August 5, 2021
On August 5, Teekay Corporation, Teekay Tankers, and Teekay LNG Partners, released Q2-2021 earnings results.
In the second quarter of 2021, Teekay reported a small consolidated adjusted net profit. This result was due to weaker spot tanker rates and a heavier-than-normal drydocking schedule in both our daughter entities.
However, Teekay reached a major milestone on the path towards our strategic goal of winding down our FPSO segment, including fulfilling our remaining obligations relating to the Banff field, which resulted in a $33 million gain from the reversal of our asset retirement obligation liability in the second quarter of 2021.
Compared to the previous quarter, Teekay Tankers earnings results were weaker due to the lower spot tanker rates and expiration of certain fixed-rate time charters that were secured during last year’s strong tanker market. Despite a challenging quarter, Teekay Tankers continues to have a strong balance sheet with a healthy liquidity position and low financial leverage, which enables us to continue reducing our overall cost of capital by unwinding expensive sale-leasebacks and replacing them with lower cost financings.
Teekay LNG continues to deliver solid performance and strong earnings despite a heavier-than-normal drydocking schedule during the quarter. The outlook for the LNG shipping market is positive as reflected in the current spot and time charter LNG shipping rates, which we believe should provide tailwinds for Teekay LNG through its spot market-linked charter contract as well as its upcoming charter renewals in 2022.
With over 98 percent of our LNG fleet fixed for the remainder of 2021, and 89 percent fixed for 2022, we are anticipating that Teekay LNG will continue to enjoy fairly consistent results through the rest of this year and into next with upside from one of our spot market-linked charter contracts.
Looking ahead, Teekay continues to see a strong correlation between global vaccination programs and the increase in oil demand which we estimate to be approximately 3-4% lower currently compared to pre-pandemic levels.
As the world recovers from the pandemic, we expect the demand for oil and gas and related transportation services to gradually return to 2019 levels, which we believe will be positive for our core gas and oil shipping businesses, and for the Teekay Group overall.
We would like to acknowledge all our colleagues across the globe for their continued dedication and perseverance as they continue to respond to ongoing restrictions while providing safe and uninterrupted services to our customers.