Highlights
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 September 30, 2017.
|
|
Three Months Ended |
|
|
September 30, |
June 30, |
September 30, |
|
|
2017 |
2017 (2) |
2016 |
(in
thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
GAAP FINANCIAL COMPARISON |
|
|
|
Revenues |
273,626 |
|
264,792 |
|
286,298 |
|
(Loss)
income from vessel operations |
(273,707 |
) |
46,218 |
|
61,739 |
|
Equity
income |
4,416 |
|
3,425 |
|
4,937 |
|
Net (loss)
income |
(320,276 |
) |
(16,466 |
) |
50,861 |
|
Net (loss)
income attributable to the partners and preferred unitholders |
(317,491 |
) |
(20,005 |
) |
47,700 |
|
NON-GAAP FINANCIAL COMPARISON |
|
|
|
Total cash
flow from vessel operations (CFVO) (1) |
124,181 |
|
134,601 |
|
139,188 |
|
Distributable cash flow (DCF) (1) |
13,382 |
|
27,242 |
|
31,780 |
|
Adjusted
net income attributable to the partners and preferred unitholders
(1) |
3,064 |
|
10,427 |
|
10,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 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).
- Please refer to Appendices in the second quarter of 2017
release for a reconciliation of these non-GAAP measures to the most
directly comparable financial measures under GAAP.
GAAP net (loss) income and adjusted net income
for the third 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, the non-payment of charter-hire payments since
November 2016 and subsequent contract termination of the Arendal
Spirit UMS in April 2017 and higher repair and maintenance expenses
relating to the Partnership's FPSO units, partially offset by
higher utilization and lower operating expenses relating to the
Partnership's shuttle tanker fleet during the third quarter of
2017. Additionally, GAAP net (loss) income for the third quarter of
2017, compared to the same quarter of the prior year, was impacted
by the write-down of six of the Partnership's vessels and offshore
units during the third quarter of 2017 and a net increase in the
realized and unrealized loss on derivative instruments due to the
amendments of certain interest rate swaps during the third quarter
of 2017 and changes in the fair value of derivatives, partially
offset by the net gain recorded during the third quarter of 2017
due to the reversal and settlement of previously recorded
contingent liabilities.
CEO Commentary
“In September 2017, we completed the previously
announced comprehensive transaction with Brookfield, which
significantly strengthened the Partnership’s balance sheet,”
commented Ingvild Sæther, President and CEO of Teekay Offshore
Group Ltd.
“During the third quarter of 2017, we reported
lower cash flows than expected as a result of various non-recurring
items and timing differences,” Ms. Sæther continued. “In addition,
we recognized impairment charges in the third quarter of 2017
mainly relating to cost overruns and delays experienced on the
upgrade of the Petrojarl I FPSO unit and the pending charter
expiration on the Rio das Ostras FPSO unit in January 2018.”
"We are pleased to announce that we have entered
into a head of terms with Premier Oil to extend the employment of
the Voyageur Spirit FPSO unit on the Huntington field in the North
Sea out to April 2019, which we believe aligns both parties to
maximize the life of the field" commented Ms. Sæther.
“Looking ahead to the fourth quarter of 2017 and
into 2018, our growth projects are now starting to deliver and
generate cash flows, which we expect will provide significant
additional future cash flows,” Ms. Sæther continued. “In October
and November 2017, the Randgrid FSO unit commenced its charter
contract with Statoil on the Gina Krog field, and we took delivery
of our first two East Coast Canada shuttle tanker newbuildings and
our third towage newbuilding. In addition, we expect our other
growth projects to commence their respective charter contracts
between now and into the first quarter of 2018, including the Libra
FPSO unit, the Petrojarl I FPSO unit and our third East Coast
Canada shuttle tanker newbuilding. In aggregate, these projects,
once they all commence operations, are expected to generate
approximately $200 million of annual cash flow from vessel
operations.”
Ms. Sæther added, “Over the course of 2017, we
have started to see green shoots of a potential recovery in the
offshore market. Most notably, these include stronger crude oil
prices as Brent crude oil is now above $60 per barrel, lower
break-even price levels for offshore projects, interest from
international oil companies for the numerous offshore blocks
recently awarded in Brazil, tenders for new shuttle tanker
requirements, and, after almost two years with very few
transactions, increased activity in the FPSO market, including
several charter contract awards. With a stronger balance
sheet, access to capital, market-leading positions and strong
operational platforms, we believe we are well-positioned to benefit
from future opportunities as the global energy market
recovers.”
Summary of Recent Events
Strategic Partnership with Brookfield and Comprehensive
Solution
On September 25, 2017, Teekay Offshore completed
the previously announced strategic partnership with Brookfield
Business Partners L.P., together with its institutional partners
(collectively Brookfield), and related transactions (collectively
the Brookfield Transaction), which included the following, among
others:
- Brookfield and Teekay Corporation (Teekay) invested $610
million and $30 million, respectively, in Teekay Offshore at a
price of $2.50 per common unit and received 65.5 million Teekay
Offshore warrants (Warrants) on a pro rata basis. Following the
transaction, Brookfield owns approximately 60 percent and Teekay
owns approximately 14 percent of the common units of Teekay
Offshore;
- Brookfield acquired from Teekay both a 49 percent interest in
TOO GP in exchange for $4 million and an option to acquire an
additional two percent of TOO GP, subject to the satisfaction of
certain conditions, in exchange for 1.0 million of the Warrants
issued to Brookfield;
- Teekay Offshore repurchased and canceled 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. Concurrently, Teekay Offshore's Series D tranche B
warrants to purchase common units issued on June 29, 2016, were
amended to reduce the exercise price from $6.05 to $4.55;
- Teekay Offshore extended the mandatory prepayment date for the
Arendal Spirit UMS debt facility to September 30, 2018 in exchange
for a principal prepayment of $30 million;
- Brookfield acquired 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 issued to
Brookfield. Brookfield extended the maturity date of the loan from
2019 to 2022;
- Teekay Offshore transferred its shuttle tanker business into a
new, wholly-owned, non-recourse subsidiary, Teekay Shuttle Tankers
L.L.C. (ShuttleCo). As part of the formation of ShuttleCo, a
majority of Teekay Offshore's shuttle tanker fleet was refinanced
with a new $600 million, five-year debt facility, and two 50
percent-owned vessels were 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, were transferred from Teekay Offshore to ShuttleCo;
- All of Teekay Offshore's existing NOK bonds due to mature in
late-2018 will 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 priced at a fixed coupon of 7.125
percent per annum; and
- Certain financial institutions providing interest rate swaps to
Teekay Offshore (i) lowered the fixed interest rate on the swaps,
(ii) extended the termination option of the swaps by two years to
2021, and (iii) eliminated the financial guarantee and security
package currently provided by Teekay in return for a prepayment
amount and fees.
Randgrid FSO Commences Charter Contract with Statoil
In early October 2017,
the Randgrid FSO unit, which was converted from one of
the Partnership’s shuttle tankers at Sembcorp’s Sembawang shipyard
in Singapore, commenced its charter contract with Statoil on the
Gina Krog oil and gas field in the Norwegian sector of the North
Sea.
Voyageur Spirit FPSO Head of Terms
In November 2017, the Partnership entered into a
heads of terms with Premier Oil to extend the employment of the
Voyageur Spirit FPSO unit on the Huntington field for an additional
twelve months out to April 2019. The new contract, which will take
effect in April 2018, will include a fixed charter rate component
plus and upside component based on oil production and oil
price.
Rio das Ostras FPSO to be Redelivered as
Scheduled
The Partnership received notice from the
charterer, Petrobras, that it plans to redeliver the Rio das Ostras
FPSO unit to Teekay Offshore upon completion of the unit's firm
charter contract in January 2018. As a result, the
Partnership is seeking redeployment opportunities.
Delivery of East Coast Canada Shuttle Tanker
Newbuildings
In October and November 2017, the Partnership
took delivery of the first two East Coast Canada shuttle tanker
newbuildings, the Beothuk Spirit and Norse Spirit, which are
scheduled to commence long-term charters in December 2017 and
January 2018 with a group of companies that includes Canada
Hibernia Holding Corporation, Chevron Canada, Exxon Mobil, Husky
Energy, Mosbacher Operating Ltd., Murphy Oil, Nalcor Energy,
Statoil and Suncor Energy. These newbuildings will replace
two existing shuttle tankers that are currently operating in East
Coast Canada, with the first replaced vessel transferring to the
North Sea to provide required capacity in the Partnership's
Contract of Affreighment (CoA) fleet and the second replaced vessel
redelivering to its owner.
Delivery of Towage Newbuilding
In October 2017, the Partnership took delivery
of the third of four state-of-the-art SX-157 Ulstein Design
ultra-long distance towing and offshore installation newbuildings,
the ALP Sweeper, constructed by Niigata Shipbuilding & Repair
in Japan. Due to the delayed delivery of the vessel, the
Partnership received a reimbursement from the shipyard of $8.1
million.
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).
|
Three Months Ended |
|
September 30, 2017 |
(in thousands
of U.S. Dollars) |
(unaudited) |
|
FPSO Segment |
Shuttle Tanker Segment |
FSO Segment |
UMS Segment |
Towage Segment |
Conventional Tanker Segment |
Eliminations(ii) |
Total |
GAAP FINANCIAL
COMPARISON |
|
|
|
|
|
|
|
|
Revenues |
116,611 |
|
135,549 |
|
10,205 |
|
— |
|
11,431 |
|
3,181 |
|
(3,351 |
) |
273,626 |
|
(Loss) income from
vessel operations |
(236,935 |
) |
(20,497 |
) |
1,780 |
|
(10,053 |
) |
(5,947 |
) |
(1,216 |
) |
(839 |
) |
(273,707 |
) |
Equity income |
4,416 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
4,416 |
|
NON-GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
|
|
CFVO from (used for)
consolidated vessels (i) |
60,918 |
|
62,491 |
|
5,540 |
|
(8,413 |
) |
(2,945 |
) |
(1,216 |
) |
— |
|
116,375 |
|
CFVO from equity
accounted vessels (i) |
7,806 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
7,806 |
|
Total CFVO (i) |
68,724 |
|
62,491 |
|
5,540 |
|
(8,413 |
) |
(2,945 |
) |
(1,216 |
) |
— |
|
124,181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
September 30, 2016 |
(in thousands
of U.S. Dollars) |
(unaudited) |
|
FPSO Segment |
Shuttle Tanker Segment |
FSO Segment |
UMS Segment |
Towage Segment |
Conventional Tanker Segment |
Eliminations |
Total |
GAAP FINANCIAL
COMPARISON |
|
|
|
|
|
|
|
|
Revenues |
121,294 |
|
128,482 |
|
14,251 |
|
13,395 |
|
5,345 |
|
3,531 |
|
— |
|
286,298 |
|
Income (loss) from
vessel operations |
30,929 |
|
30,281 |
|
5,664 |
|
777 |
|
(5,121 |
) |
(791 |
) |
— |
|
61,739 |
|
Equity income |
4,937 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
4,937 |
|
NON-GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
|
|
CFVO from (used for)
consolidated vessels (i) |
63,064 |
|
59,745 |
|
9,431 |
|
2,424 |
|
(2,086 |
) |
(791 |
) |
— |
|
131,787 |
|
CFVO from equity
accounted vessels (i) |
7,401 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
7,401 |
|
Total CFVO (i) |
70,465 |
|
59,745 |
|
9,431 |
|
2,424 |
|
(2,086 |
) |
(791 |
) |
— |
|
139,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 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.
- Includes revenues and expenses earned and incurred between
segments of Teekay Offshore, during the three months ended
September 30, 2017.
FPSO Segment
Income from vessel operations and cash flow from
vessel operations decreased for the three months ended September
30, 2017, compared to the same quarter of the prior year, primarily
due to the redelivery of the Petrojarl Varg FPSO unit at the end of
July 2016 and higher operating expenses due to the timing of
repairs and maintenance expenses. Income from vessel operations for
the three months ended September 30, 2017 was also impacted by the
write-downs of the Petrojarl I and Rio das Ostras FPSO units.
Shuttle Tanker Segment
Cash flow from vessel operations increased for
the three months ended September 30, 2017, compared to the same
quarter of the prior year, primarily due to: an increase in project
revenues as certain shuttle tankers provided offloading services on
the Gina Krog oil and gas field while waiting for the completion of
the Randgrid FSO unit; higher CoA fleet utilization and higher
average rates; higher charter renewal rates for the Petronordic and
Petroatlantic tankers; and lower operating expenses due to the
timing of repairs and maintenance. These increases were partially
offset by: the sale of the Navion Europa in November 2016; higher
time-charter hire expenses, primarily due to the in-charter of the
Grena Knutsen commencing in September 2016; and higher general and
administrative expenses mainly due to non-recurring legal fees.
Loss from vessel operations for the three months ended September
30, 2017 includes write-downs of the HiLoad DP unit and the Nordic
Rio, Nordic Brasilia and Navion Marita DP1 shuttle tankers.
FSO Segment
Income from vessel operations and cash flow from
vessel operations decreased for the three months ended September
30, 2017, compared to the same quarter of the prior year, mainly
due to the redelivery of the Navion Saga following completion of
its time-charter-out contract in October 2016. Teekay Offshore sold
the Navion Saga in October 2017 for $7.4 million for recycling.
UMS Segment
Income from vessel operations and cash flow from
vessel operations decreased for the three months ended September
30, 2017, compared to the same quarter of the prior year, mainly
due to the non-payment of charter hire since November 2016 and the
subsequent termination by Petrobras of the charter contract for the
Arendal Spirit UMS in April 2017, along with approximately $3
million in restructuring costs associated with severance of crew
and onshore support staff incurred in the third quarter of 2017 due
to the lay-up of the unit.
Towage Segment
Income from vessel operations and cash flow from
vessel operations decreased for the three months ended September
30, 2017, compared to the same quarter of the prior year, due to
lower average charter rates and fleet utilization, partially offset
by the delivery of the ALP Striker and ALP Defender towage
newbuildings in September 2016 and June 2017, respectively.
Conventional Tanker Segment
Income from vessel operations and cash flow from
vessel operations for the three months ended September 30, 2017
were comparable to the same quarter of the prior year.
Teekay Offshore’s Fleet
The following table summarizes Teekay Offshore’s
fleet as of November 1, 2017.
|
Number of Vessels |
|
Owned Vessels |
Chartered-in Vessels |
Committed Newbuildings / Conversions /
Upgrade |
Total |
FPSO Segment |
6 |
(i) |
— |
2 |
(ii) |
8 |
Shuttle Tanker
Segment |
29 |
(iii) |
3 |
4 |
(iv) |
36 |
FSO Segment |
6 |
(v) |
— |
— |
|
6 |
UMS Segment |
1 |
|
— |
— |
|
1 |
Towage Segment |
9 |
(vi) |
— |
1 |
(vii) |
10 |
Conventional
Segment |
— |
|
2 |
— |
|
2 |
Total |
51 |
|
5 |
7 |
|
63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Includes one FPSO unit, the Cidade de Itajai FPSO, in which
Teekay Offshore’s ownership interest is 50 percent.
- 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.
- Includes (a) six shuttle tankers in which Teekay Offshore’s
ownership interest is 50 percent, (b) the HiLoad DP unit and (c)
one Suezmax-size DP2 shuttle tanker newbuilding that delivered to
Teekay Offshore in October 2017 for employment under the East Coast
of Canada charter contracts.
- Includes two Suezmax-size DP2 shuttle tanker newbuildings
scheduled to deliver in November 2017 and early-2018 for employment
under the East Coast of Canada charter contracts and two additional
Suezmax-size DP2 shuttle tanker newbuildings scheduled for delivery
in late-2019 and early-2020, which will provide shuttle tanker
services in the North Sea under Teekay Offshore’s existing master
agreement with Statoil.
- Includes the Randgrid FSO unit which commenced its charter
contract with Statoil on the Gina Krog oil and gas field in early
October 2017; excludes the Navion Saga, which was sold in
early-October 2017.
- Includes the ALP Sweeper long-distance towing and offshore
installation vessel newbuilding which delivered to Teekay Offshore
in early-October 2017.
- Consists of one long-distance towing and offshore installation
vessel newbuilding scheduled to be delivered in early-2018.
Liquidity
As of September 30, 2017, the Partnership
had total liquidity of $416.3 million, excluding $24.3 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, November 9, 2017 at 12:00 p.m. (ET) to discuss
the results for the third quarter of 2017. All unitholders and
interested parties are invited to listen to the live conference
call by choosing from the following options:
- By dialing 1-800-239-9838 or 416-640-5944, if outside North
America, and quoting conference ID code 7283934.
- 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 Third 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, comprised of 63 offshore
assets, including floating production, storage and offloading
(FPSO) units, shuttle tankers, floating storage and offtake (FSO)
units, a unit 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 units 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 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, 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 (loss) 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 |
Nine Months Ended |
|
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
|
2017 |
2017 |
2016 |
2017 |
2016 |
|
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
|
|
|
|
|
|
|
Revenues |
273,626 |
|
264,792 |
|
286,298 |
|
814,556 |
|
877,470 |
|
|
|
|
|
|
|
|
Voyage
expenses |
(25,102 |
) |
(20,196 |
) |
(21,495 |
) |
(70,439 |
) |
(57,427 |
) |
Vessel
operating expenses |
(86,769 |
) |
(89,705 |
) |
(94,008 |
) |
(255,464 |
) |
(280,121 |
) |
Time-charter hire expenses |
(20,677 |
) |
(19,507 |
) |
(18,894 |
) |
(61,940 |
) |
(53,045 |
) |
Depreciation and amortization |
(75,304 |
) |
(74,287 |
) |
(74,159 |
) |
(224,317 |
) |
(223,138 |
) |
General and
administrative |
(19,870 |
) |
(13,379 |
) |
(15,201 |
) |
(47,866 |
) |
(43,491 |
) |
Write-down
of vessels (1) |
(316,726 |
) |
(1,500 |
) |
— |
|
(318,226 |
) |
(43,650 |
) |
Restructuring charge |
(2,885 |
) |
— |
|
(802 |
) |
(3,335 |
) |
(2,289 |
) |
(Loss) income from vessel operations |
(273,707 |
) |
46,218 |
|
61,739 |
|
(167,031 |
) |
174,309 |
|
|
|
|
|
|
|
Interest
expense |
(38,819 |
) |
(36,602 |
) |
(35,379 |
) |
(111,525 |
) |
(104,752 |
) |
Interest
income |
710 |
|
406 |
|
298 |
|
1,462 |
|
995 |
|
Realized
and unrealized (loss) gain |
|
|
|
|
|
|
on derivative
instruments (2) |
(19,232 |
) |
(21,797 |
) |
20,247 |
|
(47,561 |
) |
(102,280 |
) |
Equity
income |
4,416 |
|
3,425 |
|
4,937 |
|
12,316 |
|
13,846 |
|
Foreign
currency exchange (loss) gain (3) |
(6,526 |
) |
(6,564 |
) |
817 |
|
(13,313 |
) |
(15,108 |
) |
Other income (expense) - net (4) |
15,174 |
|
(1,134 |
) |
(195 |
) |
14,262 |
|
(21,472 |
) |
(Loss) income before income tax (expense)
recovery |
(317,984 |
) |
(16,048 |
) |
52,464 |
|
(311,390 |
) |
(54,462 |
) |
Income tax
(expense) recovery |
(2,292 |
) |
(418 |
) |
(1,603 |
) |
(4,089 |
) |
2,671 |
|
Net (loss) income |
(320,276 |
) |
(16,466 |
) |
50,861 |
|
(315,479 |
) |
(51,791 |
) |
|
|
|
|
|
|
Non-controlling interests in net (loss) income |
(2,785 |
) |
3,539 |
|
3,161 |
|
3,126 |
|
7,545 |
|
Preferred
unitholders' interest in net (loss) income |
11,917 |
|
12,386 |
|
12,386 |
|
36,689 |
|
33,449 |
|
General
partner’s interest in net (loss) income |
(6,373 |
) |
(648 |
) |
706 |
|
(7,057 |
) |
(1,857 |
) |
Limited
partners’ interest in net (loss) income |
(323,035 |
) |
(31,743 |
) |
34,608 |
|
(348,237 |
) |
(90,928 |
) |
|
|
|
|
|
|
|
Weighted-average number of common units: |
|
|
|
|
|
-
basic |
170,657,562 |
|
151,364,950 |
|
139,057,659 |
|
156,966,145 |
|
118,046,087 |
|
-
diluted |
182,393,904 |
|
151,364,950 |
|
157,914,277 |
|
156,966,145 |
|
118,046,087 |
|
Total
number of common units outstanding |
|
|
|
|
|
|
at end of
period |
410,045,210 |
|
153,858,292 |
|
143,059,606 |
|
410,045,210 |
|
143,059,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) During the three and nine months ended
September 30, 2017, the Partnership incurred a $316.7 million
write-down related to the Petrojarl I FPSO unit due to increased
costs and time associated with upgrade work on the unit, the Rio
das Ostras FPSO unit due to the expected expiration of the charter
in early-2018, three DP1 shuttle tankers as a result of a change in
operational plans for the vessels, and the HiLoad DP unit due to a
change in expectations for the future opportunities of the
unit.
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 during the nine months ended
September 30, 2016.
(2) Realized (loss) gain on
derivative instruments relates to amounts the Partnership actually
paid to settle derivative instruments, and the unrealized gain
(loss) on derivative instruments relates to the change in fair
value of such derivative instruments. During the three and nine
months ended September 30, 2017, as part of the Brookfield
Transaction, the Partnership amended certain interest rate swaps to
lower the fixed rate interest rate on the swaps and recorded $38.0
million of related rate reset and transaction fees which are
included in the realized loss relating to interest rate swaps in
the table below.
|
|
Three Months Ended |
Nine Months Ended |
|
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
2017 |
2017 |
2016 |
2017 |
2016 |
Realized (loss) gain relating to: |
|
|
|
|
|
|
Interest rate
swaps |
(48,974 |
) |
(10,296 |
) |
(13,507 |
) |
(69,936 |
) |
(40,989 |
) |
|
Foreign currency
forward contracts |
1,048 |
|
(309 |
) |
(1,764 |
) |
640 |
|
(6,384 |
) |
|
|
(47,926 |
) |
(10,605 |
) |
(15,271 |
) |
(69,296 |
) |
(47,373 |
) |
|
|
|
|
|
|
|
Unrealized gain (loss) relating to: |
|
|
|
|
|
|
Interest rate
swaps |
28,465 |
|
(12,871 |
) |
31,894 |
|
19,097 |
|
(67,845 |
) |
|
Foreign currency
forward contracts |
229 |
|
1,679 |
|
3,624 |
|
2,638 |
|
12,938 |
|
|
|
28,694 |
|
(11,192 |
) |
35,518 |
|
21,735 |
|
(54,907 |
) |
Total
realized and unrealized (loss) gain on |
|
|
|
|
|
|
derivative instruments |
(19,232 |
) |
(21,797 |
) |
20,247 |
|
(47,561 |
) |
(102,280 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) gain includes a
realized loss relating to the amounts the Partnership paid to
settle its non-designated cross currency swaps and an unrealized
gain relating to the change in fair value of such swaps, partially
offset by an unrealized loss on the revaluation of the NOK bonds,
as detailed in the table below. During the three and nine months
ended September 30, 2017, the Partnership recorded a $40.2 million
realized loss relating to the partial termination of certain cross
currency swaps, which was offset by a $40.2 million unrealized
gain, and is included in the table below. During the nine months
ended September 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 |
Nine Months Ended |
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
2017 |
2017 |
2016 |
2017 |
2016 |
Realized loss on cross
currency swaps |
(42,987 |
) |
(3,310 |
) |
(3,330 |
) |
(49,501 |
) |
(41,276 |
) |
Unrealized gain on
cross currency swaps |
54,488 |
|
8,111 |
|
19,803 |
|
66,978 |
|
58,276 |
|
Unrealized loss on revaluation of NOK bonds |
(12,823 |
) |
(7,797 |
) |
(13,613 |
) |
(21,881 |
) |
(61,807 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) In September and October 2017, the Partnership
settled certain claims from CeFront Technology AS and Sevan Marine
ASA , respectively, and reversed related contingent liabilities
recorded in June 2016 arising from the cancellations of two UMS
newbuildings. A net gain of $15.0 million is reported in Other
income (expense) - net for the three and nine months ended
September 30, 2017.
During 2016, the Partnership accrued for
potential damages resulting from the cancellations of the UMS
newbuildings and reversed other contingent liabilities previously
recorded that were subject to the delivery of the UMS newbuildings.
This net loss provision of $23.4 million was reported in Other
income (expense) - net for the nine months ended September 30,
2016. The UMS newbuilding contracts are held in separate
subsidiaries of the Partnership and obligations of these
subsidiaries are non-recourse to the Partnership.
Teekay Offshore Partners L.P.Consolidated Balance Sheets(in
thousands of U.S. Dollars)
|
|
As at |
As at |
As at |
|
|
September 30, 2017 |
June 30, 2017 |
December 31, 2016 |
|
|
(unaudited) |
(unaudited) |
(unaudited) |
ASSETS |
|
|
|
Current |
|
|
|
Cash and
cash equivalents |
416,346 |
|
212,267 |
|
227,378 |
|
Restricted
cash - current |
27,470 |
|
96,728 |
|
92,265 |
|
Accounts
receivable |
138,462 |
|
123,018 |
|
114,576 |
|
Vessels
held for sale |
12,400 |
|
6,900 |
|
6,900 |
|
Net
investments in direct financing leases - current |
6,004 |
|
5,794 |
|
4,417 |
|
Prepaid
expenses |
26,308 |
|
23,676 |
|
25,187 |
|
Due from
affiliates |
44,765 |
|
32,966 |
|
77,811 |
|
Other current assets |
17,110 |
|
11,127 |
|
21,282 |
|
Total current assets |
688,865 |
|
512,476 |
|
569,816 |
|
|
|
|
|
|
Restricted
cash - long-term |
— |
|
2,992 |
|
22,644 |
|
|
|
|
|
|
Vessels and equipment |
|
|
|
At cost,
less accumulated depreciation |
3,825,666 |
|
3,997,446 |
|
4,084,803 |
|
Advances on
newbuilding contracts and conversion costs |
689,252 |
|
695,985 |
|
632,130 |
|
Net
investments in direct financing leases |
12,769 |
|
14,080 |
|
13,169 |
|
Investment
in equity accounted joint ventures |
168,852 |
|
152,946 |
|
141,819 |
|
Deferred
tax asset |
23,760 |
|
24,918 |
|
24,659 |
|
Other
assets |
86,037 |
|
92,293 |
|
100,435 |
|
Goodwill |
129,145 |
|
129,145 |
|
129,145 |
|
Total assets |
5,624,346 |
|
5,622,281 |
|
5,718,620 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current |
|
|
|
Accounts
payable |
37,362 |
|
14,384 |
|
8,946 |
|
Accrued
liabilities |
210,434 |
|
139,913 |
|
150,281 |
|
Deferred
revenues |
58,484 |
|
56,301 |
|
57,373 |
|
Due to
affiliates |
124,711 |
|
88,854 |
|
96,555 |
|
Current
portion of long-term debt |
788,700 |
|
891,558 |
|
586,892 |
|
Current
portion of derivative instruments |
53,646 |
|
58,935 |
|
55,002 |
|
Current
portion of in-process revenue contracts |
10,290 |
|
11,524 |
|
12,744 |
|
Other current liabilities |
1,480 |
|
— |
|
— |
|
Total current liabilities |
1,285,107 |
|
1,261,469 |
|
967,793 |
|
Long-term
debt |
2,288,853 |
|
2,252,561 |
|
2,596,002 |
|
Derivative
instruments |
194,354 |
|
272,422 |
|
282,138 |
|
Due to
affiliates |
160,757 |
|
200,000 |
|
200,000 |
|
In-process
revenue contracts |
43,204 |
|
45,182 |
|
50,281 |
|
Other long-term liabilities |
181,420 |
|
202,600 |
|
211,611 |
|
Total liabilities |
4,153,695 |
|
4,234,234 |
|
4,307,825 |
|
|
|
|
|
|
Redeemable non-controlling interest |
(34 |
) |
424 |
|
962 |
|
Convertible preferred units |
— |
|
272,877 |
|
271,237 |
|
|
|
|
|
|
Equity |
|
|
|
Limited
partners - common units |
999,616 |
|
757,086 |
|
784,056 |
|
Limited
partners - preferred units |
266,925 |
|
266,925 |
|
266,925 |
|
General
partner |
14,910 |
|
20,105 |
|
20,658 |
|
Warrants |
132,320 |
|
13,797 |
|
13,797 |
|
Accumulated
other comprehensive loss |
(2,768 |
) |
(2,920 |
) |
(804 |
) |
Non-controlling interests |
59,682 |
|
59,753 |
|
53,964 |
|
Total equity |
1,470,685 |
|
1,114,746 |
|
1,138,596 |
|
Total liabilities and total
equity |
5,624,346 |
|
5,622,281 |
|
5,718,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teekay Offshore Partners L.P.Consolidated Statements of Cash
Flows(in thousands of U.S. Dollars)
|
Nine Months Ended |
|
September 30, 2017 |
September 30, 2016 |
|
(unaudited) |
(unaudited) |
Cash and cash
equivalents provided by (used for) |
|
|
OPERATING
ACTIVITIES |
|
|
Net loss |
(315,479 |
) |
(51,791 |
) |
Non-cash items: |
|
|
Unrealized gain on derivative instruments |
(88,706 |
) |
(4,353 |
) |
Equity
income, net of dividends received of $7,000 (2016: $3,472) |
(5,316 |
) |
(10,374 |
) |
Depreciation and amortization |
224,317 |
|
223,138 |
|
Write-down of vessels |
318,226 |
|
43,650 |
|
Deferred
income tax expense (recovery) |
2,677 |
|
(6,013 |
) |
Amortization of in-process revenue contracts |
(9,531 |
) |
(9,567 |
) |
Unrealized foreign currency exchange loss and other |
14,260 |
|
43,536 |
|
Change in
non-cash working capital items related to operating activities |
64,084 |
|
68,277 |
|
Expenditures for dry docking |
(11,875 |
) |
(22,343 |
) |
Net operating cash flow |
192,657 |
|
274,160 |
|
FINANCING
ACTIVITIES |
|
|
Proceeds from long-term
debt |
307,004 |
|
283,828 |
|
Scheduled repayments of
long-term debt |
(419,064 |
) |
(314,653 |
) |
Prepayments of
long-term debt |
(24,687 |
) |
(197,776 |
) |
Debt issuance
costs |
(5,696 |
) |
(10,988 |
) |
Decrease in restricted
cash |
87,439 |
|
13,890 |
|
Proceeds from issuance
of common units and warrants |
640,595 |
|
124,879 |
|
Proceeds from issuance
of preferred units and warrants |
— |
|
100,000 |
|
Repurchase of preferred
units |
(250,022 |
) |
— |
|
Expenses relating to
equity offerings |
(11,564 |
) |
(5,911 |
) |
Cash distributions paid
by the Partnership |
(51,087 |
) |
(61,827 |
) |
Cash distributions paid
by subsidiaries to non-controlling interests |
(4,404 |
) |
(4,610 |
) |
Equity contribution
from joint venture partners |
6,000 |
|
750 |
|
Other |
(483 |
) |
(90 |
) |
Net financing cash flow |
274,031 |
|
(72,508 |
) |
INVESTING
ACTIVITIES |
|
|
Net payments for
vessels and equipment, including advances on newbuilding contracts
and conversion costs |
(257,897 |
) |
(238,349 |
) |
Proceeds from sale of
vessels and equipment |
— |
|
55,450 |
|
Direct financing lease
payments received (investments) |
4,278 |
|
(1,481 |
) |
Investment in equity
accounted joint ventures |
(24,101 |
) |
(52,873 |
) |
Net investing cash flow |
(277,720 |
) |
(237,253 |
) |
Increase (decrease) in
cash and cash equivalents |
188,968 |
|
(35,601 |
) |
Cash and cash
equivalents, beginning of the period |
227,378 |
|
258,473 |
|
Cash and cash equivalents, end of the period |
416,346 |
|
222,872 |
|
|
|
|
|
|
|
|
|
|
|
Teekay Offshore Partners L.P.Appendix A - Reconciliation of
Non-GAAP Financial MeasuresAdjusted Net Income(in thousands of U.S.
Dollars)
|
|
|
Three Months Ended |
|
|
|
September 30, 2017 |
September 30, 2016 |
|
|
|
(unaudited) |
(unaudited) |
Net (loss)
income – GAAP basis |
(320,276 |
) |
50,861 |
|
Adjustments: |
|
|
|
Net loss
(income) attributable to non-controlling interests |
(2,785 |
) |
3,161 |
|
Net
(loss) income attributable to the partners and preferred
unitholders |
(317,491 |
) |
47,700 |
|
Add
(subtract) specific items affecting net (loss) income: |
|
|
|
Foreign
currency exchange loss (gain) (1) |
3,706 |
|
(4,147 |
) |
|
Unrealized
gain on derivative instruments (2) |
(29,183 |
) |
(36,989 |
) |
|
Realized
loss on interest rate swap amendments |
37,950 |
|
— |
|
|
Write-down
of vessels (3) |
316,726 |
|
— |
|
|
Pre-operational costs (4) |
3,160 |
|
1,869 |
|
|
Contingency
settlements, restructuring charges and other (5) |
(6,404 |
) |
1,262 |
|
|
Non-controlling interests’ share of items above
(6) |
(5,400 |
) |
309 |
|
Total adjustments |
320,555 |
|
(37,696 |
) |
Adjusted net income attributable to the
partners and preferred unitholders |
3,064 |
|
10,004 |
|
|
|
|
|
|
|
|
|
|
|
(1) Foreign currency exchange loss (gain) 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 gain 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.
(4) Reflects depreciation and amortization expense,
general and administrative 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 September 30, 2017. Reflects depreciation and amortization
expense and vessel operating expenses related to the Petrojarl I
FPSO unit while undergoing upgrades and a realized loss on foreign
currency forward contracts relating to conversion costs on the Gina
Krog FSO unit during the three months ended September 30, 2016.
(5) Other items for the three months ended
September 30, 2017 includes a partial reversal of an accrual
relating to potential damages resulting from the cancellation of
the UMS newbuildings recorded in June 2016, the settlement of a
contingent liability, non-recurring general and administrative
expenses relating to the Brookfield Transaction, restructuring
charges relating to severance costs from the termination of the
charter contract for the Arendal Spirit UMS, and a decrease in the
deferred income tax asset for the Partnership's Norwegian tax
structures. Other items for the three months ended September 30,
2016 includes restructuring charges relating to the reorganization
within the Partnership’s FPSO segment and a write-off of UMS
newbuilding fees previously capitalized during the three months
ended September 30, 2016.
(6) Items affecting net (loss) income include
amounts attributable to the Partnership’s consolidated
non-wholly-owned subsidiaries. Each item affecting net (loss)
income 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) income
listed in the table.
Teekay Offshore Partners L.P.Appendix B - Reconciliation of
Non-GAAP Financial MeasuresDistributable Cash Flow(in thousands of
U.S. Dollars, except unit and per unit data)
|
|
|
Three Months Ended |
|
|
September 30, |
|
|
|
2017 |
2016 |
|
|
|
(unaudited) |
(unaudited) |
|
|
|
|
|
Net (loss) income |
(320,276 |
) |
50,861 |
|
Add
(subtract): |
|
|
|
Write-down
of vessels (1) |
316,726 |
|
— |
|
|
Realized
loss on amendment/early termination of interest rate and cross
currency swaps |
78,117 |
|
— |
|
|
Depreciation and amortization |
75,304 |
|
74,159 |
|
|
Pre-operational costs |
8,597 |
|
447 |
|
|
Unrealized
foreign exchange and other, net |
7,200 |
|
(6,351 |
) |
|
Distributions relating to equity financing of newbuildings and
conversion costs |
6,991 |
|
4,571 |
|
|
Partnership's share of equity accounted joint venture's
distributable |
|
|
|
|
cash flow net of
estimated maintenance capital expenditures (2) |
5,046 |
|
4,818 |
|
|
Deferred
income tax expense (recovery) |
1,915 |
|
(577 |
) |
|
Amortization of non-cash portion of revenue contracts |
(4,041 |
) |
(4,032 |
) |
|
Equity
income |
(4,416 |
) |
(4,937 |
) |
|
Distributions on preferred units |
(11,917 |
) |
(12,386 |
) |
|
Net
reversal of loss provision relating to cancellation of UMS
newbuildings |
(15,000 |
) |
— |
|
|
Estimated
maintenance capital expenditures (3) |
(41,862 |
) |
(33,233 |
) |
|
Unrealized
gain on non-designated derivative instruments (4) |
(83,182 |
) |
(35,518 |
) |
Distributable cash flow before non-controlling
interests |
19,202 |
|
37,822 |
|
|
Non-controlling interests' share of DCF |
(5,820 |
) |
(6,042 |
) |
Distributable Cash Flow |
13,382 |
|
31,780 |
|
Amount attributable to the General Partner |
(31 |
) |
(321 |
) |
Limited partners' Distributable Cash Flow |
13,351 |
|
31,459 |
|
Weighted-average number of common units
outstanding |
170,657,562 |
|
139,057,659 |
|
Distributable Cash Flow per limited partner
unit |
0.08 |
|
0.23 |
|
|
|
|
|
|
|
|
|
|
|
(1) See footnote (1) of the summary consolidated
statements of (loss) income included in this release for further
details.
(2) Estimated maintenance capital expenditures
relating to the Partnership’s equity accounted joint venture for
the three months ended September 30, 2017 and 2016 were $1.0
million for each period.
(3) Estimated maintenance capital expenditures for
the three months ended September 30, 2016 includes a $7.0 million
reduction relating to cash compensation received from the shipyard
in connection with the delayed delivery of the ALP Striker in
September 2016.
(4) Derivative instruments include interest rate
swaps. cross currency swaps, and foreign currency forward
contracts.
Teekay Offshore Partners L.P.Appendix C - Supplemental Segment
Information(in thousands of U.S. Dollars)
|
Three Months Ended September 30,
2017 |
|
(unaudited) |
|
FPSO Segment |
Shuttle Tanker Segment |
FSO Segment |
UMS Segment |
Towage Segment |
Conventional Tanker Segment |
Eliminations(1) |
Total |
|
|
|
|
|
|
|
|
|
Revenues |
116,611 |
|
135,549 |
|
10,205 |
|
— |
|
11,431 |
|
3,181 |
|
(3,351 |
) |
273,626 |
|
Voyage expenses |
— |
|
(20,018 |
) |
(258 |
) |
— |
|
(6,191 |
) |
(45 |
) |
1,410 |
|
(25,102 |
) |
Vessel operating
expenses |
(40,816 |
) |
(31,007 |
) |
(5,132 |
) |
(4,509 |
) |
(5,825 |
) |
— |
|
520 |
|
(86,769 |
) |
Time-charter hire
expenses |
— |
|
(16,415 |
) |
— |
|
— |
|
— |
|
(4,262 |
) |
— |
|
(20,677 |
) |
Depreciation and
amortization |
(36,497 |
) |
(31,049 |
) |
(2,589 |
) |
(1,640 |
) |
(4,111 |
) |
— |
|
582 |
|
(75,304 |
) |
General and
administrative |
(11,004 |
) |
(6,060 |
) |
(446 |
) |
(1,019 |
) |
(1,251 |
) |
(90 |
) |
— |
|
(19,870 |
) |
Write-down of
vessels |
(265,229 |
) |
(51,497 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
(316,726 |
) |
Restructuring charge |
— |
|
— |
|
— |
|
(2,885 |
) |
— |
|
— |
|
— |
|
(2,885 |
) |
(Loss) income from vessel operations |
(236,935 |
) |
(20,497 |
) |
1,780 |
|
(10,053 |
) |
(5,947 |
) |
(1,216 |
) |
(839 |
) |
(273,707 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
2016 |
|
(unaudited) |
|
FPSO Segment |
Shuttle Tanker Segment |
FSO Segment |
UMS Segment |
Towage Segment |
Conventional Tanker Segment |
Eliminations |
Total |
|
|
|
|
|
|
|
|
|
Revenues |
121,294 |
|
128,482 |
|
14,251 |
|
13,395 |
|
5,345 |
|
3,531 |
|
— |
|
286,298 |
|
Voyage expenses |
— |
|
(18,898 |
) |
(96 |
) |
— |
|
(2,440 |
) |
(61 |
) |
— |
|
(21,495 |
) |
Vessel operating
expenses |
(42,353 |
) |
(33,062 |
) |
(6,056 |
) |
(8,331 |
) |
(4,206 |
) |
— |
|
— |
|
(94,008 |
) |
Time-charter hire
expenses |
— |
|
(14,723 |
) |
— |
|
— |
|
— |
|
(4,171 |
) |
— |
|
(18,894 |
) |
Depreciation and
amortization |
(37,180 |
) |
(30,166 |
) |
(2,205 |
) |
(1,647 |
) |
(2,961 |
) |
— |
|
— |
|
(74,159 |
) |
General and
administrative |
(10,235 |
) |
(1,147 |
) |
(230 |
) |
(2,640 |
) |
(859 |
) |
(90 |
) |
— |
|
(15,201 |
) |
Restructuring charge |
(597 |
) |
(205 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
(802 |
) |
Income (loss) from vessel operations |
30,929 |
|
30,281 |
|
5,664 |
|
777 |
|
(5,121 |
) |
(791 |
) |
— |
|
61,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes revenues and expenses earned and
incurred between segments of Teekay Offshore during the three
months ended September 30, 2017.
Teekay Offshore Partners L.P.Appendix D - Reconciliation of
Non-GAAP Financial MeasuresCash Flow From (Used For) Vessel
Operations From Consolidated Vessels(in thousands of U.S.
Dollars)
|
|
Three Months Ended |
|
|
September 30, 2017 |
|
|
(unaudited) |
|
|
|
Shuttle |
|
|
|
Conventional |
|
|
|
FPSO |
Tanker |
FSO |
UMS |
Towage |
Tanker |
|
|
|
Segment |
Segment |
Segment |
Segment |
Segment |
Segment |
Eliminations(1) |
Total |
(Loss)
income from vessel operations |
|
|
|
|
|
|
|
|
|
(See Appendix C) |
(236,935 |
) |
(20,497 |
) |
1,780 |
|
(10,053 |
) |
(5,947 |
) |
(1,216 |
) |
(839 |
) |
(273,707 |
) |
Depreciation and amortization |
36,497 |
|
31,049 |
|
2,589 |
|
1,640 |
|
4,111 |
|
— |
|
(582 |
) |
75,304 |
|
Realized
gain (loss) from the |
|
|
|
|
|
|
|
|
|
settlements of
non-designated |
|
|
|
|
|
|
|
|
|
foreign currency
forward contracts |
168 |
|
442 |
|
— |
|
— |
|
312 |
|
— |
|
— |
|
922 |
|
Amortization of non-cash portion of |
|
|
|
|
|
|
|
|
|
revenue contracts |
(4,041 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
|
(4,041 |
) |
Write-down
of vessels |
265,229 |
|
51,497 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
316,726 |
|
Falcon
Spirit revenue accounted for |
|
|
|
|
|
|
|
|
|
as a direct financing
lease |
— |
|
— |
|
(408 |
) |
— |
|
— |
|
— |
|
— |
|
(408 |
) |
Falcon
Spirit cash flow from |
|
|
|
|
|
|
|
|
|
time-charter
contracts |
— |
|
— |
|
1,579 |
|
— |
|
— |
|
— |
|
— |
|
1,579 |
|
Eliminations upon consolidation |
— |
|
— |
|
— |
|
— |
|
(1,421 |
) |
— |
|
1,421 |
|
— |
|
Cash flow from (used for) vessel |
|
|
|
|
|
|
|
|
|
operations from consolidated vessels |
60,918 |
|
62,491 |
|
5,540 |
|
(8,413 |
) |
(2,945 |
) |
(1,216 |
) |
— |
|
116,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
September 30, 2016 |
|
|
(unaudited) |
|
|
|
Shuttle |
|
|
|
Conventional |
|
|
|
FPSO |
Tanker |
FSO |
UMS |
Towage |
Tanker |
|
|
|
Segment |
Segment |
Segment |
Segment |
Segment |
Segment |
Eliminations(1) |
Total |
Income
(loss) from vessel operations |
|
|
|
|
|
|
|
|
|
(See Appendix C) |
30,929 |
|
30,281 |
|
5,664 |
|
777 |
|
(5,121 |
) |
(791 |
) |
— |
|
61,739 |
|
Depreciation and amortization |
37,180 |
|
30,166 |
|
2,205 |
|
1,647 |
|
2,961 |
|
— |
|
— |
|
74,159 |
|
Realized
(loss) gain from the |
|
|
|
|
|
|
|
|
|
settlements of
non-designated |
|
|
|
|
|
|
|
|
|
foreign currency
forward contracts |
(1,013 |
) |
(702 |
) |
— |
|
— |
|
74 |
|
— |
|
— |
|
(1,641 |
) |
Amortization of non-cash portion of |
|
|
|
|
|
|
|
|
|
revenue contracts |
(4,032 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(4,032 |
) |
Falcon
Spirit revenue accounted for |
|
|
|
|
|
|
|
|
|
as a direct financing
lease |
— |
|
— |
|
(640 |
) |
— |
|
— |
|
— |
|
— |
|
(640 |
) |
Falcon
Spirit cash flow from |
|
|
|
|
|
|
|
|
|
time-charter contracts |
— |
|
— |
|
2,202 |
|
— |
|
— |
|
— |
|
— |
|
2,202 |
|
Cash flow from (used for) vessel |
|
|
|
|
|
|
|
|
|
operations from consolidated vessels |
63,064 |
|
59,745 |
|
9,431 |
|
2,424 |
|
(2,086 |
) |
(791 |
) |
— |
|
131,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes revenues and expenses earned and
incurred between segments of Teekay Offshore during the three
months ended September 30, 2017.
Teekay Offshore 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 |
Three Months Ended |
|
|
September 30, 2017 |
September 30, 2016 |
|
(unaudited) |
(unaudited) |
|
|
At 100% |
Partnership's 50% |
At 100% |
Partnership's 50% |
Revenues |
21,462 |
|
10,731 |
|
20,065 |
|
10,033 |
|
Vessel and
other operating expenses |
(5,851 |
) |
(2,925 |
) |
(5,264 |
) |
(2,632 |
) |
Depreciation and amortization |
(4,410 |
) |
(2,205 |
) |
(4,408 |
) |
(2,204 |
) |
Income from
vessel operations of equity accounted vessels |
11,201 |
|
5,601 |
|
10,393 |
|
5,197 |
|
Net
interest expense |
(1,806 |
) |
(903 |
) |
(1,872 |
) |
(936 |
) |
Realized
and unrealized (loss) gain on derivative instruments (1) |
(146 |
) |
(73 |
) |
1,785 |
|
893 |
|
Foreign currency exchange loss |
(216 |
) |
(108 |
) |
(237 |
) |
(119 |
) |
Total other
items |
(2,168 |
) |
(1,084 |
) |
(324 |
) |
(162 |
) |
Net income
/ equity income of equity accounted vessels |
|
|
|
|
|
before income tax
expense |
9,033 |
|
4,517 |
|
10,069 |
|
5,035 |
|
Income tax expense |
(201 |
) |
(101 |
) |
(195 |
) |
(98 |
) |
Net income
/ equity income of equity accounted vessels |
8,832 |
|
4,416 |
|
9,874 |
|
4,937 |
|
|
|
|
|
|
|
Income from
vessel operations of equity accounted vessels |
11,201 |
|
5,601 |
|
10,393 |
|
5,197 |
|
Depreciation and amortization |
4,410 |
|
2,205 |
|
4,408 |
|
2,204 |
|
Cash flow from vessel operations from equity
accounted vessels |
15,611 |
|
7,806 |
|
14,801 |
|
7,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Realized and unrealized (loss) gain on
derivative instruments for the three months ended September 30,
2017 and 2016 includes unrealized gains of $1.0 million ($0.5
million at the Partnership’s 50% share) and $2.7 million ($1.3
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 estimated
future cash flow from vessel operations to be provided by the
Partnership’s existing growth projects once delivered; the contract
terms related to the extension of the employment of the Voyageur
Spirit FPSO unit on the Huntington field and the expected impact on
the life of the Huntington field; the timing and cost of delivery
and start-up of various newbuildings and conversion/upgrade
projects and the commencement of related contracts; a potential
offshore market recovery, including increased demand for shuttle
tankers and FPSO units; the Rio das Ostras FPSO redeployment; the
repurchase of existing NOK bonds; and the Partnership’s ability to
benefit from future opportunities. 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:
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; 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; delays in the commencement of
charter contracts; the inability to negotiate acceptable terms and
final documentation related to the Voyageur Spirit FPSO heads of
terms; the ability of the Partnership to secure redeployment
opportunities for the Rio das Ostras FPSO; 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.
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