Teekay Corp Ltd (TK) 2006 Q4 法說會逐字稿

Good morning; my name is [Frederica], and I will be your conference operator today. At this time, I would like to welcome everyone to the Teekay Shipping's Fourth Quarter Year-end Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [OPERATOR INSTRUCTIONS].

Thank you; Mr. Moller you may begin your conference.

Before Mr. Moller begins, and before I read the forward-looking statements, I would like to direct all participants to our website at www.Teekay.com where you will find a copy of the fourth quarter of 2006 earnings presentation. Mr. Moller and Mr. Lok will review this presentation during today's conference call.

I will now read the forward-looking statements. Please allow me to remind you that various remarks we may make about future expectations, plans and prospects for the Company and the shipping industry constitute forward-looking statements for purposes of the Safe Harbor provision under Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our most recent annual report on Form 20-F dated December 31, 2005 on file with the SEC.

I will now turn it over to Mr. Moller to begin.

Thank you, Scott; good morning, ladies and gentlemen and thanks for joining us on this morning's call.

Let me begin by thanking the many analysts who joined us for our Analysts' Day in New York last month to discuss the exciting developments at Teekay. We appreciate the follow-up work many of you have done, including the publication of a number of very thoughtful reports, and we plan to follow up with an Investors' Day later this spring.

On this morning's call, I'll review the key developments in our business in Q4 and our highlights for 2006, and our CFO, Vince Lok will discuss our financials. And we are also joined for the Q&A session by our Chief Strategy Officer, Peter Evensen.

Beginning with the highlights for the fourth quarter on slide three, I'm pleased to report to you on a quarter with strong operating performance and a number of important new strategic developments.

Our net income for the quarter on an operating basis was $79.2 million, or $1.06 per share. We generated cash flow from vessel operations, or CFVO, of $161 million, of which $107 million, or two-thirds, came from our fixed-rate businesses. In December, we successfully launched another Teekay growth vehicle with the IPO of Teekay Offshore Partners, or TOO. TOO has been well received by investors with a unit price up over 40% since the IPO.

We concluded a life-of-field extension on our largest shuttle tanker contract with Statoil, and have followed this deal with an order for two Aframax shuttle tanker newbuildings for delivery in 2010.

Teekay LNG opened a new growth avenue for its business, agreeing to acquire three LPG carriers from IM Skaugen.

We formed a tonnage pool with A.P. Moller-Maersk in the Intermediate Product Tanker Sector, and we continued our share repurchase program adding another 491,000 shares since our last report on November 2, 2006.

On slide number four, we highlight some of the key events that took place in 2006. With the consolidation of Teekay Petrojarl results, our revenues for the year exceeded $2 billion. For the year, net income, again on an operating basis, was $326 million, or $4.34 per share, and we generated $622 million of CFVO.

At the end of the year, our asset base had reached $7.7 billion, reflecting an average annual growth rate of more than 25% over the past six years, and we are continuing to expand significantly with the investment commitments across all of our business segments totaling 29 newbuildings and new vessel conversions valued at some $3.6 billion.

We made a strategic entry into the high-growth FPSO sector through a joint venture and a subsequent acquisition of 64.5% of shares in Petrojarl, and the Company was awarded the contract to supply an FPSO for the Siri project in Brazil. Early in the year, we secured a major new contract with Petrobras involving 13-year contracts and charters for three shuttle tankers.

Teekay spot Aframax fleet averaged #36,000 per day for the year, which somewhat surprisingly was only $1,000 below the figure for 2005 in spite of a combination of net growth in the world tanker fleet and low oil demand growth.

We took advantage of a temporary dip in newbuilding prices in early 2006 by placing orders for ten Suezmax newbuildings, including a number of vessels with shuttle features. These orders are currently in the money by more than $110 million.

In 2006, we bought back a total of eight million of our shares at a total cost of $233 million, bringing our total repurchases over the past two years to approximately 20 million shares, or 24% of our outstanding shares at an average price of just under $42, and this has clearly proven to be an excellent investment.

And finally, we increased our regular dividend payments for the fourth year in a row, this time by 14%.

As you can see, on many fronts 2006 was a great year for Teekay.

Next turning to slide five, I'm going to briefly review the significance of the Teekay Petrojarl opportunity. We are excited about our acquisition of Petrojarl because it has two avenues for major revenue growth; winning new business and repricing its existing out-of-the-money contracts, and I'm first going to talk about the growth opportunity. As a platform, Petrojarl is well positioned to win new projects. It has a position as an industry pioneer with over 20 years of experience in sophisticated harsh weather FPSOs. It has in-house engineering capability; it has a proven track record in project execution and reliable operations, which is critical, plus it has a cost of capital advantage through Teekay Offshore.

In today's offshore markets, new FPSO projects are very profitable. The Siri FPSO project, for example, is expected to generate annual CFVO of $30 million on an investment of around $160 million.

Slide six shows what's driving the FPSO growth opportunity, namely the increase in global deepwater oil production. Deepwater production, shown by the red lines and measured against the right-hand axis, is expected to almost triple between 2005 and 2015. Offshore oil reservoirs are strategically important to publicly listed oil companies because they're the only real opportunity to add to reserves outside of Russia and the Middle East.

High oil prices and technological advances are stimulating energy companies to push further offshore. Ten years ago, the industry was just learning to go after oil in water depths of up to 1,000 meters; today, companies are pursuing oil in ultra-deep water of 3,000 meters.

As shown on slide number seven, this growth is expected to translate into a near doubling of the world's FPSO fleet over the next five years from 111 units to approximately 200 units after accounting for the redeployment of certain existing units.

FSPOs are also increasingly becoming the popular choice in regions where exploration is going towards deeper waters, including Brazil, West Africa, and the Gulf of Mexico. Our growth prospects are further enhanced by the trend toward energy companies outsourcing to independent FPSO contractors.

On slide number eight, we highlight the second avenue for major value growth for Petrojarl, namely the repricing opportunity on existing FPSO units. Petrojarl's contracts were entered into during a much lower rate environment and today they are significantly out-of-the-money. In the next few years, Petrojarl has contractual opportunity to reprice some of its biggest contracts either by renegotiating their existing terms, or by pulling out of the contracts and seeking redeployment elsewhere at higher rates. Since these types of negotiations typically commence one to two years ahead of time, we should soon be entering the window for such discussions.

The recent repricing of the Petrojarl Varg FPSO contract is a good demonstration of the magnitude of the opportunity. In 2006, Petrojarl renegotiated an increase in the rate on this unit from approximately $155,000 per day to a new minimum rate of $220,000 per day plus upside if the production rate improves above today's level. This increase resulted in a doubling of annual CFVO on this vessel. And we are currently estimating Petrojarl's existing contract value to be out-of-the-money by $600 million.

Turning to slide nine, the acquisition of Petrojarl has made Teekay a one-stop provider of customized services across the floating production, floating storage, and transportation value chain. Let me give you some examples of how we add value by bundling these services in combinations that suit our customers' specific needs. On the Banff field for example, we have an FPSO which due to its limited storage capacity is being supported by one of our floating storage vessels.

On the Foinaven Field, we provide an integrated service that involves the customer paying us a fixed price per barrel of oil for the combined service of producing the oil onboard our FPSO then transporting it to shore onboard our shuttle tankers. And later this year, we will be commencing a long-term storage contract on the Volve Field in the North Sea using a recently-converted Teekay hull and we will also transport the oil onboard our shuttle tankers.

As shown on slide ten, our entry into the FPSO sector provides the final element in the marine midstream strategy of serving our customers from reservoir to refinery. In addition to floating production, floating storage and shuttling, we provide conventional crude oil transportation, ship-to-ship lightering, refined product shipping, and liquefied gas transportation.

Turning to slide 11, after the TOO IPO, we now have in place a corporate structure to facilitate our continued growth and meet our funding needs in each of our businesses. The access to low-cost capital provided by TGP and TOO supports the ambitious growth plans for our gas and offshore businesses, while our conventional tanker business resides within the Parent Company whose financial strength will allow us to make constant cyclical investments. This corporate structure represents a major competitive advantage for Teekay going forward.

Slide number 12 shows that our new corporate structure has also served to illuminate the value of Teekay. Today, the sum of Teekay's parts is more than $72 per share, and with conventional tanker values expected to stay high, our sum of the parts is only going to continue to go up driven by increasing GP and LP distributions, FPSO contract renewals, and the continued strong cash flow generation in our conventional tanker business. In fact, the $72 figure is already $5 higher than just four weeks ago when we held our Analysts' Day, mainly as a result of the rising unit prices in TGP and TOO.

On my remaining few slides I will briefly reviews the main developments in each of our segments. You will have noticed from our press release that following the TOO IPO and the Petrojarl acquisitions, we have reformatted our reporting into four segments; offshore, liquefied gas, fixed-rate tankers, and spot tankers.

Turning to slide 13, I will first look at the offshore segment, which now includes Petrojarl's results. CFVO was $60.8 million in the quarter, up from one year ago, and mainly due to the addition of Petrojarl's FPSOs and increases in certain shuttle tanker contract renewals. During the quarter, we signed a life-of-field extension on our biggest shuttle frame contract with Statoil covering the Norwegian Continental Shelf.

As I said, this is our biggest single shuttle tanker contract affreightment whose original term was due to expire at the end of 2007, but with this extension, we expect to be serving some oil fields under this contract beyond the year 2030. We followed up this contract renewal with orders for two Aframax shuttle tanker newbuildings from Korea, probably the most sophisticated shuttle tankers ever ordered. Scheduled for delivery in Q3 of 2010, the ships will either be used to service new long-term contracts that we may be awarded in the next couple of yeas, or on our existing COAs in the North Sea. This actually marks the first time since entering the shuttle business six year ago that Teekay has ordered fully-purpose built shuttle tanker newbuildings signaling I believe that the global shuttle business is set to grow as a result of increases in offshore production.

The conversion of two remaining tankers in our current three-ship Brazil shuttle project is ongoing, and the ships are scheduled to deliver on charter during the first and second quarter of 2007 respectively. These ships will be offered to TOO within a year of delivery.

And finally, we agreed to sell an older shuttle tanker that was surplus to our requirements for a firm price of $33 million.

Turning to slide 14, our liquefied gas segment, the segment saw CFVO rise to $19.9 million. As reported on our last call, we took delivery in Q4 of the first LNG newbuilding for RasGas II. I'm proud to mention that during its first loading operation, this ship achieved the best performance recorded for any LNG carrier that has ever loaded at the [inaudible] plant terminal in Qatar. The second vessel delivered in January this year and the third vessel is due to deliver at the end of this month. During the quarter, Teekay LNG agreed to acquire from IM Skaugen three LPG carriers. These ships, expected to deliver from a shipyard in China between early 2008 and the middle of 2009, will serve on the 15-year fixed-rate charters to Skaugen. And this transaction opens up a new platform for Teekay LNG to pursue in other growth markets.

Turning to the developments in our conventional tanker segment on slide 15, there were no new developments in our fixed-rate tanker segment, which performed well during the quarter, generating CFVO of $6 million. Our spot tanker segment produced CFVO of $54.3 million. Aframax fleets continued their strength from the previous quarter, with our Aframax fleet averaging TCO of $34,800 per day. Rates for medium-sized tankers continued their strength from the previous quarter, outperforming larger ship sizes on a relative basis due to the beneficial of growing non-OPEC production and limited exposures to reduced Middle East OPEC volumes.

On a pure spot basis, that is excluding the effect of hedges mentioned in the footnote on page four of our earnings release, our Suezmax fleet earned a healthy $44,900 a day. The current quarter is shaping up nicely with two-thirds of our spot tanker days locked in as an average Aframax rate of $37,.000.

Changes in our in-charter fleet resulted in a net reduction of one Aframax crude oil tanker and the addition of one MR product tanker. Our LR II product tanker newbuilding program saw the deliver in Q4 of the first of four vessels under construction. Since the beginning the year, we've taken delivery of two further vessels in this series and the fourth vessel is due to deliver in Q2.

We formed a pool with A.P. Moller-Maersk to combine our respective fleets of 15,000 to 20,000 tons of so-called intermediate product tankers. Swift Tankers, as the pool is known, is initially operating a fleet of some 25-plus ships, thereby offering a more flexible service to our customers in Northwest Europe. The fleet size is expected to increase to 35 ships over the next two year, and the pool may also expand its activities to other regions. It is noteworthy that Teekay's contribution to Swift Tankers consists purely of in-chartered vessels, illustrating the growing footprint of our freight-freighting strategy.

Turning briefly to our outlook for the tanker market in 2007 on slide 16, as a starting point there are no signs of any slack capacity in the world tanker fleet. This is also supported by data from Platou showing that the average utilization in the world's tanker fleet in 2006 was 89%, just one point below what is normally considered full utilization.

On the slide, we summarize the key dynamics in the supply/demand equation. Running through the supply figures on the left, Clarkson shows a 2007 auto book of 34 million tons. Typically each year there tends to be a 10% attrition from Clarkson's first estimate of deliveries due to construction delays and other factors so we are modeling 30.6 tons of expected deliveries. Mandatory scrapping is estimated at eight million tons this year. This is actually the highest figure since the new IMO rules came into effect, and we've already seen a significant pickup in the face of scrapping in the first two months of the year.

Ships are leaving the fleet at a high rate to be converted for other uses, mostly offshore. Conversions reported by Clarkson, plus additional tonnage which our intelligence indicates as being committed for other uses already stand at 2.5 million tons just seven weeks into the year. Because some of these conversions are likely to come from vessels already counted in the mandatory scrapping pool, we have conservatively assumed that only three million tons of non-mandatory tonnage will leave for conversion this year. This gets us to our net estimated fleet growth this year of 19.6 million tons, or 5.2% of the world fleet.

On the demand side, the IEA recently increased its forecast of 2007 oil demand growth to 1.8%. Translating this figure into tanker demand growth using the rule of thumb multiplier of 2.5 times points to an increase in tanker demand of 4.5%, practically offsetting net fleet growth. The 2.5 times multiplier may prove to be conservative. On past calls, we've talked about how changes in freighting patterns are increasing the average length of haul and that this is substantially underpinning the tanker market.

In addition, we may see more long-haul OPEC oil in the second half of the year. Current reduced OPEC production will not allow to normal Q2 oil inventory buildup so OPEC will likely have to raise production to meet seasonal demand increases later this year. Our conclusion is that tanker supply and demand both at growth again will be finally balanced in 2007. With no spare capacity available in the world fleet to absorb shock to the system, we believe that any major directional change in the tanker rates in 2007 is most likely to be to the upside.

Now I'll hand it over to Vince to discuss our financial results in more detail.

Thanks Bjorn. Overall our fourth quarter results were consistent with our third quarter results. Net income for the fourth quarter was $60.3 million, or $0.81 per share. This included a number of items that on a net basis had the effect of decreasing net income by $18.9 million, or $0.25 per share. Without these items, where largely relate to unrealized foreign exchange-related items, and a write down of equipment, net income would have been $79.2 million, or $1.06 per share.

Our consolidated financial statements now include the account of Petrojarl from October 1, 2006 as a result of our 64.5% interest in Petrojarl. We are in the process of finalizing certain elements of the purchase price allocation and therefore the allocation is subject to further refinance. However, should there be any adjustments to allocation in future quarters, any resulting changes may impact depreciation or amortization but would not affect cash flow.

As I review the financial results, I will specifically highlight changes resulting from the consolidation of Petrojarl. I should point out that Petrojarl has been included in our financial statement in accordance with U.S. GAAP, including purchase price adjustments in Teekay's income statement and balance sheet format. Consequently these amounts are not directly comparable to Petrojarl's recently-released International GAAP-based fourth quarter results.

Looking at the operating results of each of our segments on slide 18 of the presentation, overall cash flow from vessel operations, or CSVOs amounted to $161 million compared to $204 million in the fourth quarter of 2005. As Bjorn mentioned, and as shown on the slide, we have expanded our segment reporting into four segments to include Petrojarl's four FPSOs. We have also reclassified comparative periods to reflect these new segments.

Our offshore segment includes our shuttle tankers, FSOs and Petrojarl's fleet of FPSOs. This segment generated CSVO of $60.8 million, up from $48.6 million in the same period last year. This increase primarily reflects the addition of $17 million of CSVO from Petrojarl, partially offset by an increase in the operating expenses in our shuttle tanker fleet due to higher repairs and maintenance costs. We expect our offshore segment CSVO to be in the range of $60 to $65 million in the first quarter of 2007.

Our fixed-rate tanker segment, which includes Teekay LNGs fixed-rate Suezmax fleet, and other conventional tankers directly operated by Teekay on long-term contracts, generated $26 million in CSVOs during the fourth quarter, virtually unchanged from the $26.7 million in the fourth quarter of 2005.

Our liquefied gas segment, which includes our LNG and LPG carriers generated $19.9 million in CSVOs during the quarter, up from the $17.3 million in the previous year. This increase was primarily due to the delivery of our fifth LNG carrier on October 31, which is on charter to RasGas II. As previously agreed, this vessel, along with two other RasGas II vessels, which were then under construction, were sold to our 68% owned subsidiary Teekay LNG Partners. The second RasGas II vessel delivered on January 2 and a third vessel is scheduled to deliver later this month.

We expect CSVO from the liquefied gas segment to be approximately $25 million in the first quarter, and approximately $30 million in the second quarter after the delivery of all three RasGas II vessels.

In addition to the RasGas II carriers, we have six other LNG and three LPG newbuildings on order, which are scheduled to deliver during 2008 and 2009. The contribution from our spot tanker segment was $54.3 million in the fourth quarter compared to $111.5 million in the fourth quarter of 2005. This decrease was primarily due to the very high spot tanker rates experienced in the fourth quarter of last year and a reduction in the size of our spot in-charter fleet during the past year.

Our spot Aframax fleet earned an average TCE rate of $34,800 per day in the fourth quarter of 2006, which is down from the $48,000 per day earned in the same period last year. However, our spot tanker fleet earned an average TCE rate of $35,800 per day for the year ended 2006, December 31, 2006, which is comparable to the average earned in 2005 of $36,800.

Turning next to slide 19 and reviewing the remaining income statement figures in comparison to the fourth quarter 2005, voyage revenues in the fourth quarter of 2006 included $95.5 million from Petrojarl, including non-cash revenue of $22.4 million on the amortization of in-process revenue contracts recorded as pat of the purchase price allocation. The term "in-process revenue contract" represents the negative value currently assigned to the existing Petrojarl charter contracts, as those contracts are presently below market levels.

On acquisitions, this negative value is recorded as a liability on Teekay's consolidated balance sheet as part of the purchase price allocation and is being amortized to revenue for the weighted remaining term of those contracts of approximately five years.

Excluding the impact of Petrojarl, G&A expenses were $44.3 million compared to $45.4 million in the fourth quarter of 2005. This $1.1 million decrease is not directly comparable because the 2006 quarter included a $2.5 expense for stock options as per our adoption of FAS-D123 in 2006. Excluding stock option expenses, G&A expenses declined by $3.6 million from the previous year due primarily to a reduction in the crew's bonuses.

Petrojarl's G&A expenses in the fourth quarter of $12.1 million included $2.9 million in non-recurring items, which are not expected to recur in 2007. Including the impact of our acquisition of Petrojarl, we currently expect G&A expenses to run in the $53 to $57 million range for the first quarter.

The $4.8 million on write downs in vessels and equipment for the quarter included a $5.5 million write down of a volatile organic compound, or VOC plant on one of our shuttle tankers, which was redeployed from the North Sea to Brazil. This VOC plant will be reinstalled on one of our other shuttle tankers operating in the North Sea.

During the fourth quarter of 2006, we incurred $1.5 million of restructuring costs, which completes the relocation of certain operational functions which we discussed earlier this year.

Excluding $6 million of net interest expense relating to Petrojarl and $8.7 million of additional interest expense incurred by Teekay as a result of the Petrojarl share acquisition, net interest expense increased to $26.6 million in the fourth quarter, up from $22.8 million in the year ago, primarily due to newbuilding deliveries and increase in interest rates on our floating [array sets] and the expiring of certain more stable interest rate slots earlier in the year. This is partially offset by the repurchase of 32 million of our bonds and the conversion of our exchangeable [inaudible] to equity in February 2006.

We recognized an income tax expense of $2 million this quarter, which was primarily related to unrealized foreign exchange gains. Excluding the effect of the foreign exchange gains, we recognized an income tax recovery of $3 million in the fourth quarter. Excluding any foreign exchange impact, we estimate a similar tax recovery in the first quarter.

Minority interest expense -- I'm sorry, minority interest recovery in the fourth quarter was $4.2 million, which relates primarily to the minority interest expense in Teekay's LNG unrealized foreign exchange losses and the minority interest in the results of Petrojarl. Excluding the foreign exchange impact minority interest expense in the fourth quarter was $700,000. With the full quarter of Teekay Offshore, we expect that minority interest expanse will be roughly $5 to $6 million next quarter.

Other items net of $2.9 million comprises mainly of income from our [VSD] assets, partially offset by our write down of capitalized loan costs.

Turning to slide 20, we are presenting the December 31 balanced as compared to the September 30 balance sheet. The majority of the changes to the balance sheet from last quarter are due to the consolidation of Petrojarl. As a result of the purchase price allocation, Petrojarl's assets include 64.5% of the fair value adjustment. Cash and cash equivalents balance of $344 million include $62 million of Petrojarl and cash.

Vessels and equipment increased by $1.8 billion from the previous quarter of which $1.3 billion is related to Petrojarl, and the remaining $500 million is mainly related to the delivery of the RasGas II LNG vessel, a newbuilding product tanker, and the consolidation of five 50% owned shuttle tankers which previously were equity accounted for.

The majority of the $139 million increase to intangible assets and goodwill is related to the Petrojarl acquisition. Total debt, including current portion, increased by $700 million primarily due to the consolidation of $325 million of Petrojarl's debt and $220 million of debt associated with the five shuttle tankers, and the purchase of an additional 22% interest in Petrojarl during the fourth quarter. This was partially offset by the net proceeds from the Teekay Offshore IPO and cash flow generated from operations during the quarter.

Included in other long-term liabilities is approximately $400 million in in-process revenue contracts. As I indicated earlier, this represents our 64.5% share of the negative value we have currently assigned to Petrojarl's existing charter contracts, which are presently out-of-the-money.

Minority interested by $178 million, reflecting mainly the minority share of assets of Petrojarl and Teekay offshore, as well as the consolidation of the five shuttle tankers previously mentioned.

Our consolidated liquidity as of December 31 was $2.1 billion, up significantly from $938 million at September 30 as a result of a number of financings and refinancing completed during the fourth quarter, as well as the IPO Teekay Offshore and the inclusion of Petrojarl's liquidity. Approximately $1.1 billion of the total liquidity is at the Teekay Parent level and the remainder is in the two MLTs and Petrojarl.

Net of restricted cash net debt capitalization was 47.5% at the end of the year, an increase from 42% at September 30, reflecting the increase in our debt as explained earlier.

Turning to slide 21, over the past quarter we have repurchased approximately half million shares for a total cost of $21 million, and at an average price of $42.74 per share. If the remaining share repurchase authorization of approximately 100 million is completed at an average price of about $50 per share, we will have repurchased almost 22 million shares or 26% of outstanding shares since November 2004 when our initial share repurchase was announced.

Looking forward to the results of the first quarter of 2007, we have booked approximately two-thirds of our spot voyage fleet at an average Aframax rate of $37,000 per day. On slide 22, our rule of thumb EPS guidance is a quarter EPS of $0.06 for every $1,000 Aframax [inaudible] above our net income rate of about $16,000 per day. This takes into account the consolidation of Petrojarl, which we currently expect to have a minimal effect on our net income.

We have increased our estimated net income rates level by $500 per day, reflect a higher average in charter rate for our spot fleet and higher operating expenses.

Overall, we are expecting a strong first quarter in each of our segments. In addition, with our large newbuilding program and projects incurred through 2010, we have a significant of built-in growth. In 2007, we will be taking delivery of two newbuilding LNG carriers for RasGas II, two shuttle tankers which will go on charters to Petrojarl, three newbuilding charter tankers, and one FSO unit, all of which will further augment our operating cash flow. With the completion of Teekay Offshore IPO, and our strong liquidity position, we believe that we are well positioned to take advantage of further value-enhancing growth opportunities.

I will now turn over to Bjorn to conclude.

Thank you Vince; and turning to slide 23, as we told analysts in New York last month, Teekay has a long history of being an excellent tanker Company, and this part will always be a proud part of our heritage. However, in recent years, we've become so much more than just a tanker Company; today we are a rapidly growing asset management Company focused not he marine midstream space. You see on this slide the four strategic components that form the basis for our shareholder value creation, namely being disciplined traders in a cyclical commodity industry; applying Teekay's operational franchise towards delivering safe, high quality service to our customers; leveraging our multi disciplinary expertise to successfully securing, executing, and managing value-added projects; and continuing to develop an innovative corporate structure such as our MLPs to facilitate our profitable growth.

Thank you for listening this morning. Vince, Peter, and I are now ready to take your questions.

[OPERATOR INSTRUCTIONS].

Okay well, it seems like we've given you all the information that you needed this quarter, which is great, and we really appreciate you listening in. Thanks very much, and we are excited to go back to our desks and keep adding shareholder value. Thanks; have a great day.

This concludes today's conference call and you may now disconnect.