SOURCE: U.S. Shipping Partners L.P.

July 09, 2007 11:01 ET

U.S. Shipping Partners Joint Venture Has Chartered Two of Its Domestic Product Tanker Newbuildings to the US Navy

EDISON, NJ--(Marketwire - July 9, 2007) - U.S. Shipping Partners L.P. (NYSE: USS) (the "Partnership") announced today that the US Navy's Military Sealift Command has agreed to charter two new tankers being constructed for the Partnership's joint venture. The initial charter will be for twelve months at a cost of approximately $51 million. The Navy then has options to extend the charters via three one-year options and a further 11-month option, which if exercised would increase the cost to approximately $220 million.

The US Navy said the ships would be deployed globally to transport petroleum products in support of US military forces. They will replace the current government-owned T-5 tankers that are expected to reach the end of their service life in 2010.

The ships, due for delivery to the Navy in late 2010 and early 2011, are part of a series of nine 49,000-dwt tankers on order at San Diego's National Steel and Shipbuilding Company. U.S. Shipping Partners fixed the first of this series of vessels to oil major BP in December 2006.

Mr. Paul Gridley, Chairman and Chief Executive Officer of U.S. Shipping Partners, stated: "We are pleased to have this award, which we believe validates our newbuilding strategy. Competition for this award was vigorous. Although only one year of the charter is firm, we believe the Navy will exercise the options to extend the charter of these vessels."

The Partnership, through its subsidiary USS Product Carriers LLC ("Product Carriers"), entered into a contract, effective March 14, 2006, with the National Steel and Shipbuilding Company ("NASSCO"), a subsidiary of General Dynamics Corporation ("General Dynamics"), for the construction of nine 49,000 deadweight ton ("dwt") double-hulled tankers. General Dynamics provided a performance guarantee to Product Carriers in respect of the obligations of NASSCO under the construction contract. NASSCO is scheduled to deliver the first tanker in the second quarter of 2009, with subsequent tankers delivered every six to eight months. We currently expect the cost to construct these nine tankers to aggregate approximately $1.0 billion, exclusive of capitalized interest. The base contract price is subject to increase based on increases in certain published price indexes. In addition, NASSCO and Product Carriers share in any cost savings achieved measured against the original contract price based on the terms of the construction contract. On August 7, 2006, the Partnership entered into a joint venture, USS Products Investor LLC, to finance the construction of the first five petroleum tankers.

About U.S. Shipping Partners L.P.

U.S. Shipping Partners L.P. is a leading provider of long-haul marine transportation services, principally for refined petroleum products, in the U.S. domestic "coastwise" trade. U.S. Shipping Partners L.P. is also involved in the coastwise transportation of petrochemical and commodity chemical products. For additional information about U.S. Shipping Partners L.P., please visit www.usslp.com.

This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Partnership, which may cause our actual results to differ materially from those implied or expressed by the forward-looking statements. Such assumptions, risks and uncertainties are discussed in detail in the Partnership's filings with the SEC.

Contact Information

  • Contact Information:
    Albert Bergeron
    Chief Financial Officer
    U.S. Shipping Partners L.P.
    1-866-467-2400