Teekay Tankers is in no rush to go out and order new vessels despite amassing cash in strong markets.
The US-listed owner’s 45 suezmaxes and aframaxes/LR2s date from between 2004 and 2013.
Asked if he feared going out and buying assets at a peak, chief executive Kevin Mackay told an earnings call: “I think it’s an arithmetic question. If you sell older assets, your average fleet age comes down.
“But the way we look at it is, what is the best thing to do with our fleet? And at this point in time, we’re extremely comfortable with where our fleet stands.”
Mackay said the age is in line with average industry profiles.
He called the midsize tanker market “a fantastic segment” that is benefitting from the tonne-mile increases as a result of Europe banning Russian imports.
“But there’s a lot going on right now,” Mackay said. “And in our view, there’s really no rush to do anything. We’re really in a good position.”
Teekay’s forward view of the market is strong.
“We can continue to trade our assets for several years into the future without any difficulty,” Mackay told the call.
“We could also sell, and with asset prices being high, we keep our options open. If we’re offered a very nice opportunity to sell an asset and add incremental value above what our forward expectations are, we’ll obviously consider that.”
But he added: “I don't see the need right now to pull the trigger to do anything immediately.”
Piling up cash for investment
Mackay admitted it will be necessary to carry out a fleet renewal at some point.
“But we also feel that there’s no need to rush into that,” he said. “We’ve got time. And yes, we can sell some of our older assets, and we may do so. The focus now is on maximising exposure to the strength of the market and keep ships bringing in rates that we’re getting today at $70,000 a day.”
Asked if investors should view Teekay Tankers as a closed-end fund that would eventually be sold off, chief financial officer Stewart Andrade said “you’d see us being a significant dividend payer and distributing the capital that we’re generating” if that were the case.
“We’re not doing that,” he told analysts. “We’re holding on to the capital and creating capacity to reinvest in the fleet.”
Andrade said this will be done “when the time is right and in an investment that we think will be accretive and add value for our shareholders.”
Teekay Tankers has bought back 19 vessels this year out of sale-and-leaseback financing arrangements at a cost of $364m.
Eight tankers remain to be repurchased.
Andrade said purchase options total $137m for these ships.
“While still dependent on market conditions, we anticipate exercising those options and completing that phase of our balance sheet optimisation,” Andrade said.
Cash stood at $83m at the end of the third quarter.
