Teekay Corporation yesterday reported results for the three and nine months ended September 30, 2022. These results include the Company’s publicly-listed consolidated subsidiary, Teekay Tankers Ltd. (Teekay Tankers) (NYSE:TNK), and all remaining subsidiaries and equity-accounted investments. As a result of Stonepeak’s acquisition of Teekay LNG Partners L.P. (Teekay LNG) (now known as Seapeak LLC) in January 2022, certain information in this release presents Teekay LNG and various subsidiaries that provided the shore-based operations for Teekay LNG and certain of Teekay LNG’s joint ventures under management services contracts (collectively, the Teekay Gas Business) as a discontinued operation. Teekay, together with its subsidiaries other than Teekay Tankers, is referred to in this release as Teekay Parent.
CEO Commentary
“Our consolidated financial results for the third quarter of 2022 were stronger than the previous quarter, primarily due to higher spot tanker rates,” commented Kenneth Hvid, Teekay’s President and CEO.
“Recently, we successfully completed the remaining key milestones relating to winding down our FPSO segment and have now fully divested our FPSO business. During the third quarter of 2022, we completed the sale of the Sevan Hummingbird and in late-October, we transferred the ownership of our last remaining FPSO, the Petrojarl Foinaven, to a European shipyard for green recycling. I am very pleased with both the commercial and operational execution of winding down our FPSO business where the sale proceeds from the Sevan Hummingbird and the lump sum payment received from the customer on the Petrojarl Foinaven are now expected to fully offset our decommissioning and recycling costs relating to these units.”
“The tanker market continued to strengthen during the third quarter on the back of strong tanker supply and demand fundamentals, which has been further boosted by increased tanker tonne-mile demand due to changes in crude oil trading patterns as a result of Russia’s invasion of Ukraine. During the third quarter of 2022, Teekay Tankers experienced counter-seasonal strength in spot tanker rates, with rates hitting their highest level for a third quarter since 2008, and we are seeing further strength so far in the fourth quarter of 2022. With almost all of Teekay Tankers’ fleet currently trading in the spot market, we have significant operating leverage to benefit from a strong tanker market.”
“During the quarter, we sold the 0.9 million of Teekay Tankers Class A common shares for $22.8 million that we acquired in late-2021 and early-2022 for a total cost of $10.0 million. Following this opportunistic trade, we remain Teekay Tankers’ largest shareholder, with economic ownership of 28.5%. In addition, Teekay Corporation put in place a $30 million share repurchase program, under which we have so far repurchased approximately 1.5 million of our common shares at an average price of $3.59 per share.”
“With the positive tanker market fundamentals and our net cash position, which is especially valuable during times of extreme volatility and global economic uncertainty, we believe we are well-positioned to pursue future investment opportunities to create long-term shareholder value.”
Summary of Results
The Company’s adjusted net income attributable to shareholders of Teekay(1) for the third quarter of 2022 increased compared to the same quarter of the prior year, primarily due to stronger earnings from Teekay Tankers as a result of higher spot tanker rates and lower interest expense in Teekay Parent due to bond repurchases completed during the first half of 2022, which was partially offset by the loss of earnings contribution from the Teekay Gas Business as a result of the sale of the Teekay Gas Business on January 13, 2022.
In addition, consolidated GAAP net income attributable to shareholders of Teekay increased during the third quarter of 2022, compared to the same quarter of the prior year, mainly due to $21.1 million in gains from the sale of assets and a $4.0 million reduction in the estimated costs associated with the recycling of the Petrojarl Foinaven FPSO unit, both of which were recognized in the third quarter of 2022.
The following table highlights the operating performance of Teekay Tankers’ vessels trading in revenue sharing arrangements (RSAs), voyage charters and full service lightering, in each case measured in net revenues(a) per revenue day, or time-charter equivalent (TCE) rates, before off-hire bunker expenses:
Teekay Parent
During the third quarter of 2022, Teekay Parent sold 0.9 million Teekay Tankers Class A common shares for total proceeds of $22.8 million, or an average price of $25.20 per share. These shares were acquired in December 2021 through February 2022 for $10.0 million, or an average purchase price of $11.03 per share.
In August 2022, Teekay’s Board of Directors approved a $30 million common share repurchase program. Since that time, Teekay has repurchased a total of approximately 1.5 million common shares, or approximately 1.4% of the outstanding common shares immediately prior to commencement of the program, for a total cost of $5.3 million, representing an average repurchase price of $3.59 per share.
On July 1, 2022, Teekay Parent completed the sale of the Sevan Hummingbird FPSO unit to a third party, which resulted in a gain on sale of approximately $13.0 million. In October 2022, Teekay Parent delivered and transferred the ownership of its last remaining FPSO unit, the Petrojarl Foinaven, to a European shipyard for green recycling. The combined proceeds from the sale of the Sevan Hummingbird FPSO unit and the final contractual lump sum payment received from the customer of the Petrojarl Foinaven FPSO unit to cover the green recycling costs totaled approximately $25 million, which was received during the third quarter of 2022. As at September 30, 2022, Teekay Parent’s remaining decommissioning and recycling costs are now estimated to be approximately $15 million, which are expected to be paid in the fourth quarter of 2022 through the end of 2023.
Teekay Tankers
In July 2022, Teekay Tankers agreed to sell one Aframax tanker for $24.8 million, which was completed in September 2022 and resulted in a gain on sale of $8.2 million.
In September and October 2022, Teekay Tankers made $44.9 million in prepayments and fully repaid a term loan related to four vessels. The prepayments were made with existing liquidity and the four vessels will be unencumbered.
The following table summarizes Teekay Tankers’ TCE rates booked to-date in the fourth quarter of 2022 for its spot- traded fleet only:
Full Report
Source: Teekay