Harbor Star bags salvage contract for sunken oil ship

Harbor Star Shipping Services [TUGS 0.60 ?3.5%; 5% avgVol] [link] announced that it has signed a “no-cure, no-pay” contract for the salvage of the M/T Terranova, which includes “oil spill response operations”. The M/T Terranova is the oil tanker that sank near Limay, Bataan, on July 25 carrying 1.4 million liters of industrial fuel oil. TUGS said that it “immediately mobilized its tugboats and salvage equipment to the grounding site.”

MB BOTTOM-LINE: The contract was signed the day before the Philippine Coast Guard (PCG) said that it could siphon out all of the industrial fuel oil from the tanker before it could leak, and that it could do so within seven days. At the time it said this, the PCG said that there was “nothing to worry about”, but then later announced that its siphoning activities would be postponed for four days. So while I don’t know the breakdown of the contract between the salvage of the ship and the oil spill containment services, it appears as though the high-risk salvage income (no-cure/no-pay means TUGS will get nothing if they fail even if they spend a lot in the attempt) risk might be mitigated by the income it will earn through handling whatever oil might get into the water before the PCG can do its thing. Sure, TUGS made only P8 million in FY23 from salvage (just 0.35% of total revenue), but salvage is fascinating, so I’m interested any time salvage might intersect with a public company like TUGS!