Welcome to Teekay Tankers Ltd.'s Fourth Quarter and Fiscal 2013 Earnings Results Conference Call. [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 Ltd.'s Chief Executive Officer. Please go ahead, sir.

Before Mr. Chan begins, I'd like to direct all participants to our website at www.teekaytankers.com, where you'll find a copy of the fourth quarter and fiscal 2013 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 fourth quarter and fiscal 2013 earnings release and earnings presentation available on our website. I will now turn the call over to Mr. Chan to begin.

Thank you, Ryan. Hello, everyone, and thank you very much for joining us. With me here in Vancouver is Vince Lok, Teekay Tankers' Chief Financial Officer; and Brian Fortier, Group Controller of Teekay Corporation. During today's call, I will be taking you through Teekay Tankers' fourth quarter and fiscal year 2013 earnings results presentation, which can be found on our website. Beginning with our recent highlights on Slide 3 of the presentation, Teekay Tankers generated an adjusted net loss of $0.03 per share in the fourth quarter compared to an adjusted net loss of $0.05 per share in the third quarter. Cash available for distribution, or CAD, was $0.12 per share in the fourth quarter, up from $0.10 per share in the third quarter. These increases were primarily due to stronger Suezmax and Aframax spot tanker rates earned in the fourth quarter and interest income recognized on our term-loan investments secured by 2 modern VLCCs. In accordance with our current fixed dividend policy, the company declared a fourth quarter dividend of $0.03 per share. This was Teekay Tankers' 25th consecutive quarterly dividend, which was paid on January 31 to all shareholders of record as of January 17. Since inception, Teekay Tankers has paid a total of $7.30 per share in dividends. Teekay Tankers' dividend is currently fixed at an annual level of $0.12 per share payable quarterly. During the fourth quarter, the company recorded a $14.9 million reversal of the previously recorded loss provision on its investment in term loans, secured by 2 VLCCs. As a result of this reversal, the previously recorded loss provision associated with these term loans has been fully eliminated. In January 2014, Teekay Tankers and Teekay Corporation jointly created and co-invested in Tanker Investments Ltd., TIL, a new tanker company which will seek to opportunistically…

[Operator Instructions] And our first question comes from Jon Chappell with Evercore.

I wanted to talk about the Teekay Operations, if there's anymore clarity you can provide around that. First of all, when is that acquisition supposed to close? And then second of all, the fee revenue from operations. Is there any way to kind of give us, obviously, not like forward guidance, but what that fee revenue for the technical and commercial management of those pools was for Teekay Corp., let's say, in 2013?

On your first question, Jon, it's expected that the transaction would close in Q2. And in terms of guidance, we can probably give a little bit better off-line. But as you know, commercial pools charge 1.25% of gross freights and a couple hundred dollars a day, somewhere between $200 and $300 a day, for administration costs. And so that's kind of their revenue line. And then there's, obviously, associated costs with that. But I can't really give you much more than that at this time.

Okay. And then the TIL part of that operations business, let's call it, is it fees for just the gross freight? But it sounds like this business is going to be a little bit more of sale and purchase, opportunistic. Is there any fees associated with S&P activity for the owned tonnage and then with TIL?

Yes, the fees are kind of split. So the commercial and technical will be owned by TNK, and so those fees will accrue to TNK. On the S&P side, that will accrue to our overall sponsor, which is still Teekay Corp.

Okay, got it. And then if you could just explain a little bit more, TIL wants to be very nimble and opportunistic, et cetera. But where's TNK's kind of direct growth initiatives come from now? Is it really competing against TIL? Or do you see growth more through just the return of the cycle and fees from the operations business? Is there really a lot of growth potential directly for TNK?

Well, TIL is an enhancement of that growth for TNK through its ownership and the participation in the warrants. But as you say, TNK's growth is the return of the cycle and enhancing that potentially through additional in-charters or -- and the timely renewal of the fleet, but -- so we do see there being more opportunities at TNK in addition to the benefit of being an investor in TIL.

Okay. Final one on the 2 VLCCs. I know you probably don't want to say any timing about when you would sell them. I'm just trying to figure out the modeling of those. You'd mentioned in your prepared remarks that there's interest income associated with that. So are they going to show up as you operate them and generate cash flow, especially in a strong VL market in your revenue line, in your operating expense line, or is there just going to be an operating income line associated with that?

Jon, it's Vince. As of right now, these loans are still sitting as loans receivables with a book value of $136 million. Should the values change, that could potentially result in additional interest income recognized in the revenues. However, if we were to take ownership of the vessels, then they would switch from being a loan receivable into vessels on the balance sheet. And that would change the accounting for that. But as of right now, they're still sitting at loans receivable right now.

Okay. And how are the conversations going with the second mortgagees, whatever? I mean, we've talked about this in the past. This was a unique opportunity for you. It looks like it's going to end up paying off. The VLCCs aren't your core competency, really. I mean, they're crude tankers, but you're more of a midsized operator. Do you ideally hope to dispose of these at some point? Or given your views on the cycle, do you hold on to them a little bit longer?

Well, our discussions with the other mortgagees is clearly defined through our coordination agreement, so that's an ongoing clear process. And then in terms of the future, again, I mean, you're right, we would ultimately like to deploy this capital in our core segments of Aframax or Suezmaxes. But the timing is not one that we need to take immediate action. So it'd be a balance between finding the right time and the right buyer for these assets, or in the meantime we have the luxury of being patient and generating cash flows in the spot market.

Our next question comes from Justin Yagerman with Deutsche Bank.

This is Taylor Mulherin on for Justin this morning. So I just wanted to follow-up quickly on TIL, just to get a little clarification. I understand there's different strategies between the 2 companies, but could you just elaborate a little bit on how any conflicts -- if there were a market opportunity to come up of a vessel that potentially would be attracted to both companies was out there, how would something like that be resolved?

Yes, I mean, fortunately the sandbox is quite large out there for a number of ships, so we don't anticipate a lot of conflict or very little conflict. But if there were rare opportunities where both companies were looking to buy assets, we would certainly work together and not be out there, ensuring that we don't bid up the price for other third parties. We would be looking to obtain the best value for ships amongst the whole Teekay group.

Got it. And then just a couple of questions about the market, in general. Obviously, the market's been pretty strong in Q4. And then earlier in Q1, it's come off a little bit lately. But I wanted to ask you, is there sort of a lag effect from what we see in the market when we just look at spot rates versus what actually hits the bottom line for Teekay Tankers? And then if there is one, basically, how long is that usually?

Yes, there is certainly a lag effect. You fix ships, what you read in the market reports, but then the voyages don't usually start for a few weeks and counting, then accrues it over from a discharge-port basis. So the lag -- Vince, would you say, it's about 2 or 3 weeks maybe, roughly?

Yes, that sounds about right. Yes.

Yes. That's usually the lag.

Got it. Okay, and then my last one, you talked about how you're more focused on the midsized Suezmax and Aframax vessels more than VLCCs. Is there something -- and clearly, there must be something that you find more attractive about those size of vessels, maybe certain trade lanes appear more attractive. You talked about the Atlantic to Asia route. Can you just sort of elaborate on what you're seeing in those specific trade lanes for those vessel sizes?

Sure, Taylor. Our general overall view is that the larger tanker segments, the Aframax, Suezmax and VLCCs are largely correlated. And so the reason -- over time. And so the overall reason why we like Aframax and Suezmax is because that's our area where we have the scale. We operate our own commercial tonnage pools for both of those segments, where we combine our ships with other people's ships and, therefore, have the ability to triangulate and have higher utilization, and therefore, outperform the market in those areas. As well as our customer relationships are people looking for that, those sized segments. And finally, those segments tend to also offer, particularly Aframaxes, a greater ability to trade through charters in and out. And so those are the reasons why we like it. But overall, those markets are generally -- are correlated.

Our next question comes from Fotis Giannakoulis with Morgan Stanley.

I have a couple of questions about -- if you can give us a description of how the flows have changed since the beginning of the year? We saw the rates spiking towards the end of '13 and early '14, and lately the rates have come down. What was the reason of this significant volatility?

Yes, Fotis, I mean, it's a combination, as we said, of seasonal and the fundamental shift. I mean, January was one of the highest months for imports in China, and those barrels are going West Africa, Latin America, out to South America to the East. And so we had a combination of those types of fundamental increases in oil supply and then, as well, the seasonal factors such as refinery -- timing of refinery maintenance now kicking in, in the spring causes those markets to come down, and the diminishment of certain of those weather delays that you would have seen more in the winter. So it's a combination of those 2 factors that caused that spike.

So what's -- I see the grasp with your performance, and it's clearly much higher than what the market averaged. If -- you gave us an explanation about the LR2 vessels trading in the dirty space. What is the reason that you have a good outperformance on the MR segment?

So the MR segment, again, is because the benchmark rate there tends to be on various routes, specific as opposed to the triangulated route. And I know you publish in yours a triangulated route MR, and that's a much better benchmark. And so our earnings, obviously, reflect the actual triangulation of those MR ships trading in a large pool. And that's the one pool that Teekay doesn't operate in. We trade it in our third-party pool, but has significant scale. And again, we benefit from that scale and triangulation.

And can you give us an outlook for the product tanker market, the rest of the quarter? Do you see improving versus the beginning of the quarter that seems to have started at a much weaker pace?

Yes, as we said in our -- in the prepared remarks, the product tanker markets tend to not have the big spikes. They've been more stable, and we see that continuing. The underlying fundamentals are still good and the general theme of the increased demand for product tankers, we believe, is still intact. But we -- that market just traditionally hasn't seen that significant rate volatility that the crude markets have.

One last question about the TIL investment. What was the reason that the Teekay invested together with TNK in this new venture? Was the capital of Teekay necessary? Why this complicated structure?

Well, I can't speak for Peter from Teekay Corp., but the contribution of the 4 Suezmaxes were the last owned conventional ships from Teekay Corp., helping it transform its model of having all of the assets at the daughter companies. And so that was the contribution there from Teekay Corp. And then from TNK's perspective, it's the ability to invest in secondhand tankers and increase the exposure for our shareholders at TNK to the return of the tanker market.

And there are no additional questions at this time. Please continue.

Thank you, Tracy, and thanks, everyone for joining us this quarter. We'll speak to you next quarter.

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your line, and have a great day.