Note 5 – Vessels

The carrying values of the vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of constructing new vessels. Historically, both charter rates and vessel values have been cyclical. The carrying amounts of vessels held and used by us are reviewed for potential impairment or reversal of prior impairment charges whenever events or changes in circumstances indicate that the carrying amount of a particular vessel may not accurately reflect the recoverable amount of a particular vessel.

Vessels

² Relates solely to depreciation of vessels, drydocking, and EGCS. Depreciation of office leases and other property, plant, and equipment represents an additional $1,437 thousand, which combined with the depreciation of vessels, drydocking, and EGCS comprises $84,264 thousand in depreciation and amortization.

Cost of advances for vessel upgrades relates to prepaid drydocking.

Cost of advances of vessel upgrades
$ in thousands
At January 1, 2024			10
Additions			6,639
Transferred to vessels			(6,649	)
At September 30, 2024			-

Advances for vessels under construction
The Company has entered into agreements to build four large VLCCs, fitted with exhaust gas cleaning systems, expected to be delivered between February and July 2026. Two will be constructed at each Hyundai Samho Heavy Industries Co., Ltd. (“HHI”) and Hanwha Ocean Co., Ltd. (“Hanwha”) in South Korea. The average price for the four ships is $130 million, adjusted for change orders. As of September 30, 2024, the Company has paid $77.3 million related to the installments under its newbuilding program. In addition, the Company has capitalized $1.5 million as borrowing costs in connection with the financing of the vessels under construction, at an average interest rate of 7.3% p.a., and $0.1 million related to other directly attributable expenses.

Cost of vessels under construction
$ in thousands
At January 1, 2024			-
Additions			78,870
At September 30, 2024			78,870

Vessels under construction
$ in thousands
Within the next 12 months			102,566
From one year to three years			339,946
At September 30, 2024*			442,512

*These are estimates only and are subject to change as construction progresses.