Teekay Tankers Ltd. reported the Company’s results for the quarter ended June 30, 2025. As a result of the Company’s acquisition of Teekay Corporation Ltd.’s Australian operations and management services companies (collectively, the Acquired Operations) on December 31, 2024, financial information (excluding non-GAAP financial measures) in this release related to all periods prior to December 31, 2024 has been retroactively adjusted or recast to include the Acquired Operations on a consolidated basis in accordance with Common Control accounting as required under GAAP.

Consolidated Financial Summary

Second Quarter of 2025 Compared to First Quarter of 2025

GAAP net income and non-GAAP adjusted net income for the second quarter of 2025 included increases compared to the first quarter of 2025, primarily due to higher average spot tanker rates, partially offset by the sales of six vessels during the first half of 2025, as well as a higher number of scheduled dry dockings and the annual recognition of equity-based compensation in the second quarter of 2025. In addition, GAAP net income for the second quarter of 2025 included a $13.9 million gain from the sale of two vessels compared to a $39.0 million gain from the sale of four vessels and a $4.7 million unrealized loss on investment in marketable securities in the first quarter of 2025.

Second Quarter of 2025 Compared to Second Quarter of 2024

GAAP net income and non-GAAP adjusted net income for the second quarter of 2025 decreased compared to the same period of the prior year, primarily due to lower average spot tanker rates, as well as certain fleet changes, including the sales of eight vessels, the acquisition of two vessels, and the redelivery of four chartered-in vessels at various times between the third quarter of 2024 and the end of the second quarter of 2025. In addition, GAAP net income for the second quarter of 2025 included a $13.9 million gain from the sale of two vessels.

CEO Commentary

“Teekay Tankers posted strong financial results for the second quarter of 2025, generating GAAP net income of $62.6 million and adjusted net income of $48.7 million,” commented Kenneth Hvid, Teekay Tankers’ President and Chief Executive Officer. “Spot tanker rates were counter-seasonally strong during the quarter with rates outperforming the last two quarters and at levels well above the historical average for a second quarter. So far in the third quarter, we have seen rates soften slightly in line with normal seasonal trends. Looking ahead, with OPEC+ unwinding production cuts at an accelerated pace, an increase in non-OPEC+ production in the Atlantic Basin, and low global oil inventories, we believe Teekay Tankers is well-positioned to benefit from the potential seasonal tanker demand uplift later in the year.”

“Since reporting earnings in May 2025, the Company continues to be active on its fleet renewal plan, acquiring one modern Suezmax vessel and opportunistically agreeing to purchase the remaining 50% ownership interest of the Hong Kong Spirit VLCC. Simultaneously, we continue to realize historically high values for older vessels by agreeing to sell an additional five vessels for total combined proceeds of approximately $158.5 million, which we expect to result in estimated book gains on sale of approximately $46 million.”

“With our low cash flow break-even levels and significant balance sheet strength, we believe Teekay Tankers is very well positioned to continue to generate significant free cash flow while we continue to take incremental steps on fleet renewal and return capital to shareholders.”

Summary of Recent Events

Vessel Purchases

In late-May 2025, the Company completed the previously announced purchase of a 2019-built Aframax-sized vessel.

In July 2025, the Company purchased (1) a 2017-built Suezmax vessel for $64.3 million and (2) agreed to acquire a 2013-built VLCC for a purchase price of $63 million. The VLCC is currently owned through the Company’s 50/50 joint venture, and the vessel is expected to be delivered to the Company during the third quarter of 2025. Upon completion of the sale of this VLCC to the Company, the joint venture will be unwound and net proceeds, after the repayment of debt totaling $15.0 million and settlement of working capital, will be distributed to the shareholders of the joint venture.

Vessel Sales

In April and May 2025, the Company completed the previously announced sales of a 2006-built and a 2009-built Suezmax vessel for combined gross proceeds of $62 million and gains on sales of $13.9 million, which were reflected in the second quarter of 2025.

Since reporting earnings in May 2025, the Company has agreed to sell four Suezmaxes vessels and one Aframax- sized vessel for total gross proceeds of $158.5 million. Three Suezmax vessels and one Aframax-sized vessel are expected to be delivered in the third quarter of 2025. The remaining Suezmax vessel is expected to be delivered in the third or fourth quarter of 2025. The combined accounting gains from these sales are estimated to be $46 million.

The Company’s Board of Directors declared its regular, fixed quarterly cash dividend in the amount of $0.25 per outstanding common share for the quarter ended June 30, 2025. This dividend is payable on August 22, 2025 to all of Teekay Tankers’ shareholders of record on August 11, 2025.

Tanker Market

Mid-size crude tanker spot rates improved during the second quarter of 2025 compared to the first quarter of 2025, primarily due to the impact of longer average voyage distances during April. Rates subsequently softened during the remainder of the quarter in line with normal seasonal trends, though the market saw a brief period of volatility in mid-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.

In the near term, rising crude oil production and seaborne exports during the second half of the year should be positive for tanker demand heading into the seasonally stronger winter months. The OPEC+ group continues to unwind the 2.2 million barrels per day (mb/d) of voluntary production cuts that have been in place since late-2023 with the announcement of a 548 thousand barrels per day (kb/d) increase during August. This follows the return of 137 kb/d of production in April and the unwinding of 411 kb/d in each of May, June, and July. By August, the group is expected to have returned 1.9 mb/d of the 2.2 mb/d in voluntary supply cuts and is expected to unwind the full amount by September 2025, a year ahead of the original schedule.

While OPEC+ is in the process of returning production to the market, we have yet to see this being fully reflected in seaborne exports as a portion of this extra production is being consumed in the Middle East to meet rising power demand during the summer months. However, we expect that Middle East crude oil exports will rise after the summer, creating additional tanker demand during the latter part of the third quarter and into the fourth quarter of 2025. New offshore oil production coming online in Brazil and Guyana should also increase overall volumes and support crude tanker tonne-mile demand during the second half of the year.

Looking further ahead, the medium-term demand outlook remains complex due to a combination of economic and geopolitical factors. Uncertainty surrounding U.S. trade tariffs continues to cloud the economic outlook, with most major forecasting agencies having lowered their outlook for global GDP and trade growth since the start of the year. As a result, the IEA has lowered its outlook for global oil demand growth in 2025 to 0.7 mb/d, compared to forecast growth of 1.0 mb/d at the start of the year, with further growth of 0.7 mb/d projected in 2026.

Geopolitical events continue to have an outsized influence on global oil and tanker markets. While the recent conflict between Israel and Iran did not have a material impact on regional oil production, exports, or tanker movements, it did highlight the importance of the region to the global oil trade with over 20 mb/d of oil flowing from the Middle East Gulf. More recently, Houthi rebels have resumed attacks on shipping in the Red Sea, which is likely to constrain vessel transits through the region and support tonne-mile demand as vessels take longer routes.

The conflict between Russia and Ukraine continues, with the EU recently implementing a new sanctions package that includes a lowering of the price cap from $60 per barrel to $47.60 per barrel, a ban on the import of refined products made from Russian crude, and the addition of 105 tankers to the sanctioned vessel list. Following the most recent round of sanctions a total of 530 Aframaxes, Suezmaxes, and VLCCs (or 19% of the fleet) with an average age of 20 years is now under some form of sanction. Should there be a reversal of sanctions, we believe that the majority of these vessels will have difficulty returning to conventional trading given that 60% are aged 20 years or older.

The pace of tanker orders(1) has slowed in 2025 with orders for just under 11 million deadweight tons (mdwt) placed in the first half of 2025 compared to 42 mdwt in the same period of 2024. The orderbook for tankers(1), when measured as a percentage of the tanker fleet, has stabilized in recent months at approximately 15% across the tanker fleet(1). A lack of tanker scrapping means that the fleet continues to age, with the average age of the tanker fleet(1) at a 25-year high of 14.0 years as of the start of July 2025. We believe the combination of the current orderbook, an aging tanker fleet, and constraints on available yard space should result in relatively low levels of tanker fleet growth over the medium term.

In summary, the Company believes that the near-term outlook for spot tanker rates will be positive after the seasonally weaker summer months. However, while fleet supply fundamentals continue to look supportive, there are economic and geopolitical uncertainties that make it difficult to predict how, and along what specific timeline, things will unfold for the tanker market in the medium term.

Full Report

Source: Teekay Tankers