Our business is to own crude oil and product tankers and we employ a chartering
strategy that seeks to capture upside opportunities in the spot market while
using fixed-rate time charters to reduce downside risks. Teekay Corporation,
which formed us in 2007, is a leading provider of marine services to the global
oil and natural gas industries and the world’s largest operator of medium-sized
oil tankers. We believe we benefit from Teekay Corporation’s expertise,
relationships and reputation as we operate our fleet and pursue growth opportunities.
We have acquired the majority of our current operating fleet from Teekay Corporation
at various times since our inception and we anticipate additional opportunities
to expand our fleet through acquisitions of tankers from third parties, and
additional tankers that Teekay Corporation may offer to us from time to time.
These tankers may include crude oil and product tankers.
Since the first quarter of 2013, we have distributed to our shareholders a
fixed quarterly dividend of $0.03 per share ($0.12 per share annually), which
is reviewed from time to time by our Board of Directors. Prior to the first
quarter of 2013, we distributed to our shareholders on a quarterly basis, all
of our Cash Available for Distribution, subject to any reserves our Board of
Directors determined to be required for prudent conduct of our business.
Dividend Policy.
Under the supervision of our executive officers and Board of Directors, our
operations are managed by Teekay Tankers Management Services Ltd. (our Manager),
a subsidiary of Teekay Corporation, that provides to us commercial, technical,
administrative and strategic services. We have entered into a long-term agreement
with our Manager (the Management Agreement) pursuant to which our Manager and
its affiliates provide to us technical, administrative and strategic services.
Commercial services are provided to us by other wholly or partially owned subsidiaries
of Teekay Corporation that manage the Gemini Suezmax Pool, the Teekay Aframax
Pools and the Taurus Tankers LR2 Pool. We pay our Manager a market-based fee
for its services. In order to provide our Manager with an incentive to improve
our operation and financial conditions, we have agreed to pay a performance
fee to our Manager under certain circumstances, in addition to the basic fee
provided in the Management Agreement.
We employ our chartering strategy based on the outlook of our Manager for freight
rates, oil tanker market conditions and global economic conditions. We employ
our vessels on fixed rate time-charter out contracts and in various pooling
arrangements, the majority of which are managed by wholly or partially owned
subsidiaries of Teekay Corporation which employ vessels on the spot market.
By employing some of our vessels in these pooling arrangements with Teekay,
we believe we benefit from Teekay Corporation’s expertise in commercial
management of oil tankers and economies of scale of a larger fleet, including
higher vessel utilization and daily revenues. We also believe that these pooling
arrangements limit Teekay Corporation’s ability to compete with us in
the spot market.
Expand our fleet through accretive acquisitions. Since our initial public offering,
we have purchased 21 conventional tankers from Teekay Corporation at prices
equal to their fair market values. In the future, we anticipate growing our
fleet primarily through acquisitions of tankers from third parties, by securing
additional third parties in-chartered vessels and by ordering newbuildings.
Tactically manage our mix of spot and charter contracts. We employ a chartering
strategy that seeks to capture upside opportunities in the spot market while
using fixed-rate time charters to reduce downside risks. We believe that our
Manager’s experience operating through cycles in the tanker spot market
will assist us in employing this strategy and seeking to maximize operating
results.
Increase cash flow by participating in the pooling arrangements. Through the
participation of a significant number of our vessels in the Gemini Suezmax Pool,
the Teekay Aframax Pools and the Taurus Tankers LR2 Pool, we believe that we
benefit from Teekay Corporation’s reputation and the scope of Teekay Corporation’s
operations. We believe that the cash flow we derive over time from operating
some of our vessels in these pooling arrangements exceeds the amount we would
otherwise derive by operating these vessels outside of the pooling arrangements
due to higher vessel utilization and daily revenues. We also derive pool and
vessel management income as a result of our August 2014 purchase of a 50% interest
in TTOL, which includes Teekay Corporation’s conventional tanker commercial
and technical management operations and is the owner of interests in three of
the pooling arrangements. We seek to increase this fee income by increasing
the number of vessels participating in the applicable pooling arrangements and
receiving management services from TTOL.
Provide superior customer service by maintaining high reliability, safety, environmental
and quality standards. We believe that energy companies seek transportation
partners that have a reputation for high reliability, safety, environmental
and quality standards. We leverage our reputation for operational expertise
and customer base to further expand these relationships with consistent delivery
of superior customer service through our Manager.
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