TIDMTXO
RNS Number : 8415V
TXO PLC
18 January 2013
TXO PLC
("TXO" or "the Company")
UPDATE ON GRAND BAHAMA GROUP LIMITED INVESTMENT
TXO plc, the AIM quoted oil and gas investment company,
announces by way of an update to the announcement dated 18(th)
December 2012, that the Grand Bahama Group Limited ("GBG"), in
which the Company has a current equity holding in GBG of 23.64%,
has announced the following new contracts.
The Board of the GBG has announced that its wholly owned
subsidiary Morgan Oil Marine (Bahamas) Limited ("MOM") has entered
into two five-year minimum term contracts with two major shipping
agents in the Bahamas, namely Freeport Ship Services Limited
("FSS") and Elnet Maritime Agency Limited ("Elnet").
With the newly commissioned 1 million gallon Barge "Martha" due
to become operational on Monday 21 January 2013, the business will
be in a position to start collecting the used oils and ships slops
etc immediately. The oil recovered will then be offloaded and
stored securely, pending completion of the Hydrocarbon Recovery
Plant ("HRP"), which will now be funded in whole or in part from
revenues being generated from the collection charges and the sale
of new lubricants. As soon as the HRP is complete, the used oils
will be reprocessed and sold as Reprocessed Fuel Oil, at a
discounted rate to that dictated by the American Petroleum
Index.
As this will have an uncertain, but significant bearing on any
further investment required by MOM, GBG has agreed with TXO that it
will be in the interests of both parties to enter into a new and
revised Investment and Option Agreement, details of which will be
announced in due course.
Elnet Maritime Services Limited ("Elnet")
Elnet is a ship agency and logistics Company that was
established by local Bahamian, Elbert "Ellie" Hepburn in 2008.
Since then, the business has enjoyed substantial [revenue/profit]
growth in excess of 100% per annum.
The business focuses on long-term commitments and lasting
relationships with customers, supplier and partners. They offer a
full range of Ship agency services, including husbandry and
specialise in serving the needs of the oil tankers that visit the
two existing oil terminals on the Island, a third terminal of which
is currently being planned. In 2012 they serviced over 600 ships
calling at the two existing terminals.
Elnet has recently entered into a strategic partnership with GAC
Group, one of the world's largest shipping agents, that represents
more than 3,500 principals and 50,000 vessels annually.
Freeport Ship Service Limited ("FSS")
FSS is a ship agency and logistics Company, based in Freeport,
Bahamas founded in 2003 by Jeremy Cafferata.
FSS handles the majority of the vessels that call at The Grand
Bahama Shipyard including major cruise ship clients: Carnival
Cruise Lines, Holland America Lines, Norwegian Cruise Line, Royal
Caribbean Cruise Lines, Celebrity Cruises, Pullmantur and Princess
Cruises.
In addition, FSS represents other prominent ship owners and
managers at all ports of entry in Grand Bahama, namely: Freeport
Container Port, Freeport Harbour Company, Bahama Rock, BORCO,
Bradford Grand Bahama and South Riding Point. It also provides the
same services to those ships out at anchorage.
What the Agency contracts mean for MOM
These Contracts offer MOM the exclusive rights to collect and
reprocess used lubricating oils, Heavy Fuel Oil washings,
contaminated fuels, tank residues, sludges, emulsions, oil
interceptors and Ships effluent from the Agents' ship owning
customers.
In addition, MOM has the right to supply new BP Castrol Marine
lubricants under its existing BP Castrol Marine Distributorship
that covers, exclusively, all of the Caribbean.
Both Elnet and FSS have agreed to actively promote MOM's
services to all of their existing customers throughout the world
and similarly to those ships contacting them as they enter Bahamian
territorial waters.
Each contract is for a minimum term of five years, rolling
annually thereafter and schedules a fixed rate tariff that MOM will
charge ship owners for its services, dependent upon volume and the
type of waste being collected. However, all tariffs to be charged
to the Customer and commissions payable to the respective Agent are
commercially sensitive in nature and cannot be publically disclosed
at this time.
David Morgan, Chairman of GBG stated:
"All ships produce used oils and ships slops as they
circumnavigate the globe, and are legally obliged under the
international Marpol convention to offload their used oils at the
next suitable port of call. Ships visiting Freeport, or requiring
services as they pass close by, must go through one of the several
shipping agents operating on the Island.
Up until now, the Agents have had to turn ships away as Freeport
was unable to receive used oils, with the nearest reception
facilities being based on the East coast of America. This has
proved costly not just for Freeport, but for ship owners too both
in terms of the fees to enter US ports and secondly, in terms of
logistics, by virtue of the fact that fully laden ships often have
to face stringent security controls in order to gain entry to a US
Port. In some instances, this can take days.
Certainly, for the c. 4,800 ships visiting Freeport or sailing
close by, perhaps on their way to the Panama Canal, it will still
make good commercial sense to call at Freeport, even if they have
to go onto the USA in any event.
Whilst the volumes we hope to collect will be significant, it is
difficult to predict exact quantities. However, we forecast a
minimum amount of 17,000 tonnes in the first year, in addition to
the estimated 50,000 tonnes we hope to collect from the Grand
Bahama Shipyard. This will equate to approximately 20 million
gallons, depending upon the water content. Thereafter, we expect
the volume to grow significantly as the market becomes aware of the
new reception and the significant cost benefits of offloading in
Freeport, as compared to the Eastern Seaboard of the USA.
The Hydrocarbon Recovery Facility once complete will have a
50-gallon per minute capacity and could run 24/7. There is also
scope for considerably expanding the plant beyond that if and when
it becomes necessary."
"Ellie" Hepburn of Elnet said:
"We are delighted to announce our strategic relationship with
Morgan Oil Marine. Since the beginning, we have had to turn ships
away week after week, because of the heavy legal obligations that
are imposed on ship-owners and the lack of such facilities here in
Freeport.
Even though most of our customers are aware of the problems we
have had in this regard, we still receive approximately 10
enquiries a month. Hence, we will be shouting it from the rooftops
that such a service is now available here in Freeport.
Additionally, with Morgan Oil's 800 foot waterfront, there will
be lots of other opportunities over and above used oil collection
that we hope to explore together. This could include fuel
lightering, the provision of fresh water and crew services etc.
We expect that Morgan Oil Marine will be busy beyond belief.
This is a very important day for Freeport, the effects of which
cannot be underestimated."
Jeremy Cafferata, President of Freeport Ships Services
added:
"My comments on the desperate need for a facility of this nature
on the Island are well documented and I cannot overestimate how
important this will be in ensuring the future success of Freeport.
The inability to deal with used oils of this nature has been the
Port's biggest restriction on growth in recent years. It is crucial
that we are able to offer such services in order to compete
globally and take advantage of the significant volume increase of
traffic that is expected as a result of the widening of the Panama
Canal.
All of the Maritime businesses will welcome Morgan Oil Marine
with open arms and over and above the Port itself, the ability for
the Islands to be able to deal with their own waste oils will have
a positive environmental impact throughout the Bahamas.
We are delighted that we have entered into this contract with
MOM and we look forward to a long, prosperous and mutually
beneficial relationship for the many years to come."
Tim Baldwin, Chairman of TXO commented:
"We are delighted with the progress of GBG and are in the
process of negotiating a new and revised Investment and Option
Agreement, so that we may invest further monies and increase our
equity holding. GBG helps balance our portfolio of assets as we
consider it a low risk, sustainable and cash generative business.
These two contracts are an early indication of what we can expect
and should help to provide TXO shareholders with an excellent
return on their investment."
For further information, please contact:
TXO PLC
Tim Baldwin, Chairman +44 (0) 207 518 4300
Fox-Davies Capital Limited
Simon Leathers +44 (0) 20 3463 5022
Richard Hail
Lothbury Financial Services Limited
Michael Padley +44 (0) 20 3440 7620
Chris Roberts
This information is provided by RNS
The company news service from the London Stock Exchange
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