Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. |
Form 20-F ý Form 40- F ¨ |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1). |
Yes ¨ No ý |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7). |
Yes ¨ No ý |
TEEKAY OFFSHORE PARTNERS L.P. | |||
By: | Teekay Offshore GP L.L.C., its general partner | ||
Date: August 3, 2017 | By: | /s/ Edith Robinson | |
Edith Robinson Secretary |
• | Reported GAAP net loss attributable to the partners and preferred unitholders of ($20.0) million and adjusted net income attributable to the partners and preferred unitholders(1) of $10.4 million (excluding items listed in Appendix A to this release) in the second quarter of 2017. |
• | Generated GAAP income from vessel operations of $46.2 million and total cash flow from vessel operations(1) of $134.6 million in the second quarter of 2017. |
• | Generated distributable cash flow(1) of $27.2 million, or $0.18 per common unit, in the second quarter of 2017. |
• | Recently announced entering into agreements for a comprehensive, transformative financial transaction with Brookfield Business Partners which is expected to significantly strengthen Teekay Offshore's financial position and fully finance its existing growth projects. |
• | Entered into a conditional shipbuilding contract to construct two Suezmax DP2 shuttle tanker newbuildings, which will serve under the Master Agreement with Statoil, with options to order up to two additional vessels. |
• | Signed an amendment to the charter contract with QGEP for the Petrojarl I FPSO unit, extending field start-up to the first quarter of 2018. |
• | Took delivery of the Randgrid FSO unit, which is expected to arrive in the North Sea in early-September 2017 and commence operations in early-October 2017 under its charter contract with Statoil. |
Three Months Ended | |||||||
June 30, | March 31, | June 30, | |||||
2017 | 2017 (2) | 2016 | |||||
(in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | ||||
GAAP FINANCIAL COMPARISON | |||||||
Revenues | 264,792 | 276,138 | 284,464 | ||||
Income from vessel operations | 46,218 | 60,458 | 24,271 | ||||
Equity income | 3,425 | 4,475 | 3,626 | ||||
Net (loss) income | (16,466 | ) | 21,263 | (100,129 | ) | ||
Net (loss) income attributable to the partners and preferred unitholders | (20,005 | ) | 18,891 | (102,625 | ) | ||
NON-GAAP FINANCIAL COMPARISON | |||||||
Total cash flow from vessel operations (CFVO) (1) | 134,601 | 141,289 | 144,208 | ||||
Distributable cash flow (DCF) (1) | 27,242 | 30,633 | 45,885 | ||||
Adjusted net income attributable to the partners and preferred unitholders (1) | 10,427 | 15,157 | 23,566 |
(1) | These are non-GAAP financial measures. Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under United States generally accepted accounting principles (GAAP). |
(2) | Please refer to Appendices in the first quarter of 2017 release for a reconciliation of these non-GAAP measures to the most directly comparable financial measures under GAAP. |
• | Brookfield and Teekay Corporation (Teekay) will invest $610 million and $30 million, respectively, in Teekay Offshore at a price of $2.50 per common unit and receive 65.5 million Teekay Offshore warrants (Warrants) on a pro rata basis. Following the investment, Brookfield will own approximately 60 percent and Teekay will own approximately 14 percent of the common units of Teekay Offshore; |
• | Brookfield will acquire from Teekay both a 49 percent interest in TOO GP and an option to acquire an additional two percent of TOO GP subject to the satisfaction of certain conditions. On closing, Brookfield will have the right to elect four members to the nine-member Board of Directors of TOO GP; |
• | Teekay Offshore will repurchase and cancel all $304 million of the outstanding Series C-1 and Series D preferred units from the existing unitholders for an aggregate of approximately $250 million in cash, which will save approximately $28 million annually in cash distributions; |
• | Teekay Offshore has reached agreement in principle with the lenders of the Arendal Spirit UMS debt facility to extend the mandatory prepayment date to September 30, 2018, in exchange for a principal prepayment, subject to receipt of lenders' final internal approvals; |
• | Brookfield will acquire from a subsidiary of Teekay, the $200 million loan, previously extended to Teekay Offshore, in exchange for $140 million in cash and 11.4 million of the Warrants to be issued to Brookfield. Brookfield has agreed to extend the maturity date of the loan from 2019 to 2022; |
• | Teekay Offshore will transfer its shuttle tanker business into a new, wholly-owned, non-recourse subsidiary, Teekay Shuttle Tankers L.L.C. (or ShuttleCo). As part of the formation of ShuttleCo, a majority of Teekay Offshore's shuttle tanker fleet will be refinanced with a new $600 million, five-year debt facility, and two 50 percent-owned vessels will be refinanced with a new $71 million, four-year debt facility. In addition, an existing $250 million debt facility secured by the three East Coast of Canada newbuildings, and an existing $141 million private placement bond secured by two vessels, will be transferred from Teekay Offshore to ShuttleCo; |
• | A significant portion of Teekay Offshore's existing NOK bonds due to mature in late-2018 are expected to be repurchased with proceeds from a new five-year $250 million U.S. Dollar denominated bond offering by ShuttleCo in the Norwegian bond market, which recently priced at a fixed coupon of 7.125 percent per annum; and |
• | Certain financial institutions providing interest rate swaps to Teekay Offshore have agreed to (i) lower the fixed interest rate on the swaps, (ii) extend the termination option of the swaps by two years to 2021, and (iii) eliminate the financial guarantee and security package currently provided by Teekay in return for a prepayment amount and fees. |
Three Months Ended | ||||||||||||||
June 30, 2017 | ||||||||||||||
(in thousands of U.S. Dollars) | (unaudited) | |||||||||||||
FPSO Segment | Shuttle Tanker Segment | FSO Segment | UMS Segment | Towage Segment | Conventional Tanker Segment | Total | ||||||||
GAAP FINANCIAL COMPARISON | ||||||||||||||
Revenues | 110,247 | 132,964 | 10,798 | 3,089 | 4,229 | 3,465 | 264,792 | |||||||
Income (loss) from vessel operations | 31,601 | 38,293 | 1,178 | (17,050 | ) | (7,021 | ) | (783 | ) | 46,218 | ||||
Equity income | 3,425 | — | — | — | — | — | 3,425 | |||||||
NON-GAAP FINANCIAL COMPARISON | ||||||||||||||
CFVO from (used for) consolidated vessels (i) | 64,015 | 68,063 | 6,719 | (6,528 | ) | (3,446 | ) | (783 | ) | 128,040 | ||||
CFVO from equity accounted vessels (i) | 6,561 | — | — | — | — | — | 6,561 | |||||||
Total CFVO (i) | 70,576 | 68,063 | 6,719 | (6,528 | ) | (3,446 | ) | (783 | ) | 134,601 | ||||
Three Months Ended | ||||||||||||||
June 30, 2016 | ||||||||||||||
(in thousands of U.S. Dollars) | (unaudited) | |||||||||||||
FPSO Segment | Shuttle Tanker Segment | FSO Segment | UMS Segment | Towage Segment | Conventional Tanker Segment | Total | ||||||||
GAAP FINANCIAL COMPARISON | ||||||||||||||
Revenues | 124,715 | 125,840 | 13,789 | 3,736 | 11,730 | 4,654 | 284,464 | |||||||
Income (loss) from vessel operations | 36,412 | 34,751 | 5,117 | (51,760 | ) | (62 | ) | (187 | ) | 24,271 | ||||
Equity income | 3,626 | — | — | — | — | — | 3,626 | |||||||
NON-GAAP FINANCIAL COMPARISON | ||||||||||||||
CFVO from (used for) consolidated vessels (i) | 68,682 | 63,878 | 8,802 | (6,415 | ) | 2,893 | (187 | ) | 137,653 | |||||
CFVO from equity accounted vessels (i) | 6,555 | — | — | — | — | — | 6,555 | |||||||
Total CFVO (i) | 75,237 | 63,878 | 8,802 | (6,415 | ) | 2,893 | (187 | ) | 144,208 |
(i) | These are non-GAAP financial measures. Please refer to “Definitions and Non-GAAP Financial Measures” and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under GAAP. |
Number of Vessels | ||||||||||||
Owned Vessels | Chartered-in Vessels | Committed Newbuildings / Conversions / Upgrade | Total | |||||||||
FPSO Segment | 6 | (i) | — | 2 | (ii) | 8 | ||||||
Shuttle Tanker Segment | 28 | (iii) | 3 | 3 | (iv) | 34 | ||||||
FSO Segment | 6 | (v) | — | 1 | (vi) | 7 | ||||||
UMS Segment | 1 | — | — | 1 | ||||||||
Towage Segment | 8 | — | 2 | (vii) | 10 | |||||||
Conventional Segment | — | 2 | — | 2 | ||||||||
Total | 49 | 5 | 8 | 62 |
(i) | Includes one FPSO unit, the Cidade de Itajai FPSO, in which Teekay Offshore’s ownership interest is 50 percent. |
(ii) | Consists of the Petrojarl I FPSO upgrade project and Teekay Offshore’s 50 percent ownership interest in the Libra FPSO conversion project, which units are scheduled to commence operations in early-2018 and late-2017, respectively. The Libra FPSO unit conversion was completed in late-March 2017 and arrived at the Libra field in offshore Brazil in May 2017 where it is undergoing field installation |
(iii) | Includes six shuttle tankers in which Teekay Offshore’s ownership interest is 50 percent and one HiLoad DP unit. |
(iv) | Includes three Suezmax-size, DP2 shuttle tanker newbuildings scheduled to be delivered in late-2017 through the early-2018 for employment under the East Coast of Canada charter contracts. |
(v) | Includes the Navion Saga which, as at June 30, 2017, was classified as held for sale. |
(vi) | Consists of the Randgrid FSO, which has been converted from a shuttle tanker for use on the Gina Krog Field in the North Sea and is scheduled to commence operations in the fourth quarter of 2017. |
(vii) | Consists of two long-distance towing and offshore installation vessel newbuildings scheduled to deliver during late-2017 and early-2018. |
• | By dialing 1-800-390-5202 or 416-204-1626, if outside North America, and quoting conference ID code 5007615. |
• | By accessing the webcast, which will be available on Teekay Offshore's website at www.teekay.com (the archive will remain on the website for a period of one year). |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | |||||||
2017 | 2017 | 2016 | 2017 | 2016 | |||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||
Revenues | 264,792 | 276,138 | 284,464 | 540,930 | 591,172 | ||||||
Voyage expenses | (20,196 | ) | (25,141 | ) | (17,588 | ) | (45,337 | ) | (35,932 | ) | |
Vessel operating expenses | (89,705 | ) | (78,990 | ) | (90,761 | ) | (168,695 | ) | (186,113 | ) | |
Time-charter hire expenses | (19,507 | ) | (21,756 | ) | (18,829 | ) | (41,263 | ) | (34,151 | ) | |
Depreciation and amortization | (74,287 | ) | (74,726 | ) | (74,057 | ) | (149,013 | ) | (148,979 | ) | |
General and administrative | (13,379 | ) | (14,617 | ) | (13,821 | ) | (27,996 | ) | (28,290 | ) | |
Write-down of vessels (1) | (1,500 | ) | — | (43,650 | ) | (1,500 | ) | (43,650 | ) | ||
Restructuring charge | — | (450 | ) | (1,487 | ) | (450 | ) | (1,487 | ) | ||
Income from vessel operations | 46,218 | 60,458 | 24,271 | 106,676 | 112,570 | ||||||
Interest expense | (36,602 | ) | (36,104 | ) | (33,347 | ) | (72,706 | ) | (69,373 | ) | |
Interest income | 406 | 346 | 293 | 752 | 697 | ||||||
Realized and unrealized loss | |||||||||||
on derivative instruments (2) | (21,797 | ) | (6,532 | ) | (62,037 | ) | (28,329 | ) | (122,527 | ) | |
Equity income | 3,425 | 4,475 | 3,626 | 7,900 | 8,909 | ||||||
Foreign currency exchange loss (3) | (6,564 | ) | (223 | ) | (13,087 | ) | (6,787 | ) | (15,925 | ) | |
Other (expense) income - net (1) | (1,134 | ) | 222 | (21,286 | ) | (912 | ) | (21,277 | ) | ||
(Loss) income before income tax (expense) recovery | (16,048 | ) | 22,642 | (101,567 | ) | 6,594 | (106,926 | ) | |||
Income tax (expense) recovery | (418 | ) | (1,379 | ) | 1,438 | (1,797 | ) | 4,274 | |||
Net (loss) income | (16,466 | ) | 21,263 | (100,129 | ) | 4,797 | (102,652 | ) | |||
Non-controlling interests in net (loss) income | 3,539 | 2,372 | 2,496 | 5,911 | 4,384 | ||||||
Preferred unitholders' interest in net (loss) income | 12,386 | 12,386 | 10,314 | 24,772 | 21,063 | ||||||
General partner’s interest in net (loss) income | (648 | ) | 130 | (2,260 | ) | (518 | ) | (2,563 | ) | ||
Limited partners’ interest in net (loss) income | (31,743 | ) | 6,375 | (127,408 | ) | (25,368 | ) | (142,265 | ) | ||
Weighted-average number of common units: | |||||||||||
- basic | 151,364,950 | 148,633,906 | 107,794,323 | 150,006,972 | 107,424,853 | ||||||
- diluted | 151,364,950 | 149,662,366 | 107,794,323 | 150,006,972 | 107,424,853 | ||||||
Total number of common units outstanding | |||||||||||
at end of period | 153,858,292 | 149,718,936 | 137,430,180 | 153,858,292 | 137,430,180 |
(1) | In June 2016, as part of the Partnership's 2016 financing initiatives, the Partnership canceled the UMS construction contracts for its two UMS newbuildings. As a result, the Partnership incurred a $43.7 million write-down related to these two UMS newbuildings, included in Write-down of vessels for the three and six months ended June 30, 2016. In addition, the Partnership, in accordance with GAAP, accrued for potential damages resulting from the cancellations and reversed the contingent liabilities previously recorded that were subject to the delivery of the UMS newbuildings. This net loss provision of $23.4 million is reported in Other (expense) income - net for the three and six months ended June 30, 2016. The newbuilding contracts are held in separate subsidiaries of the Partnership and obligations of these subsidiaries are non-recourse to the Partnership. |
(2) | Realized loss on derivative instruments relates to amounts the Partnership actually paid to settle derivative instruments, and the unrealized (loss) gain on derivative instruments relates to the change in fair value of such derivative instruments, as detailed in the table below: |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | |||||||
2017 | 2017 | 2016 | 2017 | 2016 | |||||||
Realized loss relating to: | |||||||||||
Interest rate swaps | (10,296 | ) | (10,666 | ) | (13,515 | ) | (20,962 | ) | (27,482 | ) | |
Foreign currency forward contracts | (309 | ) | (100 | ) | (1,687 | ) | (410 | ) | (4,620 | ) | |
(10,605 | ) | (10,766 | ) | (15,202 | ) | (21,372 | ) | (32,102 | ) | ||
Unrealized (loss) gain relating to: | |||||||||||
Interest rate swaps | (12,871 | ) | 3,503 | (47,818 | ) | (9,367 | ) | (99,739 | ) | ||
Foreign currency forward contracts | 1,679 | 731 | 983 | 2,410 | 9,314 | ||||||
(11,192 | ) | 4,234 | (46,835 | ) | (6,957 | ) | (90,425 | ) | |||
Total realized and unrealized loss on | |||||||||||
derivative instruments | (21,797 | ) | (6,532 | ) | (62,037 | ) | (28,329 | ) | (122,527 | ) |
(3) | The Partnership entered into cross currency swaps to economically hedge the foreign currency exposure on the payment of interest and repayment of principal amounts of the Partnership’s Norwegian Kroner (NOK) bonds with maturity dates through to 2019. In addition, the cross currency swaps economically hedge the interest rate exposure on the NOK bonds. The Partnership has not designated, for accounting purposes, these cross currency swaps as cash flow hedges of its NOK bonds and, thus, foreign currency exchange loss includes a realized loss relating to the amounts the Partnership paid to settle its non-designated cross currency swaps and an unrealized gain (loss) relating to the change in fair value of such swaps, partially offset by an unrealized (loss) gain on the revaluation of the NOK bonds, as detailed in the table below. In addition, during the six months ended June 30, 2016, the Partnership's realized loss on cross-currency swaps includes a $32.6 million loss on the maturity of the swap associated with the NOK 500 million bond which settled in January 2016, which was offset by a $32.6 million realized foreign currency exchange gain on the settlement of the bond which is not included in the table below. |
Three Months Ended | Six Months Ended | |||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||
Realized loss on cross currency swaps | (3,310 | ) | (3,204 | ) | (2,671 | ) | (6,514 | ) | (37,947 | ) |
Unrealized gain (loss) on cross currency swaps | 8,111 | 4,379 | (14,422 | ) | 12,490 | 38,473 | ||||
Unrealized (loss) gain on revaluation of NOK bonds | (7,797 | ) | (1,261 | ) | 3,293 | (9,058 | ) | (48,194 | ) |
As at | As at | As at | |||||
June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||
(unaudited) | (unaudited) | (unaudited) | |||||
ASSETS | |||||||
Current | |||||||
Cash and cash equivalents | 212,267 | 193,419 | 227,378 | ||||
Restricted cash - current | 96,728 | 97,310 | 92,265 | ||||
Accounts receivable | 123,018 | 132,415 | 114,576 | ||||
Vessels held for sale | 6,900 | 6,900 | 6,900 | ||||
Net investments in direct financing leases - current | 5,794 | 1,994 | 4,417 | ||||
Prepaid expenses | 23,676 | 30,628 | 25,187 | ||||
Due from affiliates | 32,966 | 20,013 | 77,811 | ||||
Other current assets | 11,127 | 21,316 | 21,282 | ||||
Total current assets | 512,476 | 503,995 | 569,816 | ||||
Restricted cash - long-term | 2,992 | 2,970 | 22,644 | ||||
Vessels and equipment | |||||||
At cost, less accumulated depreciation | 3,997,446 | 4,012,105 | 4,084,803 | ||||
Advances on newbuilding contracts and conversion costs | 695,985 | 680,439 | 632,130 | ||||
Net investments in direct financing leases | 14,080 | 13,700 | 13,169 | ||||
Investment in equity accounted joint ventures | 152,946 | 154,048 | 141,819 | ||||
Deferred tax asset | 24,918 | 23,765 | 24,659 | ||||
Other assets | 92,293 | 96,992 | 100,435 | ||||
Goodwill | 129,145 | 129,145 | 129,145 | ||||
Total assets | 5,622,281 | 5,617,159 | 5,718,620 | ||||
LIABILITIES AND EQUITY | |||||||
Current | |||||||
Accounts payable | 14,384 | 15,454 | 8,946 | ||||
Accrued liabilities | 139,913 | 139,771 | 150,281 | ||||
Deferred revenues | 56,301 | 57,017 | 57,373 | ||||
Due to affiliates | 88,854 | 70,774 | 96,555 | ||||
Current portion of long-term debt | 891,558 | 620,803 | 586,892 | ||||
Current portion of derivative instruments | 58,935 | 60,119 | 55,002 | ||||
Current portion of in-process revenue contracts | 11,524 | 12,744 | 12,744 | ||||
Total current liabilities | 1,261,469 | 976,682 | 967,793 | ||||
Long-term debt | 2,252,561 | 2,500,306 | 2,596,002 | ||||
Derivative instruments | 272,422 | 268,578 | 282,138 | ||||
Due to affiliates | 200,000 | 200,000 | 200,000 | ||||
In-process revenue contracts | 45,182 | 47,139 | 50,281 | ||||
Other long-term liabilities | 202,600 | 207,297 | 211,611 | ||||
Total liabilities | 4,234,234 | 4,200,002 | 4,307,825 | ||||
Redeemable non-controlling interest | 424 | 955 | 962 | ||||
Convertible preferred units | 272,877 | 272,053 | 271,237 | ||||
Equity | |||||||
Limited partners - common units | 757,086 | 787,065 | 784,056 | ||||
Limited partners - preferred units | 266,925 | 266,925 | 266,925 | ||||
General partner | 20,105 | 20,720 | 20,658 | ||||
Warrants | 13,797 | 13,797 | 13,797 | ||||
Accumulated other comprehensive loss | (2,920 | ) | (591 | ) | (804 | ) | |
Non-controlling interests | 59,753 | 56,233 | 53,964 | ||||
Total equity | 1,114,746 | 1,144,149 | 1,138,596 | ||||
Total liabilities and total equity | 5,622,281 | 5,617,159 | 5,718,620 |
Six Months Ended | ||||
June 30, 2017 | June 30, 2016 | |||
(unaudited) | (unaudited) | |||
Cash and cash equivalents provided by (used for) | ||||
OPERATING ACTIVITIES | ||||
Net income (loss) | 4,797 | (102,652 | ) | |
Non-cash items: | ||||
Unrealized (gain) loss on derivative instruments | (5,526 | ) | 51,094 | |
Equity income, net of dividends received of $7,000 (2016: $3,472) | (900 | ) | (5,437 | ) |
Depreciation and amortization | 149,013 | 148,979 | ||
Write-down of vessels | 1,500 | 43,650 | ||
Deferred income tax expense (recovery) | 762 | (5,436 | ) | |
Amortization of in-process revenue contracts | (6,319 | ) | (6,355 | ) |
Unrealized foreign currency exchange (gain) loss and other | 35,143 | 26,735 | ||
Change in non-cash working capital items related to operating activities | 14,909 | 32,055 | ||
Expenditures for dry docking | (2,815 | ) | (10,801 | ) |
Net operating cash flow | 190,564 | 171,832 | ||
FINANCING ACTIVITIES | ||||
Proceeds from long-term debt | 207,464 | 163,112 | ||
Scheduled repayments of long-term debt | (263,169 | ) | (263,850 | ) |
Prepayments of long-term debt | — | (21,607 | ) | |
Debt issuance costs | (2,214 | ) | (6,102 | ) |
Decrease in restricted cash | 15,189 | 31,990 | ||
Proceeds from issuance of common units | 585 | 102,930 | ||
Proceeds from issuance of preferred units and warrants | — | 100,000 | ||
Expenses relating to equity offerings | (212 | ) | (5,601 | ) |
Cash distributions paid by the Partnership | (34,412 | ) | (45,538 | ) |
Cash distributions paid by subsidiaries to non-controlling interests | (660 | ) | (110 | ) |
Equity contribution from joint venture partners | — | 750 | ||
Other | (483 | ) | (90 | ) |
Net financing cash flow | (77,912 | ) | 55,884 | |
INVESTING ACTIVITIES | ||||
Net payments for vessels and equipment, including advances on newbuilding contracts and conversion costs | (118,601 | ) | (106,432 | ) |
Proceeds from sale of vessels and equipment | — | 55,450 | ||
Direct financing lease payments received (investments) | 3,177 | (1,616 | ) | |
Investment in equity accounted joint ventures | (12,339 | ) | (52,873 | ) |
Net investing cash flow | (127,763 | ) | (105,471 | ) |
(Decrease) increase in cash and cash equivalents | (15,111 | ) | 122,245 | |
Cash and cash equivalents, beginning of the period | 227,378 | 258,473 | ||
Cash and cash equivalents, end of the period | 212,267 | 380,718 |
Three Months Ended | ||||||
June 30, 2017 | June 30, 2016 | |||||
(unaudited) | (unaudited) | |||||
Net loss – GAAP basis | (16,466 | ) | (100,129 | ) | ||
Adjustments: | ||||||
Less: net loss attributable to non-controlling interests | 3,539 | 2,496 | ||||
Net loss attributable to the partners and preferred unitholders | (20,005 | ) | (102,625 | ) | ||
Add (subtract) specific items affecting net income: | ||||||
Foreign currency exchange loss (1) | 3,254 | 10,416 | ||||
Unrealized loss on derivative instruments (2) | 10,832 | 44,978 | ||||
Write-down of vessels (3) | 1,500 | 43,650 | ||||
Net loss provision relating to cancellation of UMS newbuildings (3) | 1,167 | 21,282 | ||||
Termination of Arendal Spirit UMS charter contract (4) | 8,888 | — | ||||
Pre-operational costs (5) | 1,788 | 3,393 | ||||
Business development fees, restructuring charge and other (6) | 3,003 | 2,162 | ||||
Non-controlling interests’ share of items above (7) | — | 310 | ||||
Total adjustments | 30,432 | 126,191 | ||||
Adjusted net income attributable to the partners and preferred unitholders | 10,427 | 23,566 |
(1) | Foreign currency exchange loss primarily relates to the Partnership’s revaluation of all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rate at the end of each reporting period and the unrealized gain or loss related to the Partnership’s cross currency swaps related to the Partnership's NOK bonds and excludes the realized gain or loss relating to the Partnership's cross currency swaps. |
(2) | Reflects the unrealized loss due to changes in the mark-to-market value of interest rate swaps and foreign currency forward contracts that are not designated as hedges for accounting purposes, 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 equity accounted joint venture and hedge ineffectiveness within the Libra FPSO equity accounted joint venture. |
(3) | See footnote (1) of the summary consolidated statements of (loss) income included in this release for further details. A further accrual for the second quarter of 2017 was included in "Net loss provision relating to cancellation of UMS newbuildings". |
(4) | Includes the write-off of deferred revenues and operating expenses as a result of the termination of the Arendal Spirit UMS charter contract in late-April 2017. |
(5) | Reflects depreciation and amortization expense and vessel operating expenses relating to the Petrojarl I FPSO unit while undergoing upgrades and realized losses on interest rate swaps relating to the Libra FPSO conversion and the ALP towage newbuildings for the three months ended June 30, 2017. Reflects the costs associated with the delivery deferral of one of the Partnership's two UMS newbuildings up to its cancellation date, depreciation and amortization expense and vessel operating expenses relating to the Petrojarl I FPSO unit while undergoing upgrades and realized gains on foreign currency forward contracts relating to the conversion costs on the Gina Krog FSO unit during the three months ended June 30, 2016. |
(6) | Other items for the three months ended June 30, 2017 includes an increase in the Piranema Spirit FPSO rate reduction contingency partially offset by an increase in the deferred income tax asset for the Partnership's Norwegian tax structures. Other items for the three months ended June 30, 2016 includes restructuring charges relating to the reorganization within the Partnership’s FPSO segment and a write-down of equipment in one of the Partnership's joint ventures. |
(7) | Items affecting net loss include amounts attributable to the Partnership’s consolidated non-wholly-owned subsidiaries. Each item affecting net loss is analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests’ percentage share in this subsidiary to arrive at the non-controlling interests’ share of the amount. The amount identified as “non-controlling interests’ share of items above” in the table above is the cumulative amount of the non-controlling interests’ proportionate share of items affecting net loss listed in the table. |
Three Months Ended | ||||||
June 30, | ||||||
2017 | 2016 | |||||
(unaudited) | (unaudited) | |||||
Net loss | (16,466 | ) | (100,129 | ) | ||
Add (subtract): | ||||||
Depreciation and amortization | 74,287 | 74,057 | ||||
Unrealized loss on non-designated derivative instruments (1) | 11,192 | 46,835 | ||||
Distributions relating to equity financing of newbuildings and conversion costs | 6,249 | 4,041 | ||||
Partnership's share of equity accounted joint venture's distributable | ||||||
cash flow net of estimated maintenance capital expenditures (2) | 4,422 | 4,140 | ||||
Deferred income tax recovery | (674 | ) | (1,897 | ) | ||
Amortization of non-cash portion of revenue contracts | (3,997 | ) | (3,997 | ) | ||
Equity income | (3,425 | ) | (3,626 | ) | ||
Distributions on preferred units | (12,386 | ) | (10,314 | ) | ||
Estimated maintenance capital expenditures (3) | (32,676 | ) | (40,118 | ) | ||
Net loss provision relating to cancellation of UMS newbuildings (4) | 1,167 | 21,282 | ||||
Write-down of vessels (4) | 1,500 | 43,650 | ||||
Unrealized foreign exchange and other, net | 4,797 | 17,022 | ||||
Distributable cash flow before non-controlling interests | 33,990 | 50,946 | ||||
Non-controlling interests' share of DCF | (6,748 | ) | (5,061 | ) | ||
Distributable Cash Flow | 27,242 | 45,885 | ||||
Amount attributable to the General Partner | (31 | ) | (309 | ) | ||
Limited partners' Distributable Cash Flow | 27,211 | 45,576 | ||||
Weighted-average number of common units outstanding | 151,365 | 107,794 | ||||
Distributable Cash Flow per limited partner unit | 0.18 | 0.42 |
(1) | Derivative instruments include interest rate swaps and foreign currency forward contracts. |
(2) | Estimated maintenance capital expenditures relating to the Partnership’s equity accounted joint venture for the three months ended June 30, 2017 and 2016 were $1.0 million for each period. |
(3) | Estimated maintenance capital expenditures for the three months ended June 30, 2017 also includes $8.4 million cash compensation received from the shipyard in connection with the delayed delivery of the ALP Defender in June 2017. |
(4) | See footnote (1) of the summary consolidated statements of (loss) income included in this release for further details. |
Three Months Ended June 30, 2017 | ||||||||||||||
(unaudited) | ||||||||||||||
FPSO Segment | Shuttle Tanker Segment | FSO Segment | UMS Segment | Towage Segment | Conventional Tanker Segment | Total | ||||||||
Revenues | 110,247 | 132,964 | 10,798 | 3,089 | 4,229 | 3,465 | 264,792 | |||||||
Voyage expenses | — | (17,319 | ) | (430 | ) | — | (2,409 | ) | (38 | ) | (20,196 | ) | ||
Vessel operating expenses | (35,079 | ) | (28,410 | ) | (4,693 | ) | (17,333 | ) | (4,190 | ) | — | (89,705 | ) | |
Time-charter hire expenses | — | (15,387 | ) | — | — | — | (4,120 | ) | (19,507 | ) | ||||
Depreciation and amortization | (36,497 | ) | (30,049 | ) | (2,588 | ) | (1,634 | ) | (3,519 | ) | — | (74,287 | ) | |
General and administrative | (7,070 | ) | (3,506 | ) | (409 | ) | (1,172 | ) | (1,132 | ) | (90 | ) | (13,379 | ) |
Write-down of vessels | — | — | (1,500 | ) | — | — | — | (1,500 | ) | |||||
Income (loss) from vessel operations | 31,601 | 38,293 | 1,178 | (17,050 | ) | (7,021 | ) | (783 | ) | 46,218 | ||||
Three Months Ended June 30, 2016 | ||||||||||||||
(unaudited) | ||||||||||||||
FPSO Segment | Shuttle Tanker Segment | FSO Segment | UMS Segment | Towage Segment | Conventional Tanker Segment | Total | ||||||||
Revenues | 124,715 | 125,840 | 13,789 | 3,736 | 11,730 | 4,654 | 284,464 | |||||||
Voyage expenses | — | (12,573 | ) | (124 | ) | — | (4,281 | ) | (610 | ) | (17,588 | ) | ||
Vessel operating expenses | (41,365 | ) | (29,792 | ) | (6,195 | ) | (9,319 | ) | (3,924 | ) | (166 | ) | (90,761 | ) |
Time-charter hire expenses | — | (14,764 | ) | — | — | — | (4,065 | ) | (18,829 | ) | ||||
Depreciation and amortization | (37,234 | ) | (30,089 | ) | (2,209 | ) | (1,695 | ) | (2,830 | ) | — | (74,057 | ) | |
General and administrative | (8,217 | ) | (3,871 | ) | (144 | ) | (832 | ) | (757 | ) | — | (13,821 | ) | |
Write-down of vessels | — | — | — | (43,650 | ) | — | — | (43,650 | ) | |||||
Restructuring charge | (1,487 | ) | — | — | — | — | — | (1,487 | ) | |||||
Income (loss) from vessel operations | 36,412 | 34,751 | 5,117 | (51,760 | ) | (62 | ) | (187 | ) | 24,271 |
Three Months Ended | |||||||||||||||
June 30, 2017 | |||||||||||||||
(unaudited) | |||||||||||||||
Shuttle | Conventional | ||||||||||||||
FPSO | Tanker | FSO | UMS | Towage | Tanker | ||||||||||
Segment | Segment | Segment | Segment | Segment | Segment | Total | |||||||||
Income (loss) from vessel operations | |||||||||||||||
(See Appendix C) | 31,601 | 38,293 | 1,178 | (17,050 | ) | (7,021 | ) | (783 | ) | 46,218 | |||||
Depreciation and amortization | 36,497 | 30,049 | 2,588 | 1,634 | 3,519 | — | 74,287 | ||||||||
Realized (loss) gain from the | |||||||||||||||
settlements of non-designated | |||||||||||||||
foreign currency forward contracts | (86 | ) | (279 | ) | — | — | 56 | — | (309 | ) | |||||
Amortization of non-cash portion of | |||||||||||||||
revenue contracts | (3,997 | ) | — | — | — | — | — | (3,997 | ) | ||||||
Termination of Arendal Spirit UMS | |||||||||||||||
charter contract | — | — | — | 8,888 | — | — | 8,888 | ||||||||
Write-down of vessels | — | — | 1,500 | — | — | — | 1,500 | ||||||||
Falcon Spirit revenue accounted for | |||||||||||||||
as a direct financing lease | — | — | (366 | ) | — | — | — | (366 | ) | ||||||
Falcon Spirit cash flow from | |||||||||||||||
time-charter contracts | — | — | 1,819 | — | — | — | 1,819 | ||||||||
Cash flow from (used for) vessel operations | |||||||||||||||
from consolidated vessels | 64,015 | 68,063 | 6,719 | (6,528 | ) | (3,446 | ) | (783 | ) | 128,040 |
Three Months Ended | |||||||||||||||
June 30, 2016 | |||||||||||||||
(unaudited) | |||||||||||||||
Shuttle | Conventional | ||||||||||||||
FPSO | Tanker | FSO | UMS | Towage | Tanker | ||||||||||
Segment | Segment | Segment | Segment | Segment | Segment | Total | |||||||||
Income (loss) from vessel operations | |||||||||||||||
(See Appendix C) | 36,412 | 34,751 | 5,117 | (51,760 | ) | (62 | ) | (187 | ) | 24,271 | |||||
Depreciation and amortization | 37,234 | 30,089 | 2,209 | 1,695 | 2,830 | — | 74,057 | ||||||||
Realized (loss) gain from the | |||||||||||||||
settlements of non-designated | |||||||||||||||
foreign currency forward contracts | (967 | ) | (962 | ) | — | — | 125 | — | (1,804 | ) | |||||
Amortization of non-cash portion of | |||||||||||||||
revenue contracts | (3,997 | ) | — | — | — | — | — | (3,997 | ) | ||||||
Write-down of vessels | — | — | — | 43,650 | — | — | 43,650 | ||||||||
Falcon Spirit revenue accounted for | |||||||||||||||
as a direct financing lease | — | — | (702 | ) | — | — | — | (702 | ) | ||||||
Falcon Spirit cash flow from | |||||||||||||||
time-charter contracts | — | — | 2,178 | — | — | — | 2,178 | ||||||||
Cash flow from (used for) vessel operations | |||||||||||||||
from consolidated vessels | 68,682 | 63,878 | 8,802 | (6,415 | ) | 2,893 | (187 | ) | 137,653 |
Three Months Ended | Three Months Ended | ||||||||
June 30, 2017 | June 30, 2016 | ||||||||
(unaudited) | (unaudited) | ||||||||
At 100% | Partnership's 50% | At 100% | Partnership's 50% | ||||||
Revenues | 23,653 | 11,827 | 19,077 | 9,539 | |||||
Vessel and other operating expenses | (10,532 | ) | (5,266 | ) | (5,968 | ) | (2,984 | ) | |
Depreciation and amortization | (4,400 | ) | (2,200 | ) | (4,402 | ) | (2,201 | ) | |
Write-down of equipment | — | — | (1,351 | ) | (676 | ) | |||
Income from vessel operations of equity accounted vessels | 8,721 | 4,361 | 7,356 | 3,678 | |||||
Net interest expense | (1,859 | ) | (930 | ) | (1,892 | ) | (946 | ) | |
Realized and unrealized (loss) gain on derivative instruments (1) | (273 | ) | (137 | ) | 1,254 | 627 | |||
Foreign currency exchange gain | 85 | 43 | 611 | 306 | |||||
Total other items | (2,047 | ) | (1,024 | ) | (27 | ) | (13 | ) | |
Net income / equity income of equity accounted vessels | |||||||||
before income tax recovery (expense) | 6,674 | 3,337 | 7,329 | 3,665 | |||||
Income tax recovery (expense) | 175 | 88 | (78 | ) | (39 | ) | |||
Net income / equity income of equity accounted vessels | 6,849 | 3,425 | 7,251 | 3,626 | |||||
Income from vessel operations of equity accounted vessels | 8,721 | 4,361 | 7,356 | 3,678 | |||||
Depreciation and amortization | 4,400 | 2,200 | 4,402 | 2,201 | |||||
Write-down of equipment | — | — | 1,351 | 676 | |||||
Cash flow from vessel operations from equity accounted vessels | 13,121 | 6,561 | 13,109 | 6,555 |
(1) | Realized and unrealized (loss) gain on derivative instruments for the three months ended June 30, 2017 and 2016 includes an unrealized gain of $0.9 million ($0.4 million at the Partnership’s 50% share) and $2.1 million ($1.0 million at the Partnership’s 50% share), respectively, related to interest rate swaps for the Cidade de Itajai and the Libra FPSO units. |