HAMILTON, BERMUDA--(Marketwired - Apr 8, 2013) - Teekay Tankers Ltd. (TNK) (Teekay Tankers or the Company) announced today that it has entered into an agreement with STX Offshore & Shipbuilding Co., Ltd., (STX) of South Korea for the construction of four, fuel-efficient 113,000 dead-weight tonne (dwt) Long Range 2 (LR2) product tanker newbuildings for a fully built-up cost of approximately $47 million each. The agreement with STX also includes fixed-price options for up to 12 additional LR2 newbuildings that can be declared over the next 18 months. Upon delivery, it is expected that the vessels will operate in Teekay Corporation's Taurus Tankers LR2 Pool (the Taurus LR2 Pool), which is one of the world's largest LR2 pools with approximately 20 LR2 product tankers.
The agreement with STX includes a favorable installment payment schedule, with the majority of the purchase price due upon delivery. The Company intends to finance the installment payments with its existing liquidity, which was approximately $327 million as of December 31, 2012. The Company expects to secure long-term debt financing for the four vessels prior to their scheduled deliveries in late-2015 and early-2016.
"The shift in global refining capacity east of the Suez Canal, development of new long-haul product tanker trading patterns, including the potential for increased U.S. exports, and a relatively modest orderbook, make the LR2 segment a particularly attractive growth area for Teekay Tankers," commented Bruce Chan, Teekay Tankers' Chief Executive Officer. "With their fuel-efficient design, which is estimated to result in 20 to 30 percent fuel savings compared to current vessels in the existing LR2 fleet, we believe these newbuildings will be very attractive to our customers. Furthermore, we believe the vessel deliveries are well-timed to benefit from expected improvements in refined product and global crude oil tanker market fundamentals."
Mr. Chan added, "We are pleased to be working with STX, a high quality Korean yard with a strong track record for successful newbuilding deliveries. Working closely over the past two years with STX, our customers and our sponsor, Teekay Corporation, we evaluated several vessel configuration options before proceeding with a design we believe will provide an optimal combination of function and efficiency. In addition, we have been able to benefit from our sponsor's strong shipyard relationship to achieve favorable pricing and an option stream that supports Teekay Tankers' future growth and fleet renewal objectives."
About Teekay Tankers
Teekay Tankers currently owns a fleet of 27 double-hull vessels, including 11 Aframax tankers, 10 Suezmax tankers, three Long Range 2 (LR2) product tankers, three Medium-Range (MR) product tankers, and has time-chartered in two Aframax tankers. Teekay Corporation (TK) manages these vessels through a mix of short- or medium-term fixed-rate time-charter contracts and spot tanker market trading. The Company also owns a VLCC newbuilding through a 50 percent joint venture, which is scheduled to deliver in the second quarter of 2013. Teekay Tankers was formed in December 2007 by Teekay Corporation as part of its strategy to expand its conventional oil tanker business.
Teekay Tankers' common stock trades on the New York Stock Exchange under the symbol "TNK".
FORWARD LOOKING STATEMENTS
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: the purchase price, timing of vessel deliveries and timing of shipyard payments related to the Company's four LR2 newbuildings; the Company's ability to finance the four LR2 newbuildings from existing liquidity and its ability to secure long-term debt financing for these vessels prior to their delivery; the potential for the Company to exercise its options to order up to 12 additional LR2 newbuildings; expectations regarding the ability to trade the LR2 newbuildings in the crude oil and refined product markets and the Company's intention to trade the four newbuildings in the Taurus LR2 Pool upon their respective deliveries; the expected amount of fuel savings to be achieved by the four LR2 newbuildings compared to existing Aframax/LR2 conventional tankers and the ability of these vessels to compete for future cargoes; and the relative attractiveness of the LR2 product tanker sector for investment and impact of current and expected industry fundamentals on future spot trading rates in this product tanker segment, including the potential for increased U.S. exports.
The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: vessel change orders and other modifications that would affect pricing on the four LR2 newbuildings; shipyard construction delays or factors, including insolvency, that could impact the ability of STX to complete delivery of the four LR2 newbuildings or to deliver additional vessels to the Company pursuant to the potential future exercise of shipyard options; the inability of the Company to secure long-term financing prior to the delivery for the four LR2 newbuildings; changes in the production of or demand for refined products; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in the global LR2 orderbook; future spot rates in Aframax and LR2 trades which may impact decisions to trade the LR2 newbuildings in the crude oil or refined product markets; the future existence of the Taurus LR2 Pool; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; and other factors discussed in Teekay Tankers' filings from time to time with the United States Securities and Exchange Commission, including its Report on Form 20-F for the fiscal year ended December 31, 2011. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.