Teekay Offshore Partners Reports First Quarter 2016 Results
/EINPresswire.com/ -- HAMILTON, BERMUDA -- (Marketwired) -- 05/19/16 -- Highlights
-- Generated distributable cash flow(1) of $62.0 million, or $0.58 per
common unit, in the first quarter of 2016.
-- Generated cash flow from vessel operations(2) of $166.1 million in the
first quarter of 2016, an increase of 22 percent from the same period of
the prior year.
-- Declared first quarter 2016 cash distribution of $0.11 per common unit.
-- Executing on financing initiatives to address Teekay Offshore's 2016 and
2017 funding requirements, which the Partnership expects to finalize in
June 2016.
-- Completed the sale of two conventional tankers and one shuttle tanker
for total gross proceeds of approximately $55 million.
-- Total liquidity of approximately $336 million as at March 31, 2016.
(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).
(2) Cash flow from vessel operations (CFVO) is a non-GAAP financial measure
used by certain investors to measure the financial performance of
shipping companies. CFVO should not be considered as an alternative to
net income, equity income or any other indicator of the Partnership's
performance required by GAAP. Please refer to Appendix E and F
included in this release for a description and reconciliation of this
non-GAAP financial measure to the most directly comparable GAAP
financial measure.
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 March 31, 2016. During the first quarter of 2016, the Partnership generated distributable cash flow(1) of $62.0 million, compared to $60.6 million in the same period of the prior year. The increase in distributable cash flow was primarily due to the acquisition of the Petrojarl Knarr (Knarr) floating production, storage and offloading (FPSO) unit in July 2015, the commencement of the Arendal Spirit unit for maintenance and safety (UMS) charter contract in June 2015, and the commencement of the East Coast Canada shuttle tanker contracts in June 2015. These increases were partially offset by the reduction in revenue earned on the Petrojarl Varg (Varg) FPSO unit as it prepares to come off field in August 2016, the expiration of two shuttle tanker contracts in the second quarter of 2015, and the sale of two conventional tankers and one shuttle tanker during 2015.
On April 1, 2016, the Partnership declared a cash distribution of $0.11 per common unit for the quarter ended March 31, 2016. The cash distribution was paid on May 13, 2016 to all unitholders of record on April 29, 2016.
CEO Commentary
"The Partnership generated higher cash flows in the first quarter of 2016 compared to the same period in the prior year as our fleet continues to operate at high uptime and utilization," commented Peter Evensen, Chief Executive Officer of Teekay Offshore GP LLC. "The increase in cash flow was mainly driven by various growth projects that delivered during 2015, which more than offset the lower revenue from the Varg FPSO as the unit begins to wind down operations after almost 18 years on the Varg field. We continue to receive a strong level of customer interest in the Varg FPSO for various other offshore production opportunities in Norway."
Mr. Evensen continued, "Since reporting our earnings in February 2016, we have made significant progress toward addressing the Partnership's 2016 and 2017 funding needs and I am pleased to report that we have completed, or are nearing completion of, a number of financing initiatives which we believe will cover all of our liquidity requirements over the medium-term. This includes new committed facilities for our East Coast Canada shuttle tankers, refinancing $75 million of the existing Varg FPSO debt facility, an agreement to extend the majority of our 2017 and 2018 Norwegian bond maturities to late-2018, and discussions with the shipyard to defer the delivery of two UMS newbuildings. We are also in advanced discussions with investors on a new $200 million preferred equity issuance."
Mr. Evensen continued, "Upon our anticipated completion of these various initiatives, which we expect will occur prior to the end of June 2016, the Partnership's financial position will be significantly strengthened. Importantly, we will have secured all the necessary financing for our pipeline of growth projects delivering through early-2018 which, once delivered, are expected to add over $200 million to Teekay Offshore's annual cash flow from vessel operations, including our 50 percent share of cash flows from the Libra FPSO."
Summary of Recent Events
Financing Initiatives
Since early 2016, the Partnership has been negotiating a series of financing initiatives intended to fund its unfunded capital expenditures and upcoming debt maturities. The main financing initiatives include:
-- obtaining additional bank financing, including a $250 million debt
facility for the three East Coast of Canada newbuilding shuttle tankers,
a $40 million debt facility for six un-mortgaged vessels, and a new $35
million tranche added to an existing debt facility secured by two
shuttle tankers;
-- refinancing $75 million of an existing revolving credit facility
relating to the Varg FPSO unit;
-- extending the majority of the principal maturity payments to late-2018
for two of the Partnership's existing NOK senior unsecured bonds,
previously due in January 2017 and January 2018;
-- extending beyond 2018 the maturity date of $200 million of existing
intercompany loans made by Teekay Corporation to the Partnership;
-- issuing $200 million of preferred equity; and
-- deferring the delivery of the two remaining UMS newbuildings.
Completion of each of these initiatives is subject to, and conditioned upon, completion of each of the other initiatives described above, as well as the financing initiatives being undertaken by Teekay Corporation. Please refer to Teekay Corporation's first quarter 2016 earnings release for additional information regarding these initiatives.
In April 2016, the Partnership completed the new $35 million tranche on an existing debt facility secured by two shuttle tankers. As of May 18, 2016, the Partnership has received lender commitments for the other bank financing initiatives, received a majority of lender commitments for the Varg FPSO refinancing, received commitments from a majority of the NOK bondholders to extend the bond maturities (only 66.7% of the votes are required to approve the proposal), extended the $200 million Teekay Corporation intercompany loan maturity, is in discussions to defer the delivery of the two remaining UMS newbuildings, and is in advanced discussions relating to the preferred equity financing. The Partnership expects to complete all these initiatives before June 30, 2016.
Arendal Spirit UMS Update
On April 21, 2016, during the process of lifting the gangway connecting the Arendal Spirit UMS to an FPSO unit in a period of heavy waves, the gangway of the Arendal Spirit suffered extensive damage, resulting in the UMS being declared off-hire by its charterer, Petrobras. The Partnership is arranging to replace this gangway with the gangway from the second UMS newbuilding, which is currently in the process of being transported from the shipyard in China to Brazil. The Partnership anticipates having the new gangway installed on the Arendal Spirit by mid-June, at which point the unit is expected to recommence full operations.
Sale-leaseback of Two Conventional Tankers
In March 2016, the Partnership completed the sale of two conventional tankers, the Kilimanjaro Spirit and Fuji Spirit, to a third party for aggregate sales proceeds of approximately $50 million. After repaying existing debt secured by these vessels, this transaction added approximately $30 million to the Partnership's liquidity position. Related to the sale of these vessels, the Partnership has arranged to charter back both vessels for a period of three-years with an additional one-year extension option at $23,000 per day and $22,750 per day, respectively. One vessel has been fixed on a two-year time charter-out contract at $25,000 per day and the other vessel is currently trading in the spot conventional tanker market.
Sale of One Shuttle Tanker
In January 2016, the Partnership completed the sale of one shuttle tanker, the Navion Torinita, to a third party for aggregate sale proceeds of approximately $5 million.
Financial Summary
The Partnership reported adjusted net income attributable to the partners(1) of $44.0 million for the quarter ended March 31, 2016, compared to $40.5 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 decreasing net income by $48.4 million and $57.7 million for the quarters ended March 31, 2016 and 2015, respectively, as detailed in Appendix A to this release. Including these items, the Partnership reported, on a GAAP basis, net loss attributable to the partners of $4.4 million for the first quarter of 2016, compared to a net loss attributable to the partners of $17.2 million in the same period of the prior year. Net revenues(2) increased to $288.4 million for the first quarter of 2016, compared to $242.5 million in the same period of the prior year.
Adjusted net income attributable to the partners for the three months ended March 31, 2016 increased from the same period in the prior year mainly due to the acquisition of the Knarr FPSO unit on July 1, 2015, the Arendal Spirit UMS commencing its charter contract in June 2015, and the commencement of the East Coast of Canada shuttle tanker contracts in June 2015. These increases were partially offset by a reduction in revenue earned relating to the Varg FPSO unit as it prepares to come off field in August 2016, the expiration of two shuttle tanker contracts in the second quarter of 2015, and the sale of two conventional tankers and one shuttle tanker during 2015.
For accounting purposes, the Partnership is required to recognize, through the consolidated statements of (loss) income, changes in the fair value of 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 financial measure to the most
directly comparable financial measure under GAAP and information about
specific items affecting net loss that are typically excluded by
securities analysts in their published estimates of the Partnership's
financial results.
(2) Net revenues is a non-GAAP financial measure used by certain investors
to measure the financial performance of shipping companies. Please
refer to Appendix C included in this release for a reconciliation of
this non-GAAP financial measure to the most directly comparable
financial measure under GAAP.
Operating Results
The following table highlights certain financial information for Teekay Offshore's six segments: the FPSO segment, the Shuttle Tanker segment, the FSO segment, the UMS segment, the Towage segment and the Conventional Tanker segment (please refer to the "Teekay Offshore's Fleet" section of this release below and Appendices C through F for further details).
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Three Months Ended
(in thousands of U.S. March 31, 2016
Dollars) (unaudited)
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Shuttle
FPSO Tanker FSO UMS
Segment Segment Segment Segment
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Net revenues(1) 132,784 112,246 14,151 13,482
Vessel operating expenses (46,915) (28,881) (5,473) (7,927)
Time-charter hire expense - (14,812) - -
Depreciation and
amortization (37,583) (30,648) (2,172) (1,696)
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CFVO from consolidated
vessels(2) 72,131 62,878 9,836 4,862
CFVO from equity accounted
vessels(3) 8,233 - - -
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Total CFVO(2)(3) 80,364 62,878 9,836 4,862
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Three Months Ended
(in thousands of U.S. March 31, 2015
Dollars) (unaudited)
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Shuttle
FPSO Tanker FSO UMS
Segment Segment Segment Segment(4)
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Net revenues(1) 98,275 118,561 14,354 -
Vessel operating expenses (36,766) (34,317) (6,359) -
Time-charter hire expense - (6,321) - -
Depreciation and
amortization (24,485) (28,367) (2,920) -
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CFVO from consolidated
vessels(2) 44,118 67,738 8,531 (507)
CFVO from equity accounted
vessel(3) 8,854 - - -
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Total CFVO(2)(3) 52,972 67,738 8,531 (507)
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Three Months Ended
(in thousands of U.S. March 31, 2016
Dollars) (unaudited)
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Conventional
Towage Tanker
Segment Segment Total
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Net revenues(1) 7,565 8,136 288,364
Vessel operating expenses (4,885) (1,271) (95,352)
Time-charter hire expense - (510) (15,322)
Depreciation and
amortization (2,823) - (74,922)
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CFVO from consolidated
vessels(2) 1,967 6,182 157,856
CFVO from equity accounted
vessels(3) - - 8,233
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Total CFVO(2)(3) 1,967 6,182 166,089
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Three Months Ended
(in thousands of U.S. March 31, 2015
Dollars) (unaudited)
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Conventional
Towage Tanker
Segment Segment Total
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Net revenues(1) 3,782 7,494 242,466
Vessel operating expenses (751) (1,374) (79,567)
Time-charter hire expense (662) - (6,983)
Depreciation and
amortization (548) (1,674) (57,994)
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CFVO from consolidated
vessels(2) 2,059 5,868 127,807
CFVO from equity accounted
vessel(3) - - 8,854
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Total CFVO(2)(3) 2,059 5,868 136,661
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(1) Net revenues is a non-GAAP financial measure used by certain investors
to measure the financial performance of shipping companies. Please
refer to Appendix C, included in this release for a reconciliation of
this non-GAAP financial measure to the most directly comparable GAAP
financial measure.
(2) CFVO from consolidated vessels represents income (loss) from vessel
operations before depreciation and amortization expense, write-down and
gain on sale of vessels, and amortization of the non-cash portion of
revenue contracts, and includes the realized losses on the settlement
of foreign exchange forward contracts and adjusts for direct financing
leases to a cash basis. CFVO is a non-GAAP financial measure used by
certain investors to measure the financial performance of shipping
companies. CFVO should not be considered as an alternative to net
income, equity income or any other indicator of the Partnership's
performance required by GAAP. Please refer to Appendix E included in
this release for a description and reconciliation of this non-GAAP
financial measure to the most directly comparable GAAP financial
measure.
(3) CFVO from equity accounted vessels represents the Partnership's
proportionate share of CFVO from its equity-accounted vessels, the
Cidade de Itajai FPSO unit and the Libra FPSO conversion project.
Please see Appendix F for a description and reconciliation of CFVO from
equity accounted vessels (a non-GAAP financial measure) as used in this
release to the most directly comparable GAAP financial measure.
(4) The Partnership acquired 100 percent of the outstanding shares of
Logitel Offshore Holding AS (Logitel) during the third quarter of 2014
and operations began in the second quarter of 2015.
FPSO Segment
Cash flow from vessel operations from the Partnership's FPSO segment (which also includes the results from two equity-accounted FPSO units), increased to $80.4 million for the first quarter of 2016, compared to $53.0 million for the same period of the prior year, primarily due to the acquisition of the Knarr FPSO unit from Teekay Corporation in July 2015, partially offset by a reduction in revenue earned relating to the Varg FPSO unit as it prepares to come off field in August 2016. In accordance with the Varg FPSO charter contract, from February 1, 2016 to August 1, 2016, the Partnership does not receive the capital portion of the charter hire but does continue to receive the operating portion of the charter hire.
Shuttle Tanker Segment
Cash flow from vessel operations from the Partnership's Shuttle Tanker segment decreased to $62.9 million for the first quarter of 2016 compared to $67.7 million for the same period of the prior year, primarily due to the sale of Navion Svenita in March 2015 and the expirations of a long-term contract of affreightment and a time-charter out contract over the past year, partially offset by the commencement of the East Coast of Canada shuttle tanker contracts in June 2015 and an increase in charter rates in certain contracts.
FSO Segment
Cash flow from vessel operations from the Partnership's FSO segment increased to $9.8 million for the first quarter of 2016, compared to $8.5 million for the same period of the prior year, primarily due to lower crew costs due to the strengthening of the U.S. Dollar compared to the same period of the prior year.
UMS Segment
Cash flow from vessel operations from the Partnership's UMS segment increased to $4.9 million for the first quarter of 2016, due to the Arendal Spirit UMS commencing its charter contract with Petrobras in June 2015.
Towage Segment
Cash flow from vessel operations from the Partnership's Towage segment decreased slightly to $2.0 million for the first quarter of 2016, compared to $2.1 million for the same period of the prior year as the increase in fleet size during 2015 was offset by lower charter rates and utilization.
Conventional Tanker Segment
Cash flow from vessel operations from the Partnership's Conventional Tanker segment increased to $6.2 million for the first quarter of 2016, compared to $5.9 million for the same period of the prior year, primarily due to a $4.0 million early termination fee received from Teekay Corporation relating to the charter contract termination for the Kilimanjaro Spirit during the first quarter of 2016, partially offset by the sale of two conventional tankers, the SPT Explorer and Navigator Spirit, in the fourth quarter of 2015.
Teekay Offshore's Fleet
The following table summarizes Teekay Offshore's fleet as of May 1, 2016.
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Number of Vessels
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Committed
Newbuildings /
Owned Chartered-in Conversions /
Vessels Vessels Upgrade Total
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Shuttle Tanker
Segment 29(i) 3 3(ii) 35
FPSO Segment 6(iii) - 2(iv) 8
FSO Segment 6 - 1(v) 7
Towage Segment 6 - 4(vi) 10
Conventional Segment - 2 - 2
UMS Segment 1 - 2(vii) 3
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Total 48 5 12 65
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(i) Includes six shuttle tankers in which Teekay Offshore's ownership
interest is 50 percent, one shuttle tanker in which Teekay Offshore's
ownership interest is 67 percent and one HiLoad DP unit.
(ii) Includes three Suezmax-size, DP2 shuttle tanker newbuildings
scheduled to be delivered in the third quarter of 2017 through the
first quarter of 2018 for employment under the East Coast of Canada
contracts.
(iii) Includes one FPSO unit, the Cidade de Itajai, in which Teekay
Offshore's ownership interest is 50 percent.
(iv) Consists of the Petrojarl I FPSO upgrade project and Teekay
Offshore's 50 percent ownership interest in the Libra FPSO conversion
project.
(v) Consists of the Randgrid shuttle tanker, which is being converted
into an FSO unit for use with the Gina Krog FSO project scheduled to
deliver early-2017.
(vi) Consists of four long-distance towing and offshore installation
vessel newbuildings scheduled to deliver in the third quarter of 2016
through the first quarter of 2017.
(vii) Consists of two UMS newbuildings scheduled to deliver in late-2019,
subject to the finalization of a deferral agreement with the
shipyard.
Liquidity Update
As of March 31, 2016, the Partnership had total liquidity of $336 million, comprised of cash and cash equivalents.
Availability of 2015 Annual Report
Teekay Offshore Partners L.P. filed its 2015 Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (SEC) on April 18, 2016. Copies are available on Teekay Offshore's website, under "Investors - Teekay Offshore Partners L.P. - Financials & Presentations", at www.teekay.com. Unitholders may request a printed copy of this annual report, including the complete audited financial statements free of charge by contacting Teekay Offshore's Investor Relations.
Conference Call
The Partnership plans to host a conference call on Thursday, May 19, 2016 at 12:00 pm (ET) to discuss the results for the first quarter of 2016. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
-- By dialing 1-800-524-8950 or 416-260-0113, if outside North America, and
quoting conference ID code 4260566.
-- 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 30 days).
An accompanying First Quarter 2016 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.
The conference call will be recorded and available until Thursday, June 2, 2016. This recording can be accessed following the live call by dialing 1-888-203-1112 or 647-436-0148, if outside North America, and entering access code 4260566.
About Teekay Offshore Partners L.P.
Teekay Offshore Partners L.P. is an international provider of marine transportation, oil production, storage, long-distance towing and offshore installation and maintenance and safety services to the offshore oil industry, primarily focusing on the deepwater offshore oil regions of the North Sea, Brazil and the East Coast of Canada. Teekay Offshore is structured as a publicly-traded master limited partnership (MLP) with consolidated assets of approximately $5.7 billion, comprised of 65 offshore assets, including floating production, storage and offloading (FPSO) units, shuttle tankers, floating storage and offtake (FSO) units, units for maintenance and safety (UMS), long-distance towing and offshore installation vessels and conventional tankers. The majority of Teekay Offshore's fleet is employed on medium-term, stable contracts.
Teekay Offshore's common units trade on the New York Stock Exchange under the symbol "TOO".
This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, or any other securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Teekay Offshore Partners L.P.
Summary Consolidated Statements of (Loss) Income
(in thousands of U.S. Dollars, except unit data)
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Three Months Ended
March 31, December 31, March 31,
2016 2015 2015
(unaudited) (unaudited) (unaudited)(1)
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Revenues 306,708 339,142 264,983
Voyage expenses (18,344) (26,607) (22,517)
Vessel operating expenses (95,352) (108,920) (79,567)
Time-charter hire expense (15,322) (15,112) (6,983)
Depreciation and
amortization(2) (74,922) (71,974) (57,994)
General and administrative (14,469) (14,190) (15,020)
(Write-down) and gain on sale
of vessels(3) - (55,645) (13,853)
Restructuring charge - (276) -
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Income from vessel operations 88,299 46,418 69,049
Interest expense (36,026) (33,013) (24,799)
Interest income 404 203 135
Realized and unrealized
(losses) gains on derivative
instruments(4) (60,490) 16,478 (62,808)
Equity income 5,283 913 4,091
Foreign currency exchange
loss(5) (2,838) (827) (4,644)
Other income - net 9 825 254
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(Loss) income before income tax
recovery (5,359) 30,997 (18,722)
Income tax recovery 2,836 15,703 79
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Net (loss) income (2,523) 46,700 (18,643)
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Non-controlling interests in
net (loss) income 1,888 2,829 3,998
Dropdown Predecessor's interest
in net loss(1) - - (5,415)
Preferred unitholders' interest
in net (loss) income 10,750 10,750 2,719
General Partner's interest in
net (loss) income (304) 662 3,764
Limited partners' interest in
net (loss) income (14,857) 32,459 (23,709)
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Weighted-average number of
common units:
- basic 107,055,382 107,016,572 92,391,826
- diluted 107,055,382 107,047,391 92,391,826
Total number of common units
outstanding at end of period 107,128,349 107,026,979 92,413,598
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(1) The Partnership has recast its financial results to include the
financial results of the Knarr FPSO unit relating to the period prior
to its acquisition by the Partnership from Teekay Corporation when it
was under common control, which pre-acquisition results are referred to
in this release as the Dropdown Predecessor. In accordance with GAAP,
business acquisitions of entities under common control that have begun
operations are required to be accounted for in a manner whereby the
Partnership's financial statements are retroactively adjusted to
include the historical results of the acquired vessels from the date
the vessels were originally under the control of Teekay Corporation.
For these purposes, the Knarr FPSO unit was under common control by
Teekay Corporation from March 9, 2015 to July 1, 2015, when it was sold
to the Partnership.
(2) The Partnership considers its shuttle tankers to comprise of two
components: i) a conventional tanker (the "tanker component") and ii)
specialized shuttle equipment (the "shuttle component"). The
Partnership differentiates these two components on the principle that a
shuttle tanker can also operate as a conventional tanker without the
use of the shuttle component. The economics of this alternate use
depend on the supply and demand fundamentals in the two segments.
Historically, the useful life of both components was assessed as 25
years commencing from the date the vessel is delivered from the
shipyard. During the three months ended March 31, 2016, the Partnership
has considered factors related to the ongoing use of the shuttle
component and has reassessed the useful life as being 20 years based on
the challenges associated with adverse market conditions in the energy
sector and other long term factors associated with the global oil
industry. This change in estimate, commencing January 1, 2016, impacts
the entire fleet of its shuttle tanker vessels. Separately, the
Partnership has reviewed the depreciation of the tanker component for
eight vessels in its fleet that are 17 years of age or older. Based on
the Partnership's expected operating plan for these vessels, the
Partnership has reassessed the estimated useful life of the tanker
component for these vessels as 20 years commencing January 1, 2016. The
effect of these changes in estimates was to increase depreciation
expense and net loss by $7.3 million for the three months ended March
31, 2016.
(3) The write-down for the three months ended December 31, 2015 includes
the impairment of two of the Partnership's 2000s-built conventional
tankers and five of the Partnership's 1990s-built shuttle tankers to
their estimated fair value, using appraised values. The write-down of
the two conventional tankers was the result of the expected sale of the
vessels and the vessels were classified as held for sale on the
Partnership's consolidated balance sheet as at December 31, 2015. The
write-down of the five shuttle tankers, which have an average age of
17.5 years, was the result of changes in our expectations of their
future opportunities, primarily due to their advanced age.
The write-down and gain on sale of vessels for the three months ended
March 31, 2015 includes the impairment of two of the Partnership's
1990s-built shuttle tankers to their estimated fair values, using
appraised values, and the gain on the sale of a 1997-built shuttle
tanker, the Navion Svenita. The write-downs were the result of a change
in the operating plans of one vessel and the expected sale of one
vessel.
(4) Realized losses on derivative instruments relate to amounts the
Partnership actually paid to settle derivative instruments, and the
unrealized (losses) gains on derivative instruments relate to the
change in fair value of such derivative instruments, as detailed in the
table below:
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Three Months Ended
March 31, December March 31,
2016 31, 2015 2015
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Realized losses relating to:
Interest rate swaps (13,967) (15,363) (13,419)
Foreign currency forward contracts (2,933) (3,909) (3,253)
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(16,900) (19,272) (16,672)
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Unrealized (losses) gains relating to:
Interest rate swaps (51,921) 34,255 (41,040)
Foreign currency forward contracts 8,331 1,495 (5,096)
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(43,590) 35,750 (46,136)
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Total realized and unrealized (losses)
gains on derivative instruments (60,490) 16,478 (62,808)
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(5) Foreign currency exchange loss includes realized losses relating to the
amounts the Partnership paid to settle its non-designated cross
currency swaps that were entered into as an economic hedge relating to
the Partnership's Norwegian Kroner (NOK)-denominated unsecured bonds as
detailed in the table below. In addition, in the three months ended
March 31, 2016, the realized loss on cross currency swaps includes a
$32.6 million loss on the maturity of the cross currency swaps
associated with the NOK 500 million bond settled during the quarter,
which was offset by a $32.6 million gain on settlement of the bond, not
included in the table below. The Partnership issued NOK 600 million of
unsecured bonds in 2012 maturing in 2017, NOK 1,300 million of
unsecured bonds in 2013, of which NOK 500 million matured in 2016 and
NOK 800 million is maturing in 2018, and NOK 1,000 million of unsecured
bonds in 2014 maturing in 2019. Foreign currency exchange 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:
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Three Months Ended
March 31, December 31, March 31,
2016 2015 2015
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Realized losses on cross currency
swaps (35,276) (2,967) (2,380)
Unrealized gains (losses) on cross
currency swaps 52,895 (9,409) (32,201)
Unrealized (losses) gains on
revaluation of NOK bonds (51,487) 12,615 29,392
Teekay Offshore Partners L.P.
Consolidated Balance Sheets
(in thousands of U.S. Dollars)
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As at As at
March 31, 2016 December 31, 2015
(unaudited) (unaudited)
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ASSETS
Current
Cash and cash equivalents 335,751 258,473
Restricted cash - current 6,836 51,431
Accounts receivable 131,775 153,662
Vessels held for sale - 55,450
Net investments in direct financing
leases - current 6,328 5,936
Prepaid expenses 38,279 34,027
Due from affiliates 57,936 81,271
Other current assets 21,221 20,490
----------------------------------------------------------------------------
Total current assets 598,126 660,740
----------------------------------------------------------------------------
Restricted cash - long-term 15,864 9,089
Vessels and equipment
At cost, less accumulated depreciation 4,250,285 4,348,535
Advances on newbuilding contracts and
conversion costs 470,005 395,084
Net investments in direct financing
leases 9,747 11,535
Investment in equity accounted joint
ventures 70,656 77,647
Deferred tax asset 31,600 30,050
Other assets 76,160 82,341
Goodwill 129,145 129,145
----------------------------------------------------------------------------
Total assets 5,651,588 5,744,166
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current
Accounts payable 20,858 15,899
Accrued liabilities 124,955 91,065
Deferred revenues 49,122 54,378
Due to affiliates 105,326 304,583
Current portion of derivative
instruments 209,795 201,456
Current portion of long-term debt 615,803 485,069
Current portion of in-process revenue
contracts 12,744 12,779
----------------------------------------------------------------------------
Total current liabilities 1,138,603 1,165,229
----------------------------------------------------------------------------
Long-term debt 2,675,444 2,878,805
Derivative instruments 205,997 221,329
Due to affiliates 200,000 -
In-process revenue contracts 59,883 63,026
Other long-term liabilities 186,331 192,258
----------------------------------------------------------------------------
Total liabilities 4,466,258 4,520,647
----------------------------------------------------------------------------
Redeemable non-controlling interest 2,297 3,173
Convertible Preferred Units (10.4
million units issued and outstanding at
March 31, 2016 and December 31, 2015) 252,334 252,498
Equity
Limited partners - common units (107.1
million and 107.0 million units issued
and outstanding at March 31, 2016 and
December 31, 2015, respectively) 603,518 629,264
Limited partners - preferred units (11.0
million units issued and outstanding at
March 31, 2016 and December 31, 2015) 266,925 266,925
General Partner 17,082 17,608
Non-controlling interests 56,009 53,355
Accumulated other comprehensive (loss)
income (12,835) 696
----------------------------------------------------------------------------
Total equity 930,699 967,848
----------------------------------------------------------------------------
Total liabilities and total equity 5,651,588 5,744,166
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Teekay Offshore Partners L.P.
Consolidated Statements of Cash Flows
(in thousands of U.S. Dollars)
----------------------------------------------------------------------------
Three Months Ended
March 31, 2016 March 31, 2015
(unaudited) (unaudited)(1)
----------------------------------------------------------------------------
Cash and cash equivalents provided by (used
for)
OPERATING ACTIVITIES
Net loss (2,523) (18,643)
Non-cash items:
Unrealized (gain) loss on derivative
instruments (9,356) 78,337
Equity income (5,283) (4,091)
Depreciation and amortization 74,922 57,994
Write-down and (gain) on sale of vessels - 13,853
Deferred income tax recovery (3,538) (434)
Amortization of in-process revenue
contracts (3,177) (3,142)
Unrealized foreign currency exchange gain
and other 24,901 (22,532)
Change in non-cash working capital items
related to operating activities 52,860 23,262
Expenditures for dry docking (3,445) (3,963)
----------------------------------------------------------------------------
Net operating cash flow 125,361 120,641
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 50,410 379,717
Scheduled repayments of long-term debt (125,030) (65,812)
Prepayments of long-term debt (21,607) (13,606)
Debt issuance costs (99) (4,658)
Purchase of Teekay Knarr AS and Knarr L.L.C
from Teekay Corporation (net of cash
acquired of $14.2 million) - 14,247
Decrease in restricted cash 37,820 10,870
Cash distributions paid by the Partnership (22,763) (57,722)
Cash distributions paid by subsidiaries to
non-controlling interests (110) (2,610)
Other (204) 288
----------------------------------------------------------------------------
Net financing cash flow (81,583) 260,714
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Net expenditures for vessels and equipment,
including advances on newbuilding contracts
and conversion costs (25,277) (320,989)
Proceeds from sale of vessels and equipment 55,450 8,918
Repayment from joint ventures - 5,225
Direct financing lease payments received 1,396 1,146
Return of capital from (investment in)
equity accounted joint ventures 1,931 (5,016)
Increase in restricted cash - (34,082)
----------------------------------------------------------------------------
Net investing cash flow 33,500 (344,798)
----------------------------------------------------------------------------
Increase in cash and cash equivalents 77,278 36,557
Cash and cash equivalents, beginning of the
period 258,473 252,138
----------------------------------------------------------------------------
Cash and cash equivalents, end of the period 335,751 288,695
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) In accordance with GAAP, the Consolidated Statement of Cash Flows for
the three months ended March 31, 2015 includes the cash flows relating
to the Knarr FPSO unit Dropdown Predecessor for the period from March
9, 2015 to March 31, 2015, when the vessel was under the common control
of Teekay Corporation, but prior to its acquisition by the Partnership.
Teekay Offshore Partners L.P.
Appendix A - Specific Items Affecting Net 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 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
March 31, 2016 March 31, 2015
(unaudited) (unaudited)
----------------------------------------------------------------------------
Net loss - GAAP basis (2,523) (18,643)
Adjustments:
Net income attributable to non-controlling
interests (1,888) (3,998)
Net loss attributable to Dropdown
Predecessor - 5,415
----------------------------------------------------------------------------
Net loss attributable to the partners (4,411) (17,226)
----------------------------------------------------------------------------
Add (subtract) specific items affecting net
loss:
Foreign currency exchange losses(1) 191 4,696
Unrealized losses on derivative
instruments(2) 42,926 36,627
Write-down and (gain) on sale of
vessels(3) - 13,853
Pre-operational costs(4) 5,150 2,307
Early termination fee and other(5) 296 -
Non-controlling interests' share of items
above(6) (202) 251
----------------------------------------------------------------------------
Total adjustments 48,361 57,734
----------------------------------------------------------------------------
Adjusted net income attributable to the
partners 43,950 40,508
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Foreign currency exchange 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 for outstanding Norwegian bonds of
the Partnership and excludes the realized gains and losses relating to
the cross currency swaps.
(2) Reflects the unrealized 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, hedge
ineffectiveness from derivative instruments designated as hedges for
accounting purposes, the unrealized mark-to-market value of the
interest rate swaps within the Cidade de Itajai FPSO joint venture and
hedge ineffectiveness within the Libra FPSO equity accounted joint
venture.
(3) Please refer to footnote (3) of the summary consolidated statements of
loss for a description of the write-down of vessels for the three
months ended March 31, 2015.
(4) Reflects the realized losses on foreign currency forward contracts
relating to upgrade costs on the Petrojarl I FPSO unit and the
conversion costs on the Gina Krog FSO unit, depreciation and
amortization expense relating to the Petrojarl I FPSO unit while
undergoing conversion, and costs associated to the delivery deferral of
the Stavanger Spirit UMS.
(5) Other items for the three months ended March 31, 2016 includes $4.3
million relating to an increase in depreciation expense as a result of
the change in the useful life estimate of the shuttle component of the
Partnership's shuttle tankers from 25 years to 20 years effective
January 1, 2016, partially offset by an early termination fee received
from Teekay Corporation of $4.0 million related to the sale of the
Kilimanjaro Spirit conventional tanker.
(6) Items affecting net loss include amounts attributable to the
Partnership's consolidated non-wholly-owned subsidiaries. Each item
affecting net loss is analyzed to determine whether any of the amounts
originated from a consolidated non-wholly-owned subsidiary. Each amount
that originates from a consolidated non-wholly-owned subsidiary is
multiplied by the non-controlling interests' percentage share in this
subsidiary to arrive at the non-controlling interests' share of the
amount. The amount identified as "non-controlling interests' share of
items above" in the table above is the cumulative amount of the non-
controlling interests' proportionate share of items listed in the
table.
Teekay Offshore Partners L.P.
Appendix B - Reconciliation of Non-GAAP Financial Measure
Distributable Cash Flow
(in thousands of U.S. Dollars, except unit and per unit amounts)
Distributable cash flow represents net loss adjusted for depreciation and amortization expense, non-controlling interests, non-cash items, distributions relating to equity financing of newbuilding installments, distributions on our preferred units, vessel and business acquisition costs, estimated maintenance capital expenditures, write-down and gains on sale of vessels, unrealized 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 loss for the three months ended March 31, 2016 and March 31, 2015.
----------------------------------------------------------------------------
Three Months Ended
March 31,
2016 2015
(unaudited) (unaudited)
----------------------------------------------------------------------------
Net loss (2,523) (18,643)
Net loss attributable to Dropdown
Predecessor - 5,415
----------------------------------------------------------------------------
Net loss attributable to the partners and
non-controlling interests' (2,523) (13,228)
Depreciation and amortization 74,922 53,604
Equity income from joint ventures (5,283) (4,091)
Distributions relating to equity financing
of newbuildings and conversion costs 3,262 3,749
Partnership's share of equity accounted
joint venture's distributable cash flow net
of estimated maintenance capital
expenditures(1) 5,725 5,654
Write-down and (gain on sale) of vessels - 13,853
Distributions relating to preferred units (10,750) (2,719)
Estimated maintenance capital
expenditures(2) (40,671) (29,254)
Unrealized losses on derivative
instruments(3) 43,590 36,097
Foreign currency exchange and other, net (1,373) 4,033
----------------------------------------------------------------------------
Distributable cash flow before non-
controlling interests 66,647 67,698
Non-controlling interests' share of DCF (4,610) (7,086)
----------------------------------------------------------------------------
Distributable Cash Flow 62,037 60,612
Amount attributable to the General Partner (240) (5,264)
----------------------------------------------------------------------------
Limited partners' Distributable Cash Flow 61,797 55,348
Weighted-average number of common units
outstanding 107,055,382 92,391,826
----------------------------------------------------------------------------
Distributable Cash Flow per limited partner
unit 0.58 0.60
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Estimated maintenance capital expenditures relating to the
Partnership's equity accounted joint venture for the three months ended
March 31, 2016 and 2015 were $1.0 million.
(2) Effective January 1, 2016, the Partnership changed the estimated useful
life of its shuttle tankers that are 17 years of age or older and the
shuttle component of its shuttle tankers from 25 years to 20 years.
This resulted in an increase in estimated maintenance capital
expenditure of $3.1 million for the three months ended March 31, 2016.
(3) Derivative instruments include interest rate swaps and foreign exchange
forward contracts.
Teekay Offshore Partners L.P.
Appendix C - Reconciliation of Non-GAAP Financial Measure
Net Revenues
(in thousands of U.S. Dollars)
Net revenues represents 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 revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies, however, it is not required by GAAP and should not be considered as an alternative to revenues or any other indicator of the Partnership's performance required by GAAP.
----------------------------------------------------------------------------
Three Months Ended March 31, 2016
(unaudited)
----------------------------------------------------------------------------
Shuttle
FPSO Tanker FSO UMS
Segment Segment Segment Segment
----------------------------------------------------------------------------
Revenues 132,784 126,184 14,363 13,482
Voyage expenses - (13,938) (212) -
----------------------------------------------------------------------------
Net revenues 132,784 112,246 14,151 13,482
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended March 31, 2015
(unaudited)
----------------------------------------------------------------------------
Shuttle
Tanker FSO UMS
FPSO Segment Segment Segment Segment(1)
----------------------------------------------------------------------------
Revenues 98,275 138,090 14,486 -
Voyage expenses - (19,529) (132) -
----------------------------------------------------------------------------
Net revenues 98,275 118,561 14,354 -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended March 31,
2016
(unaudited)
----------------------------------------------------------------------------
Conventional
Towage Tanker
Segment Segment Total
----------------------------------------------------------------------------
Revenues 11,083 8,812 306,708
Voyage expenses (3,518) (676) (18,344)
----------------------------------------------------------------------------
Net revenues 7,565 8,136 288,364
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended March 31,
2015
(unaudited)
----------------------------------------------------------------------------
Conventional
Towage Tanker
Segment Segment Total
----------------------------------------------------------------------------
Revenues 6,070 8,062 264,983
Voyage expenses (2,288) (568) (22,517)
----------------------------------------------------------------------------
Net revenues 3,782 7,494 242,466
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) The Partnership acquired 100% of the outstanding shares of Logitel
during the third quarter of 2014 and operations began in the second
quarter of 2015.
Teekay Offshore Partners L.P.
Appendix D - Supplemental Segment Information
(in thousands of U.S. Dollars)
----------------------------------------------------------------------------
Three Months Ended March 31, 2016
(unaudited)
----------------------------------------------------------------------------
Shuttle
FPSO Tanker FSO UMS
Segment Segment Segment Segment
----------------------------------------------------------------------------
Net revenues (See Appendix
C) 132,784 112,246 14,151 13,482
Vessel operating expenses (46,915) (28,881) (5,473) (7,927)
Time-charter hire expense - (14,812) - -
Depreciation and
amortization (37,583) (30,648) (2,172) (1,696)
General and administrative (8,674) (3,957) (238) (693)
----------------------------------------------------------------------------
Income (loss) from vessel
operations 39,612 33,948 6,268 3,166
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended March 31, 2016
(unaudited)
----------------------------------------------------------------------------
Conventional
Towage Tanker
Segment Segment Total
----------------------------------------------------------------------------
Net revenues (See Appendix
C) 7,565 8,136 288,364
Vessel operating expenses (4,885) (1,271) (95,352)
Time-charter hire expense - (510) (15,322)
Depreciation and
amortization (2,823) - (74,922)
General and administrative (734) (173) (14,469)
----------------------------------------------------------------------------
Income (loss) from vessel
operations (877) 6,182 88,299
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended March 31, 2015
(unaudited)
----------------------------------------------------------------------------
Shuttle
FPSO Tanker FSO UMS
Segment Segment Segment Segment
----------------------------------------------------------------------------
Net revenues (See Appendix
C) 98,275 118,561 14,354 -
Vessel operating expenses (36,766) (34,317) (6,359) -
Time-charter hire expense - (6,321) - -
Depreciation and
amortization (24,485) (28,367) (2,920) -
General and administrative (4,942) (8,399) (610) (507)
(Write-down) and gain on
sale of vessels - (13,853) - -
----------------------------------------------------------------------------
Income (loss) from vessel
operations 32,082 27,304 4,465 (507)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended March 31, 2015
(unaudited)
----------------------------------------------------------------------------
Conventional
Towage Tanker
Segment Segment Total
----------------------------------------------------------------------------
Net revenues (See Appendix
C) 3,782 7,494 242,466
Vessel operating expenses (751) (1,374) (79,567)
Time-charter hire expense (662) - (6,983)
Depreciation and
amortization (548) (1,674) (57,994)
General and administrative (310) (252) (15,020)
(Write-down) and gain on
sale of vessels - - (13,853)
----------------------------------------------------------------------------
Income (loss) from vessel
operations 1,511 4,194 69,049
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Teekay Offshore Partners L.P.
Appendix E - Reconciliation of Non-GAAP Financial Measure
Cash Flow From (Used For) Vessel Operations From Consolidated Vessels
(in thousands of U.S. Dollars)
Cash flow from (used for) vessel operations from consolidated vessels represents income (loss) from vessel operations before depreciation and amortization expense, write-down and gain on sale of vessels, and amortization of the non-cash portion of revenue contracts, and includes the realized gains and losses on the settlement of foreign exchange forward contracts and adjusts for direct financing leases to a cash basis. Cash flow from vessel operations is included because certain investors use this data to measure a company's financial performance. Cash flow from vessel operations 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.
----------------------------------------------------------------------------
Three Months Ended
March 31, 2016
(unaudited)
----------------------------------------------------------------------------
Shuttle
FPSO Tanker FSO UMS
Segment Segment Segment Segment
----------------------------------------------------------------------------
Income (loss) from vessel
operations (See Appendix D) 39,612 33,948 6,268 3,166
Depreciation and
amortization 37,583 30,648 2,172 1,696
Realized (losses) gains from
the settlements of non-
designated foreign exchange
forward contracts (1,067) (1,718) - -
Amortization of non-cash
portion of revenue
contracts (3,997) - - -
Falcon Spirit revenue
accounted for as
directfinancing lease - - (758) -
Falcon Spirit cash flow from
time-charter contracts - - 2,154 -
----------------------------------------------------------------------------
Cash flow from vessel
operations from
consolidated vessels 72,131 62,878 9,836 4,862
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended
March 31, 2016
(unaudited)
----------------------------------------------------------------------------
Towage Conventional
Segment Tanker Segment Total
----------------------------------------------------------------------------
Income (loss) from vessel
operations (See Appendix D) (877) 6,182 88,299
Depreciation and
amortization 2,823 - 74,922
Realized (losses) gains from
the settlements of non-
designated foreign exchange
forward contracts 21 - (2,764)
Amortization of non-cash
portion of revenue
contracts - - (3,997)
Falcon Spirit revenue
accounted for as
directfinancing lease - - (758)
Falcon Spirit cash flow from
time-charter contracts - - 2,154
----------------------------------------------------------------------------
Cash flow from vessel
operations from
consolidated vessels 1,967 6,182 157,856
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended
March 31, 2015
(unaudited)
----------------------------------------------------------------------------
Shuttle
FPSO Tanker FSO UMS
Segment Segment Segment Segment
----------------------------------------------------------------------------
Income (loss) from vessel
operations (See Appendix D) 32,082 27,304 4,465 (507)
Cash flow from vessel
operations from
consolidated vessels
attributable to Dropdown
Predecessor (8,399) - - -
Depreciation and
amortization 24,485 28,367 2,920 -
Realized losses from the
settlements of non-
designated foreign exchange
forward contracts (908) (1,786) - -
Amortization of non-cash
portion of revenue
contracts (3,142) - - -
Write-down and (gain) on
sale of vessels - 13,853 - -
Falcon Spirit revenue
accounted for as direct
financing lease - - (984) -
Falcon Spirit cash flow from
time-charter contracts - - 2,130 -
----------------------------------------------------------------------------
Cash flow from (used for)
vessel operations from
consolidated vessels 44,118 67,738 8,531 (507)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three Months Ended
March 31, 2015
(unaudited)
----------------------------------------------------------------------------
Conventional
Towage Tanker
Segment Segment Total
----------------------------------------------------------------------------
Income (loss) from vessel
operations (See Appendix D) 1,511 4,194 69,049
Cash flow from vessel
operations from
consolidated vessels
attributable to Dropdown
Predecessor - - (8,399)
Depreciation and
amortization 548 1,674 57,994
Realized losses from the
settlements of non-
designated foreign exchange
forward contracts - - (2,694)
Amortization of non-cash
portion of revenue
contracts - - (3,142)
Write-down and (gain) on
sale of vessels - - 13,853
Falcon Spirit revenue
accounted for as direct
financing lease - - (984)
Falcon Spirit cash flow from
time-charter contracts - - 2,130
----------------------------------------------------------------------------
Cash flow from (used for)
vessel operations from
consolidated vessels 2,059 5,868 127,807
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Teekay Offshore Partners L.P.
Appendix F - Reconciliation of Non-GAAP Financial Measure
Cash Flow From Vessel Operations From Equity Accounted Vessels
(in thousands of U.S. Dollars)
Cash flow from vessel operations from equity accounted vessels represents income from vessel operations before depreciation and amortization expense. Cash flow from equity accounted vessel represents the Partnership's proportionate share of cash flow from vessel operations from its equity-accounted vessels, the Cidade de Itajai FPSO unit and the Libra FPSO conversion project. 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.
----------------------------------------------------------------------------
Three Months Ended Three Months Ended
March 31, 2016 March 31, 2015
(unaudited) (unaudited)
----------------------------------------------------------------------------
At Partnership's At Partnership's
100% 50% 100% 50%
----------------------------------------------------------------------------
Voyage revenues 21,720 10,860 23,711 11,856
Vessel and other operating
expenses (5,254) (2,627) (5,997) (2,999)
Depreciation and
amortization (4,384) (2,192) (4,164) (2,082)
General and administrative - - (6) (3)
----------------------------------------------------------------------------
Income from vessel
operations of equity
accounted vessels 12,082 6,041 13,544 6,772
----------------------------------------------------------------------------
Net interest expense (1,398) (699) (2,630) (1,315)
Realized and unrealized
gains (losses) on
derivative instruments(1) 35 18 (2,522) (1,261)
----------------------------------------------------------------------------
Total other items (1,363) (681) (5,152) (2,576)
----------------------------------------------------------------------------
Net income / equity income
of equity accounted
vessel before income tax
expense 10,719 5,360 8,392 4,196
Income tax expense (154) (77) (210) (105)
----------------------------------------------------------------------------
Net income / equity income
of equity accounted
vessels 10,565 5,283 8,182 4,091
----------------------------------------------------------------------------
Income from vessel
operations of equity
accounted vessels 12,082 6,041 13,544 6,772
Depreciation and
amortization 4,384 2,192 4,164 2,082
----------------------------------------------------------------------------
Cash flow from vessel
operations from equity
accounted vessels 16,466 8,233 17,708 8,854
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Realized and unrealized gains (losses) on derivative instruments for
the three months ended March 31, 2016 and 2015 include total unrealized
gains of $1.2 million ($0.6 million at the Partnership's 50% share) and
unrealized losses of $1.1 million ($0.5 million at the Partnership's
50% share), respectively, related to interest rate swaps for the Cidade
de Itajai FPSO unit and the Libra FPSO conversion project.
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 timing and completion of financing initiatives to address the Partnership's medium-term funding needs and their impact on the Partnership's financial position, including, among other things, plans to refinance and access additional debt, extend the maturities to late-2018 for two NOK senior unsecured bonds, issue equity securities and defer deliveries of two UMSs; the impact of growth projects on the Partnership's future cash flows; securing all the necessary financing for the Partnership's pipeline of growth projects; the replacement of the Arendal Spirit UMS gangway and timing of recommencing operations; the timing and completion of negotiating contract extensions; and the interest of current and potential customers in chartering the Varg FPSO. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: the Partnership's ability to complete its financing initiatives, including delivery deferrals for the UMS newbuildings, to address the Partnership's medium-term funding needs, including financing for existing growth projects; failure of lenders, bondholders, investors or other third parties to approve or agree to the proposed terms of the financing initiatives of the Partnership; failure to achieve or the delay in achieving expected benefits of such financing initiatives; 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, Brazil and East Coast of Canada offshore fields; potential early termination of contracts; shipyard delivery or vessel conversion and upgrade delays and cost overruns; changes in exploration, production and storage of offshore oil and gas, either generally or in particular regions that would impact expected future growth; delays in the commencement of charter contracts; potential delays related to the Arendal Spirit UMS recommencing operations; failure by the Partnership to secure a new charter contract for the Varg FPSO; 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, 2015. 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.
Contacts:
For Investor Relations enquiries contact:
Teekay Offshore Partners L.P.
Ryan Hamilton
+1 (604) 609-6442
www.teekay.com
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