APRIL 8, 2013 — "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," says Bruce Chan (left), CEO of Teekay Tankers Ltd. (NYSE: TNK).
Today, the company reports 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 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. On 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. Teekay Tankers 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.
"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," commented Mr. Chan. "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."