Phillips sells, leases back, Polar Endeavour

Kristen Nelson

Phillips Petroleum Co. has sold and leased back the Polar Endeavour crude oil tanker, the company said in recent filings.

Phillips received $205 million for the tanker, which will be operated by Polar Tankers, a subsidiary of Phillips. The Polar Endeavour entered service July 11.

Phillips Alaska spokeswoman Dawn Phillips told PNA Aug. 23 that the Polar Endeavour was sold to Arctic Funding L.P. and that under the terms of the sale, the ship will be leased back to Polar Tankers for 10 years with a purchase option at the end of the lease term. Phillips said in its filings that it has provided a guarantee of the residual value at the end of the term of $147 million.

Patience said this business transaction will allow Phillips to take capital tied up in the Endeavour and re-invest it in the four additional ships under construction. She said Phillips entered into this lease transaction because the cost was competitive with alternative methods of financing the $200 million per vessel costs.

Phillips retains full operational control of the vessel, Patience said, as well as the operational risks.

Phillips’ second tanker, the Polar Resolution, was christened March 3 and is expected to enter service in early 2002. Phillips expects to add a new Millennium Class tanker to its fleet each year through 2005. In addition to the five Millennium Class tankers already built or under construction, the company has an option for two additional tankers. The option for the sixth ship is subject to exercise in the third quarter of 2001; the seventh during the fourth quarter of 2001.