Highlights
Teekay Offshore GP LLC (TOO GP), 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 September 30, 2018.
|
|
|
Three Months Ended |
|
September 30, |
June 30, |
September 30, |
|
2018 |
2018 (3) |
2017 |
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
GAAP FINANCIAL COMPARISON |
|
|
|
Revenues |
327,658 |
|
320,354 |
|
273,626 |
|
Income
(loss) from vessel operations |
61,713 |
|
(132,019 |
) |
(273,707 |
) |
Equity
income |
11,877 |
|
8,346 |
|
4,416 |
|
Net loss
attributable to the partners and preferred unitholders |
(38,570 |
) |
(168,500 |
) |
(317,491 |
) |
Limited
partners' interest in net loss for basic net loss per common
unit |
(0.11 |
) |
(0.43 |
) |
(1.77 |
) |
NON-GAAP FINANCIAL COMPARISON |
|
|
|
Adjusted
net income (loss) attributable to the partners and preferred
unitholders (1) |
7,053 |
|
(732 |
) |
3,064 |
|
Limited
partners' interest in adjusted net income (loss) per common unit
(1) |
0.00 |
|
(0.02 |
) |
(0.05 |
) |
Total cash
flow from vessel operations (CFVO) (1) |
167,323 |
|
162,242 |
|
124,181 |
|
Distributable cash flow (DCF) (1) |
14,401 |
|
25,327 |
|
13,382 |
|
|
(1) These are non-GAAP financial measures. Please
refer to “Definitions and Non-GAAP Financial Measures” and the
Appendices to this release for definitions of these terms and
reconciliations of these non-GAAP financial measures as used in
this release to the most directly comparable financial measures
under United States generally accepted accounting principles
(GAAP). |
(2) Subject to completion of various conditions
precedent. |
(3) Please refer to Appendices to the release
announcing the results for the second quarter of 2018 attached as
Exhibit 1 to the Form 6-K filed with the Securities and Exchange
Commission on August 2, 2018, for a reconciliation of these
non-GAAP measures to the most directly comparable financial
measures under GAAP. |
|
GAAP net loss decreased and non-GAAP adjusted
net income increased for the third quarter of 2018, compared to the
same quarter of the prior year, primarily as a result of higher
earnings in the FPSO and FSO segments and a reduction in the loss
in the UMS segment. GAAP net loss for the third quarter of 2018
also decreased, compared to the same quarter of the prior year, due
to vessel write-downs during the third quarter of 2017, partially
offset by losses on repurchases of bonds maturing in 2019 and a
promissory note maturing in 2022 incurred in the third quarter of
2018. Please refer to the section titled “Operating Results”
later in this earnings release for a more detailed analysis of
variances by segment.
CEO Commentary
“For the third quarter of 2018, our total cash
flow from vessel operations increased significantly from the same
quarter of the prior year primarily driven by stronger earnings
from our shuttle tanker fleet, a full quarter contribution from the
contract start-up of the Petrojarl I FPSO and our third East Coast
Canada shuttle tanker newbuilding and lower operating costs in our
shuttle and FPSO fleets,” commented Ingvild Sæther, President and
CEO of Teekay Offshore Group Ltd.
“Earlier this week, we announced that we reached
a constructive settlement agreement with Petrobras relating to
previously-terminated charter contracts, which we expect will
result in the recognition of approximately $91 million of revenue
in the fourth quarter of 2018 on a present-value basis. The
agreement also incentivizes Petrobras to enter into new contracts
with us in the future on certain existing assets, through an offset
mechanism."
“Since reporting earnings in August 2018, we
have continued to successfully secure charter contracts for our
existing assets, which are expected to provide significant cash
flow upside to us. I am pleased to announce that we have entered
into an agreement with Alpha Petroleum for the Petrojarl Varg FPSO
for deployment on the Cheviot oil field, which is one of the
largest undeveloped oil fields in the UK sector of the North Sea.
Alpha Petroleum is currently working to satisfy the remaining
conditions precedent to the effectiveness of the contract."
Summary of Recent Events
Settlement Agreements with Petrobras
In October 2018, the Partnership 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 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 the Arendal Spirit UMS, 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 revenues 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; in addition, Teekay
Offshore is not obligated to hold any of the designated assets
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
expected settlement amounts.
In addition, in October 2018, Teekay Offshore,
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 the settlement
agreement, Teekay Offshore has agreed to a reduction in charter
rate for the FPSO totaling approximately $11 million, which is
expected to be credited to Petrobras over the remaining contract
term. This amount was accrued in Teekay Offshore's financial
statements in prior periods, primarily in 2016 and 2017.
Recontracting of the Petrojarl Varg FPSO
In October 2018, the Partnership entered into an
agreement with Alpha Petroleum Resources Limited (Alpha) for the
Petrojarl Varg FPSO for their development of the Cheviot oil field
on the UK continental shelf. The FPSO contract is for a seven-year
fixed term from first oil, which is targeted for the second quarter
of 2021, after completion of a life extension and upgrade phase for
the Petrojarl Varg FPSO taking place at Sembcorp Marine’s
shipyard in Singapore. The life extension and upgrade costs for the
Petrojarl Varg FPSO will be funded predominantly by Alpha in
advance. The Petrojarl Varg FPSO is intended to be used
for the entire expected life of the Cheviot field.
The effectiveness of the agreement remains
subject to satisfaction of a number of conditions precedent,
including (i) initial funding from Alpha to cover life
extension and upgrade costs for the Petrojarl Varg, which is
conditional on Alpha finalizing its debt facilities with a
consortium of lenders, and (ii) approval by relevant
governmental authorities of Alpha’s final field development plan
for the Cheviot field. There are no assurances that the conditions
precedent to the agreement will be met or when they may be met.
The Cheviot field is 100%-owned by Alpha and is
one of the largest undeveloped oil fields in the UK sector of the
North Sea. Matching the field development requirements of a
projected total of 18 wells (including 13 production wells) was a
key factor for the Petrojarl Varg FPSO being selected by
Alpha Petroleum through a solutions-driven process undertaken with
Teekay Offshore.
ALP Contract Award
In October 2018, ALP Maritime, the Partnership’s
towage subsidiary, was awarded a contract to provide five vessels
to perform mobilization and field installation services for Total's
Kaombo Sul project. The contract is expected to require
approximately 300-350 vessel equivalent days to service the
project. This contract was awarded after the Partnership's
successful completion of a contract of similar scale for Total's
Kaombo Norte project earlier this year.
Shuttle Tanker Newbuildings
In late-July 2018, the Partnership entered into
shipbuilding contracts with Samsung Heavy Industries Co. Ltd. to
construct two LNG-fueled Aframax DP2 shuttle tanker newbuildings,
bringing the Partnership’s orderbook to a total of six shuttle
tankers. These newbuildings will be constructed based on Teekay
Offshore's New Shuttle Spirit design which incorporates proven
technologies to increase fuel efficiency and reduce emissions,
including LNG propulsion technology. Upon expected delivery in
late-2020 through early-2021, these vessels will join the
Partnership’s contract of affreightment (CoA) shuttle tanker
portfolio in the North Sea to provide needed capacity to meet its
customers’ needs.
Financing Update
In July 2018, the Partnership completed an
upsized $700 million private placement of 8.5% senior unsecured
notes maturing in 2023 (the Notes). Brookfield Business Partners
L.P., together with its institutional partners (Brookfield), the
holder of approximately 60% of Teekay Offshore’s outstanding common
units, purchased $500 million principal amount of the Notes. The
Partnership used a portion of the net proceeds from the issuance to
(a) repurchase $225.2 million of the $300 million aggregate
principal of its outstanding 6% senior notes maturing in 2019, (b)
repurchase NOK 914 million of the NOK 1,000 million aggregate
principal of its NOK senior notes maturing in 2019 (the NOK notes)
and settle $36.5 million of the cross-currency swaps which were an
economic hedge to the NOK notes, and (c) repay at par an
outstanding $200 million 10% promissory note held by Brookfield
maturing in 2022 along with an associated $12 million early
termination fee.
Following the Notes private placement,
Brookfield exercised its option to acquire an additional 2%
ownership interest in Teekay Offshore’s general partner (Teekay
Offshore GP) from Teekay Corporation. As a result, Brookfield now
holds a 51% interest in Teekay Offshore GP.
Operating Results
The following table highlights certain financial
information for Teekay Offshore’s six segments: the FPSO segment,
the shuttle tanker segment, the FSO segment, the UMS segment, the
towage segment and the conventional tanker segment (please refer to
the “Teekay Offshore’s Fleet” section of this release below and
Appendices C through E for further details).
|
|
|
Three Months Ended |
|
September 30, 2018 |
(in thousands of U.S. Dollars) |
(unaudited) |
|
FPSO Segment |
ShuttleTankerSegment |
FSO Segment |
UMS Segment |
Towage Segment |
Conventional Tanker Segment |
Eliminations |
Total |
GAAP FINANCIAL
COMPARISON |
|
|
|
|
|
|
|
|
Revenues |
131,244 |
|
144,298 |
|
32,586 |
|
— |
|
14,954 |
|
4,576 |
|
— |
|
327,658 |
|
Income (loss) from
vessel operations |
32,815 |
|
30,284 |
|
10,092 |
|
(2,532 |
) |
(7,064 |
) |
(1,882 |
) |
— |
|
61,713 |
|
Equity income |
11,877 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
11,877 |
|
NON-GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
|
|
CFVO from (used for)
consolidated vessels (i) |
60,009 |
|
67,435 |
|
21,823 |
|
(879 |
) |
(2,065 |
) |
(1,882 |
) |
— |
|
144,441 |
|
CFVO from
equity-accounted vessels (i) |
22,882 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
22,882 |
|
Total CFVO (i) |
82,891 |
|
67,435 |
|
21,823 |
|
(879 |
) |
(2,065 |
) |
(1,882 |
) |
— |
|
167,323 |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
September 30, 2017 |
(in thousands of U.S. Dollars) |
(unaudited) |
|
FPSO Segment |
ShuttleTankerSegment |
FSO Segment |
UMS Segment |
Towage Segment |
Conventional Tanker Segment |
Eliminations (ii) |
Total |
GAAP FINANCIAL
COMPARISON |
|
|
|
|
|
|
|
|
Revenues |
116,611 |
|
135,549 |
|
10,205 |
|
— |
|
11,431 |
|
3,181 |
|
(3,351 |
) |
273,626 |
|
(Loss) income from
vessel operations |
(236,935 |
) |
(20,497 |
) |
1,780 |
|
(10,053 |
) |
(5,947 |
) |
(1,216 |
) |
(839 |
) |
(273,707 |
) |
Equity income |
4,416 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
4,416 |
|
NON-GAAP
FINANCIAL COMPARISON |
|
|
|
|
|
|
|
CFVO from (used for)
consolidated vessels (i) |
60,918 |
|
62,491 |
|
5,540 |
|
(8,413 |
) |
(2,945 |
) |
(1,216 |
) |
— |
|
116,375 |
|
CFVO from
equity-accounted vessels (i) |
7,806 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
7,806 |
|
Total CFVO (i) |
68,724 |
|
62,491 |
|
5,540 |
|
(8,413 |
) |
(2,945 |
) |
(1,216 |
) |
— |
|
124,181 |
|
|
(i) These are non-GAAP financial measures. Please
refer to “Definitions and Non-GAAP Financial Measures” and the
Appendices to this release for definitions of these terms and
reconciliations of these non-GAAP financial measures as used in
this release to the most directly comparable financial measures
under GAAP. |
(ii) Includes revenues and expenses earned and
incurred between segments of Teekay Offshore, during the three
months ended September 30, 2017. |
|
FPSO Segment
Income from vessel operations (including equity
income) and cash flow from vessel operations (including
equity-accounted vessels) increased for the three months ended
September 30, 2018, compared to the same quarter of the prior year,
primarily due to the commencement of operations of the Pioneiro de
Libra and the Petrojarl I FPSO units in late-November 2017 and
early-May 2018, respectively, and lower operating expenses for the
Piranema FPSO as a result of repairs incurred in the third quarter
of 2017, partially offset by the lower charter rates from the
Voyageur Spirit and Ostras FPSO unit contract extensions. Loss from
vessel operations in the third quarter of 2017 included the
write-downs of the Petrojarl I and Ostras FPSO units.
Shuttle Tanker Segment
Income from vessel operations and cash flow from
vessel operations increased for the three months ended September
30, 2018, compared to the same quarter of the prior year, primarily
due to the redelivery of an in-chartered vessel in January 2018 and
the delivery and contract start-up of the East Coast shuttle tanker
newbuildings, the Beothuk Spirit, Norse Spirit and Dorset Spirit,
in December 2017, January 2018 and May 2018, respectively;
partially offset by the redelivery of the Nordic Spirit in May
2018, the redelivery and subsequent sale of the Stena Spirit in
August 2018, and more dry-docking days during the third quarter of
2018.
Income from vessel operations increased for the
three months ended September 30, 2018, compared to the same quarter
of the prior year, also due to write-downs of the HiLoad DP unit
and the Nordic Rio, Nordic Brasilia, and Navion Marita DP1 shuttle
tankers in the third quarter of 2017; partially offset by higher
depreciation expense resulting from a change in the estimated
useful life of the tanker component for all shuttle tankers from 25
years to 20 years, effective January 1, 2018.
FSO Segment
Income from vessel operations and cash flow from
vessel operations increased for the three months ended September
30, 2018, compared to the same quarter of the prior year, primarily
due to the commencement of the Randgrid FSO charter contract in
October 2017.
UMS Segment
Loss from vessel operations and cash flow used
for vessel operations decreased for the three months ended
September 30, 2018, compared to the same quarter of the prior year,
due to lower operating expenses as a result of the lay-up of the
Arendal Spirit UMS since the fourth quarter of 2017.
Towage Segment
Loss from vessel operations and cash flow used
for vessel operations increased (excluding inter-segment
elimination) for the three months ended September 30, 2018,
compared to the same quarter of the prior year, due to higher
operating expenses and depreciation as a result of the deliveries
of ALP Sweeper and ALP Keeper in October 2017 and February 2018,
respectively.
Conventional Tanker Segment
Loss from vessel operations and cash flow used
for vessel operations increased for the three months ended
September 30, 2018, compared to the same quarter of the prior year,
primarily due to the termination of the Blue Power time-charter-out
contract in the fourth quarter of 2017 and subsequent trading of
the vessel in the weak spot conventional tanker market during 2018,
and dry docking of the Blue Power in the third quarter of 2018. The
time-charter-in contracts for both of the conventional tankers
included in this segment are scheduled to expire in March 2019.
Teekay Offshore’s Fleet
The following table summarizes Teekay Offshore’s
fleet as of November 1, 2018.
|
|
|
Number of Vessels |
|
Owned Vessels |
Chartered-in Vessels |
CommittedNewbuildings |
Total |
FPSO Segment |
8 |
|
(i) |
— |
|
|
— |
|
|
8 |
|
|
Shuttle Tanker
Segment |
28 |
|
(ii) |
2 |
|
|
6 |
|
(iii) |
36 |
|
|
FSO Segment |
6 |
|
|
— |
|
|
— |
|
|
6 |
|
|
UMS Segment |
1 |
|
|
— |
|
|
— |
|
|
1 |
|
|
Towage Segment |
10 |
|
|
— |
|
|
— |
|
|
10 |
|
|
Conventional
Segment |
— |
|
|
2 |
|
|
— |
|
|
2 |
|
|
Total |
53 |
|
|
4 |
|
|
6 |
|
|
63 |
|
|
|
(i) Includes two FPSO units, the Cidade de Itajai
and Pioneiro de Libra, in which Teekay Offshore’s ownership
interest is 50 percent. |
(ii) Includes four shuttle tankers in which
Teekay Offshore’s ownership interest is 50 percent and one HiLoad
DP unit. |
(iii) Includes six DP2 shuttle tanker
newbuildings scheduled for delivery in late-2019 through
early-2021, two of which will operate under Teekay Offshore's
master agreement with Equinor (formerly Statoil) and four of which
will join Teekay Offshore's CoA portfolio in the North Sea. |
|
Liquidity Update
As of September 30, 2018, the Partnership
had total liquidity of $199.9 million.
Conference Call
The Partnership plans to host a conference call
on Thursday, November 1, 2018 at 12:00 p.m. (ET) to discuss
the results for the third quarter of 2018. All unitholders and
interested parties are invited to listen to the live conference
call by choosing from the following options:
- By dialing 1-888-599-8686 or 647-794-4605, if outside North
America, and quoting conference ID code 7831663
- By accessing the webcast, which will be available on Teekay
Offshore's website at www.teekay.com (the archive will remain on
the website for a period of one year).
An accompanying Third Quarter 2018 Earnings
Presentation will also be available at www.teekay.com in advance of
the conference call start time.
About Teekay Offshore Partners
L.P.
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
consolidated assets of approximately $5.4 billion, comprised of 63
offshore assets, including floating production, storage and
offloading (FPSO) units, shuttle tankers (including six
newbuildings), 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
Definitions and Non-GAAP Financial
Measures
This release includes various financial measures
that are non-GAAP financial measures as defined under the rules of
the U.S. Securities and Exchange Commission. These non-GAAP
financial measures, which include Cash Flow from Vessel Operations,
Adjusted Net Income, and Distributable Cash Flow are intended to
provide additional information and should not be considered a
substitute for measures of performance prepared in accordance with
GAAP. In addition, these measures do not have standardized
meanings, and may not be comparable to similar measures presented
by other companies. The Partnership believes that certain investors
use this information to evaluate the Partnership’s financial
performance, as does management.
Non-GAAP Financial Measures
Cash Flow from (used for) Vessel Operations
(CFVO) represents income (loss) from vessel operations before
depreciation and amortization expense, amortization of in-process
revenue contracts, vessel write-downs, gains or losses on the sale
of vessels, write-off of deferred revenues and operating expenses
and adjustments for direct financing leases to a cash basis, but
includes realized gains or losses on the settlement of foreign
currency forward contracts. CFVO from Consolidated Vessels
represents CFVO from vessels that are consolidated on the
Partnership’s financial statements. CFVO from Equity-Accounted
Vessels represents the Partnership’s proportionate share of CFVO
from its equity-accounted vessels. The Partnership does not control
its equity-accounted vessels and as a result, the Partnership does
not have the unilateral ability to determine whether the cash
generated by its equity-accounted vessels is retained within the
entities in which the Partnership holds the equity-accounted
investments or distributed to the Partnership and other owners. In
addition, the Partnership does not control the timing of such
distributions to the Partnership and other owners. Consequently,
readers are cautioned when using total CFVO as a liquidity measure
as the amount contributed from CFVO from Equity-Accounted Vessels
may not be available to the Partnership in the periods such CFVO is
generated by its equity-accounted vessels. CFVO is a non-GAAP
financial measure used by certain investors and management to
measure the operational financial performance of companies. Please
refer to Appendices D and E of this release for reconciliations of
these non-GAAP financial measures to income (loss) from vessel
operations and income from vessel operations of equity-accounted
vessels, respectively, the most directly comparable GAAP measures
reflected in the Partnership’s consolidated financial
statements.
Adjusted Net Income excludes items of income or
loss from GAAP net loss that are typically excluded by securities
analysts in their published estimates of the Partnership’s
financial results. The Partnership believes that certain investors
use this information to evaluate the Partnership’s financial
performance, as does management. Please refer to Appendix A of this
release for a reconciliation of this non-GAAP financial measure to
net loss, the most directly comparable GAAP measure reflected in
the Partnership’s consolidated financial statements.
Distributable Cash Flow (DCF) represents GAAP
net loss adjusted for depreciation and amortization expense,
deferred income tax expense or recovery, vessel write-downs, gains
or losses on the sale of vessels, vessel and business acquisition
costs, distributions relating to equity financing of newbuilding
installments and conversion costs, pre-operational expenses,
distributions on the Partnership's preferred units, gains on
extinguishment of contingent liabilities and losses on non-cash
accruals of contingent liabilities, amortization of the non-cash
portion of revenue contracts, estimated maintenance capital
expenditures, unrealized gains and losses from non-designated
derivative instruments, unrealized foreign exchange gains and
losses, ineffectiveness for derivative instruments designated as
hedges for accounting purposes, adjustments for direct financing
leases to a cash basis, gains or losses on debt repurchases and
foreign exchange related items, including the Partnership's
proportionate share of such items in equity-accounted for
investments and non-controlling interests proportionate share of
such interests. 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. DCF is a quantitative standard used
in the publicly-traded partnership investment community and by
management to assist in evaluating financial performance. Please
refer to Appendix B of this release for a reconciliation of this
non-GAAP financial measure to net loss, the most directly
comparable GAAP measure reflected in the Partnership’s consolidated
financial statements.
|
Teekay Offshore Partners L.P. |
Summary Consolidated Statements of Loss |
(in
thousands of U.S. Dollars, except unit data) |
|
|
|
Three Months Ended |
Nine Months Ended |
|
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
|
2018 |
2018 |
2017 |
2018 |
2017 |
|
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
|
|
|
|
|
|
|
Revenues
(1) |
327,658 |
|
320,354 |
|
273,626 |
|
971,211 |
|
814,556 |
|
|
|
|
|
|
|
|
Voyage
expenses (1) |
(40,914 |
) |
(36,486 |
) |
(25,102 |
) |
(112,406 |
) |
(70,439 |
) |
Vessel
operating expenses (1) |
(103,399 |
) |
(110,298 |
) |
(86,769 |
) |
(329,079 |
) |
(255,464 |
) |
Time-charter hire expenses |
(13,144 |
) |
(13,464 |
) |
(20,677 |
) |
(39,335 |
) |
(61,940 |
) |
Depreciation and amortization (2) |
(91,523 |
) |
(95,440 |
) |
(75,304 |
) |
(281,267 |
) |
(224,317 |
) |
General and
administrative |
(15,416 |
) |
(17,890 |
) |
(19,870 |
) |
(51,092 |
) |
(47,866 |
) |
Gain on
sale and (write-down) of vessels (3) |
350 |
|
(178,795 |
) |
(316,726 |
) |
(206,941 |
) |
(318,226 |
) |
Restructuring charge |
(1,899 |
) |
— |
|
(2,885 |
) |
(1,899 |
) |
(3,335 |
) |
Income (loss) from vessel operations |
61,713 |
|
(132,019 |
) |
(273,707 |
) |
(50,808 |
) |
(167,031 |
) |
|
|
|
|
|
|
Interest
expense |
(54,736 |
) |
(49,662 |
) |
(38,819 |
) |
(145,971 |
) |
(111,525 |
) |
Interest
income |
991 |
|
734 |
|
710 |
|
2,383 |
|
1,462 |
|
Realized
and unrealized gain (loss) |
|
|
|
|
|
|
on derivative
instruments (4) |
9,381 |
|
9,441 |
|
(19,232 |
) |
53,273 |
|
(47,561 |
) |
Equity
income |
11,877 |
|
8,346 |
|
4,416 |
|
34,221 |
|
12,316 |
|
Foreign
currency exchange loss (5) |
(266 |
) |
(3,860 |
) |
(6,526 |
) |
(6,069 |
) |
(13,313 |
) |
Losses on
debt repurchases (6) |
(55,479 |
) |
— |
|
— |
|
(55,479 |
) |
— |
|
Other (expense) income - net |
(699 |
) |
(592 |
) |
15,174 |
|
(4,562 |
) |
14,262 |
|
Loss before income tax expense |
(27,218 |
) |
(167,612 |
) |
(317,984 |
) |
(173,012 |
) |
(311,390 |
) |
Income tax
expense |
(12,137 |
) |
(880 |
) |
(2,292 |
) |
(18,775 |
) |
(4,089 |
) |
Net loss |
(39,355 |
) |
(168,492 |
) |
(320,276 |
) |
(191,787 |
) |
(315,479 |
) |
|
|
|
|
|
|
Non-controlling interests in net loss |
(785 |
) |
8 |
|
(2,785 |
) |
(8,637 |
) |
3,126 |
|
Preferred
unitholders' interest in net loss |
8,038 |
|
8,038 |
|
11,917 |
|
23,447 |
|
36,689 |
|
General
partner’s interest in net loss |
(354 |
) |
(1,342 |
) |
(6,373 |
) |
(1,571 |
) |
(7,057 |
) |
Limited
partners’ interest in net loss |
(46,254 |
) |
(175,196 |
) |
(323,035 |
) |
(205,026 |
) |
(348,237 |
) |
Limited
partner's interest in net loss for |
|
|
|
|
|
|
basic loss per
unit |
(46,254 |
) |
(175,196 |
) |
(302,720 |
) |
(205,026 |
) |
(329,543 |
) |
Limited
partner's interest in net loss |
|
|
|
|
|
|
per common unit |
|
|
|
|
|
-
basic |
(0.11 |
) |
(0.43 |
) |
(1.77 |
) |
(0.50 |
) |
(2.10 |
) |
-
diluted |
(0.11 |
) |
(0.43 |
) |
(1.79 |
) |
(0.50 |
) |
(2.10 |
) |
Weighted-average number of common units: |
|
|
|
|
|
-
basic |
410,314,977 |
|
410,310,586 |
|
170,657,562 |
|
410,243,129 |
|
156,966,145 |
|
-
diluted |
410,314,977 |
|
410,310,586 |
|
182,393,904 |
|
410,243,129 |
|
156,966,145 |
|
Total
number of common units outstanding |
|
|
|
|
|
|
at end of
period |
410,314,977 |
|
410,314,977 |
|
410,045,210 |
|
410,314,977 |
|
410,045,210 |
|
|
(1) Effective January 1, 2018, the Partnership
adopted the new revenue accounting standard, which resulted in
increasing revenues by $14.3 million and $47.9 million for the
three and nine months ended September 30, 2018, respectively,
increasing voyage expenses by $2.7 million and $9.1 million for the
three and nine months ended September 30, 2018, respectively, and
increasing vessel operating expenses by $10.9 million and $36.6
million for the three and nine months ended September 30, 2018,
respectively. |
|
(2) The Partnership's shuttle tankers are
comprised of two components: i) a conventional tanker (the “tanker
component”) and ii) specialized shuttle equipment (the “shuttle
component”). The Partnership differentiated these two components on
the principle that a shuttle tanker can also operate as a
conventional tanker without the use of the shuttle component. The
economics of this alternate use depend on the supply and demand
fundamentals in the two segments. Historically, the Partnership has
assessed the useful life of the tanker component as being 25 years
and the shuttle component as being 20 years. During the three
months ended March 31, 2018, the Partnership has considered
challenges associated with shuttle tankers that have approached 20
years of age in recent years and has reassessed the useful life of
the tanker component to be 20 years. This change in estimate,
commencing January 1, 2018, impacted 21 vessels in the
Partnership's shuttle tanker fleet. Separately, the Partnership has
reviewed the residual value for seven vessels in its fleet that are
17 years of age or older and, as a result of a change in current
estimated recycling values, has decreased the residual value for
these vessels. The effect of these changes in estimates increased
depreciation expense and decreased net income by $4.5 million and
$14.4 million for the three and nine months ended September 30,
2018, respectively. |
|
(3) During the three months ended September 30,
2018, the Partnership sold a 2001-built shuttle tanker, the Stena
Spirit (which the Partnership owned through a 50 percent-owned
subsidiary), for net proceeds of $8.8 million, and recorded a gain
on sale of $0.4 million in the Partnership's shuttle tanker
segment. |
During the three months ended June 30, 2018, the
Partnership incurred a write-down of $181.4 million, mainly related
to the Piranema Spirit and Ostras FPSO units as a result of a
reassessment of the future redeployment assumptions for both units.
In June 2018, the Partnership sold a 1998-built shuttle tanker, the
Navion Britannia, for net proceeds of $10.4 million, and recorded a
gain on sale of $2.6 million in the Partnership's shuttle tanker
segment. |
During the three months ended March 31, 2018, the
Partnership incurred a write-down of $28.5 million related to two
older shuttle tankers ($14.2 million which relates to one shuttle
tanker the Partnership owns through a 50 percent-owned subsidiary),
due to the expected redelivery of these vessels from their
charterer after completing their bareboat charter contracts in
April 2018 and the resulting change in the expectations for the
future employment opportunities for the vessels. |
During the three and nine months ended September 30,
2017, the Partnership incurred a $316.7 million write-down related
to the Petrojarl I FPSO unit due to increased costs and time
associated with upgrade work on the unit, the Ostras FPSO unit due
to the expected expiration of the charter in early-2018, three DP1
shuttle tankers as a result of a change in operational plans for
the vessels, and the HiLoad DP unit due to a change in expectations
for the future opportunities of the unit. |
|
(4) Realized (loss) gain on derivative instruments
relates to amounts the Partnership actually paid to settle
derivative instruments, and the unrealized gain (loss) on
derivative instruments relates to the change in fair value of such
derivative instruments, as detailed in the table below: |
|
|
Three Months Ended |
Nine Months Ended |
|
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
2018 |
2018 |
2017 |
2018 |
2017 |
Realized (loss) gain relating to: |
|
|
|
|
|
|
Interest rate swaps |
(10,749 |
) |
(5,843 |
) |
(48,974 |
) |
(33,735 |
) |
(69,936 |
) |
|
Foreign currency
forward contracts |
(747 |
) |
370 |
|
1,048 |
|
242 |
|
640 |
|
|
|
(11,496 |
) |
(5,473 |
) |
(47,926 |
) |
(33,493 |
) |
(69,296 |
) |
|
|
|
|
|
|
|
Unrealized gain (loss) relating to: |
|
|
|
|
|
|
Interest rate
swaps |
20,083 |
|
18,674 |
|
28,465 |
|
88,057 |
|
19,097 |
|
|
Foreign currency
forward contracts |
794 |
|
(3,760 |
) |
229 |
|
(1,291 |
) |
2,638 |
|
|
|
20,877 |
|
14,914 |
|
28,694 |
|
86,766 |
|
21,735 |
|
Total
realized and unrealized gain (loss) on |
|
|
|
|
|
|
derivative instruments |
9,381 |
|
9,441 |
|
(19,232 |
) |
53,273 |
|
(47,561 |
) |
|
(5) The Partnership entered into cross-currency swaps
to economically hedge the foreign currency exposure on the payment
of interest and repayment of principal amounts of the Partnership’s
Norwegian Kroner (NOK) bonds. In addition, the cross-currency swaps
economically hedge the interest rate exposure on the NOK bonds. The
Partnership has not designated, for accounting purposes, these
cross-currency swaps as cash flow hedges of its NOK bonds and,
thus, foreign currency exchange loss includes a realized loss
relating to the amounts the Partnership paid to settle its
non-designated cross-currency swaps and an unrealized gain (loss)
relating to the change in fair value of such swaps, partially
offset by the realized gain and unrealized (loss) gain on the
revaluation of the NOK bonds, as detailed in the table below. In
July 2018, the Partnership used a portion of the net proceeds from
the issuance of the Notes to repurchase approximately NOK 914
million of the NOK 1,000 million aggregate principal of its NOK
bonds and terminated NOK 905 million of the associated NOK 1,000
million aggregate notional amount of the cross-currency swaps,
resulting in a cash settlement of $36.5 million on the
cross-currency swap termination. |
|
Three Months Ended |
Nine Months Ended |
|
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|
2018 |
2018 |
2017 |
2018 |
2017 |
Realized loss on
cross-currency swaps |
(36,768 |
) |
(1,444 |
) |
(42,987 |
) |
(39,504 |
) |
(49,501 |
) |
Unrealized gain (loss)
on cross-currency swaps |
37,367 |
|
(4,433 |
) |
54,488 |
|
39,272 |
|
66,978 |
|
Realized gain on
revaluation of NOK bonds |
34,993 |
|
— |
|
— |
|
34,993 |
|
— |
|
Unrealized (loss) gain on revaluation of NOK
bonds |
(35,712 |
) |
4,791 |
|
(12,823 |
) |
(36,562 |
) |
(21,881 |
) |
|
(6) Losses on debt repurchases of $55.5 million
for the three and nine months ended September 30, 2018,
related to the prepayment of the Brookfield Promissory Note and the
repurchases of $225.2 million of the existing $300.0 million senior
unsecured bonds maturing in July 2019, and NOK 914 million of the
existing NOK 1,000 million senior unsecured bonds maturing in
January 2019. The losses on debt repurchases are comprised of an
acceleration of non-cash accretion expense of $31.5 million
resulting from the difference between the $200 million face value
of the Brookfield Promissory Note and its accounting carrying value
of $168.5 million and an associated early termination fee of $12
million, as well as 2.0% - 2.5% premiums on the repurchase of the
bonds and the write-off of capitalized loan costs. The accounting
carrying value of the $200 million Brookfield Promissory Note was
lower than face value due to it being recorded at its relative fair
value based on the allocation of total net proceeds invested by
Brookfield on September 25, 2017. |
Teekay Offshore Partners L.P. |
Consolidated Balance Sheets |
(in
thousands of U.S. Dollars) |
|
|
As at |
As at |
As at |
|
September 30, 2018 |
June 30, 2018 |
December 31, 2017 |
|
(unaudited) |
(unaudited) |
(unaudited) |
ASSETS |
|
|
|
Current |
|
|
|
Cash and cash
equivalents |
199,860 |
|
241,202 |
|
221,934 |
|
Restricted cash |
9,901 |
|
12,425 |
|
28,360 |
|
Accounts
receivable |
154,962 |
|
134,931 |
|
162,691 |
|
Vessel held for
sale |
— |
|
8,000 |
|
— |
|
Prepaid expenses |
32,624 |
|
37,011 |
|
30,336 |
|
Due from
affiliates |
55,736 |
|
51,249 |
|
37,376 |
|
Other
current assets |
14,203 |
|
10,644 |
|
29,249 |
|
Total current
assets |
467,286 |
|
495,462 |
|
509,946 |
|
|
|
|
|
|
|
|
|
Vessels and
equipment |
|
|
|
At cost, less
accumulated depreciation |
4,312,214 |
|
4,388,304 |
|
4,398,836 |
|
Advances on newbuilding
contracts and conversion costs |
63,826 |
|
17,742 |
|
288,658 |
|
Investment in equity
accounted joint ventures |
207,075 |
|
195,082 |
|
169,875 |
|
Deferred tax asset |
12,046 |
|
22,674 |
|
28,110 |
|
Due from
affiliates |
987 |
|
— |
|
— |
|
Other assets |
175,214 |
|
177,254 |
|
113,225 |
|
Goodwill |
129,145 |
|
129,145 |
|
129,145 |
|
Total
assets |
5,367,793 |
|
5,425,663 |
|
5,637,795 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Current |
|
|
|
Accounts payable |
9,878 |
|
12,020 |
|
43,317 |
|
Accrued
liabilities |
147,444 |
|
142,147 |
|
187,687 |
|
Deferred revenues |
54,734 |
|
55,786 |
|
69,668 |
|
Due to affiliates |
67,315 |
|
57,331 |
|
108,483 |
|
Current portion of
derivative instruments |
21,391 |
|
62,273 |
|
42,515 |
|
Current portion of
long-term debt |
556,498 |
|
473,691 |
|
589,767 |
|
Other
current liabilities |
36,381 |
|
10,437 |
|
9,056 |
|
Total current
liabilities |
893,641 |
|
813,685 |
|
1,050,493 |
|
|
|
|
|
Long-term debt |
2,633,343 |
|
2,492,517 |
|
2,533,961 |
|
Derivative
instruments |
68,375 |
|
83,211 |
|
167,469 |
|
Due to affiliates |
125,000 |
|
290,959 |
|
163,037 |
|
Other
long-term liabilities |
238,572 |
|
281,798 |
|
249,336 |
|
Total
liabilities |
3,958,931 |
|
3,962,170 |
|
4,164,296 |
|
|
|
|
|
Redeemable
non-controlling interest |
— |
|
— |
|
(29 |
) |
|
|
|
|
Equity |
|
|
|
Limited partners -
common units |
829,193 |
|
879,437 |
|
1,004,077 |
|
Limited partners -
preferred units |
384,274 |
|
384,274 |
|
266,925 |
|
General Partner |
14,646 |
|
15,032 |
|
15,996 |
|
Warrants |
132,225 |
|
132,225 |
|
132,225 |
|
Accumulated other
comprehensive income (loss) |
6,272 |
|
6,213 |
|
(523 |
) |
Non-controlling interests |
42,252 |
|
46,312 |
|
54,828 |
|
Total equity |
1,408,862 |
|
1,463,493 |
|
1,473,528 |
|
Total liabilities and total equity |
5,367,793 |
|
5,425,663 |
|
5,637,795 |
|
Teekay Offshore Partners L.P. |
Consolidated Statements of Cash Flows |
(in
thousands of U.S. Dollars) |
|
|
Nine Months Ended |
|
September 30, 2018 |
September 30, 2017 |
|
(unaudited) |
(unaudited) |
Cash, cash equivalents
and restricted cash provided by (used for) |
|
|
OPERATING
ACTIVITIES |
|
|
Net loss |
(191,787 |
) |
(315,479 |
) |
Non-cash items: |
|
|
Unrealized gain on derivative instruments |
(126,038 |
) |
(88,706 |
) |
Equity
income, net of dividends received of $4,700 (2017 - $7,000) |
(29,521 |
) |
(5,316 |
) |
Depreciation and amortization |
281,267 |
|
224,317 |
|
Write-down and (gain) on sale of vessels |
206,941 |
|
318,226 |
|
Deferred
income tax expense |
15,888 |
|
2,677 |
|
Amortization of in-process revenue contracts |
(13,900 |
) |
(9,531 |
) |
Unrealized foreign currency exchange loss and other |
35,153 |
|
14,260 |
|
Change in
non-cash working capital items related to operating activities |
(85,168 |
) |
67,534 |
|
Expenditures for dry docking |
(18,290 |
) |
(11,875 |
) |
Net operating cash flow |
74,545 |
|
196,107 |
|
FINANCING
ACTIVITIES |
|
|
Proceeds from long-term
debt |
726,520 |
|
307,004 |
|
Scheduled repayments of
long-term debt |
(452,070 |
) |
(419,064 |
) |
Prepayments of
long-term debt |
(412,309 |
) |
(24,687 |
) |
Debt issuance
costs |
(13,488 |
) |
(5,696 |
) |
Proceeds from credit
facility due to affiliates |
125,000 |
|
— |
|
Proceeds from issuance
of preferred units |
120,000 |
|
— |
|
Proceeds from issuance
of common units |
— |
|
640,595 |
|
Repurchase of preferred
units |
— |
|
(250,022 |
) |
Expenses relating to
equity offerings |
(3,997 |
) |
(11,564 |
) |
Cash distributions paid
by the Partnership |
(34,502 |
) |
(51,087 |
) |
Cash distributions paid
by subsidiaries to non-controlling interests |
(5,437 |
) |
(4,404 |
) |
Equity contribution
from joint venture partners |
— |
|
6,000 |
|
Contribution from
non-controlling interest to subsidiaries |
1,498 |
|
— |
|
Other |
(963 |
) |
(3,933 |
) |
Net financing cash flow |
50,252 |
|
183,142 |
|
INVESTING
ACTIVITIES |
|
|
Net payments for
vessels and equipment, including advances on newbuilding contracts
and conversion costs |
(212,683 |
) |
(257,897 |
) |
Proceeds from sale of
vessels and equipment |
19,210 |
|
— |
|
Direct financing lease
payments received |
4,589 |
|
4,278 |
|
Investment in equity
accounted joint ventures |
(1,700 |
) |
(24,101 |
) |
Acquisition of companies from Teekay Corporation (net of cash
acquired of $26.6 million) |
25,254 |
|
— |
|
Net investing cash flow |
(165,330 |
) |
(277,720 |
) |
(Decrease) increase in
cash, cash equivalents and restricted cash |
(40,533 |
) |
101,529 |
|
Cash,
cash equivalents and restricted cash, beginning of the period |
250,294 |
|
342,287 |
|
Cash, cash equivalents and restricted cash, end of the
period |
209,761 |
|
443,816 |
|
Teekay Offshore Partners L.P. |
Appendix A - Reconciliation of Non-GAAP Financial
Measures |
Adjusted Net Income |
(in
thousands of U.S. Dollars) |
|
|
|
Three Months Ended |
|
|
September 30, 2018 |
September 30, 2017 |
|
|
(unaudited) |
(unaudited) |
Net loss –
GAAP basis |
(39,355 |
) |
(320,276 |
) |
Adjustments: |
|
|
|
Net
loss attributable to non-controlling interests |
(785 |
) |
(2,785 |
) |
Net
loss attributable to the partners and preferred
unitholders |
(38,570 |
) |
(317,491 |
) |
Add
(subtract) specific items affecting net loss: |
|
|
|
Losses on
debt repurchases (1) |
55,479 |
|
— |
|
|
Other
(2) |
8,086 |
|
(6,404 |
) |
|
Realized
loss on interest rate swap amendments |
6,250 |
|
37,950 |
|
|
(Gain) on
sale and write-down of vessels (3) |
(350 |
) |
316,726 |
|
|
Pre-operational costs (4) |
— |
|
3,160 |
|
|
Foreign
currency exchange (gain) loss (5) |
(717 |
) |
3,706 |
|
|
Unrealized
gain on derivative instruments (6) |
(23,300 |
) |
(29,183 |
) |
|
Non-controlling interests' share of items above
(7) |
175 |
|
(5,400 |
) |
Total adjustments |
45,623 |
|
320,555 |
|
Adjusted net income attributable to the
partners and preferred unitholders |
7,053 |
|
3,064 |
|
|
|
|
Preferred
unitholders' interest in adjusted net income |
8,038 |
|
11,917 |
|
General
Partner's interest in adjusted net income |
(7 |
) |
(218 |
) |
Limited
partners' interest in adjusted net income |
(978 |
) |
(8,635 |
) |
Limited
partners' interest in adjusted net income per common unit,
basic |
0.00 |
|
(0.05 |
) |
Weighted-average number of common units outstanding,
basic |
410,314,977 |
|
170,657,562 |
|
|
(1) See footnote (6) of the summary consolidated
statements of loss included in this release for further
details. |
(2) Other items for the three months ended
September 30, 2018 include a decrease in the deferred income
tax asset for the Partnership's Norwegian tax structures, the
reversal of the accelerated portion on the Piranema FPSO in-process
revenue contract amortization, and restructuring charges related to
severance costs from crew reduction on the Petrojarl Varg FPSO.
Other items for the three months ended September 30, 2017 includes
a partial reversal of an accrual relating to potential damages
resulting from the cancellation of the UMS newbuildings recorded in
June 2016, the settlement of a contingent liability, non-recurring
general and administrative expenses relating to the Brookfield
transactions in September 2017, restructuring charges relating to
severance costs from the termination of the charter contract for
the Arendal Spirit UMS, and a decrease in the deferred income tax
asset for the Partnership's Norwegian tax structures. |
(3) See footnote (3) of the summary consolidated
statements of loss included in this release for further
details. |
(4) Reflects depreciation and amortization
expense, general and administrative expenses and vessel operating
expenses relating to the Petrojarl I FPSO unit while undergoing
upgrades. |
(5) Foreign currency exchange (gain) loss
primarily relates 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,
including revaluation of all foreign-currency-denominated monetary
assets and liabilities within the equity accounted joint ventures,
unrealized gain or loss related to the Partnership’s cross-currency
swaps related to the Partnership's NOK bonds, and excludes the
realized gain or loss relating to the Partnership's cross-currency
swaps and NOK bonds. |
(6) Reflects the net unrealized gain due to
changes in the mark-to-market value of interest rate swaps and
foreign currency forward contracts that are not designated as
hedges for accounting purposes and the unrealized mark-to-market
value of the interest rate swaps within the Cidade de Itajai and
Pioneiro de Libra FPSO equity-accounted joint ventures. |
(7) Items affecting net loss include amounts
attributable to the Partnership’s consolidated non-wholly-owned
subsidiaries. Each item affecting net loss is 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
above” in the table above is the cumulative amount of the
non-controlling interests’ proportionate share of items affecting
net loss listed in the table. |
Teekay Offshore Partners L.P. |
Appendix B - Reconciliation of Non-GAAP Financial
Measures |
Distributable Cash Flow |
(in
thousands of U.S. Dollars, except unit and per unit data) |
|
|
|
Three Months Ended |
|
September 30, |
|
|
2018 |
2017 |
|
|
(unaudited) |
(unaudited) |
|
|
|
|
Net loss |
(39,355 |
) |
(320,276 |
) |
Add
(subtract): |
|
|
|
Depreciation and
amortization |
91,523 |
|
75,304 |
|
|
Losses on debt
repurchases (1) |
55,479 |
|
— |
|
|
Partnership's share of
equity accounted joint venture's distributable cash flow net of
estimated maintenance capital expenditures (2) |
10,909 |
|
5,046 |
|
|
Deferred income tax
expense |
10,453 |
|
1,915 |
|
|
Realized loss on
amendment/early termination of interest rate and cross-currency
swaps |
6,250 |
|
78,117 |
|
|
(Gain) on sale and
write-down of vessels (3) |
(350 |
) |
316,726 |
|
|
Distributions on
preferred units |
(8,038 |
) |
(11,917 |
) |
|
Amortization of
non-cash portion of revenue contracts |
(9,058 |
) |
(4,041 |
) |
|
Equity income |
(11,877 |
) |
(4,416 |
) |
|
Unrealized foreign
exchange and other, net |
(14,113 |
) |
7,788 |
|
|
Unrealized gain on
non-designated derivative instruments (4) |
(20,877 |
) |
(83,182 |
) |
|
Estimated
maintenance capital expenditures |
(54,359 |
) |
(41,862 |
) |
Distributable cash flow before non-controlling
interests |
16,587 |
|
19,202 |
|
|
Non-controlling interests' share of DCF |
(2,186 |
) |
(5,820 |
) |
Distributable Cash Flow |
14,401 |
|
13,382 |
|
Amount attributable to the General Partner |
(31 |
) |
(31 |
) |
Limited Partners' Distributable Cash Flow |
14,370 |
|
13,351 |
|
Weighted-average number of common units
outstanding |
410,314,977 |
|
170,657,562 |
|
Distributable Cash Flow per Limited Partner
Unit |
0.04 |
|
0.08 |
|
|
(1) See footnote (6) of the summary consolidated
statements of loss included in this release for further
details. |
(2) Estimated maintenance capital expenditures
relating to the Partnership’s equity-accounted joint ventures were
$5.5 million and $1.0 million for the three months ended
September 30, 2018 and 2017, respectively. |
(3) See footnote (3) of the summary consolidated
statements of loss included in this release for further
details. |
(4) Derivative instruments include interest rate swaps
and foreign currency forward contracts. |
Teekay Offshore Partners L.P. |
Appendix C - Supplemental Segment Information |
(in
thousands of U.S. Dollars) |
|
|
Three Months Ended September 30,
2018 |
|
(unaudited) |
|
FPSOSegment |
ShuttleTankerSegment |
FSOSegment |
UMSSegment |
TowageSegment |
ConventionalTankerSegment |
Eliminations |
Total |
|
|
|
|
|
|
|
|
|
Revenues |
131,244 |
|
144,298 |
|
32,586 |
|
— |
|
14,954 |
|
4,576 |
|
— |
|
327,658 |
|
Voyage expenses |
— |
|
(28,633 |
) |
(188 |
) |
(8 |
) |
(9,392 |
) |
(2,693 |
) |
— |
|
(40,914 |
) |
Vessel operating
expenses |
(51,662 |
) |
(33,427 |
) |
(11,366 |
) |
(572 |
) |
(6,372 |
) |
— |
|
— |
|
(103,399 |
) |
Time-charter hire
expenses |
— |
|
(9,469 |
) |
— |
|
— |
|
— |
|
(3,675 |
) |
— |
|
(13,144 |
) |
Depreciation and
amortization |
(36,662 |
) |
(37,703 |
) |
(10,371 |
) |
(1,653 |
) |
(5,134 |
) |
— |
|
— |
|
(91,523 |
) |
General and
administrative |
(8,206 |
) |
(5,132 |
) |
(569 |
) |
(299 |
) |
(1,120 |
) |
(90 |
) |
— |
|
(15,416 |
) |
Gain on sale of
vessel |
— |
|
350 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
350 |
|
Restructuring charge |
(1,899 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(1,899 |
) |
Income (loss) from vessel operations |
32,815 |
|
30,284 |
|
10,092 |
|
(2,532 |
) |
(7,064 |
) |
(1,882 |
) |
— |
|
61,713 |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
2017 |
|
(unaudited) |
|
FPSOSegment |
ShuttleTankerSegment |
FSOSegment |
UMSSegment |
TowageSegment |
ConventionalTankerSegment |
Eliminations (1) |
Total |
|
|
|
|
|
|
|
|
|
Revenues |
116,611 |
|
135,549 |
|
10,205 |
|
— |
|
11,431 |
|
3,181 |
|
(3,351 |
) |
273,626 |
|
Voyage expenses |
— |
|
(20,018 |
) |
(258 |
) |
— |
|
(6,191 |
) |
(45 |
) |
1,410 |
|
(25,102 |
) |
Vessel operating
expenses |
(40,816 |
) |
(31,007 |
) |
(5,132 |
) |
(4,509 |
) |
(5,825 |
) |
— |
|
520 |
|
(86,769 |
) |
Time-charter hire
expenses |
— |
|
(16,415 |
) |
— |
|
— |
|
— |
|
(4,262 |
) |
— |
|
(20,677 |
) |
Depreciation and
amortization |
(36,497 |
) |
(31,049 |
) |
(2,589 |
) |
(1,640 |
) |
(4,111 |
) |
— |
|
582 |
|
(75,304 |
) |
General and
administrative |
(11,004 |
) |
(6,060 |
) |
(446 |
) |
(1,019 |
) |
(1,251 |
) |
(90 |
) |
— |
|
(19,870 |
) |
Write-down of
vessels |
(265,229 |
) |
(51,497 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
(316,726 |
) |
Restructuring charge |
— |
|
— |
|
— |
|
(2,885 |
) |
— |
|
— |
|
— |
|
(2,885 |
) |
(Loss) income from vessel operations |
(236,935 |
) |
(20,497 |
) |
1,780 |
|
(10,053 |
) |
(5,947 |
) |
(1,216 |
) |
(839 |
) |
(273,707 |
) |
|
(1) Includes revenues and expenses earned and
incurred between segments of Teekay Offshore during the three
months ended September 30, 2017. |
Teekay Offshore Partners L.P. |
Appendix D - Reconciliation of Non-GAAP Financial
Measures |
Cash Flow from (used for) Vessel Operations From
Consolidated Vessels |
(in
thousands of U.S. Dollars) |
|
|
|
Three Months Ended |
|
|
September 30, 2018 |
|
|
(unaudited) |
|
|
|
Shuttle |
|
|
|
Conventional |
|
|
|
FPSO |
Tanker |
FSO |
UMS |
Towage |
Tanker |
|
|
|
Segment |
Segment |
Segment |
Segment |
Segment |
Segment |
Eliminations |
Total |
Income
(loss) from vessel operations |
|
|
|
|
|
|
|
|
|
(See Appendix C) |
32,815 |
|
30,284 |
|
10,092 |
|
(2,532 |
) |
(7,064 |
) |
(1,882 |
) |
— |
|
61,713 |
|
Depreciation and amortization |
36,662 |
|
37,703 |
|
10,371 |
|
1,653 |
|
5,134 |
|
— |
|
— |
|
91,523 |
|
Realized
loss from the |
|
|
|
|
|
|
|
|
|
settlements of
non-designated |
|
|
|
|
|
|
|
|
|
foreign currency
forward contracts |
(410 |
) |
(202 |
) |
— |
|
— |
|
(135 |
) |
— |
|
— |
|
(747 |
) |
Amortization of non-cash portion of |
|
|
|
|
|
|
|
|
|
revenue contracts |
(9,058 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
|
(9,058 |
) |
Gain on
sale of vessel |
— |
|
(350 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
(350 |
) |
Falcon
Spirit revenue accounted for |
|
|
|
|
|
|
|
|
|
as a direct financing
lease |
— |
|
— |
|
(254 |
) |
— |
|
— |
|
— |
|
— |
|
(254 |
) |
Falcon
Spirit cash flow from |
|
|
|
|
|
|
|
|
|
time-charter contracts |
— |
|
— |
|
1,614 |
|
— |
|
— |
|
— |
|
— |
|
1,614 |
|
Cash flow from (used for) vessel |
|
|
|
|
|
|
|
|
|
operations from consolidated vessels |
60,009 |
|
67,435 |
|
21,823 |
|
(879 |
) |
(2,065 |
) |
(1,882 |
) |
— |
|
144,441 |
|
|
|
Three Months Ended |
|
|
September 30, 2017 |
|
|
(unaudited) |
|
|
|
Shuttle |
|
|
|
Conventional |
|
|
|
FPSO |
Tanker |
FSO |
UMS |
Towage |
Tanker |
|
|
|
Segment |
Segment |
Segment |
Segment |
Segment |
Segment |
Eliminations (1) |
Total |
(Loss)
income from vessel operations |
|
|
|
|
|
|
|
|
|
(See Appendix C) |
(236,935 |
) |
(20,497 |
) |
1,780 |
|
(10,053 |
) |
(5,947 |
) |
(1,216 |
) |
(839 |
) |
(273,707 |
) |
Depreciation and amortization |
36,497 |
|
31,049 |
|
2,589 |
|
1,640 |
|
4,111 |
|
— |
|
(582 |
) |
75,304 |
|
Realized
gain (loss) from the |
|
|
|
|
|
|
|
|
|
settlements of
non-designated |
|
|
|
|
|
|
|
|
|
foreign currency
forward contracts |
168 |
|
442 |
|
— |
|
— |
|
312 |
|
— |
|
— |
|
922 |
|
Amortization of non-cash portion of |
|
|
|
|
|
|
|
|
|
revenue contracts |
(4,041 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(4,041 |
) |
Write-down
of vessels |
265,229 |
|
51,497 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
316,726 |
|
Falcon
Spirit revenue accounted for |
|
|
|
|
|
|
|
|
|
as a direct financing
lease |
— |
|
— |
|
(408 |
) |
— |
|
— |
|
— |
|
— |
|
(408 |
) |
Falcon
Spirit cash flow from |
|
|
|
|
|
|
|
|
|
time-charter
contracts |
— |
|
— |
|
1,579 |
|
— |
|
— |
|
— |
|
— |
|
1,579 |
|
Eliminations upon consolidation |
— |
|
— |
|
— |
|
— |
|
(1,421 |
) |
— |
|
1,421 |
|
— |
|
Cash flow from (used for) vessel |
|
|
|
|
|
|
|
|
|
operations from consolidated vessels |
60,918 |
|
62,491 |
|
5,540 |
|
(8,413 |
) |
(2,945 |
) |
(1,216 |
) |
— |
|
116,375 |
|
|
(1) Includes revenues and expenses earned and
incurred between segments of Teekay Offshore during the three
months ended September 30, 2017. |
Teekay Offshore Partners L.P. |
Appendix E - Reconciliation of Non-GAAP Financial
Measures |
Cash Flow From Vessel Operations From Equity-Accounted
Vessels |
(in
thousands of U.S. Dollars) |
|
|
|
Three Months Ended |
Three Months Ended |
|
|
September 30, 2018 |
September 30, 2017 |
|
(unaudited) |
(unaudited) |
|
|
At 100% |
Partnership's 50% |
At 100% |
Partnership's 50% |
Revenues |
63,188 |
|
31,594 |
|
21,462 |
|
10,731 |
|
Vessel and
other operating expenses |
(17,423 |
) |
(8,712 |
) |
(5,851 |
) |
(2,925 |
) |
Depreciation and amortization |
(15,807 |
) |
(7,904 |
) |
(4,410 |
) |
(2,205 |
) |
Income from
vessel operations of equity-accounted vessels |
29,958 |
|
14,978 |
|
11,201 |
|
5,601 |
|
Net
interest expense |
(12,357 |
) |
(6,179 |
) |
(1,806 |
) |
(903 |
) |
Realized
and unrealized gain (loss) on derivative instruments (1) |
4,553 |
|
2,277 |
|
(146 |
) |
(73 |
) |
Foreign currency exchange gain (loss) |
1,965 |
|
983 |
|
(216 |
) |
(108 |
) |
Total other
items |
(5,839 |
) |
(2,919 |
) |
(2,168 |
) |
(1,084 |
) |
Net income
/ equity income of equity-accounted vessels before income tax
expense |
24,119 |
|
12,059 |
|
9,033 |
|
4,517 |
|
Income tax expense |
(363 |
) |
(182 |
) |
(201 |
) |
(101 |
) |
Net income
/ equity income of equity-accounted vessels |
23,756 |
|
11,877 |
|
8,832 |
|
4,416 |
|
Income from
vessel operations of equity-accounted vessels |
29,958 |
|
14,978 |
|
11,201 |
|
5,601 |
|
Depreciation and amortization |
15,807 |
|
7,904 |
|
4,410 |
|
2,205 |
|
Cash flow from vessel operations from
equity-accounted vessels |
45,765 |
|
22,882 |
|
15,611 |
|
7,806 |
|
|
(1) Realized and unrealized gain (loss) on derivative
instruments includes an unrealized gain of $4.8 million ($2.4
million at the Partnership’s 50% share) and $1.0 million ($0.5
million at the Partnership’s 50% share) for the three months ended
September 30, 2018 and 2017, respectively, related to interest rate
swaps for the Cidade de Itajai and Pioneiro de Libra FPSO
units. |
|
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, among others:
the timing and amount of future settlement payments from Petrobras,
including the impact on revenue for the fourth quarter of 2018 and
of any Offset Amounts; the timing and certainty of the
effectiveness of the agreement with Alpha to develop the Cheviot
field, including satisfaction by Alpha of the various conditions
precedent to its effectiveness, which conditions remain out of our
control; future cash flows from the Petrojarl Varg FPSO charter
contract; the timing and certainty of first oil on the Cheviot
field and the number of wells on the field; the expected funding
from Alpha for the life extension and upgrade costs relating to the
Petrojarl Varg FPSO; the impact of contract extensions on the
Partnership’s future cash flows; the timing and cost of delivery
and start-up of various newbuildings and the commencement of
related contracts; fuel consumption and emissions for the shuttle
tanker newbuildings; and achieving 2018 priorities of the
Partnership. 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: 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;
increased operating expenses; potential early termination of
contracts; shipyard delivery delays and cost overruns; delays in
the commencement of charter contracts; the inability of charterers
to make future charter payments; the inability of the Partnership
to renew or replace long-term contracts on existing vessels; the
ability to fund the Partnership’s remaining capital commitments and
debt maturities; the Partnership’s ability to collect the amounts
due under the settlement agreement with Petrobras; the ability of
Alpha to satisfy all of the conditions precedent relating to the
contract with Alpha; 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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