The company generated GAAP consolidated income from vessel operations of $66.7 mill and consolidated total cash flow from vessel operations of $183.6 mill in 4Q17.
“On a consolidated basis, Teekay’s financial results improved in the fourth quarter of 2017, compared to the third quarter of 2017, primarily driven by increased cash flows from Teekay Parent’s FPSO units, the delivery of several offshore and LNG projects at Teekay Offshore and Teekay LNG, and higher tanker rates,” said Kenneth Hvid, Teekay’s President and CEO. “We anticipate that Teekay’s results should continue to benefit as our remaining offshore and LNG projects deliver over the next few years."
“With the US capital markets opening the year strongly, coupled with the positive sentiment in the broader energy markets, we made what we believe to be a prudent move to further strengthen Teekay Parent’s balance sheet. In January, 2018, we completed a convertible bond offering and concurrent equity offering, raising total gross proceeds of $222.5 mill, which provides us with financial flexibility and optionality, with current total liquidity of over $500 mill.”
“We believe the Teekay Group is at a positive inflection point. Over the past couple of years, we have taken steps to strengthen the financial foundation of each of our companies and we are now starting to move from an execution phase, to one where we are now primarily focused on operating and growing our cash flows.
“The Teekay Group has taken delivery of 12 vessels over the past 12 months with more to come through 2020. Importantly, due to the contracted nature of these projects, each vessel is expected to provide incremental cash flow growth upon its delivery, totalling approximately $450 mill in annual operating cash flow between Teekay LNG and Teekay Offshore.
“In addition, we continue to see signs of an energy market recovery in our LNG, offshore and crude oil tanker businesses. With stronger balance sheets, market-leading positions and strong operational platforms, we believe that each of our businesses is well-positioned to benefit from an energy market recovery,” he concluded.
Daughter company, Teekay Tankers, reported a GAAP net loss of $1.9 mill and an adjusted net loss of $5.9 mill for 4Q17.
The company generated GAAP income from vessel operations of $2.8 mill and cash flow from vessel operations of $32.1 mill. It completed merger with Tanker Investments (TIL), increasing its fleet by 18 vessels to 58 conventional tankers during 4Q17.
During the quarter, the company also completed a five-year $270 mill debt refinancing related to 14 of the former-TIL vessels, which extends the debt maturity profile and reduces interest expense.
“Since reporting our third quarter earnings in early-November, we completed our strategic merger with TIL and concluded the planned refinancing of two of its key debt facilities, which further strengthened our balance sheet,” said Kevin Mackay, Teekay Tankers’ president and CEO. “The refinancing of these facilities aligns their covenants with Teekay Tankers’ more favourable covenant package, lowers the cost of this financing, while also improving our debt maturity profile through lower principal amortisation and the extension of the maturities from 2019 and 2020 respectively, out to the end of 2022.
“While crude tanker spot rates increased in 4Q17, they did not experience the typical winter seasonal spike, primarily due to lower OPEC oil production, supply outages and a lack of winter weather delays. Fortunately, our fixed-charter coverage and growing lightering business helped to mitigate some of the tanker rate weakness experienced during the quarter. Since that time, we have seen further weakness in the crude tanker market driven by many of these same factors, combined with higher bunker fuel costs as crude oil has recently hit highs of $70 per barrel.
“Looking ahead, we expect elevated levels of tanker scrapping will positively contribute to a significant slowdown in tanker fleet growth which, when coupled with stronger oil market fundamentals, should lead to a recovery in tanker rates in the latter part of 2018 and into 2019,” he concluded.