Teekay Offshore Partners Announces Settlement Agreements With Petrobras
October 29 2018 - 6:59AM
Teekay Offshore Partners L.P. (NYSE:TOO) (Teekay Offshore or the
Partnership) announced today that certain of its subsidiaries have
entered into a settlement agreement with Petróleo Brasileiro S.A.
and Petroleo Netherlands B.V. – PNBV S.A. (together Petrobras) with
respect to various disputes relating to the previously-terminated
charter contracts of the HiLoad DP unit and Arendal Spirit unit for
maintenance and safety (UMS).
As part of the settlement agreement, Petrobras
has agreed to pay a total amount of $96 million to Teekay Offshore,
which includes $55 million that is payable unconditionally within
30 days. The remaining $41 million is to be paid in two separate
instalments of $22 million and $19 million by the end of 2020 and
2021, respectively, subject to certain potential offsets more fully
described below.
If in the ordinary course of business and prior
to the end of 2021, new charter contracts are entered into with
Petrobras in respect of specific Teekay Offshore assets (being
Arendal Spirit UMS, Petrojarl Cidade de Rio das Ostras FPSO and
Piranema Spirit FPSO), the deferred $41 million (payable in two
instalments in 2020 and 2021, respectively) will be reduced by 40
percent of any revenue actually received in this same period from
such new contracts (Offset Amounts). There are no contracts
in place currently that would result in any Offset Amounts being
generated and neither Petrobras nor Teekay Offshore have any
obligation to enter into such contracts and furthermore, there is
no obligation to hold any of the designated assets as available for
charter by Petrobras.
In the fourth quarter of 2018, Teekay Offshore
expects to recognize the above-mentioned settlement, which is
expected to increase Teekay Offshore’s revenues by approximately
$91 million, which represents the present value of the future cash
settlement amounts.
In addition, Teekay Offshore has, through
separate subsidiaries, entered into a further settlement agreement
with Petrobras with regards to a dispute relating to the charter of
the Piranema Spirit FPSO pursuant to which Teekay Offshore has
agreed to a reduction in charter rate totaling approximately $11
million, which is expected to be credited to Petrobras over the
remaining contract term. As at June 30, 2018, this amount was
already accrued in Teekay Offshore’s financial statements.
“Over the past decade, we have built a strong
partnership with Petrobras. Petrobras has grown to become one of
our largest customers, and we look forward to further strengthening
this long-term partnership in the future,” commented Ingvild
Sæther, President and Chief Executive Officer of Teekay Offshore
Group Ltd. “We settled the contractual disagreements in a
very constructive manner and we can now turn our full attention to
working together to deliver offshore production and logistics
solutions for the fast-growing Brazilian offshore market.”
About Teekay Offshore
Teekay Offshore Partners L.P. is a leading
international midstream services provider to the offshore oil
production industry, focused on the ownership and operation of
critical infrastructure assets in offshore oil regions of the North
Sea, Brazil and the East Coast of Canada. Teekay Offshore is
structured as a publicly-traded master limited partnership with
assets under management of approximately $5.9 billion, comprised of
63 offshore assets, including floating production, storage and
offloading (FPSO) units, shuttle tankers, floating storage and
offtake (FSO) units, long distance towing and offshore installation
vessels, a unit for maintenance and safety (UMS), and conventional
tankers. The majority of Teekay Offshore’s fleet is employed on
medium-term, stable contracts.
Teekay Offshore's common units and preferred
units trade on the New York Stock Exchange under the symbols "TOO",
"TOO PR A", "TOO PR B" and “TOO PR E”, respectively.
For Investor Relations enquiries
contact:
Ryan HamiltonTel: +1 (604) 609-2963Website: www.teekay.com
Forward Looking Statements
This release contains forward-looking statements
(as defined in Section 21E of the Securities Exchange Act of 1934,
as amended) which reflect management’s current views with respect
to certain future events and performance, including: the timing and
amount of future settlement payments, including the impact on
revenue for the fourth quarter of 2018; and Brazilian offshore
market fundamentals. 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: the
Partnership’s ability to collect the amounts due under the
settlement agreement with Petrobras; changes in exploration,
production and storage of offshore oil and gas, either generally or
in particular regions that would impact expected future growth,
particularly in or related to North Sea, Brazil and East Coast of
Canada offshore fields; significant changes in oil prices;
variations in expected levels of field maintenance; 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, 2017. The Partnership expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Partnership’s expectations with respect
thereto or any change in events, conditions or circumstances on
which any such statement is based.
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