December 10, 2003
Teekay welcomes accelerated tanker phase out
Based on information provided by the IMO, 19 of Teekay Shipping Corporation's (Teekay)(NYSE:TK) total fleet of 149 vessels will be affected by the IMO accelerated phase-out schedule for single hull tankers, effectively reducing the economic life of each of these vessels. As a result of these regulations, the company expects to take a non-cash write-down to the book value of certain vessels totaling approximately $50 to $60 million in the fourth quarter of 2003, representing approximately 1.5 percent of the company's total assets. Teekay will be reviewing the depreciation policy of its non double-hull vessels to reflect the new regulations.
Bjorn Moller, Teekay's President and Chief Executive Officer, commented, "We view the amended IMO rules as very positive news for Teekay as one of the world's largest operators of high-quality modern tonnage. The accelerated phase-out of 12 percent of the world tanker fleet over the next two years coupled with the forecasted increase in global oil demand should offset the current tanker orderbook. As a result, we expect the current tight balance between tanker supply and demand to continue during this period. These regulations should also lead to increasingly difficult trading conditions for single-hull tankers from 2010, if not sooner. It is therefore appropriate to take a write-down due to the likely discrimination against single-hull vessels."
Over 83% of Teekay's fleet is either double-hull or double-bottom/sided, compared to approximately 68% of the current world tanker fleet.