Teekay LNG Partners Reports Second Quarter 2015 Results
(firmenpresse) - HAMILTON, BERMUDA -- (Marketwired) -- 08/06/15 -- Highlights
Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE: TGP), today reported the Partnership's results for the quarter ended June 30, 2015. During the second quarter of 2015, the Partnership generated distributable cash flow(1) of $65.8 million, compared to $61.5 million in the same period of the prior year. The increase in distributable cash flow was primarily due to lower interest expense resulting from the December 2014 termination of capital leases for, and the subsequent refinancing of, three 70 percent-owned liquefied natural gas (LNG) carriers and an increase in the charter rates for the Partnership's four 33 percent-owned LNG carriers servicing the Angola LNG project and two of the Partnership's Suezmax tankers. These increases were partially offset by the termination of the charter contract for the Partnership's 52 percent-owned Magellan Spirit LNG carrier in March 2015 (which termination the Partnership's Malt Joint Venture is currently disputing), the scheduled expiration of the charter contract for the Partnership's 52 percent-owned Methane Spirit LNG carrier in March 2015 and the sale of one 2001-built conventional tanker in August 2014.
On July 2, 2015, the Partnership declared a cash distribution of $0.70 per unit for the quarter ended June 30, 2015. The cash distribution will be paid on August 14, 2015 to all unitholders of record on July 14, 2015.
CEO Commentary
"The Partnership generated stronger than expected cash flow coverage for the second quarter, primarily due to higher than expected revenues from our Exmar LPG and Angola joint ventures," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "We also successfully secured contracts with BP for its Freeport LNG volumes. This is our second U.S. LNG export project and will add to the Partnership's strong portfolio of long-term fee-based contracted cash flows with up to two vessels operating under fixed-rate contracts commencing in 2019. This transaction further supports our belief that fuel-efficient MEGI LNG carriers are becoming the new standard in global LNG shipping."
Mr. Evensen continued, "The Partnership's cash flows are stable and growing, supported by a large and diversified portfolio of long-term fee-based contracts of $11.4 billion with an average remaining contract duration of approximately 13 years and no direct commodity price exposure. Despite the current volatility in the energy markets, the long-term fundamentals in the LNG market remain attractive. With a strong pipeline of contracted growth projects and access to competitive bank financing and multiple capital markets, we believe the Partnership is well-positioned for further distributable cash flow growth."
Recent Transactions
Charter Contacts with BP for up to Two LNG Carrier Newbuilds
In June 2015, Teekay LNG entered into a 13-year charter contract with BP Shipping Limited (BP) for one LNG carrier newbuilding, plus an option exercisable by BP by the end of the third quarter of 2015 for one additional LNG carrier charter under similar terms. The vessels, including the optional charter if exercised by BP, will primarily provide LNG transportation of BP's LNG volumes from the Freeport LNG project located on Quintana Island near Freeport, Texas, which is scheduled for start-up in 2018 and will consist of three LNG trains with a total capacity of 13.2 million metric tonnes per annum.
In connection with the signing of the BP contracts, the Partnership ordered two fuel-efficient 174,000 cubic meter LNG carrier newbuildings to be constructed by Hyundai Samho Heavy Industries Co., Ltd. of South Korea for a fully built-up cost of approximately $425 million, scheduled for delivery in the first quarter of 2019. As part of the order, the Partnership received an option to order one additional vessel. These newbuildings will be constructed with M-type, Electronically Controlled, Gas Injection (MEGI) twin engines, which are designed to be significantly more fuel-efficient and have lower emission levels than engines currently used in LNG shipping.
Financial Summary
The Partnership reported adjusted net income attributable to the partners(1) of $39.5 million for the quarter ended June 30, 2015, compared to $42.6 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of increasing net income by $18.6 million and $1.1 million for the three months ended June 30, 2015 and 2014, respectively, primarily relating to unrealized gains and losses on derivative instruments and foreign currency exchange gains and losses, as detailed in Appendix A to this release. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $58.1 million and $43.6 million for the three months ended June 30, 2015 and 2014, respectively.
Adjusted net income attributable to the partners for the three months ended June 30, 2015 decreased from the same period in the prior year, primarily due to the Magellan Spirit LNG carrier grounding incident and disputed off- hire and related charter contract termination during the first quarter of 2015, the scheduled expiration of the charter contract for the Methane Spirit LNG carrier in mid-March 2015 and the sale of one conventional tanker in August 2014, partially offset by the termination of capital leases for, and the subsequent refinancing at a lower interest rate of, three LNG carriers owned by the Partnership's RasGas II Joint Venture in December 2014, and the acquisition of one LPG carrier, the Norgas Napa, in November 2014.
For accounting purposes, the Partnership is required to recognize the changes in the fair value of its outstanding derivative instruments that are not designated as hedges for accounting purposes in net income. This method of accounting does not affect the Partnership's cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized gains or losses on the consolidated statements of income as detailed in notes 1, 2 and 3 to the Consolidated Statements of Income and Comprehensive Income included in this release.
Operating Results
The following table highlights certain financial information for Teekay LNG's two segments: the Liquefied Gas Segment and the Conventional Tanker Segment (please refer to the "Teekay LNG's Fleet" section of this release below and Appendices C through F for further details).
Liquefied Gas Segment
Cash flow from vessel operations from the Partnership's Liquefied Gas segment, excluding equity accounted vessels, was $60.3 million in the second quarter of 2015 compared to $61.9 million in the same quarter of the prior year. The decrease was primarily due to the depreciation of the Euro against the U.S. Dollar compared to the same quarter of the prior year and increased project-related costs. These decreases were partially offset by the acquisition of the Norgas Napa in November 2014 and charter rate adjustments associated with the Arctic Spirit and Polar Spirit.
Cash flow from vessel operations from the Partnership's equity accounted vessels in the Liquefied Gas segment was $47.9 million in the second quarter of 2015 compared to $50.9 million in the same quarter of the prior year. The decrease was primarily due to the disputed termination of the charter contract for the Magellan Spirit in March 2015 and the scheduled expiration of the charter contract for the Methane Spirit in mid-March 2015. Both the Magellan Spirit and Methane Spirit are owned through the Partnership's 52 percent interest in the Malt Joint Venture with Marubeni Corporation. The decreases were partially offset by increased charter rates for the Partnership's four 33 percent-owned LNG carriers servicing the Angola LNG project and increased cash flows from the Partnership's 50 percent-owned LPG joint venture, Exmar LPG BVBA, as a result from the addition of four LPG newbuildings delivered during 2014 and early 2015, net of the sale of four older LPG carriers during 2014.
Conventional Tanker Segment
Cash flow from vessel operations from the Partnership's Conventional Tanker segment increased to $11.5 million in the second quarter of 2015 compared to $9.7 million in the same quarter of the prior year. The increase is due to higher charter rates earned by the Partnership's two Suezmax tankers, the Bermuda Spirit and Hamilton Spirit, which reverted back to their original higher rates in October 2014 after a two-year reduction, partially offset by the sale of one 2001-built Suezmax tanker in August 2014.
Teekay LNG's Fleet
The following table summarizes the Partnership's fleet as of August 1, 2015:
Liquidity and Continuous Offering Program Update
In 2013, the Partnership implemented a continuous offering program (COP) under which the Partnership may issue new common units at market prices up to a maximum aggregate amount of $100 million. During the second quarter of 2015, the Partnership sold an aggregate of 279,792 common units under the COP, generating net proceeds of approximately $9.6 million. Since initiation of the program, the Partnership has sold an aggregate of 1,614,326 common units under the COP, generating net proceeds of approximately $63.0 million (including the general partner's 2 percent contribution and net of offering costs).
As of June 30, 2015, the Partnership had total liquidity of $244.1 million (comprised of $107.0 million in cash and cash equivalents and $137.1 million in undrawn credit facilities).
Conference Call
The Partnership plans to host a conference call on Thursday, August 6, at 11:00 a.m. (ET) to discuss the results for the second quarter of 2015. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
A supporting Second Quarter 2015 Earnings Presentation will also be available at in advance of the conference call start time.
The conference call will be recorded and made available until Thursday, August 20, 2015. 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 9263289.
About Teekay LNG Partners L.P.
Teekay LNG Partners is one of the world's largest independent owners and operators of LNG carriers, providing LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts through its interests in 50 LNG carriers (including one LNG regasification unit and 21 newbuildings), 30 LPG/Multigas carriers (including three in-chartered LPG carriers and eight newbuildings) and eight conventional tankers. The Partnership's interests in these vessels range from 20 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (NYSE: TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.
Teekay LNG Partners' common units trade on the New York Stock Exchange under the symbol "TGP".
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 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.
Distributable cash flow represents net income adjusted for depreciation and amortization expense, non -cash items, estimated maintenance capital expenditures, unrealized gains and losses from derivatives, distributions relating to equity financing of newbuilding installments, equity income, adjustments for direct financing leases to a cash basis, and 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 required by GAAP and should not be considered as an alternative to net income or any other indicator of the Partnership's performance required by GAAP. The table below reconciles distributable cash flow to net income.
Net voyage revenues represents voyage revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net voyage revenues is included because certain investors use this data to measure the financial performance of shipping companies. Net voyage revenues is not required by GAAP and should not be considered as an alternative to voyage revenues or any other indicator of the Partnership's performance required by GAAP.
Cash flow from vessel operations from consolidated vessels represents income from vessel operations before (a) depreciation and amortization expense, (b) amortization of in-process revenue contracts included in voyage revenues, and includes (c) adjustments for direct financing leases to a cash basis, realized gains or losses on the Toledo Spirit derivative contract, and the revenue for two Suezmax tankers recognized to a cash basis. The Partnership's direct financing leases for the periods indicated relates to the Partnership's 69 percent interest in two LNG carriers, the Tangguh Sago and Tangguh Hiri, and the two LNG carriers acquired from Awilco. The Partnership's cash flow from vessel operations from consolidated vessels does not include the Partnership's cash flow from vessel operations from its equity accounted joint ventures. Cash flow from vessel operations is included because certain investors use cash flow from vessel operations to measure a company's financial performance, and to highlight this measure for the Partnership's consolidated vessels. Cash flow from vessel operations from consolidated vessels is not required by GAAP and should not be considered as an alternative to net income or any other indicator of the Partnership's performance required by GAAP.
Cash flow from vessel operations from equity accounted vessels represents income from vessel operations before (a) depreciation and amortization expense, (b) amortization of in-process revenue contracts, (c) gain on sale of vessels and includes (d) adjustments for direct financing leases to a cash basis. Cash flow from vessel operations from equity accounted vessels is included because certain investors use cash flow from vessel operations to measure a company's financial performance, and to highlight this measure for the Partnership's equity accounted joint ventures. Cash flow from vessel operations from equity-accounted vessels is not required by GAAP and should not be considered as an alternative to equity income or any other indicator of the Partnership's performance required by GAAP.
Forward Looking Statements
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: the Partnership's expected future revenues and remaining average contract duration; fundamentals in the liquefied gas industry; the delivery timing and total cost of newbuilding vessels, the commencement of related time charter contracts and the effect of these contracts on the Partnership's distributable cash flows; the timing and certainty of BP contracting one additional LNG carrier on similar terms as the first vessel; expected fuel-efficiency and emission levels associated with the MEGI engines; the timing and certainty of exercising the Partnership's existing option to order one additional MEGI LNG carrier newbuilding; the outcome of the Partnership's dispute over the Magellan Spirit offhire incident and claimed charter contract termination; the Partnership's access to competitive bank financing; and the timing of the commencement of operations of the Freeport LNG project and the expected total LNG production capacity of the project. 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: potential shipyard construction delays, newbuilding specification changes or cost overruns; changes in production of LNG or LPG, either generally or in particular regions; changes in trading patterns or timing of start-up of new LNG liquefaction and regasification projects significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of long-term contracts of existing vessels in the Teekay LNG fleet; the inability of charterers to make future charter payments; the inability of the Partnership to renew or replace long-term contracts on existing vessels; actual performance of the MEGI engines; factors affecting the outcome of the Partnership's dispute over the Magellan Spirit; the Partnership's ability to raise financing for its existing newbuildings or to purchase additional vessels or to pursue other projects; timely completion of the Freeport LNG project as currently designed; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2014. The Partnership expressly disclaims any obligation 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.
Contacts:
For Investor Relations enquiries:
Ryan Hamilton
+1 (604) 609-6442
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Datum: 06.08.2015 - 06:00 Uhr
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