HAMILTON, Bermuda, Oct. 29, 2018 (GLOBE NEWSWIRE) -- Teekay Offshore Partners L.P. (NYSE:TOO) (Teekay Offshore or the Partnership) announced today that certain of its subsidiaries have entered into a settlement agreement with Petróleo Brasileiro S.A. and Petroleo Netherlands B.V. – PNBV S.A. (together Petrobras) with respect to various disputes relating to the previously-terminated charter contracts of the HiLoad DP unit and Arendal Spirit unit for maintenance and safety (UMS).
As part of the settlement agreement, Petrobras has agreed to pay a total amount of $96 million to Teekay Offshore, which includes $55 million that is payable unconditionally within 30 days. The remaining $41 million is to be paid in two separate instalments of $22 million and $19 million by the end of 2020 and 2021, respectively, subject to certain potential offsets more fully described below.
If in the ordinary course of business and prior to the end of 2021, new charter contracts are entered into with Petrobras in respect of specific Teekay Offshore assets (being Arendal Spirit UMS, Petrojarl Cidade de Rio das Ostras FPSO and Piranema Spirit FPSO), the deferred $41 million (payable in two instalments in 2020 and 2021, respectively) will be reduced by 40 percent of any revenue actually received in this same period from such new contracts (Offset Amounts). There are no contracts in place currently that would result in any Offset Amounts being generated and neither Petrobras nor Teekay Offshore have any obligation to enter into such contracts and furthermore, there is no obligation to hold any of the designated assets as available for charter by Petrobras.
In the fourth quarter of 2018, Teekay Offshore expects to recognize the above-mentioned settlement, which is expected to increase Teekay Offshore’s revenues by approximately $91 million, which represents the present value of the future cash settlement amounts.
In addition, Teekay Offshore has, through separate subsidiaries, entered into a further settlement agreement with Petrobras with regards to a dispute relating to the charter of the Piranema Spirit FPSO pursuant to which Teekay Offshore has agreed to a reduction in charter rate totaling approximately $11 million, which is expected to be credited to Petrobras over the remaining contract term. As at June 30, 2018, this amount was already accrued in Teekay Offshore’s financial statements.
“Over the past decade, we have built a strong partnership with Petrobras. Petrobras has grown to become one of our largest customers, and we look forward to further strengthening this long-term partnership in the future,” commented Ingvild Sæther, President and Chief Executive Officer of Teekay Offshore Group Ltd. “We settled the contractual disagreements in a very constructive manner and we can now turn our full attention to working together to deliver offshore production and logistics solutions for the fast-growing Brazilian offshore market.”
About Teekay Offshore
Teekay Offshore Partners L.P. is a leading international midstream services provider to the offshore oil production industry, focused on the ownership and operation of critical infrastructure assets in 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 with assets under management of approximately $5.9 billion, comprised of 63 offshore assets, including floating production, storage and offloading (FPSO) units, shuttle tankers, floating storage and offtake (FSO) units, long distance towing and offshore installation vessels, a unit for maintenance and safety (UMS), and conventional tankers. The majority of Teekay Offshore’s fleet is employed on medium-term, stable contracts.
Teekay Offshore's common units and preferred units trade on the New York Stock Exchange under the symbols "TOO", "TOO PR A", "TOO PR B" and “TOO PR E”, respectively.
For Investor Relations
enquiries contact:
Ryan Hamilton
Tel: +1 (604) 609-2963
Website: www.teekay.com
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: the timing and amount of future settlement payments, including the impact on revenue for the fourth quarter of 2018; and Brazilian offshore market fundamentals. 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 collect the amounts due under the settlement agreement with Petrobras; changes in exploration, production and storage of offshore oil and gas, either generally or in particular regions that would impact expected future growth, particularly in or related to North Sea, Brazil and East Coast of Canada offshore fields; significant changes in oil prices; variations in expected levels of field maintenance; 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, 2017. 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.