The group generated GAAP consolidated income from vessel operations of $1.9 mill, which includes $32.8 mill in asset impairments and consolidated total cash flow from vessel operations of $164.2 mill during the period, compared with $48.3 mill and $254.5 mill for 2Q17, respectively.
“Both our consolidated and Teekay Parent's results improved in the second quarter of 2018, compared to the same period of the prior year, due mainly to higher cash flows generated by our directly-owned FPSO units that have upside exposure to oil prices and production,” said Kenneth Hvid, Teekay’s President and CEO. “I would like to point out, similar to last quarter, when making year-over-year comparisons of Teekay’s consolidated results, it is important to account for the de-consolidation of Teekay Offshore as of 25th September, 2017 and the adoption of the new revenue accounting standard as of 1st January, 2018.
“At Teekay Parent, I am pleased to report that we have secured a one-year charter contract extension on the ‘Banff FPSO’, which will continue to have a fixed-rate component and an upside component linked to oil prices and production. Teekay Parent continues to strengthen its balance sheet with the recent agreement to sell our ownership interest in Sevan Marine for approximately $28 mill and the repurchase of approximately $53 mill of our 8.5% senior notes due in 2020 at an average price below current levels and well below the make whole price.
“At Teekay LNG, we continue to execute on our portfolio of growth projects with the delivery of two additional LNG carrier newbuildings, both on long-term charters, and the completion of multiple debt refinancings. Looking ahead, we expect to take delivery of seven LNG carrier newbuildings and the Bahrain LNG terminal project to commence over the next 18 months, which we anticipate will help drive further cash flow growth and the delevering of Teekay LNG's balance sheet.
“At Teekay Tankers, including the sale-leaseback transaction previously announced in May, 2018, we have signed term sheets for three financings, which, upon completion, are expected to increase Teekay Tankers' net liquidity position by approximately $110 mill.
“Teekay Offshore has secured new FPSO charter contract extensions on the ‘Voyageur Spirit’ and ‘Ostras’, refinanced its 2019 bond maturities and ordered two additional LNG-fuelled shuttle tanker newbuildings, which are expected to further strengthen its position as the leading provider of contract of affreightment (CoA) shuttle tanker services in the North Sea.
“We continue to make progress on strengthening the financial foundation across the Teekay Group, while maintaining our market-leading positions and strong operating platforms and we believe that the Teekay Group is positioning to benefit from a continued broader energy and tanker market recovery," he concluded.
As mentioned, in late-July, 2018, Teekay Offshore signed shipbuilding contracts with Samsung Heavy Industries for two Aframax DP2 shuttle tanker newbuildings.
These newbuildings will be constructed based on Teekay Offshore's new ‘Shuttle Spirit’ design. which incorporates technologies to increase fuel efficiency and reduce emissions, including LNG propulsion technology.
Upon their expected delivery in late-2020 through early-2021, the vessels will join Teekay Offshore’s CoA portfolio in the North Sea.
Teekay Tankers reported GAAP net loss of $27.4 mill and an adjusted net loss of $28.7 mill in 2Q18, compared to losses of $37.5 mill and $7.1 mill for 2Q17, respectively.
The daughter company generated GAAP loss from operations of $13.4 mill and total cash flow from vessel operations of $16.6 mill during the period, compared to a profit of $1.6 mill and cash flow of $28 mill in 2Q17, respectively.
“Including our sale-leaseback transaction previously-announced in May, we have signed term sheets for three financings which, upon completion, are expected to increase our net liquidity position by approximately $110 mill and extend our debt maturity profile,” commented Kevin Mackay, Teekay Tankers’ President and CEO. “In June 2018, we signed term sheets for a sale-leaseback financing transaction relating to six Aframax tankers and a loan to fund working capital in our revenue sharing arrangement (RSA) pooling operations.
“While OPEC supply cuts and a further drawdown of global oil inventories continued to weigh on crude tanker rates during the second quarter of 2018, our fixed charter cover and full service lightering business continued to support our results.”
“Looking ahead, while we expect the tanker market to remain under pressure in the near-term, we believe that an inflection point will be reached in the later part of 2018, due to improving demand fundamentals and slowing fleet supply growth resulting from elevated scrapping and a shrinking mid-size tanker orderbook. The improved tanker market is expected to be further boosted by positive demand developments ahead of the new IMO fuel regulations in 2020.”
In July, 2018, Teekay Tankers entered into a timecharter-out contract with a key customer for a Suezmax for a firm period of 12 months, plus an extension option, which is expected to commence by mid-August, 2018.
The new charter contract is expected to add around $6.4 mill in fixed revenues over the initial 12-month period.