Executive Summary / Key Takeaways

• Seapeak LLC is undergoing a significant strategic transformation, actively modernizing its fleet with advanced, more efficient LNG and ammonia-capable LPG carriers while systematically managing its older, less efficient steam turbine vessels.
• The company's substantial newbuilding program, totaling over $934 million in remaining commitments through 2027, underpins its long-term growth strategy and commitment to future-proof its operations against evolving environmental standards and market demands.
• Recent financial performance reflects this transition, with a decline in voyage revenues and net income in the first half of 2025, largely due to the lay-up of older vessels and restructuring charges, partially offset by contributions from newer assets and joint ventures.
• Despite a working capital deficit, Seapeak maintains a robust liquidity position, supported by undrawn credit facilities and expected operating cash flows, providing confidence in its ability to meet near-term obligations and finance its fleet expansion.
• Key risks include the ongoing oversupply in the LNG carrier market, geopolitical uncertainties, and the potential impact of new U.S. port fees on Chinese-connected vessels, which the company is actively monitoring and mitigating through strategic fleet adjustments.

Seapeak's Foundation and Market Position

Seapeak LLC, established in 2004 and formerly known as Teekay LNG Partners L.P. until its rebranding on February 25, 2022, stands as a prominent international provider of marine transportation services, primarily focusing on Liquefied Natural Gas (LNG) and Natural Gas Liquid (NGL). The company's core strategy centers on servicing customers through its extensive fleet under medium to long-term, fixed-rate charters, a model designed to provide stable revenue streams. This approach is complemented by a strategic willingness to explore adjacent liquefied gas markets, renewable energy opportunities, and other maritime ventures, often through joint ventures and partnerships that enhance market access and operational scale.

The global energy landscape in which Seapeak operates is dynamic, characterized by increasing demand for cleaner-burning fuels like LNG and LPG, yet also subject to significant volatility. A notable industry trend is the integration of maritime emissions into the European Union Emissions Trading System (EU ETS), which began phasing in at 40% in 2024, rising to 70% in 2025, and reaching 100% in 2026. This regulatory shift necessitates a focus on more environmentally compliant and efficient vessels. The market is also experiencing a near-term oversupply of LNG carriers, largely due to project delays, which can exert downward pressure on charter rates.

In this competitive environment, Seapeak faces a diverse set of rivals. Direct competitors include specialized players like Dorian LPG (LPG), primarily focused on LPG transport and often engaging in spot market contracts, and BW LPG , another LPG-centric company emphasizing fleet modernization and sustainability. Flex LNG , a key competitor in the LNG space, distinguishes itself with advanced vessel technology and eco-friendly features. Seapeak's competitive advantage stems from its diversified fleet, encompassing both LNG and NGL carriers, and its long-standing industry legacy, which fosters strong customer relationships and a broad service portfolio. This comprehensive offering allows Seapeak to pursue complex, multi-gas projects, potentially providing greater stability compared to rivals more concentrated in a single gas type or reliant on volatile spot markets. However, Seapeak may face challenges in matching the innovation speed of technology-focused competitors like Flex LNG . Significant barriers to entry in this capital-intensive industry, such as high vessel acquisition costs and stringent regulatory requirements, further solidify Seapeak's established market position. Indirect competition arises from alternative energy transport solutions like pipelines and emerging renewable energy infrastructure, which could gradually shift demand away from marine gas transport.

Technological Differentiators and Innovation

Seapeak's strategic evolution is deeply intertwined with its commitment to technological advancement, particularly in its newbuilding programs. The company is actively moving away from older, less efficient vessel designs towards modern, high-performance carriers.

At the core of its technological differentiation are the new M-type, Electronically Controlled, Gas Admission (ME-GA) propulsion LNG carriers and ammonia-capable dual-fueled LPG carriers. The five 174,000-cubic meter ME-GA LNG carriers currently under construction with Samsung Heavy Industries Co., Ltd. represent a significant leap in efficiency and environmental performance compared to the company's legacy steam turbine vessels. While specific quantifiable benefits like percentage fuel savings or emissions reductions for ME-GA propulsion are not explicitly detailed, the strategic intent is clear: these vessels are designed to be more efficient, addressing the "less efficient design" issue that has rendered older steam turbine carriers less attractive to charterers. The decision to reduce the estimated useful life of seven older steam turbine LNG carriers from 35 years to 25 years, effective January 1, 2025, directly underscores the economic disadvantage of the legacy technology and the imperative for modern, efficient designs.

Furthermore, Seapeak, through its Exmar LPG Joint Venture, is investing in "ammonia capable dual-fueled LPG carriers." This initiative, including four 45,000-cubic meter vessels from Hyundai Mipo Dockyard (010620.KS) and four 40,000-cubic meter vessels from Nantong CIMC Sinopacific Offshore Engineering Co., Ltd., positions Seapeak at the forefront of future fuel flexibility. Ammonia is being explored as a potential zero-carbon marine fuel, and these vessels are designed to be adaptable to such transitions. This strategic investment in dual-fuel and ammonia-capable technology enhances Seapeak's competitive moat by offering charterers vessels that are not only more efficient today but also future-proofed against increasingly stringent environmental regulations and the anticipated shift towards alternative marine fuels.

For investors, these technological differentiators translate into several critical benefits. The adoption of ME-GA propulsion and ammonia-capable dual-fuel systems is expected to lead to improved operational efficiency, potentially resulting in lower operating costs and higher utilization rates due to increased charterer interest in modern, compliant vessels. This strategic investment enhances Seapeak's market positioning, allowing it to command potentially higher charter rates and secure longer-term contracts, thereby strengthening its financial performance and long-term growth trajectory in a rapidly evolving energy shipping market.

Strategic Fleet Evolution: Modernization and Diversification

Seapeak's current strategy is a clear response to evolving market dynamics, marked by both the active management of legacy assets and aggressive investment in a modern, diversified fleet.

The company is systematically addressing the challenges posed by its older steam turbine LNG carriers. As of June 30, 2025, its LNG segment included seven such vessels, which are the oldest in its fleet. These vessels face "adverse market conditions" due to an "oversupply of this type of vessel and reduced charterer interest due to their less efficient design." In response, Seapeak reduced their estimated useful life from 35 years to 25 years, effective January 1, 2025. Furthermore, three of these vessels were placed in lay-up in early 2025 and classified as held for sale. This strategic shift also led to $19.30 million in restructuring charges during the second quarter of 2025, primarily for anticipated severance costs related to dismissing Spanish seafarers from its Spanish fleet of four steam turbine LNG carriers. The three RasGas II Joint Venture steam turbine LNG carriers, whose 20-year fixed-rate charters conclude in late 2026 and early 2027, are also considered at a "higher risk of future impairment" as their sale is a "possible outcome." This proactive management of less efficient assets is crucial for optimizing the fleet and reducing exposure to an unfavorable market segment.

Simultaneously, Seapeak is making substantial investments in newbuilding programs to modernize and expand its fleet. In November 2022, the company entered into contracts for five 174,000-cubic meter M-type, Electronically Controlled, Gas Admission propulsion LNG carriers with Samsung Heavy Industries Co., Ltd. (010140.KS), with deliveries scheduled throughout 2027. The total fully built-up cost for these advanced LNG carriers is $1.20 billion, with remaining expenditures of $934.40 million expected through 2027 ($170.50 million in the remainder of 2025, $125.10 million in 2026, and $638.80 million in 2027). The company intends to finance these commitments using existing liquidity, future operating cash flow, and long-term debt financing.

In its NGL segment, Seapeak's Exmar LPG Joint Venture is also expanding. In March 2023 and March 2024, contracts were signed for four 45,000-cubic meter ammonia capable dual-fueled LPG carriers, scheduled for delivery in 2026. Seapeak's proportionate share of the total cost for these vessels is approximately $173.70 million. Additionally, in January 2025, the Exmar LPG Joint Venture assumed shipbuilding contracts for four 40,000-cubic meter dual-fueled LPG carriers from a Chinese shipbuilder, with deliveries anticipated in late 2025 and 2026. Seapeak's proportionate share for these vessels is approximately $145.50 million. These investments highlight a clear strategy to enhance the NGL fleet with modern, versatile, and environmentally forward-looking vessels. The purchase of the Marvel Swan LNG carrier in October 2024 for $213 million, followed by a sale-leaseback arrangement in January 2025, further demonstrates the company's dynamic approach to fleet management and financing.

Financial Performance: A Snapshot of Transition

Seapeak's financial performance for the three and six months ended June 30, 2025, reflects a company in transition, managing legacy assets while investing heavily in its future fleet.

Consolidated voyage revenues decreased to $158.64 million for the second quarter of 2025, down from $175.50 million in the prior-year period, representing a 9.6% decline. For the six months ended June 30, 2025, consolidated voyage revenues were $319.07 million, a 10.0% decrease from $354.62 million in the same period of 2024. This decline was primarily driven by the LNG segment, where voyage revenues fell by 7.5% in Q2 2025 and 6.4% in the first half of 2025, largely due to the lay-up of three steam turbine LNG carriers and lower short-term charter rates for the Seapeak Vancouver. These reductions were partially offset by the acquisition of the Marvel Swan LNG carrier in October 2024 and increased reimbursement of seafarers' costs and ship management fees from joint ventures. The NGL segment also experienced a significant decline in voyage revenues, down 18.1% in Q2 2025 and 23.8% in the first half of 2025, mainly attributable to the redelivery of six chartered-in NGL carriers and the sales of several multi-gas carriers during 2024.

Net income saw a substantial decrease, falling to $25.90 million in Q2 2025 from $71.42 million in Q2 2024, a 63.7% reduction. For the six-month period, net income was $33.85 million, a sharp 77.9% drop from $153.29 million in the prior year. This decline was significantly impacted by the $19.30 million in restructuring charges recognized during the second quarter of 2025, related to the dismissal of Spanish seafarers. Income from vessel operations in the LNG segment decreased by 54.2% in Q2 2025 and 36.7% in the first half of 2025, while the NGL segment's income from vessel operations increased by 22.7% in Q2 2025 but decreased by 5.7% for the six-month period. Equity income, particularly from the Exmar LPG Joint Venture, also saw a decline, influenced by non-recurring gains in 2024 and unrealized losses on derivative instruments, though partially offset by earnings from new vessel deliveries.

The company's TTM Gross Profit Margin stands at 42.92%, with an Operating Profit Margin of -20.92% and a Net Profit Margin of -27.59%, reflecting the impact of recent restructuring charges and asset write-downs. The TTM EBITDA Margin is 14.66%.

Despite these profitability pressures, Seapeak demonstrates a solid liquidity position. Total liquidity, comprising cash, cash equivalents, and undrawn credit facilities, increased by $47.70 million to $386.40 million as of June 30, 2025, from $338.70 million at December 31, 2024. This improvement was primarily driven by a $60 million decrease in amounts drawn on its revolving credit facility, partially offset by a $12.30 million decrease in cash and cash equivalents.

However, management anticipates "sufficient liquidity to continue as a going concern for at least the one-year period" following the issuance of its financial statements on August 14, 2025, supported by existing funds, operating cash flows, distributions from joint ventures, and financing for newbuildings. The TTM Debt/Equity Ratio is 1.28, indicating a manageable leverage profile given the asset-heavy nature of the business.

Risks and Outlook: Charting Future Waters

Seapeak faces a complex interplay of risks and opportunities as it executes its strategic transformation. The most immediate challenge stems from the "oversupply of this type of vessel and reduced charterer interest due to their less efficient design" affecting its legacy steam turbine LNG carriers. This market dynamic could lead to further impairments or lower charter rates for these vessels, particularly for the three RasGas II Joint Venture LNG carriers whose charters expire in late 2026 and early 2027.

Geopolitical instability also presents a significant risk. The ongoing Russia-Ukraine war has disrupted energy markets and supply chains, though Seapeak has "not experienced any material adverse operational or financial impact as a result of the Russia-Ukraine war" to date. However, continued hostilities could adversely affect its business. Political unrest in Yemen has already led to extended charter deferrals for the MALT Joint Venture's Seapeak Marib and Seapeak Arwa until March and April 2028, with no assurance of repayment for deferred amounts.

Furthermore, global trade tensions and new regulatory measures pose potential headwinds. The U.S. administration's new port docking fees for Chinese-connected ships, effective October 14, 2025, could "disrupt the competitive landscape within our industry and global NGL carrier routes." Seapeak has 14 Chinese-built vessels (including joint venture interests), and its Exmar LPG Joint Venture has newbuildings from Chinese shipbuilders. While there are exemptions, including for LNG vessels, the full impact remains uncertain.

Looking ahead, management's outlook is cautiously optimistic regarding liquidity, projecting "sufficient liquidity to continue as a going concern for at least the one-year period" from August 14, 2025. This confidence is underpinned by existing liquidity, expected operating cash flows, distributions from equity-accounted joint ventures, and planned financing for newbuildings. However, the company acknowledges that its "results for 2025 and beyond may be negatively impacted to the extent that there are periods within 2025 or subsequent years that we have LNG carriers without charter contracts or we have rechartered our LNG carriers at rates lower than they earned on their prior charter contracts," primarily due to the near-term oversupply in the LNG market. The company and its joint venture partner will be assessing opportunities for the RasGas II Joint Venture vessels throughout the remainder of 2025 and 2026.

Conclusion

Seapeak LLC is at a pivotal juncture, actively reshaping its fleet and operational strategy to align with the future demands of global energy transportation. The core investment thesis hinges on its decisive move to modernize its fleet with advanced, efficient, and environmentally adaptable LNG and NGL carriers, while prudently managing its legacy assets. This strategic renewal, characterized by significant newbuilding commitments and a focus on long-term charters, positions Seapeak to capitalize on the sustained global demand for gas.

While the company's recent financial performance reflects the costs of this transition, including restructuring charges and the impact of laying up older vessels, its underlying liquidity remains robust. The strategic investments in ME-GA propulsion and ammonia-capable dual-fueled vessels are crucial technological differentiators, enhancing its competitive standing against rivals like Flex LNG (FLNG) and BW LPG (BWLPG) by offering superior efficiency and future-proofing. Despite facing headwinds from LNG oversupply, geopolitical uncertainties, and evolving trade regulations, Seapeak's proactive fleet management and diversified operational model provide a resilient foundation. The successful execution of its newbuilding program and the ability to secure favorable long-term charters for its advanced fleet will be critical indicators of its long-term value creation in a dynamic and essential industry.