SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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TEEKAY OFFSHORE PARTNERS L.P.
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By:
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Teekay Offshore GP L.L.C., its general partner
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Date: August 3, 2017
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By:
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/s/ Edith Robinson
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Edith Robinson
Secretary
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TEEKAY OFFSHORE PARTNERS REPORTS
SECOND QUARTER 2017 RESULTS
Highlights
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•
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Reported GAAP net
loss
attributable to the partners and preferred unitholders of
($20.0) million
and adjusted net
income
attributable to the partners and preferred unitholders
(1)
of
$10.4 million
(excluding items listed in
Appendix A
to this release) in the
second
quarter of
2017
.
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•
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Generated GAAP
income
from vessel operations of
$46.2 million
and total cash flow from vessel operations
(1)
of
$134.6 million
in the
second
quarter of
2017
.
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•
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Generated distributable cash flow
(1)
of
$27.2 million
, or
$0.18
per common unit, in the
second
quarter of
2017
.
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•
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Recently announced entering into agreements for a comprehensive, transformative financial transaction with Brookfield Business Partners which is expected to significantly strengthen Teekay Offshore's financial position and fully finance its existing growth projects.
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•
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Entered into a conditional shipbuilding contract to construct two Suezmax DP2 shuttle tanker newbuildings, which will serve under the Master Agreement with Statoil, with options to order up to two additional vessels.
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•
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Signed an amendment to the charter contract with QGEP for the
Petrojarl I
FPSO unit, extending field start-up to the first quarter of 2018.
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Took delivery of the
Randgrid
FSO unit, which is expected to arrive in the North Sea in early-September 2017 and commence operations in early-October 2017 under its charter contract with Statoil.
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Hamilton, Bermuda, August 3, 2017
- Teekay Offshore GP LLC (
TOO GP
), the general partner of Teekay Offshore Partners L.P. (
Teekay Offshore
or
the Partnership
) (NYSE:TOO), today reported the Partnership’s results for the quarter ended
June 30, 2017
.
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Three Months Ended
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June 30,
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March 31,
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June 30,
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2017
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2017
(2)
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2016
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(in thousands of U.S. Dollars)
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(unaudited)
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(unaudited)
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(unaudited)
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GAAP FINANCIAL COMPARISON
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Revenues
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264,792
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276,138
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284,464
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Income from vessel operations
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46,218
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60,458
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24,271
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Equity income
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3,425
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4,475
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3,626
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Net (loss) income
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(16,466
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)
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21,263
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(100,129
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)
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Net (loss) income attributable to the partners and preferred unitholders
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(20,005
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)
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18,891
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(102,625
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)
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NON-GAAP FINANCIAL COMPARISON
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Total cash flow from vessel operations (
CFVO
)
(1)
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134,601
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141,289
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144,208
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Distributable cash flow (
DCF
)
(1)
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27,242
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30,633
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45,885
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Adjusted net income attributable to the partners and preferred unitholders
(1)
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10,427
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15,157
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23,566
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(1)
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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
).
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(2)
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Please refer to Appendices in the first quarter of 2017 release for a reconciliation of these non-GAAP measures to the most directly comparable financial measures under GAAP.
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Teekay Offshore Partners L.P.
Investor Relations Tel: +1 604 844-6654 www.teekayoffshore.com
4
th
Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, Bermuda
GAAP net loss and adjusted net income for the second quarter of 2017, compared to the same quarter of the prior year, were impacted by the redelivery of the
Varg
FPSO unit at the end of July 2016, the redelivery of the
Navion Saga
FSO unit in October 2016 and lower utilization in the Partnership's towage fleet during the second quarter of 2017
, partially offset by the commencement of time-charter contracts for two shuttle tankers during the second quarter of 2017 and lower operating expenses in the Partnership's shuttle tanker fleet from lower repairs and maintenance costs. Additionally, GAAP net loss decreased for the second quarter of 2017, compared to the same quarter of the prior year, primarily due to the
write-down of two UMS newbuildings due to the cancellation of the related construction contracts during the second quarter of 2016 and a decrease in the unrealized loss on non-designated derivative instruments, partially offset by the write-off of deferred operating expenses as a result of the charter contract termination for the
Arendal Spirit
UMS during the second quarter of 2017.
CEO Commentary
“The comprehensive transaction announced last week with our new strategic partner, Brookfield, is expected to transform Teekay Offshore’s capital structure and position us to better service our customers,” commented Ingvild Sæther, President and CEO of Teekay Offshore Group Ltd. “With our existing in-progress growth projects now fully financed with this transaction and nearing completion, our top priority is delivering these projects into operation, which include the
Libra
FPSO conversion,
Randgrid
FSO conversion,
Petrojarl I
FPSO upgrade, East Coast Canada shuttle tanker newbuildings and remaining ALP towage newbuildings. Once delivered over the next few quarters, these projects are expected to contribute approximately an incremental $200 million of run-rate annual cash flow from vessel operations, which will add to the Partnership’s strong existing portfolio of forward fixed-rate cash flows. Longer-term, with a more sustainable balance sheet, stronger liquidity position and greater access to capital, we believe Teekay Offshore is well-positioned to take advantage of future growth opportunities as the global energy markets recover.”
Summary of Recent Events
Strategic Partnership with Brookfield and Comprehensive Solution
In late-July 2017, Teekay Offshore announced entering into agreements for a strategic partnership with Brookfield Business Partners L.P., together with its institutional partners (collectively
Brookfield
), and related transactions (together
the Brookfield Transaction
), which include the following:
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Brookfield and Teekay Corporation (
Teekay
) will invest $610 million and $30 million, respectively, in Teekay Offshore at a price of $2.50 per common unit and receive 65.5 million Teekay Offshore warrants (
Warrants)
on a pro rata basis. Following the investment, Brookfield will own approximately 60 percent and Teekay will own approximately 14 percent of the common units of Teekay Offshore;
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Brookfield will acquire from Teekay both a 49 percent interest in TOO GP and an option to acquire an additional two percent of TOO GP subject to the satisfaction of certain conditions. On closing, Brookfield will have the right to elect four members to the nine-member Board of Directors of TOO GP;
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Teekay Offshore will repurchase and cancel all $304 million of the outstanding Series C-1 and Series D preferred units from the existing unitholders for an aggregate of approximately $250 million in cash, which will save approximately $28 million annually in cash distributions;
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Teekay Offshore has reached agreement in principle with the lenders of the
Arendal Spirit
UMS debt facility to extend the mandatory prepayment date to September 30, 2018, in exchange for a principal prepayment, subject to receipt of lenders' final internal approvals;
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Brookfield will acquire from a subsidiary of Teekay, the $200 million loan, previously extended to Teekay Offshore, in exchange for $140 million in cash and 11.4 million of the Warrants to be issued to Brookfield. Brookfield has agreed to extend the maturity date of the loan from 2019 to 2022;
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Teekay Offshore will transfer its shuttle tanker business into a new, wholly-owned, non-recourse subsidiary, Teekay Shuttle Tankers L.L.C. (or
ShuttleCo
). As part of the formation of ShuttleCo, a majority of Teekay Offshore's shuttle tanker fleet will be refinanced with a new $600 million, five-year debt facility, and two 50 percent-owned vessels will be refinanced with a new $71 million, four-year debt facility. In addition, an existing $250 million debt facility secured by the three East Coast of Canada newbuildings, and an existing $141 million private placement bond secured by two vessels, will be transferred from Teekay Offshore to ShuttleCo;
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A significant portion of Teekay Offshore's existing NOK bonds due to mature in late-2018 are expected to be repurchased with proceeds from a new five-year $250 million U.S. Dollar denominated bond offering by ShuttleCo in the Norwegian bond market, which recently priced at a fixed coupon of 7.125 percent per annum; and
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Certain financial institutions providing interest rate swaps to Teekay Offshore have agreed to (i) lower the fixed interest rate on the swaps, (ii) extend the termination option of the swaps by two years to 2021, and (iii) eliminate the financial guarantee and security package currently provided by Teekay in return for a prepayment amount and fees.
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As part of the Brookfield Transaction, Teekay Offshore has reduced its existing common unit distribution to reinvest cash in the business and further strengthen the Partnership’s balance sheet. For the quarter ended June 30, 2017, TOO GP declared a cash distribution of $0.01 per common unit, payable on August 11, 2017 to all unitholders of record on August 7, 2017.
The Brookfield Transaction has been approved by the Board of Directors of Teekay, TOO GP, and Brookfield. Teekay Offshore’s Conflicts Committee, comprised of independent members of the board of directors of TOO GP and assisted by independent legal and financial advisors, also approved the transactions between Teekay Offshore and Brookfield and Teekay Offshore and Teekay. Closing of the Brookfield Transaction, which remains subject to various conditions, including, among others, regulatory approvals, is expected to occur in the third quarter of 2017.
Shuttle Tanker Newbuildings
In addition to the formation of the ShuttleCo, Teekay Offshore has entered into conditional shipbuilding contracts with Samsung Heavy Industries Co., Ltd. to construct two Suezmax DP2 shuttle tanker newbuildings with options to order up to two additional vessels. These newbuilding vessels will be constructed based on the Partnership's
New Shuttle Spirit
design which incorporates proven technologies to increase fuel efficiency and reduce emissions, including LNG propulsion technology. Upon delivery scheduled in 2019 and 2020, these vessels will provide shuttle tanker services in the North Sea under the Partnership’s existing Master Agreement with Statoil ASA (
Statoil
) and will free up required vessel capacity to service Teekay Offshore's contract of affreightment (
CoA
) fleet in the North Sea.
Petrojarl I
Charter Amendment
In July 2017, the Partnership signed an amendment to the
Petrojarl I
FPSO charter contract with Queiroz Galvão Exploração e Produção SA (
QGEP
). The amended charter contract includes an extension to the delivery window for the project and an adjusted charter rate profile which reduces the day rate for the FPSO unit during the first 18 months of production. During the final 3.5 years of the contract, the charter contract will revert to a rate that is higher than the original daily rate, plus production tariffs, which provides the potential for the Partnership to more than recover the reduction during the first 18 months. Start-up of oil production on the Atlanta Field is expected to occur in the first quarter of 2018.
Delivery of Newbuilding Towage Vessel
In June 2017, the Partnership took delivery of the
ALP Defender
, the second of four
state-of-the-art SX-157 Ulstein Design ultra-long distance towing and offshore installation newbuildings being constructed by Niigata Shipbuilding & Repair in Japan. Due to the delayed delivery of the vessel
, during the second quarter of 2017, the Partnership received a reimbursement from the shipyard of $8.5 million and received an advance payment of $15.8 million on a reimbursement related to delayed deliveries of the two remaining ultra-long distance towing and offshore installation newbuildings, which are scheduled to be delivered in late-2017 and early-2018.
New North Sea Shuttle Tanker Contract
In June 2017, the Partnership finalized the previously announced
three-year shuttle tanker CoA to service a development in the U.K. North Sea. The CoA is expected to commence during the third quarter of 2017 and will require the use of up to approximately 0.6 shuttle tanker equivalents per annum, which will be provided by the Partnership's existing CoA shuttle tanker fleet.
Operating Results
The following table highlights certain financial information for Teekay Offshore’s six segments: the FPSO segment, the shuttle tanker segment, the FSO segment, the UMS segment, the towage segment and the conventional tanker segment (please refer to the “Teekay Offshore’s Fleet” section of this release below and
Appendices C
through
E
for further details).
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Three Months Ended
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June 30, 2017
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(in thousands of U.S. Dollars)
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(unaudited)
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FPSO
Segment
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Shuttle Tanker Segment
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FSO
Segment
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UMS
Segment
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Towage
Segment
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Conventional
Tanker
Segment
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Total
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GAAP FINANCIAL COMPARISON
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Revenues
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110,247
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132,964
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10,798
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3,089
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4,229
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3,465
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264,792
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Income (loss) from vessel operations
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31,601
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38,293
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1,178
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(17,050
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)
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(7,021
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)
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(783
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)
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46,218
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Equity income
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3,425
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—
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—
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—
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—
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—
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3,425
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NON-GAAP FINANCIAL COMPARISON
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CFVO from (used for) consolidated vessels
(i)
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64,015
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68,063
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6,719
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(6,528
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)
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(3,446
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)
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(783
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128,040
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CFVO from equity accounted vessels
(i)
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6,561
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—
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—
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—
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—
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—
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6,561
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Total CFVO
(i)
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70,576
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68,063
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6,719
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(6,528
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)
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(3,446
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)
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(783
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)
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134,601
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Three Months Ended
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June 30, 2016
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(in thousands of U.S. Dollars)
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(unaudited)
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FPSO
Segment
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Shuttle Tanker Segment
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FSO
Segment
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UMS
Segment
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Towage
Segment
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Conventional
Tanker
Segment
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Total
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GAAP FINANCIAL COMPARISON
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Revenues
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124,715
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125,840
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13,789
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3,736
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11,730
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4,654
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284,464
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Income (loss) from vessel operations
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36,412
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34,751
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5,117
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(51,760
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)
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(62
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(187
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24,271
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Equity income
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3,626
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—
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—
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—
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—
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—
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3,626
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NON-GAAP FINANCIAL COMPARISON
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CFVO from (used for) consolidated vessels
(i)
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68,682
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63,878
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8,802
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(6,415
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)
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2,893
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(187
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)
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137,653
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CFVO from equity accounted vessels
(i)
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6,555
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—
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—
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—
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—
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—
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6,555
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Total CFVO
(i)
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75,237
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63,878
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8,802
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(6,415
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)
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2,893
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(187
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)
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144,208
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(i)
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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.
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FPSO Segment
Income from vessel operations and cash flow from vessel operations decreased for the
three months ended June 30, 2017
, compared to the same quarter of the prior year, primarily due to the redelivery of the
Varg
FPSO unit at the end of July 2016, partially offset by lower operating expenses for the
Knarr
FPSO unit following the successful completion of its final performance test in August 2016.
Shuttle Tanker Segment
Income from vessel operations and cash flow from vessel operations increased for the
three months ended June 30, 2017
, compared to the same quarter of the prior year primarily due to the commencement of new time-charter contracts for the
Petronordic
and
Petroatlantic
following completion of their previous bareboat charters contracts,
higher CoA fleet utilization, an increase in charter rates under certain contracts in the time-chartered-out fleet, and lower operating expenses due to
the
timing of repairs and maintenance
. These increases were partially offset by the redelivery of one vessel to the Partnership in June 2016 upon completion of its time-charter out contract (which commenced operating in the Partnership's CoA fleet in the North Sea in late-2016), the sale of the
Navion Europa
in November 2016, and higher time-charter hire expenses primarily due to the in-charter of the
Grena Knutsen
commencing in September 2016.
FSO Segment
Income from vessel operations and cash flow from vessel operations
decreased for the
three months ended June 30, 2017
, compared to the same quarter of the prior year,
due to the off-hire of the
Navion Saga
following completion of its time-charter out contract in October 2016.
UMS Segment
Cash flow from vessel operations for the
three months ended June 30, 2017
were consistent compared to the same quarter of the prior year. Income from vessel operations
for the
three months ended June 30, 2017
reflects the operational review by the charterer and associated non-payment
of charter hire since early-November 2016 and subsequent charter contract termination of the
Arendal Spirit
UMS, which resulted in the net write-off of
$8.9 million
of deferred mobilization costs. Income from vessel operations for the three months ended June 30, 2016 reflects the off-hire of the
Arendal Spirit
UMS following damage suffered to the unit's gangway and
included a
$43.7 million write-down of two UMS newbuildings due to the cancellation of the related construction contracts.
Towage Segment
Income from vessel operations and cash flow from vessel operations decreased
for the
three months ended June 30, 2017
, compared to the same quarter of the prior year, due to
lower realized rates and fleet utilization, partially offset by the delivery of two towage newbuildings, the
ALP Striker
and
ALP Defender
, in September 2016 and June 2017, respectively.
Conventional Tanker Segment
Income from vessel operations and cash flow from vessel operations decreased
for the
three months ended June 30, 2017
, compared to the same quarter of the prior year,
primarily due to lower earnings related to one of the conventional tankers trading in the spot market.
Teekay Offshore’s Fleet
The following table summarizes Teekay Offshore’s fleet as of August 1,
2017
.
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Number of Vessels
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Owned Vessels
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Chartered-in Vessels
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Committed Newbuildings / Conversions / Upgrade
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Total
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FPSO Segment
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6
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(i)
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—
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2
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(ii)
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8
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Shuttle Tanker Segment
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28
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(iii)
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3
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3
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(iv)
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34
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FSO Segment
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6
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(v)
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—
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1
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(vi)
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7
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UMS Segment
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1
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—
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—
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1
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Towage Segment
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8
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—
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2
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(vii)
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10
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Conventional Segment
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—
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2
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—
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2
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Total
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49
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5
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|
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8
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62
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(i)
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Includes one FPSO unit, the
Cidade de Itajai
FPSO, in which Teekay Offshore’s ownership interest is 50 percent.
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(ii)
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Consists of the
Petrojarl I
FPSO upgrade project and Teekay Offshore’s 50 percent ownership interest in the
Libra
FPSO conversion project, which units are scheduled to commence operations in early-2018 and late-2017, respectively. The
Libra
FPSO unit conversion was completed in late-March 2017 and arrived at the Libra field in offshore Brazil in May 2017 where it is undergoing field installation
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(iii)
|
Includes six shuttle tankers in which Teekay Offshore’s ownership interest is 50 percent and one
HiLoad
DP unit.
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(iv)
|
Includes three Suezmax-size, DP2 shuttle tanker newbuildings scheduled to be delivered in late-2017 through the early-2018 for employment under the East Coast of Canada charter contracts.
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(v)
|
Includes the
Navion Saga
which, as at June 30, 2017, was classified as held for sale.
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(vi)
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Consists of the
Randgrid
FSO, which has been converted from a shuttle tanker for use on the
Gina Krog
Field in the North Sea and is scheduled to commence operations in the fourth quarter of 2017.
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(vii)
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Consists of two long-distance towing and offshore installation vessel newbuildings scheduled to deliver during
late-2017 and early-2018
.
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Liquidity
As of
June 30, 2017
, the Partnership had total liquidity of
$212.3 million
, excluding $60 million included in restricted cash relating to amounts deposited in escrow to pre-fund a portion of the remaining
Petrojarl I
FPSO upgrade project costs.
Conference Call
The Partnership plans to host a conference call on Thursday,
August 3, 2017
at 12:00 p.m. (ET) to discuss the results for the
second
quarter of 2017. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
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•
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By dialing 1-800-390-5202 or 416-204-1626, if outside North America, and quoting conference ID code 5007615.
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•
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By accessing the webcast, which will be available on Teekay Offshore's website at
www.teekay.com
(the archive will remain on the website for a period of one year).
|
An accompanying Second Quarter 2017 Earnings Presentation will also be available at
www.teekay.com
in advance of the conference call start time.
About Teekay Offshore Partners L.P.
Teekay Offshore Partners L.P. is an international provider of marine transportation, oil production, storage, long-distance towing and offshore installation and maintenance and safety services to the oil industry, primarily focusing on oil production-related activities of its customers and operating in offshore oil regions of the North Sea, Brazil and the East Coast of Canada. Teekay Offshore is structured as a publicly-traded master limited partnership (
MLP
) with consolidated assets of approximately
$5.6 billion
as at
June 30, 2017
, comprised of
62
offshore assets, including floating production, storage and offloading (
FPSO
) units, shuttle tankers, floating storage and offtake (
FSO
) units, units for maintenance and safety (
UMS
), long-distance towing and offshore installation vessels and conventional tankers. The majority of Teekay Offshore's fleet is employed on medium-term, stable contracts.
Teekay Offshore's common and Series A and B preferred units trade on the New York Stock Exchange under the symbols "TOO", "TOO PR A " and "TOO PR B", respectively.
For Investor Relations enquiries contact:
Ryan Hamilton
Tel: +1 (604) 844-6654
Website:
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, and 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 (used for)
Vessel Operations
(
CFVO
) represents income from vessel operations before depreciation and amortization expense, amortization of in-process revenue contracts, vessel write-downs, gains or losses on the sale of vessels, write-off of deferred revenues and operating expenses and adjustments for direct financing leases to a cash basis, but includes realized gains or losses on the settlement of foreign currency forward contracts.
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 (loss)
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
(loss) income
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
(loss) income
, the most directly comparable GAAP measure reflected in the Partnership’s consolidated financial statements.
Distributable Cash Flow
(
DCF
) represents GAAP net
(loss) income
adjusted for depreciation and amortization expense, deferred income tax expense or recovery, vessel write-downs, gains or losses on the sale of vessels, vessel and business acquisition costs, distributions relating to equity financing of newbuilding installments and conversion costs, pre-operational expenses, distributions on the Partnership's preferred units, gains on extinguishment of contingent liabilities and losses on non-cash accruals of contingent liabilities, amortization of the non-cash portion of revenue contracts, estimated maintenance capital expenditures, unrealized gains and losses from non-designated derivative instruments, ineffectiveness for derivative instruments designated as hedges for accounting purposes, 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 and non-controlling interests proportionate share of such interests. 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
(loss) income
, the most directly comparable GAAP measure reflected in the Partnership’s consolidated financial statements.
Teekay Offshore Partners L.P.
Summary Consolidated Statements of
(Loss) Income
(in thousands of U.S. Dollars, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Six Months Ended
|
|
|
|
June 30,
|
March 31,
|
June 30,
|
June 30,
|
June 30,
|
|
|
|
2017
|
2017
|
2016
|
2017
|
2016
|
|
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
264,792
|
|
276,138
|
|
284,464
|
|
540,930
|
|
591,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voyage expenses
|
(20,196
|
)
|
(25,141
|
)
|
(17,588
|
)
|
(45,337
|
)
|
(35,932
|
)
|
|
Vessel operating expenses
|
(89,705
|
)
|
(78,990
|
)
|
(90,761
|
)
|
(168,695
|
)
|
(186,113
|
)
|
|
Time-charter hire expenses
|
(19,507
|
)
|
(21,756
|
)
|
(18,829
|
)
|
(41,263
|
)
|
(34,151
|
)
|
|
Depreciation and amortization
|
(74,287
|
)
|
(74,726
|
)
|
(74,057
|
)
|
(149,013
|
)
|
(148,979
|
)
|
|
General and administrative
|
(13,379
|
)
|
(14,617
|
)
|
(13,821
|
)
|
(27,996
|
)
|
(28,290
|
)
|
|
Write-down of vessels
(1)
|
(1,500
|
)
|
—
|
|
(43,650
|
)
|
(1,500
|
)
|
(43,650
|
)
|
|
Restructuring charge
|
—
|
|
(450
|
)
|
(1,487
|
)
|
(450
|
)
|
(1,487
|
)
|
|
Income from vessel operations
|
46,218
|
|
60,458
|
|
24,271
|
|
106,676
|
|
112,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
(36,602
|
)
|
(36,104
|
)
|
(33,347
|
)
|
(72,706
|
)
|
(69,373
|
)
|
|
Interest income
|
406
|
|
346
|
|
293
|
|
752
|
|
697
|
|
|
Realized and unrealized loss
|
|
|
|
|
|
|
|
|
|
|
|
|
on derivative instruments
(2)
|
(21,797
|
)
|
(6,532
|
)
|
(62,037
|
)
|
(28,329
|
)
|
(122,527
|
)
|
|
Equity income
|
3,425
|
|
4,475
|
|
3,626
|
|
7,900
|
|
8,909
|
|
|
Foreign currency exchange loss
(3)
|
(6,564
|
)
|
(223
|
)
|
(13,087
|
)
|
(6,787
|
)
|
(15,925
|
)
|
|
Other (expense) income - net
(1)
|
(1,134
|
)
|
222
|
|
(21,286
|
)
|
(912
|
)
|
(21,277
|
)
|
|
(Loss) income before income tax (expense) recovery
|
(16,048
|
)
|
22,642
|
|
(101,567
|
)
|
6,594
|
|
(106,926
|
)
|
|
Income tax (expense) recovery
|
(418
|
)
|
(1,379
|
)
|
1,438
|
|
(1,797
|
)
|
4,274
|
|
|
Net (loss) income
|
(16,466
|
)
|
21,263
|
|
(100,129
|
)
|
4,797
|
|
(102,652
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests in net (loss) income
|
3,539
|
|
2,372
|
|
2,496
|
|
5,911
|
|
4,384
|
|
|
Preferred unitholders' interest in net (loss) income
|
12,386
|
|
12,386
|
|
10,314
|
|
24,772
|
|
21,063
|
|
|
General partner’s interest in net (loss) income
|
(648
|
)
|
130
|
|
(2,260
|
)
|
(518
|
)
|
(2,563
|
)
|
|
Limited partners’ interest in net (loss) income
|
(31,743
|
)
|
6,375
|
|
(127,408
|
)
|
(25,368
|
)
|
(142,265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common units:
|
|
|
|
|
|
|
|
|
|
|
|
- basic
|
151,364,950
|
|
148,633,906
|
|
107,794,323
|
|
150,006,972
|
|
107,424,853
|
|
|
- diluted
|
151,364,950
|
|
149,662,366
|
|
107,794,323
|
|
150,006,972
|
|
107,424,853
|
|
|
Total number of common units outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
at end of period
|
153,858,292
|
|
149,718,936
|
|
137,430,180
|
|
153,858,292
|
|
137,430,180
|
|
|
|
|
|
(1)
|
In June 2016, as part of the Partnership's 2016 financing initiatives, the Partnership canceled the UMS construction contracts for its two UMS newbuildings. As a result, the Partnership incurred a
$43.7 million
write-down related to these two UMS newbuildings, included in Write-down of vessels for the three and six months ended June 30, 2016. In addition, the Partnership, in accordance with GAAP, accrued for potential damages resulting from the cancellations and reversed the contingent liabilities previously recorded that were subject to the delivery of the UMS newbuildings. This net loss provision of $23.4 million is reported in Other (expense) income - net for the three and six months ended June 30, 2016. The newbuilding contracts are held in separate subsidiaries of the Partnership and obligations of these subsidiaries are non-recourse to the Partnership.
|
|
|
|
|
(2)
|
Realized
loss
on derivative instruments relates to amounts the Partnership actually paid to settle derivative instruments, and the unrealized
(loss) gain
on derivative instruments relates to the change in fair value of such derivative instruments, as detailed in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Six Months Ended
|
|
|
|
June 30,
|
March 31,
|
June 30,
|
June 30,
|
June 30,
|
|
|
2017
|
2017
|
2016
|
2017
|
2016
|
|
Realized loss relating to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
(10,296
|
)
|
(10,666
|
)
|
(13,515
|
)
|
(20,962
|
)
|
(27,482
|
)
|
|
|
Foreign currency forward contracts
|
(309
|
)
|
(100
|
)
|
(1,687
|
)
|
(410
|
)
|
(4,620
|
)
|
|
|
|
(10,605
|
)
|
(10,766
|
)
|
(15,202
|
)
|
(21,372
|
)
|
(32,102
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (loss) gain relating to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
(12,871
|
)
|
3,503
|
|
(47,818
|
)
|
(9,367
|
)
|
(99,739
|
)
|
|
|
Foreign currency forward contracts
|
1,679
|
|
731
|
|
983
|
|
2,410
|
|
9,314
|
|
|
|
|
(11,192
|
)
|
4,234
|
|
(46,835
|
)
|
(6,957
|
)
|
(90,425
|
)
|
|
Total realized and unrealized loss on
|
|
|
|
|
|
|
|
|
|
|
|
|
derivative instruments
|
(21,797
|
)
|
(6,532
|
)
|
(62,037
|
)
|
(28,329
|
)
|
(122,527
|
)
|
|
|
|
|
(3)
|
The Partnership entered into cross currency swaps to economically hedge the foreign currency exposure on the payment of interest and repayment of principal amounts of the Partnership’s Norwegian Kroner (
NOK
) bonds with maturity dates through to 2019. In addition, the cross currency swaps economically hedge the interest rate exposure on the NOK bonds. The Partnership has not designated, for accounting purposes, these cross currency swaps as cash flow hedges of its NOK bonds and, thus, foreign currency exchange
loss
includes a realized
loss
relating to the amounts the Partnership paid to settle its non-designated cross currency swaps and an unrealized
gain (loss)
relating to the change in fair value of such swaps, partially offset by an unrealized
(loss) gain
on the revaluation of the NOK bonds, as detailed in the table below. In addition, during the six months ended June 30, 2016, the Partnership's realized loss on cross-currency swaps includes a $32.6 million loss on the maturity of the swap associated with the NOK 500 million bond which settled in January 2016, which was offset by a $32.6 million realized foreign currency exchange gain on the settlement of the bond which is not included in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Six Months Ended
|
|
|
June 30,
|
March 31,
|
June 30,
|
June 30,
|
June 30,
|
|
|
2017
|
2017
|
2016
|
2017
|
2016
|
|
Realized loss on cross currency swaps
|
(3,310
|
)
|
(3,204
|
)
|
(2,671
|
)
|
(6,514
|
)
|
(37,947
|
)
|
|
Unrealized gain (loss) on cross currency swaps
|
8,111
|
|
4,379
|
|
(14,422
|
)
|
12,490
|
|
38,473
|
|
|
Unrealized (loss) gain on revaluation of NOK bonds
|
(7,797
|
)
|
(1,261
|
)
|
3,293
|
|
(9,058
|
)
|
(48,194
|
)
|
Teekay Offshore Partners L.P.
Consolidated Balance Sheets
(in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
As at
|
As at
|
|
|
|
June 30, 2017
|
March 31, 2017
|
December 31, 2016
|
|
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
ASSETS
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash equivalents
|
212,267
|
|
193,419
|
|
227,378
|
|
|
Restricted cash - current
|
96,728
|
|
97,310
|
|
92,265
|
|
|
Accounts receivable
|
123,018
|
|
132,415
|
|
114,576
|
|
|
Vessels held for sale
|
6,900
|
|
6,900
|
|
6,900
|
|
|
Net investments in direct financing leases - current
|
5,794
|
|
1,994
|
|
4,417
|
|
|
Prepaid expenses
|
23,676
|
|
30,628
|
|
25,187
|
|
|
Due from affiliates
|
32,966
|
|
20,013
|
|
77,811
|
|
|
Other current assets
|
11,127
|
|
21,316
|
|
21,282
|
|
|
Total current assets
|
512,476
|
|
503,995
|
|
569,816
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash - long-term
|
2,992
|
|
2,970
|
|
22,644
|
|
|
|
|
|
|
|
|
|
|
|
Vessels and equipment
|
|
|
|
|
|
|
|
At cost, less accumulated depreciation
|
3,997,446
|
|
4,012,105
|
|
4,084,803
|
|
|
Advances on newbuilding contracts and conversion costs
|
695,985
|
|
680,439
|
|
632,130
|
|
|
Net investments in direct financing leases
|
14,080
|
|
13,700
|
|
13,169
|
|
|
Investment in equity accounted joint ventures
|
152,946
|
|
154,048
|
|
141,819
|
|
|
Deferred tax asset
|
24,918
|
|
23,765
|
|
24,659
|
|
|
Other assets
|
92,293
|
|
96,992
|
|
100,435
|
|
|
Goodwill
|
129,145
|
|
129,145
|
|
129,145
|
|
|
Total assets
|
5,622,281
|
|
5,617,159
|
|
5,718,620
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Accounts payable
|
14,384
|
|
15,454
|
|
8,946
|
|
|
Accrued liabilities
|
139,913
|
|
139,771
|
|
150,281
|
|
|
Deferred revenues
|
56,301
|
|
57,017
|
|
57,373
|
|
|
Due to affiliates
|
88,854
|
|
70,774
|
|
96,555
|
|
|
Current portion of long-term debt
|
891,558
|
|
620,803
|
|
586,892
|
|
|
Current portion of derivative instruments
|
58,935
|
|
60,119
|
|
55,002
|
|
|
Current portion of in-process revenue contracts
|
11,524
|
|
12,744
|
|
12,744
|
|
|
Total current liabilities
|
1,261,469
|
|
976,682
|
|
967,793
|
|
|
Long-term debt
|
2,252,561
|
|
2,500,306
|
|
2,596,002
|
|
|
Derivative instruments
|
272,422
|
|
268,578
|
|
282,138
|
|
|
Due to affiliates
|
200,000
|
|
200,000
|
|
200,000
|
|
|
In-process revenue contracts
|
45,182
|
|
47,139
|
|
50,281
|
|
|
Other long-term liabilities
|
202,600
|
|
207,297
|
|
211,611
|
|
|
Total liabilities
|
4,234,234
|
|
4,200,002
|
|
4,307,825
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable non-controlling interest
|
424
|
|
955
|
|
962
|
|
|
Convertible preferred units
|
272,877
|
|
272,053
|
|
271,237
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Limited partners - common units
|
757,086
|
|
787,065
|
|
784,056
|
|
|
Limited partners - preferred units
|
266,925
|
|
266,925
|
|
266,925
|
|
|
General partner
|
20,105
|
|
20,720
|
|
20,658
|
|
|
Warrants
|
13,797
|
|
13,797
|
|
13,797
|
|
|
Accumulated other comprehensive loss
|
(2,920
|
)
|
(591
|
)
|
(804
|
)
|
|
Non-controlling interests
|
59,753
|
|
56,233
|
|
53,964
|
|
|
Total equity
|
1,114,746
|
|
1,144,149
|
|
1,138,596
|
|
|
Total liabilities and total equity
|
5,622,281
|
|
5,617,159
|
|
5,718,620
|
|
Teekay Offshore Partners L.P.
Consolidated Statements of Cash Flows
(in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
June 30, 2017
|
June 30, 2016
|
|
|
(unaudited)
|
(unaudited)
|
|
Cash and cash equivalents provided by (used for)
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
Net income (loss)
|
4,797
|
|
(102,652
|
)
|
|
Non-cash items:
|
|
|
|
Unrealized (gain) loss on derivative instruments
|
(5,526
|
)
|
51,094
|
|
|
Equity income, net of dividends received of $7,000 (2016: $3,472)
|
(900
|
)
|
(5,437
|
)
|
|
Depreciation and amortization
|
149,013
|
|
148,979
|
|
|
Write-down of vessels
|
1,500
|
|
43,650
|
|
|
Deferred income tax expense (recovery)
|
762
|
|
(5,436
|
)
|
|
Amortization of in-process revenue contracts
|
(6,319
|
)
|
(6,355
|
)
|
|
Unrealized foreign currency exchange (gain) loss and other
|
35,143
|
|
26,735
|
|
|
Change in non-cash working capital items related to operating activities
|
14,909
|
|
32,055
|
|
|
Expenditures for dry docking
|
(2,815
|
)
|
(10,801
|
)
|
|
Net operating cash flow
|
190,564
|
|
171,832
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
Proceeds from long-term debt
|
207,464
|
|
163,112
|
|
|
Scheduled repayments of long-term debt
|
(263,169
|
)
|
(263,850
|
)
|
|
Prepayments of long-term debt
|
—
|
|
(21,607
|
)
|
|
Debt issuance costs
|
(2,214
|
)
|
(6,102
|
)
|
|
Decrease in restricted cash
|
15,189
|
|
31,990
|
|
|
Proceeds from issuance of common units
|
585
|
|
102,930
|
|
|
Proceeds from issuance of preferred units and warrants
|
—
|
|
100,000
|
|
|
Expenses relating to equity offerings
|
(212
|
)
|
(5,601
|
)
|
|
Cash distributions paid by the Partnership
|
(34,412
|
)
|
(45,538
|
)
|
|
Cash distributions paid by subsidiaries to non-controlling interests
|
(660
|
)
|
(110
|
)
|
|
Equity contribution from joint venture partners
|
—
|
|
750
|
|
|
Other
|
(483
|
)
|
(90
|
)
|
|
Net financing cash flow
|
(77,912
|
)
|
55,884
|
|
|
INVESTING ACTIVITIES
|
|
|
|
Net payments for vessels and equipment, including advances on newbuilding contracts and conversion costs
|
(118,601
|
)
|
(106,432
|
)
|
|
Proceeds from sale of vessels and equipment
|
—
|
|
55,450
|
|
|
Direct financing lease payments received (investments)
|
3,177
|
|
(1,616
|
)
|
|
Investment in equity accounted joint ventures
|
(12,339
|
)
|
(52,873
|
)
|
|
Net investing cash flow
|
(127,763
|
)
|
(105,471
|
)
|
|
(Decrease) increase in cash and cash equivalents
|
(15,111
|
)
|
122,245
|
|
|
Cash and cash equivalents, beginning of the period
|
227,378
|
|
258,473
|
|
|
Cash and cash equivalents, end of the period
|
212,267
|
|
380,718
|
|
Teekay Offshore Partners L.P.
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted Net
Income
(in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
June 30, 2017
|
June 30, 2016
|
|
|
|
|
(unaudited)
|
(unaudited)
|
|
Net loss – GAAP basis
|
(16,466
|
)
|
(100,129
|
)
|
|
Adjustments:
|
|
|
|
|
Less
: net loss attributable to non-controlling interests
|
3,539
|
|
2,496
|
|
|
Net loss attributable to the partners and preferred unitholders
|
(20,005
|
)
|
(102,625
|
)
|
|
Add (subtract) specific items affecting net income:
|
|
|
|
|
Foreign currency exchange loss
(1)
|
3,254
|
|
10,416
|
|
|
|
Unrealized loss on derivative instruments
(2)
|
10,832
|
|
44,978
|
|
|
|
Write-down of vessels
(3)
|
1,500
|
|
43,650
|
|
|
|
Net loss provision relating to cancellation of UMS newbuildings
(3)
|
1,167
|
|
21,282
|
|
|
|
Termination of
Arendal Spirit
UMS charter contract
(4)
|
8,888
|
|
—
|
|
|
|
Pre-operational costs
(5)
|
1,788
|
|
3,393
|
|
|
|
Business development fees, restructuring charge and other
(6)
|
3,003
|
|
2,162
|
|
|
|
Non-controlling interests’ share of items above
(7)
|
—
|
|
310
|
|
|
Total adjustments
|
30,432
|
|
126,191
|
|
|
Adjusted net income attributable to the partners and preferred unitholders
|
10,427
|
|
23,566
|
|
|
|
|
|
(1)
|
Foreign currency exchange
loss
primarily relates 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 the unrealized gain or loss related to the Partnership’s cross currency swaps related to the Partnership's NOK bonds and excludes the realized gain or loss relating to the Partnership's cross currency swaps.
|
|
|
|
|
(2)
|
Reflects the unrealized
loss
due to changes in the mark-to-market value of interest rate swaps and foreign currency forward contracts that are not designated as hedges for accounting purposes, hedge ineffectiveness from derivative instruments designated as hedges for accounting purposes, the unrealized mark-to-market value of the interest rate swaps within the
Cidade de Itajai
FPSO equity accounted joint venture and hedge ineffectiveness within the
Libra
FPSO equity accounted joint venture.
|
|
|
|
|
(3)
|
See footnote (1) of the summary consolidated statements of
(loss) income
included in this release for further details. A further accrual for the second quarter of 2017 was included in "
Net loss provision relating to cancellation of UMS newbuildings"
.
|
|
|
|
|
(4)
|
Includes the write-off of deferred revenues and operating expenses as a result of the termination of the
Arendal Spirit
UMS charter contract in late-April 2017.
|
|
|
|
|
(5)
|
Reflects depreciation and amortization expense and vessel operating expenses relating to the
Petrojarl I
FPSO unit while undergoing upgrades and realized losses on interest rate swaps relating to the
Libra
FPSO conversion and the ALP towage newbuildings for the three months ended June 30, 2017. Reflects the costs associated with the delivery deferral of one of the Partnership's two UMS newbuildings up to its cancellation date, depreciation and amortization expense and vessel operating expenses relating to the
Petrojarl I
FPSO unit while undergoing upgrades and realized gains on foreign currency forward contracts relating to the conversion costs on the
Gina Krog
FSO unit during the three months ended June 30, 2016.
|
|
|
|
|
(6)
|
Other items for the three months ended
June 30, 2017
includes an increase in the
Piranema Spirit
FPSO rate reduction contingency partially offset by an increase in the deferred income tax asset for the Partnership's Norwegian tax structures. Other items for the three months ended June 30, 2016
includes restructuring charges relating to the reorganization within the Partnership’s FPSO segment and a write-down of equipment in one of the Partnership's joint ventures.
|
|
|
|
|
(7)
|
Items affecting net
loss
include amounts attributable to the Partnership’s consolidated non-wholly-owned subsidiaries. Each item affecting net
loss
is 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 above” in the table above is the cumulative amount of the non-controlling interests’ proportionate share of items affecting net
loss
listed in the table.
|
Teekay Offshore Partners L.P.
Appendix B - Reconciliation of Non-GAAP Financial Measures
Distributable Cash Flow
(in thousands of U.S. Dollars, except per unit and per unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
|
|
|
2017
|
2016
|
|
|
|
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Net loss
|
(16,466
|
)
|
(100,129
|
)
|
|
Add (subtract):
|
|
|
|
|
|
|
Depreciation and amortization
|
74,287
|
|
74,057
|
|
|
|
Unrealized loss on non-designated derivative instruments
(1)
|
11,192
|
|
46,835
|
|
|
|
Distributions relating to equity financing of newbuildings and conversion costs
|
6,249
|
|
4,041
|
|
|
|
Partnership's share of equity accounted joint venture's distributable
|
|
|
|
|
|
cash flow net of estimated maintenance capital expenditures
(2)
|
4,422
|
|
4,140
|
|
|
|
Deferred income tax recovery
|
(674
|
)
|
(1,897
|
)
|
|
|
Amortization of non-cash portion of revenue contracts
|
(3,997
|
)
|
(3,997
|
)
|
|
|
Equity income
|
(3,425
|
)
|
(3,626
|
)
|
|
|
Distributions on preferred units
|
(12,386
|
)
|
(10,314
|
)
|
|
|
Estimated maintenance capital expenditures
(3)
|
(32,676
|
)
|
(40,118
|
)
|
|
|
Net loss provision relating to cancellation of UMS newbuildings
(4)
|
1,167
|
|
21,282
|
|
|
|
Write-down of vessels
(4)
|
1,500
|
|
43,650
|
|
|
|
Unrealized foreign exchange and other, net
|
4,797
|
|
17,022
|
|
|
Distributable cash flow before non-controlling interests
|
33,990
|
|
50,946
|
|
|
|
Non-controlling interests' share of DCF
|
(6,748
|
)
|
(5,061
|
)
|
|
Distributable Cash Flow
|
27,242
|
|
45,885
|
|
|
Amount attributable to the General Partner
|
(31
|
)
|
(309
|
)
|
|
Limited partners' Distributable Cash Flow
|
27,211
|
|
45,576
|
|
|
Weighted-average number of common units outstanding
|
151,365
|
|
107,794
|
|
|
Distributable Cash Flow per limited partner unit
|
0.18
|
|
0.42
|
|
|
|
|
|
(1)
|
Derivative instruments include interest rate swaps and foreign currency forward contracts.
|
|
|
|
|
(2)
|
Estimated maintenance capital expenditures relating to the Partnership’s equity accounted joint venture for the three months ended
June 30, 2017
and
2016
were $1.0 million for each period.
|
|
|
|
|
(3)
|
Estimated maintenance capital expenditures for the three months ended
June 30, 2017
also includes $8.4 million cash compensation received from the shipyard in connection with the delayed delivery of the
ALP Defender
in June 2017.
|
|
|
|
|
(4)
|
See footnote (1) of the summary consolidated statements of (loss) income included in this release for further details.
|
Teekay Offshore Partners L.P.
Appendix C - Supplemental Segment Information
(in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
|
|
(unaudited)
|
|
|
FPSO Segment
|
Shuttle Tanker Segment
|
FSO Segment
|
UMS Segment
|
Towage Segment
|
Conventional Tanker Segment
|
Total
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
110,247
|
|
132,964
|
|
10,798
|
|
3,089
|
|
4,229
|
|
3,465
|
|
264,792
|
|
|
Voyage expenses
|
—
|
|
(17,319
|
)
|
(430
|
)
|
—
|
|
(2,409
|
)
|
(38
|
)
|
(20,196
|
)
|
|
Vessel operating expenses
|
(35,079
|
)
|
(28,410
|
)
|
(4,693
|
)
|
(17,333
|
)
|
(4,190
|
)
|
—
|
|
(89,705
|
)
|
|
Time-charter hire expenses
|
—
|
|
(15,387
|
)
|
—
|
|
—
|
|
—
|
|
(4,120
|
)
|
(19,507
|
)
|
|
Depreciation and amortization
|
(36,497
|
)
|
(30,049
|
)
|
(2,588
|
)
|
(1,634
|
)
|
(3,519
|
)
|
—
|
|
(74,287
|
)
|
|
General and administrative
|
(7,070
|
)
|
(3,506
|
)
|
(409
|
)
|
(1,172
|
)
|
(1,132
|
)
|
(90
|
)
|
(13,379
|
)
|
|
Write-down of vessels
|
—
|
|
—
|
|
(1,500
|
)
|
—
|
|
—
|
|
—
|
|
(1,500
|
)
|
|
Income (loss) from vessel operations
|
31,601
|
|
38,293
|
|
1,178
|
|
(17,050
|
)
|
(7,021
|
)
|
(783
|
)
|
46,218
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016
|
|
|
(unaudited)
|
|
|
FPSO Segment
|
Shuttle Tanker Segment
|
FSO Segment
|
UMS Segment
|
Towage Segment
|
Conventional Tanker Segment
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
124,715
|
|
125,840
|
|
13,789
|
|
3,736
|
|
11,730
|
|
4,654
|
|
284,464
|
|
|
Voyage expenses
|
—
|
|
(12,573
|
)
|
(124
|
)
|
—
|
|
(4,281
|
)
|
(610
|
)
|
(17,588
|
)
|
|
Vessel operating expenses
|
(41,365
|
)
|
(29,792
|
)
|
(6,195
|
)
|
(9,319
|
)
|
(3,924
|
)
|
(166
|
)
|
(90,761
|
)
|
|
Time-charter hire expenses
|
—
|
|
(14,764
|
)
|
—
|
|
—
|
|
—
|
|
(4,065
|
)
|
(18,829
|
)
|
|
Depreciation and amortization
|
(37,234
|
)
|
(30,089
|
)
|
(2,209
|
)
|
(1,695
|
)
|
(2,830
|
)
|
—
|
|
(74,057
|
)
|
|
General and administrative
|
(8,217
|
)
|
(3,871
|
)
|
(144
|
)
|
(832
|
)
|
(757
|
)
|
—
|
|
(13,821
|
)
|
|
Write-down of vessels
|
—
|
|
—
|
|
—
|
|
(43,650
|
)
|
—
|
|
—
|
|
(43,650
|
)
|
|
Restructuring charge
|
(1,487
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,487
|
)
|
|
Income (loss) from vessel operations
|
36,412
|
|
34,751
|
|
5,117
|
|
(51,760
|
)
|
(62
|
)
|
(187
|
)
|
24,271
|
|
Teekay Offshore Partners L.P.
Appendix D - Reconciliation of Non-GAAP Financial Measures
Cash Flow
From (Used For)
Vessel Operations From Consolidated Vessels
(in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30, 2017
|
|
|
|
(unaudited)
|
|
|
|
|
Shuttle
|
|
|
|
Conventional
|
|
|
|
FPSO
|
Tanker
|
FSO
|
UMS
|
Towage
|
Tanker
|
|
|
|
Segment
|
Segment
|
Segment
|
Segment
|
Segment
|
Segment
|
Total
|
|
Income (loss) from vessel operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(See
Appendix C
)
|
31,601
|
|
38,293
|
|
1,178
|
|
(17,050
|
)
|
(7,021
|
)
|
(783
|
)
|
46,218
|
|
|
Depreciation and amortization
|
36,497
|
|
30,049
|
|
2,588
|
|
1,634
|
|
3,519
|
|
—
|
|
74,287
|
|
|
Realized (loss) gain from the
|
|
|
|
|
|
|
|
|
|
|
settlements of non-designated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign currency forward contracts
|
(86
|
)
|
(279
|
)
|
—
|
|
—
|
|
56
|
|
—
|
|
(309
|
)
|
|
Amortization of non-cash portion of
|
|
|
|
|
|
|
|
|
|
|
revenue contracts
|
(3,997
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3,997
|
)
|
|
Termination of
Arendal Spirit
UMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
charter contract
|
—
|
|
—
|
|
—
|
8,888
|
|
—
|
|
—
|
|
8,888
|
|
|
Write-down of vessels
|
—
|
|
—
|
|
1,500
|
|
—
|
|
—
|
|
—
|
|
1,500
|
|
|
Falcon Spirit
revenue accounted for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a direct financing lease
|
—
|
|
—
|
|
(366
|
)
|
—
|
|
—
|
|
—
|
|
(366
|
)
|
|
Falcon Spirit
cash flow from
|
|
|
|
|
|
|
|
|
|
|
time-charter contracts
|
—
|
|
—
|
|
1,819
|
|
—
|
|
—
|
|
—
|
|
1,819
|
|
|
Cash flow from (used for) vessel operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from consolidated vessels
|
64,015
|
|
68,063
|
|
6,719
|
|
(6,528
|
)
|
(3,446
|
)
|
(783
|
)
|
128,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30, 2016
|
|
|
|
(unaudited)
|
|
|
|
|
Shuttle
|
|
|
|
Conventional
|
|
|
|
FPSO
|
Tanker
|
FSO
|
UMS
|
Towage
|
Tanker
|
|
|
|
Segment
|
Segment
|
Segment
|
Segment
|
Segment
|
Segment
|
Total
|
|
Income (loss) from vessel operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(See
Appendix C
)
|
36,412
|
|
34,751
|
|
5,117
|
|
(51,760
|
)
|
(62
|
)
|
(187
|
)
|
24,271
|
|
|
Depreciation and amortization
|
37,234
|
|
30,089
|
|
2,209
|
|
1,695
|
|
2,830
|
|
—
|
|
74,057
|
|
|
Realized (loss) gain from the
|
|
|
|
|
|
|
|
|
|
settlements of non-designated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign currency forward contracts
|
(967
|
)
|
(962
|
)
|
—
|
|
—
|
|
125
|
|
—
|
|
(1,804
|
)
|
|
Amortization of non-cash portion of
|
|
|
|
|
|
|
|
|
|
revenue contracts
|
(3,997
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3,997
|
)
|
|
Write-down of vessels
|
—
|
|
—
|
|
—
|
|
43,650
|
|
—
|
|
—
|
|
43,650
|
|
|
Falcon Spirit
revenue accounted for
|
|
|
|
|
|
|
|
|
|
as a direct financing lease
|
—
|
|
—
|
|
(702
|
)
|
—
|
|
—
|
|
—
|
|
(702
|
)
|
|
Falcon Spirit
cash flow from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
time-charter contracts
|
—
|
|
—
|
|
2,178
|
|
—
|
|
—
|
|
—
|
|
2,178
|
|
|
Cash flow from (used for) vessel operations
|
|
|
|
|
|
|
|
|
|
from consolidated vessels
|
68,682
|
|
63,878
|
|
8,802
|
|
(6,415
|
)
|
2,893
|
|
(187
|
)
|
137,653
|
|
Teekay Offshore Partners L.P.
Appendix E - Reconciliation of Non-GAAP Financial Measures
Cash Flow From Vessel Operations From Equity Accounted Vessels
(in thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Three Months Ended
|
|
|
|
June 30, 2017
|
June 30, 2016
|
|
|
(unaudited)
|
(unaudited)
|
|
|
|
At 100%
|
Partnership's 50%
|
At 100%
|
Partnership's 50%
|
|
Revenues
|
23,653
|
|
11,827
|
|
19,077
|
|
9,539
|
|
|
Vessel and other operating expenses
|
(10,532
|
)
|
(5,266
|
)
|
(5,968
|
)
|
(2,984
|
)
|
|
Depreciation and amortization
|
(4,400
|
)
|
(2,200
|
)
|
(4,402
|
)
|
(2,201
|
)
|
|
Write-down of equipment
|
—
|
|
—
|
|
(1,351
|
)
|
(676
|
)
|
|
Income from vessel operations of equity accounted vessels
|
8,721
|
|
4,361
|
|
7,356
|
|
3,678
|
|
|
Net interest expense
|
(1,859
|
)
|
(930
|
)
|
(1,892
|
)
|
(946
|
)
|
|
Realized and unrealized (loss) gain on derivative instruments
(1)
|
(273
|
)
|
(137
|
)
|
1,254
|
|
627
|
|
|
Foreign currency exchange gain
|
85
|
|
43
|
|
611
|
|
306
|
|
|
Total other items
|
(2,047
|
)
|
(1,024
|
)
|
(27
|
)
|
(13
|
)
|
|
Net income / equity income of equity accounted vessels
|
|
|
|
|
|
|
|
before income tax recovery (expense)
|
6,674
|
|
3,337
|
|
7,329
|
|
3,665
|
|
|
Income tax recovery (expense)
|
175
|
|
88
|
|
(78
|
)
|
(39
|
)
|
|
Net income / equity income of equity accounted vessels
|
6,849
|
|
3,425
|
|
7,251
|
|
3,626
|
|
|
|
|
|
|
|
|
|
|
Income from vessel operations of equity accounted vessels
|
8,721
|
|
4,361
|
|
7,356
|
|
3,678
|
|
|
Depreciation and amortization
|
4,400
|
|
2,200
|
|
4,402
|
|
2,201
|
|
|
Write-down of equipment
|
—
|
|
—
|
|
1,351
|
|
676
|
|
|
Cash flow from vessel operations from equity accounted vessels
|
13,121
|
|
6,561
|
|
13,109
|
|
6,555
|
|
|
|
|
|
(1)
|
Realized and unrealized
(loss) gain
o
n derivative instruments for the
three months ended June 30, 2017
and
2016
includes an unrealized
gain
of
$0.9 million
(
$0.4 million
at the Partnership’s 50% share) and $2.1 million ($1.0 million at the Partnership’s 50% share), respectively, related to interest rate swaps for the
Cidade de Itajai
and the
Libra
FPSO units.
|
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: the proposed Brookfield Transaction; the timing and completion of the Brookfield Transaction; the expected effects of the completion of the Brookfield Transaction on the Partnership’s operations and financial condition, including its ability to benefit from an energy market recovery, reduced financial leverage, enhanced liquidity, future access to capital, and ability to better service customers and take advantage of future growth opportunities; completion of the restructuring of the shuttle tanker business; proposed refinancings or amendments of credit facilities and bonds; the expected effects of the completion of the Brookfield Transaction on Teekay, including a release of Teekay from financial guarantees; the future cash flow from vessel operations to be provided by the Partnership’s existing growth projects once delivered; required capital expenditures for newbuilding vessels and the expected full financing of existing growth projects; the expected employment of the newbuilding shuttle tankers under the Partnership’s agreement with Statoil and the expected required capacity in the Partnership’s CoA fleet in the North Sea; the timing of start-up and the vessel equivalent requirements of the new CoAs; the Partnership’s timing of delivery and start-up of various newbuildings and conversion/upgrade projects and the commencement of related contracts; and the outcome of claims and disputes relating to order cancellations and other matters. 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: failure to satisfy the closing conditions of the Brookfield Transaction, including, without limitation, obtaining the required approvals from relevant regulatory authorities; any failure of counterparties to agreements with Teekay or the Partnership to perform their commitments relating to the Brookfield Transaction; failure to realize the expected benefits of the Brookfield Transaction; changes in exploration, production and storage of offshore oil and gas, either generally or in particular regions that would impact expected future growth, particularly in or related to North Sea, Brazil and East Coast of Canada offshore fields; vessel operations; significant changes in oil prices; variations in expected levels of field maintenance; increased operating expenses; potential early termination of contracts; shipyard delivery or vessel conversion and upgrade delays and cost overruns; the inability of the Partnership to successfully defend against claims or disputes, or the significant cost of undertaking such defenses; delays in the commencement of charter contracts; the ability to fund the Partnership’s remaining capital commitments and debt maturities; and other factors discussed in Teekay Offshore’s filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2016. The Partnership expressly disclaims any obligation or undertaking 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.