Canada's Teekay Tankers has bought back two vessels with cash as it predicts tougher times ahead in the next few months.
The New York-listed shipowner said it had repurchased the unnamed aframaxes from a sale and leaseback company for a combined $29.6m.
The deals last month were funded with existing cash balances and the two ships are now debt-free.
The Teekay Corp spin-off also said another aframax had been fixed for a year in the third quarter, at $18,700 per day.
In August, the company secured a three-year $67m loan to refinance four suezmaxes, leaving it free of maturities until 2023.
The company said it has a "strong" liquidity position of $470m. The net loss in the third quarter was $44m, compared to a loss of $19.8m a year earlier.
This was due to a $45m write-down on the sale of five aframaxes accounted for in the period.
Revenue dipped to $170m from $187m year-on-year.
Ebitda of $48m was well ahead of consensus at $44m, Fearnley Securities said.
The company has 62% of suezmax days fixed at $24,200 per day for the fourth quarter, and 54% of aframax days at $12,400.
Well-time charters
Chief executive Kevin Mackay said that, despite weaker spot tanker rates and a heavy drydock schedule, adjusted net income was $3.1m in the quarter.
"We benefited from well-timed fixed-rate charters secured over the last several quarters at rates meaningfully above current spot market levels," he added.
Mackay said 22% of the fleet is fixed at an average rate of $37,600 per day.
"This weakness in spot tanker rates has continued into the fourth quarter; however, there is potential for an uplift in spot tanker rates as seasonal winter conditions typically tighten tanker supply as we move through the fourth quarter," the CEO added.
Debt chopped
Vessel sales worth $100m over the last year have contributed to net debt reduction of $500m, or 50% of the total.
"In addition to delevering our balance sheet, we have also reduced our cost of capital through the recently completed debt refinancing and the voluntary early termination of existing sale-leaseback financings on two of our vessels," Mackay said.
The fleet consists of 52 tankers, including 26 suezmaxes and 17 aframaxes.
The next few months look to be challenging, the company said.
But the company expects tanker demand to continue to recover during 2021 as oil demand increases and oil inventories are brought back to more normal levels.
More scrapping next year?
Teekay said: "Although scrapping has been very low this year, scrapping facilities have now returned to full operation, and the level may pick up during periods of potentially weaker spot tanker rates in 2021."
Parent Teekay Corporation, which has three FPSOs of its own, posted a reduced net loss of $35.4m in the quarter, against $198m in 2019.
Revenue was down at $396m from $426m.
In early October, the company closed on a new revolving loan of up to $150m, maturing in June 2022, to refinance debt maturing next month.
