Q2 2025 Teekay Tankers Ltd Earnings Call

Operator 3: Welcome to the Teekay Group Q2 2025 Earnings Results Conference Call. During the call, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. At that time, if you have a question, participants will be asked to press star 1 to register for a question. For assistance during the call, please press star 0 on your touch-tone phone. As a reminder, this call is being recorded now. For opening remarks and introductions, I would like to turn it over to the company. Please go ahead.

Event Specialist: Welcome to the Teekay Group's second quarter 2025 earnings results conference call. During the call, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question and answer session. At that time, if you have a question, participants will be asked to press star one to register for a question. For assistance during the call, please press star zero on your touch-tone phone. As a reminder, this call is being recorded. Now, for opening remarks and introductions, I would like to turn it over to the company. Please go ahead.

Welcome to the TK group, second quarter 2025, earnings results conference call. During the call, all participants will be in a listen-only mode afterwards. You will be invited to participate in a question and answer session. At that time if you have a question, participants will be asked to press star 1 to register for Quest for a question for assistance. During the call, please press star zero on your touchtone phone as a reminder, this call is being recorded. Now, for opening remarks and introductions, I would like to turn it over to the company. Please go ahead.

Ed: Before we begin, I would like to direct all participants to our website at www.teekay.com, where you will find a copy of the Teekay Group's second quarter 2025 earnings presentation. Kenneth will review this presentation during today's conference call. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the second quarter 2025 Teekay Group earnings presentation available on our website. I'll now turn the call over to Kempfitt, Teekay Corporation and Teekay Tankers, President and CEO, to begin.

Ryan Hamilton: Before we begin, I would like to direct all participants to our website at www.teekay.com, where you will find a copy of the Teekay Group's Q2 2025 earnings presentation. Kenneth will review this presentation during today's conference call. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Q2 2025 Teekay Group earnings presentation available on our website. I'll now turn the call over to Kenneth Hvid, Teekay Corporation and Teekay Tankers President and CEO to begin.

Before we begin, I would like to direct all participants to our website at www.tek.com where you will find a copy of the TK, group's second, quarter, 2025 earnings presentation.

Kennet will review this presentation. During today's call, it's called.

Please allow me to remind you. That our discussion today stands for looking statements actual results. May differ materially from results, projected by those, who are looking statements.

Additional information concerning factors that could cause actual results to materially differ from those. In the forward-looking statements is contained in the second quarter of 2025, TK group earnings presentations, available on our website. I'll now turn the call over to Kent Tiki Corporation and Tiki tankers president and CEO.

Kenneth Hvid: Thank you, Ed. Hello, everyone, thank you very much for joining us today for the Teekay Group's Q2 2025 earnings conference call. Joining me on the call today for the Q&A session is Brody Speers, Teekay Corporation's and Teekay Tankers CFO, Ryan Hamilton, our VP of Finance and Corporate Development, and Christian Waldegrave, our Director of Research. Starting on slide 3 of the presentation, we will cover Teekay Tankers recent highlights. Teekay Tankers reported GAAP net income of $62.6 million, or $1.81 per share, adjusted net income of $48.7 million or $1.41 per share in the Q2. Q2 spot rates were counter seasonally strong, with rates outperforming the last 2 quarters and above long-term averages for Q2.

Kenneth Hvid: Thank you, Ed. Hello, everyone, and thank you very much for joining us today for the Teekay Group's second quarter 2025 earnings conference call. Joining me on the call today for the Q&A session is Brody Spears, Teekay Corporation's and Teekay Tankers' CFO, Ryan Hamilton, our VP of Finance and Corporate Development, and Christian Waldergrave, our Director of Research. Starting on slide three of the presentation, we will cover Teekay Tankers' recent highlights. Teekay Tankers reported a net income of $62.6 million or $1.81 per share and adjusted net income of $48.7 million or $1.41 per share in the second quarter. Second quarter spot rates were counter-seasonally strong, with rates outperforming the last two quarters and above long-term averages for the second quarter.

Thank you. Hello everyone. And uh, thank you very much for joining us today for the TK group's second quarter 2025 earnings conference call.

Joining me on the call today. For the Q&A session is a brutish Spears, CK corporations, and TK, tankers CFO Ryan. Hamilton our VP finance and corporate development and Christian Walder, grave, our director of research.

Starting on, slide 3 of the presentation, we will cover TK, Tango's, recent highlights.

Tango's reported, gaap, net income of, 62.6 million, or $1.81 per share and adjusted net income of 48.7 million, or $1.41 per share in the second quarter.

Kenneth Hvid: Further, with spot rates well above our free cash flow breakeven levels, the company generated approximately $62.8 million in free cash flow from operations, and at the end of the quarter, had a cash and short-term investment position of $712 million and no debt. With strong free cash flow generation and cash position, Teekay Tankers is well-positioned to continue actively executing on our fleet renewal strategy. This includes reducing our exposure to 18- to 19-year-old vessels, as well as opportunistically selling some 2009-built Suezmaxes in today's historically higher asset price environment, as well as making incremental purchases of modern vessels. In July, we acquired 1 modern Suezmax, and we agreed to acquire the remaining 50% ownership interest in the Hong Kong Spirit VLCC from our joint venture partner. This VLCC acquisition was opportunistic based on relative market values and our belief in the near-term strength of the tanker market.

Kenneth Hvid: Further, with spot rates well above our free cash flow break-even levels, the company generated approximately $62.8 million in free cash flow from operations, and at the end of the quarter, had a cash and short-term investment position of $712 million and no debt. With strong free cash flow generation and cash position, Teekay Tankers is well-positioned to continue actively executing on our fleet renewal strategy. This includes reducing our exposure to 18 to 19-year-old vessels, as well as opportunistically selling some 2009-built Suez Maxes in today's historically higher asset price environment, as well as making incremental purchases of modern vessels. In July, we acquired one modern Suez Max, and we agreed to acquire the remaining 50% ownership interest in the Hong Kong Spirit VLCC from our joint venture partner.

Second quarter, spot rates, were counter. Seasonal is strong with rates outperforming the last 2 quarters and about long-term averages for second quarter.

Further with spot rates. Well, above our free cash flow, Break Even levels The company generated approximately 62.8 million in free cash flow from operations and at the end of the quarter, had a cash and short-term investment position of 712 million and no debt.

With strong free, cash flow generation and cash position. GK Tangos is well, positioned to continue actively executing on our Fleet renewal strategy.

This includes reducing our exposure to 18 to 19 year old vessels as well as opportunistically selling. Some 2009 build sewers Maxes in today's historically higher asset price environment as well as making incremental purchases of modern vessels.

Kenneth Hvid: This VLCC acquisition was opportunistic based on relative market values and our belief in the near-term strength of the tanker market. In addition, the company agreed to sell four Suez Maxes and one ALAT2, which will be delivered to the new owners in the third and fourth quarters for a combined total of $158.5 million, which we expect to result in an estimated book gain on sale of approximately $46 million. So far, in 2025, we have sold or agreed to sell 11 vessels for a total gross proceeds of $340 million and estimated book gains on sale of approximately $100 million. Although our sales have outpaced our purchases so far this year, the plan is to gradually change the pace of buying as we remain focused on renewing and growing our fleet in an accretive manner to future earnings.

In July, we acquired 1 modern sewage Max and we agreed to acquire the remaining 50% ownership interest in the Hong Kong Spirit vlcc from our joint venture partner.

Kenneth Hvid: In addition, the company agreed to sell 4 Suezmaxes and 1 LR2, which will be delivered to their new owners in Q3 and Q4 for a combined total of $158.5 million, which we expect to result in an estimated book gain on sale of approximately $46 million. Far in 2025, we have sold or agreed to sell 11 vessels for total gross proceeds of $340 million and estimated book gains on sale of approximately $100 million. Although our sales have outpaced our purchases so far this year, the plan is to gradually change the pace of buying as we remain focused on renewing and growing our fleet in an accretive manner to future earnings.

This VLC acquisition was opportunistic, based on relative market values and our belief in the near-term strength of the tanker market.

In addition, the company agrees to sell for service Maxes and 1, a lat 2 which will be delivered to the new owners in the third and fourth quarters.

For Combined total of 158 and a half million dollars, which we expect to result in an estimated book gain on sale of approximately 46 million.

So far in 2025, we have sold our great sell, 11 vess for total gross, proceeds of 340 million and estimated book gains on sale of approximately 100 million dollars. Although our sales have outpaced our purchases. So far this year, the plan is to gradually change. The pace of buying as we remain focused on renewing and growing our Fleet in an accretive manner to Future earnings.

Kenneth Hvid: Looking at our third quarter to-date rates, we have secured spot rates of $31,400 per day and $28,200 per day for our Suez Max and Afrimax ALAT2 fleets, respectively, with approximately 43% of our spot days booked. We believe there are potential tailwinds for the tanker markets towards the end of the year and that the fundamentals for the medium term remain balanced, but with more uncertainty due to the complex geopolitical landscape. We'll discuss the drivers of the market in the next few slides. Lastly, Teekay Tankers has declared its regular quarterly fixed dividend of $0.25 per share. Moving to slide four, we look at recent developments in the spot market. Spot tanker rates improved during the second quarter compared to the last two quarters, and rates were above long-term average levels for a second quarter.

Kenneth Hvid: Looking at our Q3 to date rates, we have secured spot rates of $31,400 per day and $28,200 per day for our Suezmax and Aframax LR2 fleets respectively, with approximately 43% of our spot days booked. We believe there are potential tailwinds for the tanker markets towards the end of the year, and that the fundamentals for the medium-term remain balanced, but with more uncertainty due to the complex geopolitical landscape. We'll discuss the drivers of the market in the next few slides. Lastly, Teekay Tankers has declared its regular quarterly fixed dividend of $0.25 per share. Moving to slide 4, we look at recent developments in the spot market. Spot tanker rates improved during the Q2 compared to the last 2 quarters, and rates were above long-term average levels for a Q2.

Looking at our third floor today, rates we have secured spot rates are 31400 per dollars dollars per day and 28,200 per day for our sewers. Max and aframax L2 fleets respectively with approximately 43% of our spot days booked

We believe there are potential Tailwind for the tanker markets towards the end of the year, and that the fundamentals for the medium-term remain balanced, but with more uncertainty due to the complex geopolitical landscape.

We'll discuss the drivers of the market in the next few slides.

25 cents per share.

Moving to slide 4. We look at recent developments in the spot Market.

Kenneth Hvid: The strength in tanker rates was primarily due to longer average voyage distances during April, though rates subsequently softened during the remainder of the quarter in line with normal seasonal trends. The market saw a brief period of volatility in the middle of June following the escalation of hostilities between Israel and Iran. However, there was no material disruption to regional oil production, exports, or tanker movements, with several spot charters failing subjects and rates quickly reverting to prior levels once a ceasefire was announced. Turning to slide five, we look at near-term oil fundamentals, which we believe could give support to tanker rates during the second half of the year. Global oil production is expected to increase sharply in the coming months due to the unwinding of OPEC Plus supply cuts and higher production from South America.

Kenneth Hvid: The strength in tanker rates was primarily due to longer average voyage distances during April, though rates subsequently softened during the remainder of the Q, in line with normal seasonal trends. The market saw a brief period of volatility in the middle of June following the escalation of hostilities between Israel and Iran. However, there was no material disruption to regional oil production, exports, or tanker movements, with several spot charters sailing subjects and rates quickly reverting to prior levels once a ceasefire was announced. Turning to slide 5, we look at near-term oil fundamentals, which we believe could give support to tanker rates during the H2 of the year. Global oil production is expected to increase sharply in the coming months due to the unwinding of OPEC+ supply cuts and higher production from South America.

Spot tanker rates improved during the second quarter compared to the last two quarters, and rates were above long-term average levels for a second quarter. The strength in tanker rates was primarily due to longer average voyage distances. During April, rates subsequently softened during the remainder of the quarter in line with normal seasonal trends.

The market saw a brief period of volatility in the middle of June following, the escalation of hostilities between Israel and Iran. However, there was no material disruption to Regional oil production exports, or tanker movements with several spot Charters failing subjects and rates quickly, reverting to Prior levels once a ceasefire was announced,

Turning to slide 5, we look at near-term oil fundamentals which we believe could give support to tango rates during the second half of the year.

Kenneth Hvid: The OPEC Plus group has accelerated their unwind and at the current pace will have fully unwound the 2.2 million barrels per day of voluntary supply cuts by September 2025, a full year ahead of schedule. This should translate into increased tanker-tonne mile demand, particularly from September onwards, as reduced domestic demand will allow Middle Eastern producers led by Saudi Arabia to increase seaborne exports. New offshore oil production coming online in Brazil and Guyana should also increase volumes and support crude tanker-tonne mile demand during the second half of the year. As shown by the chart on the left of the slide, global oil supply is expected to exceed demand in the coming quarters, leading to an expected build in global oil inventories. The chart on the right shows that oil inventories outside of China are currently below average levels.

Kenneth Hvid: The OPEC+ group has accelerated their unwind and at the current pace, will have fully unwound the 2.2 million barrels per day of voluntary supply cuts by September 2025, a full year ahead of schedule. This should translate into increased tanker ton-mile demand, particularly from September onwards, as reduced domestic demand will allow Middle Eastern producers, led by Saudi Arabia, to increase seaborne exports. New offshore oil production coming online in Brazil and Guyana should also increase volumes and support crude tanker ton-mile demand during the H2 of the year. As shown by the chart on the left of the slide, global oil supply is expected to exceed demand in the coming quarters, leading to an expected build in global oil inventories. The chart on the right shows that oil inventories outside of China are currently below average levels.

Global oil production is expected to increase, sharply in the coming months. Due to the unwinding of OPEC, plus, Supply, cuts and higher production from South America.

The OPEC plus group has accelerated the unwind and at the current Pace, we'll have fully unwind. The 2.2 million barrels per day. Of voluntary Supply cuts by September 2025 a full year ahead of schedule.

This should translate into increased tankerton mild demand, particularly from September onwards as reduced. Domestic demand. Will allow Middle Eastern. Producers led by Saudi Arabia to increase Seaborn exports.

New offshore oil production coming on line in Brazil and Tiana. Should also increase volumes and support crew tanks on mild demand during the second half of the year.

Kenneth Hvid: Therefore, we expect that the market will be able to absorb the additional supply that is due to come online. Periods of oil inventory builds have historically been positive for tanker rates, and we believe this could be another tailwind for rates as we move into the seasonally stronger winter months. Turning to slide six, we review the key drivers of the medium-term outlook, but also some of the uncertainties which add a layer of complexity. Global oil demand is projected to increase by 0.7 million barrels per day in both 2025 and 2026, as per the IEA. While this is lower than projections made at the start of the year, it still represents healthy growth and would push total oil demand to a record high of almost 105 million barrels per day.

Kenneth Hvid: Therefore, we expect that the market will be able to absorb the additional supply that is due to come online. Periods of oil inventory builds have historically been positive for tanker rates, and we believe this could be another tailwind for rates as we move into the seasonally stronger winter months. Turning to slide 6, we review the key drivers of the medium-term outlook, but also some of the uncertainties, which add a layer of complexity. Global oil demand is projected to increase by 0.7 million barrels per day in both 2025 and 2026, as per the IEA. While this is lower than projections made at the start of the year, it still represents healthy growth and would push total oil demand to a record high of almost 105 million barrels per day.

As shown by the chart on the left of the slide. Global oil supply is expected to exceed demand. In the coming quarters leading to an expected build in global oil. Inventories the chart on the right shows that oil inventories outside of China are currently below average levels. Therefore, we expect that the market will be able to absorb the additional Supply that is due to come online.

Periods of oil inventory. Bills have historically been positive for tanker rates and we believe this could be another Tailwind for rates as we move into the seasonally stronger winter months.

Turning to slide 6, we review the key drivers of the medium-term Outlook but also some of the uncertainties which add a layer of complexity.

Global oil demand is projected to increase by 7 million barrels per day in both 2025 and 2026, as per the IEA.

Kenneth Hvid: As mentioned on the previous slide, growing oil supply from both OPEC Plus and non-OPEC Plus sources will help meet this demand growth and provide positive tanker-tonne mile demand growth, particularly as we anticipate that a growing portion of new oil supply coming online in the Atlantic Basin will be moved long haul to meet growing demand in Asia. Turning to global fleet supply, the pace of new tanker orders has slowed significantly since the start of the year, with 11 million dead weight of new orders placed in the first six months compared to 42 million dead weight in the same period of 2024. The order book, when measured as a percentage of the global tanker fleet, has stabilized in recent months at approximately 15%.

Kenneth Hvid: As mentioned on the previous slide, growing oil supply from both OPEC+ and non-OPEC+ sources will help meet this demand growth and provide positive tanker ton-mile demand growth, particularly as we anticipate that a growing portion of new oil supply coming online in the Atlantic Basin will be moved long haul to meet growing demand in Asia. Turning to global fleet supply, the pace of new tanker orders has slowed significantly since the start of the year, with 11 million deadweight of new orders placed in the first 6 months compared to 42 million deadweight in the same period of 2024. The order book, when measured as a percentage of the global tanker fleet, has stabilized in recent months at approximately 15%.

While this is lower than projections made at the start of the year, is still represents Healthy Growth and would push total oil demand to a record high of almost 105 million barrels per day.

As mentioned on the previous slide growing all Supply from both OPEC plus, and non-opec. Plus sources will help meet this demand growth and provide positive tanker son, Myles, demand growth, particularly, as we anticipate that a growing portion of new oil supply coming online in the Atlantic Basin will be moved long. Hold to meet growing demand in Asia.

Turning to Global Fleet Supply. The pace of new Tango orders have has slowed significantly since the start of the year with 11 million, that way of new orders placed in the first 6 months compared to 42 million dead weight in the same period of 2024.

Kenneth Hvid: Meanwhile, a lack of tanker scrapping means that the fleet continues to age, with the average age of the global tanker fleet at a 25-year high of 14 years. Should tanker market conditions worsen, there could be increased pressure on the large and growing pool of scrap candidates to leave the market, providing a mechanism to rebalance the global fleet. We believe the combination of the current order book and aging tanker fleet and constraints on available yard space points towards a balanced fleet supply outlook and should result in continued low levels of tanker fleet growth over the medium term. While underlying tanker market fundamentals look positive, a number of geopolitical factors add complexity to the outlook and will likely influence the direction of spot tanker rates.

Kenneth Hvid: Meanwhile, a lack of tanker scrapping means that the fleet continues to age, with the average age of the global tanker fleet at a 25-year high of 14 years. Should tanker market conditions worsen, there could be increased pressure on the large and growing pool of scrap candidates to leave the market, providing a mechanism to rebalance the global fleet. We believe the combination of the current order book, an aging tanker fleet, and constraints on available yard space points towards a balanced fleet supply outlook and should result in continued low levels of tanker fleet growth over the medium term. While underlying tanker market fundamentals look positive, a number of geopolitical factors add complexity to the outlook and will likely influence the direction of spot tanker rates.

The order book when measured as a percentage of the global Tango fleet has stabilized in recent months at approximately 15%. Meanwhile, a lack of tank of scrapping means that the fleet continues to age with the average age of the global Tango Fleet at 25 year, high of 14 years.

To tangga market conditions, worsen that could be increased pressure on the large and growing pool of scrap candidates to leave the market providing a mechanism to rebalance the global Fleet. We believe the company of the current order book and aging Tango Fleet and constraints on available yspace points towards a balanced. Fleet Supply Outlook and should result in continued. Low levels of Tango Fleet growth over the medium term.

Kenneth Hvid: I'll not go into each point in detail, but I note that in September alone, we expect that the OPEC+ group will complete the unwinding of their 2.2 million barrels per day of voluntary supply cuts. The EU will introduce a new price cap of $0.4760 per barrel on Russian crude oil exports. President Trump's 50-day ultimatum to Russia is set to expire, though this timeline could be moved up given Trump's recent comments. As we saw yesterday, the US just announced sanctions on additional 50 vessels moving Iranian crude oil. As such, we anticipate that the market will continue to exhibit volatility going forward, both in the short and medium term. Turning to slide 7, we highlight how Teekay Tankers continues to build value while remaining patient for future fleet renewal.

Kenneth Hvid: I'll not go into each point in detail, but I note that in September alone, we expect that the OPEC Plus group will complete the unwinding of the 2.2 million barrels per day of voluntary supply cuts. The EU will introduce a new price cap of $47.60 per barrel on Russian crude oil exports. President Trump's 50-day ultimatum to Russia is set to expire, though this timeline could be moved up given Trump's recent comments. And as we saw yesterday, the US just announced sanctions on additional 50 vessels moving Iranian crude oil. As such, we anticipate that the market will continue to exhibit volatility going forward, both in the short and medium term. Turning to slide seven, we highlight how Teekay Tankers continues to build value while remaining patient for future fleet renewal.

President Trump's 50-day automation to Russia is set to expire, though. This time line could be moved up, given Trump's reasons comments. And as we saw yesterday, the US just announced sanctions on additional 50 vessels moving Iranian crude oil as such. We anticipate that the market will continue to exhibit. Volatility going forward both in the short and medium-term.

Turning to slide 7, we highlight how TK Tankers continues to build value while remaining patient for future fleet renewal.

Kenneth Hvid: With our operating leverage and low free cash flow breakevens of $13,000 per day, Teekay Tankers generated $128 million in free cash flow in the H1 of the year. With no debts on our balance sheet, the company continues to build its financial strength and flexibility. Looking ahead, the company is well positioned to continue generating free cash flows. To emphasize, for every $5,000 increase in spot rates above our break even produces $1.89 per share of annual free cash flow, or over 4% on a free cash flow yield basis. In summary, Teekay Tankers is an operating company in a cyclical, capital-intensive business. We remain disciplined in our capital allocation as our financial strength positions the company well for future fleet renewal while enabling us to continue to build value in a complex tanker market outlook.

Kenneth Hvid: With our operating leverage and low free cash flow break-evens of $13,000 per day, Teekay Tankers generated $128 million in free cash flow in the first half of the year. With no debt on our balance sheet, the company continues to build its financial strength and flexibility. Looking ahead, the company is well-positioned to continue generating free cash flows. To emphasize, for every $5,000 increase in spot rates above our break-even produces $1.89 per share of annual free cash flow or over 4% on a free cash flow yield basis. In summary, Teekay Tankers is an operating company in a cyclical, capital-intensive business. We remain disciplined in our capital allocation as our financial strength positions the company well for future fleet renewal while enabling us to continue to build value in a complex tanker market outlook.

With our operating leverage and low free cash flow. Break evens of 13,000 per day teekay. Tankers generated 128 million in free cash flow in the first half of the year.

With no debts on our balance sheet, the company continues, to build its Financial strength and flexibility.

Looking ahead. The company is well positioned to continue generating free cash, flows to emphasize for every 5,000 increase in spot rates above our break. Even produces 1.89 cents per share of annual free cash flow or over 4. Cent 4% on a free cash flow yield basis.

Kenneth Hvid: In the near term, with a low cash flow break-even, we expect to continue generating strong cash flows and taking incremental steps on fleet renewal while returning capital to shareholders. With that, operator, we're now available to take questions.

Kenneth Hvid: In the near term, with a low cash flow breakeven, we expect to continue generating strong cash flows and taking incremental steps on fleet renewal while returning capital to shareholders. With that, operator, we're now available to take questions.

In summary, CK Tango is an operating company in a cyclical capitals, Capital intensive business. We remain disciplined in our Capital allocation as our financial strength positions, the company. Well for future Fleet renewal while enabling us to continue to build value. In a complex tanker Market Outlook in the near term, will low cash flow Break Even we expect to continue generating strong cash flows and taking incremental steps on fleet. Renewal while returning Capital to shareholders with that operator we're now available to take questions.

Operator 3: Our first question is going to come from Omar Nokta from Jefferies. Please go ahead.

Operator: Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach the equipment. Again, press star one to ask a question. If you are in the event via web interface and would like to ask a question, simply type your question in the ask a question box and click send. Our first question is going to come from Omar Nakda from Jeffreys. Please go ahead.

Thank you.

If you are dialed in by the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad,

if you are using a speaker-phone, please make sure.

Your mute function is turned off to allow your signal to reach the equipment. Again, press star 1 to ask a question if you are in the event via web interface and would like to ask a question, simply type your question in the ask a question box and click Send.

Our first question is going to come from Omar nocta from just Jeffries. Please go ahead.

Omar Nokta: Hi, Kenneth. Hi, guys. Good morning.

Omar Nokta: Yeah, I get it. Hi, guys. Good after. Good morning. Thanks for the update. Just wanted to, yeah, just wanted to ask quickly, maybe if you wouldn't mind just expanding on the comments you made early in the presentation. You're referencing the purchasing of the latest ship and then some of the sales you did. And you mentioned that you would be looking to change the pace given the need to renew. And so just wanted a bit more clarity. Are you talking about accelerating the pace of acquisitions or maybe right-sizing the ratio between purchasing and selling?

Kenneth Hvid: Morning.

Omar Nokta: Just wanted to ask quickly, maybe if you wouldn't mind just expanding on the comments you made early in the presentation. You were referencing the purchasing of the latest ship and then some of the sales you did, and you mentioned that you would be looking to change the pace given the need to renew. Just wanted a bit more clarity. Are you talking about accelerating the pace of acquisitions or maybe right-sizing the ratio between purchasing and selling?

No, I get it. Hi. Hi guys, good after uh good morning. Um, thanks for the update, just wanted to. Yeah, just wanted to ask quickly. Uh maybe if you wouldn't mind just expanding on the comments, you made early in the presentation, you're referencing the purchasing of the the latest ship and then some of the sales you did. And you mentioned that you would be looking to change the pace given the need to renew. And so just wanted a bit more clarity. Are you talking about accelerating the pace of Acquisitions or maybe, right sizing the ratio between purchasing and and selling

Kenneth Hvid: Yeah, morning, Omar. Thanks for that question. I think what we wanted to point out, as everybody can see, we've been fairly active in selling some of our older ships in the first half of this year. So we sold a total of 11 ships. And then at the same time, we've started picking up a couple of younger ships. Last year, we picked up a couple of Afrimaxes. We did a Suez Max now, and then we simplified the ownership structure around the VLCC that we own 50% of. So the point that we're making here is that I think we've said that the selling is largely done for now. And what we're looking to do is we are going to recycle a lot of the capital that we will be collecting from those sales and gradually start adding newer ships to the fleet again.

Kenneth Hvid: Yeah. Morning, Omar. Thanks for that question. I think what we wanted to point out, as everybody can see, we've been fairly active in selling some of our older ships in the H1 of this year. We sold a total of 11 ships and at the same time, we've started picking up a couple of younger ships. Last year, we picked up a couple of Aframaxes. We did a Suezmax now and we simplified the ownership structure around the VLCC that we own 50% of. The point that we're making here is that I think we've said the selling is largely done for now and what we're looking to do is we are going to recycle a lot of the capital that we will be collecting from those sales and gradually start adding newer ships to the fleet again.

Good morning, Omar. Thanks for. Thanks for that question. I think what we wanted to to point out, as, as everybody can see, we've been fairly fairly active in selling, some of our older ships in the, in the first half of, of this year. So, we've sold a, a total of of 11 ships and, um, and then, at the same time, we we've started, uh, picking up a couple of younger ships with last year, we picked up a couple of air from. Uh, we did a sewers Max now and then we we uh, simplified the the ownership structure around the V vlcc that we own 50% off. Uh, so the, the point that we're making here is that I think we we've said this the selling is, is largely done for now. And, uh, what we're looking to do is we are are going to recycle, ugh. A lot of the capital that uh that we uh will be collecting from those sales and uh and gradually start um um adding newer ships uh to to the fleet again.

Omar Nokta: Okay, thank you. And you mentioned the opportunistic transaction to take the full ownership of the VLCC. You've also got, I guess, the opportunistic stake in Ardmore, given your exposure to MRs and obviously have your bread and butter, Suez Max and Afrimax. How are you thinking about further capital deployment as you renew the fleet? Are you looking within the same, you know, your main asset class, or do you look towards a larger or perhaps a smaller segment?

Omar Nokta: Okay. Thank you. You mentioned the opportunistic transaction to take the full ownership of the VLCC. You've also got, I guess, the opportunistic stake in Ardmore, giving you exposure to MRs and obviously have your bread and butter, Suezmax, Aframax. How are you thinking about further capital deployment as you renew the fleet? Are you looking within the same, your main asset class, or do you look towards a larger or perhaps a smaller segment?

Okay. Thank you. And you mentioned the opportunistic transaction to take the uh full ownership of the vlcc. Um you've also got I guess the op opportunistic stake in Ardmore, uh giving you exposure to Mrs. And obviously have your bread and butter as soon as that for Max. How are you thinking about? You know, further Capital deployment, as you renew the fleet, are you looking within the same? You know, your your, your your, your main asset class or do you look, uh, towards a larger or perhaps a smaller segments?

Kenneth Hvid: I would say our number one priority is finding good purchase candidates within our core segments of Aframax and Suezmax. We are, of course, looking at where we are and trying to square making sense of selling at what we think are quite strong prices for the older assets, and then recycling the capital into younger assets where we can find good value. There are still some relative price movements there, and we think that there are the odd opportunity that allows us to kind of create a positive arbitrage on that. In the near term, I think that you will see us finding single vessels in our core segments, Aframax and Suezmax. Over the medium term, we might be going in a little bit bigger with new buildings if we think that that's the right time, or we may be looking at other asset classes.

Kenneth Hvid: Yeah, I would say our number one priority is finding good purchase candidates within our core segments of Afrimaxes and Suez Maxes. We are, of course, looking at where we are and trying to square, making sense of selling at what we think are quite strong prices for the older assets and then recycling the capital into younger assets where we can find good value. And there's some relative price movements there, and we think that there are the odd opportunities that allow us to kind of create a positive arbitrage on that. So in the near term, I think that you will see us finding single vessels in our core segments, Afrimaxes and Suez Maxes. And over the medium term, we might be going in a little bit bigger with new buildings if you think that that's the right time, or we may be looking at other asset classes.

Kenneth Hvid: The priority right now and in the near term here is really just reloading on our core asset classes.

Kenneth Hvid: But the priority right now and in the near term here is really just reloading on our core asset classes.

Into younger assets where we can find good value and there's some relative price movements there and we think that there are the, the odd opportunity that that allows us to, to kind of create a positive Arbitrage on, on that. Uh, so in the near term, uh, I think that you'll see us, uh, finding single vessels in in our core segments. A from axis and sewage Maxes and over the medium-term. Um, we might be, uh, going in a little bit bigger with with new buildings, if, if you think, that's the right time or, or maybe looking at at other asset classes, but the priority right now. And, and in the near term here is, is really just a reloading on, uh, on on our core asset classes.

Omar Nokta: Okay, very good and very clear. Thanks, Kenneth. I'll pass it back.

Omar Nokta: Okay. Very good and very clear. Thanks, Kenneth. I'll pass it back.

Okay, very good. Very clear. Thank thanks Kenneth. I'll pass it back.

Kenneth Hvid: Appreciate it. Thanks, Omar.

Kenneth Hvid: Appreciate it. Thanks, Omar.

Just appreciate it. Thanks so much.

Operator: And our next question is going to come from Ken Hoexa from Bank of America. Please go ahead. And Ken, are you there? Do you perhaps have your mute function button on?

Operator 3: Our next question is going to come from Ken Hoexter from Bank of America. Please go ahead. Ken, are you there? Do you perhaps have your mute function button on?

And our next question is going to come from Ken hoaxer from Bank of America. Please go ahead.

Tim Chang: Hi, this is Tim Chang on for Ken Hoexter with BofA. You mentioned OPEC+ unwinding production cuts in September, an increase in non-OPEC production in the Atlantic Basin as favorable for demand uplift later in the year. Do you see this lifting rates mainly in 4Q, just given that rate softening due to seasonality in Q3?

Tim Chang: Hi, this is Tim Chang on for Ken Hexter with DOJ. You mentioned OPEC's plus unwinding production cuts in September, an increase in non-OPEC production in the Atlantic Basin as favorable for demand uplift later in the year. Do you see this lifting rates mainly in 4Q, just given that rate softening due to seasonality in the third quarter?

And Ken, are you there? Do you perhaps have your mute function button on? Hi. This is Tim Chang on for Ken hexar with de, um, and you mentioned the Opex plus unwinding production Cuts in September and increase in non-op pack, production in the Atlantic Basin, as favorable for demand up with later, in the year. Do you see this lifting rates, mainly in 4 q, just giving that rate softening due to seasonality in the third quarter?

Order.

Kenneth Hvid: Yeah, hi, it's Christian here. Yeah, we definitely see more oil volumes coming on the market later in the year with OPEC Plus. It's not just the production increase, but the fact that, you know, the Middle Eastern countries have been keeping more oil domestically during the summer months for power generation. So as we get through the summer and probably into September, we should see more Middle East volumes hitting the water. And then we do expect more oil coming from Guyana and Brazil in the second half as well. And we still have the normal seasonality in tanker rates. You know, the summer months, as we've seen in the last couple of months here, tend to be a bit flatter. The winters do tend to be seasonally stronger months.

Christian Waldegrave: Yeah, hi, it's Christian here. Yeah, we definitely see more oil volumes coming on the market later in the year with OPEC+. It's not just the production increase, but the fact that the Middle Eastern countries have been keeping more oil domestically during the summer months for power generation. As we get through the summer and probably into September, we should see more Middle East volumes hitting the water, and then we do expect more oil coming from Guyana and Brazil in H2 as well. We still have the normal seasonality in tanker rates. The summer months, as we've seen in the last couple of months here, tend to be a bit flatter. The winters do tend to be seasonally stronger months.

Yeah. Hi, it's Christian here. Yeah. Um, we

Definitely see more oil volumes coming on the market later in the year with OPEC. Plus, it's not just the production increase, but the fact that, um,

You know, the Middle Eastern countries have been keeping more oil domestically during the summer months of power generation. So as we get through the summer and probably into September, we should see more Middle East, uh, volume hitting the water. And then we do expect more oil coming from, uh, Gana and Brazil in the second half as well. And we still have the normal seasonality and tanker rates, you know, the, uh, the summer months, as we've seen in the last couple of months here, tend to be a bit flatter

Christian Waldegrave: With more export volumes coming online in H2 and also some of the geopolitical complexities as well that Kenneth Hvid touched on in terms of more sanctions on Russia and Iran, which just makes trade in general less efficient. We certainly think that there'll be some more volatility and stronger rates as we go into the latter part of the year.

Kenneth Hvid: So with more export volumes coming online in the second half, and also some of the geopolitical complexities as well that Kenneth touched on in terms of more sanctions on Russia and Iran, which just makes trade in general less efficient, we certainly think that there'll be some more volatility and stronger rates as we go into the latter part of the year.

And the winter does tend to be seasonally stronger months, so with more export volumes coming online in the second half and also some of the geopolitical complexities as well that I kind of touched on in terms of more sanctions on Russia and Iran, which just makes trade in general less efficient. We certainly think that there will be some more volatility and stronger rates as we go into the latter part of the year.

Tim Chang: Got it. Thank you. Secondly, other revenues stepped up materially to $42 million from around $33 million last quarter. How should we think about run rate going forward there?

Tim Chang: Got it. Thank you. And then secondly, other revenue stepped up materially to 42 million from around 33 million last quarter. How should we think about run rate going forward there?

Got it. Thank you. And then secondly, other revenue stepped up materially to $42 million from around $33 million last quarter. How should we think about the run rate going forward there?

Brody Speers: Yeah, hi, this is Brody. Yeah, the other revenues were a bit higher this quarter because we had a one-time restructuring charge in our Australian business that was funded by one of our customers for an FPSO that the contract had expired on. So it's about 6 million higher this quarter than it otherwise would be because of that. So that was a flow-through cost to TK.

Brody Speers: Yeah. Hi, this is Brody. Yeah, the other revenues were a bit higher this quarter because we had a one-time restructuring charge in our Australian business that was funded by one of our customers for an FPSO that the contract had expired on. It's about $6 million higher this quarter than it otherwise would be because of that. That was a flow-through cost to Teekay.

Yeah, hi. This is uh, Brody. Um, yeah. The other revenues were a bit higher this quarter because we had a 1-time, um, restructuring charge in our Australian business. That was, um, funded by 1 of our customers for a, for an fpso that, um, the, the contract had, uh, expired on. So it's about 6 million higher this quarter than it, otherwise would be because of that. So, so that was a, a flow through cost, uh, to TK.

Tim Chang: Got it. Very clear. Thank you for taking my question.

Omar Nokta: Got it. Very clear. Thank you for taking that question.

Got it. Very clear. Thank you for taking my question.

Operator 3: There are no further questions in the queue at this moment. I'll turn the conference back over to the company for any additional or closing remarks.

Operator: And there are no further questions in the queue at this moment. I'll turn the conference back over to the company for any additional or closing remarks.

And there are no further questions in.

Do you at this moment? I'll turn the conference back over to the company for any additional or closing remarks.

Kenneth Hvid: Well, thank you very much for tuning in to our call this morning. We look forward to reporting back to you next quarter. Have a great day.

Kenneth Hvid: Well, thank you very much for tuning into our call this morning. We look forward to reporting back to you next quarter. Have a great day.

Well, thank you very much for tuning in to our our call this morning and we look forward to reporting back to you. Next quarter, have a great day.

Operator 3: This concludes today's call. Thank you for your participation. You may now disconnect.

Operator: And this concludes today's call. Thank you for your participation. You may now disconnect.

And this concludes today's call. Thank you for your participation. You may now disconnect.