Highlights
Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P.
(Teekay LNG or the Partnership) (NYSE:TGP), today reported the
Partnership’s results for the quarter ended June 30, 2018.
|
Three Months Ended |
|
June 30, 2018 |
March 31, 2018 |
June 30, 2017 |
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
GAAP
FINANCIAL COMPARISON |
|
|
|
Voyage
revenues |
122,315 |
|
115,306 |
|
100,904 |
|
Income from
vessel operations |
10,505 |
|
25,142 |
|
29,871 |
|
Equity
income (loss) |
11,194 |
|
26,724 |
|
(507 |
) |
Net income
(loss) attributable to the partners and preferred unitholders |
2,734 |
|
(6,894 |
) |
(16,073 |
) |
Limited
partners’ interest in net loss per common unit |
(0.05 |
) |
(0.16 |
) |
(0.23 |
) |
NON-GAAP
FINANCIAL COMPARISON |
|
|
|
Adjusted
net income attributable to the partners and preferred unitholders
(1) |
13,535 |
|
22,058 |
|
17,860 |
|
Limited
partners’ interest in adjusted net income per common unit (1) |
0.09 |
|
0.19 |
|
0.19 |
|
Total cash
flow from vessel operations (CFVO) (1) |
115,005 |
|
117,595 |
|
106,252 |
|
Distributable cash flow (DCF) (1) |
31,116 |
|
35,341 |
|
40,623 |
|
(1) These are non-GAAP financial measures.
Please refer to “Definitions and Non-GAAP Financial Measures” and
the Appendices to this release for definitions of these terms and
reconciliations of these non-GAAP financial measures as used in
this release to the most directly comparable financial measures
under United States generally accepted accounting principles
(GAAP).
GAAP net income (loss) and non-GAAP adjusted net
income attributable to the partners and preferred unitholders for
the three months ended June 30, 2018, compared to the same
quarter in the prior year, were positively impacted by the
deliveries of seven liquefied natural gas (LNG) and three LPG
carrier newbuildings between July 2017 and May 2018 and the
commencement of short-term charter contracts for certain of the
vessels in the Partnership’s 52 percent-owned joint venture with
Marubeni Corporation (the Teekay LNG-Marubeni Joint Venture). These
increases were partially offset by the sale of a conventional
tanker and a liquefied petroleum gas (LPG) carrier in the first
quarter of 2018, lower rates earned in 2018 on two conventional
tankers upon the expiration of their fixed-rate charter contracts
in 2017, and a decrease in earnings in 2018 on seven Multi-gas
carriers following the termination of their previous charter
contracts.
In addition, GAAP net income (loss) was
positively impacted for the three months ended June 30, 2018,
compared to the same quarter of the prior year, by various items,
including increases in unrealized gains on derivative instruments
and foreign currency exchange gains during the three months ended
June 30, 2018 and the write-down of a conventional tanker during
the three months ended June 30, 2017. These increases were
partially offset by the write-down of four Multi-gas carriers in
the second quarter of 2018.
CEO Commentary
“As expected, we experienced another quarter of
increased earnings and cash flow from our LNG
carriers,” commented Mark Kremin, President and Chief
Executive Officer of Teekay Gas Group Ltd. “We have taken
delivery of nine LNG carriers over the
past nine months, including the Myrina and
the Megara in early-May and mid-July 2018,
respectively, both of which
are on long-term, fixed-rate charters to Shell, and
we are anticipating the delivery of the Bahrain
Spirit FSU later this
month.” Mr. Kremin continued, “The
Yamal LNG consortium has asked us to deliver our
second ARC7 LNG carrier earlier than the scheduled November
2018 date, and we are making arrangements to meet this
request in order to service the project's second LNG
train, which is expected to come online in
September 2018. Looking ahead, we have nine LNG newbuilding
carriers and the Bahrain LNG terminal
project still to deliver over the next 18
months, which we expect will help drive further cash flow
growth and the delevering of our balance sheet.”
Mr. Kremin continued, “Unfortunately, the
results from the seven Multi-gas carriers we took back in late-2017
due to non-payment of charter-hire are continuing to underperform
and have continued to significantly impact our quarterly
results. We are evaluating pooling arrangements and
potentially other adjacent transportation markets for employing
these vessels; however, we are not anticipating a significant
turnaround relating to these vessels over the near-term. As a
result, we have taken an accounting impairment on four of these
vessels during the second quarter of 2018.”
Mr. Kremin added, “We have now
completed all of our
2018 secured debt refinancings and expect to
commence the process to refinance our 364-day unsecured revolver
shortly, which has been refinanced three times previously. In
addition, we are making good progress on our 2019
financing and refinancings. Looking ahead, we
believe Teekay LNG is well-positioned to take
advantage of the strong LNG demand fundamentals we
see developing over the medium-term.”
Summary of Recent Events
LNG and Mid-sized LPG Carrier Newbuilding
Deliveries
In July 2018, the Partnership’s 20 percent-owned
joint venture with China LNG Shipping (Holdings) Limited (China
LNG), CETS Investment Management (HK) Co. Ltd. (an affiliate of
China National Offshore Oil Corporation (CNOOC)) and BW LNG
Investments Pte. Ltd., took delivery of one LNG carrier
newbuilding, the Pan Europe, which immediately commenced its
20-year charter contract with Royal Dutch Shell (Shell).
In May and July 2018, the Partnership took
delivery of two M-Type, Electronically Controlled, Gas Injection
(MEGI) LNG carrier newbuildings, the Myrina and Megara, which
immediately commenced their six to eight-year charter contracts
with Shell.
In May and July 2018, the Partnership’s 50
percent-owned joint venture with Exmar NV (the Exmar LPG Joint
Venture) took delivery of its remaining LPG carrier newbuildings,
the Koksijde and the Wepion, which are currently trading in the
spot market.
Debt Financing Update
In May 2018, the Teekay LNG-Marubeni Joint
Venture refinanced an outstanding $105 million debt facility
secured by the Woodside Donaldson LNG carrier, which reduced its
financing cost and extended the maturity date from 2021 to
2026.
In June 2018, the Partnership refinanced an
outstanding $57 million debt facility maturing in 2018 and secured
by the Polar Spirit and Arctic Spirit LNG carriers with a new $40
million debt facility maturing in 2022.
In July 2018, the Partnership refinanced an
outstanding debt facility of 107 million Euro ($125 million)
maturing in 2018 and secured by the Madrid Spirit LNG carrier with
a new 100 million Euro ($117 million) debt facility maturing in
2024.
In July 2018, the Partnership’s 50 percent-owned
Exmar LPG joint venture completed a three-year, $35 million debt
facility maturing in 2021 for its final LPG carrier newbuilding,
the Wepion, which delivered on July 31, 2018.
Operating Results
The following table highlights certain financial
information for Teekay LNG’s two segments: the Liquefied Gas
Segment and the Conventional Tanker Segment (please refer to the
“Teekay LNG’s Fleet” section of this release below and Appendices C
through E for further details).
|
Three Months Ended |
|
June 30, 2018 |
June 30, 2017 |
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker
Segment |
Total |
Liquefied Gas Segment |
Conventional Tanker
Segment |
Total |
GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
|
Voyage
revenues |
112,172 |
|
10,143 |
|
122,315 |
|
89,431 |
|
11,473 |
|
100,904 |
|
Income
(loss) from vessel operations |
9,445 |
|
1,060 |
|
10,505 |
|
40,043 |
|
(10,172 |
) |
29,871 |
|
Equity
income (loss) |
11,194 |
|
— |
|
11,194 |
|
(507 |
) |
— |
|
(507 |
) |
NON-GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
|
CFVO
from consolidated vessels(i) |
72,356 |
|
2,235 |
|
74,591 |
|
68,456 |
|
4,970 |
|
73,426 |
|
CFVO
from equity-accounted vessels(i) |
40,414 |
|
— |
|
40,414 |
|
32,826 |
|
— |
|
32,826 |
|
Total CFVO(i) |
112,770 |
|
2,235 |
|
115,005 |
|
101,282 |
|
4,970 |
|
106,252 |
|
- These are non-GAAP financial measures. Please refer to
“Definitions and Non-GAAP Financial Measures” and the Appendices to
this release for definitions of these terms and reconciliations of
these non-GAAP financial measures as used in this release to the
most directly comparable financial measures under GAAP.
Liquefied Gas Segment
Income from vessel operations decreased and CFVO
from consolidated vessels increased, in each case for the liquefied
gas segment for the three months ended June 30, 2018, compared to
the same quarter of the prior year. Results were positively
impacted primarily by the deliveries of four LNG carrier
newbuildings, the Macoma, Murex, Magdala and Myrina between October
2017 and May 2018 and due to the chartering of the Torben Spirit at
higher rates in 2018. These increases were partially offset by
lower earnings on seven of the Partnership's Multi-gas carriers
following the Partnership's termination of their charter contracts
due to non-payment by the charterer. In addition, income from
vessel operations was impacted by the write-downs of four Multi-gas
carriers in the three months ended June 30, 2018 as a result of the
Partnership's evaluation of alternative strategies for these assets
during the second quarter of 2018, combined with the current
charter rate environment and the outlook for charter rates for
these vessels.
Equity income (loss) was positively impacted and
CFVO from equity-accounted vessels increased for the three months
ended June 30, 2018, compared to the same quarter of the prior
year, primarily due to higher fleet utilization in the Teekay
LNG-Marubeni Joint Venture since certain of the joint venture’s
vessels commenced short-term charter contracts at higher rates; the
delivery of the Eduard Toll ARC7 LNG carrier in January 2018 to the
Yamal LNG Joint Venture; the deliveries of the Pan Asia and Pan
Americas LNG carriers in October 2017 and January 2018,
respectively, in the Partnership’s 30 percent-owned joint venture
with China LNG and CETS; and the deliveries of three LPG carriers
in the Exmar LPG Joint Venture. These increases were partially
offset by the sale of the Courcheville LPG carrier in January 2018;
lower rates earned in the Exmar LPG Joint Venture; and the sale of
the S/S Excelsior LNG carrier in the Partnership’s 50 percent-owned
joint venture with Exmar NV (the Excelsior Joint Venture) in
January 2018. Equity income (loss) was also positively impacted by
an increase in net unrealized gains on designated and
non-designated derivative instruments in our equity-accounted
vessels.
Conventional Tanker Segment
Income (loss) from vessel operations improved
and CFVO from consolidated vessels decreased for the conventional
tanker segment for the three months ended June 30, 2018, compared
to the same quarter of the prior year. These results were impacted
by: the sale of the Teide Spirit in February 2018 and associated
restructuring charges as a result of the sale; and lower rates
earned in 2018 on the African Spirit and European Spirit upon the
expiration of their fixed-rate charter contracts in 2017. In
addition, income (loss) from vessel operations for the three months
ended June 30, 2018 compared to the same quarter of the prior year
was positively impacted by a write-down in 2017 of the European
Spirit conventional tanker to its estimated fair value.
Teekay LNG's Fleet
The following table summarizes the Partnership’s
fleet as of August 1, 2018, excluding the Partnership’s 30 percent
interest in a regasification terminal currently under
construction:
|
Number of Vessels |
|
Owned and In-Chartered Vessels(i) |
Newbuildings |
Total |
LNG
Carrier Fleet |
40(ii) |
9(iii) |
49 |
LPG/Multi-gas Carrier Fleet |
29(iv) |
— |
29 |
Conventional Tanker Fleet |
4(v) |
— |
4 |
Total |
73 |
9 |
82 |
- Owned vessels includes vessels accounted for as vessels related
to capital leases.
- The Partnership’s ownership interests in these vessels range
from 20 percent to 100 percent.
- The Partnership's ownership interests in these newbuildings,
range from 20 percent to 100 percent.
- The Partnership’s ownership interests in these vessels range
from 50 percent to 99 percent.
- Two of the Partnership's conventional tankers, the African
Spirit and European Spirit are classified as held for sale.
Liquidity
As of June 30, 2018, the Partnership had
total liquidity of $443.6 million (comprised of $177.1 million in
cash and cash equivalents and $266.5 million in undrawn credit
facilities).
Availability of 2017 Annual
Report
The Partnership filed its 2017 Annual Report on
Form 20-F with the U.S. Securities and Exchange Commission (SEC) on
April 16, 2018. Copies of this report are available on Teekay LNG’s
website, under “Investors - Teekay LNG - Financials &
Presentations”, at www.teekay.com. Unitholders may request a
printed copy of this Annual Report, including the complete audited
financial statements, free of charge by contacting Teekay LNG’s
Investor Relations Department.
Conference Call
The Partnership plans to host a conference call
on Thursday, August 2, 2018 at 11:00 a.m. (ET) to discuss the
results for the second quarter of 2018. All unitholders and
interested parties are invited to listen to the live conference
call by choosing from the following options:
- By dialing (888) 882-4478 or (647) 484-0475, if outside North
America, and quoting conference ID code 7938223.
- By accessing the webcast, which will be available on Teekay
LNG’s website at www.teekay.com (the archive will remain on
the website for a period of one year).
An accompanying Second Quarter 2018 Earnings
Presentation will also be available at www.teekay.com in
advance of the conference call start time.
About Teekay LNG Partners L.P.
Teekay LNG Partners is one of the world's
largest independent owners and operators of LNG carriers, providing
LNG, LPG and crude oil marine transportation services primarily
under long-term, fee-based charter contracts through its interests
in 49 LNG carriers (including nine newbuildings), 22 LPG carriers,
seven Multi-gas carriers, and four conventional tankers. The
Partnership's ownership interests in these vessels range from 20 to
100 percent. In addition, the Partnership owns a 30 percent
interest in a regasification teminal, which is currently under
construction. Teekay LNG Partners is a publicly-traded master
limited partnership formed by Teekay Corporation (NYSE: TK) as part
of its strategy to expand its operations in the LNG and LPG
shipping sectors.
Teekay LNG Partners’ common units and preferred
units trade on the New York Stock Exchange under the symbols “TGP”,
“TGP PR A” and “TGP PR B”, respectively.
For Investor Relationsenquiries
contact:
Ryan HamiltonTel: +1 (604) 609-2963Website: www.teekay.com
Definitions and Non-GAAP Financial Measures
This release includes various financial measures
that are non-GAAP financial measures as defined under the rules of
the U.S. Securities and Exchange Commission. These non-GAAP
financial measures, which include Cash Flow from Vessel Operations,
Adjusted Net Income, and Distributable Cash Flow, are intended to
provide additional information and should not be considered a
substitute for measures of performance prepared in accordance with
GAAP. In addition, these measures do not have standardized meanings
across companies, and therefore may not be comparable to similar
measures presented by other companies. The Partnership believes
that certain investors use this information to evaluate the
Partnership’s financial performance, as does management.
Non-GAAP Financial Measures
Cash Flow from Vessel Operations (CFVO)
represents income from vessel operations before depreciation and
amortization expense, amortization of in-process revenue contracts,
vessel write-downs, gain and losses on the sales of vessels and
adjustments for direct financing leases to a cash basis, but
includes realized gains or losses on a derivative charter contract.
CFVO from Consolidated Vessels represents CFVO from vessels that
are consolidated on the Partnership’s financial statements. CFVO
from Equity-Accounted Vessels represents the Partnership’s
proportionate share of CFVO from its equity-accounted vessels. The
Partnership does not control its equity-accounted vessels and as a
result, the Partnership does not have the unilateral ability to
determine whether the cash generated by its equity-accounted
vessels is retained within the entities in which the Partnership
holds the equity-accounted investments or distributed to the
Partnership and other owners. In addition, the Partnership does not
control the timing of such distributions to the Partnership and
other owners. Consequently, readers are cautioned when using total
CFVO as a liquidity measure as the amount contributed from CFVO
from Equity-Accounted Vessels may not be available to the
Partnership in the periods such CFVO is generated by its
equity-accounted vessels. CFVO is a non-GAAP financial measure used
by certain investors and management to measure the operational
financial performance of companies. Please refer to Appendices D
and E of this release for reconciliations of these non-GAAP
financial measures to income from vessel operations and income from
vessel operations of equity-accounted vessels, respectively, the
most directly comparable GAAP measures reflected in the
Partnership’s consolidated financial statements.
Adjusted Net Income excludes items of income or
loss from GAAP net income (loss) that are typically excluded by
securities analysts in their published estimates of the
Partnership’s financial results. The Partnership believes that
certain investors use this information to evaluate the
Partnership’s financial performance, as does management. Please
refer to Appendix A of this release for a reconciliation of this
non-GAAP financial measure to net income (loss), and refer to
footnote (3) of the Consolidated Statements of Income (Loss) for a
reconciliation of adjusted equity income to equity income (loss),
the most directly comparable GAAP measure reflected in the
Partnership’s consolidated financial statements.
Distributable Cash Flow (DCF) represents GAAP
net income adjusted for write-down of vessels, depreciation and
amortization expense, deferred income tax and other non-cash items,
estimated maintenance capital expenditures, unrealized gains and
losses from non-designated derivative instruments, ineffectiveness
for derivative instruments designated as hedges for accounting
purposes, distributions relating to equity financing of newbuilding
installments, distributions relating to preferred units,
adjustments for direct financing leases to a cash basis and foreign
exchange related items, including the Partnership’s proportionate
share of such items in equity-accounted for investments.
Maintenance capital expenditures represent those capital
expenditures required to maintain over the long-term the operating
capacity of, or the revenue generated by, the Partnership’s capital
assets. DCF is a quantitative standard used in the publicly-traded
partnership investment community and by management to assist in
evaluating financial performance. Please refer to Appendix B of
this release for a reconciliation of this non-GAAP financial
measure to net income, the most directly comparable GAAP measure
reflected in the Partnership’s consolidated financial
statements.
Teekay LNG Partners L.P.Consolidated
Statements of Income (Loss)(in thousands of U.S. Dollars,
except unit and per unit data)
|
Three Months Ended |
Six Month Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
2018 |
2018 |
2017 |
2018 |
2017 |
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
Voyage revenues |
122,315 |
|
115,306 |
|
100,904 |
|
237,621 |
|
202,084 |
|
|
|
|
|
|
|
Voyage
expenses |
(7,951 |
) |
(5,801 |
) |
(996 |
) |
(13,752 |
) |
(2,433 |
) |
Vessel
operating expenses |
(33,969 |
) |
(28,467 |
) |
(26,001 |
) |
(62,436 |
) |
(49,389 |
) |
Depreciation and amortization |
(29,794 |
) |
(29,267 |
) |
(26,794 |
) |
(59,061 |
) |
(52,914 |
) |
General and
administrative expenses |
(7,096 |
) |
(6,571 |
) |
(4,642 |
) |
(13,667 |
) |
(8,799 |
) |
Write-down
of vessels(1) |
(33,000 |
) |
(18,662 |
) |
(12,600 |
) |
(51,662 |
) |
(12,600 |
) |
Restructuring charges (2) |
— |
|
(1,396 |
) |
— |
|
(1,396 |
) |
— |
|
Income from vessel operations |
10,505 |
|
25,142 |
|
29,871 |
|
35,647 |
|
75,949 |
|
|
|
|
|
|
|
Equity
income (loss)(3) |
11,194 |
|
26,724 |
|
(507 |
) |
37,918 |
|
5,380 |
|
Interest
expense |
(28,171 |
) |
(24,706 |
) |
(20,525 |
) |
(52,877 |
) |
(37,513 |
) |
Interest
income |
902 |
|
914 |
|
579 |
|
1,816 |
|
1,433 |
|
Realized
and unrealized gain (loss) on non-designated derivative
instruments(4) |
4,302 |
|
8,001 |
|
(7,384 |
) |
12,303 |
|
(6,197 |
) |
Foreign
currency exchange gain (loss)(5) |
8,443 |
|
(1,273 |
) |
(15,825 |
) |
7,170 |
|
(19,393 |
) |
Other
income (expense) (6) |
350 |
|
(52,582 |
) |
390 |
|
(52,232 |
) |
781 |
|
Net income (loss) before tax
expense |
7,525 |
|
(17,780 |
) |
(13,401 |
) |
(10,255 |
) |
20,440 |
|
Income tax
expense |
(843 |
) |
(779 |
) |
(236 |
) |
(1,622 |
) |
(393 |
) |
Net income (loss) |
6,682 |
|
(18,559 |
) |
(13,637 |
) |
(11,877 |
) |
20,047 |
|
|
|
|
|
|
|
Non-controlling interest in net income (loss) |
3,948 |
|
(11,665 |
) |
2,436 |
|
(7,717 |
) |
7,063 |
|
Preferred
unitholders' interest in net income (loss) |
6,426 |
|
6,425 |
|
2,813 |
|
12,851 |
|
5,625 |
|
General
Partner's interest in net income (loss) |
(68 |
) |
(272 |
) |
(378 |
) |
(340 |
) |
147 |
|
Limited
partners’ interest in net income (loss) |
(3,624 |
) |
(13,047 |
) |
(18,508 |
) |
(16,671 |
) |
7,212 |
|
Limited
partners' interest in net income (loss) per common unit: |
|
|
|
|
|
•
Basic |
(0.05 |
) |
(0.16 |
) |
(0.23 |
) |
(0.21 |
) |
0.09 |
|
•
Diluted |
(0.05 |
) |
(0.16 |
) |
(0.23 |
) |
(0.21 |
) |
0.09 |
|
Weighted-average number of common units outstanding: |
|
|
|
|
|
•
Basic |
79,687,499 |
|
79,637,607 |
|
79,626,819 |
|
79,667,384 |
|
79,608,587 |
|
•
Diluted |
79,687,499 |
|
79,637,607 |
|
79,626,819 |
|
79,667,384 |
|
79,741,256 |
|
Total number of common units outstanding at end of
period |
79,687,499 |
|
79,687,499 |
|
79,626,819 |
|
79,687,499 |
|
79,626,819 |
|
(1) In June 2018, the carrying values for four of the
Partnership's seven wholly-owned Multi-gas carriers (the Napa
Spirit, Pan Spirit, Camilla Spirit and Cathinka Spirit) were
written down to their estimated fair values, using appraised
values, as a result of the Partnership's evaluation of alternative
strategies for these assets, combined with the current charter rate
environment and the outlook for charter rates for these vessels.
The total impairment charge of $33.0 million related to these four
Multi-gas carriers is included in write-down of vessels for the
three and six months ended June 30, 2018 in the Partnership's
consolidated statement of income (loss). The African Spirit and
European Spirit conventional tankers were classified as vessels
held for sale upon the expiration of their time-charter contracts
in 2017. The Partnership recorded an aggregate write-down of $5.7
million for the three months ended March 31, 2018 and six months
ended June 30, 2018 on these two conventional tankers as the
estimated fair values of these vessels had decreased. In addition,
the Partnership recorded a write-down of $13.0 million for the
three months ended March 31, 2018 and six months ended June 30,
2018 relating to the Alexander Spirit conventional tanker to its
estimated fair value, using an appraised value. This was a result
of changes in the Partnership's expectations of the vessel's future
opportunities after its current contract ends in 2019. The
write-down of vessels of $12.6 million for the three and six months
ended June 30, 2017 relates to the write-down of the European
Spirit upon marketing the vessel for sale in 2017.
(2) In February 2018, the Teide Spirit conventional tanker was
sold and as a result of this sale, the Partnership recorded
restructuring charges of $1.4 million relating to seafarer
severance costs.
(3) The Partnership’s proportionate share of items within equity
income (loss) as identified in Appendix A of this release is
detailed in the table below. By excluding these items from equity
income (loss), the Partnership believes the resulting adjusted
equity income is a normalized amount that can be used to better
evaluate the financial performance of the Partnership’s
equity-accounted investments. Adjusted equity income is a non-GAAP
financial measure.
|
Three Months Ended |
Six Month Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2018 |
2018 |
2017 |
2018 |
2017 |
Equity
income (loss) |
11,194 |
|
26,724 |
|
(507 |
) |
37,918 |
|
5,380 |
|
Proportionate share of unrealized (gain) loss on non-designated
derivative instruments |
(2,977 |
) |
(8,221 |
) |
182 |
|
(11,198 |
) |
(1,602 |
) |
Proportionate share of ineffective portion of hedge-accounted
interest rate swaps |
(1,809 |
) |
(3,259 |
) |
4,109 |
|
(5,068 |
) |
3,566 |
|
Proportionate share of write-down and loss on sale of vessel |
— |
|
257 |
|
— |
|
257 |
|
— |
|
Gain on
sale of equity-accounted investment |
— |
|
(5,563 |
) |
— |
|
(5,563 |
) |
— |
|
Proportionate share of other items |
(128 |
) |
128 |
|
211 |
|
— |
|
241 |
|
Equity income adjusted for items in Appendix A |
6,280 |
|
10,066 |
|
3,995 |
|
16,346 |
|
7,585 |
|
(4) The realized (losses) gains on
non-designated derivative instruments relate to the amounts the
Partnership actually paid or received to settle non-designated
derivative instruments and the unrealized gains (losses) on
non-designated derivative instruments relate to the change in fair
value of such non-designated derivative instruments, as detailed in
the table below:
|
Three Months Ended |
Six Month Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2018 |
2018 |
2017 |
2018 |
2017 |
Realized (losses) gains relating to: |
|
|
|
|
|
Interest
rate swap agreements |
(4,310 |
) |
(4,478 |
) |
(4,610 |
) |
(8,788 |
) |
(9,285 |
) |
Interest
rate swaption agreements termination |
— |
|
— |
|
(1,005 |
) |
— |
|
(610 |
) |
Toledo
Spirit time-charter derivative contract |
150 |
|
309 |
|
(135 |
) |
459 |
|
(120 |
) |
|
(4,160 |
) |
(4,169 |
) |
(5,750 |
) |
(8,329 |
) |
(10,015 |
) |
Unrealized gains (losses) relating to: |
|
|
|
|
|
Interest
rate swap agreements |
7,522 |
|
11,898 |
|
(1,866 |
) |
19,420 |
|
2,436 |
|
Interest
rate swaption agreements |
— |
|
2 |
|
112 |
|
2 |
|
142 |
|
Toledo
Spirit time-charter derivative contract |
940 |
|
270 |
|
120 |
|
1,210 |
|
1,240 |
|
|
8,462 |
|
12,170 |
|
(1,634 |
) |
20,632 |
|
3,818 |
|
Total realized and unrealized gains (losses) on
non-designated derivative instruments |
4,302 |
|
8,001 |
|
(7,384 |
) |
12,303 |
|
(6,197 |
) |
(5) For accounting purposes, the Partnership is
required to revalue all foreign currency-denominated monetary
assets and liabilities based on the prevailing exchange rates at
the end of each reporting period. This revaluation does not affect
the Partnership’s cash flows or the calculation of distributable
cash flow, but results in the recognition of unrealized foreign
currency translation gains or losses in the Consolidated Statements
of Income (Loss).
Foreign currency exchange gain (loss) includes
realized losses relating to the amounts the Partnership paid to
settle the Partnership’s non-designated cross-currency swaps that
were entered into as economic hedges in relation to the
Partnership’s Norwegian Kroner (NOK) denominated unsecured bonds.
Foreign currency exchange gain (loss) also includes unrealized
gains (losses) relating to the change in fair value of such
derivative instruments, partially offset by unrealized gains
(losses) on the revaluation of the NOK bonds as detailed in the
table below:
|
Three Months Ended |
Six Month Ended |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
2018 |
2018 |
2017 |
2018 |
2017 |
Realized
losses on cross-currency swaps |
(1,798 |
) |
(1,384 |
) |
(2,084 |
) |
(3,182 |
) |
(5,621 |
) |
Realized
losses on cross-currency swaps termination |
— |
|
— |
|
(25,733 |
) |
— |
|
(25,733 |
) |
Realized
gains on repurchase of NOK bonds |
— |
|
— |
|
25,733 |
|
— |
|
25,733 |
|
Unrealized
(losses) gains on cross-currency swaps |
(16,566 |
) |
22,334 |
|
34,906 |
|
5,768 |
|
37,605 |
|
Unrealized gains (losses) on revaluation of NOK
bonds |
14,852 |
|
(17,487 |
) |
(36,325 |
) |
(2,635 |
) |
(36,931 |
) |
(6) The Partnership owns a 70 percent interest
in Teekay Nakilat Corporation (the Teekay Nakilat Joint Venture,
which wholly-owns a subsidiary which was the lessee under three
separate 30-year capital lease arrangements with a third party for
for three LNG carriers (RasGas II LNG Carriers). Under the terms of
these leases, the lessor claimed tax depreciation on the capital
expenditures it incurred to acquire these vessels and paid the
lessee an upfront benefit in the amount of $60.9 million at the
lease inception. As is typical in these leasing arrangements, tax
and change of law risks were assumed by the lessee, in this case
the Teekay Nakilat Joint Venture. Lease payments under the lease
arrangements were based on certain tax and financial assumptions at
the commencement of the leases in 2006 and subsequently adjusted to
maintain the lessor's agreed after-tax margin. On December 22,
2014, the Teekay Nakilat Joint Venture terminated the leases of the
RasGas II LNG Carriers; however, it remained obligated to the
lessor for changes in tax treatment.
The UK taxing authority (HMRC) has been
challenging the use by third parties of similar lease structures in
the United Kingdom courts. One of those challenges was eventually
decided in favor of HMRC, with the lessor and lessee choosing not
to appeal further. This case concluded that capital allowances are
not available to the lessor. On the basis of this conclusion,
HMRC is now asking lessees on other leases, including the Teekay
Nakilat Joint Venture, to accept that capital allowances are not
available to their lessors. Under the terms of the Teekay Nakilat
Joint Venture lease, the lessor is entitled to make a determination
that additional rentals are due, even where a court has not made a
determination on whether capital allowances are available or where
discussions are otherwise ongoing with HMRC on the matter (such
that additional rentals paid may be rebated in due course if the
final tax position is not as determined by the lessor). On May 10,
2018, the lessor made a determination that additional rentals are
due under the leases. As a result, during the six months ended June
30, 2018, the Teekay Nakilat Joint Venture recognized an additional
tax indemnification guarantee liability of $53.0 million. The total
liability was $56.0 million (42.3 million GBP) as at June 30, 2018,
and this amount will be paid during the third quarter of 2018. The
Teekay Nakilat Joint Venture is in discussions with HMRC in
relation to the correct tax treatment to be applied to the
leases.
Teekay LNG Partners L.P.Consolidated
Balance Sheets(in thousands of U.S. Dollars)
|
As at June 30, |
As at March 31, |
As at December 31, |
|
2018 |
2018 |
2017 |
|
(unaudited) |
(unaudited) |
(unaudited) |
ASSETS |
|
|
|
Current |
|
|
|
Cash and
cash equivalents |
177,071 |
|
197,007 |
|
244,241 |
|
Restricted
cash – current |
53,599 |
|
19,256 |
|
22,326 |
|
Accounts
receivable |
29,679 |
|
22,561 |
|
24,054 |
|
Prepaid
expenses |
4,800 |
|
6,209 |
|
6,539 |
|
Vessels
held for sale |
29,911 |
|
28,000 |
|
33,671 |
|
Current
portion of derivative assets |
3,054 |
|
1,919 |
|
1,078 |
|
Current
portion of net investments in direct financing leases |
10,453 |
|
10,676 |
|
9,884 |
|
Advances to
affiliates |
8,538 |
|
5,621 |
|
7,300 |
|
Other
current assets |
2,035 |
|
3,972 |
|
— |
|
Total current assets |
319,140 |
|
295,221 |
|
349,093 |
|
Restricted
cash – long-term |
29,823 |
|
67,032 |
|
72,868 |
|
Vessels and equipment |
|
|
|
At cost,
less accumulated depreciation |
1,349,449 |
|
1,388,434 |
|
1,416,381 |
|
Vessels
related to capital leases, at cost, less accumulated
depreciation |
1,406,462 |
|
1,213,748 |
|
1,044,838 |
|
Advances on newbuilding contracts |
349,169 |
|
407,211 |
|
444,493 |
|
Total vessels and equipment |
3,105,080 |
|
3,009,393 |
|
2,905,712 |
|
Investment
in and advances to equity-accounted joint ventures |
1,100,674 |
|
1,087,877 |
|
1,094,596 |
|
Net
investments in direct financing leases |
480,294 |
|
482,946 |
|
486,106 |
|
Derivative
assets |
12,878 |
|
18,459 |
|
6,172 |
|
Intangible
assets – net |
56,650 |
|
58,864 |
|
61,078 |
|
Goodwill –
liquefied gas segment |
35,631 |
|
35,631 |
|
35,631 |
|
Other assets |
8,055 |
|
8,165 |
|
8,043 |
|
Total assets |
5,148,225 |
|
5,063,588 |
|
5,019,299 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current |
|
|
|
Accounts
payable |
2,973 |
|
1,995 |
|
3,509 |
|
Accrued
liabilities |
123,713 |
|
119,404 |
|
45,757 |
|
Unearned
revenue |
25,227 |
|
19,770 |
|
25,873 |
|
Current
portion of long-term debt |
372,378 |
|
524,166 |
|
552,404 |
|
Current
obligations related to capital leases |
83,374 |
|
82,652 |
|
106,946 |
|
In-process
contracts |
3,445 |
|
6,163 |
|
7,946 |
|
Current
portion of derivative liabilities |
64,329 |
|
62,586 |
|
79,139 |
|
Advances
from affiliates |
18,959 |
|
11,984 |
|
12,140 |
|
Total current liabilities |
694,398 |
|
828,720 |
|
833,714 |
|
Long-term
debt |
1,355,377 |
|
1,235,722 |
|
1,245,588 |
|
Long-term
obligations related to capital leases |
1,123,419 |
|
1,018,416 |
|
904,603 |
|
Other
long-term liabilities |
42,369 |
|
43,669 |
|
58,174 |
|
Derivative liabilities |
37,059 |
|
36,678 |
|
45,797 |
|
Total liabilities |
3,252,622 |
|
3,163,205 |
|
3,087,876 |
|
Equity |
|
|
|
Equity |
|
|
|
Limited
partners – common units |
1,502,492 |
|
1,517,132 |
|
1,539,248 |
|
Limited
partners – preferred units |
285,159 |
|
285,159 |
|
285,159 |
|
General
partner |
49,403 |
|
49,696 |
|
50,152 |
|
Accumulated
other comprehensive income |
11,772 |
|
5,870 |
|
4,479 |
|
Partners' equity |
1,848,826 |
|
1,857,857 |
|
1,879,038 |
|
Non-controlling interest |
46,777 |
|
42,526 |
|
52,385 |
|
Total equity |
1,895,603 |
|
1,900,383 |
|
1,931,423 |
|
Total liabilities and total
equity |
5,148,225 |
|
5,063,588 |
|
5,019,299 |
|
Teekay LNG Partners L.P.Consolidated
Statements of Cash Flows(in thousands of U.S. Dollars)
|
Six Months Ended |
|
June 30, |
June 30, |
|
2018 |
2017 |
|
(unaudited) |
(unaudited) |
Cash, cash
equivalents and restricted cash provided by (used for) |
|
|
OPERATING ACTIVITIES |
|
|
Net
(loss) income |
(11,877 |
) |
20,047 |
|
Non-cash
items: |
|
|
Unrealized gain on non-designated derivative
instruments |
(20,632 |
) |
(3,818 |
) |
Depreciation and amortization |
59,061 |
|
52,914 |
|
Write-down of vessels |
51,662 |
|
12,600 |
|
Unrealized foreign currency exchange gain and
other |
(20,167 |
) |
(9,091 |
) |
Equity income, net of dividends received of $11,583
(2017 - $21,281) |
(26,335 |
) |
15,901 |
|
Non-cash item included in other income (expense) |
53,000 |
|
— |
|
Ineffective portion on qualifying cash flow hedging
instruments included in interest expense |
— |
|
747 |
|
Change in
non-cash operating assets and liabilities |
3,299 |
|
3,145 |
|
Expenditures for dry docking |
(4,423 |
) |
(11,042 |
) |
Net operating cash flow |
83,588 |
|
81,403 |
|
FINANCING ACTIVITIES |
|
|
Proceeds
from issuance of long-term debt |
248,392 |
|
166,663 |
|
Scheduled
repayments of long-term debt |
(105,099 |
) |
(103,343 |
) |
Prepayments
of long-term debt |
(205,765 |
) |
(63,704 |
) |
Financing
issuance costs |
(4,971 |
) |
(2,077 |
) |
Proceeds
from financing related to sales and leaseback of vessels |
243,812 |
|
297,230 |
|
Scheduled
repayments of obligations related to capital leases |
(25,316 |
) |
(19,045 |
) |
Cash
distributions paid |
(34,727 |
) |
(28,274 |
) |
Dividends
paid to non-controlling interest |
(157 |
) |
(658 |
) |
Other |
— |
|
(605 |
) |
Net financing cash flow |
116,169 |
|
246,187 |
|
INVESTING ACTIVITIES |
|
|
Capital
contributions to equity-accounted joint ventures |
(27,071 |
) |
(96,960 |
) |
Return of
capital from equity-accounted joint ventures |
— |
|
40,320 |
|
Proceeds
from sale of equity-accounted joint venture |
54,438 |
|
— |
|
Receipts
from direct financing leases |
5,242 |
|
9,037 |
|
Proceeds
from sale of vessel |
— |
|
20,580 |
|
Expenditures for vessels and equipment |
(311,308 |
) |
(244,387 |
) |
Net investing cash flow |
(278,699 |
) |
(271,410 |
) |
|
|
|
(Decrease)
increase in cash, cash equivalents and restricted cash |
(78,942 |
) |
56,180 |
|
Cash, cash equivalents and restricted cash, beginning
of the period |
339,435 |
|
243,173 |
|
Cash, cash equivalents and restricted cash, end
of the period |
260,493 |
|
299,353 |
|
Teekay LNG Partners L.P.Appendix A -
Reconciliation of Non-GAAP Financial
MeasuresAdjusted Net Income(in thousands
of U.S. Dollars)
|
Three Months Ended |
June 30, |
2018 |
2017 |
(unaudited) |
(unaudited) |
Net income
(loss) – GAAP basis |
6,682 |
|
(13,637 |
) |
Less: Net
income attributable to non-controlling interests |
(3,948 |
) |
(2,436 |
) |
Net income (loss) attributable to the partners
and preferred unitholders |
2,734 |
|
(16,073 |
) |
Add
(subtract) specific items affecting net income: |
|
|
Write-down of vessels(1) |
33,000 |
|
12,600 |
|
Unrealized foreign currency exchange (gains) losses(2) |
(11,091 |
) |
13,939 |
|
Unrealized (gains) losses on non-designated and designated
derivative instruments and other items from equity–accounted
investees(3) |
(4,914 |
) |
4,502 |
|
Unrealized (gains) losses on non-designated derivative
instruments(4) |
(8,462 |
) |
1,634 |
|
Interest rate swaption agreements termination |
— |
|
1,005 |
|
Ineffective portion on qualifying cash flow hedging
instruments included in interest expense |
— |
|
747 |
|
Other items |
1,054 |
|
— |
|
Non-controlling interests’ share of items above(5) |
1,214 |
|
(494 |
) |
Total adjustments |
10,801 |
|
33,933 |
|
Adjusted net income attributable to the
partners and preferred unitholders |
13,535 |
|
17,860 |
|
|
|
|
Preferred
unitholders' interest in adjusted net income |
6,426 |
|
2,813 |
|
General
Partner's interest in adjusted net income |
142 |
|
300 |
|
Limited
partners’ interest in adjusted net income |
6,967 |
|
14,747 |
|
Limited
partners’ interest in adjusted net income per common unit,
basic |
0.09 |
|
0.19 |
|
Weighted-average number of common units outstanding, basic |
79,687,499 |
|
79,626,819 |
|
- See Note 1 to the Consolidated Statements of Income (Loss)
included in this release for further details.
- Unrealized foreign currency exchange gains (losses) primarily
relate to the Partnership’s revaluation of all foreign
currency-denominated monetary assets and liabilities based on the
prevailing exchange rate at the end of each reporting period and
unrealized (gains) losses on the cross-currency swaps economically
hedging the Partnership’s NOK bonds. This amount excludes the
realized losses relating to the cross-currency swaps for the NOK
bonds. See Note 5 to the Consolidated Statements of Income (Loss)
included in this release for further details.
- Reflects the unrealized gains (losses) due to changes in the
mark-to-market value of derivative instruments that are not
designated as hedges for accounting purposes and any
ineffectiveness for derivative instruments designated as hedges for
accounting purposes within the Partnership’s equity-accounted
investments. See Note 3 to the Consolidated Statements of Income
(Loss) included in this release for further details.
- Reflects the unrealized gains (losses) due to changes in the
mark-to-market value of derivative instruments that are not
designated as hedges for accounting purposes. See Note 4 to the
Consolidated Statements of Income (Loss) included in this release
for further details.
- Items affecting net income (loss) include items from the
Partnership’s consolidated non-wholly-owned subsidiaries. The
specific items affecting net income (loss) are analyzed to
determine whether any of the amounts originated from a consolidated
non-wholly-owned subsidiary. Each amount that originates from a
consolidated non-wholly-owned subsidiary is multiplied by the
non-controlling interests’ percentage share in this subsidiary to
arrive at the non-controlling interests’ share of the amount. The
amount identified as “non-controlling interests’ share of items
listed above” in the table above is the cumulative amount of the
non-controlling interests’ proportionate share of the other
specific items affecting net income (loss) listed in the
table.
Teekay LNG Partners L.P.Appendix B -
Reconciliation of Non-GAAP Financial
MeasuresDistributable Cash Flow (DCF)(in
thousands of U.S. Dollars, except units outstanding and per unit
data)
|
Three Months Ended |
June 30, |
2018 |
2017 |
(unaudited) |
(unaudited) |
|
|
|
|
Net income (loss): |
6,682 |
|
(13,637 |
) |
Add: |
|
|
Write-down of vessels |
33,000 |
|
12,600 |
|
Depreciation and amortization |
29,794 |
|
26,794 |
|
Partnership’s share of equity–accounted joint
ventures' DCF net of estimated maintenance capital
expenditures(1) |
14,939 |
|
12,229 |
|
Direct finance lease payments received in excess of
revenue recognized and other adjustments |
2,897 |
|
5,056 |
|
Distributions relating to equity financing of new
buildings |
2,289 |
|
1,536 |
|
Deferred income tax and other non-cash items |
21 |
|
170 |
|
Ineffective portion on qualifying cash flow hedging
instruments included in interest expense |
— |
|
747 |
|
Less: |
|
|
Distributions relating to preferred units |
(6,426 |
) |
(2,813 |
) |
Unrealized (gain) loss on non-designated derivative
instruments |
(8,462 |
) |
1,634 |
|
Unrealized foreign currency exchange (gain)
loss |
(11,091 |
) |
13,939 |
|
Equity (income) loss |
(11,194 |
) |
507 |
|
Estimated maintenance capital
expenditures |
(16,345 |
) |
(13,190 |
) |
Distributable Cash Flow before Non-controlling interest |
36,104 |
|
45,572 |
|
Non-controlling interests’ share of DCF
before estimated maintenance capital expenditures |
(4,988 |
) |
(4,949 |
) |
Distributable Cash Flow |
31,116 |
|
40,623 |
|
Amount of cash distributions attributable
to the General Partner |
(228 |
) |
(228 |
) |
Limited partners' Distributable Cash Flow |
30,888 |
|
40,395 |
|
Weighted-average number of common units
outstanding |
79,687,499 |
|
79,626,819 |
|
Distributable Cash Flow per limited
partner common unit |
0.39 |
|
0.51 |
|
(1) The estimated maintenance capital expenditures relating to
the Partnership’s share of equity-accounted joint ventures were
$8.3 million and $8.0 million for the three months ended June 30,
2018 and 2017, respectively.
Teekay LNG Partners L.P.Appendix C -
Supplemental Segment Information(in thousands of U.S.
Dollars)
|
Three Months Ended June 30,
2018 |
|
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker
Segment |
Total |
Voyage
revenues |
112,172 |
|
10,143 |
|
122,315 |
|
Voyage
expenses |
(4,445 |
) |
(3,506 |
) |
(7,951 |
) |
Vessel
operating expenses |
(30,422 |
) |
(3,547 |
) |
(33,969 |
) |
Depreciation and amortization |
(28,661 |
) |
(1,133 |
) |
(29,794 |
) |
General and
administrative expenses |
(6,199 |
) |
(897 |
) |
(7,096 |
) |
Write-down
of vessels |
(33,000 |
) |
— |
|
(33,000 |
) |
Income from vessel operations |
9,445 |
|
1,060 |
|
10,505 |
|
|
|
|
|
|
Three Months Ended June 30,
2017 |
|
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker
Segment |
Total |
Voyage
revenues |
89,431 |
|
11,473 |
|
100,904 |
|
Voyage
expenses |
(602 |
) |
(394 |
) |
(996 |
) |
Vessel
operating expenses |
(21,374 |
) |
(4,627 |
) |
(26,001 |
) |
Depreciation and amortization |
(23,839 |
) |
(2,955 |
) |
(26,794 |
) |
General and
administrative expenses |
(3,573 |
) |
(1,069 |
) |
(4,642 |
) |
Write-down
of vessel |
— |
|
(12,600 |
) |
(12,600 |
) |
Income (loss) from vessel operations |
40,043 |
|
(10,172 |
) |
29,871 |
|
Teekay LNG Partners L.P.Appendix D -
Reconciliation of Non-GAAP Financial MeasuresCash
Flow from Vessel Operations from Consolidated Vessels(in
thousands of U.S. Dollars)
|
Three Months Ended June 30,
2018 |
|
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker
Segment |
Total |
Income from
vessel operations (See Appendix C) |
9,445 |
|
1,060 |
|
10,505 |
|
Depreciation and amortization |
28,661 |
|
1,133 |
|
29,794 |
|
Write-down
of vessels |
33,000 |
|
— |
|
33,000 |
|
Amortization of in-process contracts included in voyage
revenues |
(1,647 |
) |
(108 |
) |
(1,755 |
) |
Direct
finance lease payments received in excess of revenue recognized and
other adjustments |
2,897 |
|
— |
|
2,897 |
|
Realized
gain on Toledo Spirit derivative contract |
— |
|
150 |
|
150 |
|
Cash flow from vessel operations from consolidated
vessels |
72,356 |
|
2,235 |
|
74,591 |
|
|
|
|
|
|
Three Months Ended June 30,
2017 |
|
(unaudited) |
|
Liquefied Gas Segment |
Conventional Tanker
Segment |
Total |
Income
(loss) from vessel operations (See Appendix C) |
40,043 |
|
(10,172 |
) |
29,871 |
|
Depreciation and amortization |
23,839 |
|
2,955 |
|
26,794 |
|
Write-down
of vessel |
— |
|
12,600 |
|
12,600 |
|
Amortization of in-process contracts included in voyage
revenues |
(482 |
) |
(278 |
) |
(760 |
) |
Direct
finance lease payments received in excess of revenue
recognized |
5,056 |
|
— |
|
5,056 |
|
Realized
loss on Toledo Spirit derivative contract |
— |
|
(135 |
) |
(135 |
) |
Cash flow from vessel operations from consolidated
vessels |
68,456 |
|
4,970 |
|
73,426 |
|
Teekay LNG Partners L.P.Appendix E -
Reconciliation of Non-GAAP Financial MeasuresCash
Flow from Vessel Operations from Equity-Accounted
Vessels(in thousands of U.S. Dollars)
|
Three Months Ended |
|
June 30, 2018 |
June 30, 2017 |
|
(unaudited) |
(unaudited) |
|
At |
Partnership's |
At |
Partnership's |
100% |
Portion(1) |
100% |
Portion(1) |
Voyage
revenues |
137,291 |
|
59,845 |
|
117,326 |
|
52,516 |
|
Voyage
expenses |
(2,469 |
) |
(1,254 |
) |
(3,760 |
) |
(1,923 |
) |
Vessel
operating expenses and general and administrative expenses |
(48,496 |
) |
(21,738 |
) |
(43,070 |
) |
(20,010 |
) |
Depreciation and amortization |
(25,368 |
) |
(12,652 |
) |
(26,156 |
) |
(13,074 |
) |
Income from vessel operations of equity-accounted
vessels |
60,958 |
|
24,201 |
|
44,340 |
|
17,509 |
|
Other
items, including interest expense, realized and unrealized gain
(loss) on derivative instruments |
(29,721 |
) |
(13,007 |
) |
(45,480 |
) |
(18,016 |
) |
Net income (loss) / equity income (loss) of
equity-accounted vessels |
31,237 |
|
11,194 |
|
(1,140 |
) |
(507 |
) |
|
|
|
|
|
Income from
vessel operations of equity-accounted vessels |
60,958 |
|
24,201 |
|
44,340 |
|
17,509 |
|
Depreciation and amortization |
25,368 |
|
12,652 |
|
26,156 |
|
13,074 |
|
Direct
finance lease payments received in excess of revenue
recognized |
12,574 |
|
4,523 |
|
9,303 |
|
3,361 |
|
Amortization of in-process revenue contracts |
(1,822 |
) |
(962 |
) |
(2,168 |
) |
(1,118 |
) |
Cash flow from vessel operations from equity-accounted
vessels |
97,078 |
|
40,414 |
|
77,631 |
|
32,826 |
|
(1) The Partnership's equity-accounted vessels for the three
months ended June 30, 2018 and 2017 include: the Partnership’s
40 percent ownership interest in Teekay Nakilat (III) Corporation,
which owns four LNG carriers; the Partnership’s 49 percent
ownership interest in the Partnership’s joint venture with Exmar NV
(the Excalibur Joint Venture), which owns one LNG carrier; the
Partnership's 50 percent ownership interest up to January 2018 in
the Excelsior Joint Venture, which owns one regasification unit;
the Partnership’s 33 percent ownership interest in four LNG
carriers servicing the Angola LNG project; the Partnership’s 52
percent ownership interest in the Teekay LNG-Marubeni Joint
Venture, which owns six LNG carriers; the Partnership’s 50 percent
ownership interest in Exmar LPG BVBA, which owns and in-charters 22
vessels, including one LPG carrier newbuilding, as at June 30,
2018, compared to 23 owned and in-chartered vessels, including four
LPG carrier newbuildings, as at June 30, 2017; the
Partnership’s 30 percent ownership interest in two LNG carriers as
at June 30, 2018, compared to two LNG carrier newbuildings as
at June 30, 2017 for Shell, and the Partnership's 20 percent
ownership interest in two LNG carrier newbuildings for Shell; the
Partnership’s 50 percent ownership interest in one ARC7 LNG carrier
and five ARC7 LNG carrier newbuildings in the joint venture between
the Partnership and China LNG Shipping (Holdings) Limited as at
June 30, 2018, compared to six ARC7 LNG carrier newbuildings
as at June 30, 2017; and the Partnership's 30 percent
ownership interest in Bahrain LNG W.L.L., which owns an LNG
receiving and regasification terminal under construction in
Bahrain.
Teekay LNG Partners L.P.Appendix F -
Summarized Financial Information of Equity-Accounted Joint
Ventures(in thousands of U.S. Dollars)
|
As at June 30, 2018 |
As at December 31,
2017 |
|
(unaudited) |
(unaudited) |
|
At |
Partnership's |
At |
Partnership's |
100% |
Portion(1) |
100% |
Portion(1) |
Cash and
restricted cash, current and non-current |
372,061 |
|
155,094 |
|
295,148 |
|
128,004 |
|
Current
portion of derivative assets |
3,366 |
|
1,657 |
|
1,594 |
|
785 |
|
Other
current assets |
47,979 |
|
20,397 |
|
53,068 |
|
22,661 |
|
Vessels and
equipment, including vessels related to capital leases |
2,102,148 |
|
1,071,849 |
|
2,202,418 |
|
1,133,804 |
|
Advances on
newbuilding contracts |
1,284,648 |
|
469,750 |
|
1,211,210 |
|
450,523 |
|
Net
investments in direct financing leases, current and
non-current |
2,553,100 |
|
961,973 |
|
2,013,759 |
|
722,408 |
|
Derivative
assets |
26,371 |
|
10,418 |
|
4,602 |
|
2,259 |
|
Other non-current assets |
52,824 |
|
38,459 |
|
86,167 |
|
54,060 |
|
Total assets |
6,442,497 |
|
2,729,597 |
|
5,867,966 |
|
2,514,504 |
|
|
|
|
|
|
Current
portion of long-term debt and obligations related to capital
leases |
185,162 |
|
81,917 |
|
162,915 |
|
73,975 |
|
Current
portion of derivative liabilities |
15,690 |
|
5,334 |
|
21,973 |
|
7,217 |
|
Other
current liabilities |
117,404 |
|
48,727 |
|
98,657 |
|
43,193 |
|
Long-term
debt and obligations related to capital leases |
3,542,221 |
|
1,442,987 |
|
3,023,713 |
|
1,231,433 |
|
Shareholders' loans, current and non-current |
368,352 |
|
131,412 |
|
368,937 |
|
131,685 |
|
Derivative
liabilities |
44,087 |
|
14,761 |
|
73,454 |
|
24,235 |
|
Other
long-term liabilities |
68,120 |
|
35,197 |
|
77,297 |
|
39,855 |
|
Equity |
2,101,461 |
|
969,262 |
|
2,041,020 |
|
962,911 |
|
Total liabilities and equity |
6,442,497 |
|
2,729,597 |
|
5,867,966 |
|
2,514,504 |
|
|
|
|
|
|
Investments
in equity-accounted joint ventures |
|
969,262 |
|
|
962,911 |
|
Advances to equity-accounted joint ventures |
|
131,412 |
|
|
131,685 |
|
Investments in and advances to equity-accounted joint
ventures |
|
1,100,674 |
|
|
1,094,596 |
|
(1) The Partnership's equity-accounted vessels as at
June 30, 2018 and December 31, 2017 include: the Partnership’s
40 percent ownership interest in Teekay Nakilat (III) Corporation,
which owns four LNG carriers; the Partnership’s 49 percent
ownership interests in the Excalibur Joint Venture, which owns one
LNG carrier; the Partnership's 50 percent ownership interest up to
January 2018 in the Excelsior Joint Venture, which owns one
regasification unit as at December 31, 2017; the Partnership’s 33
percent ownership interest in four LNG carriers servicing the
Angola LNG project; the Partnership’s 52 percent ownership interest
in the Teekay LNG-Marubeni Joint Venture, which owns six LNG
carriers; the Partnership’s 50 percent ownership interest in Exmar
LPG BVBA, which owns and in-charters 22 vessels, including one LPG
carrier newbuilding, as at June 30, 2018, compared to 23
owned and in-chartered vessels including three LPG carrier
newbuildings, as at December 31, 2017; the Partnership’s 30
percent ownership interest in two LNG carriers as at June 30,
2018, compared to two LNG carrier newbuildings as at
December 31, 2017 for Shell, and the Partnership's 20 percent
ownership interest in two LNG carrier newbuildings for Shell; the
Partnership’s 50 percent ownership interest in one ARC7 LNG carrier
and five ARC7 LNG carrier newbuildings in the joint venture between
the Partnership and China LNG Shipping (Holdings) Limited as at
June 30, 2018, compared to six ARC7 LNG carrier newbuildings
as at December 31, 2017; and the Partnership's 30 percent
ownership interest in Bahrain LNG W.L.L., which owns an LNG
receiving and regasification terminal under construction in
Bahrain.
Forward-Looking Statements
This release contains forward-looking statements
(as defined in Section 21E of the Securities Exchange Act of 1934,
as amended) which reflect management’s current views with respect
to certain future events and performance, including statements
regarding: the timing of newbuilding vessel deliveries and the
commencement of related contracts; the start-up timing for the
second Yamal LNG project's train; the future Multi-gas carrier
market; the effects of future newbuilding deliveries on the
Partnership’s future cash flows and balance sheet leverage; the
timing and certainty of completing the refinancing of Teekay LNG’s
unsecured revolver; Teekay LNG’s ability to benefit from future LNG
fundamentals; and the timing of payment by the Teekay Nakilat Joint
Venture of a tax indemnification guarantee liability. The following
factors are among those that could cause actual results to differ
materially from the forward-looking statements, which involve risks
and uncertainties, and that should be considered in evaluating any
such statement: potential shipyard and project construction delays,
newbuilding specification changes or cost overruns; changes in
production of LNG or LPG, either generally or in particular
regions; changes in trading patterns or timing of start-up of new
LNG liquefaction and regasification projects significantly
affecting overall vessel tonnage requirements; changes in
applicable industry laws and regulations and the timing of
implementation of new laws and regulations; the potential for early
termination of long-term contracts of existing vessels in the
Partnership's fleet; the inability of charterers to make future
charter payments; the inability of the Partnership to renew or
replace long-term contracts on existing vessels; the Partnership’s
or the Partnership’s joint ventures’ ability to secure or draw on
financings for its vessels; progress of the Yamal LNG project;
refinancing discussions with lenders and indemnification guarantee
discussions with the HMRC; and other factors discussed in Teekay
LNG Partners’ filings from time to time with the SEC, including its
Report on Form 20-F for the fiscal year ended December 31, 2017.
The Partnership expressly disclaims any obligation to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Partnership’s
expectations with respect thereto or any change in events,
conditions or circumstances on which any such statement is
based.
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