HAMILTON,
BERMUDA--(Marketwired - Aug. 8, 2013) - Highlights
- Generated distributable cash flow(1) of
$43.0 million in the second quarter of 2013.
- Completed acquisition of Voyageur Spirit FPSO unit from Teekay Corporation
for $540 million.
- Completed acquisition of a 50 percent interest
in Cidade de Itajai FPSO unit from
Teekay Corporation for $204 million.
- First two BG Shuttle Tanker newbuildings
delivered in May and June 2013.
- Awarded contract with Statoil to convert an
existing shuttle tanker to an FSO unit.
- Liquidity of approximately $487 million as at
June 30, 2013, pro forma for debt refinancing of Varg FPSO completed in July 2013.
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 June 30, 2013. During the second quarter of 2013, the
Partnership generated distributable cash flow(1) of
$43.0 million, compared to $54.2 million in the same period of the
prior year.
On July 12, 2013, a cash distribution of $0.5253
per common unit was declared for the quarter ended June 30, 2013.
The cash distribution is payable on August 9, 2013 to all
unitholders of record on July 23, 2013.
"During the second and third quarters of 2013
to-date, the Partnership completed a number of acquisitions, vessel
deliveries and new contracts which the Partnership expects will all
contribute to Teekay Offshore's future distributable cash flow
growth," commented Peter Evensen, Teekay Offshore GP LLC's Chief
Executive Officer. "In May and June 2013, respectively, we
completed the accretive acquisitions of the Voyageur Spirit FPSO
and a 50 percent interest in the Cidade de Itajai FPSO, bringing
the Partnership's total FPSO fleet count to five units. Although
issues were encountered in achieving full production on the
Voyageur Spirit related to gas compression equipment, our sponsor,
Teekay Corporation, will indemnify the Partnership for loss of
revenues resulting from the delay in achieving final acceptance by
the charterer. This indemnification will effectively be applied as
reduction to the $540 million purchase price the Partnership paid
to Teekay Corporation to acquire the Voyageur Spirit FPSO and will
not impact the Partnership's distributable cash flow. For the
second quarter of 2013, the amount of the purchase price adjustment
was approximately $12.5 million. Since April 13, 2013, the Voyageur
Spirit FPSO has been operating at partial production levels and is
expected to reach full capacity levels during August 2013."
Mr. Evensen continued, "During the second quarter,
the Partnership also took delivery of the first two of four BG
shuttle tanker newbuildings, the Samba
Spirit and Lambada Spirit,
with the remaining two BG shuttle tanker newbuildings,
the Bossa Nova
Spirit and Sertanejo Spirit,
which recently secured long-term debt financing, scheduled for
delivery in September and November of 2013. In addition, in May
2013, we were awarded a contact with Statoil Petroleum AS to
convert the 1995-built shuttle tanker, the Randgrid, to an FSO unit. The converted FSO unit will
operate on the Gina Krog oil and gas field in the North Sea under a
new three-year charter contract, plus 12 additional one-year
extension options, commencing in the first quarter of 2017."
Mr. Evensen continued, "Looking ahead, Teekay
Offshore continues to bid on new FPSO projects and are currently
working on three customer-funded Front-end Engineering and Design,
or FEED, studies. In addition, through our relationship with Remora
AS, we are also engaged in a FEED study to develop the next
generation of DP HiLoad offtake units."
(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 floating production, storage and
offloading (FPSO) unit from Teekay Corporation for a purchase price
of $540 million. The Voyageur Spirit FPSO unit has been contracted
by E.ON Ruhrgas UK E&P Limited (E.ON) to operate on the
Huntington Field in the North Sea under a five-year time-charter,
plus up to 10 one-year extension options. The acquisition has been
financed with a new $330 million debt facility secured by the FPSO
unit, a portion of the proceeds from the public offering completed
in September 2012, and an equity private placement of common units
to Teekay Corporation completed in May 2013.
On April 13, 2013, the Voyageur Spirit FPSO unit
achieved first oil and began production. The charter contract with
E.ON required the FPSO unit to achieve full production capability
within a specified time period to receive final acceptance from
E.ON. Due to a defective gas compressor on board the unit, the FPSO
unit was unable to achieve final acceptance within the allowable
timeframe, resulting in the FPSO unit being declared off-hire by
the charterer retroactive to April 13, 2013. Under the Voyageur
Spirit FPSO sale and purchase agreement between Teekay Corporation
and Teekay Offshore, since Teekay Offshore acquired the Voyageur
Spirit, Teekay Corporation warranted that the FPSO unit would be
accepted by the charterer and agreed to indemnify Teekay Offshore
for loss of revenue under the charter with E.ON from the date of
acquisition until final acceptance is achieved, up to a maximum of
$54 million. For the period from May 2, 2013 to June 30, 2013, the
indemnification effectively resulted in a reduction to the Voyageur
Spirit FPSO purchase price of approximately $12.5 million.
The Partnership now expects the Voyageur Spirit
FPSO to reach full production capacity in mid-August and achieve
final acceptance by the end of August 2013. Teekay Corporation
intends to enter into commercial negotiations with the charterer to
seek compensation for the services provided by the FPSO unit to
E.ON during the period prior to final acceptance since the FPSO has
been operating and producing oil at partial production levels
throughout the period since April 13, 2013.
Any amounts relating to the indemnification from
Teekay Corporation to Teekay Offshore will be effectively treated
as a reduction in the purchase price paid by Teekay Offshore. In
addition, any compensation received from the charterer during the
indemnification period will reduce the amount of Teekay
Corporation's indemnification to Teekay Offshore. Although the
Partnership's reported revenues will be lower as a result of any
off-hire relating to the Voyageur Spirit FPSO, there is no net
impact on the Partnership's cash flows as a result of the Teekay
Corporation indemnification.
Acquisition of a 50 Percent Interest in Cidade de Itajai
FPSO
In June 2013, the Partnership completed the
acquisition of a 50 percent interest in the Cidade de Itajai (Itajai)
FPSO unit from Teekay Corporation for a purchase price of $204
million. The Itajai FPSO has been
operating on the Baúna and Piracaba (previously named Tiro and
Sidon) fields in the Santos Basin offshore Brazil since February
2013 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 unit is owned by
Brazilian-based Odebrecht Oil & Gas S.A. (a member of the
Odebrecht group) (Odebrecht). The
acquisition was financed with the assumption of 50% of the joint
venture's outstanding debt of approximately $290 million and
approximately $54 million with proceeds from the equity private
placement completed in April 2013.
Statoil
FSO Contract
In May 2013, the Partnership entered into an
agreement with Statoil Petroleum AS (Statoil), on behalf of the
field license partners, to provide a floating storage and offtake
(FSO) unit for the Gina Krog oil and gas field located in the North
Sea. The contract will be serviced by a new FSO unit converted from
the 1995-built shuttle tanker, Randgrid, which the Partnership
currently owns through a 67 percent-owned subsidiary. The FSO
conversion project is expected to be completed for a net capital
cost of approximately $220 million, including the cost of acquiring
the remaining 33 percent ownership interest in the Randgrid shuttle
tanker. Following scheduled completion in early 2017, the newly
converted FSO unit will commence operations under a three-year firm
period time-charter contract to Statoil, which includes 12
additional one-year extension options.
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 will 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 August 1, 2013.
|
Number of Vessels |
|
Owned
Vessels |
|
Chartered-in Vessels |
|
Committed Newbuildings
/
Conversions |
|
Conversion
Candidates (iii) |
|
Total |
Shuttle Tanker Segment |
29(i) |
|
4 |
|
2(ii) |
|
1 |
|
36 |
FPSO Segment |
5(iv) |
|
- |
|
- |
|
- |
|
5 |
Conventional Tanker
Segment |
5 |
|
- |
|
- |
|
- |
|
5 |
FSO Segment |
5 |
|
- |
|
1(v) |
|
- |
|
6 |
Total |
44 |
|
4 |
|
3 |
|
1 |
|
52 |
-
Includes six shuttle tankers in which Teekay
Offshore's ownership interest is 50 percent and two shuttle tankers
in which Teekay Offshore's ownership interest is 67 percent. One of
the 67 percent owned shuttle tankers, the Randgrid, will be converted to an FSO unit for the
Statoil project after its current charter contract expires in
2015.
-
Includes two shuttle tanker newbuildings expected
to deliver in September 2013 and November 2013 and to commence
operations under 10-year charter contracts with a subsidiary of BG
Group plc in Brazil.
-
Includes one shuttle tanker which is currently in
lay-up and is a candidate for conversion to an offshore
asset.
-
Includes one FPSO unit in which Teekay Offshore's
ownership interest is 50 percent.
-
Includes the Navion
Clipper shuttle tanker, which is currently being
converted into an FSO unit and is expected to commence operations
under a 10-year charter contract in the third quarter of 2014 with
Salamander Energy plc.
Other 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 (the BG Shuttle Tankers),
constructed by Samsung Heavy Industries for an estimated total cost
of approximately $446 million (excluding capitalized interest and
miscellaneous construction costs). The BG Shuttle Tankers will
operate under ten-year, fixed-rate time-charter-out contracts,
which include certain extension options and vessel purchase options
exercisable by the charterer. In May 2013, the Partnership took
delivery of the Samba Spirit, the first
of the four shuttle tanker newbuildings, which commenced its
time-charter contract with BG in late June 2013. In June 2013, the
Partnership took delivery of the Lambada
Spirit, the second of the four shuttle tanker newbuildings,
which will commence its time-charter contract with BG in August
2013. The remaining two shuttle tanker newbuildings, which recently
received financing commitments through a ten-year senior secured
private placement, are scheduled to be delivered in September 2013
and November 2013, respectively.
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, was completed in August 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. In July 2013, Remora was awarded a contract by
BG Brasil to perform a FEED study to develop the next generation of
HiLoad DP units. The design, which is based on the main parameters
of the first generation design, will include new features, such as
increased engine power and the capability to maneuver vessels
larger than Suezmax conventional tankers.
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.
Pursuant to the omnibus agreement and subsequent
agreements, Teekay Corporation is obligated to offer to sell to the
Partnership thePetrojarl 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, 2014.
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 mid-2014.
In November 2011, Teekay Corporation acquired from
Sevan Marine ASA, a Norway-based developer of cylindrical-shaped
FPSO units, theHummingbird 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
$9.7 million for the quarter ended June 30, 2013, compared to $20.6
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 $47.9 million
and decreasing net income by $32.8 million for the quarters ended
June 30, 2013 and June 30, 2012, respectively, as detailed
in Appendix A to this release.
Including these items, the Partnership reported, on a GAAP basis,
net income attributable to the partners of $57.6 million for the
second quarter of 2013, compared to a net loss of $12.1 million in
the same period of the prior year. Net revenues(2) increased
to $199.1 million for the second quarter of 2013, compared to
$190.5 million in the same period of the prior year.
The Partnership reported adjusted net income
attributable to the partners(1) of
$28.6 million for the six months ended June 30, 2013, compared to
$46.7 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 $49.2
million and decreasing net income by $6.2 million for the six
months ended June 30, 2013 and June 30, 2012, respectively, as
detailed in Appendix A to this
release. Including these items, the Partnership reported, on a GAAP
basis, net income attributable to the partners of $77.7 million for
the six months ended June 30, 2013, compared to $40.5 million in
the same period of the prior year. Net revenues(2) for
the six months ended June 30, 2013 was $388.3 million, which is
consistent with the same period of the prior year.
(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 |
Adjusted net income attributable to the partners
for the three and six months ended June 30, 2013 declined from the
same periods in the prior year, mainly due to the Voyageur Spirit FPSO off-hire discussed elsewhere
in this release and the sale and lay-up of older shuttle and
conventional tankers during 2012 and 2013 as their related charter
contracts expired or terminated. In addition, there is a higher
level of maintenance activity in the FPSO fleet during the first
six months of 2013. Given the delay in the achieving final
acceptance for the Voyageur
Spirit FPSO unit, the Partnership has not recorded the
revenues associated with its operations in the second quarter;
however, $12.5 million has been reimbursed by our sponsor, Teekay
Corporation, which is recorded in equity as an adjustment to the
purchase price. As a result of the indemnification from Teekay
Corporation, there is no net impact on the Partnership's cash flows
relating to the Voyageur
Spirit FPSO off-hire.
Adjusted net income is expected to increase during
the latter half of 2013 when the Voyageur
Spirit reaches final acceptance and the four shuttle
tanker newbuildings begin their time-charter contracts in
Brazil.
For accounting purposes, the Partnership is
required to recognize, through the consolidated statements of
income (loss), 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.
The Partnership has recast its financial results
to include the results of the Voyageur
Spirit FPSO unit relating to the period prior to its
acquisition by the Partnership from Teekay when it was under common
control, 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 Partnership's financial statements are retroactively
adjusted to include the historical results of the acquired vessels
from the date the vessel was originally under the control of
Teekay. For these purposes, the Voyageur
SpiritFPSO was under common control by Teekay from April 13,
2013 to May 2, 2013, when it was sold to the Partnership.
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 |
|
June 30, 2013 |
|
(unaudited) |
(in thousands of U.S.
dollars) |
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO
Segment |
Total |
Net revenues(1) |
110,947 |
65,260 |
7,879 |
15,053 |
199,139 |
Vessel operating expenses |
36,511 |
40,074 |
1,619 |
8,315 |
86,519 |
Time-charter hire expense |
14,093 |
- |
- |
- |
14,093 |
Depreciation and amortization |
28,165 |
17,789 |
1,568 |
2,743 |
50,265 |
CFVO from consolidated vessels(2) |
54,422 |
17,234 |
11,810 |
6,749 |
90,215 |
CFVO from equity accounted vessel(3) |
- |
1,311 |
- |
- |
1,311 |
Total CFVO(2) |
54,422 |
18,545 |
11,810 |
6,749 |
91,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
June 30, 2012 |
(unaudited) |
(in thousands of U.S.
dollars) |
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO
Segment |
Total |
Net revenues(1) |
111,598 |
56,317 |
7,765 |
14,781 |
190,461 |
Vessel operating expenses |
39,653 |
28,203 |
1,556 |
6,986 |
76,398 |
Time-charter hire expense |
12,969 |
- |
- |
- |
12,969 |
Depreciation and amortization |
31,944 |
12,727 |
1,715 |
2,001 |
48,387 |
CFVO from consolidated vessels(2) |
54,283 |
22,329 |
25,192 |
8,010 |
109,814 |
(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) |
Cash flow from vessel operations (CFVO) from consolidated vessels represents income from
vessel operations before depreciation and amortization expense,
write-down of vessels and amortization of deferred gains, includes
the realized gains (losses) on the settlement of foreign exchange
forward contracts and cash flow from vessel operations relating to
its discontinued operations and excludes the cash flow from vessel
operations relating to the Partnership's Dropdown Predecessor and
adjusting for direct financing leases to a cash basis. CFVO is a
non-GAAP financial measure used by certain investors to measure the
financial performance of shipping companies. Please refer
to Appendix E included in this
release for a description and reconciliation of this non-GAAP
measure to the most directly comparable GAAP financial
measure. |
(3) |
The Partnership's equity accounted investment for the three
months ended June 30, 2013 reflects the Partnership's 50 percent
interest in the Itajai FPSO unit.
Please see Appendix F for a
description and reconciliation of CFVO from equity accounted
vessels (a non-GAAP measure) as used in this release to the most
directly comparable GAAP financial measure. |
Shuttle Tanker
Segment
Cash flow from vessel operations from the
Partnership's Shuttle Tanker segment in the second quarter of 2013
of $54.4 million was comparable with the $54.3 million generated in
the second quarter of 2012. Higher revenues from increased rates on
both time-charter and contract of affreightment contracts as well
as new contracts were partially offset by the lay-up of
the Navion Torinita and
the Navion Clipperupon expiration of
their time-charter contracts in the second and fourth quarters of
2012, respectively, and the sales of the Navion Fennia andNavion
Savonita in the third and fourth quarters of 2012,
respectively.
FPSO Segment
Cash flow from vessel operations from the
Partnership's FPSO segment, including the equity-accounted vessel,
decreased to $18.5 million for the second quarter of 2013 compared
to $22.3 million for the same period of the prior year, primarily
due to the higher maintenance costs and higher crew wages,
partially offset by cash flow from the Itajai FPSO.
Conventional Tanker
Segment
Cash flow from vessel operations from the
Partnership's Conventional Tanker segment decreased to $11.8
million in the second quarter of 2013 compared to $25.2 million for
the same period of the prior year primarily due to a $14.7 million
termination fee received from Teekay Corporation in the second
quarter of 2012 for the termination of the time-charter contract
for the Hamane Spirit as well as
the sale of five conventional tankers during the past twelve
months. This was partially offset by a $4.5 million termination fee
received in the second quarter of 2013 for the termination of
the Gotland Spirit time-charter
contract with Teekay Corporation.
FSO Segment
Cash flow from vessel operations from the
Partnership's FSO segment in the second quarter of 2013 decreased
to $6.7 million compared from $8.0 million generated in the same
period of the prior year primarily due to higher vessel operating
expenditures related to an underwater inspection of
the Dampier Spirit, as well as an
increase in crewing costs in the FSO fleet.
Liquidity and Continuous
Offering Program Update
In May 2013, the Partnership implemented a
continuous offering program (COP) under
which the Partnership may issue new common units, representing
limited partner interests, at market prices up to maximum aggregate
amount of $100 million. Through June 30, 2013, the Partnership sold
an aggregate of 85,508 common units under the COP, generating
proceeds of approximately $2.7 million (including the Partnership's
general partner's 2 percent proportionate capital contribution and
net of offering costs). The net proceeds from the issuance of these
common units were used for general partnership purposes.
As of June 30, 2013, the Partnership had total
liquidity of $286.7 million, which consisted of $163.7 million in
cash and cash equivalents and $123.0 million in undrawn revolving
credit facilities. Including the $200 million revolving credit
facility relating to the Varg FPSO
completed in July 2013, the Partnership had total liquidity of
approximately $487 million as at June 30, 2013.
Conference Call
The Partnership also plans to host a conference
call on Friday, August 9, 2013 at noon (ET) to discuss the results
for the second 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 2823263.
- 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 Second 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, August 16, 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 2823263.
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 two committed newbuildings), five
floating production, storage and offloading (FPSO) units, six floating storage and offtake
(FSO) units (including one FSO unit under
conversion) 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."
TEEKAY OFFSHORE PARTNERS
L.P. |
SUMMARY
CONSOLIDATED STATEMENTS OF INCOME (LOSS) |
(in thousands of U.S. dollars, except unit data) |
|
Three Months Ended |
|
Six months ended |
|
|
June 30, 2013(1) |
|
March 31, 2013 |
|
June 30, 2012 |
|
June 30, 2013(1) |
|
June 30, 2012 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
REVENUES |
222,412 |
|
212,112 |
|
224,158 |
|
434,524 |
|
451,506 |
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
Voyage expenses |
23,273 |
|
22,948 |
|
33,697 |
|
46,221 |
|
63,214 |
|
Vessel operating expenses (2) |
86,519 |
|
77,324 |
|
76,398 |
|
163,843 |
|
153,258 |
|
Time-charter hire expense |
14,093 |
|
14,777 |
|
12,969 |
|
28,870 |
|
26,586 |
|
Depreciation and amortization |
50,265 |
|
44,510 |
|
48,387 |
|
94,775 |
|
96,391 |
|
General and administrative (2) |
10,417 |
|
10,390 |
|
8,706 |
|
20,807 |
|
17,630 |
|
Write-down of vessels |
- |
|
- |
|
1,048 |
|
- |
|
1,048 |
|
Restructuring charge(3) |
1,395 |
|
659 |
|
- |
|
2,054 |
|
- |
|
Total operating expenses |
185,962 |
|
170,608 |
|
181,205 |
|
356,570 |
|
358,127 |
|
Income from vessel
operations |
36,450 |
|
41,504 |
|
42,953 |
|
77,954 |
|
93,379 |
|
OTHER ITEMS |
|
|
|
|
|
|
|
|
|
|
Interest expense |
(16,035 |
) |
(11,628 |
) |
(12,267 |
) |
(27,663 |
) |
(24,782 |
) |
Interest income |
1,465 |
|
195 |
|
138 |
|
1,660 |
|
350 |
|
Realized and unrealized gains (losses) |
|
|
|
|
|
|
|
|
|
|
on derivative instruments (4) |
33,901 |
|
(1,077 |
) |
(60,317 |
) |
32,824 |
|
(44,078 |
) |
Equity income |
1,598 |
|
- |
|
- |
|
1,598 |
|
- |
|
Foreign exchange gains (losses)(5) |
3,555 |
|
(3,638 |
) |
888 |
|
(83 |
) |
(1,872 |
) |
Loss on bond repurchase(6) |
- |
|
(1,759 |
) |
- |
|
(1,759 |
) |
- |
|
Other income (expense) - net |
260 |
|
314 |
|
(119 |
) |
574 |
|
1,278 |
|
Total other items |
24,744 |
|
(17,593 |
) |
(71,677 |
) |
7,151 |
|
(69,104 |
) |
Income from continuing operations before income tax (expense)
recovery |
61,194 |
|
23,911 |
|
(28,724 |
) |
85,105 |
|
24,275 |
|
Income tax (expense) recovery |
(456 |
) |
234 |
|
1,946 |
|
(222 |
) |
461 |
|
Net income (loss) from continuing operations |
60,738 |
|
24,145 |
|
(26,778 |
) |
84,883 |
|
24,736 |
|
Net (loss) income from discontinued operations(7) |
(2,134 |
) |
(2,175 |
) |
15,149 |
|
(4,309 |
) |
18,238 |
|
Net income (loss) |
58,604 |
|
21,970 |
|
(11,629 |
) |
80,574 |
|
42,974 |
|
Non-controlling interests in net income (loss) |
3,274 |
|
1,777 |
|
499 |
|
5,051 |
|
2,468 |
|
Dropdown Predecessor's interest in net income
(loss) (1) |
(2,225 |
) |
- |
|
- |
|
(2,225 |
) |
- |
|
General Partner's interest in net income (loss)(8) |
3,833 |
|
3,073 |
|
1,808 |
|
6,906 |
|
4,863 |
|
Limited partners' interest in net income (loss)(8) |
51,909 |
|
17,120 |
|
(13,936 |
) |
69,029 |
|
35,643 |
|
Weighted-average number of common units - basic |
82,726,359 |
|
80,105,408 |
|
70,626,554 |
|
81,423,123 |
|
70,626,554 |
|
Weighted-average number of common units -diluted |
82,742,751 |
|
80,106,741 |
|
70,626,554 |
|
81,432,027 |
|
70,626,554 |
|
(1) |
Results for the Voyageur
Spirit FPSO unit for the period beginning in April 13,
2013 prior to its acquisition by the Partnership on May 2, 2013
when it was owned and operated by Teekay Corporation, are included
in the Dropdown Predecessor. The
amounts included in this release related to the Dropdown
Predecessor are preliminary, and will be finalized for inclusion in
the Partnership's Form 6-K filing for the quarter ended June 30,
2013. Any revisions to the preliminary Dropdown Predecessor figures
are only expected to impact the accounting for the periods prior to
the date the Voyageur Spirit FPSO
unit was acquired by the Partnership, and therefore will have no
effect on the adjusted net income attributable to the partners or
distributable cash flow of the Partnership for any period,
including the second quarter of 2013. |
(2) |
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 and $8.6
million and $17.7 million for the three and six months ended June
30, 2013, respectively, have been presented in vessel operating
expenses. Prior to 2013, the Partnership 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 $9.3 million and $19.3 million for the three and
six months ended June 30, 2012, respectively. |
(3) |
Restructuring charge for the three and six months ended June
30, 2013 relates to the reorganization of the Partnership's marine
operations to create better alignment with its shuttle tanker and
conventional tanker business units. |
(4) |
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 |
|
Six months
ended |
|
|
June 30, 2013 |
|
March 31, 2013 |
|
June 30, 2012 |
|
June 30, 2013 |
|
June 30,
2012 |
|
Realized (losses) gains relating to: |
|
|
|
|
|
|
|
|
|
|
|
Interest
rate swaps |
(14,956 |
) |
(14,623 |
) |
(14,338 |
) |
(29,579 |
) |
(29,345 |
) |
|
Termination of interest rate swap in Dropdown Predecessor |
(4,099 |
) |
- |
|
- |
|
(4,099 |
) |
- |
|
|
Foreign
currency forward contract |
(1,646 |
) |
353 |
|
437 |
|
(1,293 |
) |
1,635 |
|
|
(20,701 |
) |
(14,270 |
) |
(13,901 |
) |
(34,971 |
) |
(27,710 |
) |
Unrealized gains (losses) relating to: |
|
|
|
|
|
|
|
|
|
|
|
Interest
rate swaps |
52,947 |
|
14,971 |
|
(41,842 |
) |
67,918 |
|
(17,079 |
) |
|
Termination of interest rate swap in Dropdown Predecessor |
3,984 |
|
- |
|
- |
|
3,984 |
|
- |
|
|
Foreign
currency forward contracts |
(2,329 |
) |
(1,778 |
) |
(4,574 |
) |
(4,107 |
) |
711 |
|
|
54,602 |
|
13,193 |
|
(46,416 |
) |
67,795 |
|
(16,368 |
) |
Total realized and unrealized gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
on
non-designated derivative instruments |
33,901 |
|
(1,077 |
) |
(60,317 |
) |
32,824 |
|
(44,078 |
) |
(5) |
Foreign exchange gain (loss) 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 gain (loss) 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 |
|
Six
months ended |
|
|
June 30, 2013 |
|
March 31, 2013 |
|
June 30, 2012 |
|
June 30, 2013 |
|
June 30, 2012 |
|
Realized gain on partial termination of cross-currency
swap |
- |
|
6,800 |
|
- |
|
6,800 |
|
- |
|
Realized foreign exchange loss on partial repurchase of NOK
bonds |
- |
|
(6,573 |
) |
- |
|
(6,573 |
) |
- |
|
Realized gains on cross-currency swaps |
297 |
|
725 |
|
696 |
|
1,022 |
|
1,690 |
|
Unrealized losses on cross-currency swaps |
(9,307 |
) |
(25,502 |
) |
(10,776 |
) |
(34,809 |
) |
(2,897 |
) |
Unrealized gains on revaluation of NOK bonds |
13,250 |
|
25,011 |
|
9,414 |
|
38,261 |
|
383 |
|
|
|
(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. |
(7) |
Results for six conventional tankers (Hamane Spirit, Torben Spirit, Luzon
Spirit, Leyte Sprit, Poul
Spirit and Gotland Spirit),
which we sold or held for sale during 2012 and 2013, have been
included in Net (loss) income from discontinued operations for the
three and six months ended June 30, 2013 and June 30, 2012. |
(8) |
The General Partner's and Limited Partners' interest in
net income for both the three months and six months ended June 30,
2013 is cumulatively reduced by approximately $1.8 million
associated with the accrued dividends for the preferred equity
units issued on April 30, 2013. |
TEEKAY OFFSHORE PARTNERS
L.P. |
|
CONSOLIDATED BALANCE
SHEETS |
|
(in thousands of U.S. dollars) |
|
|
As
at
June 30, 2013
(unaudited) |
As
at
March 31, 2013
(unaudited) |
As
at
December 31, 2012
(unaudited) |
|
|
|
ASSETS |
|
|
|
|
Current |
|
|
|
|
Cash and cash equivalents |
163,744 |
172,801 |
206,339 |
|
Accounts receivable |
176,189 |
100,715 |
91,879 |
|
Vessels held for sale |
6,800 |
- |
13,250 |
|
Net investments in direct
financing leases - current |
5,628 |
5,387 |
5,647 |
|
Prepaid expenses |
30,461 |
31,348 |
29,384 |
|
Due from affiliates |
35,570 |
163,202 |
29,682 |
|
Current portion of derivative
instruments |
546 |
3,119 |
12,398 |
|
Other current assets |
- |
513 |
8 |
|
Total current assets |
418,938 |
477,085 |
388,587 |
|
Vessels and
equipment |
|
|
|
|
|
At cost, less accumulated depreciation |
2,935,389 |
2,287,334 |
2,327,337 |
|
|
Advances on newbuilding contracts |
82,499 |
139,628 |
127,286 |
|
Investment in and advances to
joint venture |
62,880 |
- |
- |
|
Net investments in direct
financing leases |
24,634 |
26,135 |
27,568 |
|
Derivative instruments |
9,398 |
34 |
2,913 |
|
Deferred income tax |
10,824 |
9,021 |
8,948 |
|
Other assets |
36,008 |
31,068 |
28,112 |
|
Intangible assets - net |
12,952 |
14,230 |
15,527 |
|
Goodwill - shuttle tanker segment |
127,113 |
127,113 |
127,113 |
|
Total assets |
3,720,635 |
3,111,648 |
3,053,391 |
|
LIABILITIES
AND EQUITY |
|
|
|
|
Current |
|
|
|
|
Accounts payable |
23,580 |
12,164 |
15,220 |
|
Accrued liabilities |
154,188 |
73,701 |
84,349 |
|
Due to affiliates |
92,123 |
41,852 |
47,810 |
|
Current portion of long-term
debt |
288,690 |
250,414 |
248,385 |
|
Current portion of derivative
instruments |
89,111 |
47,874 |
47,748 |
|
Current portion of in-process revenue contracts |
12,744 |
12,744 |
12,744 |
|
Total current liabilities |
660,436 |
438,749 |
456,256 |
|
Long-term debt |
1,895,628 |
1,623,410 |
1,521,247 |
|
Derivative instruments |
137,999 |
213,757 |
213,731 |
|
In-process revenue contracts |
95,009 |
98,151 |
101,294 |
|
Other long-term liabilities |
37,072 |
25,643 |
26,819 |
|
Total liabilities |
2,826,144 |
2,399,710 |
2,319,347 |
|
Redeemable
non-controlling interest |
28,357 |
28,383 |
28,815 |
|
Equity |
|
|
|
|
Limited partners - common units
(83.7 and 80.1 million units issued and outstanding at June 30,
2013 and December 31, 2012, respectively) |
649,814 |
617,199 |
640,990 |
|
Limited partners - preferred
units (6.0 and nil million units issued and outstanding at June 30,
2013 and December 31, 2012, respectively) |
144,921 |
- |
- |
|
General Partner |
20,475 |
20,012 |
20,162 |
|
Accumulated other comprehensive loss |
- |
- |
(58 |
) |
Partners' equity |
815,210 |
637,211 |
661,094 |
|
Non-controlling interests |
50,924 |
46,344 |
44,135 |
|
Total equity |
866,134 |
683,555 |
705,229 |
|
Total liabilities and total
equity |
3,720,635 |
3,111,648 |
3,053,391 |
|
TEEKAY
OFFSHORE PARTNERS
L.P. |
|
CONSOLIDATED STATEMENTS OF
CASH FLOWS |
|
(in thousands of U.S. dollars) |
|
|
|
|
|
Six
months ended |
|
|
June 30, 2013(1) |
|
June 30, 2012 |
|
|
(unaudited) |
|
(unaudited) |
|
Cash and cash equivalents
provided by (used for) |
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
Net income |
80,574 |
|
42,974 |
|
Non-cash items: |
|
|
|
|
|
Unrealized (gain) loss on derivative instruments |
(32,927 |
) |
19,499 |
|
|
Equity income |
(1,598 |
) |
- |
|
|
Depreciation and amortization |
96,011 |
|
99,614 |
|
|
Write-down and loss on sale of vessels |
19,029 |
|
3,269 |
|
|
Deferred income tax (recovery) expense |
(62 |
) |
91 |
|
|
Foreign currency exchange gain and other |
(36,098 |
) |
(7,543 |
) |
Change in non-cash working
capital items related to operating activities |
6,919 |
|
(23,056 |
) |
Expenditures for dry docking |
(7,656 |
) |
(8,619 |
) |
Net operating cash flow |
124,192 |
|
126,229 |
|
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
|
Proceeds from long-term debt |
736,725 |
|
265,053 |
|
Scheduled repayments of long-term
debt |
(97,215 |
) |
(95,032 |
) |
Prepayments of long-term
debt |
(424,152 |
) |
(203,273 |
) |
Debt issuance costs |
(10,126 |
) |
(4,362 |
) |
Equity contribution from Teekay
Corporation to Dropdown Predecessor |
5,596 |
|
- |
|
Purchase of Voyageur LLC from
Teekay Corporation |
(252,086 |
) |
- |
|
Equity contribution from joint
venture partner |
1,500 |
|
1,000 |
|
Proceeds from issuance of common
units |
65,067 |
|
- |
|
Proceeds from issuance of
preferred units |
150,000 |
|
- |
|
Expenses relating to equity
offerings |
(5,385 |
) |
(117 |
) |
Cash distributions paid by the
Partnership |
(90,972 |
) |
(76,779 |
) |
Cash distributions paid by subsidiaries to non-controlling
interests |
(280 |
) |
(5,657 |
) |
Net financing cash flow |
78,672 |
|
(119,167 |
) |
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
|
Expenditures for vessels and
equipment |
(216,242 |
) |
(26,148 |
) |
Purchase of equity investment in
Itajai joint venture |
(52,520 |
) |
- |
|
Proceeds from sale of vessels and
equipment |
20,350 |
|
9,485 |
|
Direct financing lease payments received |
2,953 |
|
9,129 |
|
Net investing cash flow |
(245,459 |
) |
(7,534 |
) |
|
|
|
|
|
Decrease in
cash and cash equivalents |
(42,595 |
) |
(472 |
) |
Cash and cash equivalents, beginning of
the period |
206,339 |
|
179,934 |
|
Cash and cash equivalents, end of the
period |
163,744 |
|
179,462 |
|
(1) |
In accordance with GAAP, the Consolidated Statement of Cash
Flows for the six months ended June 30, 2013 includes the cash
flows relating to the Voyageur
Spirit FPSO unit Dropdown Predecessor for the period from
April 13, 2013 to May 2, 2013, when the vessel was under the common
control of Teekay Corporation, but prior to its acquisition by the
Partnership. The amounts included in this release related to the
Dropdown Predecessor are preliminary, and will be finalized for
inclusion in the Partnership's Form 6-K filing for the quarter
ended June 30, 2013. Any revisions to the preliminary Dropdown
Predecessor figures are only expect to impact the accounting for
the periods prior to the date the Voyageur
Spirit FPSO unit was acquired by the Partnership, and
therefore will have no effect on the adjusted net income
attributable to the partners or distributable cash flow of the
Partnership for any period, including the second quarter of
2013. |
TEEKAY OFFSHORE PARTNERS
L.P. |
APPENDIX A - SPECIFIC ITEMS
AFFECTING NET INCOME (LOSS) |
(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 (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 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 |
|
Six months ended |
|
|
June 30, 2013 |
|
June 30, 2012 |
|
June 30, 2013 |
|
June 30, 2012 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
Net income (loss) - GAAP
basis |
58,604 |
|
(11,629 |
) |
80,574 |
|
42,974 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Net income attributable to non-controlling interests |
(3,274 |
) |
(499 |
) |
(5,051 |
) |
(2,468 |
) |
|
Net loss attributable to Dropdown Predecessor |
2,225 |
|
- |
|
2,225 |
|
- |
|
Net income
(loss) attributable to the partners |
57,555 |
|
(12,128 |
) |
77,748 |
|
40,506 |
|
Add (subtract) specific items affecting net income
(loss): |
|
|
|
|
|
|
|
|
|
Foreign exchange (gains) losses(1) |
(3,529 |
) |
(192 |
) |
836 |
|
3,560 |
|
|
Unrealized (gains) losses on derivative
instruments(2) |
(51,803 |
) |
46,416 |
|
(64,996 |
) |
16,368 |
|
|
Components of discontinued operations(3) |
3,302 |
|
(12,449 |
) |
7,749 |
|
(12,449 |
) |
|
Write-down of vessel |
- |
|
1,048 |
|
- |
|
1,048 |
|
|
Realized losses on foreign currency forward
contracts(4) |
1,863 |
|
- |
|
1,863 |
|
- |
|
|
Restructuring charge and other (5) |
1,501 |
|
(2,410 |
) |
2,322 |
|
(2,956 |
) |
|
Loss on bond repurchase(6) |
- |
|
- |
|
1,759 |
|
- |
|
|
Foreign currency exchange losses resulting |
|
|
|
|
|
|
|
|
|
from hedging ineffectiveness |
- |
|
254 |
|
- |
|
234 |
|
|
Non-controlling interests' share of items above(7) |
808 |
|
94 |
|
1,278 |
|
407 |
|
Total adjustments |
(47,858 |
) |
32,761 |
|
(49,189 |
) |
6,212 |
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to the
partners |
9,697 |
|
20,633 |
|
28,559 |
|
46,718 |
|
(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 repurchase of Norwegian
kroner bonds and exclude the realized gains and losses relating to
the cross currency swaps for outstanding Norwegian bonds of the
Partnership |
(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, including the interest rate swap from Itajai FPSO equity accounted joint venture and
excluding amounts relating to the Dropdown Predecessor. |
(3) |
Related to components of net income (loss) from discontinued
operations. The results for the three months ended June 30, 2013
include the termination fee received from Teekay Corporation upon
cancellation of the Gotland
Spirit time-charter contract, partially offset by the
write down to the Gotland
Spirit to its estimated fair value in conjunction with
the termination of its charter contract and the loss on sale of
the Poul Spirit. In addition, the
results for the six months ended June 30, 2013 include the
termination fee received from Teekay Corporation upon cancellation
of the Poul Spirit time-charter
contract, partially offset by the write down of Poul Spirit to its estimated fair value in
conjunction with the termination of its charter contract. The
results for the three and six months ended June 30, 2012 include
the termination fee received from Teekay Corporation upon the
cancellation of the Hamane
Spirit time-charter contract, partially offset by the
loss on sale of the Hamane Spirit. |
(4) |
Reflects the realized losses on foreign currency forward
contracts entered into for the expected purchase of the HiLoad DP
unit from Remora that is not designated as a hedge for accounting
purposes. |
(5) |
Other items include restructuring charges of $1.4 million and
$2.1 million for the three and six months ended June 30, 2013,
respectively, relating to the reorganization of the Partnership's
marine operations to create better alignment with its shuttle
tanker and conventional tanker business units. Other items for the
three and six months ended June 30, 2013 and 2012 include $0.1
million, $0.3 million, $0.2 million and ($0.2) million,
respectively, relating to the revaluation of a fair value
adjustment of contingent consideration liability associated with
the purchase of the Scott
Spirit shuttle tanker. In addition, other items include a
one-time reversal of an income tax accrual of $2.8 million for the
three and six months ended June 30, 2012. |
(6) |
Loss on bond repurchase for the six months ended June 30,
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
(loss) adjusted for depreciation and amortization expense,
non-controlling interest, net loss in the Dropdown Predecessor,
non-cash items, distributions relating to equity financing of
newbuilding installments and on our preferred units, certain
realized losses on forward contracts, vessel acquisition costs,
estimated maintenance capital expenditures, unrealized gains and
losses from derivatives, non-cash income taxes, foreign currency
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
(loss) for the quarters ended June 30, 2013 and June 30, 2012,
respectively.
|
Three Months Ended |
|
|
June 30, 2013 |
|
June 30, 2012 |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
Net income (loss) |
58,604 |
|
(11,629 |
) |
Net loss attributable to Dropdown Predecessor |
2,225 |
|
- |
|
|
60,829 |
|
(11,629 |
) |
Add (subtract): |
|
|
|
|
|
Depreciation and amortization |
49,169 |
|
48,387 |
|
|
Write down of vessel |
- |
|
1,048 |
|
|
Non-cash items in discontinued operations(1) |
8,179 |
|
3,838 |
|
|
Distributions relating to equity financing of newbuilding
installments |
2,813 |
|
1,447 |
|
|
Partnership's share of equity accounted joint ventures'
distributable cash flow before estimated maintenance capital
expenditures |
814 |
|
- |
|
|
Equity income |
(1,598 |
) |
- |
|
|
Distributions relating to preferred units |
(1,817 |
) |
- |
|
|
Estimated maintenance capital expenditures(2) |
(26,808 |
) |
(27,652 |
) |
|
Indemnification from Teekay Corporation
relating to the Voyageur SpiritFPSO(2) |
12,505 |
|
- |
|
|
Unrealized (losses) gains on non-designated derivative
instruments (3) |
(50,618 |
) |
46,416 |
|
|
Foreign exchange and other, net |
(3,382 |
) |
(2,683 |
) |
|
Distributable Cash Flow before
Non-Controlling Interests |
50,086 |
|
59,172 |
|
|
Non-controlling interests' share of DCF |
(7,046 |
) |
(4,991 |
) |
Distributable Cash Flow |
43,040 |
|
54,181 |
|
(1) |
Includes depreciation, write-down and loss on sale of vessels
included within discontinued operations. |
(2) |
Indemnification of the loss of revenues from the Voyageur
Spirit FPSO is effectively treated as a reduction to estimated
maintenance capital expenditures in the second quarter of 2013,
since the indemnification amount received from Teekay Corporation
is effectively treated as a reduction to the purchase price of the
Voyageur Spirit FPSO. |
(3) |
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 June 30, 2013 |
|
(unaudited) |
|
|
|
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO Segment |
Total |
Revenues |
133,222 |
65,260 |
8,877 |
15,053 |
222,412 |
Voyage expenses |
22,275 |
- |
998 |
- |
23,273 |
Net revenues |
110,947 |
65,260 |
7,879 |
15,053 |
199,139 |
|
|
|
|
|
|
|
Three
Months Ended June 30, 2012 |
|
(unaudited) |
|
|
|
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO Segment |
Total |
Revenues |
143,748 |
56,317 |
9,312 |
14,781 |
224,158 |
Voyage expenses |
32,150 |
- |
1,547 |
- |
33,697 |
Net revenues |
111,598 |
56,317 |
7,765 |
14,781 |
190,461 |
|
|
|
|
|
|
TEEKAY OFFSHORE PARTNERS
L.P. |
APPENDIX D - SUPPLEMENTAL
SEGMENT INFORMATION |
(in thousands of U.S. dollars) |
|
|
|
Three
Months Ended June 30, 2013 |
|
(unaudited) |
|
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO Segment |
Total |
Net revenues (1) |
110,947 |
65,260 |
7,879 |
15,053 |
199,139 |
Vessel operating expenses(2) |
36,511 |
40,074 |
1,619 |
8,315 |
86,519 |
Time-charter hire expense |
14,093 |
- |
- |
- |
14,093 |
Depreciation and amortization |
28,165 |
17,789 |
1,568 |
2,743 |
50,265 |
General and administrative(2) |
4,911 |
4,600 |
97 |
809 |
10,417 |
Restructuring charge |
957 |
- |
438 |
- |
1,395 |
Income from vessel operations |
26,310 |
2,797 |
4,157 |
3,186 |
36,450 |
|
|
|
|
|
|
|
Three
Months Ended June 30, 2012 |
|
(unaudited) |
|
Shuttle Tanker Segment |
FPSO Segment |
Conventional Tanker
Segment |
FSO Segment |
Total |
|
|
|
|
|
|
Net revenues(1) |
111,598 |
56,317 |
7,765 |
14,781 |
190,461 |
Vessel operating expenses(2) |
39,653 |
28,203 |
1,556 |
6,986 |
76,398 |
Time-charter hire expense |
12,969 |
- |
- |
- |
12,969 |
Depreciation and amortization |
31,944 |
12,727 |
1,715 |
2,001 |
48,387 |
General and administrative(2) |
5,397 |
2,614 |
243 |
452 |
8,706 |
Write-down of vessel |
1,048 |
- |
- |
- |
1,048 |
Income from vessel operations |
20,587 |
12,773 |
4,251 |
5,342 |
42,953 |
(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 $8.6
million for the three months ended June 30, 2013 have 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 amount
reclassified was $9.3 million for the three months ended June 30,
2012. |
TEEKAY OFFSHORE PARTNERS
L.P. |
APPENDIX E - RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE |
CASH FLOW FROM VESSEL OPERATIONS FROM CONSOLIDATED
VESSELS |
(in thousands of U.S. dollars) |
Description of Non-GAAP
Financial Measure - Cash Flow from Vessel Operations from
Consolidated Vessels
Cash flow from vessel operations from consolidated
vessels represents income from vessel operations before
depreciation and amortization expense, write down of vessels and
amortization of deferred gains, includes the realized gains
(losses) on the settlement of foreign exchange forward contracts
and cash flow from vessel operations relating to its discontinued
operations and excludes the cash flow from vessel operations
relating to the Partnership's Dropdown Predecessor and adjusting
for direct financing leases to a cash basis. Cash flow from vessel
operations is included because certain investors use this data to
measure a company's financial performance. Cash flow from vessel
operations is not required by GAAP and should not be considered as
an alternative to net income (loss) or any other indicator of the
Partnership's performance required by GAAP.
|
Three
Months Ended June 30, 2013 |
|
|
(unaudited) |
|
|
Shuttle Tanker Segment |
|
FPSO Segment(1) |
|
Conventional Tanker
Segment |
FSO Segment |
|
Total |
|
Income from vessel operations (Appendix
D) |
26,310 |
|
2,797 |
|
4,157 |
3,186 |
|
36,450 |
|
Depreciation and amortization |
28,165 |
|
17,789 |
|
1,568 |
2,743 |
|
50,265 |
|
Realized (losses) gains from the settlements of
non-designated foreign exchange forward contracts |
(53 |
) |
271 |
|
- |
- |
|
218 |
|
Amortization of intangible and non-cash portion of revenue
contracts |
- |
|
(3,122 |
) |
- |
- |
|
(3,122 |
) |
Falcon Spirit revenue accounted for as direct financing
lease |
- |
|
- |
|
- |
(1,304 |
) |
(1,304 |
) |
Falcon Spirit cash flow from time-charter contracts |
- |
|
- |
|
- |
2,124 |
|
2,124 |
|
Cash flow from discontinued operations |
- |
|
- |
|
6,085 |
- |
|
6,085 |
|
Dropdown Predecessor cash flow from vessel operations |
- |
|
(501 |
) |
- |
- |
|
(501 |
) |
Cash flow from vessel operations from
consolidated vessels |
54,422 |
|
17,234 |
|
11,810 |
6,749 |
|
90,215 |
|
|
Three
Months Ended June 30, 2012 |
|
|
(unaudited) |
|
|
Shuttle Tanker Segment |
FPSO Segment |
|
Conventional Tanker
Segment |
FSO Segment |
|
Total |
|
Income from vessel operations (Appendix
D) |
20,587 |
12,773 |
|
4,251 |
5,342 |
|
42,953 |
|
Depreciation and amortization |
31,944 |
12,727 |
|
1,715 |
2,001 |
|
48,387 |
|
Unrealized gains from the change in fair value of designated
foreign exchange forward contracts |
254 |
- |
|
- |
- |
|
254 |
|
Realized gains (losses) from the settlements of
non-designated foreign exchange forward contracts |
450 |
(13 |
) |
- |
- |
|
437 |
|
Amortization of intangible and non-cash portion of revenue
contracts |
- |
(3,158 |
) |
- |
- |
|
(3,158 |
) |
Write-down of vessel |
1,048 |
- |
|
- |
- |
|
1,048 |
|
Falcon Spirit revenue accounted for as direct financing
lease |
- |
- |
|
- |
(1,437 |
) |
(1,437 |
) |
Falcon Spirit cash flow from time-charter contracts |
- |
- |
|
- |
2,104 |
|
2,104 |
|
Cash flow from discontinued operations |
- |
- |
|
19,226 |
- |
|
19,226 |
|
Cash flow from vessel operations
fromconsolidated vessels |
54,283 |
22,329 |
|
25,192 |
8,010 |
|
109,814 |
|
(1) |
Cash flow from vessel operations for the FPSO unit segment
includes the cash flows generated by the Voyageur Spirit FPSO unit since its acquisition
by the Partnership on May 2, 2013. Cash flow for
the Voyageur Spirit FPSO unit for
the period April 13, 2013 through May 2, 2013 prior to its
acquisition by the Partnership when it was under common control by
Teekay Corporation, referred to as the Dropdown Predecessor, has
been excluded from cash flow from vessel operations. |
TEEKAY OFFSHORE PARTNERS
L.P. |
APPENDIX F - RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE |
CASH FLOW FROM VESSEL OPERATIONS FROM EQUITY ACCOUNTED
VESSEL |
(in thousands of U.S. dollars) |
Description of Non-GAAP
Financial Measure - Cash Flow from Vessel Operations from Equity
Accounted Vessel
Cash flow from vessel operations from equity
accounted vessel represents income from vessel operations before
depreciation and amortization expense. Cash flow from equity
accounted vessel represents the Partnership's proportionate share
of cash flow from vessels operations from its equity accounted
vessel, the Itajai FPSO unit. Cash
flow from vessel operations from equity accounted vessel 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
venture. Cash flow from vessel operations from equity accounted
vessel is not required by GAAP and should not be considered as an
alternative to equity income or any other indicator of the
Partnership's performance required by GAAP.
|
Three
and Six Months Ended |
|
|
June 30,
2013 |
|
|
(unaudited) |
|
|
At |
|
Partnership's |
|
|
100% |
|
50% |
|
Voyage revenues |
4,375 |
|
2,188 |
|
Vessel and other operating expenses |
1,736 |
|
868 |
|
Depreciation and amortization |
802 |
|
401 |
|
General and administrative |
18 |
|
9 |
|
Income from vessel operations of equity accounted vessel |
1,819 |
|
910 |
|
Interest expense |
(887 |
) |
(443 |
) |
Unrealized gains on derivative instruments |
2,371 |
|
1,185 |
|
Foreign currency exchange gain |
(38 |
) |
(19 |
) |
Total other items |
1,446 |
|
723 |
|
Net income / equity income of equity accounted vessel |
|
|
|
|
before income tax expense |
3,265 |
|
1,633 |
|
Income tax expense |
69 |
|
35 |
|
Net income / equity income of equity accounted vessel |
3,196 |
|
1,598 |
|
|
|
|
|
|
Income from vessel operations |
1,819 |
|
910 |
|
Depreciation and amortization |
802 |
|
401 |
|
Cash flow from vessel operations from
equity accounted vessel |
2,621 |
|
1,311 |
|
|
|
|
|
|
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 expected contribution of recent acquisitions, vessel
deliveries and new contracts to cash flow growth; the timing of
the Voyageur Spirit achieving
final acceptance and commencing full operations under the E.ON
contract; the timing of the Lambada
Spirit shuttle tanker commencing its contract with BG;
the timing of the HiLoad DP unit commencing its 10-year
time-charter contract with Petroleo Brasileiro SA; the potential
for the Partnership to acquire future HiLoad projects developed by
Remora, including development of the next generation HiLoad DP
units with BG Brasil; 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 timing of and cost of converting
the Randgrid into an FSO unit and
the timing of the commencement of the commencement of its 3-year
charter contract with Statoil; 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; 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; the inability of the Voyageur Spirit
FPSO to complete the repair of its compressors, achieve full
production and receive final acceptance by E.ON during August 2013;
the potential for the loss of revenue under the charter with E.ON
from the date of acquisition until final acceptance exceeds Teekay
Corporation's maximum indemnification of $54 million; 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, or third parties; the Partnership's ability to raise
adequate financing to purchase additional assets; delays in vessel
deliveries or conversions; 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:
Investor Relations enquiries:
Kent Alekson
+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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