Bjørn Tore Larsen, chairman of ADS Crude Carriers, has outlined why the company decided to sell off its fleet of VLCCs as well as hinting at what ADS’s next investments might be.
The pure-play tanker player has just delivered its last ship, the ADS Page, marking its exit from shipowning. It bought three VLCCs from John Fredriksen’s SFL Corp in July 2018.
We didn’t consider the risk-reward balance to be in our favour and we decided to cash out our chips
“We know that the tanker market is very volatile and always has the potential to skyrocket again next week or next month. Even so, we didn’t consider the risk-reward balance to be in our favor and we decided to cash out our chips,” Larsen wrote in a letter to shareholders yesterday.
Larsen said ADS would be back into shipowning when the right investment targets appear. The aim would be for counter-cyclical investments, with quality ships – likely larger bulkers and tankers – bought at low prices at a significant discount to newbuilding parity.
Another possible investment avenue for ADS are projects with long-term secured cashflow and low residual risk, with solid returns on equity.
“This could be in projects where we – perhaps through partnerships – have a competitive advantage. Such opportunities are rare, but they happen,” Larsen wrote.