Euronav NV reported its non-audited financial results for the fourth quarter ended 31 December 2023.

Alexander Saverys, CEO of Euronav said: “The fourth quarter of 2023 has been a transformative one for Euronav. A solution for the deadlock with Frontline was found, CMB solidified its position as anchor shareholder and the CMB.TECH transaction was announced. Whilst the acquisition of CMB.TECH would be a very big step in our diversification and decarbonisation strategy, we have also continued to optimise and modernise our fleet with the new orders of 2 Suezmaxes and 2 more VLCC’s, that will be ready to be powered by ammonia, and the sale of the oldest ship in our fleet. We have also concluded the sale and delivery of 23 VLCC’s to Frontline, with only one remaining to be delivered. Euronav is quickly gearing up to become the reference in sustainable shipping.”

For the fourth quarter of 2023, the Company realized a net gain of USD 410.9 million or USD 2.03 per share (fourth quarter 2022: a net gain of 235.1 USD million or USD 1.17 per share). Proportionate EBITDA (a non-IFRS measure) for the same period was USD 477.7 million (fourth quarter 2022: USD 317.8 million).

EURONAV TANKER FLEET DEVELOPMENTS

2x new Suezmax time chartered to Valero

The two newbuilding ice classed Suezmax orders at Daehan Shipbuilding have been long term time chartered to Valero. Delivery of these vessels is expected in April/May 2026 when each of the time charter contracts will begin.

Total of 4x new VLCC under construction

Euronav has lifted the option for one more VLCC at Qingdao Beihai shipyard (China) in December and another one in January. Euronav now has four VLCC’s on order at Qingdao Beihai following the ordering of two VLCC’s earlier in the year. The vessels are expected to be delivered in Q4 2026 & Q1 2027 respectively and will be ready to be powered by a dual- fuel diesel-ammonia engine.

Update on vessels sold so far to FRO

So far 23 VLCC’s out of the 24 VLCC’s that were included in the deal, have been sold and delivered to Frontline. The VLCC Camus is expected to be delivered in March. The total capital gain in Q4 amounted to USD 323.3 million, and a capital gain of approximately USD 374.2 million is expected in Q1 2024 (including Camus).

Sale of Oceania

Euronav has sold the ULCC Oceania (2003 – 441,561 DWT). This sale is part of our ongoing fleet optimisation strategy and in response to new regulations such as EEXI (Energy Efficiency Existing Ship Index) which came into force in 2023. This transaction will generate a capital gain of USD 34.8 million in Q1/2024. The Oceania is debt free and was delivered to her new owner on 15 January 2024.

CORPORATE GOVERNANCE DEVELOPMENTS

AGREEMENT WITH THE REFERENCE SHAREHOLDERS

On 9 October 2023 Euronav’s two reference shareholders, CMB NV (“CMB”) and Frontline plc/Famatown Finance Limited (“Frontline”), reached an agreement on a transaction involving the Company that puts an end to uncertainties and risks arising from their entrenched differences over strategy, while offering other shareholders the opportunity to realise substantial cash value for their investment or remain as shareholders of the Company under the new strategy.

The transaction comprises three interdependent agreements, under the terms of which:

•CMB acquired Frontline’s 26.12% stake in the Company for $18.43 per share;
•Frontline acquired 24 VLCC tankers from the Euronav fleet for $2.35 billion (the“Vessel Sale”);
•The Company’s pending arbitration action against Frontline and affiliates has been settled.

Following its acquisition of Euronav shares from Frontline, CMB now owns more than 53% of the Company. In compliance with Belgian market rules, CMB will launch a mandatory takeover offer (“the Offer”) for all outstanding shares in Company, at a price of USD 17.86 per share paid in cash, i.e. USD 18.43 per share less USD 0.57 dividend per share.

The Supervisory Board unanimously decided to appoint following Management Board members upon recommendation of the Corporate Governance & Nomination committee:

-Alexander Saverys (Chief Executive Officer)
-Ludovic Saverys (Chief Financial Officer)
-Michael Saverys (Chief Chartering Officer)
-Maxime van Eecke (Chief Commercial Officer)
-Benoit Timmermans (Chief Strategy Officer)

Capital Markets Day

On 12 January 2024, Euronav held a Capital Markets Day together with CMB.TECH in light of the proposed transaction that was announced in December and requires approval of the shareholders during an SGM on 7 February. During the Webinar, the Management Board, together with other members of the managament gave their insights on what the transaction would entail, the new strategy & the various business units.

SGM

Euronav will organize a Special General Meeting on the 7th of February to vote on the proposed transaction in which Euronav would acquire CMB.TECH. The convening notice and the other documents related to this meeting are available on the company’s website https://www.euronav.com/investors/legal-information/sgm/2024/ The practical formalities for participation in this meeting are described in the convening notice.

Future Company name

Given the Company’s strong focus on decarbonization following implementation of its new strategy and the Transaction, Euronav intends to propose to its shareholders to change its corporate name to CMB.TECH following completion of the Transaction and the Offer. It envisages to keep the “Euronav” name as the brand name for its tanker division.

Expected Timeline:

•7 February 2024: SGM
•8 February 2024: Closing of the Transaction
•Mid-February 2024 Targeted approval date of MTO Prospectus / CMB launches mandatory offer (MTO) for Euronav
•Mid-March 2024 Targeted close of acceptance period for MTO

TRANSFER FAST

Euronav is pleased to announce a new chapter in the evolution of the FAST platform. In a strategic move to enhance capabilities and ensure continued growth, Euronav is transferring the FAST platform to ZeroNorth.

TANKER MARKET & OUTLOOK

Some context is required when assessing the dynamics of the large crude tanker market during Q4 and the associated freight rates. Heightened geopolitical tensions, longer ton miles and more oil on the water in transit provided a very supportive background during the quarter. These factors are supported by robust industry fundamentals regarding vessel supply, global fleet age and positive year on year growth for crude consumption.

Crude oil demand & supply

In January 2024, The International Energy Agency (IEA) increased its estimates of world oil supply, raising it by 1.5 million barrel per day (mb/d) to a new high of 103.5 mb/d, fuelled by record-setting output from the US, Brazil, Guyana and Canada. Non-OPEC+ production will dominate growth this year, accounting for close to 1.5 mb/d.

Global demand is forecast to be at an all-time high and growing in 2024, but at a slower pace. Increases in global oil demand are set to halve from 2.3 mb/d in 2023 to 1.3 mb/d in 2024, with the post-Covid recovery all but complete, GDP growth below trend in major economies, and as energy efficiency improvements and electrification of the vehicle fleet curb oil use. (source: IEA) According to Morgan Stanley, China and India remain key demand drivers for 2024 (58% of the consensus growth 2023/24) – with petrochemicals and aviation as key sectoral drivers (84% of the consensus growth 2023/24). Supply is forecast to slightly outweigh demand resulting in modest inventory builds in 2024.

Rising geopolitical tensions in the Middle East, which accounts for one-third of the world’s seaborne oil trade, has increased market volatility at the start of 2024. While oil production has not been impacted, a rising number of ship owners are diverting cargoes away from the Red Sea. According to IMF Portwatch, ships transiting the Suez Canal have fallen by 40% (full year 2023 versus week of January 12, 2024), with a commensurate increase in voyages around Cape of Good Hope. In 2023, roughly 10% of the world’s seaborne oil trade, or around 7.2 mb/d of crude and oil products passed through this major trade route. The tight tanker supply-demand rate means that a small marginal tanker supply disruption could lead to high freight rate volatility. (source: Morgan Stanley, IEA)

Maritime crude oil trading patterns are further impacted by the US temporarily lifting the sanctions on oil from Venezuela (October 18, 2023 until April 18, 2024). According to Clarksons, this could be very beneficial for tanker operators if this leads to increased exports to the US and Europe. Currently, as a result of these sanctions, crude export from Venezuela was transported through the so-called dark fleet. Now that sanctions have been lifted it is expected that these barrels will be transported by conventional fleet. Pool operator Tankers International also believes this could have a positive impact for VLCC’s. The IEA assumes that Venezuela and Iran will be able to even grow their export if more international sanctions are gradually lifted/eased.

Vessel Supply

The Order Book / Fleet (OB/F) ratio for the crude tanker segments remains favourable and far below historic ratios. In January 2024, the ratio stands at 2.6% for VLCC (OB/F average since 1996 is 18.6%) and 10.1% for Suezmax (OB/F average since 1996 is 20.9%). In addition, over a period of 23 years, both the VLCC and the Suezmax fleet has never had a higher average fleet age as today (11.51 years for VLCC, 11.77 years for Suezmax). (Source: Clarksons)

Freight rates

Rates in the crude tanker segment remain firm. Atlantic Basin production and exports (US and Brazil) are expected to increase, and the concerns regarding the Red Sea turmoil and whether there will be sufficient supply of crude tankers also contributes. In addition, global oil production is expected to increase by to 103.5 mb/d, though there could be risk to the downside should OPEC further prolong and/or deepen planned production cuts.

So far in the first quarter, Euronav VLCCs in the Tankers International Pool have earned USD 50,430 per day with 46% of the available days fixed. Euronav’s Suezmax fleet trading on the spot market has earned USD 54,892 per day on average with 54% of the available days fixed.

DISTRIBUTION TO SHAREHOLDERS

We will not distribute a dividend for Q4 2023.

Source: Euronav