Teekay expects to wind down FPSO segment by year-end

Teekay is on course to bring its floating production, storage and offloading (FPSO) segment to a close by the end of 2022.

It follows the sale of two of its major vessels in recent months, as the company makes good on its ambition to exit the FPSO game.

Buyers have been found for the Sevan Hummingbird FPSO and Petrojarl Foinaven FPSO, both of which have served long stints in the North Sea.

© Supplied by Teekay

Foinaven is due to leaves the namesake West of Shetland field imminently, headed for Hunterston Port, though it is still not known whether it will be decommissioned there.

A buyer for the aged vessel has been found, Bermuda-headquartered Teekay has confirmed, but a name is yet to be revealed.

Meanwhile the Hummingbird has been acquired by North Sea operator Ping Petroleum for use on the Avalon field, 75 miles north-east of Aberdeen.

It will remain in the Port of Nigg for the next few months while modifications are made, before it heads for the North Sea once more.

The sale of Hummingbird and Foinaven will likely cover the break up costs of each unit, Teekay said in its first half results, published Thursday.

Kenneth Hvid, the vessel owner’s president and chief executive, said: “I am pleased to report that we successfully completed the sale of the Sevan Hummingbird FPSO to a third party on July 1, 2022. The proceeds from the sale of the Sevan Hummingbird FPSO combined with a contractual lump sum from our customer on the Petrojarl Foinaven FPSO, which is expected to be received in the third quarter of 2022, are anticipated to largely cover the remaining decommissioning costs relating to these two units and we expect to substantially complete the wind-down of our FPSO segment by the end of the year.”

For the second quarter of 2022, Teekay declared total adjusted earnings before interest, tax, depreciation and amortisation (ebitda) of $50.6 million.

Revenue for the first half of the year stood at $493m, up from $337m in the same period in 2021.

Teekay also reversed large losses from vessel operations, posting profits for H1 2022 of $14.2m.

Mr Hvid said: “Our consolidated financial results for the second quarter of 2022 were higher than the previous quarter, primarily due to higher spot tanker rates and lower general and administrative expenses, partially offset by the sale of all of our interests in Seapeak LLC in mid-January 2022.

He added: “The impact of Russia’s invasion of Ukraine is reshaping the global energy markets. We believe that the increased tanker tonne-mile demand due to changes in crude oil trading patterns, combined with increasing oil consumption as part of continuing economic re-opening and the low tanker orderbook are all constructive for tanker rates.

“During the second quarter of 2022, Teekay Tankers saw charter rates reach their highest level in two years and rates have further strengthened into the third quarter of 2022. Teekay Tankers’ fleet of nearly 50 medium-sized tankers provides attractive operating leverage in a strengthening tanker market.”