Teekay Tankers’ adjusted fourth-quarter 2017 net loss of $5.9 million was attributable to the absence of the typical winter seasonal spike in the spot tanker freight market, CEO Kevin Mackay said this week.
“This market is very weak and if it continues at these levels, we will have to look at levers available to us [to cut costs],” Mackay said during the company’s earnings call.
Further sale-and-leasebacks for the company’s fleet, select asset sales, financing of service business and evaluation of quarterly dividends were among the “levers” the company could consider to cut costs, Mackay said.
He attributed additional tonnage exiting the storage arena and entering the spot market to backwardated crude markets, adding to already lengthy global tanker tonnage.
Continued OPEC crude production cutbacks forced VLCC tankers into the Atlantic Basin where they competed for Suezmax cargoes, softening both segments of the market.
LOOP EXPORTS GIVE HOPE
One positive area for the company was the US Gulf Coast, where exports of US crude were expected to continue increasing tonne mile demand.
Recent developments at the Louisiana Offshore Oil Platform were not expected to make an immediate dent in the dirty tankers market.
Mackay said that even though LOOP seems like an interesting proposition, the lack of a direct pipeline from the Permian Basin to Louisiana made it less attractive to crude market players.
The Shaden, the first VLCC tanker to directly load a cargo at LOOP, departed the terminal Sunday carrying US crude, data from Platts cFlow trade flow software showed.
According to the data, the tanker was sailing to Rizhao, China.
The company said it were looking at the potential crude flow increase to Louisiana if the Capline crude pipeline was reversed.
The Capline crude pipeline is partially owned and operated by Marathon and runs from St. James, Louisiana to Patoka, Illinois.
The reversal could allow roughly 390,000 b/d of light and heavy Western Canadian crude to reach the USGC.
The company’s position was still tempered though.
“The significance of LOOP I don’t see as being a major factor,” Mackay said. Only 15% of total US crude export volume comes down the Mississippi River, he added.
The company posted an adjusted profit of $5.1 million in the year-ago period, it said.
Source: PlattsPrevious Next