Teekay LNG chief executive Mark Kremin is happy to have BlackRock involved in LNG shipping and sees opportunities for more deals.
The head of the New York-listed and Vancouver-based company said BlackRock's deal to take LNG carrier owning rival GasLog private by buying out the Livanos family’s 45% stake for $5.80 per share was a validation of natural gas shipping.
“I think it’s pretty exciting that we see an investor like BlackRock coming in," Kremin said on Teekay LNG's fourth-quarter earnings call.
"BlackRock has a very good reputation for [environmental, social and governance issues]. The fact that they value shipping as part of the infrastructure of LNG, there’s a real validation for our business.”
The GasLog deal, announced on 22 February, follows on from New Fortress Energy's $5bn purchase of Golar LNG Partners in mid-January.
This deal saw New York-listed New Fortress build a fleet of 13 ships, including seven floating storage and regasification units and six LNG carriers.
Kremin went on to say there were further opportunities to consolidate the sector.
"We’re obviously not going to comment on any specifics, but I think that the market does have consolidation opportunities," he said.
"We’ve seen two companies go, or will be going, private this year. There are more, smaller shipowners around that weren't here five years ago. I don’t know whether it’d be us but, I think with some of these smaller shipowners, there's room for consolidation."
For the fourth quarter, long-term charter-focused Teekay LNG trumpeted a $234m adjusted profit — the highest in the company's 16-year history and up from the $169m reported in 2019.
On a quarterly basis, Teekay LNG reported adjusted net income of $60m for the three months ending 31 December — up from $50.3m year on year.
On the earnings call, Kremin spent most of his prepared remarks discussing his confidence in the company's future, largely due to China's transition away from coal.
"We have structured our business for the long term and the long-term prospects for LNG are attractive as the world, and China in particular, transitions away from dirtier forms of fuel, like coal, to cleaner-burning LNG," Kremin said.
In China, he said demand for LNG will come from coal power plants switching to gas and the construction of new gas-fired power plants to meet the country's growing needs.
Most of that gas will be moved on the water, which are long-haul journeys lucrative for gas carrier owners.
"Asian LNG demand, which is typically longer haul than other areas of the world, is predicted to account for nearly 75% of all LNG demand by 2040” keeping Teekay's business in demand, Kremin said.
That outlook, plus Teekay LNG's $1.15 per share per year dividend plan — up from $1 per share per year from 2020 — makes the company an attractive investment, Kremin said.
Teekay LNG shares closed down $0.21 to $13.54, amid a broader market downturn.
