Teekay Corporation Ltd.

Welcome to TK's Corporation Third Quarter 2020 Earnings Results Conference Call. During the call, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question and answer session. At that time, if you have a question, participants will be asked to press star 1 to register for a question. For assistance during the call, please press star 0 on your touchtone phone. As a reminder, this call is being recorded. Now. For opening remarks and introductions, I would like to turn the call over to the company.

Before we begin, I'd like to direct all participants to our website at www.tk.com, where you'll find a copy of the third quarter 2020 earnings presentation. Kenneth and Ravince will review this presentation during today's conference call. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the third quarter 2020 earnings release and earnings presentation available on our website. I'll now turn the call over to Vince Locke, TK Corporation's Group CFO, to begin.

Thanks, Ryan. Hello, everyone. Thank you for joining us today for TK Corporation's third quarter 2020 earnings conference call, and we hope that you and your families are safe and healthy. I will briefly review our financial results for the quarter and provide an update on our three FPSOs before handing the call over to Kenneth. Starting with our recent highlights on slide three of the presentation. In the third quarter of 2020, we reported our fourth consecutive quarterly adjusted profit with consolidated adjusted net income of 15 million or 15 cents per share compared to an adjusted net loss of 24 million or 24 cents per share in the same period of the prior year. We also generated total adjusted EBITDA of 227 million, an increase of 34 million, or 18%, from the same period of last year. Compared to the third quarter of last year, our stronger results this quarter is driven by higher adjusted earnings in each of our main businesses. With this growth program completed late last year, TK LNG generated strong earnings and cash flows this quarter, despite a heavy scheduled dry dock program. TK tankers also reported positive adjusted net income and outperformed a weak spot tanker market on the strength of fixed rate charters secured over the past several quarters at attractive levels. And TK parents' results improved due to higher earnings from the Foyne Haven and Hummingbird FDSOs and lower net G&A expenses. partially offset by lower earnings from the BAMF FPSO, which ceased production and commenced decommissioning in June 2020, which I will discuss in more detail on the next slide. Looking ahead, we are expecting to report another positive adjusted net income next quarter, though we expect our tanker results to be weaker due to lower spot tanker rates and a higher number of scheduled dry dockings in the tanker fleet. partially offset by stronger earnings from our gas business due to fewer scheduled dry dockings in the gas fleet in Q4. For guidance on our fourth quarter results, please refer to the appendix of this presentation. Turning to the balance sheet, we have continued to increase the financial strength across the TK Group, which is one of our strategic priorities. Over the past year, we reduced our consolidated net debt by over $940 million or 22%, which created significant equity value and reduced our interest expense throughout the group. We have also increased our total consolidated liquidity from $0.6 billion to $1.1 billion on a pro forma basis as of September 30th, which provides financial strength and flexibility. Lastly, at TK Parent, using some of our cash balances we opportunistically repurchased $14.4 million in principal amount of our existing convertible and secured bonds for a total consideration of $11.9 million at all and average prices of $81.55 and $92.23, respectively. In addition, we also completed the refinancing of our equity margin revolver of up to $150 million, which remains fully undrawn, and we eliminated all intercompany debt guarantees with T&K's recently completed debt refinancing of four Suezmax tankers. Turning to slide four, we continue to make progress in winding down our FPSO segment. The Fawn Haven FPSO has been operating under a long-term bare-boat charter contract at a nominal day rate since receiving an upfront $67 million cash payment in April 2020. And importantly, we have eliminated our operational exposure to the previous loss-making contract. We are pleased to report that we are nearing completion of phase one of the BAMF FPSO decommissioning project, which has been progressing well in terms of both schedule and budget. The FPSO unit left its field as scheduled in late August, and we are now preparing for the green recycling of the unit in the first quarter of 2021. As we discussed last quarter, we have continued to wind down the operating costs of the unit during decommissioning, incurring $11 million of net operating costs in the third quarter, which is lower than forecast, and we expect this to be further reduced in the fourth quarter to approximately $5 million, with ongoing operating costs to be largely eliminated by the end of the year, apart from costs that may be incurred to recycle the unit early next year. As a reminder, the BAMF has a unique contract structure where TK is also responsible for part of the remediation of the subsea infrastructure. We had already accrued these costs on our balance sheet in prior periods as an asset retirement obligation, or ARO. During the third quarter, we incurred about $12 million of ARO costs, and as at September 30th, our remaining net ARO accrual was $34 million. We expect to incur approximately 5 million of these ARO costs in the fourth quarter and the remaining ARO expected is expected to be incurred as part of phase two in the summer of 2021. Lastly, the Hummingbird FPSO continues to operate on the chestnut field under a fixed rate contract. However, the Charter has the right to terminate the contract as early as mid 2021 if the field is deemed uneconomic. we had a small remaining book value on the unit of about 12 million, which we decided to write off in the third quarter, based upon conservative assumptions related to the continued weakness in oil prices and the possibility that Charter could choose to exercise its termination option. However, we are continuing to work with the customer of the Hummingbird to maximize the production life of the chestnut field, and in the meantime, the field is still producing about 6,000 barrels per day and is generating positive cash flow for TK. With that, I will now turn the call over to Kenneth.