TEEKAY OFFSHORE PARTNERS L.P. 4th Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, Bermuda |
| Generated distributable cash flow of $29.2 million in the first quarter of 2011, up 5.8
percent from the same period of the prior year. |
| Increased quarterly cash distribution by 5.3 percent to $0.50 per unit for the first
quarter of 2011. |
| On March 8, 2011, acquired the remaining 49 percent interest in Teekay Offshore Operating
L.P. from Teekay Corporation. |
| Partnerships total liquidity was $382 million as at March 31, 2011. |
(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 U.S. generally accepted accounting principles (GAAP). |
1
Number of Vessels | ||||||||||||||||
Owned | Committed | |||||||||||||||
Vessels | Chartered-in Vessels | Newbuildings | Total | |||||||||||||
Shuttle Tanker Segment |
30 | (i) | 5 | 1 | 36 | |||||||||||
Conventional Tanker Segment |
11 | | | 11 | ||||||||||||
FSO Segment |
5 | (ii) | | | 5 | |||||||||||
FPSO Segment |
2 | | | 2 | ||||||||||||
Total |
48 | 5 | 1 | 54 | ||||||||||||
(i) | Includes six shuttle tankers in which Teekay Offshores interest is 50
percent and three shuttle tankers in which Teekay Offshores ownership is 67
percent. |
|
(ii) | As a result of the charterer exercising its purchase option in
accordance with the terms of the charter contract, Teekay Offshore sold the
Karratha Spirit FSO for sales proceeds of $5.1 million during the first quarter
of 2011. |
2
3
Three Months Ended | ||||||||||||||||||||
March 31, 2011 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Conventional | ||||||||||||||||||||
Shuttle Tanker | Tanker | FSO | FPSO | |||||||||||||||||
(in thousands of U.S. dollars) | Segment | Segment | Segment | Segment | Total | |||||||||||||||
Net revenues |
119,204 | 29,617 | 17,200 | 42,285 | 208,306 | |||||||||||||||
Vessel operating expenses |
40,785 | 5,825 | 9,148 | 19,372 | 75,130 | |||||||||||||||
Time-charter hire expense |
20,270 | | | | 20,270 | |||||||||||||||
Depreciation and amortization |
27,432 | 6,045 | 3,181 | 8,912 | 45,570 | |||||||||||||||
Cash flow from vessel operations(1) |
45,652 | 22,043 | 4,804 | 19,496 | 91,995 |
Three Months Ended | ||||||||||||||||||||
March 31, 2010 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Conventional | ||||||||||||||||||||
Shuttle Tanker | Tanker | FSO | FPSO | |||||||||||||||||
(in thousands of U.S. dollars) | Segment | Segment | Segment(2) | Segment(2) | Total | |||||||||||||||
Net revenues |
112,939 | 25,914 | 20,401 | 39,371 | 198,625 | |||||||||||||||
Vessel operating expenses |
34,163 | 5,714 | 8,405 | 15,106 | 63,388 | |||||||||||||||
Time-charter hire expense |
25,038 | | | | 25,038 | |||||||||||||||
Depreciation and amortization |
24,955 | 5,742 | 5,417 | 8,894 | 45,008 | |||||||||||||||
Cash flow from vessel operations(1) |
44,804 | 19,007 | 9,534 | 15,768 | 89,113 |
(1) | Cash flow from vessel operations represents income from vessel operations before
depreciation and amortization expense and amortization of deferred gains, includes the
realized gains (losses) on the settlements foreign exchange forward contracts and excludes the
cash flow from vessel operations relating to the Partnerships Dropdown Predecessor and
adjusting for direct financing leases to a cash basis. Cash flow from vessel operations is a
non-GAAP financial measure used by certain investors to measure the financial performance of
shipping companies. Please see the Partnerships web site at www.teekayoffshore.com for a
reconciliation of this non-GAAP measure as used in this release to the most directly
comparable GAAP financial measure. |
|
(2) | Cash flow from vessel operations for the FSO segment and FPSO segment excludes the cash flow
generated by the Falcon Spirit FSO unit and the Rio das Ostras FPSO unit until their
acquisition by the Partnership on April 1, 2010 and October 1, 2010, respectively. Results
for the Falcon Spirit FSO unit and the Rio das Ostras FPSO unit for the periods prior to their
acquisition by the Partnership when they were owned and operated by Teekay are included in the
Dropdown Predecessor. |
4
| By dialing (866) 322-8032 or (416) 640-3406, if outside North America, and quoting
conference ID code 5531030. |
| By accessing the webcast, which will be available on Teekay Offshores Web site at
www.teekayoffshore.com (the archive will remain on the Web site for a period of 30
days). |
5
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2011 | 2010 (1) | 2010 (1)(2) | ||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
REVENUES |
233,771 | 229,263 | 233,579 | |||||||||
OPERATING EXPENSES |
||||||||||||
Voyage expenses |
25,465 | 26,151 | 34,954 | |||||||||
Vessel operating expenses (3) |
75,130 | 77,344 | 63,388 | |||||||||
Time-charter hire expense |
20,270 | 20,981 | 25,038 | |||||||||
Depreciation and amortization |
45,570 | 50,230 | 45,008 | |||||||||
General and administrative (3) |
18,730 | 13,394 | 16,634 | |||||||||
Loss on sale of vessel |
171 | | | |||||||||
Write-down of vessels |
900 | 9,441 | | |||||||||
Restructuring charge (4) |
3,924 | | 119 | |||||||||
190,160 | 197,541 | 185,141 | ||||||||||
Income from vessel operations |
43,611 | 31,722 | 48,438 | |||||||||
OTHER ITEMS |
||||||||||||
Interest expense |
(8,469 | ) | (8,553 | ) | (9,880 | ) | ||||||
Interest income |
129 | 200 | 165 | |||||||||
Realized and unrealized gain (loss)
on derivative instruments (5) |
10,840 | 63,863 | (24,475 | ) | ||||||||
Foreign exchange (loss) gain (6) |
(799 | ) | (348 | ) | 1,622 | |||||||
Income tax (expense) recovery |
(2,653 | ) | 1,133 | 6,911 | ||||||||
Other income net |
1,310 | 1,296 | 2,481 | |||||||||
Net income |
43,969 | 89,313 | 25,262 | |||||||||
Net income attributable to: |
||||||||||||
Non-controlling interests |
20,593 | 39,332 | 10,849 | |||||||||
Dropdown Predecessor (1) (2) |
| | (467 | ) | ||||||||
Partners |
23,376 | 49,981 | 14,880 | |||||||||
Limited partners units outstanding: |
||||||||||||
Weighted-average number of common units outstanding |
||||||||||||
- Basic and diluted |
57,170,219 | 50,547,500 | 38,206,000 | |||||||||
Total units outstanding at end of period |
62,800,314 | 55,237,500 | 42,760,000 |
(1) | Results for the Rio das Ostras FPSO unit for the period beginning April 2008 prior to its
acquisition by the Partnership in October 2010 when it was owned and operated by Teekay
Corporation, are included in the Dropdown Predecessor. |
|
(2) | Results for the Falcon Spirit FSO unit for the period beginning December 2009 prior to its
acquisition by the Partnership in April 2010 when it was owned and operated by Teekay
Corporation, are included in the Dropdown Predecessor. |
|
(3) | The Partnership has entered into foreign exchange forward contracts, which are economic
hedges for certain vessel operating expenses and general and administrative expenses. Certain
of these forward contracts have been designated as cash flow hedges pursuant to GAAP.
Unrealized gains (losses) arising from hedge ineffectiveness from such forward contracts,
including forward contracts relating to the Dropdown Predecessor, are reflected in vessel
operating expenses, and general and administrative expenses in the above Summary Consolidated
Statements of Income as detailed in the table below: |
Three Months Ended | ||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||
Vessel operating expenses |
(184 | ) | (69 | ) | (1,125 | ) | ||||||
General and administrative |
130 | (272 | ) | (712 | ) |
(4) | Restructuring charges for the three months ended March 31, 2011 were incurred in connection
with the sale of a FSO unit and the termination of the charter contract of one of the
Partnerships shuttle tankers. Restructuring charges for the three months ended March 31, 2010
were incurred in connection with the re-flagging of certain of the Partnerships vessels. |
6
(5) | The realized (losses) gains relate to the amounts the Partnership actually paid or received
to settle such derivative instruments and the unrealized gains (losses) relate to the change
in fair value of such derivative instruments as detailed in the table below: |
Three Months Ended | ||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||
Realized (losses) gains relating to: |
||||||||||||
Interest rate swaps |
(13,702 | ) | (12,993 | ) | (12,787 | ) | ||||||
Foreign currency forward contract |
418 | (384 | ) | (155 | ) | |||||||
(13,284 | ) | (13,377 | ) | (12,942 | ) | |||||||
Unrealized gains (losses) relating to: |
||||||||||||
Interest rate swaps |
20,765 | 76,368 | (10,949 | ) | ||||||||
Foreign currency forward contracts |
3,359 | 872 | (584 | ) | ||||||||
24,124 | 77,240 | (11,533 | ) | |||||||||
Total realized and unrealized gains (losses) on non-designated
derivative instruments |
10,840 | 63,863 | (24,475 | ) | ||||||||
(6) | Foreign exchange (loss) gain includes realized gains of $0.7 million for the three months
ended March 31, 2011 relating to the amounts the Partnership received to settle the
Partnerships non-designated cross currency swap that was entered into as an economic hedge in
relation to the Partnerships NOK 600 million unsecured bond. Foreign exchange (loss) gain
also includes unrealized gains of $6.2 million for the three months ended March 31, 2011
relating to the change in fair value of such derivative instrument, partially offset by $5.3
million in unrealized losses on the revaluation of the NOK bond. |
7
As at | As at | |||||||
March 31, 2011 | December 31, 2010 | |||||||
(unaudited) | (unaudited) | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
123,422 | 166,483 | ||||||
Other current assets |
156,946 | 142,493 | ||||||
Vessels and equipment |
2,271,695 | 2,299,507 | ||||||
Other assets |
75,501 | 78,267 | ||||||
Intangible assets |
26,983 | 28,763 | ||||||
Goodwill |
127,113 | 127,113 | ||||||
Total Assets |
2,781,660 | 2,842,626 | ||||||
LIABILITIES AND EQUITY |
||||||||
Accounts payable and accrued liabilities |
101,491 | 101,287 | ||||||
Other current liabilities |
145,511 | 113,183 | ||||||
Current portion of long-term debt |
137,468 | 152,096 | ||||||
Long-term debt |
1,667,768 | 1,565,044 | ||||||
Other long-term liabilities |
117,483 | 140,842 | ||||||
Redeemable non-controlling interest |
40,614 | 41,725 | ||||||
Equity: |
||||||||
Non-controlling interest |
48,323 | 170,876 | ||||||
Partners equity |
523,002 | 557,573 | ||||||
Total Liabilities and Equity |
2,781,660 | 2,842,626 | ||||||
8
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010(1) | |||||||
(unaudited) | (unaudited) | |||||||
Cash and cash equivalents provided by (used for) |
||||||||
OPERATING ACTIVITIES |
||||||||
Net operating cash flow |
69,028 | 73,951 | ||||||
FINANCING ACTIVITIES |
||||||||
Proceeds from drawdown of long-term debt |
177,644 | 62,000 | ||||||
Scheduled repayments of long-term debt |
(44,441 | ) | (11,839 | ) | ||||
Prepayments of long-term debt |
(50,360 | ) | (110,163 | ) | ||||
Advances to affiliates |
| (44,410 | ) | |||||
Joint venture partner advances |
14,500 | 4,532 | ||||||
Contribution by Teekay Corporation relating to acquisition of Rio das Ostras |
1,000 | | ||||||
Purchase of 49% interest in Teekay Offshore Operating L.P. |
(160,000 | ) | | |||||
Equity contribution from joint venture partner |
750 | | ||||||
Proceeds from issuance of common units |
| 100,581 | ||||||
Expenses of equity offerings |
| (4,452 | ) | |||||
Cash distributions paid by the Partnership |
(27,723 | ) | (17,665 | ) | ||||
Cash distributions paid by subsidiaries to non-controlling interests |
(17,449 | ) | (19,472 | ) | ||||
Other |
| 333 | ||||||
Net financing cash flow |
(106,079 | ) | (40,555 | ) | ||||
INVESTING ACTIVITIES |
||||||||
Expenditures for vessels and equipment |
(16,907 | ) | (208 | ) | ||||
Proceeds from sale of vessels and equipment |
5,054 | | ||||||
Investment in direct financing lease assets |
370 | (886 | ) | |||||
Direct financing lease payments received |
5,473 | 6,178 | ||||||
Net investing cash flow |
(6,010 | ) | 5,084 | |||||
(Decrease) increase in cash and cash equivalents |
(43,061 | ) | 38,480 | |||||
Cash and cash equivalents, beginning of the period |
166,483 | 109,407 | ||||||
Cash and cash equivalents, end of the period |
123,422 | 147,887 | ||||||
(1) | In accordance with GAAP, the Summary Consolidated Statements of Cash Flows includes the
cash flows relating to the Falcon Spirit FSO unit, for the period from December 15, 2009 to
April 1, 2010 and the Rio das Ostras FPSO unit, for the period from April 1, 2008 to October
1, 2010, when the vessels were under the common control of Teekay Corporation, but prior to
their acquisition by the Partnership. |
9
Three Months Ended | ||||||||
March 31, 2011 | March 31, 2010 | |||||||
(unaudited) | (unaudited) | |||||||
Net income GAAP basis |
43,969 | 25,262 | ||||||
Adjustments: |
||||||||
Net (income) attributable to non-controlling interests |
(20,593 | ) | (10,849 | ) | ||||
Net loss attributable to Dropdown Predecessor |
| 467 | ||||||
Net income attributable to the partners |
23,376 | 14,880 | ||||||
Add (subtract) specific items affecting net income: |
||||||||
Foreign exchange losses (gains) (1) |
1,464 | (636 | ) | |||||
Foreign currency exchange losses resulting
from hedging ineffectiveness (2) |
54 | 1,860 | ||||||
Deferred income tax expense (recovery) relating to unrealized
foreign exchange gains (3) |
6,519 | (3,209 | ) | |||||
Unrealized (gains) losses on derivative instruments (4) |
(24,124 | ) | 11,150 | |||||
Loss on sale of vessel (5) |
171 | | ||||||
Write-down of vessel (6) |
900 | | ||||||
Restructuring charges and other(7) |
4,873 | 119 | ||||||
Non-controlling interests share of items above |
8,849 | (4,019 | ) | |||||
Total adjustments |
(1,294 | ) | 5,265 | |||||
Adjusted net income attributable to the partners |
22,082 | 20,145 | ||||||
(1) | Foreign exchange losses (gains) primarily relate to the Partnerships revaluation of all
foreign currency-denominated monetary assets and liabilities based on the prevailing exchange
rate at the end of each reporting period, excluding amounts related to Dropdown Predecessor. |
|
(2) | Foreign currency exchange losses resulting from hedging ineffectiveness include the
unrealized losses arising from hedge ineffectiveness from foreign exchange forward contracts
that are or have been designated as hedges for accounting purposes. This excludes foreign
currency exchange gains resulting from hedging ineffectiveness relating to the Dropdown
Predecessors of $0.02 million for the three months ended March 31, 2010. |
|
(3) | Portion of deferred income tax (recovery) expense related to unrealized foreign exchange
gains and losses. |
|
(4) | Reflects the unrealized losses (gains) due to changes in the mark-to-market value of interest
rate swaps and foreign exchange forward contracts that are not designated as hedges for
accounting purposes, excluding unrealized losses of $0.4 million relating to the Dropdown
Predecessors for the three months ended March 31, 2010. |
|
(5) | Loss on sale of vessel relates to the sale of the Karratha Spirit FSO unit. |
|
(6) | Write-down of vessel is related to the valuation impairment of one conventional tanker based
on its projected discounted cash flows. |
|
(7) | Restructuring charges of $3.9 million for the three months ended March 31, 2011 were incurred
in connection with the sale of a FSO unit and the termination of the charter contract of one
of the Partnerships shuttle tankers. Restructuring charges of $0.1 million for the three
months ended March 31, 2010 were incurred in connection with the re-flagging of certain of the
Partnerships vessels. Other items for the three months ended March 31, 2011 include $0.9
million related to a one-time management fee associated with the portion of stock-based
compensation grants of Teekays former Chief Executive Officer that had not yet vested prior
to the date of his retirement on March 31, 2011. |
10
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited) | ||||
Net income |
43,969 | |||
Add (subtract): |
||||
Depreciation and amortization |
45,570 | |||
Loss on sale of vessel |
171 | |||
Write-down of vessel |
900 | |||
Foreign exchange and other, net |
3,154 | |||
Deferred income tax expense |
1,169 | |||
Estimated maintenance capital expenditures |
(25,610 | ) | ||
Unrealized gains on non-designated derivative instruments (1) |
(24,124 | ) | ||
Distributable Cash Flow before Non-Controlling Interest |
45,199 | |||
Non-controlling interests share of DCF |
(15,983 | ) | ||
Distributable Cash Flow |
29,216 | |||
(1) | Derivative instruments include interest rate swaps and foreign exchange forward
contracts. |
11
Three Months Ended March 31, 2011 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Shuttle | Conventional | |||||||||||||||||||
Tanker | Tanker | FSO | FPSO | |||||||||||||||||
Segment | Segment | Segment | Segment | Total | ||||||||||||||||
Net revenues (1) |
119,204 | 29,617 | 17,200 | 42,285 | 208,306 | |||||||||||||||
Vessel operating expenses |
40,785 | 5,825 | 9,148 | 19,372 | 75,130 | |||||||||||||||
Time-charter hire expense |
20,270 | | | | 20,270 | |||||||||||||||
Depreciation and amortization |
27,432 | 6,045 | 3,181 | 8,912 | 45,570 | |||||||||||||||
General and administrative |
12,482 | 1,749 | 1,063 | 3,436 | 18,730 | |||||||||||||||
Loss on sale of vessel |
| | 171 | | 171 | |||||||||||||||
Write-down of vessel |
| 900 | | | 900 | |||||||||||||||
Restructuring charges |
1,227 | | 2,697 | | 3,924 | |||||||||||||||
Income from vessel operations |
17,008 | 15,098 | 940 | 10,565 | 43,611 | |||||||||||||||
Three Months Ended March 31, 2010 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Shuttle | Conventional | |||||||||||||||||||
Tanker | Tanker | FSO | FPSO | |||||||||||||||||
Segment | Segment | Segment(2) | Segment(2) | Total | ||||||||||||||||
Net revenues(1) |
112,939 | 25,914 | 20,401 | 39,371 | 198,625 | |||||||||||||||
Vessel operating expenses |
34,163 | 5,714 | 8,405 | 15,106 | 63,388 | |||||||||||||||
Time-charter hire expense |
25,038 | | | | 25,038 | |||||||||||||||
Depreciation and amortization |
24,955 | 5,742 | 5,417 | 8,894 | 45,008 | |||||||||||||||
General and administrative |
11,260 | 1,193 | 1,010 | 3,171 | 16,634 | |||||||||||||||
Restructuring charges |
119 | | | | 119 | |||||||||||||||
Income from vessel operations |
17,404 | 13,265 | 5,569 | 12,200 | 48,438 | |||||||||||||||
(1) | Net revenues represents revenues less voyage expenses, which comprise all expenses relating
to certain voyages, including bunker fuel expenses, port fees, canal tolls and brokerage
commissions. Net revenues are a non-GAAP financial measure used by certain investors to
measure the financial performance of shipping companies. Please see the Partnerships web
site at www.teekayoffshore.com for a reconciliation of this non-GAAP measure as used
in this release to the most directly comparable GAAP financial measure. |
|
(2) | Income from operations for the Falcon Spirit FSO unit and the Rio das Ostras FPSO unit for
the periods prior to their acquisition by the Partnership on April 1, 2010 and October 1,
2010, respectively, when they were owned and operated by Teekay Corporation are required by
GAAP to be included in Teekay Offshores results for such prior periods. The amounts included
in this release related to the Falcon Spirit FSO unit Dropdown Predecessor and the Rio das
Ostras FPSO Dropdown Predecessor figures are only expected to impact the accounting for
periods prior to the date the Falcon Spirit FSO unit and the Rio das Ostras FPSO were acquired
by the Partnership, and therefore will have no effect on the adjusted net income attributable
to the partners or distributable cash flow of the Partnership for any period, including the
first quarter of 2010. |
12
13
TEEKAY OFFSHORE PARTNERS L.P. By: Teekay Offshore GP L.L.C., its general partner |
||||
Date: May 13, 2011 | By: | /s/ Peter Evensen | ||
Peter Evensen | ||||
Chief Executive Officer and Chief Financial Officer (Principal Financial and Accounting Officer) |
||||