The deal was signed in April 2017, and once completed, is expected to further strengthen the company’s balance sheet and boost its liquidity position by approximately USD 30 million.
The transaction, which is subject to final lessor approval and customary closing conditions, is expected to be completed in mid-2017, Teekay Tankers said.
The announcement was made within the framework of the company’s quarterly results for the first quarter.
During the quarter, Teekay Tankers booked a net income of USD 2.8 million, slashed from last year’s USD 38.9 million. The decrease was attributed to lower spot tanker rates compared to the same period of the prior year along with losses on the sales of two Suezmax tankers and two Medium Range (MR) tankers, which were sold in the first quarter of 2017 and the second half of 2016, respectively.
The company has also agreed to sell an older Aframax tanker, the Kyeema Spirit, which is scheduled to deliver in the second quarter of 2017. The 1999-built tanker was sold in March for USD 7.5 million.
“During the first quarter of 2017, we generated cash flow from operations of USD 34.4 million, and paid a quarterly dividend of 3 cents per share,” commented Kevin Mackay, Teekay Tankers’ President and CEO.
“While spot tanker rates were largely in-line with those for the fourth quarter of 2016, the tanker market experienced downward pressure over the course of the recent quarter, primarily due to heavy refinery maintenance, OPEC supply cuts and higher tanker fleet growth. Overall, we anticipate the tanker market to weaken into 2017 as a result of ongoing OPEC supply cuts and higher tanker fleet growth; however, robust global oil demand growth and changing trading patterns due to OPEC supply cuts are expected to provide support to mid-size tanker demand as more crude oil moves long-haul from the Atlantic basin to Asia.”
Looking ahead to 2018, Mackay said that the company anticipates a renewed market upturn driven by a lack of new tanker ordering, increased scrapping due to regulatory changes, and a more balanced oil market.
Since February 2017, Teekay Tankers entered into a time charter-out contract for one Suezmax tanker at a rate of approximately USD 21,000 per day and a firm period of one year, plus an extension option, which commenced in early-April 2017.