Teekay Tankers posted stronger results for the fourth quarter of 2019, riding on strong spot tanker rates.
The New York-listed company, a spin-off of Vancouver-based Teekay Corp, recorded a net profits of $63.1m, up from $11.5m in the same period of 2018. Revenue rose to $304m from $240m.
“With average crude spot tanker rates reaching their highest levels since 2008, Teekay Tankers had one of its most profitable quarters since the end of the tanker market super-cycle in 2009,” president and chief executive Kevin Mackay said in a quarterly report.
Part of the fourth-quarter strength spilled over to this quarter, when the company secured year-to-date spot tanker rates of $51,700 per ship per day day for its suezmaxes and $38,600 per day for aframaxes.
“This strength continued into the early part of 2020, and I am pleased that the spot rates our fleet has secured in the first quarter of 2020 to-date are significantly higher than those achieved in the fourth quarter,” Mackay said.
Mackay admitted that tanker markets are weakening due to the coronavirus epidemic and the removal of US sanctions on Cosco Shipping Tanker (Dalian).
“However, we continue to believe that the tanker supply and demand fundamentals point towards an improved rate environment in the medium-term," he said.
After unveiling the sales of three 2003-built suezmax tankers and a portion of its ship-to-ship transfer business, Teekay Tankers said a 2004-built suezmax in its fleet was also sold. It did not identify the ship.
In total, the company are receiving cash proceeds of $104m for those assets.
This, coupled with a $533m refinancing credit facility, helped reduce its net pro forma debt level to $844m as of the end of December, down from the prior quartered. Total liquidity improved to $260m from $95.1m.
“Since November 2019, we have taken advantage of improved tanker market conditions,” Mackay said.
“We have agreed to several opportunistic asset sales for combined proceeds of over $100m at attractive levels, which when combined with strong free cash flow from operations, is accelerating our planned balance sheet delevering efforts.”
Mackay suggested his company is well prepared for the IMO 2020 transition, with 75% of its fuel requirements this year already secured.
“Teekay Tankers fully supports the use of cleaner burning fuels across the industry…We experienced a smooth transition to the lower sulphur fuels, which we attribute to our extensive preparations over the past three years,” Mackay said.
