Welcome to Teekay Tankers Limited Third Quarter 2012 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. (Operator Instructions) As a reminder, this call is being recorded. Now for opening remarks and introductions, I would like to turn the call over to Mr. Bruce Chan, Teekay Tankers Limited Chief Executive Officer. Please go ahead, sir.

Before Mr. Chan begins, I would like to direct all participants to our website at www.teekaytankers.com, where you'll find a copy of the third quarter of 2012 earnings presentation. Mr. Chan 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 of 2012 earnings release and earnings presentation available on our website. I will now turn the call over to Mr. Chan to begin.

Thanks, [Ryan]. Hello, everyone, and thank you very much for joining us. With me here in Vancouver is Vince Lok, Teekay Tankers' Chief Financial Officer; Brian Fortier, Corporate Controller of Teekay Corporation; and Peter Evensen, Teekay Corporation's CEO. During today's call, I will be taking you through Teekay Tankers’ third quarter earnings results presentation, which can be found on our website. Beginning with our recent highlights on slide number three of the presentation, Teekay Tankers generated cash available for distribution before reserves of $0.12 per share in the third quarter. This is down from $0.15 per generated in the second quarter, due to the seasonally weak summer spot market, lower averaged time-charter higher rates and heavy summer drydocking schedule, which was time to coincide with the expected seasonal weakness. Teekay Tankers declared a dividend of $0.02 per share for the third quarter, down from $0.11 per share paid in the previous quarter, mainly due to the same factors that affected cash available for distribution and an increase in our quarterly reserve for debt principal repayments. Our third quarter dividend, which is our 20th consecutive quarterly dividend, will be paid out on November 26th to all shareholders of record on November 19th. It is important to note that our dividend is liquidity neutral. In keeping with the dividend policy, we have maintained since our IPO, Teekay Tankers pays out all of its cash available for distribution each quarter after reserving for debt principal repayments and estimated drydocking expenses. In the third quarter, we reported an adjusted net loss of $0.09 per share, compared to adjusted net income of $0.01 in the second quarter. We continue to focus on tactically managing our fleet to ensure we maintain strong fixed cover during this period of cyclical weakness in the tanker markets. During the…

(Operator Instructions) Our first question comes from Michael Webber from Wells Fargo. Please go ahead.

Hey. Good morning, guys. How are you?

Good morning. How are you?

Hey good. I wanted to touch first on the Aframax re-charter. Obviously, it’s pretty solid in above markets for an extended period of time. Can you tell us a little bit about, I guess some of the circumstance around that recharter., How are you guys have been able to lock down that down. And then just maybe some new kind of color there because certainly it got us surprise?

Yeah. We’re very pleased with that charter. It’s to one of very good customer of Teekays and it’s the ship that fits into their requirements nicely and it’s an extension of an existing charter. So it positions well for their requirements. And as a result, we've been able to achieve a rate that's we think will service well over the period.

Yeah. Now, it’s definitely above market. In terms of the Aframaxes in general, I mean, the to-date value, these will generate the spot market, little bit better than we had expected as well. Can you maybe talk a little bit what was going on there and maybe geographically shipping these away from the Pacific? I mean, what’s really driving that Aframax performance, kind of, quarters a day?

We were very pleased with the performance on a relative sense. It actually not a shifting away from the Pacific, it’s actually thanks to a significant amount of exposure in the Pacific where the market tends to be stronger in this period. And so I think that's been reflected. Although we do have some ships in the Caribbean and that market has just very recently started to increase. So we’re hopefully going to catch some of that spike as well.

Got you. Great. One more and I’ll turn it over, kind of, going to your metrics and always that’s helpful. The distributable cash metric is helpful too. And a footnote you have $3.5 million drydock reserve figure for Q4 which is roughly in line with what he had. Is that a good ballpark for we should use for 2013. Do you think that’s going to change appreciably with the larger fleet?

That’s a reserve, Mike, that is based on a five-year rolling drydock schedule.

Yeah.

So that’s a run rate you should use for the foreseeable future on the fourth-quarter basis.

Great. Thanks guys. I’ll turn it over.

Thank you.

The next question comes from Justin Yagerman from Deutsche Bank. Please go ahead.

Hi. Good morning. It’s actually Josh on for Justin.

Hey Josh.

Just wanted to touch on -- I guess your market outlook in the crude sector was, I guess, weaker than we’ve heard in the past. And I was just wondering how you think about increasing some of your fixed rate coverage days in 2013. I know that moved up a few percentage points but if you’re still expecting 80% utilization or these weak utilization level in 2013. I mean, should we be expecting to see somewhere these charters?

Josh, as we’ve done in the past, we’ve certainly taken advantage of Teekay Corporations relationships and try to find charters when they’re available. With the spot rates being low through the summer, there hasn’t really been a lot of opportunities to lock-in rates that were attractive relative to the spot market. Although as the market improves during the winter and as we’ve seen in prior years, that’s when we are sometimes able to find that type of time-charter coverage. And so it really depends on the winter market rally and what customers are looking to do to protect their coverage going forward as well.

Got it. On the product tanker side, I guess, we’ve seen a bit more time-charter activity there. You guys don’t have any kind of spot EMR exposure. Are there any plans to maybe charter in product tankers that are kind of on the -short-term basis with options as such?

But as you’ve seen with our current Aframax and charter, there are opportunities to in-charter, shorter term periods with options and if it makes sense, then we can employ it in our network at higher rates and have potential favorable options that is something we would consider. But again, it depends on having to right ship and having the right rate structure. We don’t take too much risk in the firm period and to really try to isolate some option on the extension period.

So I would take it, you are, kind of, seeing limited opportunities on both the crude and product tanker side with charter-in, I guess, just given the lag of charter-in exposure at the moment?

In the quarter, we do operate in most as Aframax LR2 areas and that -- there is some activity out there but again you got to find the right charter for that.

With regard to LR2s, are those trading dirty right now or they trading clean?.

Our LR2s trade in Teekay Corporation’s Taurus Tankers' LR2 pool. So they trade as a pool of around 20 LR2s primarily in the clean market of those some of the ships, opportunistically trade dirty.

And then I guess, I have to ask on the newbuilding side or I guess, maybe fleet growth side, I guess, with the weak 2013 and the potential recovery thereafter. I guess, didn’t newbuilding make more sense here and are you guys kind of getting close to or seriously considering placing any orders?

As Peter mentioned earlier, we have been looking at the Teekay’s Corporations one Spirit eco-friendly design that has significant field consumption savings on a traditional ship design. And so that certainly provides better opportunity to -- for investment going forward but as you say the outlook for 2013 is more muted and so we’re being patient and we’ll continue the dialog with shipyards but the patience is still the order of day.

I guess, just one more question and then I’ll turn it over. With regards to that new design, does that have applicability for the smaller private tanker space or is that more for the larger prudent, maybe, potentially LR2 side.

It has applicability on all those sizes.

Okay. Great. Thank you for the time.

Thank you.

Thank you. The next question comes from Jon Chappel from Evercore Partners. Please go ahead.

Thanks. Good morning, guys.

Hey, Jon. How are you?

Good. Thanks. Bruce, couple of details on the drydocking. You mentioned, 115 more days in the third quarter. Can you talk about number one, which ships were involved in the 3Q drydocking and then cost associated with us because and whether you’re expensing that or not because the OpEx was pretty meaningfully higher than what we’ve been forecasting for the full fleet?

Hey, Jon. There were three Suezmaxes that drydock in the third quarter. There were the Ganges, Iskmati, and Yamuna and the drydocking costs are capitalized and depreciated to depreciation expense but as you know, we reserve on the dividend in $3.4 million per quarter based on the five-year drydock schedule. So in the fourth quarter, we have one drydock which is an Aframax tanker on a fixed-rate charter for about 35 days.

Yeah. I saw that guidance in the Appendix of the Teekay presentation. We gave good, I guess, transparency on the drydocking schedule. I guess, two things that are done. Number one, can you, kind of, give us which ships are involved in it ’13 at least maybe by asset class, to try to figure out the impact on the bottom line? And then, I guess, also is a follow up to my first question, was there maybe some cost associated with the Kyeema that could have fallen in the third quarter and what kind of fourth quarter OpEx run rate should we be looking for?

Yeah. The Kyeema incident there was $200,000 deductible that was an OpEx in the third quarter, and about seven days of off-hire. And then we also had some additional repair cost on Nassau Spirit in the third quarter which increased the third quarter OpEx. In the fourth quarter, it's really the 35 days of off-hire for the Kyeema and no additional OpEx relate to that, because it’s covered by insurance. And turning to your question about 2013 drydocks and there is six Suezmaxes and three Aframaxes that are schedule for drydocking next year.

Okay. That’s helpful. Thanks, Vince. Two more quick ones, one on the quarter day bookings, Bruce you would mentioned the recent spike in the crisp and that’s been really recent kind of post hurricane in this region, that 40% you booked so far, what’s the cut-off date, I’m just trying to get a sense for that’s spike in TD9 is reflected in that 14, 7 at all?

No. Vince again, that cut-off date was last week or even 10 days...

November.

Yeah. November. Yeah.

Okay.

That very recent spike is not included in that.

All right. Then the last question and I ask this almost every quarter, but I think there is a little bit more sense of urgency given what’s happened in the last 24 hours, has there been anymore thought to maybe a fixed quarterly dividend, because clearly anybody who tracks the market or even looks at your metrics, should have known that the dividend would be down pretty meaningfully sequentially, given the third quarter rate environment? But also clearly there is a fair amount of people in the markets, who are taken a back by the magnitude of the decline and it’s coming out of your stock price today. So, anyway to kind of give just of a smoothing out of the distribution by going fix at some point.

Yeah. I mean, we have been consistent with our policy and as you say it’s been predictable and people then looking at falling rates in our table and that’s a beauty of dividend policy. And so, that’s about our consistency, I think, is showing through here and that’s where -- that’s the policy we are looking to continue.

All right. I guess it works both ways and based on your fourth quarter metrics it should be up sequentially. So, I appreciate the time. Thanks, Bruce. Thanks, Vince.

Thank you.

Thank you. The next question comes from Christopher Combe from JPMorgan. Please go ahead.

Yes. Hello. I just had one follow-up question. With respect to your comments on the supply demand outlook, I get the sense it’s mostly diminish macro reducing the range in the demand side, it looks the top end you cut from 6% to 4.5% or so, is that in fact all macro and I just wondering if you have any explicit assumptions about Chinese reserve buildout and how much of the swing factor you think that might be in '13?

Yeah. I think, all -- the demand is all macro and it factors in all of those things, so it factors in what forecasting agencies are looking at where the demand is coming from and where the production is likely to come from, so I mean, its really a factor of all of those things into one.

Okay. And I imagine you, you don’t have much of the really a base case for Chinese reserve. You see this mostly opportunistic on oil price or any other key drivers?

Yeah. I mean, I think it’s just one the points that could potentially bring it into the higher end of that range and conversely if it doesn’t occur kind of lower end of that range. But that’s exactly the uncertainty that is showing why that such -- wide range on the charter.

Okay. And then the last question just to be clear, in Q4 you don’t expect off-hire from drydock or special survey you are scheduled in the summer?

I mentioned earlier there is one Aframax that’s off-hire for 35 days.

Okay. And then the NYMEX here, okay.

That’s correct. Yeah.

Got it. Thank you.

Thank you. The next question comes from Ken Hoexter from Bank of Montreal -- of America. Please go ahead.

Hey. Good morning, guys. This is actually Wilson sitting in for Ken. Startup with quick question about the VLCC notes that come due next year. How do we think about where you guys then put that capital use, I mean, obviously, I think, when you judges a deals at time, you seem like a pretty descent use of capital in terms of borrowing at a much lower rate and getting that return on it. Do you guys see kind of yourself doing something similar or how do we think about that capital as it comes straight up?

Hey, Wilson, you are right. At the time it was attractive deal and at that deal comes to end in June and we will be looking to redeploy it as to where again it’s via mix of what’s available at the time and what opportunities present themselves.

Sure. And I mean is there, I think, you probably touch on this a little bit before, but is there any interest in looking at ownership in the kind of VLCC space or was that kind of more of a one-off kind of attractive investment that presented itself?

Yeah. That investment was a one-off. We do have the one VLCC newbuilding that is under construction now and that will be entering a five year fixed rate charter and so additional VLCC exposure isn’t our primary focus.

Sure. And just as a last follow-up, could you guys just give me an update on kind of your potential liquidity that you have on hand as we kind of think about, I guess how or how much right that you guys will have to look at deals and what have you?

The current liquidity is as we said is $383 million and it has very favorable terms through the next few years and so its something that we’ve been -- we had available for us and we have been patience in employing and we will continue to be looking for opportunities.

Great. Sounds great. Thank you for your time.

Thank you.

Thank you. (Operator Instructions) There are no further questions at this time. Please continue.

Thank you, Operator, and thanks everyone for joining.