Hunter Group's VLCC Charter Dispute Escalates to Over $55 Million

The ongoing Very Large Crude Carrier (VLCC) charter dispute involving Oslo-listed Hunter Group has escalated, with the total amount of unpaid hire claimed by the company now exceeding $55 million, according to a report by *Splash247*. This follows the largest reported monthly shortfall to date, which occurred in August.

The unnamed long-term counterparty paid approximately $11.75 million less than Hunter Group asserts was due for August. This marks the sixth consecutive month of reduced payments since the dispute first emerged in March. The August shortfall alone represents a significant portion of the total, pushing the cumulative disputed amount to approximately $55.04 million, in addition to accrued interest.

Dispute History and Legal Action

The dispute began with an $8.31 million shortfall in March, followed by $9.22 million unpaid for April and $10.37 million for May. Further shortfalls of $7.88 million in June and $7.19 million in July preceded the latest increase. Hunter Group recorded net time charter earnings of approximately $31.69 million for August, indicating that over a third of the amount booked for that month remains unpaid.

Hunter Group and its legal advisers maintain that the counterparty lacks a contractual basis for reducing payments, viewing the continued shortfalls as a breach of contract. Legal proceedings are already underway, with Hunter initiating arbitration before the London Maritime Arbitrators Association after the disputed amount reached $28.21 million in June, *Splash247* reported. The proceedings are being conducted in London under English law, with Hunter seeking all outstanding hire, interest, and costs.

Financial Performance and Future Outlook

This dispute has unfolded against a period of strong profitability for Hunter Group's specific VLCC trading model. The company operates two eco-design, scrubber-fitted VLCCs, which it charters in at fixed rates and then charters out on floating contracts tied to the Baltic Exchange’s TD3C Middle East Gulf-China benchmark.

Hunter Group pays an average of $51,750 per day to charter in these two vessels, allowing it to maintain exposure to VLCC spot market movements through the index-linked charter-out agreements. The vessels entered this structure in December 2023 and March 2024. Tanker rates have surged this year; in the second quarter, Hunter reported an average spot-linked charter-out rate of $452,922 per day against its fixed charter-in cost, generating an average margin of $401,172 per day. Net time charter earnings for the quarter reached $73 million, with a net profit of $47 million.

Market conditions continued to strengthen into the third quarter. At the end of August, Hunter Group stated that 61% of available third-quarter vessel days had been booked at an average of approximately $460,000 per day. August bookings averaged around $547,000, and the then-current spot-linked rate stood at approximately $666,000 per day. Hunter ended June with $70.3 million in cash and working capital. The company's board proposed a NOK1.50 (approximately $0.15) per share dividend last month, adding to previous distributions.

The current VLCC strategy is nearing its conclusion. Hunter Group announced in April that both ships are scheduled for redelivery within 12 months as their three-year charter structures expire. The company is preparing for its next phase, with Erik Mathiesen serving as interim chief executive following the departure of former chief executive Erik Frydendal, while the board evaluates future plans post-VLCC contracts.