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Your Crude Industry Highlights for Week 31

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Part 2
Your Crude Industry Highlights for Week 31 PART 2 OF 3

Teekay Tankers Sees Freight Rate Recovery in 2H18

TNK’s 2Q17 earnings

Last week, Teekay Tankers (TNK) released its 2Q17 earnings. TNK recorded an adjusted net loss of $7.1 million, compared with its adjusted net income of $7 million in 1Q17. The company saw revenues of $108 million, which is 25% lower YoY (year-over-year).

Teekay Tankers Sees Freight Rate Recovery in 2H18

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TNK’s results were lower due to weak spot tanker rates in 2Q17. In TNK’s conference call, the company stated that crude tanker rates were lowest in 2Q17 since 2013, primarily due to the oversupply of vessels, lower OPEC (Organization of Petroleum Exporting Countries) oil production, and normal seasonal weakness.

The tanker fleet has grown 3.5% since the start of the year and is 6.5% higher YoY (year-over-year). The headwinds in the tanker industry have affected not only Teekay Tankers but also its peers—Frontline (FRO), Gener8 Maritime (GNRT), DHT Holdings (DHT), and Euronav (EURN).

TNK also stated that a slowdown in tanker fleet growth and improved oil market fundamentals would lead to a recovery in freight rates in the second half of 2018.

Recent developments

Teekay Tankers has agreed to acquire in a share-for-share merger all the remaining issued and outstanding shares of TIL. TIL owns ten Suezmax, six Aframax, and two LR2 tankers. The average age of these tankers is 7.3 years. According to TNK, this merger will strengthen TNK’s balance sheet and liquidity position. It’s also expected to be accretive to earnings per share.

Notably, TNK has completed a $153-million sale-leaseback transaction related to four Suezmax tankers. It has also sold a 1999-built Aframax tanker, the Kyeema Spirit, for $7.5 million.

Teekay Tankers has meanwhile secured a time-charter contract for one Aframax at the rate of $16,000 per day for 18 months period. The contract began in late May 2017.

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