Company: TEN-PE
Filing Date: 2025-04-11
Form Type: 20-F
Source: 0001193125-25-079101
Chunk: 111

Company: TSAKOS ENERGY NAVIGATION LTD
Filing Date: 2025-04-11
Form: 20-F
Item: Item 5
Chunk 111
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 future periods may vary significantly from current assumptions, which may result in a material impairment loss. If current economic conditions stall, worsen or if the upward trend in oil prices continues rise for an extended period, oil demand could be negatively impacted over an extended period of time. This would exacerbate the consequences of overcapacity in the tanker sector. In such circumstances, the possibility will increase that both the market value of the older vessels of our fleet and the future cash flow they are likely to earn over their remaining lives will be less than their carrying value and an impairment loss will occur.

Should the carrying value of the vessel, including any unamortized dry-docking costs exceed its future undiscounted cash flows, impairment is measured based on the excess of the carrying amount over the fair value of the asset. The fair values are determined based principally on or by corroborated observable market data. Inputs considered by management in determining the fair value include independent brokers’ valuations. As vessel values are also volatile, the actual market value of a vessel may differ significantly from estimated values within a short period of time.

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The Company would not record an impairment charge for any of the vessels for which the fair market value is below its carrying value including any unamortized dry-docking costs unless and until the Company either determines to sell the vessel for a loss or determines that the vessel’s carrying amount including any unamortized dry-docking costs is not recoverable.

For the impairment of right-of-use assets under operating leases, we compare the carrying amount including any leasehold improvements, with the estimated future undiscounted net operating cash flows expected to be generated by the use of the vessels, considering two-year charter rates estimates for the unfixed days and the average of those, over the remaining lease term, under ASC 360 “ Property, Plant and Equipment”.

As noted above, for vessels and vessels under construction, we determine projected cash flows for unfixed days using an estimated daily time charter rate based on the most recent ten-year historical average rates, inflated annually by a 2.0% growth rate. We consider this approach to be reasonable and appropriate. However, charter rates are subject to change based on a variety of factors that we cannot control and we note that charter rates over the last few years have been, on average, above their historical ten year average. If as at December 31, 2024 and 2023, we were to utilize an estimated daily time charter equivalent for our vessels’ unfixed