Teekay Offshore Agrees to Acquire 50 Percent Interest in the Cidade De Itajai FPSO Unit for Approximately $204 Million
May 29 2013 - 9:00AM
Marketwired
Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership)
(NYSE:TOO) today announced that it has agreed to acquire a 50
percent interest in the Cidade de Itajai (Itajai) floating
production, storage and offloading (FPSO) unit from Teekay
Corporation (Teekay) for a purchase price of approximately $204
million. The acquisition will be financed with assumed debt and
proceeds from the recently completed equity private placement. The
acquisition is expected to be completed on June 1, 2013, subject to
customary closing conditions. The Itajai FPSO is operating on the
Bauna and Piracaba (previously named Tiro and Sidon) fields in the
Santos Basin offshore Brazil under a nine-year fixed-rate
time-charter contract (plus extension options) with Petroleo
Brasileiro SA (Petrobras). The remaining 50 percent interest in the
Itajai FPSO is owned by Brazilian-based Odebrecht Oil & Gas
S.A.
The Partnership's 50 percent interest in the Itajai FPSO unit,
which will be equity accounted for, is expected to generate annual
Cash Flow from Vessel Operations(1) of approximately $25 million,
and annual Distributable Cash Flow(2) of approximately $14
million.
"We are pleased to be completing another strategic FPSO
acquisition, our second to-date in 2013, which will bring the
Partnership's total FPSO fleet size to five units," commented Peter
Evensen, Chief Executive Officer of Teekay Offshore GP LLC. "The
Itajai FPSO will add to our growing FPSO franchise in Brazil, where
we currently own and operate two other FPSO units, and further
builds on our strong relationship with Petrobras. In addition, the
stable fixed-rate cash flow contributed from the Itajai FPSO will
be accretive to the Partnership's distributable cash flow."
The Board of Directors of the Partnership's general partner and
its Conflicts Committee have approved the transaction. The
Conflicts Committee retained independent legal and financial
advisors to assist in evaluating the transaction.
1. Cash flow from vessel operations from equity accounted vessels
represents income from vessel operations before depreciation and
amortization expense, amortization of in-process revenue contracts and
includes adjustments for direct financing leases to a cash basis. Cash
flow from vessel operations from equity accounted vessels is included
because certain investors use cash flow from vessel operations to
measure a company's financial performance, and to highlight this measure
for the Partnership's equity-accounted joint ventures. Cash flow from
vessel operations from equity accounted vessels is not required by
United States generally accepted accounting principles (GAAP) and should
not be considered as an alternative to equity income or any other
indicator of the Partnership's performance required by GAAP.
2. 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 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.
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 35 shuttle tankers (including four chartered-in
vessels and three committed newbuildings), five floating
production, storage and offloading (FPSO) units, seven floating
storage and offtake (FSO) units (including two committed FSO
conversions) and five 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".
FORWARD LOOKING STATEMENTS
This release contains forward-looking statements (as defined in
Section 21E of the Securities Exchange Act of 1934, as amended)
which reflect management's current views with respect to certain
future events and performance, including statements regarding: the
timing, certainty and effect of the completion of the acquisition
of a 50 percent interest in the Itajai FPSO unit, including the
form of financing the acquisition; and the effect of the potential
acquisition on the Partnership's cash flow from vessel operations
and distributable cash flow. The following factors are among those
that could cause actual results to differ materially from the
forward-looking statements, which involve risks and uncertainties,
and that should be considered in evaluating any such statement:
potential failure of the proposed acquisition to be completed;
potential early termination of the contract between the Partnership
and Petrobras and inability to replace this contract; greater than
expected levels of operating expenses or less than expected oil
production by the FPSO unit; 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.
Contacts: Teekay Offshore Partners L.P. Kent Alekson Investor
Relations Enquiries +1 (604) 609-6442 www.teekayoffshore.com
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