Bermudian-domiciled Nordic American Tankers made a $15.9 million loss in the second quarter as charter rates for its oil-transporting ships were pressured by a growing global tanker fleet.

The company is also considering diversifying its capital structure, including bond financing.

Nordic American, which has a fleet of 30 near-identical Suezmax tankers, made about $16,100 per vessel per day during the three months ending on June 30. This figure, known as the average time charter equivalent, was comfortably above the company’s break-even level of $11,500 per day per vessel.

However, the net voyage revenue for the quarter was $39 million, a drop of $16 million compared to the first quarter, and $22.6 million down on the same period in 2016.

Its net loss for the second quarter compared to a $13 million gain for the same quarter in 2016.

The company is due to take delivery of three new vessels in 2018. It has paid 30 per cent of the cost of the new ships and is reviewing a financing arrangement regarding the outstanding balance of $116 million, which will be due on delivery.

The worldwide fleet of Suezmax tankers has been increasing and currently stands at 478, excluding shuttle tankers.

Last year there was a 6 per cent expansion in the global fleet, with no ships scrapped.

Two Suezmax vessels were scrapped in the first four months of this year, but 17 new tankers were added to the global fleet during the second quarter.

From now to the end of next year, a further 62 vessels are on order books, representing an expected 13 per cent increase in the worldwide fleet.

In its earnings report, Nordic American noted: “The supply of tanker tonnage is inelastic in the short term. When there are too many ships in an area, rates tend to go down. When there is scarcity of ships, rates tend to go up.

“As a matter of policy we do not predict short-term spot tanker rates which may be expected to be volatile. Going forward, we believe that Nordic American Tankers is well positioned.”

The company said its policy of paying dividends every quarter remains unchanged, however for its upcoming dividend payment, which will equate to 15 cents per share, it will pay 10 cents in cash and the remaining 5 cents of the dividend will be distributed as shares of Nordic American Offshore Ltd, an associated company of which NAT has a 22.6 per cent stake.

NOA, which is also Bermudian-domiciled, is involved in the platform supply vessel market. NAT will use a portion of its shares in the company to fulfil the dividend payout, which is due at the end of this month.

Nordic American Tankers has a net debt of about $321 million, roughly $10.7 million per vessel in its fleet. In its earnings report, it said it was continuing to maintain a strong balance sheet with low net debt.

Looking ahead at trends in the world economy and tanker market, the company stated: “The development of the world economy affects the tanker industry and the demand for oil. A low oil price is positive for the tanker industry.

“The strength of the Far Eastern economies, including China and India, is often underestimated by observers in the Western world. NAT is active in the Far East and does business with major oil companies in the area.”

NAT shares were yesterday trading at $5.51 in New York, down 11 cents, or 1.87 per cent.

Disclosure: the author owns shares in Nordic American Tankers