Teekay Corporation Price & Performance (TK)

So So the OPEC sanctions, they are having an impact. As you said, we don't know what the future is from here, whether we're going to get more sanctions or or relaxation on sanctions. But as Ken said in his remarks, all this uncertainty does create volatility when you have changes to trade patterns, disruptions, it all speaks to volatility. So we are seeing a bit of an impact in the freight market, but as you said, very difficult to sort of project forward how this is going to evolve in the coming months. [indiscernible] Thanks, Christian. I appreciate the color there. And Kenneth, thank you as well. I'll turn it over. We'll move next to Ken Hoexter with Bank of America. Hey, great. Good morning. If I guess talking about the rates, right? So we had 24 and $28,000 per day for the Suezmax Aframax at what's just about two thirds and just over half. Of the the quarterly days booked. That's down a bit from the fourth quarter, but yet talking about more sanctions having a positive impact, seasonally colder weather. Increasing power needs. So is the additional capacity creating the bigger overhang? What's driving what's your thoughts on what's driving the rates pressure on rates near term here?

Yes. I mean, for sure, we I think in Suezmaxes, there was a weaker finish to 2024 and a weaker start to 2025. And I think what we've seen now is an uplift certainly this week the fixture list is significantly stronger than what we average So I think what's driving that as we talked about in the prepared remarks, Ken, is is really whereas these arbitrage that's moving up and the VLCCs that's been moving up and then some replacement barrels that really beginning to kick in now. As you recall, the sanctioned vessels, there was a bit of a delay on and they needed to offload and then there was scrambling for cargoes and that's driving it. So we just see more cargo demand in that Okay. And then if we think about I guess the delays in the tariffs and some of the delays that have gone on. If we start getting toward a point of peace in between Russia, Ukraine, and that's going to take some time to develop Same thing in The Middle East with the Houthis. What's your thought on how that pans out? What shifts you see first? How quick, I guess, based on historical experience?

Yes. I think that's where we in on President territory. We haven't really as I think back historically had this situation before As I said, if we just look at the medium sized tankers, what really stands out is that before the invasion, as we just had, over just over 100 ships that were over 20 years old And they were typically trading with charterers that didn't have the typical age restriction and they were typically lifting cargoes from countries where you had various degrees of sanctioned oil.

Of course, what the war created was this demand for additional vessels to facilitate that trade. And as we point out, that fleet has now grown up to well, the fleet is larger, but the number of vessels over 20 today is over 300 vessels, right? So it's growing just in three years from 100 to 300 basically because nothing has been scrapped. And what we are then also saying is that if that continues the sanctions, even though you can argue that the the parallel feature is is maybe becoming saturated, but then you have another round of sanctioned vessels that are that are taking place and then there's demand for more vessels that are not sanctioned that can carry the oil. So as long as that persists, think there is a demand for the older tankers So if nothing happens and we didn't scrap any vessels and that category, as we pointed out, we would actually be a safe type of vessels that are over 20. And there's nothing in history that that kind of tells us what how quickly that can unfold. I think what we can say is that if the trade normalizes, and what we all are subjected to in kind of the regular trade, I mean, we do see the the age restrictions that especially at 20 Teekay starts kicking in and in some cases with some charters even earlier than that.

So there is a lot of vessels here that I think will either be operating with very low utilization or will be parked somewhere. Or will start going to the scrap yards. At what pace that that's going to happen? I think that's the million dollar question. And I think it's the right question to ask. But I'm afraid we don't have the answer here.

Appreciate that. That's true. That's an awful lot. Compared to normal. So maybe just two quick ones just to wrap up. The seasonality that you normally see in through 1Q into 2Q, maybe could you just remind us of that? And then then you mentioned the vessel purchased. Are you seeing a lot of especially with that much overcapacity potentially hitting and what that could do to rates? Are you seeing more books come across your desk in terms of vessel sale opportunities?

Yes, good questions. First of all, just on where we see the rate side, I think we kind of touched on it and when we looked at it, typically when you come into Q4 and go out of Q1, you kind of have rates that start low and go up and then they start coming down as we get into Q2. These past two quarters, we've kind of seen the inverse of that, I would say. So a little bit unusual, but we've had unusual years in the past couple of years. But that's kind of where rates have been going. So we definitely looks like we're moving stronger in Q2, but it's kind of the inverse of what we saw last year. And in terms of S and P opportunities, yes, market has come down on vessels, which is also why we're beginning to lean in a bit as we said to John. I mean, and as we talked about on the last quarter, kind of see ourselves maybe selling a little bit faster than we're buying, but have fleet replenishment and we haven't we haven't done a lot in recent years.

And seeing prices into kind of a zip code that we're beginning to like again. So that's why we acquired one shift today and we'll continue to look for opportunities when people have had a couple of good years as most tank owners have had, Some owners have different priorities and as we continue to say, I mean, we're an operating company. We like to have a certain scale in the market. So we'll obviously be focused on trying to renew the favor. We'll do it at a very measured pace here. Very helpful. Appreciate the thoughts. Thanks guys. Thanks, Bridget. And that will conclude the Q and A portion Thank you very much, Paul, for listening to our call today. We look forward to reporting back to you next quarter. Thank you. Have a good day. Thank you. Ladies and gentlemen, that conclude today's call.