UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the quarterly period ended November 12, 2010
Commission file number 1-33198
TEEKAY OFFSHORE PARTNERS L.P.
(Exact name of Registrant as specified in its charter)
4th floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, Bermuda
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F
þ
Form 40- F
o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1).
Yes
o
No
þ
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7).
Yes
o
No
þ
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TEEKAY OFFSHORE PARTNERS L.P.
4
th
Floor, Belvedere Building, 69 Pitts Bay Road,
Hamilton, HM 08, Bermuda
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EARNINGS
RELEASE
TEEKAY OFFSHORE PARTNERS
REPORTS THIRD QUARTER RESULTS
Highlights
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Generated distributable cash flow of $20.8 million in the third quarter of 2010.
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Declared cash distribution of $0.475 per unit for the third quarter of 2010.
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In August 2010, signed new shuttle tanker Master Agreement with Statoil ASA.
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In October 2010, acquired one FPSO unit and one newbuilding shuttle tanker for total cost
of $286 million; agreed to acquire two additional newbuilding shuttle tankers for
approximately $260 million for delivery in January and July 2011.
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Hamilton, Bermuda, November 4, 2010 Teekay Offshore GP L.L.C., the general partner of Teekay
Offshore Partners L.P.
(Teekay Offshore
or
the Partnership)
(NYSE: TOO), today reported the
Partnerships results for the quarter ended September 30, 2010. During the third quarter of 2010,
the Partnership generated distributable cash flow
(1)
of $20.8 million, compared to $28.1
million in the quarter ended June 30, 2010, primarily as a result of seasonal factors associated
with the scheduled maintenance of North Sea oil fields during the summer months.
On October 25, 2010, the Partnership declared a cash distribution of $0.475 per unit for the
quarter ended September 30, 2010. The cash distribution will be paid on November 12, 2010, to all
unitholders of record on November 5, 2010.
Acquisition of FPSO and Shuttle Tankers
On October 18, 2010, the Partnership announced that it had completed the acquisition of the Cidade
de Rio das Ostras (
Rio das Ostras
) floating production storage and offloading
(FPSO)
unit from
Teekay Corporation (
Teekay
), which is on a long-term charter with Petroleo Brasileiro SA
(
Petrobras
), for a purchase price of approximately $158 million. In addition, Teekay Offshore
announced that its 51 percent-owned subsidiary, Teekay Offshore Operating L.P. (
OPCO
), had acquired
a newbuilding shuttle tanker, the
Amundsen Spirit
, from Teekay for approximately $128 million and
had agreed to acquire two additional newbuilding shuttle tankers, the
Nansen Spirit
and the
Peary
Spirit,
from Teekay for a total purchase price of approximately $260 million. The acquisitions of
the two newbuilding shuttle tankers are expected to coincide with the commencement of their
time-charter contracts under a Master Agreement with Statoil in January 2011 and July 2011,
respectively. The Partnership financed the acquisition of the
Rio das Ostras
FPSO unit and the
Amundsen Spirit
newbuilding shuttle tanker through the assumption of $187 million of debt secured
by these assets, with the remainder of the purchase price financed from available capacity under
the Partnerships revolving credit facilities.
These transactions are expected to increase the Partnerships cash flow from vessel
operations
(2)
by approximately $60 million in 2011, and distributable cash
flow
(1)
, which includes only 51 percent of OPCOs cash flow, by approximately $20
million in 2011.
As expected, the Partnerships cash flow declined in the third quarter primarily due to the
scheduled seasonal maintenance of the North Sea oil fields, which typically occur during the summer
months, and the concurrent planned maintenance shutdown of the
Petrojarl Varg
FPSO unit commented
Peter Evensen, Chief Executive Officer of Teekay Offshore GP L.L.C. With the completion of the
North Sea field maintenance, our shuttle tanker fleet and our
Petrojarl Varg
FPSO unit have
returned to normal production levels in the fourth quarter. In addition, the recently signed
Master Agreement with Statoil, initially for seven shuttle tankers, which replaces volume-dependent
contracts of affreightment with fixed-rate, time-charter contracts effective September 1, 2010,
should reduce the seasonal variability in the Partnerships cash flows going forward.
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(1)
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Distributable cash flow is a non-GAAP financial measure used by certain investors to measure
the financial performance of the Partnership and other master limited partnerships. Please
see
Appendix B
for a reconciliation of distributable cash flow to the most directly comparable
financial measure under U.S. generally accepted accounting principles (
GAAP
).
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(2)
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Cash flow from vessel operations represents income from vessel operations before depreciation
and amortization expense and amortization of deferred gains, includes the realized gains
(losses) on the settlements foreign exchange forward contracts and excludes the cash flow from
vessel operations relating to the Dropdown Predecessor (defined in this release under
Financial Summary) and adjusting for direct financing leases to a cash basis. Cash flow
from vessel operations is a non-GAAP financial measure used by certain investors to measure
the financial performance of shipping companies. Please see the Partnerships web site at
www.teekayoffshore.com for a reconciliation of this non-GAAP measure as used in this release
to the most directly comparable GAAP financial measure.
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- more -
1
Mr. Evensen continued, Teekay Offshores FPSO and shuttle tanker businesses have experienced
several exciting developments during the past three months. The accretive acquisition of the
Rio
das Ostras
FPSO unit, located in the opportunity-rich Brazil offshore market, provides us with a
second FPSO unit and compliments our fleet of 13 shuttle tankers operating in Brazil. In addition,
we acquired the first of three shuttle tanker newbuildings, all of which will operate under the new
Master Agreement with Statoil.
Teekay Offshores Fleet
The following table summarizes Teekay Offshores fleet as of November 1, 2010, including vessels
owned by OPCO, of which the Partnership owns a 51 percent interest:
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Number of Vessels
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Owned
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Chartered-in
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Vessels
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Vessels
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Total
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Shuttle Tanker Segment
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29
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*
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6
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35
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Committed Shuttle Tanker Newbuildings
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2
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2
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Conventional Tanker Segment
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11
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11
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FSO Segment
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6
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6
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FPSO Segment
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2
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2
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Total
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50
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6
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56
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*
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Includes five shuttle tankers in which OPCOs ownership interest is 50 percent,
three shuttle tankers in which OPCOs ownership is 67 percent and one shuttle
tanker in which Teekay Offshores direct ownership interest is 50 percent.
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OPCOs fleet includes 33 shuttle tankers, including six chartered-in vessels, 4 FSO units, and 11
conventional oil tankers.
Future Growth Opportunities
Pursuant to an omnibus agreement that Teekay Offshore entered into in connection with its initial
public offering in December 2006, Teekay is obligated to offer to the Partnership its interest in
certain shuttle tankers, FSO units, FPSO units and joint ventures it may acquire in the future,
provided the vessels are servicing contracts in excess of three years in length. Teekay Offshore
also may acquire additional limited partner interests in OPCO or other vessels that Teekay may
offer the Partnership from time to time in the future. Teekay currently owns 49 percent of OPCO
and Teekay Offshore owns the remaining 51 percent, including the general partner interest.
Shuttle Tankers
As described above, OPCO recently acquired one Aframax shuttle tanker newbuilding (the
Amundsen
Spirit
) and has committed to acquire two additional Aframax shuttle tanker newbuildings (the
Nansen
Spirit
and the
Peary Spirit
) that are scheduled to deliver to OPCO in January and July 2011.
Teekay is obligated to offer to sell to the Partnership its interest in a fourth shuttle tanker
newbuilding within 365 days after its delivery, provided the vessel is servicing a charter contract
in excess of three years in length.
FPSO Units
Pursuant to the omnibus agreement and a subsequent agreement, Teekay is obligated to offer to sell
the
Petrojarl Foinaven
FPSO unit, an existing FPSO unit of Teekay operating under a long-term
contract in the North Sea, to Teekay Offshore prior to July 9, 2012. The purchase price for the
Petrojarl Foinaven
FPSO unit would be at its fair market value plus any additional tax or other
similar costs to Teekay that would be required to transfer the FPSO unit to the Partnership.
- more -
2
On October 19, 2010, Teekay announced that it had signed a contract with Petrobras to provide a
FPSO unit for the Tiro and Sidon fields located in the Santos Basin offshore Brazil. The contract
with Petrobras will be serviced by a new converted FPSO unit, to be named the
Petrojarl Cidade de
Itajai
, which is currently under conversion from an existing Aframax tanker at Sembcorp Marines
Jurong Shipyard in Singapore for a total estimated cost of approximately $370 million. The new
FPSO unit is scheduled to deliver in the second quarter of 2012, when it will commence operations
under a nine-year, fixed-rate time-charter contract to Petrobras with six additional one-year
extension options. Pursuant to the omnibus agreement, Teekay is obligated to offer to the
Partnership its interest in this FPSO project at Teekays fully built-up cost, within 365 days
after the commencement of the charter to Petrobras.
Financial Summary
The Partnership reported adjusted net income attributable to the partners
(1)
(as
detailed in
Appendix A
to this release) of $12.9 million for the quarter ended September 30, 2010,
compared to $18.9 million for the quarter ended June 30, 2010. Adjusted net income attributable
to the partners excludes a number of specific items that had the net effect of decreasing net
income by $16.8 million and $21.7 million for the quarters ended September 30, 2010 and June 30,
2010, respectively, as detailed in
Appendix A
. Including these items, the Partnership reported,
on a GAAP basis, net loss attributable to the partners of $3.9 million (as detailed in
Appendix A
to this release) for the third quarter of 2010, compared to net loss of $2.8 million in the
previous quarter. Net revenues
(2)
for the third quarter of 2010 were $172.7 million
compared to $181.0 million in the previous quarter.
For accounting purposes, the Partnership is required to recognize, through the consolidated
statements of (loss) income, changes in the fair value of certain derivative instruments as
unrealized gains or losses. This revaluation does not affect the economics of any hedging
transactions or have any impact on the Partnerships actual cash flows or the calculation of its
distributable cash flow.
The Partnership has recast its historical financial results to include the results of the
Falcon
Spirit
FSO unit and
Petrojarl Varg
FPSO unit relating to the periods prior to their acquisition by
the Partnership from Teekay, and for which pre-acquisition results are referred to in this release
as the Dropdown Predecessor. In accordance with GAAP, business acquisitions of entities under
common control that have begun operations are required to be accounted for in a manner whereby the
Partnerships financial statements are retroactively adjusted to include the historical results of
the acquired vessels from the date the vessels were originally under the control of Teekay. For
these purposes, the
Falcon Spirit
was under common control by Teekay from December 15, 2009 until
April 1, 2010, when it was sold to the Partnership, and the
Petrojarl Varg
FPSO unit was under
common control by Teekay from October 1, 2006 to September 10, 2009, when it was sold to the
Partnership.
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(1)
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Adjusted net income attributable to the partners is a non-GAAP financial measure. Please
refer to
Appendix A
included in this release for a reconciliation of this non-GAAP measure to
the most directly comparable financial measure under GAAP and information about specific items
affecting net income that are typically excluded by securities analysts in their published
estimates of the Partnerships financial results.
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(2)
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Net revenues represents revenues less voyage expenses, which comprise all expenses relating
to certain voyages, including bunker fuel expenses, port fees, canal tolls and brokerage
commissions. Net revenues is a non-GAAP financial measure used by certain investors to
measure the financial performance of shipping companies. Please see the Partnerships web
site at
www.teekayoffshore.com
for a reconciliation of this non-GAAP measure as used in this
release to the most directly comparable GAAP financial measure.
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- more -
3
Operating Results
The following table highlights certain financial information for Teekay Offshores four main
segments: the Shuttle Tanker segment, the Conventional Tanker segment, the FSO segment, and the
FPSO segment (please refer to the Teekay Offshores Fleet section of this release above and
Appendix C
for further details).
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Three Months Ended
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September 30, 2010
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(unaudited)
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Shuttle
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Conventional
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Tanker
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Tanker
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FSO
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FPSO
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(in thousands of U.S. dollars)
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Segment
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Segment
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Segment
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Segment
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Total
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Net revenues
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110,068
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22,116
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16,777
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23,726
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172,687
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Vessel operating expenses
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33,442
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6,144
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8,296
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13,223
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61,105
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Time-charter hire expense
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20,352
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20,352
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Depreciation and amortization
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26,786
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7,239
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3,479
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5,119
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42,623
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Cash flow from vessel operations
(1)
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45,636
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14,932
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8,161
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9,162
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77,891
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Three Months Ended
June 30, 2010
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(unaudited)
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Shuttle
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Conventional
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Tanker
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Tanker
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FSO
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FPSO
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(in thousands of U.S. dollars)
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Segment
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Segment
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Segment
(2)
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Segment
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Total
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Net revenues
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114,264
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21,589
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18,343
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26,815
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181,011
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Vessel operating expenses
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32,346
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5,657
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8,420
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10,190
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56,613
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Time-charter hire expense
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23,424
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23,424
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Depreciation and amortization
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29,280
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5,921
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3,829
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5,121
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44,151
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Cash flow from vessel operations
(1)
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49,343
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14,793
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9,404
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15,513
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89,053
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(1)
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Cash flow from vessel operations represents income from vessel operations before depreciation
and amortization expense and amortization of deferred gains, includes the realized gains
(losses) on the settlements foreign exchange forward contracts and excludes the cash flow from
vessel operations relating to the Dropdown Predecessor and adjusting for direct financing
leases to a cash basis. Cash flow from vessel operations is a non-GAAP financial measure used
by certain investors to measure the financial performance of shipping companies. Please see
the Partnerships web site at www.teekayoffshore.com for a reconciliation of this non-GAAP
measure as used in this release to the most directly comparable GAAP financial measure.
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(2)
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Cash flow from vessel operations for the FSO segment reflects only the cash flow generated by
the
Falcon Spirit
FSO unit subsequent to its acquisition by the Partnership on April 1, 2010.
Results for the
Falcon Spirit
FSO unit for the periods prior to its acquisition by the
Partnership when it was owned and operated by Teekay are included in the
Dropdown Predecessor
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Shuttle Tanker Segment
Cash flow from vessel operations from the Partnerships shuttle tanker segment decreased to $45.6
million for the third quarter of 2010, compared to $49.3 million for the second quarter of 2010,
primarily due to reduced revenues as a result of reduced oil production in the North Sea due to
seasonal oil field maintenance.
Conventional Tanker Segment
Cash flow from vessel operations from the Partnerships conventional tanker segment of $14.9
million in the third quarter of 2010 was consistent with the $14.8 million generated in the second
quarter of 2010.
- more -
4
FSO Segment
Cash flow from vessel operations from the Partnerships FSO segment decreased to $8.2 million in
the third quarter of 2010 from $9.4 million in the second quarter of 2010, primarily due to a
contractual reduction in the charter rate on the
Navion Saga
FSO unit effective May 1, 2010.
FPSO Segment
Cash flow from vessel operations from the Partnerships FPSO segment decreased to $9.2 million for
the third quarter of 2010, compared to $15.5 million for the second quarter of 2010, primarily due
to a planned maintenance shutdown of the
Petrojarl Varg
FPSO unit during the third quarter,
resulting in lower production tariff revenue and higher vessel operating expenses.
Liquidity
As of September 30, 2010, the Partnership had total liquidity of $448.0 million, which consisted of
$158.5 million in cash and cash equivalents and $289.5 million in undrawn revolving credit
facilities. Total liquidity increased from $246.1 million as at June 30, 2010, primarily as a
result of the Partnerships follow-on equity offering completed in August 2010, which provided net
proceeds to the Partnership of $130.4 million, cash flow from operations and an increase in the
completion of a new $32 million debt facility secured by the
Falcon Spirit
FSO in September 2010.
About Teekay Offshore Partners L.P.
Teekay Offshore Partners L.P., a publicly-traded master limited partnership formed by Teekay
Corporation (NYSE: TK), is an international provider of marine transportation, oil production and
storage services to the offshore oil industry. Teekay Offshore owns a 51 percent interest in and
controls Teekay Offshore Operating L.P., a Marshall Islands limited partnership with a fleet of
thirty-three shuttle tankers, including two newbuildings to be acquired, six chartered-in vessels,
four FSO units, and eleven conventional oil tankers. In addition, Teekay Offshore has direct
ownership interests in two shuttle tankers, two FSO units, and two FPSO units. Teekay Offshore
also has rights to participate in certain other FPSO and shuttle tanker opportunities.
Teekay Offshores common units trade on the New York Stock Exchange under the symbol TOO.
For Investor Relations enquiries contact:
Kent Alekson
Tel: +1 (604) 609-6442
Web site:
www.teekayoffshore.com
- more -
5
TEEKAY OFFSHORE PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(in thousands of U.S. dollars, except unit data)
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Three Months Ended
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Nine Months Ended
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September 30,
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June 30,
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September 30,
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September 30,
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September 30,
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2010
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2010
(1)
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2009
(2)
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2010
(1)
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2009
(2)
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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REVENUES
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200,379
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215,960
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204,509
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637,769
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608,460
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OPERATING EXPENSES
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Voyage expenses
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27,692
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34,949
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29,363
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97,595
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76,405
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Vessel operating expenses
(3)
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61,105
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56,613
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55,837
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176,126
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174,766
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Time-charter hire expense
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20,352
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23,424
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27,772
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68,814
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89,061
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Depreciation and amortization
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42,623
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|
|
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44,151
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40,981
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128,009
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121,366
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General and administrative
(3)
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14,450
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14,879
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12,840
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44,138
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38,993
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Restructuring charge
(4)
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|
|
|
371
|
|
|
|
119
|
|
|
|
4,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,222
|
|
|
|
174,016
|
|
|
|
167,164
|
|
|
|
514,801
|
|
|
|
504,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from vessel operations
|
|
|
34,157
|
|
|
|
41,944
|
|
|
|
37,345
|
|
|
|
122,968
|
|
|
|
103,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ITEMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(7,308
|
)
|
|
|
(7,318
|
)
|
|
|
(9,147
|
)
|
|
|
(22,959
|
)
|
|
|
(33,532
|
)
|
Interest income
|
|
|
235
|
|
|
|
235
|
|
|
|
141
|
|
|
|
633
|
|
|
|
1,098
|
|
Realized and unrealized (loss) gain
on derivative instruments
(5)
|
|
|
(30,769
|
)
|
|
|
(56,036
|
)
|
|
|
(37,302
|
)
|
|
|
(108,929
|
)
|
|
|
37,716
|
|
Foreign exchange gain (loss)
(3)
|
|
|
1,737
|
|
|
|
(1,200
|
)
|
|
|
(4,359
|
)
|
|
|
1,173
|
|
|
|
(7,988
|
)
|
Income tax (expense) recovery
|
|
|
(8,779
|
)
|
|
|
10,378
|
|
|
|
(20,234
|
)
|
|
|
8,686
|
|
|
|
(26,928
|
)
|
Other income net
|
|
|
1,636
|
|
|
|
1,590
|
|
|
|
2,068
|
|
|
|
5,580
|
|
|
|
7,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(9,091
|
)
|
|
|
(10,407
|
)
|
|
|
(31,488
|
)
|
|
|
7,152
|
|
|
|
81,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
|
|
(5,231
|
)
|
|
|
(7,572
|
)
|
|
|
(12,560
|
)
|
|
|
(1,954
|
)
|
|
|
32,831
|
|
Dropdown Predecessor
(1)(2)
|
|
|
|
|
|
|
|
|
|
|
(5,551
|
)
|
|
|
921
|
|
|
|
11,378
|
|
Partners
|
|
|
(3,860
|
)
|
|
|
(2,835
|
)
|
|
|
(13,377
|
)
|
|
|
8,185
|
|
|
|
37,028
|
|
Limited partners units outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of
common units outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
|
45,450,625
|
|
|
|
42,760,000
|
|
|
|
25,056,250
|
|
|
|
42,165,412
|
|
|
|
21,985,714
|
|
Weighted-average number of
subordinated units outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
|
|
|
|
|
|
|
|
|
9,800,000
|
|
|
|
|
|
|
|
9,800,000
|
|
Weighted-average number of total
units outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted
|
|
|
45,450,625
|
|
|
|
42,760,000
|
|
|
|
34,856,250
|
|
|
|
42,165,412
|
|
|
|
31,785,714
|
|
Total common units outstanding at
end of period
|
|
|
48,797,500
|
|
|
|
42,760,000
|
|
|
|
37,700,000
|
|
|
|
48,797,500
|
|
|
|
37,700,000
|
|
|
|
|
(1)
|
|
Results for the
Falcon Spirit
FSO unit for the periods prior to its acquisition by the
Partnership in April 2010 when it was owned and operated by Teekay Corporation, are included
in the
Dropdown Predecessor.
|
|
(2)
|
|
Results for the
Petrojarl Varg
FPSO unit for the periods prior to its acquisition by the
Partnership in September 2009 when it was owned and operated by Teekay Corporation, are
included in the
Dropdown Predecessor
.
|
- more -
6
|
|
|
(3)
|
|
The Partnership has entered into foreign exchange forward contracts, which are economic
hedges for certain vessel operating expenses and general and administrative expenses. Certain
of these forward contracts have been designated as cash flow hedges pursuant to GAAP.
Unrealized gains (losses) arising from hedge ineffectiveness from such forward contracts,
including forward contracts relating to the Dropdown Predecessor, are reflected in vessel
operating expenses, and general and administrative expenses in the above Summary Consolidated
Statements of (Loss) Income as detailed in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2010
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
Vessel operating expenses
|
|
|
(428
|
)
|
|
|
(1,198
|
)
|
|
|
1,404
|
|
|
|
(2,750
|
)
|
|
|
2,871
|
|
General and administrative
|
|
|
444
|
|
|
|
(854
|
)
|
|
|
1,382
|
|
|
|
(1,145
|
)
|
|
|
3,484
|
|
|
|
|
(4)
|
|
Restructuring charges were incurred in connection with the re-flagging of certain of the
Partnerships vessels, which are expected to result in lower future crewing costs.
|
|
(5)
|
|
The realized losses relate to the amounts the Partnership actually paid or received to settle
such derivative instruments and the unrealized (losses) gains relate to the change in fair
value of such derivative instruments as detailed in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2010
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
Realized losses relating to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
(10,327
|
)
|
|
|
(10,934
|
)
|
|
|
(12,743
|
)
|
|
|
(32,080
|
)
|
|
|
(34,621
|
)
|
Foreign currency forward contract
|
|
|
(150
|
)
|
|
|
(340
|
)
|
|
|
(93
|
)
|
|
|
(645
|
)
|
|
|
(4,071
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,477
|
)
|
|
|
(11,274
|
)
|
|
|
(12,836
|
)
|
|
|
(32,725
|
)
|
|
|
(38,692
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (losses) gains relating to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
(28,275
|
)
|
|
|
(41,486
|
)
|
|
|
(24,942
|
)
|
|
|
(80,327
|
)
|
|
|
71,538
|
|
Foreign currency forward contracts
|
|
|
7,983
|
|
|
|
(3,276
|
)
|
|
|
476
|
|
|
|
4,123
|
|
|
|
4,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,292
|
)
|
|
|
(44,762
|
)
|
|
|
(24,466
|
)
|
|
|
(76,204
|
)
|
|
|
76,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total realized and unrealized (losses) gains on
non-designated derivative instruments
|
|
|
(30,769
|
)
|
|
|
(56,036
|
)
|
|
|
(37,302
|
)
|
|
|
(108,929
|
)
|
|
|
37,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- more -
7
TEEKAY OFFSHORE PARTNERS L.P.
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at September 30,
|
|
|
As at June 30,
|
|
|
As at December 31,
|
|
|
|
2010
|
|
|
2010
|
|
|
2009
(1)
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
158,466
|
|
|
|
101,953
|
|
|
|
101,747
|
|
Other current assets
|
|
|
111,268
|
|
|
|
146,238
|
|
|
|
149,659
|
|
Vessels and equipment
|
|
|
1,851,239
|
|
|
|
1,885,335
|
|
|
|
1,917,248
|
|
Other assets
|
|
|
76,932
|
|
|
|
87,649
|
|
|
|
94,845
|
|
Intangible assets
|
|
|
30,793
|
|
|
|
32,826
|
|
|
|
36,885
|
|
Goodwill
|
|
|
127,113
|
|
|
|
127,113
|
|
|
|
127,113
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
2,355,811
|
|
|
|
2,381,114
|
|
|
|
2,427,497
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
82,182
|
|
|
|
75,786
|
|
|
|
74,514
|
|
Other current liabilities
|
|
|
34,717
|
|
|
|
46,294
|
|
|
|
40,220
|
|
Current portion of long-term debt
|
|
|
152,562
|
|
|
|
161,228
|
|
|
|
153,004
|
|
Current portion of derivative instruments
|
|
|
32,153
|
|
|
|
36,268
|
|
|
|
31,852
|
|
Long-term debt
|
|
|
1,339,981
|
|
|
|
1,461,590
|
|
|
|
1,627,455
|
|
Other long-term liabilities
|
|
|
136,813
|
|
|
|
114,299
|
|
|
|
73,247
|
|
Redeemable non-controlling interest
|
|
|
43,330
|
|
|
|
42,676
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
156,632
|
|
|
|
174,691
|
|
|
|
219,692
|
|
Partners equity
|
|
|
377,441
|
|
|
|
268,282
|
|
|
|
207,513
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
|
2,355,811
|
|
|
|
2,381,114
|
|
|
|
2,427,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In accordance with GAAP, the balance sheet at December 31, 2009 includes the Dropdown
Predecessor as it relates to the
Falcon Spirit
FSO unit, which was acquired by the
Partnership on April 1, 2010, to reflect ownership of the vessel from the time it began
operations as an FSO unit when owned by Teekay Corporation on December 15, 2009.
|
- more -
8
TEEKAY OFFSHORE PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2010
(1)
|
|
|
2009
(2)
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Cash and cash equivalents provided by (used for)
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net operating cash flow
|
|
|
225,528
|
|
|
|
140,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from drawdown of long-term debt
|
|
|
119,400
|
|
|
|
119,575
|
|
Scheduled repayments of long-term debt
|
|
|
(53,236
|
)
|
|
|
(24,124
|
)
|
Prepayments of long-term debt
|
|
|
(309,235
|
)
|
|
|
(241,090
|
)
|
Prepayments of long-term debt relating to Dropdown Predecessor
Falcon Spirit
|
|
|
(33,634
|
)
|
|
|
|
|
Distribution to Teekay Corporation for the acquisition of
Falcon Spirit
|
|
|
(10,495
|
)
|
|
|
|
|
Prepayments of joint venture partner advances
|
|
|
|
|
|
|
(20,775
|
)
|
Joint venture partner advances
|
|
|
|
|
|
|
474
|
|
Equity contribution from joint venture partner
|
|
|
233
|
|
|
|
4,772
|
|
Proceeds from equity offerings
|
|
|
237,041
|
|
|
|
109,227
|
|
Expenses from equity offerings
|
|
|
(11,117
|
)
|
|
|
(4,945
|
)
|
Contribution of capital from Teekay Corporation
to Dropdown Predecessor relating to
Petrojarl Varg
|
|
|
|
|
|
|
110,386
|
|
Purchase of
Petrojarl Varg
from Teekay Corporation
|
|
|
|
|
|
|
(100,000
|
)
|
Equity contribution from Teekay Corporation to Dropdown Predecessor
relating to
Falcon Spirit
|
|
|
805
|
|
|
|
|
|
Cash distributions paid by the Partnership
|
|
|
(60,579
|
)
|
|
|
(42,788
|
)
|
Cash distributions paid by subsidiaries to non-controlling interest
|
|
|
(58,969
|
)
|
|
|
(44,093
|
)
|
Other
|
|
|
(1,025
|
)
|
|
|
(1,114
|
)
|
|
|
|
|
|
|
|
Net financing cash flow
|
|
|
(180,811
|
)
|
|
|
(134,495
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Expenditures for vessels and equipment
|
|
|
(4,292
|
)
|
|
|
(11,726
|
)
|
Investment in direct financing lease assets
|
|
|
(887
|
)
|
|
|
|
|
Direct financing lease payments received
|
|
|
17,181
|
|
|
|
17,013
|
|
|
|
|
|
|
|
|
Net investing cash flow
|
|
|
12,002
|
|
|
|
5,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
56,719
|
|
|
|
11,398
|
|
Cash and cash equivalents, beginning of the period
|
|
|
101,747
|
|
|
|
132,348
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of the period
|
|
|
158,466
|
|
|
|
143,746
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
In accordance with GAAP, the Summary Consolidated Statements of Cash Flows includes the cash
flows relating to the
Falcon Spirit
FSO unit, for the period from December 15, 2009 to April
1, 2010, when the vessel was under the common control of Teekay Corporation, but prior to its
acquisition by the Partnership.
|
|
(2)
|
|
In accordance with GAAP, the Summary Consolidated Statements of Cash Flows includes the cash
flows relating to the
Petrojarl Varg
FPSO unit, for the period from October 1, 2006 to
September 10, 2009, when the vessel was under the common control of Teekay Corporation, but
prior to its acquisition by the Partnership.
|
- more -
9
TEEKAY OFFSHORE PARTNERS L.P.
APPENDIX A SPECIFIC ITEMS AFFECTING NET LOSS
(in thousands of U.S. dollars)
Set forth below is a reconciliation of the Partnerships unaudited adjusted net income attributable
to the partners, a non-GAAP financial measure, to net loss attributable to the partners as
determined in accordance with GAAP. The Partnership believes that, in addition to conventional
measures prepared in accordance with GAAP, certain investors use this information to evaluate the
Partnerships financial performance. The items below are also typically excluded by securities
analysts in their published estimates of the Partnerships financial results. Adjusted net income
attributable to the partners is intended to provide additional information and should not be
considered a substitute for measures of performance prepared in accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30, 2010
|
|
|
June 30, 2010
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Net loss GAAP basis
|
|
|
(9,091
|
)
|
|
|
(10,407
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
Net loss attributable to non-controlling interests
|
|
|
5,231
|
|
|
|
7,572
|
|
|
|
|
|
|
|
|
Net loss attributable to the partners
|
|
|
(3,860
|
)
|
|
|
(2,835
|
)
|
Add (subtract) specific items affecting net income:
|
|
|
|
|
|
|
|
|
Foreign exchange (gains) loss
(1)
|
|
|
(1,737
|
)
|
|
|
1,200
|
|
Foreign currency exchange (gains) losses resulting from hedging
ineffectiveness
(2)
|
|
|
(16
|
)
|
|
|
2,052
|
|
Deferred income tax expense (recovery) relating to unrealized foreign
exchange
gains and losses
(3)
|
|
|
13,174
|
|
|
|
(10,997
|
)
|
Unrealized losses on derivative instruments
(4)
|
|
|
20,292
|
|
|
|
44,762
|
|
Other
(5)
|
|
|
|
|
|
|
3,634
|
|
Non-controlling interests share of items above
|
|
|
(14,956
|
)
|
|
|
(18,924
|
)
|
|
|
|
|
|
|
|
Total adjustments
|
|
|
16,757
|
|
|
|
21,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to the partners
|
|
|
12,897
|
|
|
|
18,892
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Foreign exchange gains primarily relate to the Partnerships revaluation of all foreign
currency-denominated monetary assets and liabilities based on the prevailing exchange rate at
the end of each reporting period.
|
|
(2)
|
|
Foreign currency exchange losses resulting from hedging ineffectiveness include the
unrealized losses arising from hedge ineffectiveness from foreign exchange forward contracts
that are or have been designated as hedges for accounting purposes.
|
|
(3)
|
|
Portion of deferred income tax (expense) recovery related to unrealized foreign exchange
gains and losses.
|
|
(4)
|
|
Reflects the unrealized loss due to changes in the mark-to-market value of derivative
instruments that are not designated as hedges for accounting purposes.
|
|
(5)
|
|
Primarily relates to adjustments to the carrying value of certain capitalized drydocking
expenditures and non-recurring adjustments to tax accruals.
|
- more -
10
TEEKAY OFFSHORE PARTNERS L.P.
APPENDIX B RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(in thousands of U.S. dollars)
Description of Non-GAAP Financial Measure Distributable Cash Flow (
DCF
)
Distributable cash flow represents net (loss) income adjusted for depreciation and amortization
expense, non-controlling interest, non-cash items, estimated maintenance capital expenditures,
gains and losses on vessel sales, unrealized gains and losses from derivatives, non-cash income
taxes, unrealized foreign exchange related items. Maintenance capital expenditures represent those
capital expenditures required to maintain over the long-term the operating capacity of, or the
revenue generated by, the Partnerships capital assets. Distributable cash flow is a quantitative
standard used in the publicly-traded partnership investment community to assist in evaluating a
partnerships ability to make quarterly cash distributions. Distributable cash flow is not defined
by GAAP and should not be considered as an alternative to net income or any other indicator of the
Partnerships performance required by GAAP. The table below reconciles distributable cash flow to
net loss for the quarter.
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30, 2010
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
Net loss
|
|
|
(9,091
|
)
|
Add:
|
|
|
|
|
Depreciation and amortization
|
|
|
42,623
|
|
Unrealized losses on non-designated derivative instruments
|
|
|
20,292
|
|
Deferred income tax expense
|
|
|
8,405
|
|
|
|
|
|
|
Less:
|
|
|
|
|
Estimated maintenance capital expenditures
|
|
|
23,242
|
|
Foreign exchange and other, net
|
|
|
345
|
|
|
|
|
|
Distributable Cash Flow before Non-Controlling Interest
|
|
|
38,642
|
|
Non-controlling interests share of DCF
|
|
|
(17,862
|
)
|
|
|
|
|
Distributable Cash Flow
|
|
|
20,780
|
|
|
|
|
|
- more -
11
TEEKAY OFFSHORE PARTNERS L.P.
APPENDIX C SUPPLEMENTAL SEGMENT INFORMATION
(in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2010
|
|
|
|
(unaudited)
|
|
|
|
Shuttle
|
|
|
Conventional
|
|
|
|
|
|
|
|
|
|
|
|
|
Tanker
|
|
|
Tanker
|
|
|
FSO
|
|
|
FPSO
|
|
|
|
|
|
|
Segment
|
|
|
Segment
|
|
|
Segment
|
|
|
Segment
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
(1)
|
|
|
110,068
|
|
|
|
22,116
|
|
|
|
16,777
|
|
|
|
23,726
|
|
|
|
172,687
|
|
Vessel operating expenses
|
|
|
33,442
|
|
|
|
6,144
|
|
|
|
8,296
|
|
|
|
13,223
|
|
|
|
61,105
|
|
Time-charter hire expense
|
|
|
20,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,352
|
|
Depreciation and amortization
|
|
|
26,786
|
|
|
|
7,239
|
|
|
|
3,479
|
|
|
|
5,119
|
|
|
|
42,623
|
|
General and administrative
|
|
|
11,212
|
|
|
|
1,040
|
|
|
|
837
|
|
|
|
1,361
|
|
|
|
14,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from vessel operations
|
|
|
18,276
|
|
|
|
7,693
|
|
|
|
4,165
|
|
|
|
4,023
|
|
|
|
34,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2010
|
|
|
|
(unaudited)
|
|
|
|
Shuttle
|
|
|
Conventional
|
|
|
|
|
|
|
|
|
|
|
|
|
Tanker
|
|
|
Tanker
|
|
|
FSO
|
|
|
FPSO
|
|
|
|
|
|
|
Segment
|
|
|
Segment
|
|
|
Segment
(2)
|
|
|
Segment
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
(1)
|
|
|
114,264
|
|
|
|
21,589
|
|
|
|
18,343
|
|
|
|
26,815
|
|
|
|
181,011
|
|
Vessel operating expenses
|
|
|
32,346
|
|
|
|
5,657
|
|
|
|
8,420
|
|
|
|
10,190
|
|
|
|
56,613
|
|
Time-charter hire expense
|
|
|
23,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,424
|
|
Depreciation and amortization
|
|
|
29,280
|
|
|
|
5,921
|
|
|
|
3,829
|
|
|
|
5,121
|
|
|
|
44,151
|
|
General and administrative
|
|
|
11,603
|
|
|
|
1,139
|
|
|
|
1,009
|
|
|
|
1,128
|
|
|
|
14,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from vessel operations
|
|
|
17,611
|
|
|
|
8,872
|
|
|
|
5,085
|
|
|
|
10,376
|
|
|
|
41,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Net revenues represents revenues less voyage expenses, which comprise all expenses relating
to certain voyages, including bunker fuel expenses, port fees, canal tolls and brokerage
commissions. Net revenues is a non-GAAP financial measure used by certain investors to
measure the financial performance of shipping companies. Please see the Partnerships web
site at
www.teekayoffshore.com
for a reconciliation of this non-GAAP measure as used
in this release to the most directly comparable GAAP financial measure.
|
|
(2)
|
|
Income from operations for the
Falcon Spirit
FSO unit for the periods prior to its April 1,
2010 acquisition by the Partnership when it was owned and operated by Teekay Corporation, are
required by GAAP to be included in Teekay Offshores results for such prior periods.
|
- more -
12
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 managements current views with respect to certain
future events and performance, including statements regarding: the Partnerships future growth
prospects, cash flows and distributions to unitholders; the expected reduction in the seasonal
variability of the Partnerships future cash flows resulting from the new Master Agreement with
Statoil; shuttle tanker and FPSO unit production in the North Sea during the fourth quarter of
2010; the effect of the acquisition of the
Rio das Ostras
FPSO unit and three newbuilding shuttle
tankers (the
Amundsen Spirit
, the
Nansen Spirit
and the
Peary Sprit
) on the Partnerships future
results and in particular, the estimated increase to the Partnerships 2011 cash flow from vessel
operations and distributable cash flow; the purchase price and the timing of delivery and
commencement of time-charter contracts for the
Nansen Spirit
and the
Peary Spirit
; the potential
for Teekay to offer additional vessels to the Partnership and the Partnerships acquisition of any
such vessels, particularly the
Petrojarl Foinaven
FPSO unit, the
Petrojarl Cidade de Itajai
FPSO
unit and the fourth newbuilding Aframax shuttle tanker; the potential for Teekay to offer to the
Partnership additional limited partner interests in OPCO; and the potential acquisition of other
new offshore projects. 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: vessel operations and oil production
volumes; different levels of field maintenance than expected; increased operating expenses;
variability in shuttle tanker tonnage requirements under the Statoil Master Agreement;
different-than-expected levels of oil production in the North Sea offshore fields where the
Amundsen Spirit
,
Nansen Spirit
and
Peary Spirit
operate; potential delays in the commencement of
the
Nansen Spirit
and
Peary Spirit
time-charters; potential early termination of contracts,
including the
Rio das Ostras
FPSO time-charter contract and the Statoil Master Agreement; potential
delays and/or cost over-runs relating to the conversion of the
Petrojarl Cidade de Itajai
FPSO
unit; failure of Teekay to offer to the Partnership additional vessels or ownership interests in
OPCO; failure to acquire additional vessels due to Teekay Offshore determining that they are
unsuitable or not sufficiently profitable to the Partnership; required approvals by the Conflicts
Committee of Teekay Offshores general partner to acquire from Teekay vessels or ownership
interests in OPCO; the Partnerships ability to raise financing to purchase additional vessels or
interests in OPCO; failure to secure a new contract in excess of three years for Teekays fourth
Aframax shuttle tanker newbuilding; and other factors discussed in Teekay Offshores filings from
time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31,
2009. 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 Partnerships expectations with respect thereto or any change in events, conditions or
circumstances on which any such statement is based.
- end -
13
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.
|
|
|
|
|
|
TEEKAY OFFSHORE PARTNERS L.P.
By: Teekay Offshore GP L.L.C., its general partner
|
|
Date: November 12, 2010
|
By:
|
/s/ Peter Evensen
|
|
|
|
Peter Evensen
|
|
|
|
Chief Executive Officer and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
|
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