gross rate. The M/T Briolette is a 104,588 dwt Aframax tanker built in 2011.
Andreas Michalopoulos, CEO of Performance Shipping, expressed satisfaction with the continuation of their relationship with Aramco, a major player in the global energy and chemicals market. He highlighted the contract as a reflection of the company's commitment to providing high-quality maritime transportation services.
With this new agreement, Performance Shipping's contract backlog has reached $228.1 million. The company's fleet includes seven vessels, two of which operate in the spot market through pool arrangements, while the remaining five are under time charters. The current contract is the third consecutive charter agreement between Performance Shipping and Aramco.
Michalopoulos indicated optimism about the future, noting the possibility of securing higher charter rates if current market conditions persist. The company anticipates re-chartering its vessels, whose contracts expire in 2024, at favorable rates.
Performance Shipping Inc. operates its fleet on spot voyages, through pool arrangements, and on time charters. The information regarding the new charter contract is based on a press release statement from the company.
In other recent news, Performance Shipping Inc. has entered into time charter contracts for three newbuilding LR2 Aframax tanker vessels with Clearlake Shipping Pte Ltd, a subsidiary of Gunvor Group.
The contracts, which span a firm period of five years with options to extend for an additional two years, are expected to generate a gross charter rate of $31,000 per day per vessel during the initial five-year period. These recent developments are anticipated to increase the company's fixed revenue backlog to roughly $211.4 million.
The commencement of employment for the vessels is scheduled for the fourth quarter of 2025 and the first and second quarters of 2026. The firm-period contracts are projected to yield gross revenue of approximately $169.8 million, representing about 88% of the combined construction costs of the vessels.
CEO of Performance Shipping, Andreas Michalopoulos, expressed enthusiasm for the strategic relationship with Clearlake Shipping. The announcement of these contracts underscores the company's approach to securing profitable charter rates and enhancing cash flow visibility for the initial operating years of the new vessels. These are just some of the recent developments at Performance Shipping Inc.
InvestingPro Insights
Performance Shipping Inc. (NASDAQ: PSHG) has recently solidified its revenue prospects with a lucrative charter agreement, which is a positive development for the company's financial stability. In light of this, let's delve into some key insights from InvestingPro that could help investors better understand the company's financial health and market position.
Firstly, Performance Shipping boasts a strong balance sheet, holding more cash than debt. This is a reassuring sign for investors, as it indicates the company has the liquidity to manage its operations and potential investments without the heavy burden of debt.
Furthermore, the company's gross profit margins are impressive, standing at 75.22% for the last twelve months as of Q1 2024. This high margin suggests that Performance Shipping is operating efficiently, with a strong ability to convert sales into profits, which is essential for sustaining operations and potentially driving future growth.
Despite a recent decline in quarterly revenue, the company has experienced a substantial 189.23% return over the last year, signaling strong investor confidence and a robust recovery in its share price. This performance is particularly notable given that the company's price has fallen significantly over the last five years.
InvestingPro also highlights that Performance Shipping is currently trading at a low Price / Book multiple of 0.11, which could suggest that the company's stock is undervalued relative to its book value. This metric, combined with a low revenue valuation multiple, may indicate a potential investment opportunity for value-seeking investors.
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