SFL Sells Seven Tankers to Trafigura with $175 Million Profit

SFL Corporation, the tonnage provider linked to John Fredriksen, agreed to sell seven tankers to trading house and shipowner Trafigura. The deal includes four LR2 tankers and three suezmaxes, all currently on long-term charter to Trafigura, and is expected to generate about $275 million in net cash proceeds along with an accounting gain of approximately $175 million.

According to SFL's statement, the four LR2s were built in 2014 and 2015, while the three suezmaxes date from 2019. Splash247 identified the LR2s as the 115,000 dwt vessels SFL Puma, SFL Panther, SFL Tiger and SFL Lion, and the suezmaxes, of 150,000 dwt, as Marlin Sicily, Marlin Santorini and Marlin Shikoku. Per-vessel sale prices were not disclosed, although both SFL and Globe Newswire agreed on the aggregate figure of $275 million net and a $175 million gain.

The existing charter agreements with Trafigura will terminate as the vessels change hands during the fourth quarter of 2026 and the first quarter of 2027, according to Globe Newswire and Splash247. Deliveries, per the latter source, would take place between the fourth quarter of 2026 and the first quarter of the following year. The original charters included a profit-sharing mechanism in the event of a profitable sale, so the final figures SFL will receive already account for that profit split and the repayment of debt associated with the vessels.

SFL had acquired the four LR2s from companies linked to Frontline for a total of $160 million in late 2021, adding minimum five-year charters with Trafigura that contributed about $160 million in contracted backlog. The three suezmaxes, fitted with scrubbers, were acquired separately as part of what SFL described at the time as a contrarian investment in the tanker segment, also with minimum five-year charters that added another $140 million in fixed backlog. According to Splash247, the seven vessels joined SFL's fleet between December 2021 and February 2022.

SFL Management CEO Ole Hjertaker noted that the company enjoyed strong cash flows from these vessels over the past five years and also retained a significant portion of the assets' appreciation, which is now being realized through this sale. Trafigura news added that the deal is taking place against a backdrop of exceptionally high asset values and earnings in the tanker segment. Following the transaction, SFL will retain significant exposure to the sector, with three LR2s built in 2024 chartered to Vitol, the LR2s SFL Trinity and SFL Sabine, built in 2017, chartered to Phillips 66, and the suezmaxes SFL Albany and SFL Fraser, from 2020, which trade in the spot market.

Hjertaker indicated that the proceeds from the sale of the tankers will be reinvested in new investments aimed at strengthening the company's long-term distribution capacity. Splash247 noted that just two days before announcing the sale to Trafigura, SFL had ordered two very large ammonia carriers of 93,000 cubic meters for about $216 million, with delivery expected from the second quarter of 2028 and long-term charters already secured with an investment-grade European oil company, adding at least $162 million to SFL's backlog.