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Crude Oil Tanker Stocks: Estimates, Recommendations for 2Q17

PART:
1 2 3 4 5 6 7 8 9 10 11
Part 8
Crude Oil Tanker Stocks: Estimates, Recommendations for 2Q17 PART 8 OF 11

Important Events for Teekay Tankers in the Second Quarter

TNK merger with TIL

In the second quarter of 2017, Teekay Tankers (TNK) announced its merger deal with Tanker Investments (TIL). TIL’s fleet consists of ten Suezmax tankers, six Aframax tankers, and two LR2 (Long Range 2) Product Tankers. After the merger, Teekay Tankers’ fleet will have 62 conventional tankers. It will also assume $350.0 million of Tanker Investments’ debt and add $117.0 million of liquidity to TNK. According to the company, the deal will be immediately accretive to its EPS (earnings per share) and will strengthen its financial position. The merger is expected to close in the third quarter of 2017.

Important Events for Teekay Tankers in the Second Quarter

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Annual general meeting

During its 2017 annual general meeting, Teekay Tankers gave insights into the current state and outlook of the crude oil (DBO) tanker industry. That outlook could help us analyze Teekay Tankers and other crude oil tanker companies such as Tsakos Energy Navigation (TNP), Frontline (FRO), Nordic American Tankers (NAT), and DHT Holdings (DHT).

According to Teekay Tankers, crude oil tanker rates were under pressure in the first half of 2017 due to heavy refinery maintenance, OPEC (Organization of the Petroleum Exporting Companies) production cuts, and increased fleet growth. On a positive side, increased oil exports from the United States to Asia and Europe supported mid-sized tanker demand. The company believes the crude oil tanker industry is nearing the bottom of the current cycle. The positives of the tanker industry—robust oil demand growth, limited ordering in mid-sized tankers, increased scrapping due to regulatory changes, and a more balanced oil market—are expected to support the recovery of the tanker market in 2018.

In the next part, we’ll see analyst recommendations and target prices for Teekay Tankers.

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