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The Top 6 Companies In Crude Tanker Business

(TK, FRO)
By Shobhit Seth | December 31, 2015 — 12:29 PM EST SHARE

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TK
Teekay Corp
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9.32 -1.79%

FRO
Frontline Ltd
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4.59 -1.29%

TNP
Tsakos Energy Navi…
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3.91 -1.26%

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With the crude oil prices hitting their lowest levels in a decade, consumers are utilizing the situation
to pile up huge inventories, leading to sound business propositions for the companies engaged in
crude oil transportation. (For more, see Oil Prices' Impact On Oil Transport Sector.)

Here's an overview of the crude tanker business and the top six stocks in this business segment.

The Oil Tanker Business
The movement and storage of crude oil in large volume needs oil tankers, which are large sized
transport ships. There are different categories of oil tankers—a crude tanker is used for transporting
bulk volume of unrefined crude oil from the oil extraction facilities to the refineries. Whereas, a
product tanker is used to carry refined products from oil refineries to the markets/consumer
facilities. A replenishment oiler is used for refueling ships at the sea, and the old nonoperational
oil tankers which are used as floating oil storage units.

The crude tanker business falls under the oil services industry, and is often classified under the
subcategory of oil and gas storage and transportation. (For more, see The Industry Handbook: The Oil
Services Industry.)

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The crude tanker business involves Topics

firms whichReference
own, operateAdvisors Markets
or lease the crude tankersSimulator
for their Academy

requirements of oil transportation and storage. Different entities get into detailed business
contracts, which are based on duration of the lease, the quantity of the oil to be transported or Search News, Symbols, Terms

stored, the route of transport, or a mix of all such factors. Contracts also include details of which
party bears the operational expenses, including fuel costs, crew payments, and insurance. Along
with all the above mentioned factors, the demand and supply of oil across various regions of the
globe also impacts the crude tanker business.

Let’s look at the top stocks of companies operating in this oil transportation sector. The presented
list is non-inclusive, and is arranged in decreasing order of annual revenues.
Trending
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1.       Teekay Corp. (TK
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TK
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Teekay Corp
9.32 5 Dividend Stocks for Bull and Bear Markets
-1.79%
Penny Stocks to Watch for December 2017

+ ): Teekay was founded in 1973 and is based in Hamilton, Bermuda. It is a

provider of crude oil and gas transportation, floating storage and long-distance towing. It operates
through four different business segments, namely, offshore logistics, offshore production, liquefied
gas carriers and conventional tankers. It has around 200 tanker assets, making it one of the largest
crude tanker companies of the world. With a recent market cap of $710.5 million, its 2014 revenues
stood at $1.993 billion and trailing twelve months (TTM) EPS at 0.41. It has a history of regular
dividend payments with a healthy dividend yield of 25% and a quarterly dividend payment
frequency.

2.       Frontline Ltd (FRO

Trading Center
FRO
Frontline Ltd
4.59
-1.29%

Partner Links
+ ): Founded in 1984 with headquarters in Hamilton, Bermuda, the NYSE
Learn to trade stocks by investing $100,000 virtual
listed Frontline was recently acquired by Frontline 2012 Ltd. in a reverse merger transaction in dollars...
November 2015. FRO provides seaborne shipping of oil crude oil and products and operates 22
vessels including 14 enormous crude carriers (VLCC). It has a global presence, and primary regions
of operations include the Middle Eastern Gulf, Far East, Atlantic Basin, Northern Europe, the
Caribbean and the Louisiana Offshore oil port. Its business strategy follows outsourcing of many
functions including those like vessel management, crew staffing, and accounting services. With a
recent market cap of $20.03 billion, its 2014 revenues stood at $521 million, and EPS (TTM) at 0.15. It
has a history of sporadic dividend payments, with dividend yield at 6.6%.

3.       Tsakos Energy Navigation (TNP

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TNP
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Tsakos Energy Navigation Ltd
3.91
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-1.26%

+ ): TNP was founded in 1993 and is based in Athens, Greece. It is a

global provider of seaborne crude oil and petroleum transportation services. It has a large fleet of 50
vessels, with the majority comprising of mid-sized carriers. With a recent market cap of $614 million,
its 2014 revenues stood at $501 million, and EPS (TTM) at 1.42. It is a regular dividend payer with a
quarterly frequency and has a dividend yield of 3.41%.

4.       Nordic American Tanker (NAT

NAT
Nordic American Tankers Ltd
2.46
-3.91%

+ ): NAT is another Hamilton, Bermuda-based crude tanker company

that was founded in 1995. NYSE listed NAT specializes in the acquisition and chartering of double-
hull tankers. It owns and operates 24 Suezmax crude oil tankers. With a recent market cap of $1.28
billion, its 2014 revenues stood at $351 million, and EPS (TTM) at 0.94. It has a history of regular
dividend payments, with a quarterly payment frequency making it fit for investors looking for
regular dividend income. The dividend yield stood at 10.61%.

5.       Ship Finance International Limited (SFL

SFL
Ship Finance International LTD
15.50
-1.59%

+ ): SFL is based in Hamilton, Bermuda and was founded in 2003. It is

in the business of owning, operating and chartering vessels. Although it is primarily into oil
transportation, its operations also span across a wide variety of functions that include
transportation of oil, chemicals and containers. Its fleet includes around 60 different large sized
vessels. With a recent market cap of $1.42 billion, its 2014 revenues stood at $327.4 million, and EPS
(TTM) at 1.64. It has a history of regular dividend payments with a quarterly frequency and a healthy
dividend yield of 11.85%.

6.       DHT Holdings Inc. (DHT

DHT
DHT Holdings Inc
3.59
-2.45%

+ ): DHT is based in Hamilton, Bermuda and was founded in 2005. It owns

and operates crude oil tankers, and has a fleet of 18 crude tankers including 14 VLCC. With a recent
market cap of $742.8 million, its 2014 revenues stood at $150.789 million and trailing twelve

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months (TTM) EPS at 1.03. It is a regular dividend payer with a quarterly frequency and has a
Topics Reference Advisors Markets Simulator Academy
dividend yield of 9.29%.

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Historical Performance
In the last one year of declining prices and increasing oversupply of crude oil, the performance of
different stocks of crude oil tanker companies has been a mixed bag.

Graph Courtesy: Yahoo! Finance

Over a 10-year long period, there have been wide swings in the intermittent performance of the
stocks, but the overall returns have been negative.

The Bottom Line

The valuation of crude tanker companies is a complex affair, as the crude tanker market gets
impacted by a variety of factors which include the oil prices, demand and supply from various
regions of the globe, route of transportation, and geopolitical developments. The multiple and
sporadic spikes and wide swings in either directions do indicate good short term trading
opportunities for active traders. Long term investors may need to remain vigilant with regular
tracking of stock specific developments, and switching their holdings accordingly. (For more,
see Will Oil Prices Go Up In 2017?)

Disclaimer: At the time of writing this article, the author was not holding any of the mentioned stocks. 

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