HAMILTON, BERMUDA--(Marketwired - May 9, 2013) -
Highlights
- Generated distributable cash flow(1) of $41.8
million in the first quarter of 2013.
- Declared first quarter 2013 cash distribution of
$0.5253 per unit, an increase of 2.5 percent from the previous
quarter, and intends to announce a further increase by a minimum of
2.5 percent before the end of the year.
- Completed acquisition of Voyageur Spirit FPSO
unit from Teekay Corporation on May 2, 2013 for $540 million.
- Received offer from Teekay Corporation to acquire
its 50 percent interest in Cidade de Itajai FPSO unit.
- First of four shuttle tanker newbuildings will
deliver this week and is expected to commence 10-year charter with
BG Group in June 2013.
- Finalized 10-year charter contract with
Salamander Energy plc to convert an existing shuttle tanker to an
FSO unit.
- Liquidity of approximately $560 million as of
March 31, 2013, giving pro forma effect to proceeds from the April
2013 common unit private placement and preferred unit public
offering, as well as the Voyageur Spirit FPSO acquisition.
Teekay Offshore GP LLC, 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 March 31, 2013. During the first quarter of 2013, the
Partnership generated distributable cash flow(1) of $41.8 million,
compared to $42.4 million in the same period of the prior year.
On April 18, 2013, a cash distribution of $0.5253
per common unit was declared for the quarter ended March 31, 2013,
an increase of $0.0128 per unit, or 2.5 percent, from the previous
quarter. The cash distribution is payable on May 14, 2013 to all
unitholders of record on April 30, 2013.
"We are pleased to have completed the accretive
acquisition of the Voyageur Spirit FPSO last week, which brings the
Partnership's FPSO fleet to four units and will increase its
distributable cash flow commencing in the second quarter,"
commented Peter Evensen, Teekay Offshore GP LLC's Chief Executive
Officer. "As a result of this accretive acquisition, we have
increased the Partnership's first quarter distribution by 2.5
percent to $0.5253 per unit, payable in May 2013."
Mr. Evensen continued, "We expect that the
distributable cash flow accretion provided by the four BG shuttle
tanker newbuildings, the Partnership's expected acquisition of a 50
percent interest in the Cidade de Itajai FPSO, and the
post-acquisition contribution from the Voyageur Spirit FPSO will
enable us to further increase our quarterly distribution by a
minimum of 2.5 percent later in 2013. With the recent completion of
the $150 million Series A perpetual preferred unit public offering
in April 2013, which represents a new source of equity financing
that is non-dilutive to our existing common unitholders, and the
Partnership's recent $60 million common unit private placement, the
equity requirements for the Cidade de Itajai FPSO and four BG
shuttle tankers are now covered."
"During the past year, we have seen an increase in
the number of new offshore projects and Teekay Offshore is
currently bidding on several new organic FPSO and FSO projects,"
Mr. Evensen added. "This past week, we were successful in
finalizing an agreement with Salamander Energy plc to convert one
of our older shuttle tankers, the Navion Clipper, to an FSO unit
that will operate offshore Thailand under a new 10-year charter
contract commencing in the third quarter of 2014. The project's
fully-built-up capital cost is approximately $50 million and, upon
commencement of the charter contract, the FSO unit is estimated to
generate approximately $6.5 million in annual cash flow from vessel
operations."
1. 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 United States generally accepted accounting
principles (GAAP).
Summary of Recent Transactions
Voyageur Spirit FPSO Acquisition
On May 2, 2013, the Partnership completed the
acquisition of the Voyageur Spirit FPSO unit from Teekay
Corporation at a purchase price of $540 million. The Voyageur
Spirit FPSO operates on the Huntington Field in the North Sea under
a five-year contract, plus up to 10 one-year extension options,
with E.ON Ruhrgas UK E&P Limited. The acquisition was financed
with a new $330 million debt facility secured by the unit, a
portion of the proceeds from the public offering completed in
September 2012 and a $40 million common unit private placement of
common units to Teekay Corporation completed on May 2, 2013.
In anticipation of the Voyageur Spirit FPSO
acquisition, in February 2013 the Partnership made a partial
prepayment of $150 million to Teekay Corporation. The Partnership
received interest at a rate of LIBOR plus a margin of 4.25 percent
on the prepaid funds to Teekay Corporation until the Partnership
acquired the FPSO unit on May 2, 2013.
Offer to Acquire a 50 Percent Interest in Cidade
de Itajai FPSO
In April 2013, the Partnership received an offer
from Teekay Corporation to acquire its 50 percent interest in the
Cidade de Itajai (Itajai) FPSO unit at its fully built-up cost. The
Itajai FPSO unit has been operating on the Bauna and Piracaba
(previously named Tiro and Sidon) fields in the Santos Basin
offshore Brazil since February 2013 under a nine-year time-charter
contract (plus extension options) with Petroleo Brasileiro SA
(Petrobras). The offer is currently being reviewed by the
Partnership's Conflicts Committee. The remaining 50 percent
interest in the Itajai FPSO unit is owned by Brazilian-based
Odebrecht Oil & Gas S.A. (a member of the Odebrecht group)
(Odebrecht).
Salamander Energy FSO Contract
In May 2013, the Partnership finalized the
ten-year charter contract, plus extension options, with Salamander
Energy plc (Salamander) to supply an FSO unit in Asia. The
Partnership intends to convert its 1993-built shuttle tanker, the
Navion Clipper, into an FSO unit for an estimated fully built-up
cost of approximately $50 million. The unit is expected to commence
its contract with Salamander in the third quarter of 2014.
Teekay Offshore's Fleet
The following table summarizes Teekay Offshore's
fleet as of May 2, 2013.
|
Number of Vessels |
|
Owned
Vessels |
Chartered-in Vessels |
Committed Newbuildings
/
Conversions |
Conversion
Candidates (iii) |
Total |
Shuttle Tanker Segment |
27(i) |
4 |
4(ii) |
1 |
36 |
FPSO Segment |
4 |
- |
- |
- |
4 |
Conventional Tanker
Segment |
6 |
- |
- |
- |
6 |
FSO Segment |
5 |
- |
1(iv) |
- |
6 |
Total |
42 |
4 |
5 |
1 |
52 |
i. Includes six shuttle tankers in which
Teekay Offshore's ownership interest is 50 percent and three
shuttle tankers in which Teekay Offshore's ownership interest is 67
percent.
ii. Includes four shuttle tanker newbuildings expected to deliver
in May 2013, June 2013, September 2013 and November 2013 and to
commence operations under 10-year charter contracts with a
subsidiary of BG Group plc in Brazil.
iii.Includes one shuttle tanker which is currently in lay-up and is
a candidate for conversion to an offshore asset.
iv. Includes one shuttle tanker, the Navion Clipper, which is
currently being converted into an FSO unit and is expected to
commence operations under a 10-year charter contract in mid-2014
with Salamander Energy plc.
Future Growth Opportunities
Pursuant to an omnibus agreement that the
Partnership entered into in connection with our initial public
offering in December 2006, Teekay Corporation is obligated to offer
to the Partnership its interest in certain shuttle tankers, FSO
units and FPSO units Teekay Corporation owns or may acquire in the
future, provided the vessels are servicing contracts with remaining
durations of greater than three years. The Partnership may also
acquire other vessels that Teekay Corporation may offer it from
time to time and also intends to pursue direct acquisitions from
third parties and new organic offshore projects.
Shuttle Tankers
In June 2011, the Partnership entered into a new
long-term contract with a subsidiary of BG Group plc. (BG) to
provide shuttle tanker services in Brazil. The contract with BG
will be serviced by four Suezmax newbuilding shuttle tankers, being
constructed by Samsung Heavy Industries for an estimated total cost
of approximately $446 million (excluding capitalized interest and
miscellaneous construction costs). Shortly after their scheduled
deliveries between May 2013 and November 2013, the shuttle tankers
will commence operations under ten-year, fixed-rate
time-charter-out contracts. The contracts with BG also include
certain extension options and vessel purchase options exercisable
by the charterer. This week, the Partnership expects to take
delivery of the Samba Spirit, the first of the four shuttle tanker
newbuildings, which is expected to commence its time-charter
contract with BG in June 2013.
In November 2012, the Partnership agreed to
acquire a 2010-built HiLoad Dynamic Positioning (DP) unit from
Remora AS (Remora), a Norway-based offshore marine technology
company, for a total purchase price of approximately $55 million,
including modification costs. The acquisition of the HiLoad DP
unit, which will operate under a ten-year time-charter contract
with Petrobras in Brazil, is expected to be completed by June 30,
2013 and the unit is expected to commence operations at its full
time-charter rate in early 2014 once modifications, delivery of the
DP unit to Brazil, and operational testing have been completed.
Under the terms of an agreement between Remora and Teekay Offshore,
the Partnership has the right of first refusal to acquire any
future HiLoad DP projects developed by Remora.
FPSO Units
In May 2011, Teekay Corporation entered into a
joint venture agreement with Odebrecht to jointly pursue FPSO
projects in Brazil. Odebrecht is a well-established Brazil-based
company that operates in the engineering and construction,
petrochemical, bioenergy, energy, oil and gas, real estate and
environmental engineering sectors, with over 120,000 employees and
a presence in over 20 countries. As part of the joint venture
agreement, Odebrecht is a 50 percent partner in the Cidade de
Itajai FPSO project and Teekay Corporation is currently working
with Odebrecht on other FPSO project opportunities that, if
awarded, may result in the Partnership being able to acquire Teekay
Corporation's interests in such projects pursuant to the omnibus
agreement. As discussed above, in April 2013, the Partnership
received an offer from Teekay Corporation to acquire its 50 percent
interest in the Cidade de Itajai FPSO unit at Teekay Corporation's
fully built-up cost. The offer is currently being reviewed by the
Partnership's Conflicts Committee.
Pursuant to the omnibus agreement and a subsequent
agreement, Teekay Corporation is obligated to offer to sell to the
Partnership the Petrojarl Foinaven FPSO unit, an existing unit
owned by Teekay Corporation and operating under a long-term
contract in the North Sea, prior to July 9, 2013. The purchase
price for the Petrojarl Foinaven would be its fair market value
plus any additional tax or other costs incurred by Teekay
Corporation to transfer ownership of this FPSO unit to the
Partnership.
In June 2011, Teekay Corporation entered into a
contract with BG Norge Limited to provide a harsh weather FPSO unit
to operate in the North Sea. The contract will be serviced by an
FPSO unit being constructed by Samsung Heavy Industries for a fully
built-up cost of approximately $1 billion. Pursuant to the omnibus
agreement, Teekay Corporation is obligated to offer to the
Partnership its interest in this FPSO project at Teekay
Corporation's fully built-up cost within a year after the
commencement of the charter, which commencement is expected to
occur during the first half of 2014.
In November 2011, Teekay Corporation acquired from
Sevan Marine ASA, a Norway-based developer of cylindrical-shaped
FPSO units, the Hummingbird Spirit FPSO unit, which is currently
operating under a short-term charter contract. Pursuant to the
omnibus agreement, Teekay Corporation is obligated to offer to the
Partnership the Hummingbird Spirit FPSO unit within approximately
one year following commencement of a charter contract with a firm
period of greater than three years in duration.
Teekay Corporation owns two additional FPSO units,
the Petrojarl Banff FPSO and the Petrojarl 1 FPSO, which may also
be offered to the Partnership in the future pursuant to the omnibus
agreement.
Financial Summary
The Partnership reported adjusted net income
attributable to the partners(1) of $18.9 million for the quarter
ended March 31, 2013, compared to $26.1 million for the same period
of the prior year. Adjusted net income attributable to the partners
excludes a number of specific items that had the net effect of
increasing net income by $1.3 million and $26.5 million for the
quarters ended March 31, 2013 and March 31, 2012, respectively, as
detailed in Appendix A. Including these items, the Partnership
reported, on a GAAP basis, net income attributable to the partners
of $20.2 million for the first quarter of 2013, compared to net
income of $52.6 million in the same period of the prior year. Net
revenues(2) were $201.2 million for the first quarter of 2013,
compared to $202.6 million in the same period of the prior
year.
Adjusted net income attributable to the partners
for the three months ended March 31, 2013 declined from the same
period in the prior year, mainly due to the sale and lay-up of
older shuttle and conventional tankers during 2012 as their related
charter contracts expired or terminated. In addition, there was a
higher level of maintenance activity in the FPSO fleet during the
first quarter of 2013 compared to the same period in the prior
year. Adjusted net income is expected to increase during the course
of 2013 as a result of the acquisition of the Voyageur Spirit FPSO
in May 2013 and the deliveries of the four shuttle tanker
newbuildings during 2013
For accounting purposes, the Partnership is
required to recognize, through the consolidated statements of
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 nor does it have any impact
on the Partnership's actual cash flows or the calculation of its
distributable cash flow.
1. 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 Partnership's financial results.
2. Net revenues is a non-GAAP financial measure used by
certain investors to measure the financial performance of shipping
companies. Please refer to Appendix C included in this release for
a reconciliation of this non-GAAP measure to the most directly
comparable financial measure under GAAP.
Operating Results
The following table highlights certain financial
information for Teekay Offshore's four segments: the Shuttle Tanker
segment, the FPSO segment, the Conventional Tanker segment and the
FSO segment (please refer to the "Teekay Offshore's Fleet" section
of this release above and Appendix
D for further details).
|
Three Months Ended |
March 31, 2013 |
(unaudited) |
(in thousands of U.S.
dollars) |
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO
Segment |
Total |
Net revenues(1) |
108,056 |
57,685 |
19,830 |
15,625 |
201,196 |
|
|
|
|
|
|
Vessel operating expenses |
37,967 |
29,501 |
3,362 |
8,285 |
79,115 |
Time-charter hire expense |
14,777 |
- |
- |
- |
14,777 |
Depreciation and amortization |
27,605 |
12,752 |
2,410 |
2,582 |
45,349 |
|
|
|
|
|
|
Cash flow from vessel operations(1) |
48,919 |
22,256 |
15,520 |
7,358 |
94,053 |
|
Three Months Ended |
March 31, 2012 |
(unaudited) |
(in thousands of U.S.
dollars) |
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO
Segment |
Total |
Net revenues(1) |
117,772 |
57,759 |
12,353 |
14,685 |
202,569 |
|
|
|
|
|
|
Vessel operating expenses |
43,226 |
24,743 |
3,153 |
7,348 |
78,470 |
Time-charter hire expense |
13,617 |
- |
- |
- |
13,617 |
Depreciation and amortization |
31,371 |
12,726 |
2,837 |
2,258 |
49,192 |
|
|
|
|
|
|
Cash flow from vessel operations(1) |
56,768 |
27,589 |
10,240 |
7,486 |
102,083 |
1. Net revenues and cash flow from vessel
operations are non-GAAP financial measures used by certain
investors to measure the financial performance of shipping
companies. Please refer to Appendix C and Appendix E, respectively,
included in this release for reconciliations of these non-GAAP
measures to the most directly comparable GAAP financial
measures.
Shuttle Tanker Segment
Cash flow from vessel operations from the
Partnership's Shuttle Tanker segment decreased to $48.9 million for
the first quarter of 2013 compared to $56.8 million for the same
period of the prior year, primarily as a result of the lay-up of
the Navion Torinita and the Navion Clipper upon expiration of their
time-charter contracts in the second and fourth quarters of 2012,
respectively, and the sale of the Navion Savonita in the fourth
quarter of 2012.
FPSO Segment
Cash flow from vessel operations from the
Partnership's FPSO segment decreased to $22.3 million for the first
quarter of 2013 compared to $27.6 million for the same period of
the prior year. The decrease was primarily due to an increase in
vessel operating expenses related to higher maintenance costs for
the Petrojarl Varg FPSO and higher crewing and manning costs for
the Petrojarl Varg and Piranema Spirit FPSO units.
Conventional Tanker Segment
Cash flow from vessel operations from the
Partnership's Conventional Tanker segment increased to $15.5
million in the first quarter of 2013 compared to $10.2 million for
the same period of the prior year, primarily due to a $6.8 million
termination fee received from Teekay Corporation in March 2013 for
the early termination of the time-charter contract for the Poul
Spirit.
FSO Segment
Cash flow from vessel operations from the
Partnership's FSO segment in the first quarter of 2013 of $7.4
million was consistent with the $7.5 million generated in the same
period of the prior year.
Liquidity
As of March 31, 2013, the Partnership had total
liquidity of $373.6 million, which consisted of $172.8 million in
cash and cash equivalents and $200.8 million in undrawn revolving
credit facilities. Giving affect for the $60 million common unit
private placement and the $150 million preferred unit public
offering completed in April 2013 and the Partnership's acquisition
of the Voyageur Spirit FPSO in May 2013 (net of the $150 million
prepayment made in February 2013), the Partnership's liquidity at
March 31, 2013 would have been approximately $560 million.
2012 Audited Financial Statements
Teekay Offshore Partners L.P. filed its 2012
Annual Report on Form 20-F with the U.S. Securities and Exchange
Commission (SEC) on April 11, 2013. Copies are available on Teekay
Offshore's website, under "Investor Briefcase", at
www.teekayoffshore.com. Unitholders may request a printed copy of
this annual report, including the complete audited financial
statements free of charge by contacting Teekay Offshore's Investor
Relations.
Conference Call
The Partnership also plans to host a conference
call on Friday, May 10, 2013 at noon (ET) to discuss the results
for the first quarter of 2013. All unitholders and interested
parties are invited to listen to the live conference call by
choosing from the following options:
- By dialing 1-866-322-8032 or 416-640-3406, if
outside North America, and quoting conference ID code 2708898.
- By accessing the webcast, which will be available
on Teekay Offshore's website at www.teekayoffshore.com (the archive
will remain on the website for a period of 30 days).
A supporting First Quarter 2013 Earnings
Presentation will also be available at www.teekayoffshore.com in
advance of the conference call start time.
The conference call will be recorded and available
until Friday, May 17, 2013. This recording can be accessed
following the live call by dialing 1-888-203-1112 or 647-436-0148,
if outside North America, and entering access code 2708898.
About Teekay Offshore Partners L.P.
Teekay Offshore Partners L.P. is an international
provider of marine transportation, oil production and storage
services to the offshore oil industry focusing on the fast-growing,
deepwater offshore oil regions of the North Sea and Brazil. Teekay
Offshore is structured as a publicly-traded master limited
partnership and owns interests in 36 shuttle tankers (including
four chartered-in vessels and four committed newbuildings), four
floating production, storage and offloading (FPSO) units, six
floating storage and offtake (FSO) units (including one committed
FSO conversion unit) and six conventional oil tankers. The majority
of Teekay Offshore's fleet is employed on long-term, stable
contracts. In addition, Teekay Offshore has rights to participate
in certain other FPSO and shuttle tanker opportunities provided by
Teekay Corporation (NYSE: TK) and Sevan Marine ASA (Oslo Bors:
SEVAN).
Teekay Offshore's common units trade on the New
York Stock Exchange under the symbol "TOO."
TEEKAY OFFSHORE PARTNERS
L.P. |
|
SUMMARY CONSOLIDATED STATEMENTS OF
INCOME |
|
(in thousands of U.S. dollars, except unit data) |
|
|
|
|
Three Months Ended |
|
|
March 31, 2013 |
|
December 31, 2012 |
|
March 31, 2012 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
REVENUES |
224,422 |
|
238,303 |
|
233,477 |
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
Voyage expenses |
23,226 |
|
26,881 |
|
30,908 |
|
Vessel operating expenses (1) |
79,115 |
|
88,689 |
|
78,470 |
|
Time-charter hire expense |
14,777 |
|
15,493 |
|
13,617 |
|
Depreciation and amortization |
45,349 |
|
47,029 |
|
49,192 |
|
General and administrative (1) |
10,665 |
|
7,743 |
|
9,178 |
|
Write-down of vessels |
11,247 |
|
13,529 |
|
- |
|
Loss on sale of vessel |
- |
|
778 |
|
- |
|
Restructuring charge(2) |
659 |
|
1,115 |
|
- |
|
|
185,038 |
|
201,257 |
|
181,365 |
|
Income from vessel
operations |
39,384 |
|
37,046 |
|
52,112 |
|
OTHER ITEMS |
|
|
|
|
|
|
Interest expense |
(11,680 |
) |
(10,892 |
) |
(12,598 |
) |
Interest income |
195 |
|
493 |
|
212 |
|
Realized and unrealized (loss) gain on derivative
instruments (3) |
(1,077 |
) |
31,187 |
|
16,239 |
|
Foreign exchange (loss) gain(4) |
(3,640 |
) |
2,272 |
|
(2,760 |
) |
Income tax recovery (expense) |
234 |
|
11,041 |
|
(1,485 |
) |
Loss on bond repurchase(5) |
(1,759 |
) |
- |
|
- |
|
Other income - net |
313 |
|
314 |
|
1,397 |
|
Net income from continuing operations |
21,970 |
|
71,461 |
|
53,117 |
|
Net (loss) income from discontinued operations(6) |
- |
|
(5,759 |
) |
1,486 |
|
Net income |
21,970 |
|
65,702 |
|
54,603 |
|
Net income attributable to: |
|
|
|
|
|
|
|
Non-controlling interests |
1,777 |
|
(2,982 |
) |
1,969 |
|
|
Partners |
20,193 |
|
68,684 |
|
52,634 |
|
Limited partners' units outstanding: |
|
|
|
|
|
|
|
Weighted-average number of common units outstanding |
|
|
|
|
|
|
|
- Basic |
80,105,408 |
|
80,105,408 |
|
70,626,554 |
|
|
- Diluted |
80,106,741 |
|
80,105,408 |
|
70,626,554 |
|
Total units outstanding at end of period |
80,105,408 |
|
80,105,408 |
|
70,626,554 |
|
1. In order to more closely align the
Partnership's presentation to that of many of its peers, the cost
of ship management services of $9.2 million for the three months
ended March 31, 2013 have been presented in vessel operating
expenses. Prior to 2013, the Company included these amounts in
general and administrative expenses. All such costs incurred in
comparative periods have been reclassified from general and
administrative expenses to vessel operating expenses to conform to
the presentation adopted in the current period. The amounts
reclassified were $10.0 million and $10.1 million for the three
months ended December 31, 2012 and March 31, 2012, respectively.
2. Restructuring charge for the quarter ended March 31, 2013
relates to the reorganization of the Partnership's marine
operations to create better alignment with its shuttle tanker
business unit. Restructuring charge for the quarter ended December
31, 2012 relates to the reorganization of the Partnership's shuttle
and conventional tanker business units.
3. The realized (losses) gains on derivative instruments
relate to the amounts the Partnership actually paid or received to
settle such derivative instruments, and the unrealized gains
(losses) on derivative instruments relate to the change in fair
value of such derivative instruments, as detailed in the table
below:
|
Three Months Ended |
|
|
March 31, 2013 |
|
December 31, 2012 |
|
March 31, 2012 |
|
Realized (losses) gains relating
to: |
|
|
|
|
|
|
|
Interest rate swaps |
(14,623 |
) |
(14,728 |
) |
(15,007 |
) |
|
Foreign currency forward contract |
353 |
|
1,104 |
|
1,198 |
|
|
(14,270 |
) |
(13,624 |
) |
(13,809 |
) |
Unrealized gains (losses)
relating to: |
|
|
|
|
|
|
|
Interest rate swaps |
14,971 |
|
44,616 |
|
24,763 |
|
|
Foreign currency forward contracts |
(1,778 |
) |
195 |
|
5,285 |
|
|
13,193 |
|
44,811 |
|
30,048 |
|
Total realized and unrealized
gains (losses) |
|
|
|
|
|
|
|
on non-designated derivative instruments |
(1,077 |
) |
31,187 |
|
16,239 |
|
4. Foreign exchange (loss) gain includes
realized gains relating to the amounts the Partnership received to
settle the Partnership's non-designated cross currency swaps that
were entered into as an economic hedge in relation to the
Partnership's Norwegian Kroner (NOK)- denominated unsecured bonds
as detailed in the table below. The Partnership issued NOK 600
million unsecured bonds in 2010 maturing in 2013 of which it
repurchased NOK 388.5 million in the first quarter of 2013 and
recognized a realized gain of $6.8 million on the partial early
termination of a cross currency swap and a realized foreign
exchange loss of $6.6 million on the repurchase of the bonds. The
Partnership also issued NOK 600 million unsecured bonds in 2012
maturing in 2017 and NOK 1,300 million of unsecured bonds in 2013
maturing in 2016 and 2018. Foreign exchange (loss) gain also
includes unrealized (losses) gains relating to the change in fair
value of such derivative instruments, partially offset by
unrealized gains (losses) on the revaluation of the NOK bonds are
also detailed in the table below:
|
Three Months Ended |
|
|
March 31, 2013 |
|
December 31, 2012 |
|
March 31, 2012 |
|
Realized gain on partial termination of cross-currency
swap |
6,800 |
|
- |
|
- |
|
Realized foreign exchange loss on partial repurchase of NOK
bonds |
(6,573 |
) |
- |
|
- |
|
Realized gains on cross-currency swaps |
725 |
|
668 |
|
994 |
|
Unrealized (losses) gains on cross-currency swaps |
(25,502 |
) |
6,835 |
|
7,880 |
|
Unrealized gains (losses) on revaluation of NOK bonds |
25,011 |
|
(6,038 |
) |
(9,031 |
) |
5. Loss on bond repurchase for the quarter
ended March 31, 2013 relates to the repurchase of NOK 388.5 million
of the Partnership's existing NOK 600 million bond issue at a
premium.
6. Results for four conventional tankers (Hamane Spirit,
Torben Spirit, Luzon Spirit and Leyte Sprit), which we sold or held
for sale during 2012, have been included in Net (loss) income from
discontinued operations for the three months ended December 31,
2012 and March 31, 2012.
TEEKAY OFFSHORE PARTNERS
L.P. |
SUMMARY
CONSOLIDATED BALANCE SHEETS |
(in thousands of U.S. dollars) |
|
As at |
As at |
|
March 31, 2013 |
December 31, 2012 |
|
(unaudited) |
(unaudited) |
ASSETS |
|
|
Cash and cash equivalents |
172,801 |
206,339 |
Vessels held for sale |
- |
13,250 |
Other current assets |
304,284 |
168,998 |
Vessels and equipment |
2,287,334 |
2,327,337 |
Advances on newbuilding
contracts |
139,628 |
127,286 |
Other assets |
66,258 |
67,541 |
Intangible assets |
14,230 |
15,527 |
Goodwill |
127,113 |
127,113 |
Total
Assets |
3,111,648 |
3,053,391 |
LIABILITIES
AND EQUITY |
|
|
Accounts payable and accrued
liabilities |
85,865 |
99,569 |
Other current liabilities |
102,470 |
108,302 |
Current portion of long-term
debt |
250,414 |
248,385 |
Long-term debt |
1,623,410 |
1,521,247 |
Other long-term liabilities |
337,551 |
341,844 |
Redeemable non-controlling
interest |
28,383 |
28,815 |
Equity: |
|
|
|
Non-controlling interests |
46,344 |
44,135 |
|
Partners' equity |
637,211 |
661,094 |
Total Liabilities and
Equity |
3,111,648 |
3,053,391 |
|
|
TEEKAY OFFSHORE PARTNERS
L.P. |
|
SUMMARY
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(in thousands of U.S. dollars) |
|
|
|
|
Year Ended |
|
|
March 31, 2013 |
|
March 31, 2012 |
|
|
(unaudited) |
|
(unaudited) |
|
Cash and cash equivalents
provided by (used for) |
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
Net operating cash flow |
46,346 |
|
71,193 |
|
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
|
Proceeds from long-term debt |
234,986 |
|
233,202 |
|
Scheduled repayments of long-term
debt |
(23,019 |
) |
(21,154 |
) |
Prepayments of long-term
debt |
(90,352 |
) |
(188,274 |
) |
Realized gain on cross currency
swap |
6,800 |
|
- |
|
Debt issuance costs |
(5,091 |
) |
(3,913 |
) |
Cash distributions paid by the
Partnership |
(44,209 |
) |
(37,801 |
) |
Cash distributions paid by
subsidiaries to non-controlling interests |
- |
|
(2,047 |
) |
Other |
(158 |
) |
884 |
|
Net
financing cash flow |
78,957 |
|
(19,103 |
) |
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
|
Prepayment of purchase price of
Voyageur Spirit FPSO |
(150,000 |
) |
- |
|
Expenditures for vessels and
equipment |
(23,785 |
) |
(2,199 |
) |
Proceeds from sale of vessels and
equipment |
13,250 |
|
- |
|
Direct financing lease payments received |
1,694 |
|
4,917 |
|
Net
investing cash flow |
(158,841 |
) |
2,718 |
|
|
|
|
|
|
(Decrease) increase in cash and
cash equivalents |
(33,538 |
) |
54,808 |
|
Cash and cash equivalents, beginning of the period |
206,339 |
|
179,934 |
|
Cash and cash equivalents, end of the
period |
172,801 |
|
234,742 |
|
|
TEEKAY OFFSHORE PARTNERS
L.P. |
APPENDIX A - SPECIFIC ITEMS AFFECTING
NET INCOME |
(in thousands of U.S. dollars) |
Set forth below is a reconciliation of the
Partnership's unaudited adjusted net income attributable to the
partners, a non-GAAP financial measure, to net income 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 Partnership's financial performance.
The items below are also typically excluded by securities analysts
in their published estimates of the Partnership's 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 |
|
|
March 31, 2013 |
|
March 31, 2012 |
|
|
(unaudited) |
|
(unaudited) |
|
Net income - GAAP basis |
21,970 |
|
54,603 |
|
Adjustments: |
|
|
|
|
Net income attributable to non-controlling interests |
(1,777 |
) |
(1,969 |
) |
Net income
attributable to the partners |
20,193 |
|
52,634 |
|
Add (subtract) specific items
affecting net income: |
|
|
|
|
|
Foreign exchange losses (1) |
4,365 |
|
3,752 |
|
|
Unrealized gains on derivative instruments (2) |
(13,193 |
) |
(30,048 |
) |
|
Termination fee (3) |
(6,800 |
) |
- |
|
|
Write-down of vessel (4) |
11,247 |
|
- |
|
|
Restructuring charge and other (5) |
821 |
|
(566 |
) |
|
Loss on bond repurchase (6) |
1,759 |
|
- |
|
|
Non-controlling interests' share of items
above (7) |
470 |
|
313 |
|
Total adjustments |
(1,331 |
) |
(26,549 |
) |
Adjusted net income attributable to the
partners |
18,862 |
|
26,085 |
|
1. Foreign exchange losses primarily relate
to the Partnership's revaluation of all foreign
currency-denominated monetary assets and liabilities based on the
prevailing exchange rate at the end of each reporting period and
unrealized gains or losses related to the Partnership's cross
currency swaps and exclude the realized gains and losses relating
to the cross currency swaps for outstanding Norwegian bonds of the
Partnership and repurchase of Norwegian kroner bonds.
2. Reflects the unrealized (gains) losses due to changes in
the mark-to-market value of interest rate swaps and foreign
exchange forward contracts that are not designated as hedges for
accounting purposes.
3. A termination fee was received from Teekay Corporation
upon the early termination of the Poul Spirit conventional tanker
time-charter contract with Teekay Corporation in March
2013.
4. The Poul Spirit conventional tanker was written down to
its estimated fair value in conjunction with the termination of its
charter contract in March 2013.
5. Other items for the three months ended March 31, 2013
include restructuring charges of $0.7 million relating to the
reorganization of the Partnership's marine operations to create
better alignment with its shuttle tanker business unit. Other items
for the three months ended March 31, 2013 and 2012 include $0.1
million and ($0.5) million relating to the revaluation of a fair
value adjustment of contingent consideration liability associated
with the purchase of the Scott Spirit shuttle tanker.
6. Loss on bond repurchase for the three months ended March
31, 2013 relates to the repurchase of NOK 388.5 million of the
Partnership's existing NOK 600 million bond issue at a premium in
January 2013.
7. Items affecting net income include items from the
Partnership's consolidated non-wholly-owned subsidiaries. The
specific items affecting net income are analyzed to determine
whether any of the amounts originated from a consolidated
non-wholly-owned subsidiary. Each amount that originates from a
consolidated non-wholly-owned subsidiary is multiplied by the
non-controlling interests' percentage share in this subsidiary to
arrive at the non-controlling interests' share of the amount. The
amount identified as "non-controlling interests' share of items
listed above" in the table above is the cumulative amount of the
non-controlling interests' proportionate share of items listed in
the table.
TEEKAY OFFSHORE PARTNERS
L.P. |
APPENDIX B - RECONCILIATION OF NON-GAAP
FINANCIAL MEASURE DISTRIBUTABLE CASH FLOW |
(in thousands of U.S. dollars) |
Description of Non-GAAP Financial Measure -
Distributable Cash Flow (DCF)
Distributable cash flow represents net income
adjusted for depreciation and amortization expense, non-controlling
interest, non-cash items, distributions relating to equity
financing of newbuilding installments, vessel acquisition costs,
estimated maintenance capital expenditures, unrealized gains and
losses from derivatives, non-cash income taxes, loss on bond
repurchase and 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 Partnership's capital
assets. Distributable cash flow is a quantitative standard used in
the publicly-traded partnership investment community to assist in
evaluating a partnership's 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 Partnership's performance required by GAAP.
The table below reconciles distributable cash flow to net income
for the quarters ended March 31, 2013 and March 31, 2012,
respectively.
|
Three Months Ended |
|
|
March 31, 2013 |
|
March 31, 2012 |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
Net income |
21,970 |
|
54,603 |
|
Add (subtract): |
|
|
|
|
|
Write-down of vessel |
11,247 |
|
- |
|
|
Depreciation and amortization |
45,349 |
|
49,192 |
|
|
Loss on bond repurchase |
1,759 |
|
- |
|
|
Non-cash item in discontinued operations(1) |
- |
|
419 |
|
|
Foreign exchange and other, net |
2,598 |
|
1,144 |
|
|
Distributions relating to equity financing of newbuilding
installments |
2,459 |
|
914 |
|
|
Estimated maintenance capital expenditures |
(24,620 |
) |
(27,673 |
) |
|
Unrealized gains on non-designated derivative
instruments (2) |
(13,193 |
) |
(30,048 |
) |
Distributable Cash Flow before
Non-Controlling Interests |
47,569 |
|
48,551 |
|
|
Non-controlling interests' share of DCF |
(5,813 |
) |
(6,127 |
) |
Distributable Cash Flow |
41,756 |
|
42,424 |
|
-
Includes depreciation included within discontinued
operations.
-
Derivative instruments include interest rate swaps
and foreign exchange forward contracts.
TEEKAY OFFSHORE PARTNERS
L.P. |
APPENDIX C - RECONCILIATION OF NON-GAAP
FINANCIAL MEASURE NET REVENUES |
(in thousands of U.S. dollars) |
Description of Non-GAAP
Financial Measure - Net Revenues
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, however, it is not required by GAAP and should
not be considered as an alternative to revenues or any other
indicator of the Partnership's performance required by GAAP.
|
Three Months Ended March 31,
2013 |
|
(unaudited) |
|
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO Segment |
|
Total |
Revenues |
130,350 |
57,685 |
21,247 |
15,140 |
|
224,422 |
Voyage expenses (recoveries) |
22,294 |
- |
1,417 |
(485 |
) |
23,226 |
Net revenues |
108,056 |
57,685 |
19,830 |
15,625 |
|
201,196 |
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2012 |
|
(unaudited) |
|
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO Segment |
|
Total |
Revenues |
144,927 |
57,759 |
15,766 |
15,025 |
|
233,477 |
Voyage expenses |
27,155 |
- |
3,413 |
340 |
|
30,908 |
Net revenues |
117,772 |
57,759 |
12,353 |
14,685 |
|
202,569 |
|
TEEKAY OFFSHORE PARTNERS
L.P. |
APPENDIX D
- SUPPLEMENTAL SEGMENT INFORMATION |
(in thousands of U.S. dollars) |
|
|
Three Months Ended March 31,
2013 |
|
(unaudited) |
|
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO Segment |
Total |
Net revenues (1) |
108,056 |
57,685 |
19,830 |
15,625 |
201,196 |
Vessel operating expenses(2) |
37,967 |
29,501 |
3,362 |
8,285 |
79,115 |
Time-charter hire expense |
14,777 |
- |
- |
- |
14,777 |
Depreciation and amortization |
27,605 |
12,752 |
2,410 |
2,582 |
45,349 |
General and administrative(2) |
5,889 |
3,062 |
948 |
766 |
10,665 |
Write-down of vessel |
- |
- |
11,247 |
- |
11,247 |
Restructuring charge |
659 |
- |
- |
- |
659 |
Income from vessel operations |
21,159 |
12,370 |
1,863 |
3,992 |
39,384 |
|
|
|
|
|
|
|
Three Months Ended March 31,
2012 |
|
(unaudited) |
|
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO Segment |
Total |
Net revenues(1) |
117,772 |
57,759 |
12,353 |
14,685 |
202,569 |
Vessel operating expenses(2) |
43,226 |
24,743 |
3,153 |
7,348 |
78,470 |
Time-charter hire expense |
13,617 |
- |
- |
- |
13,617 |
Depreciation and amortization |
31,371 |
12,726 |
2,837 |
2,258 |
49,192 |
General and administrative(2) |
5,202 |
2,471 |
1,013 |
492 |
9,178 |
Income from vessel operations |
24,356 |
17,819 |
5,350 |
4,587 |
52,112 |
1. Net revenues is a non-GAAP financial
measure used by certain investors to measure the financial
performance of shipping companies. Please refer to Appendix C
included in this release for a reconciliation of this non-GAAP
measure to the most directly comparable GAAP financial
measure.
2. In order to more closely align the Partnership's
presentation to that of its peers, the cost of ship management
services of $9.2 million for the three months ended March 31, 2013
has been presented in vessel operating expenses. All such costs
incurred in comparative periods have been reclassified from general
and administrative expenses to vessel operating expenses to conform
to the presentation adopted in the current period. The amounts
reclassified were $10.0 million and $10.1 million for the three
months ended December 31, 2012 and March 31, 2012,
respectively.
TEEKAY OFFSHORE PARTNERS
L.P. |
APPENDIX E - RECONCILIATION OF NON-GAAP
FINANCIAL MEASURE |
CASH FLOW FROM VESSEL
OPERATIONS |
(in thousands of U.S. dollars) |
Description of Non-GAAP Financial Measure - Cash
Flow from Vessel Operations
Cash flow from vessel operations represents income
from vessel operations before depreciation and amortization expense
and amortization of in-process revenue contracts and write-down of
vessel, but includes the realized gains (losses) on the settlement
of foreign exchange forward contracts, cash flow from discontinued
operations 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. Cash flow from vessel operations
is not required by GAAP and should not be considered as an
alternative to net income or any other indicator of the
Partnership's performance required by GAAP.
|
Three Months Ended March 31,
2013 |
|
|
(unaudited) |
|
|
Shuttle Tanker Segment |
|
FPSO Segment |
|
Conventional Tanker
Segment |
FSO Segment |
|
Total |
|
Income from vessel operations (See Appendix D) |
21,159 |
|
12,370 |
|
1,863 |
3,992 |
|
39,384 |
|
Depreciation and amortization |
27,605 |
|
12,752 |
|
2,410 |
2,582 |
|
45,349 |
|
Unrealized losses from the change in fair value of designated
foreign exchange forward contracts |
59 |
|
- |
|
- |
- |
|
59 |
|
Realized gains from the settlements of non-designated foreign
exchange forward contracts |
96 |
|
257 |
|
- |
- |
|
353 |
|
Amortization of intangible and non cash portion of revenue
contracts |
- |
|
(3,123 |
) |
- |
- |
|
(3,123 |
) |
Write-down of vessel |
- |
|
- |
|
11,247 |
- |
|
11,247 |
|
Falcon Spirit revenue accounted for as direct financing
lease |
- |
|
- |
|
- |
(1,339 |
) |
(1,339 |
) |
Falcon Spirit cash flow from time-charter contracts |
- |
|
- |
|
- |
2,123 |
|
2,123 |
|
Cash flow from vessel
operations |
48,919 |
|
22,256 |
|
15,520 |
7,358 |
|
94,053 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2012 |
|
|
(unaudited) |
|
|
Shuttle Tanker Segment |
|
FPSO Segment |
|
Conventional Tanker
Segment |
FSO Segment |
|
Total |
|
Income from vessel operations (See Appendix D) |
24,356 |
|
17,819 |
|
5,350 |
4,587 |
|
52,112 |
|
Depreciation and amortization |
31,371 |
|
12,726 |
|
2,837 |
2,258 |
|
49,192 |
|
Unrealized gains from the change in fair value of designated
foreign exchange forward contracts |
(20 |
) |
- |
|
- |
- |
|
(20 |
) |
Realized gains from the settlements of non-designated foreign
exchange forward contracts |
1,061 |
|
137 |
|
- |
- |
|
1,198 |
|
Amortization of intangible and non cash portion of revenue
contracts |
- |
|
(3,093 |
) |
- |
- |
|
(3,093 |
) |
Falcon Spirit revenue accounted for as direct financing
lease |
- |
|
- |
|
- |
(1,463 |
) |
(1,463 |
) |
Falcon Spirit cash flow from time-charter contracts |
- |
|
- |
|
- |
2,104 |
|
2,104 |
|
Cash flow from discontinued operations |
- |
|
- |
|
2,053 |
- |
|
2,053 |
|
Cash flow from vessel
operations |
56,768 |
|
27,589 |
|
10,240 |
7,486 |
|
102,083 |
|
|
FORWARD LOOKING
STATEMENTS |
This release contains forward-looking statements
(as defined in Section 21E of the Securities Exchange Act of 1934,
as amended) which reflect management's current views with respect
to certain future events and performance, including statements
regarding: factors affecting the future growth of the Partnership's
distributable cash flow and adjusted net income, including expected
contributions from the Voyageur Spirit FPSO, the shuttle tanker
newbuildings expected to deliver in 2013 and the Partnership's
potential acquisition of a 50 percent interest in the Cidade de
Itajai FSPO; the timing and certainty of the Partnership's
acquisition of a 50 percent interest in the Cidade de Itajai FPSO;
the timing and certainty of the Partnership's acquisition of a
HiLoad DP unit from Remora and timing of the commencement of its
10-year time-charter contract with Petroleo Brasileiro SA; the
potential for the Partnership to acquire future HiLoad projects
developed by Remora; the timing of and cost of converting the
Navion Clipper into an FSO unit and the timing of the commencement
of its 10-year charter contract with Salamander; the potential for
Teekay Corporation to offer additional vessels to the Partnership
and the Partnership's acquisition of any such vessels, including
the Petrojarl Foinaven, the Hummingbird Spirit and the newbuilding
FPSO unit that will service the Knarr field under contract with BG
Norge Limited; the timing of delivery of vessels under construction
or conversion; the timing, amount and certainty of future increases
to the Partnership's quarterly cash distribution, including the
intention to increase the Partnership's cash distribution by at
least another 2.5 percent later in 2013; and the potential for the
Partnership to acquire other vessels or offshore projects from
Teekay Corporation or directly from third parties.
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; significant changes in oil prices;
variations in expected levels of field maintenance; increased
operating expenses; different-than-expected levels of oil
production in the North Sea and Brazil offshore fields; potential
early termination of contracts; potential delays to the
commencement of the BG shuttle tanker time-charters; failure of
Teekay Corporation to offer to the Partnership additional vessels;
the inability of the joint venture between Teekay Corporation and
Odebrecht to secure new Brazil FPSO projects that may be offered
for sale to the Partnership; the inability of Remora to develop
future HiLoad DP units; failure to obtain required approvals by the
Conflicts Committee of Teekay Offshore's general partner to approve
the acquisition of vessels offered from Teekay Corporation,
including the Cidade de Itajai FPSO, or third parties; the
Partnership's ability to raise adequate financing to purchase
additional assets; 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, 2012. 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.
Contact
Information
Contacts:
Teekay Offshore Partners L.P.
Kent Alekson
Investor Relations Enquiries
+1 (604) 609-6442
www.teekayoffshore.com
This
announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Teekay Offshore Partners L.P. via Thomson Reuters
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