Teekay LNG Partners (NYSE: TGP) reported Q2 EPS of $0.00, $0.63 worse than the analyst estimate of $0.63. Revenue for the quarter came in at $325.48 million, versus $482.81 million reported last year.

• Total adjusted EBITDA(1) of $171.9 million in the second quarter of 2021.
• Teekay Parent reduced its asset retirement obligation (ARO) associated with the Banff FPSO by approximately $33 million in the second quarter of 2021.
• Teekay LNG’s LNG fleet is 98 percent fixed for the remainder of 2021 and 89 percent fixed for 2022.
• Teekay Tankers counter-cyclically in-chartered three Aframax-sized vessels for periods of 18 to 24 months, plus extension options.

CEO Commentary“In the second quarter of 2021, we recorded a small consolidated adjusted net profit. Our results were down from the previous quarter mostly due to weaker spot tanker rates and a heavier-than-normal drydocking schedule in both our gas and tanker businesses,” commented Kenneth Hvid, Teekay’s President and CEO. “During the quarter, we also reached a major milestone on the path towards our strategic goal of winding down our FPSO segment. We have now largely completed all of our remaining obligations related to the Banff FPSO and its respective field, including securing a contract with the customer to assume our remaining subsea decommissioning responsibilities, which resulted in a $33 million reversal of our asset retirement obligation liability in the second quarter of 2021. At this time, our remaining material exposure to the FPSO market is effectively limited to the Hummingbird Spirit FPSO, which continues to operate under its existing contract with steady production and high uptime.”

Mr. Hvid continued, “Our gas business continues to deliver solid performance and strong earnings despite a heavy drydock schedule. The outlook for the LNG shipping market is positive, as reflected in the current strong spot and time charter LNG shipping rates, which we believe should provide tailwinds for Teekay LNG through its spot market-linked charter contract as well as its upcoming charter renewals in 2022. Teekay LNG does, however, continue to have nearly all of its 2021 and a vast majority of its 2022 revenue days already secured on fixed-rate charters, which are generating consistent cash flow. Looking at our oil tanker business, although the near-term outlook is uncertain due to COVID-19, we believe many of the leading indicators for a tanker market recovery continue to improve, including planned increases in OPEC+ production, declining global oil inventories, which are below five-year average levels, and positive tanker fleet supply fundamentals as reflected in a low orderbook, heightened scrapping and a very limited amount of new tanker orders. In anticipation of a tanker market recovery, Teekay Tankers counter-cyclically in-chartered three vessels for periods of 18 to 24 months with extension options.”

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