Teekay Offshore Partners Reports Fourth Quarter and Annual Results
(Thomson Reuters ONE) -
HAMILTON, BERMUDA--(Marketwire - Feb. 21, 2013) - Teekay Offshore Partners L.P.
(NYSE:TOO) -
Highlights
* Generated distributable cash flow(1) of $45.9 million in the fourth quarter
of 2012, up approximately 11 percent from the same period of the prior year.
* Acquisition of Voyageur Spirit FPSO expected to be completed in March 2013
upon final installation of the FPSO on the Huntington field. In connection
with the pending acquisition, the Partnership intends to increase its cash
distribution for the first quarter of 2013, to be paid in May 2013.
* Agreed to acquire a HiLoad Dynamic Positioning unit from Remora AS for a
total purchase price of approximately $55 million, subject to finalizing a
10-year time-charter contract with Petrobras.
* Entered into a letter of intent with Salamander Energy plc to provide an FSO
unit in Asia under a 10-year charter contract commencing in mid-2014.
Partnership expects to convert one of its older shuttle tankers, the Navion
Clipper, for the FSO project.
* Liquidity of approximately $587 million as of December 31, 2012, giving pro
forma effect to net proceeds from the January 2013 Norwegian bond offering
and repurchase.
Teekay Offshore GP LLC, the general partner of Teekay Offshore Partners L.P.
(Teekay Offshore or the Partnership) (NYSE:TOO), today reported the
Partnership's results for the quarter ended December 31, 2012. During the fourth
quarter of 2012, the Partnership generated distributable cash flow(1) of $45.9
million, compared to $41.6 million in the same period of the prior year.
On January 18, 2013, a cash distribution of $0.5125 per common unit was declared
for the quarter ended December 31, 2012. The cash distribution was paid on
February 14, 2013 to all unit-holders of record on February 4, 2013.
"We are pleased to be able to broaden our offshore loading service offering with
the intended acquisition of Remora's HiLoad DP unit and the associated omnibus
agreement with Remora, which provides the Partnership with another potential
avenue of growth," commented Peter Evensen, Teekay Offshore GP LLC's Chief
Executive Officer. Mr. Evensen continued, "As part of our current fleet renewal
process, during the past several quarters, the Partnership has sold a number of
its older conventional tankers and shuttle tankers, which has resulted in a
reduction in our cash flow from vessel operations. However, the bulk of the
current fleet renewal process is completed and the cash flows from our upcoming
fully-financed acquisition of the Voyageur Spirit FPSO and the delivery of the
four newbuilding shuttle tankers to BG will more than offset the reduction in
cash flows from the sale of our older vessels. In addition, if finalized, the
new FSO project in Asia will enable us to successfully extend the life of one of
our remaining older shuttle tankers under a long-term fixed-rate contract. As a
result, despite the delay to the acquisition of the Voyageur Spirit FPSO to
March 2013, we still intend to increase the Partnership's first quarter
distribution to be paid in May 2013."
Mr. Evensen continued, "We believe the Partnership is well-positioned to
continue growing its distributable cash flow through FPSO acquisition
opportunities from Teekay Corporation, new organic offshore projects and third-
party acquisitions. Notably, the Cidade de Itajai FPSO, which is 50 percent
owned by Teekay, commenced oil production for Petrobras in Brazil last week and
we are also currently pursuing several large FSO projects in the North Sea."
1. Distributable cash flow is a non-GAAP financial measure used by certain
investors to measure the financial performance of the Partnership and other
master limited partnerships. Please see Appendix B for a reconciliation of
distributable cash flow to the most directly comparable financial measure
under United States generally accepted accounting principles (GAAP).
Summary of Recent Transactions
In November 2012, the Partnership agreed to acquire a 2010-built HiLoad Dynamic
Positioning (DP) unit from Remora AS, a Norway-based offshore marine technology
company, for a total purchase price of approximately $55 million, including
modification costs. The HiLoad DP unit is a self-propelled dynamic positioning
system that attaches to and keeps conventional tankers in position when loading
from offshore installations. The transaction is subject to finalizing a 10-year
time-charter contract with Petroleo Brasileiro SA (Petrobras) in Brazil. The
acquisition of the HiLoad DP unit is expected to be completed in the second
quarter of 2013 and the unit is expected to commence operating at its full time-
charter rate in early 2014 once modifications, delivery of the DP unit to
Brazil, and operational testing have been completed. As part of the transaction,
Teekay Corporation (Teekay) has also agreed to invest approximately $4.4 million
to acquire a 49.9 percent ownership interest in a recapitalized Remora. In
addition, Teekay Offshore will enter into an omnibus agreement with Remora which
will provide the Partnership with the right of first refusal to acquire future
HiLoad projects developed by Remora.
In January 2013, the Partnership issued NOK 1,300 million in new senior
unsecured bonds in the Norwegian bond market, issued in two tranches that mature
in January 2016 (NOK 500 million) and January 2018 (NOK 800 million). The
aggregate principal amount of the bonds is equivalent to approximately USD 233
million and all payments under the two tranches have been swapped into US
dollars, at fixed interest rates of 4.80 percent for the tranche maturing in
January 2016 and 5.93 percent for the tranche maturing in January 2018. In
connection with the new issuances, the Partnership repurchased NOK 388.5 million
of its existing NOK 600 million bonds maturing in November 2013. The net
proceeds of approximately USD 167 million from the new bond issuance and
repurchase of existing notes were used to reduce amounts outstanding under
Teekay Offshore's revolving credit facilities and for general corporate
purposes. The Partnership will apply for listing the new bonds on the Oslo Stock
Exchange.
In January 2013, the Partnership signed a letter of intent with Salamander
Energy plc to supply a floating storage and offtake (FSO) unit in Asia for a
firm charter period of 10 years commencing in mid-2014. The Partnership intends
to convert its existing 1993-built shuttle tanker, the Navion Clipper, to an FSO
for an estimated cost of approximately $50 million. The Partnership is in the
process of finalizing the contract terms with the charterer.
Teekay Offshore's Fleet
The following table summarizes Teekay Offshore's fleet as of February 1, 2013.
Number of Vessels
Owned Chartered-in Committed Conversion
Vessels Vessels Newbuildings Candidates (iii) Total
Shuttle Tanker
Segment 28(i) 4 4(ii) 1 37
FPSO Segment 3 - - - 3
Conventional Tanker
Segment 6 - - - 6
FSO Segment 5 - - - 5
Total 42 4 4 1 51
i. Includes six shuttle tankers in which Teekay Offshore's ownership interest
is 50 percent and three shuttle tankers in which Teekay Offshore's
ownership interest is 67 percent.
ii. Includes four shuttle tanker newbuildings expected to deliver in mid- to
late-2013 and commence operations under 10-year charter contracts with a
subsidiary of BG Group plc in Brazil.
iii. Includes one shuttle tanker which is currently in lay-up and is a
candidate for conversion to an offshore asset.
In January 2013, Teekay Offshore sold a 1992-built conventional tanker, the
Leyte Spirit, and a 1992-built shuttle tanker, the Basker Spirit, to third party
buyers for total net proceeds of $13.3 million.
In December 2012, Teekay Offshore sold a 1992-built conventional tanker, the
Luzon Spirit, and a 1994-built conventional tanker, the Torben Spirit, to third
party buyers for total net proceeds of $12.7 million.
In November 2012, Teekay Offshore sold a 1992-built shuttle tanker, the Navion
Savonita, to a third party buyer for total net proceeds of $6.1 million.
Future Growth Opportunities
Pursuant to an omnibus agreement that Teekay Offshore entered into in connection
with its initial public offering in December 2006, Teekay is obligated to offer
to the Partnership its interest in certain shuttle tankers, FSO units and
floating, production, storage and offloading (FPSO) units Teekay owns or may
acquire in the future, provided the vessels are servicing contracts with
remaining durations of greater than three years. The Partnership may also
acquire other vessels that Teekay may offer it from time to time and also
intends to pursue direct acquisitions from third parties and new organic
offshore projects.
Shuttle Tankers
In June 2011, the Partnership entered into a long-term contract with a
subsidiary of BG Group plc (BG) to provide shuttle tanker services in Brazil.
The contract with BG will be serviced by four Suezmax newbuilding shuttle
tankers under construction by Samsung Heavy Industries for an estimated total
delivered cost of approximately $470 million. Upon their scheduled deliveries in
mid- to late-2013, the vessels will commence operations under 10-year, fixed-
rate time-charter contracts. The contracts with BG also include certain
extension options and vessel purchase options.
As discussed above, the Partnership has agreed to acquire a 2010-built HiLoad DP
unit from Remora AS for approximately $55 million, including modification costs.
The acquisition is subject to finalizing a 10-year time-charter contract with
Petrobras, which is expected to commence in early 2014. Under the terms of an
omnibus agreement between Remora and Teekay Offshore, the Partnership has the
right of first refusal to acquire any future HiLoad projects developed by
Remora.
FPSO Units
As previously announced, on November 30, 2011, Teekay acquired from Sevan Marine
ASA (Sevan) the Hummingbird Spirit FPSO unit (which is currently operating under
a short-term charter contract), and agreed to acquire the Voyageur Spirit FPSO
unit, which is currently expected to occur in the first quarter of 2013. In the
third quarter of 2012, Teekay Offshore agreed to acquire the Voyageur Spirit
FPSO unit from Teekay for $540 million upon commencement of the unit's charter
contract with E.ON. Pursuant to the omnibus agreement, Teekay is obligated to
offer the Hummingbird Spirit FPSO unit to Teekay Offshore within approximately
one year following commencement of a charter contract with a firm period of
greater than three years in duration.
Pursuant to the omnibus agreement and a subsequent agreement, Teekay is
obligated to offer to sell the Petrojarl Foinaven FPSO unit, an existing unit
owned by Teekay and operating under a long-term contract in the North Sea, to
Teekay Offshore prior to July 9, 2013. The purchase price for the Petrojarl
Foinaven would be its fair market value plus any additional tax or other costs
incurred by Teekay to transfer ownership of this FPSO unit to the Partnership.
In October 2010, Teekay signed a long-term contract with Petrobras to provide an
FPSO unit for the Tiro and Sidon fields located in the Santos Basin offshore
Brazil. The contract with Petrobras is being serviced by a newly-converted FPSO
unit named Cidade de Itajai in which Teekay owns a 50 percent interest. This
FPSO unit delivered from the shipyard in mid-November 2012 and achieved first
oil in mid-February 2013, at which time the unit commenced a nine-year, fixed-
rate time-charter contract with Petrobras with six additional one-year extension
options. Pursuant to the omnibus agreement, Teekay is obligated to offer to the
Partnership its 50 percent interest in this FPSO project at Teekay's fully
built-up cost, within approximately one year after the commencement of its
charter with Petrobras.
In May 2011, Teekay entered into a joint venture agreement with Odebrecht Oil &
Gas S.A. (a member of the Odebrecht group) to jointly pursue FPSO projects in
Brazil. Odebrecht is a well-established Brazil-based company that operates in
the engineering and construction, petrochemical, bioenergy, energy, oil and gas,
real estate and environmental engineering sectors, with over 120,000 employees
and a presence in over 20 countries. As part of the joint venture agreement,
Odebrecht is a 50 percent partner in the Cidade de Itajai FPSO project and
Teekay is currently working with Odebrecht on other FPSO project opportunities
that, if awarded, may result in the Partnership being able to acquire Teekay's
interests in such projects pursuant to the omnibus agreement.
In June 2011, Teekay entered into a new contract with BG Norge Limited to
provide a high-specification FPSO unit for the Knarr oil and gas field located
in the North Sea. The contract will be serviced by a new FPSO unit to be
constructed by Samsung Heavy Industries for a fully built-up cost of
approximately $1 billion. Pursuant to the omnibus agreement, Teekay is obligated
to offer to the Partnership its interest in this FPSO project at Teekay's fully
built-up cost, within approximately one year after the commencement of the
charter, which is expected to commence in the second quarter of 2014.
1. Adjusted net income attributable to the partners is a non-GAAP financial
measure. Please refer to Appendix A included in this release for a
reconciliation of this non-GAAP measure to the most directly comparable
financial measure under GAAP and information about specific items affecting
net income that are typically excluded by securities analysts in their
published estimates of the Partnership's financial results.
2. Net revenues represents revenues less voyage expenses, which comprise all
expenses relating to certain voyages, including bunker fuel expenses, port
fees, canal tolls and brokerage commissions. Net revenues is a non-GAAP
financial measure used by certain investors to measure the financial
performance of shipping companies. Please see the Partnership's web site at
www.teekayoffshore.com for a reconciliation of this non-GAAP measure as used
in this release to the most directly comparable GAAP financial measure.
Financial Summary
The Partnership reported adjusted net income attributable to the partners(1) (as
detailed in Appendix A to this release) of $29.1 million for the quarter ended
December 31, 2012, compared to $22.3 million for the same period of the prior
year. Adjusted net income attributable to the partners excludes a number of
specific items that had the net effect of increasing net income by $39.6 million
and decreasing net income by $63.5 million for the quarters ended December
31, 2012 and December 31, 2011, respectively, as detailed in Appendix A.
Including these items, the Partnership reported, on a GAAP basis, net income
attributable to the partners of $68.7 million for the fourth quarter of 2012,
compared to a net loss of $41.2 million in the same period of the prior year.
Net revenues(2) for the fourth quarter of 2012 increased to $211.4 million,
compared to $196.5 million in the same period of the prior year.
The Partnership reported adjusted net income attributable to the partners(1) (as
detailed in Appendix A to this release) of $100.1 million for the year ended
December 31, 2012, compared to $102.2 million for the same period of the prior
year. Adjusted net income attributable to the partners excludes a number of
specific items that had the net effect of increasing net income by $22.8 million
and decreasing net income by $206.4 million for the year ended December
31, 2012 and December 31, 2011, respectively, as detailed in Appendix A.
Including these items, the Partnership reported, on a GAAP basis, net income
attributable to the partners of $123.0 million for the year ended December
31, 2012, compared to a net loss of $104.3 million in the same period of the
prior year. Net revenues(2) for the year ended December 31, 2012 increased to
$810.0 million, compared to $767.1 million in the prior year.
For accounting purposes, the Partnership is required to recognize, through the
consolidated statements of income (loss), changes in the fair value of certain
derivative instruments as unrealized gains or losses. This revaluation does not
affect the economics of any hedging transactions nor does it have any impact on
the Partnership's actual cash flows or the calculation of its distributable cash
flow.
1. Adjusted net income attributable to the partners is a non-GAAP financial
measure. Please refer to Appendix A included in this release for a
reconciliation of this non-GAAP measure to the most directly comparable
financial measure under GAAP and information about specific items affecting
net income that are typically excluded by securities analysts in their
published estimates of the Partnership's financial results.
2. Net revenues represents revenues less voyage expenses, which comprise all
expenses relating to certain voyages, including bunker fuel expenses, port
fees, canal tolls and brokerage commissions. Net revenues is a non-GAAP
financial measure used by certain investors to measure the financial
performance of shipping companies. Please see the Partnership's web site at
www.teekayoffshore.com for a reconciliation of this non-GAAP measure as used
in this release to the most directly comparable GAAP financial measure.
Operating Results
The following table highlights certain financial information for Teekay
Offshore's four segments: the Shuttle Tanker segment, the FPSO segment, the
Conventional Tanker segment, and the FSO segment (please refer to the "Teekay
Offshore's Fleet" section of this release above and Appendix C for further
details).
Three Months Ended
December 31, 2012
(unaudited)
Convent-
Shuttle ional
Tanker FPSO Tanker FSO
(in thousands of U.S. dollars) Segment Segment Segment Segment (1) Total
Net revenues(2) 118,322 59,709 12,530 20,861 211,422
Vessel operating expenses 33,794 26,819 3,027 15,070 78,710
Time-charter hire expense 15,493 - - - 15,493
Depreciation and amortization 29,394 12,726 2,380 2,529 47,029
Cash flow from vessel
operations(3) 58,509 24,548 9,232 5,603 97,892
Three Months Ended
December 31, 2011
(unaudited)
(in thousands of U.S. dollars) Convent-
Shuttle ional
Tanker FPSO Tanker FSO
Segment Segment Segment Segment Total
Net revenues(2) 122,117 46,925 12,629 14,804 196,475
Vessel operating expenses 37,527 19,494 2,615 6,747 66,383
Time-charter hire expense 17,406 - - - 17,406
Depreciation and amortization 29,519 10,389 2,893 2,892 45,693
Cash flow from vessel
operations(3) 58,190 20,869 14,664 7,870 101,593
1. Business development and engineering studies relating to two North Sea FSO
projects that the Partnership is currently pursuing were completed in
December 2012. The Partnership recognized related revenue of $5.5 million
and costs of $7.3 million in the fourth quarter of 2012.
2. Net revenues represents revenues less voyage expenses, which comprise all
expenses relating to certain voyages, including bunker fuel expenses, port
fees, canal tolls and brokerage commissions. Net revenues is a non-GAAP
financial measure used by certain investors to measure the financial
performance of shipping companies. Please see the Partnership's web site at
www.teekayoffshore.com for a reconciliation of this non-GAAP measure as used
in this release to the most directly comparable GAAP financial measure.
3. Cash flow from vessel operations represents income from vessel operations
before depreciation and amortization expense and amortization of deferred
gains and in-process revenue contracts, loss on sale of vessels and write-
down of vessels, but includes the realized gains (losses) on the settlement
of foreign exchange forward contracts, cash flow from discontinued
operations and adjusting for direct financing leases to a cash basis. Cash
flow from vessel operations is a non-GAAP financial measure used by certain
investors to measure the financial performance of shipping companies. Please
see the Partnership's web site at www.teekayoffshore.com for a
reconciliation of this non-GAAP measure as used in this release to the most
directly comparable GAAP financial measure.
Shuttle Tanker Segment
Cash flow from vessel operations from the Partnership's Shuttle Tanker segment
increased slightly to approximately $58.5 million for the fourth quarter of
2012 compared to $58.2 million for the same period of the prior year, due to
decreases in vessel operating expenses and time-charter hire expense, partially
offset by lower net revenues. Vessel operating expenses decreased due to the
sale of two 1992-built shuttle tankers, the Navion Fennia and Navion Savonita in
the second and fourth quarter of 2012, respectively, and the lay-up of the
shuttle tanker Navion Torinita upon expiration of its time-charter contract in
the second quarter of 2012. Time-charter hire expense decreased due to the
redelivery of one in-chartered vessel in the fourth quarter of 2011. Net
revenues decreased due to the lay-up of the Navion Torinita and the sale of the
Navion Savonita, partially offset by increased revenue from the acquisition of
the volatile organic compound (VOC) abatement equipment from Teekay, which
included catch up revenue of $4.0 million relating to voyages prior to the
fourth quarter of 2012.
FPSO Segment
Cash flow from vessel operations from the Partnership's FPSO segment increased
to $24.5 million for the fourth quarter of 2012 compared to $20.9 million for
the same period of the prior year, primarily due to the acquisition of the
Piranema Spirit FPSO unit on November 30, 2011.
Conventional Tanker Segment
Cash flow from vessel operations from the Partnership's Conventional Tanker
segment decreased to $9.2 million in the fourth quarter of 2012 compared to
$14.7 million for the same period of the prior year, primarily due to the sale
of the 1997-built Hamane Spirit in the second quarter of 2012, the sale of the
1994-built Torben Spirit and the 1992-built Luzon Spirit in the fourth quarter
of 2012, and the lay-up of the Leyte Spirit commencing during the second quarter
of 2012. For accounting purposes, the results of the Conventional Tanker segment
exclude five tankers that have been determined to constitute discontinued
operations; however, the results of these five tankers are included in the
Conventional Tanker segment's cash flow from vessel operations.
FSO Segment
Cash flow from vessel operations from the Partnership's FSO segment decreased to
$5.6 million in the fourth quarter of 2012 compared to $7.9 million for the same
period of the prior year, primarily as a result of costs incurred for business
development and engineering studies relating to two North Sea FSO projects that
the Partnership is currently pursuing.
Liquidity
As of December 31, 2012, the Partnership had total liquidity of $419.8 million,
which consisted of $206.3 million in cash and cash equivalents and $213.5
million in undrawn revolving credit facilities. The Partnership's liquidity
balance as of December 31, 2012 increased on a pro forma basis by approximately
$167 million to $587 million giving effect to the NOK 1,300 million Norwegian
bond offering completed in January 2013 net of the repurchase of NOK 388.5
million of bonds that mature in November 2013 at a price of 102.5 percent of the
principal amount. The Partnership intends to use approximately $170 million of
this liquidity to complete the acquisition of the Voyageur Spirit FPSO unit,
which is expected to be completed in March 2013.
Conference Call
The Partnership plans to host a conference call on Friday, February 22, 2013 at
noon (ET) to discuss the results for the fourth quarter and fiscal year 2012. An
accompanying investor presentation will be available on Teekay Offshore's
website at www.teekayoffshore.com prior to the start of the call. All
unitholders and interested parties are invited to listen to the live conference
call by choosing from the following options:
* By dialing (866) 322-8032 or (416) 640-3406, if outside North America, and
quoting conference ID code 4374144.
* By accessing the webcast, which will be available on Teekay Offshore's
website at www.teekayoffshore.com (the archive will remain on the website
for a period of 30 days).
A supporting Fourth Quarter and Fiscal Year 2012 Earnings Presentation will also
be available at www.teekayoffshore.com in advance of the conference call start
time.
The conference call will be recorded and made available until Friday March
1, 2013. This recording can be accessed following the live call by dialing (888)
203-1112 or (647) 436-0148, if outside North America, and entering access code
4374144.
About Teekay Offshore Partners L.P.
Teekay Offshore Partners L.P. is an international provider of marine
transportation, oil production and storage services to the offshore oil industry
focusing on the fast-growing, deepwater offshore oil regions of the North Sea
and Brazil. Teekay Offshore owns interests in 37 shuttle tankers (including four
chartered-in vessels and four committed newbuildings), three floating
production, storage and offloading (FPSO) units, five floating storage and
offtake (FSO) units and six conventional oil tankers. Teekay Offshore has rights
to participate in certain other FPSO and shuttle tanker opportunities provided
by Teekay Corporation (NYSE:TK) and Sevan Marine ASA (Oslo Bors:SEVAN). In
addition, the Partnership has agreed to acquire the Voyageur Spirit FPSO unit
from Teekay Corporation upon commencement of its charter contract. Teekay
Offshore's operating fleet primarily operates under long-term, stable contracts
and Teekay Offshore is structured as a publicly-traded master limited
partnership.
Teekay Offshore Partners' common units trade on the New York Stock Exchange
under the symbol "TOO".
TEEKAY OFFSHORE PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands of U.S. dollars, except unit data)
Three Months Ended Year Ended
December September December December December
31, 2012 30, 2012 31, 2011 31, 2012 31, 2011(1)
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
REVENUES 238,303 223,970 223,834 926,137 873,501
OPERATING
EXPENSES
Voyage
expenses 26,881 22,968 27,359 116,111 106,377
Vessel
operating
expenses 78,710 69,345 66,383 284,712 279,963
Time-charter
hire expense 15,493 14,910 17,406 56,989 74,478
Depreciation
and
amortization 47,029 47,549 45,693 193,383 176,483
General and
administrative 17,722 19,142 18,266 74,399 71,506
Write down of
vessels 13,529 8,852 28,549 23,430 36,868
Loss on sales
of vessels 778 341 - 1,112 171
Restructuring
charge (2) 1,115 - - 1,115 3,924
201,257 183,107 203,656 751,251 749,770
Income from
vessel
operations 37,046 40,863 20,178 174,886 123,731
OTHER ITEMS
Interest
expense (10,892) (11,965) (9,658) (47,799) (36,216)
Interest
income 493 184 199 1,027 659
Realized and
unrealized
gain (loss) on
derivative
instruments
(3) 31,187 (13,458) (19,179) (26,349) (159,744)
Foreign
exchange gain
(loss) (4) 2,272 (717) 2,247 (313) 1,500
Income tax
recovery
(expense) 11,041 (1,025) (5,105) 10,477 (9,828)
Other income
(loss) - net 314 (55) 220 1,536 3,681
Net income
(loss) from
continuing
operations 71,461 13,827 (11,098) 113,465 (76,217)
Net (loss)
income from
discontinued
operations(5) (5,759) 505 (26,001) 9,550 (20,654)
Net income
(loss) 65,702 14,332 (37,0999) 123,015 (96,871)
Net income
(loss)
attributable
to:
Non-
controlling
interests (2,982) 572 4,094 58 22,454
Dropdown
Predecessor
(1) - - - - (15,075)
Partners 68,684 13,760 (41,193) 122,957 (104,250)
Limited
partners'
units
outstanding:
Weighted-
average number
of common
units
outstanding -
Basic and
diluted 80,105,408 73,577,367 65,910,343 73,750,951 62,362,072
Total units
outstanding at
end of period 80,105,408 80,105,408 70,626,554 80,105,408 70,626,554
1. Results for the Scott Spirit shuttle tanker for the period beginning July
2011 prior to its acquisition by the Partnership in October 2011 when the
vessel was owned and operated by Teekay Corporation are referred to as the
Dropdown Predecessor.
2. Restructuring charges for the year ended December 31, 2012 relate to the
reorganization of the Partnership's marine operations to create better
alignment with its shuttle and conventional tanker business units.
Restructuring charges for the year ended December 31, 2011 were incurred in
connection with the sale of an FSO unit and the termination of the charter
contract of one of the Partnership's shuttle tankers.
3. The realized (losses) gains on derivative instruments relate to the amounts
the Partnership actually paid or received to settle such derivative
instruments, and the unrealized gains (losses) on derivative instruments
relate to the change in fair value of such derivative instruments, including
derivative instruments relating to the Dropdown Predecessor, as detailed in
the table below:
Three Months Ended Year Ended
December September December December December
31, 2012 30, 2012 31, 2011 31, 2012 31, 2011
Realized
(losses)
gains
relating to:
Interest
rate swaps (14,728) (14,523) (16,115) (58,596) (58,475)
Foreign
currency
forward
contract 1,104 230 1,132 2,969 4,704
(13,624) (14,293) (14,983) (55,627) (53,771)
Unrealized
gains
(losses)
relating to:
Interest
rate swaps 44,616 (1,437) (1,214) 26,100 (100,306)
Foreign
currency
forward
contracts 195 2,272 (2,982) 3,178 (5,667)
44,811 835 (4,196) 29,278 (105,973)
Total
realized and
unrealized
gains
(losses) on
non-
designated
derivative
instruments 31,187 (13,458) (19,179) (26,349) (159,744)
4. Foreign exchange gain (loss) includes realized gains relating to the amounts
the Partnership received to settle the Partnership's non-designated cross
currency swaps that were entered into as an economic hedge in relation to the
Partnership's Norwegian Kroner (NOK)-denominated unsecured bonds as detailed in
the table below. The Partnership issued NOK 600 million unsecured bonds in 2010
maturing in 2013 and issued NOK 600 million unsecured bonds in 2012 maturing in
2017. Foreign exchange gain (loss) also includes unrealized gains (losses)
relating to the change in fair value of such derivative instruments, partially
offset by unrealized (losses) gains on the revaluation of the NOK bonds as
detailed in the table below:
Three Months Ended Year Ended
December September December December December
31, 2012 30, 2012 31, 2011 31, 2012 31, 2011
Realized
gains on
cross-
currency
swaps 668 634 661 2,992 2,881
Unrealized
gains
(losses) on
cross-
currency
swaps 6,835 6,762 (1,159) 10,700 (1,583)
Unrealized
(losses)
gains on
revaluation
of NOK bonds (6,038) (8,216) 1,872 (13,871) 2,644
5. Results for four conventional tankers (Hamane Spirit, Torben Spirit, Luzon
Spirit and Leyte Sprit) in 2012 plus an additional conventional tanker (Scotia
Spirit) in 2011 have been included in Net income (loss) from discontinued
operations and removed from individual line items of the income statement
related to continuing operations. The amounts included in this release related
to discontinued operations are preliminary, and will be finalized for inclusion
in the Partnership's Form 20-F filing for the year ended December 31, 2012. Any
revisions related to the discontinued operations disclosure are only expected to
impact the income statement classification, and therefore to have no effect on
adjusted net income attributable to the partners or distributable cash flow of
the Partnership for any period, including the fourth quarter of 2012.
TEEKAY OFFSHORE PARTNERS L.P.
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
As at As at As at
December 31, 2012 September 30, 2012 December 31, 2011
(unaudited) (unaudited) (unaudited)
ASSETS
Cash and cash
equivalents 206,339 205,753 179,934
Vessels held for sale 13,250 8,000 19,000
Other current assets 168,998 153,435 148,825
Vessels and equipment 2,327,337 2,400,466 2,539,949
Advances on newbuilding
contracts 127,286 81,868 45,637
Other assets 67,541 63,448 62,627
Intangible assets 15,527 17,056 21,644
Goodwill 127,113 127,113 127,113
Total Assets 3,053,391 3,057,139 3,144,729
LIABILITIES AND EQUITY
Accounts payable and
accrued liabilities 99,569 86,625 99,220
Other current
liabilities 108,302 114,361 99,624
Current portion of
long-term debt 248,385 121,509 229,365
Long-term debt 1,521,247 1,621,909 1,799,711
Other long-term
liabilities 341,844 394,714 393,769
Redeemable non-
controlling interest 28,815 36,241 38,307
Equity:
Non-controlling
interests 44,135 42,711 40,622
Partners' equity 661,094 639,069 444,111
Total Liabilities and
Equity 3,053,391 3,057,139 3,144,729
TEEKAY OFFSHORE PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
Year Ended
December 31, 2012 December 31, 2011
(unaudited) (unaudited)
Cash and cash equivalents provided by
(used for)
OPERATING ACTIVITIES
Net operating cash flow 261,624 254,162
FINANCING ACTIVITIES
Proceeds from drawdown of long-term
debt 318,645 457,530
Scheduled repayments of long-term debt (146,162) (110,694)
Prepayments of long-term debt (445,698) (125,562)
Debt issuance costs (4,361) (682)
Purchase of 49% interest in Teekay
Offshore Operating L.P. - (386,267)
Purchase of vessels from Teekay
Corporation - (60,683)
Equity contribution from joint venture
partner 2,750 3,750
Net proceeds from issuance of common
units 257,229 419,924
Cash distributions paid by the
Partnership (160,905) (129,323)
Cash distributions paid by
subsidiaries to non-controlling
interests (8,787) (36,980)
Purchase of VOC equipment from Teekay
Corporation (12,848) -
Contribution from Teekay Corporation
relating to Dropdown Predecessors - 2,305
Contribution from Teekay Corporation
relating to Rio das Ostras FPSO - 2,000
Net financing cash flow (200,137) 35,318
INVESTING ACTIVITIES
Expenditures for vessels and equipment (87,408) (148,480)
Proceeds from sale of vessels and
equipment 35,235 13,354
Purchase of Piranema Spirit FPSO - (161,851)
Direct financing lease payments
received 17,091 20,948
Net investing cash flow (35,082) (276,029)
Increase in cash and cash equivalents 26,405 13,451
Cash and cash equivalents, beginning
of the year 179,934 166,483
Cash and cash equivalents, end of the
year 206,339 179,934
TEEKAY OFFSHORE PARTNERS L.P.
APPENDIX A - SPECIFIC ITEMS AFFECTING NET INCOME (LOSS)
(in thousands of U.S. dollars)
Set forth below is a reconciliation of the Partnership's unaudited adjusted net
income attributable to the partners, a non-GAAP financial measure, to net income
(loss) attributable to the partners as determined in accordance with GAAP. The
Partnership believes that, in addition to conventional measures prepared in
accordance with GAAP, certain investors use this information to evaluate the
Partnership's financial performance. The items below are also typically excluded
by securities analysts in their published estimates of the Partnership's
financial results. Adjusted net income attributable to the partners is intended
to provide additional information and should not be considered a substitute for
measures of performance prepared in accordance with GAAP.
Three Months Ended Year Ended
December December December December
31, 2012 31, 2011 31, 2012 31, 2011
(unaudited) (unaudited) (unaudited) (unaudited)
Net income (loss)
- GAAP basis 65,702 (37,099) 123,015 (96,871)
Adjustments:
Net (income)
loss
attributable to
non-controlling
interests 2,982 (4,094) (58) (22,454)
Net loss
attributable to
Dropdown
Predecessor - - - 15,075
Net income (loss)
attributable to
the partners 68,684 (41,193) 122,957 (104,250)
Add (subtract)
specific items
affecting net
income (loss):
Foreign exchange
(gains)
losses(1) (1,604) (1,587) 3,305 1,382
Foreign currency
exchange losses
resulting from
hedging
ineffectiveness
(2) 146 96 440 306
Deferred income
tax expense
relating to
unrealized
foreign exchange
gains (3) - - - 10,096
Unrealized
(gains) losses
on derivative
instruments (4) (44,811) 4,196 (29,278) 93,787
Write down of
vessels (5) 13,529 28,549 23,430 36,868
Loss on sale of
vessels (5) 778 - 1,112 171
Components of
discontinued
operations(6) 5,448 29,333 (6,995) 48,820
Deferred income
tax recovery
relating to new
tax structure(7) (8,748) - (8,748) -
VOC revenues
relating to
prior periods(8) (2,280) - (2,280) -
Restructuring
charges and
other (9) 1,222 2,463 (980) 7,346
Non-controlling
interests' share
of items above (3,277) 431 (2,841) 7,662
Total adjustments (39,597) 63,481 (22,835) 206,438
Adjusted net
income
attributable to
the partners 29,087 22,288 100,122 102,188
1. Foreign exchange (gains) losses primarily relate to the Partnership's
revaluation of all foreign currency-denominated monetary assets and
liabilities based on the prevailing exchange rate at the end of each
reporting period and unrealized gains or losses related to the Partnership's
cross currency swaps and exclude the realized gains relating to the cross
currency swaps for outstanding Norwegian bonds of the Partnership.
2. Foreign currency exchange losses resulting from hedging ineffectiveness
include the unrealized losses arising from hedge ineffectiveness from
foreign exchange forward contracts that are or have been designated as
hedges for accounting purposes.
3. Reflects the portion of deferred income tax (recovery) expense related to
unrealized foreign exchange gains. There is no adjustment for this item for
the three and 12 months ended December 31, 2012, as a full valuation
allowance was taken starting in the third quarter of 2011 against this
deferred tax asset.
4. Reflects the unrealized (gains) losses due to changes in the mark-to-market
value of interest rate swaps and foreign exchange forward contracts that are
not designated as hedges for accounting purposes, excluding unrealized
losses of $12.2 million relating to the Dropdown Predecessor for the year
ended December 31, 2011.
5. The write down on vessels relates to the impairment of certain shuttle
tankers and one FSO unit based on their estimated fair value. The loss on
sale of vessels relates to the sale of two 1992-built shuttle tankers in
2012 and the Karratha Spirit FSO unit in 2011.
6. Related to components of net income (loss) from discontinued operations,
including the loss on sale of the Luzon Spirit and the Torben Spirit and the
write down of the Leyte Spirit for the three months and year ending December
31, 2012. In addition, results for the year ended December 31, 2012 include
a termination fee received from Teekay Corporation upon the cancellation of
the Hamane Spirit time-charter contract, offset by the loss on sale of the
Hamane Spirit. The three months and year ended December 31, 2011 include the
write down of the Hamane Spirit and the Torben Spirit. In addition, the year
ended December 31, 2011 includes the write down of the Luzon Spirit and the
Leyte Spirit, the loss on sale of the Scotia Spirit, offset by a tax
recovery on the loss on sale and cancellation fee received, both associated
with the sale of the Scotia Spirit.
7. The deferred income tax recovery for the three and 12 months ended December
31, 2012 relates to a new Norwegian tax structure.
8. The additional net revenues for the three and 12 months ended December
31, 2012 relate to the Partnership entering into a lease agreement in the
fourth quarter of 2012, which allows for the retroactive payment for any VOC
voyages relating to the period prior to 2012.
9. Other items for the three and 12 months ended December 31, 2012 include
restructuring charges of $1.1 million for the reorganization of the
Partnership's marine operations. For the 12 months ended December 31, 2012,
other items also includes a one-time reversal of an income tax accrual of
($2.8) million. Other items for the three and 12 months ended December
31, 2012 and 2011 include revaluations of a fair value adjustment of
contingent consideration liability associated with the purchase of the Scott
Spirit shuttle tanker for $0.1 million, $0.7 million, $0.8 million and $0.8
million, respectively. Other items for the three and 12 months ended
December 31, 2011 include $1.7 million related to a one-time success fee
relating to the purchase of the Piranema Spirit. Other items for the 12
months ended December 31, 2011 include restructuring charges of $3.9 million
incurred in connection with the sale of an FSO unit and the termination of
the charter contract of one of the Partnership's shuttle tankers and $0.9
million related to a one-time management fee.
TEEKAY OFFSHORE PARTNERS L.P.
APPENDIX B - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(in thousands of U.S. dollars)
Description of Non-GAAP Financial Measure - Distributable Cash Flow (DCF)
Distributable cash flow represents net income (loss) adjusted for depreciation
and amortization expense, non-controlling interest, non-cash items,
distributions relating to equity financing of newbuilding installments, vessel
acquisition costs, estimated maintenance capital expenditures, unrealized gains
and losses from derivatives, non-cash income taxes and unrealized foreign
exchange related items. Maintenance capital expenditures represent those capital
expenditures required to maintain over the long-term the operating capacity of,
or the revenue generated by, the Partnership's capital assets. Distributable
cash flow is a quantitative standard used in the publicly-traded partnership
investment community to assist in evaluating a partnership's ability to make
quarterly cash distributions. Distributable cash flow is not defined by GAAP and
should not be considered as an alternative to net loss or any other indicator of
the Partnership's performance required by GAAP. The table below reconciles
distributable cash flow to net income (loss) for the quarters ended December
31, 2012 and December 31, 2011, respectively.
Three Months Ended
December 31, 2012 December 31, 2011
(unaudited) (unaudited)
Net income (loss) 65,702 (37,099)
Add (subtract):
Write down of vessels 13,529 28,549
Loss on sale of vessels 778 -
Non-cash items in discontinued
operations(1) 5,668 31,834
Depreciation and amortization 47,029 45,693
Foreign exchange and other, net (3,250) 2,444
Deferred income tax recovery (9,401) (541)
Distributions relating to equity
financing of newbuilding
installments 2,384 914
Estimated maintenance capital
expenditures (26,573) (26,970)
Unrealized (gains) losses on non-
designated derivative instruments
(2) (44,811) 4,196
Distributable Cash Flow before Non-
Controlling Interest 51,055 49,020
Non-controlling interests' share of
DCF (5,126) (7,464)
Distributable Cash Flow 45,929 41,556
1. Includes write down of vessels, loss on sale of vessels and depreciation
included within discontinued operations.
2. Derivative instruments include interest rate swaps and foreign exchange
forward contracts.
TEEKAY OFFSHORE PARTNERS L.P.
APPENDIX C - SUPPLEMENTAL SEGMENT INFORMATION
(in thousands of U.S. dollars)
Three Months Ended December 31, 2012
(unaudited)
Shuttle Conventional
Tanker FPSO Tanker FSO
Segment Segment Segment Segment Total
Net revenues (1) 118,322 59,709 12,530 20,861 211,422
Vessel operating expenses 33,794 26,819 3,027 15,070 78,710
Time-charter hire expense 15,493 - - - 15,493
Depreciation and amortization 29,394 12,726 2,380 2,529 47,029
General and administrative 10,629 6,366 (206) 933 17,722
Write down of vessels 13,529 - - - 13,529
Loss on sale of vessels 778 - - - 778
Restructuring charges 647 - 468 - 1,115
Income from vessel operations 14,058 13,798 6,861 2,329 37,046
Three Months Ended December 31, 2011
(unaudited)
Shuttle Conventional
Tanker FPSO Tanker FSO
Segment Segment Segment Segment Total
Net revenues(1) 122,117 46,925 12,629 14,804 196,475
Vessel operating expenses 37,527 19,494 2,615 6,747 66,383
Time-charter hire expense 17,406 - - - 17,406
Depreciation and amortization 29,519 10,389 2,893 2,892 45,693
General and administrative 11,098 5,578 790 800 18,266
Write down of vessels 19,951 - - 8,598 28,549
Income from vessel operations 6,616 11,464 6,331 (4,233) 20,178
1. Net revenues represents revenues less voyage expenses, which comprise all
expenses relating to certain voyages, including bunker fuel expenses, port
fees, canal tolls and brokerage commissions. Net revenues is a non-GAAP
financial measure used by certain investors to measure the financial
performance of shipping companies. Please see the Partnership's web site at
www.teekayoffshore.com for a reconciliation of this non-GAAP measure as used
in this release to the most directly comparable GAAP financial measure.
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements (as defined in Section 21E of
the Securities Exchange Act of 1934, as amended) which reflect management's
current views with respect to certain future events and performance, including
statements regarding: factors affecting the Partnership's future growth
prospects and stability of its distributable cash flow, including the timing of
the acquisition of the Voyageur Spirit FPSO from Teekay; the impact of the
Voyageur Spirit FPSO acquisition and BG shuttle tanker newbuildings on the
Partnership's cash flows; the potential acquisition of a HiLoad Dynamic
Positioning unit from Remora AS and associated 10-year time-charter contract
with Petroleo Brasileiro SA; the potential for the Partnership to acquire future
HiLoad projects developed by Remora AS; the potential conversion of the Navion
Clipper into an FSO and associated 10-year charter contract; the potential for
Teekay to offer additional vessels to the Partnership and the Partnership's
acquisition of any such vessels, including the Petrojarl Foinaven, the Cidade de
Itajai, the Hummingbird Spirit and the newbuilding FPSO unit that will service
the Knarr field under contract with BG Norge Limited; the timing of delivery of
vessels under construction or conversion; the timing and amount of future
increases to the Partnership's quarterly cash distribution, including the cash
distribution for the first quarter of 2013 to be paid in May 2013; preliminary
results of discontinued operation; and the potential for the Partnership to
acquire other vessels or offshore projects from Teekay or directly from third
parties.
The following factors are among those that could cause actual results to differ
materially from the forward-looking statements, which involve risks and
uncertainties, and that should be considered in evaluating any such statement:
vessel operations and oil production volumes; significant changes in oil prices;
variations in expected levels of field maintenance; increased operating
expenses; different-than-expected levels of oil production in the North Sea and
Brazil offshore fields; potential early termination of contracts; potential
delays to the commencement of the Voyageur Spirit FPSO charter contract or the
BG time charters; failure of Teekay to offer to the Partnership additional
vessels; the inability of the joint venture between Teekay and Odebrecht to
secure new Brazil FPSO projects that may be offered for sale to the Partnership;
the inability of Remora to develop future HiLoad DP units; failure to obtain
required approvals by the Conflicts Committee of Teekay Offshore's general
partner to acquire other vessels or offshore projects from Teekay or third
parties; the Partnership's ability to raise adequate financing to purchase
additional assets; finalization of the time-charter contract relating to the
HiLoad DP unit and of negotiations and documentation relating to the proposed
FSO project; 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, 2011. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with respect thereto or any change in events, conditions or
circumstances on which any such statement is based.
Contact Information
Contacts:
Teekay Offshore Partners L.P.
Kent Alekson
Investor Relations Enquiries
+1 (604) 609-6442
www.teekayoffshore.com
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Teekay Offshore Partners L.P. via Thomson Reuters ONE
[HUG#1680143]
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Datum: 21.02.2013 - 17:18 Uhr
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