Teekay Tankers Ltd. (NYSE:TNK) Higher Despite OPEC


Shares in Teekay Tankers Ltd. (NYSE:TNK) closed higher by 4.48% on Thursday, closing at $2.80 after trading a volume of 1.78 million.

Have Teekay shares put in a bottom?

They have risen sharply in each of the last 4 daily sessions with decent volume.

Teekay Tankers Ltd. (NYSE:TNK) beats during Q2, annual dividend yield 8.57%, continues to cut debt

Teekay reported Q2 EPS of $0.20, which beat expectations by $0.01, and revenue of $139.62 million, which was ahead of expectations by $8.56 million and up 25.5% year-on-year.

“Teekay Tankers reported strong results despite a decline in crude tanker rates during the quarter, which were impacted by a combination of seasonal factors and reduced oil supply due to temporary outages in key export regions,” the company said.

It said crude tanker rates “remained significantly above the cyclical lows experience during 2011-2014.”

Teekay also confirmed that it continues to address its indebtedness and is taking steps to deleverage. It sold one tanker during the quarter for $14 million, bolstering the quality of its balance sheet.

“Using our cash flows generated to further delever our balance sheet remains a top focus as it enhances our net asset value and provides Teekay Tankers with future financial flexibility,” CFO Vince Lok said on the last earnings call.

Teekay Tankers Ltd. (NYSE:TNK) may be affected by OPEC output cut

The surprise output cut agreed at OPEC’s last meeting may be negative for the tanker industry. OPEC agreed to cut output to 32.5–33 million barrels/day, down 240,000–740,000 bpd from its August output of 33.24 million bpd.

If the output cut does become a reality, it will reduce the demand for tankers and pressure tanker spot rates during 2017.

Coupled with the likelihood of increased new tanker deliveries during 2017, this could spell trouble for shipping companies such as Teekay.

“The bulk of the fleet growth in the world Suezmax fleet will be felt more in 2017 when the majority of the Suezmax orderbook is scheduled to deliver,” Teekay said in their last earnings release. The global tanker fleet will grow by 5.1% in 2017, according to Teekay’s  projections.


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