Navios Maritime Midstream Partners LP completed its initial public offering on Nov. 13 at a price of $15 per share and gave up about 8 percent of its value on its inaugural day of trading.
Don’t let the fledgling publicly traded partnership’s name fool you: A spin-off from Navios Maritime Acquisition Corp (NYSE: NNA), Navios Maritime Midstream Partners specializes in tankers, floating pipelines that transport crude oil and other hydrocarbons overseas.
The MLP’s initial asset base comprises four very large crude carriers (VLCC) that operate under multiyear contracts with an average of 7.7 years remaining.
Navios Maritime Midstream Partners’ counterparties on these agreements are Taiwan-based Formosa Petrochemical Corp (Taipei: 6505, OTC: FPTCF) and China Ocean Shipping Company (COSCO), a state-owned logistics company. The financial strength of these customers reduces the risk of potential default.
Vessels in this class have a cargo capacity of between 200,000 and 320,000 deadweight tons and usually transport crude oil over long-haul routes from the Middle East and Africa to Northern Europe and the Far East.
Although the Shinyo Ocean and Shinyo Kannika’s fixtures expire in 2.3 years, Navios Maritime Acquisition has offered to cover any potential shortfall between the vessels’ existing day-rates and the replacement time charters.
All four of these vessels operate under charters that include a profit-sharing element, which ensures that Navios Maritime Midstream Partners will participate in any upside in the prevailing day-rates for VLCCs.
For example, the profit share on the Shinyo Coean is calculated twice annually based on the daily value of the Baltic Exchange Route AG/Japan for the previous two quarters adjusted for voyage-related expenses. Navios Maritime Midstream Partners and the charterer split any daily profit above $43,500.
Drop-down transaction from Navios Maritime Acquisition will drive much of Navios Maritime Midstream Partners’ growth.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Oct. 30, 2017
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.