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 June 30, 2019.
Consolidated Financial
Summary
| |
|
Three Months Ended |
| |
|
June 30, |
March 31, |
June 30, |
|
(in thousands of U.S. Dollars, except per unit
data) |
2019 |
2019 (2) |
2018 |
|
(unaudited) |
(unaudited) |
(unaudited) |
| GAAP
FINANCIAL RESULTS |
|
|
|
| Revenues |
319,774 |
|
336,637 |
|
320,354 |
|
| Net loss |
(27,979 |
) |
(2,598 |
) |
(168,492 |
) |
| Limited partners'
interest in net loss per common unit - basic |
(0.09 |
) |
(0.03 |
) |
(0.43 |
) |
| |
|
|
|
| NON-GAAP
FINANCIAL RESULTS: |
|
|
|
| Adjusted EBITDA
(1) |
158,941 |
|
188,150 |
|
160,198 |
|
| Adjusted net
income (loss) attributable to the partners and preferred
unitholders (1) |
4,735 |
|
29,510 |
|
(732 |
) |
| Limited partners'
interest in adjusted net income (loss) per common unit (1) |
(0.01 |
) |
0.05 |
|
(0.02 |
) |
- 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).
- Please refer to Appendices to the release announcing the
results for the first quarter of 2019 attached as Exhibit 1 to the
Form 6-K filed with the Securities and Exchange Commission on April
30, 2019, for a reconciliation of these non-GAAP measures to the
most directly comparable financial measures under GAAP.
Second Quarter of 2019 Compared to
Second Quarter of 2018
Revenues were $320 million in the second quarter
of 2019, which was consistent with the same quarter of the prior
year.
Net loss decreased to $28 million in the second
quarter of 2019 compared to $168 million in the same quarter of the
prior year primarily due to the timing of recognition of
write-downs and gains on sales of vessels and a decrease in
unrealized fair value losses on derivative instruments resulting
from movement in interest rates. In the second quarter of 2019, net
loss included a gain on the sale of three vessels of $13 million
whereas in the second quarter of 2018, net loss included
write-downs of $180 million relating to two FPSO units.
Non-GAAP Adjusted EBITDA was $159 million in the
second quarter of 2019, which was consistent with the same quarter
of 2018. An increase in Adjusted EBITDA of $11 million from the
shuttle tanker segment was offset by a decrease of $11
million from the FPSO segment.
Non-GAAP Adjusted Net Income was $5 million in
the second quarter of 2019, an increase of $5 million compared to
the same quarter of the prior year, primarily due to a decrease in
depreciation and amortization of $7 million.
Second Quarter of 2019 Compared to First
Quarter of 2019
Revenues decreased by $17 million and net loss
increased by $25 million in the second quarter of 2019, compared to
the prior quarter, primarily due to the absence of a $15 million
amortization of non-cash deferred revenue relating to the Piranema
Spirit FPSO unit, which was fully amortized during the first
quarter of 2019; a $7 million decrease in contributions from the
completion of the Rio das Ostras FPSO unit charter contract in
March 2019 and a $5 million decrease from lower utilization in the
towage fleet. Revenues and vessel operating expenses in the second
quarter of 2019 also included the recognition of deferred revenues
and deferred costs of $13 million and $15 million, respectively,
upon termination of the Cheviot Field agreement relating to the
Petrojarl Varg FPSO unit. Other items impacting the change in net
loss included a $13 million gain on the sale of three vessels
recognized in the second quarter of 2019 and a $9 million increase
in unrealized fair value losses on derivative instruments.
Non-GAAP Adjusted EBITDA and Adjusted Net Income
decreased by $29 million and $25 million, respectively, in the
second quarter of 2019, compared to the prior quarter, primarily
due to the changes in revenue and vessel operating expenses as
described above.
Please refer to “Operating Results” for
additional information on variances by segment and Appendices A and
B for reconciliations between GAAP net (loss) income and
non-GAAP Adjusted EBITDA and Adjusted Net Income (Loss),
respectively.
CEO Commentary
“We are pleased to announce another good
operational quarter with Adjusted EBITDA of $159 million. The
Shuttle Tanker and the FSO segment results were in line with first
quarter, while the FPSO segment result decreased by $22 million,
primarily on non-cash items. The Towage segment was basically
EBITDA neutral,” commented Ingvild Sæther, President and CEO of
Teekay Offshore Group Ltd.
“During the quarter we decided to terminate the
agreement with Alpha Petroleum for the redeployment of the
Petrojarl Varg FPSO on the U.K. Cheviot field. Given the increased
activity on a number of field developments in the North Sea, it was
important for us to either reach a final contract award with Alpha
Petroleum on the Cheviot field, or make the unit available for
other field developments where it can offer an attractive field
development solution.”
Ms. Sæther added, "On the financing side, we
were pleased to announce during the quarter the closing of the
refinancing of the $450 million revolving credit facility backed by
16 of our shuttle tankers on attractive terms, in addition to the
long-term financing of the first four shuttle tanker newbuildings
and the refinancing of three FPSOs with $100 million, both as
announced in the last quarterly release."
Summary of Recent Events
Brookfield Investment
In late-May 2019, the Partnership received an
unsolicited non-binding proposal from Brookfield Business Partners
L.P. (NYSE:BBU)(TSX:BBU.UN), together with its institutional
partners (collectively Brookfield), to acquire all issued and
outstanding publicly held common units representing limited
partnership interests of the Partnership that Brookfield does not
already own in exchange for $1.05 in cash per common unit. The
Partnership's Conflicts Committee, consisting only of
non-Brookfield affiliated Teekay Offshore Directors, is evaluating
the proposed offer on behalf of the owners of the non-Brookfield
owned limited partnership interests. The proposed transaction is
subject to a number of contingencies, including the approval of the
Conflicts Committee, and the satisfaction of any conditions to the
consummation of a transaction that may be set forth in any
definitive agreement concerning the transaction. There can be no
assurance that definitive documentation will be executed or that
any transaction will materialize on the terms described above or at
all.
In May 2019, Brookfield purchased all of Teekay
Corporation's remaining interests in the Partnership, including its
49% general partner interest, 13.8% interest in common units, 17.3
million common unit equivalent warrants and a $25 million loan
receivable outstanding under an unsecured revolving credit
facility, for total proceeds of $100 million.
Financings
On July 30, 2019, the remaining $75 million
principal of our outstanding five-year 6.0% senior unsecured bonds
matured and was repaid by drawing $75 million from the
Partnership's capacity under an existing revolving credit
facility.
In May 2019, the Partnership secured a $450
million refinancing of 16 shuttle tankers. The facility was used to
refinance an existing revolving credit facility dated September
2017, which bore interest at LIBOR plus a margin of 300 basis
points and had a remaining tenor of 3.4 years. The new revolving
credit facility bears interest at LIBOR plus a margin of 250 basis
points and has a tenor of five years with a profile of 8.4
years.
In late-April 2019, the Partnership closed a
$100 million refinancing of the Piranema Spirit, Voyageur Spirit,
and Petrojarl Varg FPSO units. The previous credit facility matured
at the same time with a balloon payment of $35 million. The new
revolving credit facility bears interest at LIBOR plus a margin of
300 basis points and reduces to $45 million over three years,
reflecting the relative short current contract backlog for these
FPSO units.
In April 2019, the Partnership secured a new
$414 million long-term debt facility to be used to finance four
LNG-fueled Suezmax DP2 shuttle tanker newbuildings. Upon
anticipated delivery in 2019 and 2020, two of the vessels will
commence operations under the Partnership’s master agreement with
Equinor, while the remaining two vessels will join the
Partnership’s contract of affreightment (CoA) shuttle tanker
portfolio in the North Sea. The new facility is funded and
guaranteed by both Canadian and Norwegian export credit agencies
and commercial banks, bears interest at LIBOR plus a margin of 225
basis points, and has a tenor for up to 12 years from the delivery
date of each vessel and a blended repayment profile of 18
years.
Termination of Cheviot Field
Agreement
In June 2019, the Partnership announced that an
agreement with Alpha Petroleum Resources Limited (or Alpha)
relating to the use of the Petrojarl Varg FPSO unit was terminated
as a result of Alpha being unable to satisfy certain conditions
precedent, including Alpha providing initial funding to cover life
extension and upgrade costs, by the contractual deadline. The
Partnership is currently pursing alternative deployment
opportunities for the Petrojarl Varg FPSO unit.
Change to Board of
Directors
In July 2019, Brookfield appointed Gregory
Morrison as a member of the Board of Directors of the general
partner of Teekay Offshore, replacing Walter Weathers, who was
appointed by Brookfield in September 2017.
Liquidity Update
As of June 30, 2019, the Partnership had
total liquidity of $202 million, an increase of $19 million
compared to March 31, 2019. The increase in liquidity was primarily
due to the refinancing of the Partnership's FPSO revolving credit
facility and proceeds received from the sale of the Pattani Spirit
FSO and the Nordic Spirit and Alexita Spirit shuttle tankers during
the second quarter of 2019.
Operating Results
The commentary below compares certain results of
our operating segments for the three months ended June 30, 2019 to
the same period of the prior year, unless otherwise noted.
FPSO Segment
| |
Three Months Ended |
| |
June 30, |
March 31, |
June 30, |
| |
2019 |
2019 |
2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
| Revenues |
127,478 |
|
136,560 |
|
124,053 |
|
| Adjusted EBITDA |
72,169 |
|
94,420 |
|
83,429 |
|
Adjusted EBITDA (including Adjusted EBITDA of
equity-accounted vessels) decreased by $11 million primarily due
to: a decrease of $8 million due to the completion of the
charter contract for the Rio das Ostras FPSO unit in March 2019;
and a decrease of $6 million resulting from a contract extension
for the Piranema Spirit FPSO unit at lower charter rates than the
original contract and a decrease in the amortization of non-cash
deferred revenue; partially offset by an increase of $6 million
from the commencement of operations of the Petrojarl I FPSO unit in
May 2018.
Adjusted EBITDA decreased by $22 million
compared to the three months ended March 31, 2019 primarily due to:
the absence of a $15 million amortization of non-cash deferred
revenue relating to the Piranema Spirit FPSO unit; and a $5 million
decrease from the completion of the Rio das Ostras FPSO unit
charter contract in March 2019.
Shuttle Tanker Segment
| |
Three Months Ended |
| |
June 30, |
March 31, |
June 30, |
| |
2019 |
2019 |
2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
| Revenues |
137,050 |
|
137,337 |
|
142,047 |
|
| Adjusted EBITDA |
67,688 |
|
67,337 |
|
56,254 |
|
Adjusted EBITDA increased by $11 million
primarily due to: $4 million from higher CoA utilization and rates
during the second quarter of 2019; $4 million from a decrease in
vessel operating expenses and general and administrative expenses;
and $3 million due to the timing of dry-docking of vessels.
Adjusted EBITDA was in line with first quarter
2019.
FSO Segment
| |
Three Months Ended |
| |
June 30, |
March 31, |
June 30, |
| |
2019 |
2019 |
2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
| Revenues |
34,605 |
|
34,654 |
|
33,840 |
|
| Adjusted EBITDA |
22,761 |
|
23,335 |
|
22,717 |
|
Adjusted EBITDA was consistent with prior
periods.
UMS Segment
| |
Three Months Ended |
| |
June 30, |
March 31, |
June 30, |
| |
2019 |
2019 |
2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
| Revenues |
431 |
|
1,622 |
|
— |
|
| Adjusted EBITDA |
(1,884 |
) |
1,316 |
|
(2,208 |
) |
Adjusted EBITDA was consistent with the same
quarter of the prior year.
Adjusted EBITDA decreased by $3 million compared
to the three months ended March 31, 2019, primarily due to an
insurance settlement received in the first quarter of 2019.
Towage Segment
| |
Three Months Ended |
| |
June 30, |
March 31, |
June 30, |
| |
2019 |
2019 |
2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
| Revenues |
16,716 |
|
21,986 |
|
15,510 |
|
| Adjusted EBITDA |
(426 |
) |
4,120 |
|
2,048 |
|
Adjusted EBITDA decreased by $2 million due to
an increase in vessel operating expenses relating to the
reactivation of the ALP Forward in June 2019, which was previously
in lay-up.
Adjusted EBITDA decreased by $5 million compared
to the three months ended March 31, 2019, due to a decrease in the
utilization of the towage fleet from 96% to 67% and an increase in
vessel operating expenses relating to the reactivation of the ALP
Forward in June 2019.
Conventional Tanker Segment
| |
Three Months Ended |
| |
June 30, |
March 31, |
June 30, |
| |
2019 |
2019 |
2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
| Revenues |
3,494 |
|
4,478 |
|
4,904 |
|
| Adjusted EBITDA |
(225 |
) |
(1,203 |
) |
(2,412 |
) |
Adjusted EBITDA increased by $2 million. The
Partnership redelivered the two in-chartered vessels to their
owners in March and April 2019, respectively, and no longer has
activity in the conventional tanker segment.
Teekay Offshore’s Fleet
The following table summarizes Teekay Offshore’s
fleet as of July 31, 2019. Teekay Offshore's fleet is consistent in
comparison to the previously-reported fleet table in the release
for the first quarter of 2019.
|
|
Number of Vessels |
|
|
Owned Vessels |
Chartered-in Vessels |
Committed Newbuildings |
Total |
| FPSO Segment |
8 (i) |
— |
— |
8 |
| Shuttle Tanker Segment |
25 (ii) |
2 |
6 (iii) |
33 |
| FSO Segment |
5 |
— |
— |
5 |
| UMS Segment |
1 |
— |
— |
1 |
| Towage Segment |
10 |
— |
— |
10 |
| Conventional Segment |
— |
— |
— |
— |
|
Total |
49 |
2 |
6 |
57 |
- Includes two FPSO units, the Cidade de Itajai and Pioneiro de
Libra, in which Teekay Offshore’s ownership interest is 50
percent.
- Includes four shuttle tankers in which Teekay Offshore’s
ownership interest is 50 percent and one HiLoad DP unit.
- 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 and four of
which will join Teekay Offshore's CoA portfolio in the North
Sea.
Conference Call
The Partnership plans to host a conference call
on Wednesday, July 31, 2019 at 12:00 p.m. (ET) to discuss the
results for the second quarter of 2019. All unitholders and
interested parties are invited to listen to the live conference
call by choosing from the following options:
- By dialing 1-800-367-2403 or +1 (647) 490-5367, if outside
North America, and quoting conference ID code 9980688
- 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 Second Quarter 2019 Earnings
Presentation will also be available at www.teekay.com in
advance of the conference call start time.
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:
opportunities for the Petrojarl Varg FPSO unit; Brookfield's
proposal to acquire all issued and outstanding publicly held common
units of the Partnership, and any potential resulting transactions;
the anticipated financing for two newbuilds; the timing of shuttle
tanker newbuilding deliveries and the commencement of related
contracts. 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; shipyard delivery delays and
cost overruns; delays in the commencement of charter contracts; the
Partnership’s ability to collect the amounts due under the
settlement agreement with Petrobras; new opportunities for the
Petrojarl Varg FPSO unit; and other factors discussed in Teekay
Offshore’s filings from time to time with the SEC, including its
Report on Form 20-F for the fiscal year ended December 31, 2018.
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.
About Teekay Offshore Partners
L.P.
Teekay Offshore Partners L.P. is a leading
international midstream services provider to the offshore oil
production industry, primarily 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 has consolidated assets of approximately $5.2 billion,
comprised of 57 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 and a unit
for maintenance and safety (UMS). The majority of Teekay Offshore’s
fleet is employed on medium-term, stable contracts. Brookfield owns
100 percent of Teekay Offshore’s general partner.
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:
Jan Rune SteinslandTel: +47 9705 2533Website:
www.teekayoffshore.com
Teekay Offshore Partners L.P.Summary
Consolidated Statements of Loss
| |
|
Three Months Ended |
Six Months Ended |
| |
|
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|
(in thousands of U.S. Dollars, except per unit
data) |
2019 |
2019 |
2018 |
2019 |
2018 |
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
| |
|
|
|
|
|
|
| Revenues |
319,774 |
|
336,637 |
|
320,354 |
|
656,411 |
|
643,553 |
|
| |
|
|
|
|
|
|
| Voyage
expenses |
(32,624 |
) |
(34,066 |
) |
(36,486 |
) |
(66,690 |
) |
(71,492 |
) |
| Vessel operating
expenses |
(118,718 |
) |
(101,219 |
) |
(110,298 |
) |
(219,937 |
) |
(225,680 |
) |
| Time-charter hire
expenses |
(10,619 |
) |
(12,453 |
) |
(13,464 |
) |
(23,072 |
) |
(26,191 |
) |
| Depreciation and
amortization |
(88,666 |
) |
(89,466 |
) |
(95,440 |
) |
(178,132 |
) |
(189,744 |
) |
| General and
administrative |
(17,212 |
) |
(16,992 |
) |
(17,890 |
) |
(34,204 |
) |
(35,676 |
) |
| Gain on
sale and (write-down) of vessels |
11,756 |
|
— |
|
(178,795 |
) |
11,756 |
|
(207,291 |
) |
| Operating
income (loss) |
63,691 |
|
82,441 |
|
(132,019 |
) |
146,132 |
|
(112,521 |
) |
| |
|
|
|
|
|
| Interest
expense |
(51,443 |
) |
(52,414 |
) |
(49,662 |
) |
(103,857 |
) |
(91,235 |
) |
| Interest
income |
1,253 |
|
1,070 |
|
734 |
|
2,323 |
|
1,392 |
|
| Realized and
unrealized (loss) gain |
|
|
|
|
|
| |
on derivative instruments |
(40,839 |
) |
(31,390 |
) |
9,441 |
|
(72,229 |
) |
43,892 |
|
| Equity income |
2,388 |
|
886 |
|
8,346 |
|
3,274 |
|
22,344 |
|
| Foreign currency
exchange gain (loss) |
1,789 |
|
(568 |
) |
(3,860 |
) |
1,221 |
|
(5,803 |
) |
| Other
expense - net |
(1,640 |
) |
(354 |
) |
(592 |
) |
(1,994 |
) |
(3,863 |
) |
| Loss
before income tax expense |
(24,801 |
) |
(329 |
) |
(167,612 |
) |
(25,130 |
) |
(145,794 |
) |
| Income tax
expense |
(3,178 |
) |
(2,269 |
) |
(880 |
) |
(5,447 |
) |
(6,638 |
) |
|
Net loss |
(27,979 |
) |
(2,598 |
) |
(168,492 |
) |
(30,577 |
) |
(152,432 |
) |
| |
|
|
|
|
|
| Non-controlling
interests in net loss |
1 |
|
285 |
|
8 |
|
286 |
|
(7,852 |
) |
| Preferred
unitholders' interest in net loss |
8,038 |
|
8,038 |
|
8,038 |
|
16,076 |
|
15,409 |
|
| General partner’s
interest in net loss |
(274 |
) |
(83 |
) |
(1,342 |
) |
(357 |
) |
(1,217 |
) |
| Limited partners’
interest in net loss |
(35,744 |
) |
(10,838 |
) |
(175,196 |
) |
(46,582 |
) |
(158,772 |
) |
| Limited partner's
interest in net (loss) income |
|
|
|
|
|
| |
per common unit |
|
|
|
|
|
| |
- basic |
(0.09 |
) |
(0.03 |
) |
(0.43 |
) |
(0.11 |
) |
(0.39 |
) |
| |
- diluted |
(0.09 |
) |
(0.03 |
) |
(0.43 |
) |
(0.11 |
) |
(0.39 |
) |
| Weighted-average
number of common units: |
|
|
|
|
|
| |
- basic |
410,595,551 |
|
410,342,692 |
|
410,310,586 |
|
410,469,820 |
|
410,206,610 |
|
| |
- diluted |
410,595,551 |
|
410,342,692 |
|
410,310,586 |
|
410,469,820 |
|
410,206,610 |
|
| Total number of
common units outstanding |
|
|
|
|
|
|
|
at end
of period |
410,707,764 |
|
410,400,988 |
|
410,314,977 |
|
410,707,764 |
|
410,314,977 |
|
Teekay Offshore Partners
L.P.Consolidated Balance Sheets
|
|
|
As at |
As at |
As at |
| |
|
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
|
ASSETS |
|
|
|
|
Current |
|
|
|
| Cash and cash
equivalents |
201,567 |
|
182,791 |
|
225,040 |
|
| Restricted
cash |
8,963 |
|
6,349 |
|
8,540 |
|
| Accounts
receivable |
169,137 |
|
122,083 |
|
141,903 |
|
| Vessels held for
sale |
13,756 |
|
20,027 |
|
12,528 |
|
| Prepaid
expenses |
29,277 |
|
30,062 |
|
32,199 |
|
| Due from related
parties |
— |
|
39,118 |
|
58,885 |
|
| Other
current assets |
6,272 |
|
9,506 |
|
11,879 |
|
| Total
current assets |
428,972 |
|
409,936 |
|
490,974 |
|
|
|
|
|
|
|
| |
|
|
|
|
| Vessels and
equipment |
|
|
|
|
At cost, less accumulated depreciation |
4,010,862 |
|
4,103,831 |
|
4,196,909 |
|
| Advances on
newbuilding contracts |
184,987 |
|
140,553 |
|
73,713 |
|
| Investment in
equity accounted joint ventures |
215,304 |
|
213,047 |
|
212,202 |
|
| Deferred tax
asset |
7,295 |
|
8,746 |
|
9,168 |
|
| Due from related
parties |
— |
|
954 |
|
949 |
|
| Other assets |
207,796 |
|
214,943 |
|
198,992 |
|
|
Goodwill |
129,145 |
|
129,145 |
|
129,145 |
|
| Total
assets |
5,184,361 |
|
5,221,155 |
|
5,312,052 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current |
|
|
|
| Accounts
payable |
55,544 |
|
10,990 |
|
16,423 |
|
| Accrued
liabilities |
138,204 |
|
108,577 |
|
129,896 |
|
| Deferred
revenues |
61,721 |
|
59,325 |
|
55,750 |
|
| Due to related
parties |
50,000 |
|
167,292 |
|
183,795 |
|
| Current portion of
derivative instruments |
21,693 |
|
18,245 |
|
23,290 |
|
| Current portion of
long-term debt |
487,018 |
|
480,484 |
|
554,336 |
|
| Other
current liabilities |
5,344 |
|
10,002 |
|
15,062 |
|
| Total
current liabilities |
819,524 |
|
854,915 |
|
978,552 |
|
|
|
|
|
|
|
| Long-term
debt |
2,589,431 |
|
2,561,154 |
|
2,543,406 |
|
| Derivative
instruments |
152,143 |
|
120,103 |
|
94,354 |
|
| Other
long-term liabilities |
211,449 |
|
238,049 |
|
236,616 |
|
| Total
liabilities |
3,772,547 |
|
3,774,221 |
|
3,852,928 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
| Limited partners -
common units |
837,405 |
|
873,126 |
|
883,090 |
|
| Limited partners - preferred
units |
|
384,274 |
|
384,274 |
|
384,274 |
|
| General Partner |
|
14,696 |
|
14,969 |
|
15,055 |
|
| Warrants |
132,225 |
|
132,225 |
|
132,225 |
|
| Accumulated other
comprehensive income |
6,892 |
|
7,187 |
|
7,361 |
|
|
Non-controlling interests |
|
36,322 |
|
35,153 |
|
37,119 |
|
|
Total equity |
1,411,814 |
|
1,446,934 |
|
1,459,124 |
|
|
Total liabilities and total equity |
5,184,361 |
|
5,221,155 |
|
5,312,052 |
|
Teekay Offshore Partners
L.P.Consolidated Statements of Cash
Flows
| |
Six Months Ended |
| |
June 30, 2019 |
June 30, 2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
| Cash, cash equivalents and
restricted cash provided by (used for) |
|
|
| OPERATING
ACTIVITIES |
|
|
| Net loss |
(30,577 |
) |
(152,432 |
) |
| Adjustments to reconcile net
loss to net operating cash flow: |
|
|
|
Unrealized loss (gain) on derivative instruments |
63,468 |
|
(67,795 |
) |
|
Equity income |
550 |
|
(17,644 |
) |
|
Depreciation and amortization |
178,132 |
|
189,744 |
|
|
(Gain) on sale and write-down of vessels |
(11,756 |
) |
207,291 |
|
|
Deferred income tax expense |
2,351 |
|
5,435 |
|
|
Amortization of in-process revenue contracts |
(15,062 |
) |
(6,101 |
) |
|
Expenditures for dry docking |
(10,593 |
) |
(9,995 |
) |
|
Other |
(19,415 |
) |
(992 |
) |
| Change
in non-cash working capital items related to operating
activities |
30,148 |
|
(70,456 |
) |
|
Net operating cash flow |
187,246 |
|
77,055 |
|
| FINANCING
ACTIVITIES |
|
|
| Proceeds from long-term
debt |
148,480 |
|
226,520 |
|
| Scheduled repayments of
long-term debt and settlement of related swaps |
(169,214 |
) |
(345,970 |
) |
| Prepayments of long-term
debt |
— |
|
(40,000 |
) |
| Debt issuance costs |
(13,208 |
) |
(8,346 |
) |
| Proceeds from issuance of
preferred units |
— |
|
120,000 |
|
| Expenses relating to equity
offerings |
— |
|
(3,997 |
) |
| Proceeds from credit facility
due to related parties |
— |
|
125,000 |
|
| Prepayments of credit facility
due to related parties |
(75,000 |
) |
— |
|
| Cash distributions paid by the
Partnership |
(16,075 |
) |
(22,330 |
) |
| Cash distributions paid by
subsidiaries to non-controlling interests |
(2,583 |
) |
(664 |
) |
| Cash contributions paid from
non-controlling interests to subsidiaries |
1,500 |
|
— |
|
|
Other |
(864 |
) |
(715 |
) |
|
Net financing cash flow |
(126,964 |
) |
49,498 |
|
| INVESTING
ACTIVITIES |
|
|
| Net payments for vessels and
equipment, including advances on newbuilding contracts and
conversion costs |
(112,849 |
) |
(160,175 |
) |
| Proceeds from sale of vessels
and equipment |
33,341 |
|
10,410 |
|
| Investment in equity accounted
joint ventures |
(3,824 |
) |
(1,700 |
) |
| Direct financing lease
payments received |
— |
|
2,991 |
|
| Acquisition of companies from
Teekay Corporation (net of cash acquired of $26.6 million) |
— |
|
25,254 |
|
|
Net investing cash flow |
(83,332 |
) |
(123,220 |
) |
| Decrease in cash, cash
equivalents and restricted cash |
(23,050 |
) |
3,333 |
|
| Cash,
cash equivalents and restricted cash, beginning of the period |
233,580 |
|
250,294 |
|
|
Cash, cash equivalents and restricted cash, end of the
period |
210,530 |
|
253,627 |
|
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 (SEC). These non-GAAP
financial measures, including Consolidated Adjusted EBITDA,
Adjusted EBITDA and Adjusted Net Income, are intended to provide
additional information and should not be considered substitutes 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.
These non-GAAP measures are used by management, and the Partnership
believes that these supplementary metrics assist investors and
other users of its financial reports in comparing financial and
operating performance of the Partnership across reporting periods
and with other companies.
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA represents net loss
before interest, taxes, and depreciation and amortization and is
adjusted to exclude certain items whose timing or amount cannot be
reasonably estimated in advance or that are not considered
representative of core operating performance. Such adjustments
include vessel write-downs, gains or losses on the sale of vessels,
unrealized gains or losses on derivative instruments, foreign
exchange gains or losses, losses on debt repurchases, and certain
other income or expenses. Consolidated Adjusted EBITDA also
excludes realized gains or losses on interest rate swaps as
management, in assessing the Partnership's performance, views these
gains or losses as an element of interest expense, and realized
gains or losses on derivative instruments resulting from amendments
or terminations of the underlying instruments. Consolidated
Adjusted EBITDA also excludes equity income as the Partnership does
not control its equity-accounted investments, and as a result, the
Partnership does not have the unilateral ability to determine
whether the cash generated by its equity-accounted investments is
retained within the entity in which the Partnership holds the
equity-accounted investment or distributed to the Partnership and
other owners. In addition, the Partnership does not control the
timing of any such distributions to the Partnership and other
owners.
Adjusted EBITDA represents Consolidated Adjusted
EBITDA further adjusted to include the Partnership's proportionate
share of consolidated adjusted EBITDA from its equity-accounted
joint ventures and to exclude the non-controlling interests'
proportionate share of the consolidated adjusted EBITDA from the
Partnership's consolidated joint ventures. Readers are cautioned
when using Adjusted EBITDA as a liquidity measure as the amount
contributed from Adjusted EBITDA from the equity-accounted
investments may not be available or distributed to the Partnership
in the periods such Adjusted EBITDA is generated by the
equity-accounted investments. Please refer to Appendices A and C of
this release for reconciliations of Adjusted EBITDA to net loss and
equity income, respectively, the most directly comparable GAAP
measures reflected in the Partnership’s consolidated financial
statements.
Adjusted Net Income represents net loss adjusted
to exclude the impact of certain items whose timing or amount
cannot be reasonably estimated in advance or that are not
considered representative of core operating performance consistent
with the calculation of Adjusted EBITDA. Adjusted Net Income
includes realized gains or losses on interest rate swaps as an
element of interest expense and excludes income tax expenses or
recoveries from changes in valuation allowance or uncertain tax
provisions. 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.Appendix A
- Reconciliation of Non-GAAP Financial
MeasuresAdjusted EBITDA
| |
|
|
Three Months Ended |
Six Months Ended |
| |
|
June 30, |
June 30, |
| |
|
|
2019 |
2018 |
2019 |
2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
| |
|
|
|
|
|
|
| Net
loss |
(27,979 |
) |
(168,492 |
) |
(30,577 |
) |
(152,432 |
) |
| |
Depreciation and
amortization |
88,666 |
|
95,440 |
|
178,132 |
|
189,744 |
|
| |
Interest expense,
net of interest income |
50,190 |
|
48,928 |
|
101,534 |
|
89,843 |
|
|
|
Income tax
expense |
3,178 |
|
880 |
|
5,447 |
|
6,638 |
|
| EBITDA |
114,055 |
|
(23,244 |
) |
254,536 |
|
133,793 |
|
| Add (subtract) specific income statement items
affecting EBITDA: |
|
|
|
|
| |
(Gain) on sale and write-down of vessels |
(11,756 |
) |
178,795 |
|
(11,756 |
) |
207,291 |
|
| |
Realized and
unrealized loss (gain) on derivative instruments |
40,839 |
|
(9,441 |
) |
72,229 |
|
(43,892 |
) |
| |
Equity income |
(2,388 |
) |
(8,346 |
) |
(3,274 |
) |
(22,344 |
) |
| |
Foreign currency
exchange (gain) loss |
(1,789 |
) |
3,860 |
|
(1,221 |
) |
5,803 |
|
| |
Other expense -
net |
1,640 |
|
592 |
|
1,994 |
|
3,863 |
|
|
|
Realized (loss) gain on foreign currency forward contracts |
(1,142 |
) |
370 |
|
(2,317 |
) |
990 |
|
| Total
adjustments |
25,404 |
|
165,830 |
|
55,655 |
|
151,711 |
|
|
Consolidated Adjusted EBITDA |
139,459 |
|
142,586 |
|
310,191 |
|
285,504 |
|
| |
Add: Adjusted
EBITDA from equity-accounted vessels (See Appendix C) |
22,619 |
|
22,556 |
|
43,415 |
|
44,485 |
|
|
|
Less:
Adjusted EBITDA attributable to non-controlling interests (1) |
(3,137 |
) |
(4,944 |
) |
(6,515 |
) |
(9,344 |
) |
|
Adjusted EBITDA |
158,941 |
|
160,198 |
|
347,091 |
|
320,645 |
|
- Adjusted EBITDA attributable to non-controlling interests is
summarized in the table below.
| |
|
|
Three Months Ended |
Six Months Ended |
| |
|
June 30, |
June 30, |
| |
|
|
2019 |
2018 |
2019 |
2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
| Net loss
attributable to non-controlling interests |
1 |
|
8 |
|
286 |
|
(7,852 |
) |
| |
Depreciation and
amortization |
2,749 |
|
4,104 |
|
5,433 |
|
8,668 |
|
|
|
Interest expense, net of interest income |
381 |
|
528 |
|
793 |
|
1,105 |
|
| EBITDA
attributable to non-controlling interests |
3,131 |
|
4,640 |
|
6,512 |
|
1,921 |
|
| Add (subtract) specific income statement items
affecting EBITDA: |
|
|
|
|
| |
Write-down of
vessels |
— |
|
290 |
|
— |
|
7,386 |
|
| |
Foreign currency
exchange loss |
6 |
|
14 |
|
3 |
|
37 |
|
| Total
adjustments |
6 |
|
304 |
|
3 |
|
7,423 |
|
|
Adjusted EBITDA attributable to non-controlling
interests |
3,137 |
|
4,944 |
|
6,515 |
|
9,344 |
|
Teekay Offshore Partners L.P.Appendix B
- Reconciliation of Non-GAAP Financial
MeasuresAdjusted Net Income (Loss)
|
|
|
|
Three Months Ended |
Six Months Ended |
| |
|
|
June 30, |
June 30, |
| |
|
|
2019 |
2018 |
2019 |
2018 |
|
(in thousands of U.S. Dollars, except per unit
data) |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
| Net loss |
(27,979 |
) |
(168,492 |
) |
(30,577 |
) |
(152,432 |
) |
| Adjustments: |
|
|
|
|
| |
Net loss
attributable to non-controlling interests |
1 |
|
8 |
|
286 |
|
(7,851 |
) |
| Net loss attributable to the partners and
preferred unitholders |
(27,980 |
) |
(168,500 |
) |
(30,863 |
) |
(144,581 |
) |
| Add (subtract)
specific items affecting net loss: |
|
|
|
|
| |
(Gain) on sale and
write-down of vessels |
(11,757 |
) |
178,795 |
|
(11,757 |
) |
207,291 |
|
| |
Unrealized loss
(gain) on derivative instruments |
36,225 |
|
(14,914 |
) |
63,468 |
|
(65,890 |
) |
| |
Realized loss on
interest rate swap amendments |
— |
|
— |
|
— |
|
10,000 |
|
| |
Foreign currency
exchange (gain) loss (1) |
(1,789 |
) |
2,416 |
|
(1,657 |
) |
3,066 |
|
| |
Other expense - net |
|
1,639 |
|
592 |
|
1,993 |
|
3,863 |
|
| |
Deferred income
tax expense relating to Norwegian tax structure |
1,523 |
|
735 |
|
1,957 |
|
5,409 |
|
| |
Other adjustments (2) |
|
— |
|
161 |
|
— |
|
973 |
|
| |
Adjustments
related to equity-accounted vessels (3) |
6,868 |
|
287 |
|
11,101 |
|
(5,145 |
) |
| |
Adjustments
related to non-controlling interests (4) |
6 |
|
(304 |
) |
3 |
|
(7,422 |
) |
| Total
adjustments |
32,715 |
|
167,768 |
|
65,108 |
|
152,145 |
|
|
Adjusted net income (loss) attributable to the partners and
preferred unitholders |
4,735 |
|
(732 |
) |
34,245 |
|
7,564 |
|
| |
|
|
|
|
| Preferred
unitholders' interest in adjusted net income (loss) |
8,038 |
|
8,038 |
|
16,076 |
|
15,409 |
|
| General Partner's
interest in adjusted net income (loss) |
(25 |
) |
(67 |
) |
138 |
|
(60 |
) |
| Limited partners'
interest in adjusted net income (loss) |
(3,278 |
) |
(8,703 |
) |
18,031 |
|
(7,785 |
) |
| Limited
partners' interest in adjusted net income (loss) per common unit,
basic |
(0.01 |
) |
(0.02 |
) |
0.04 |
|
(0.02 |
) |
|
Weighted-average number of common units outstanding, basic |
410,595,551 |
|
410,310,586 |
|
410,469,820 |
|
410,206,610 |
|
- Foreign currency exchange (gain) loss primarily relates to the
Partnership's revaluation of all foreign currency-denominated
assets and liabilities based on the prevailing exchange rate at the
end of each reporting period and unrealized gain or loss related to
the Partnership's cross-currency swaps related to the Partnership's
Norwegian Krone (NOK) bonds, and excludes the realized gain or loss
relating to the Partnership's cross-currency swaps and NOK
bonds.
- Other adjustments primarily reflects voyage expenses, vessel
operating expense, depreciation and amortization expense, general
and administrative expenses relating to the Petrojarl I FPSO unit
while undergoing upgrades.
- Reflects the Partnership's proportionate share of specific
items affecting the net income of the Cidade de Itajai FPSO unit
and Pioneiro de Libra FPSO unit equity-accounted joint ventures,
including the unrealized gain or loss on derivative instruments and
the foreign exchange gain or loss.
- 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 adjustments
relate to the gain on sale or write-down of vessels and foreign
currency exchange gain or loss within the Partnership's
consolidated non-wholly-owned subsidiaries.
Teekay Offshore Partners L.P.Appendix C
- Reconciliation of Non-GAAP Financial
MeasuresAdjusted EBITDA From Equity-Accounted
Vessels
| |
|
Three Months Ended |
Three Months Ended |
| |
|
June 30, 2019 |
June 30, 2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
|
|
|
At 100% |
Partnership's 50% |
At 100% |
Partnership's 50% |
| Revenues |
57,719 |
|
28,860 |
|
61,794 |
|
30,897 |
|
| Vessel and other operating expenses |
(12,481 |
) |
(6,241 |
) |
(16,682 |
) |
(8,341 |
) |
| Depreciation and amortization |
(16,294 |
) |
(8,146 |
) |
(15,455 |
) |
(7,728 |
) |
| Operating income of equity-accounted vessels |
28,944 |
|
14,473 |
|
29,657 |
|
14,828 |
|
| Net interest expense |
(10,604 |
) |
(5,302 |
) |
(11,849 |
) |
(5,925 |
) |
| Realized and unrealized (loss) gain on derivative
instruments (1) |
(13,957 |
) |
(6,979 |
) |
357 |
|
179 |
|
| Foreign
currency exchange gain (loss) |
326 |
|
163 |
|
(987 |
) |
(494 |
) |
| Total other items |
(24,235 |
) |
(12,118 |
) |
(12,479 |
) |
(6,240 |
) |
| Net income / equity income of equity-accounted
vessels before income tax expense |
4,709 |
|
2,355 |
|
17,178 |
|
8,588 |
|
| Income tax
recovery (expense) |
66 |
|
33 |
|
(484 |
) |
(242 |
) |
| Net income / equity income of
equity-accounted vessels |
4,775 |
|
2,388 |
|
16,694 |
|
8,346 |
|
| |
Depreciation and
amortization |
16,294 |
|
8,146 |
|
15,455 |
|
7,728 |
|
| |
Net interest expense |
10,604 |
|
5,302 |
|
11,849 |
|
5,925 |
|
|
|
Income
tax (recovery) expense |
(66 |
) |
(33 |
) |
484 |
|
242 |
|
| EBITDA |
31,607 |
|
15,803 |
|
44,482 |
|
22,241 |
|
| Add (subtract) specific items affecting
EBITDA: |
|
|
|
|
|
|
Realized and unrealized loss
(gain) on derivative instruments (1) |
13,957 |
|
6,979 |
|
(357 |
) |
(179 |
) |
|
|
Foreign
currency exchange (gain) loss |
(326 |
) |
(163 |
) |
987 |
|
494 |
|
|
Adjusted EBITDA from equity-accounted vessels |
45,238 |
|
22,619 |
|
45,112 |
|
22,556 |
|
- Realized and unrealized (loss) gain on derivative instruments
includes an unrealized loss of $14.1 million ($7.0 million at the
Partnership’s 50% share) for the three months ended June 30, 2019
related to interest rate swaps for the Cidade de Itajai and
Pioneiro de Libra FPSO units and an unrealized gain of $0.4 million
($0.2 million at the Partnership’s 50% share) for the three months
ended June 30, 2018 related to interest rate swaps for the Cidade
de Itajai FPSO unit.
| |
|
Six Months Ended |
Six Months Ended |
| |
|
June 30, 2019 |
June 30, 2018 |
|
(in thousands of U.S. Dollars) |
(unaudited) |
(unaudited) |
|
|
|
At 100% |
Partnership's 50% |
At 100% |
Partnership's 50% |
| Revenues |
117,444 |
|
58,722 |
|
121,451 |
|
60,726 |
|
| Vessel and other operating expenses |
(30,614 |
) |
(15,307 |
) |
(32,482 |
) |
(16,241 |
) |
| Depreciation and amortization |
(33,464 |
) |
(16,732 |
) |
(30,181 |
) |
(15,090 |
) |
| Operating income of equity-accounted vessels |
53,366 |
|
26,683 |
|
58,788 |
|
29,395 |
|
| Net interest expense (1) |
(22,684 |
) |
(11,342 |
) |
(13,368 |
) |
(6,684 |
) |
| Realized and unrealized (loss) gain on derivative
instruments (2) |
(24,222 |
) |
(12,111 |
) |
1,725 |
|
863 |
|
| Foreign
currency exchange gain (loss) |
324 |
|
162 |
|
(1,643 |
) |
(822 |
) |
| Total other items |
(46,582 |
) |
(23,291 |
) |
(13,286 |
) |
(6,643 |
) |
| Net income / equity income of equity-accounted
vessels before income tax expense |
6,784 |
|
3,392 |
|
45,502 |
|
22,752 |
|
| Income tax
expense |
(238 |
) |
(118 |
) |
(815 |
) |
(408 |
) |
| Net income / equity income of
equity-accounted vessels |
6,546 |
|
3,274 |
|
44,687 |
|
22,344 |
|
|
|
Depreciation and
amortization |
33,464 |
|
16,732 |
|
30,181 |
|
15,090 |
|
|
|
Net interest expense (1) |
22,684 |
|
11,342 |
|
13,368 |
|
6,684 |
|
| |
Income
tax expense |
238 |
|
118 |
|
815 |
|
408 |
|
| EBITDA |
62,932 |
|
31,466 |
|
89,051 |
|
44,526 |
|
| Add (subtract) specific items affecting
EBITDA: |
|
|
|
|
|
|
Realized and unrealized loss
on derivative instruments (2) |
24,222 |
|
12,111 |
|
(1,725 |
) |
(863 |
) |
|
|
Foreign
currency exchange (gain) loss |
(324 |
) |
(162 |
) |
1,643 |
|
822 |
|
|
Adjusted EBITDA from equity-accounted vessels |
86,830 |
|
43,415 |
|
88,969 |
|
44,485 |
|
- Net interest expense for the six months ended June 30, 2018
includes an unrealized gain of $9.7 million ($4.9 million at the
Partnership's 50% share) related to interest rate swaps designated
and qualifying as cash flow hedges for the Pioneiro de Libra FPSO
unit.
- Realized and unrealized (loss) gain on derivative instruments
includes an unrealized loss of $22.6 million ($11.3 million at the
Partnership’s 50% share) for the six months ended June 30, 2019
related to interest rate swaps for the Cidade de Itajai and
Pioneiro de Libra FPSO units and an unrealized gain of $2.2 million
($1.1 million at the Partnership’s 50% share) for the six months
ended June 30, 2018 related to interest rate swaps for the Cidade
de Itajai FPSO unit.
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