OceanPal Inc. Announces the Sale of M/V Salt Lake City

Rhea-AI Summary

OceanPal Inc. (NASDAQ: OP) has announced the sale of its 2005-built vessel 'Salt Lake City' through a wholly-owned subsidiary. The vessel will be sold to a third party for $16.1 million before commissions, with delivery scheduled by February 20, 2025. Following this transaction, OceanPal's fleet will be reduced to 3 Panamax dry bulk vessels and one MR2 tanker vessel.

Positive

• Sale of aging vessel (2005-built) for $16.1 million, improving fleet age profile
• Cash injection of $16.1 million (before commissions) strengthening balance sheet

Negative

• Fleet reduction from 5 to 4 vessels, decreasing revenue-generating capacity
• Loss of dry bulk capacity in the company's fleet composition

Insights

Maritime Financial Analyst

The sale of M/V Salt Lake City for $16.1 million represents a strategic move in the current dry bulk market environment. For a 19-year-old Panamax vessel, this sale price aligns well with current market valuations, considering the vessel's age and the recent trends in the second-hand vessel market.

This transaction will reduce OceanPal's fleet to just 4 vessels, significantly impacting its operational scale. The timing of the sale appears strategic, as vessels approaching 20 years of age typically face increased maintenance costs and reduced charter rate potential. The proceeds could strengthen the company's balance sheet and provide flexibility for future fleet renewal or debt reduction.

The deal's impact on OceanPal's revenue-generating capacity is notable, as the fleet reduction represents a 25% decrease in the company's vessel count. For context, Panamax vessels of this age typically generate between $12,000 to $15,000 per day in the current market, so this sale will affect the company's daily revenue potential. The February 2025 delivery timeline suggests a prompt transaction execution, which could indicate the company's desire to capitalize on current market values before potential deterioration.

Asset Management Specialist

This vessel divestment has significant implications for OceanPal's asset portfolio structure. The reduction to 4 vessels raises questions about operational efficiency and economies of scale. Small fleet operators typically face challenges in securing favorable contracts and maintaining competitive operating costs. The transaction's timing, ahead of the vessel's 20-year mark, is prudent from an asset management perspective, as older vessels typically face increased scrutiny from charterers and higher insurance premiums.

Looking at the broader market context, the $16.1 million price point for a 19-year-old Panamax suggests the company has secured a reasonable deal in the current market environment. This move could be part of a larger strategy to optimize the fleet age profile and potentially position for future fleet renewal. The cash injection could provide strategic optionality, though the significant fleet reduction might impact the company's market position and negotiating power with charterers.

ATHENS, Greece, Jan. 21, 2025 (GLOBE NEWSWIRE) -- OceanPal Inc. (NASDAQ: OP) (the “Company”), a global shipping company specializing in the ownership of vessels, today announced that, through a separate wholly-owned subsidiary, it has signed a Memorandum of Agreement to sell to a third party, the 2005-built vessel “Salt Lake City”, with delivery to the buyer latest by February 20, 2025, for a sale price of US$16.1 million before commissions.

Upon completion of the aforementioned sale, OceanPal Inc.’s fleet will consist of 3 Panamax dry bulk vessels and an MR2 tanker vessel. A table describing the current OceanPal Inc. fleet can be found on the Company’s website, www.oceanpal.com. Information contained on the Company’s website does not constitute a part of this press release.

About the Company

OceanPal Inc. is a global provider of shipping transportation services, specializing in the ownership and operation of dry bulk vessels and product tankers. The Company is engaged in the seaborne transportation of bulk commodities, including iron ore, coal, and grain, as well as refined petroleum products. OceanPal’s fleet is primarily employed on time charter trips with short to medium duration and spot charters, with a strategic focus on maximizing long-term shareholder value.

Forward Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, Company management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies that are difficult or impossible to predict and are beyond the Company’s control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk shipping capacity, changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Company’s vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, including risks associated with the continuing conflict between Russia and Ukraine and related sanctions, potential disruption of shipping routes due to accidents or political events, including the escalation of the conflict in the Middle East, vessel breakdowns and instances of off-hires and other factors. Please see the Company’s filings with the U.S. Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. The Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

FAQ

How much is OceanPal (OP) selling the M/V Salt Lake City vessel for?

OceanPal is selling the M/V Salt Lake City vessel for $16.1 million before commissions.

When will the M/V Salt Lake City vessel be delivered to the buyer?

The vessel will be delivered to the buyer latest by February 20, 2025.

How many vessels will remain in OceanPal's (OP) fleet after the sale?

After the sale, OceanPal's fleet will consist of 3 Panamax dry bulk vessels and one MR2 tanker vessel, totaling 4 vessels.

What is the age of the M/V Salt Lake City vessel being sold by OceanPal (OP)?

The M/V Salt Lake City is a 2005-built vessel, making it approximately 20 years old at the time of sale.