- Revenues of $319.8 million and net loss of $28.0 million, or ($0.09) per common unit
- Adjusted net income attributable to the partners and preferred unitholders(1) of $4.7 million and an adjusted net loss attributable to the limited partners' interest of ($0.01) per common unit (excluding items listed in Appendix B to this release)
- Adjusted EBITDA(1) of $158.9 million
- In May 2019, completed a $450 million refinancing of a long-term debt facility secured by 16 shuttle tankers
- In May 2019, received an unsolicited non-binding proposal from Brookfield to acquire all issued and outstanding publicly held common units that Brookfield does not already own in exchange for $1.05 in cash per common unit
HAMILTON, Bermuda, July 31, 2019 (GLOBE NEWSWIRE) -- Teekay Offshore GP LLC (TOO GP), 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 June 30, 2019.
Consolidated Financial Summary
| Three Months Ended | |||||||
| June 30, | March 31, | June 30, | |||||
| (in thousands of U.S. Dollars, except per unit data) | 2019 | 2019 (2) | 2018 | ||||
| (unaudited) | (unaudited) | (unaudited) | |||||
| GAAP FINANCIAL RESULTS | |||||||
| Revenues | 319,774 | 336,637 | 320,354 | ||||
| Net loss | (27,979 | ) | (2,598 | ) | (168,492 | ) | |
| Limited partners' interest in net loss per common unit - basic | (0.09 | ) | (0.03 | ) | (0.43 | ) | |
| NON-GAAP FINANCIAL RESULTS: | |||||||
| Adjusted EBITDA (1) | 158,941 | 188,150 | 160,198 | ||||
| Adjusted net income (loss) attributable to the partners and preferred unitholders (1) | 4,735 | 29,510 | (732 | ) | |||
| Limited partners' interest in adjusted net income (loss) per common unit (1) | (0.01 | ) | 0.05 | (0.02 | ) | ||
- 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).
- Please refer to Appendices to the release announcing the results for the first quarter of 2019 attached as Exhibit 1 to the Form 6-K filed with the Securities and Exchange Commission on April 30, 2019, for a reconciliation of these non-GAAP measures to the most directly comparable financial measures under GAAP.
Second Quarter of 2019 Compared to Second Quarter of 2018
Revenues were $320 million in the second quarter of 2019, which was consistent with the same quarter of the prior year.
Net loss decreased to $28 million in the second quarter of 2019 compared to $168 million in the same quarter of the prior year primarily due to the timing of recognition of write-downs and gains on sales of vessels and a decrease in unrealized fair value losses on derivative instruments resulting from movement in interest rates. In the second quarter of 2019, net loss included a gain on the sale of three vessels of $13 million whereas in the second quarter of 2018, net loss included write-downs of $180 million relating to two FPSO units.
Non-GAAP Adjusted EBITDA was $159 million in the second quarter of 2019, which was consistent with the same quarter of 2018. An increase in Adjusted EBITDA of $11 million from the shuttle tanker segment was offset by a decrease of $11 million from the FPSO segment.
Non-GAAP Adjusted Net Income was $5 million in the second quarter of 2019, an increase of $5 million compared to the same quarter of the prior year, primarily due to a decrease in depreciation and amortization of $7 million.
Second Quarter of 2019 Compared to First Quarter of 2019
Revenues decreased by $17 million and net loss increased by $25 million in the second quarter of 2019, compared to the prior quarter, primarily due to the absence of a $15 million amortization of non-cash deferred revenue relating to the Piranema Spirit FPSO unit, which was fully amortized during the first quarter of 2019; a $7 million decrease in contributions from the completion of the Rio das Ostras FPSO unit charter contract in March 2019 and a $5 million decrease from lower utilization in the towage fleet. Revenues and vessel operating expenses in the second quarter of 2019 also included the recognition of deferred revenues and deferred costs of $13 million and $15 million, respectively, upon termination of the Cheviot Field agreement relating to the Petrojarl Varg FPSO unit. Other items impacting the change in net loss included a $13 million gain on the sale of three vessels recognized in the second quarter of 2019 and a $9 million increase in unrealized fair value losses on derivative instruments.
Non-GAAP Adjusted EBITDA and Adjusted Net Income decreased by $29 million and $25 million, respectively, in the second quarter of 2019, compared to the prior quarter, primarily due to the changes in revenue and vessel operating expenses as described above.
Please refer to “Operating Results” for additional information on variances by segment and Appendices A and B for reconciliations between GAAP net (loss) income and non-GAAP Adjusted EBITDA and Adjusted Net Income (Loss), respectively.
CEO Commentary
“We are pleased to announce another good operational quarter with Adjusted EBITDA of $159 million. The Shuttle Tanker and the FSO segment results were in line with first quarter, while the FPSO segment result decreased by $22 million, primarily on non-cash items. The Towage segment was basically EBITDA neutral,” commented Ingvild Sæther, President and CEO of Teekay Offshore Group Ltd.
“During the quarter we decided to terminate the agreement with Alpha Petroleum for the redeployment of the Petrojarl Varg FPSO on the U.K. Cheviot field. Given the increased activity on a number of field developments in the North Sea, it was important for us to either reach a final contract award with Alpha Petroleum on the Cheviot field, or make the unit available for other field developments where it can offer an attractive field development solution.”
Ms. Sæther added, "On the financing side, we were pleased to announce during the quarter the closing of the refinancing of the $450 million revolving credit facility backed by 16 of our shuttle tankers on attractive terms, in addition to the long-term financing of the first four shuttle tanker newbuildings and the refinancing of three FPSOs with $100 million, both as announced in the last quarterly release."
Summary of Recent Events
Brookfield Investment
In late-May 2019, the Partnership received an unsolicited non-binding proposal from Brookfield Business Partners L.P. (NYSE:BBU)(TSX:BBU.UN), together with its institutional partners (collectively Brookfield), to acquire all issued and outstanding publicly held common units representing limited partnership interests of the Partnership that Brookfield does not already own in exchange for $1.05 in cash per common unit. The Partnership's Conflicts Committee, consisting only of non-Brookfield affiliated Teekay Offshore Directors, is evaluating the proposed offer on behalf of the owners of the non-Brookfield owned limited partnership interests. The proposed transaction is subject to a number of contingencies, including the approval of the Conflicts Committee, and the satisfaction of any conditions to the consummation of a transaction that may be set forth in any definitive agreement concerning the transaction. There can be no assurance that definitive documentation will be executed or that any transaction will materialize on the terms described above or at all.
In May 2019, Brookfield purchased all of Teekay Corporation's remaining interests in the Partnership, including its 49% general partner interest, 13.8% interest in common units, 17.3 million common unit equivalent warrants and a $25 million loan receivable outstanding under an unsecured revolving credit facility, for total proceeds of $100 million.
Financings
On July 30, 2019, the remaining $75 million principal of our outstanding five-year 6.0% senior unsecured bonds matured and was repaid by drawing $75 million from the Partnership's capacity under an existing revolving credit facility.
In May 2019, the Partnership secured a $450 million refinancing of 16 shuttle tankers. The facility was used to refinance an existing revolving credit facility dated September 2017, which bore interest at LIBOR plus a margin of 300 basis points and had a remaining tenor of 3.4 years. The new revolving credit facility bears interest at LIBOR plus a margin of 250 basis points and has a tenor of five years with a profile of 8.4 years.
In late-April 2019, the Partnership closed a $100 million refinancing of the Piranema Spirit, Voyageur Spirit, and Petrojarl Varg FPSO units. The previous credit facility matured at the same time with a balloon payment of $35 million. The new revolving credit facility bears interest at LIBOR plus a margin of 300 basis points and reduces to $45 million over three years, reflecting the relative short current contract backlog for these FPSO units.
In April 2019, the Partnership secured a new $414 million long-term debt facility to be used to finance four LNG-fueled Suezmax DP2 shuttle tanker newbuildings. Upon anticipated delivery in 2019 and 2020, two of the vessels will commence operations under the Partnership’s master agreement with Equinor, while the remaining two vessels will join the Partnership’s contract of affreightment (CoA) shuttle tanker portfolio in the North Sea. The new facility is funded and guaranteed by both Canadian and Norwegian export credit agencies and commercial banks, bears interest at LIBOR plus a margin of 225 basis points, and has a tenor for up to 12 years from the delivery date of each vessel and a blended repayment profile of 18 years.
Termination of Cheviot Field Agreement
In June 2019, the Partnership announced that an agreement with Alpha Petroleum Resources Limited (or Alpha) relating to the use of the Petrojarl Varg FPSO unit was terminated as a result of Alpha being unable to satisfy certain conditions precedent, including Alpha providing initial funding to cover life extension and upgrade costs, by the contractual deadline. The Partnership is currently pursing alternative deployment opportunities for the Petrojarl Varg FPSO unit.
Change to Board of Directors
In July 2019, Brookfield appointed Gregory Morrison as a member of the Board of Directors of the general partner of Teekay Offshore, replacing Walter Weathers, who was appointed by Brookfield in September 2017.
Liquidity Update
As of June 30, 2019, the Partnership had total liquidity of $202 million, an increase of $19 million compared to March 31, 2019. The increase in liquidity was primarily due to the refinancing of the Partnership's FPSO revolving credit facility and proceeds received from the sale of the Pattani Spirit FSO and the Nordic Spirit and Alexita Spirit shuttle tankers during the second quarter of 2019.
Operating Results
The commentary below compares certain results of our operating segments for the three months ended June 30, 2019 to the same period of the prior year, unless otherwise noted.
FPSO Segment
| Three Months Ended | ||||||
| June 30, | March 31, | June 30, | ||||
| 2019 | 2019 | 2018 | ||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | |||
| Revenues | 127,478 | 136,560 | 124,053 | |||
| Adjusted EBITDA | 72,169 | 94,420 | 83,429 | |||
Adjusted EBITDA (including Adjusted EBITDA of equity-accounted vessels) decreased by $11 million primarily due to: a decrease of $8 million due to the completion of the charter contract for the Rio das Ostras FPSO unit in March 2019; and a decrease of $6 million resulting from a contract extension for the Piranema Spirit FPSO unit at lower charter rates than the original contract and a decrease in the amortization of non-cash deferred revenue; partially offset by an increase of $6 million from the commencement of operations of the Petrojarl I FPSO unit in May 2018.
Adjusted EBITDA decreased by $22 million compared to the three months ended March 31, 2019 primarily due to: the absence of a $15 million amortization of non-cash deferred revenue relating to the Piranema Spirit FPSO unit; and a $5 million decrease from the completion of the Rio das Ostras FPSO unit charter contract in March 2019.
Shuttle Tanker Segment
| Three Months Ended | ||||||
| June 30, | March 31, | June 30, | ||||
| 2019 | 2019 | 2018 | ||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | |||
| Revenues | 137,050 | 137,337 | 142,047 | |||
| Adjusted EBITDA | 67,688 | 67,337 | 56,254 | |||
Adjusted EBITDA increased by $11 million primarily due to: $4 million from higher CoA utilization and rates during the second quarter of 2019; $4 million from a decrease in vessel operating expenses and general and administrative expenses; and $3 million due to the timing of dry-docking of vessels.
Adjusted EBITDA was in line with first quarter 2019.
FSO Segment
| Three Months Ended | ||||||
| June 30, | March 31, | June 30, | ||||
| 2019 | 2019 | 2018 | ||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | |||
| Revenues | 34,605 | 34,654 | 33,840 | |||
| Adjusted EBITDA | 22,761 | 23,335 | 22,717 | |||
Adjusted EBITDA was consistent with prior periods.
UMS Segment
| Three Months Ended | ||||||
| June 30, | March 31, | June 30, | ||||
| 2019 | 2019 | 2018 | ||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | |||
| Revenues | 431 | 1,622 | — | |||
| Adjusted EBITDA | (1,884 | ) | 1,316 | (2,208 | ) | |
Adjusted EBITDA was consistent with the same quarter of the prior year.
Adjusted EBITDA decreased by $3 million compared to the three months ended March 31, 2019, primarily due to an insurance settlement received in the first quarter of 2019.
Towage Segment
| Three Months Ended | ||||||
| June 30, | March 31, | June 30, | ||||
| 2019 | 2019 | 2018 | ||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | |||
| Revenues | 16,716 | 21,986 | 15,510 | |||
| Adjusted EBITDA | (426 | ) | 4,120 | 2,048 | ||
Adjusted EBITDA decreased by $2 million due to an increase in vessel operating expenses relating to the reactivation of the ALP Forward in June 2019, which was previously in lay-up.
Adjusted EBITDA decreased by $5 million compared to the three months ended March 31, 2019, due to a decrease in the utilization of the towage fleet from 96% to 67% and an increase in vessel operating expenses relating to the reactivation of the ALP Forward in June 2019.
Conventional Tanker Segment
| Three Months Ended | ||||||
| June 30, | March 31, | June 30, | ||||
| 2019 | 2019 | 2018 | ||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | |||
| Revenues | 3,494 | 4,478 | 4,904 | |||
| Adjusted EBITDA | (225 | ) | (1,203 | ) | (2,412 | ) |
Adjusted EBITDA increased by $2 million. The Partnership redelivered the two in-chartered vessels to their owners in March and April 2019, respectively, and no longer has activity in the conventional tanker segment.
Teekay Offshore’s Fleet
The following table summarizes Teekay Offshore’s fleet as of July 31, 2019. Teekay Offshore's fleet is consistent in comparison to the previously-reported fleet table in the release for the first quarter of 2019.
| Number of Vessels | ||||||||||||
| Owned Vessels | Chartered-in Vessels | Committed Newbuildings | Total | |||||||||
| FPSO Segment | 8 (i) | — | — | 8 | ||||||||
| Shuttle Tanker Segment | 25 (ii) | 2 | 6 (iii) | 33 | ||||||||
| FSO Segment | 5 | — | — | 5 | ||||||||
| UMS Segment | 1 | — | — | 1 | ||||||||
| Towage Segment | 10 | — | — | 10 | ||||||||
| Conventional Segment | — | — | — | — | ||||||||
| Total | 49 | 2 | 6 | 57 | ||||||||
- Includes two FPSO units, the Cidade de Itajai and Pioneiro de Libra, in which Teekay Offshore’s ownership interest is 50 percent.
- Includes four shuttle tankers in which Teekay Offshore’s ownership interest is 50 percent and one HiLoad DP unit.
- Includes six DP2 shuttle tanker newbuildings scheduled for delivery in late-2019 through early-2021, two of which will operate under Teekay Offshore's master agreement with Equinor and four of which will join Teekay Offshore's CoA portfolio in the North Sea.
Conference Call
The Partnership plans to host a conference call on Wednesday, July 31, 2019 at 12:00 p.m. (ET) to discuss the results for the second quarter of 2019. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
- By dialing 1-800-367-2403 or +1 (647) 490-5367, if outside North America, and quoting conference ID code 9980688
- 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).
An accompanying Second Quarter 2019 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.
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, among others: opportunities for the Petrojarl Varg FPSO unit; Brookfield's proposal to acquire all issued and outstanding publicly held common units of the Partnership, and any potential resulting transactions; the anticipated financing for two newbuilds; the timing of shuttle tanker newbuilding deliveries and the commencement of related contracts. 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: 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; shipyard delivery delays and cost overruns; delays in the commencement of charter contracts; the Partnership’s ability to collect the amounts due under the settlement agreement with Petrobras; new opportunities for the Petrojarl Varg FPSO unit; 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, 2018. 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.
About Teekay Offshore Partners L.P.
Teekay Offshore Partners L.P. is a leading international midstream services provider to the offshore oil production industry, primarily 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 has consolidated assets of approximately $5.2 billion, comprised of 57 offshore assets, including floating production, storage and offloading (FPSO) units, shuttle tankers (including six newbuildings), floating storage and offtake (FSO) units, long-distance towing and offshore installation vessels and a unit for maintenance and safety (UMS). The majority of Teekay Offshore’s fleet is employed on medium-term, stable contracts. Brookfield owns 100 percent of Teekay Offshore’s general partner.
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:
Jan Rune Steinsland
Tel: +47 9705 2533
Website: www.teekayoffshore.com
Teekay Offshore Partners L.P.
Summary Consolidated Statements of Loss
| Three Months Ended | Six Months Ended | ||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||
| (in thousands of U.S. Dollars, except per unit data) | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||
| Revenues | 319,774 | 336,637 | 320,354 | 656,411 | 643,553 | ||||||
| Voyage expenses | (32,624 | ) | (34,066 | ) | (36,486 | ) | (66,690 | ) | (71,492 | ) | |
| Vessel operating expenses | (118,718 | ) | (101,219 | ) | (110,298 | ) | (219,937 | ) | (225,680 | ) | |
| Time-charter hire expenses | (10,619 | ) | (12,453 | ) | (13,464 | ) | (23,072 | ) | (26,191 | ) | |
| Depreciation and amortization | (88,666 | ) | (89,466 | ) | (95,440 | ) | (178,132 | ) | (189,744 | ) | |
| General and administrative | (17,212 | ) | (16,992 | ) | (17,890 | ) | (34,204 | ) | (35,676 | ) | |
| Gain on sale and (write-down) of vessels | 11,756 | — | (178,795 | ) | 11,756 | (207,291 | ) | ||||
| Operating income (loss) | 63,691 | 82,441 | (132,019 | ) | 146,132 | (112,521 | ) | ||||
| Interest expense | (51,443 | ) | (52,414 | ) | (49,662 | ) | (103,857 | ) | (91,235 | ) | |
| Interest income | 1,253 | 1,070 | 734 | 2,323 | 1,392 | ||||||
| Realized and unrealized (loss) gain | |||||||||||
| on derivative instruments | (40,839 | ) | (31,390 | ) | 9,441 | (72,229 | ) | 43,892 | |||
| Equity income | 2,388 | 886 | 8,346 | 3,274 | 22,344 | ||||||
| Foreign currency exchange gain (loss) | 1,789 | (568 | ) | (3,860 | ) | 1,221 | (5,803 | ) | |||
| Other expense - net | (1,640 | ) | (354 | ) | (592 | ) | (1,994 | ) | (3,863 | ) | |
| Loss before income tax expense | (24,801 | ) | (329 | ) | (167,612 | ) | (25,130 | ) | (145,794 | ) | |
| Income tax expense | (3,178 | ) | (2,269 | ) | (880 | ) | (5,447 | ) | (6,638 | ) | |
| Net loss | (27,979 | ) | (2,598 | ) | (168,492 | ) | (30,577 | ) | (152,432 | ) | |
| Non-controlling interests in net loss | 1 | 285 | 8 | 286 | (7,852 | ) | |||||
| Preferred unitholders' interest in net loss | 8,038 | 8,038 | 8,038 | 16,076 | 15,409 | ||||||
| General partner’s interest in net loss | (274 | ) | (83 | ) | (1,342 | ) | (357 | ) | (1,217 | ) | |
| Limited partners’ interest in net loss | (35,744 | ) | (10,838 | ) | (175,196 | ) | (46,582 | ) | (158,772 | ) | |
| Limited partner's interest in net (loss) income | |||||||||||
| per common unit | |||||||||||
| - basic | (0.09 | ) | (0.03 | ) | (0.43 | ) | (0.11 | ) | (0.39 | ) | |
| - diluted | (0.09 | ) | (0.03 | ) | (0.43 | ) | (0.11 | ) | (0.39 | ) | |
| Weighted-average number of common units: | |||||||||||
| - basic | 410,595,551 | 410,342,692 | 410,310,586 | 410,469,820 | 410,206,610 | ||||||
| - diluted | 410,595,551 | 410,342,692 | 410,310,586 | 410,469,820 | 410,206,610 | ||||||
| Total number of common units outstanding | |||||||||||
| at end of period | 410,707,764 | 410,400,988 | 410,314,977 | 410,707,764 | 410,314,977 | ||||||
Teekay Offshore Partners L.P.
Consolidated Balance Sheets
| As at | As at | As at | |||||
| June 30, 2019 | March 31, 2019 | December 31, 2018 | |||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | ||||
| ASSETS | |||||||
| Current | |||||||
| Cash and cash equivalents | 201,567 | 182,791 | 225,040 | ||||
| Restricted cash | 8,963 | 6,349 | 8,540 | ||||
| Accounts receivable | 169,137 | 122,083 | 141,903 | ||||
| Vessels held for sale | 13,756 | 20,027 | 12,528 | ||||
| Prepaid expenses | 29,277 | 30,062 | 32,199 | ||||
| Due from related parties | — | 39,118 | 58,885 | ||||
| Other current assets | 6,272 | 9,506 | 11,879 | ||||
| Total current assets | 428,972 | 409,936 | 490,974 | ||||
| Vessels and equipment | |||||||
| At cost, less accumulated depreciation | 4,010,862 | 4,103,831 | 4,196,909 | ||||
| Advances on newbuilding contracts | 184,987 | 140,553 | 73,713 | ||||
| Investment in equity accounted joint ventures | 215,304 | 213,047 | 212,202 | ||||
| Deferred tax asset | 7,295 | 8,746 | 9,168 | ||||
| Due from related parties | — | 954 | 949 | ||||
| Other assets | 207,796 | 214,943 | 198,992 | ||||
| Goodwill | 129,145 | 129,145 | 129,145 | ||||
| Total assets | 5,184,361 | 5,221,155 | 5,312,052 | ||||
| LIABILITIES AND EQUITY | |||||||
| Current | |||||||
| Accounts payable | 55,544 | 10,990 | 16,423 | ||||
| Accrued liabilities | 138,204 | 108,577 | 129,896 | ||||
| Deferred revenues | 61,721 | 59,325 | 55,750 | ||||
| Due to related parties | 50,000 | 167,292 | 183,795 | ||||
| Current portion of derivative instruments | 21,693 | 18,245 | 23,290 | ||||
| Current portion of long-term debt | 487,018 | 480,484 | 554,336 | ||||
| Other current liabilities | 5,344 | 10,002 | 15,062 | ||||
| Total current liabilities | 819,524 | 854,915 | 978,552 | ||||
| Long-term debt | 2,589,431 | 2,561,154 | 2,543,406 | ||||
| Derivative instruments | 152,143 | 120,103 | 94,354 | ||||
| Other long-term liabilities | 211,449 | 238,049 | 236,616 | ||||
| Total liabilities | 3,772,547 | 3,774,221 | 3,852,928 | ||||
| Equity | |||||||
| Limited partners - common units | 837,405 | 873,126 | 883,090 | ||||
| Limited partners - preferred units | 384,274 | 384,274 | 384,274 | ||||
| General Partner | 14,696 | 14,969 | 15,055 | ||||
| Warrants | 132,225 | 132,225 | 132,225 | ||||
| Accumulated other comprehensive income | 6,892 | 7,187 | 7,361 | ||||
| Non-controlling interests | 36,322 | 35,153 | 37,119 | ||||
| Total equity | 1,411,814 | 1,446,934 | 1,459,124 | ||||
| Total liabilities and total equity | 5,184,361 | 5,221,155 | 5,312,052 | ||||
Teekay Offshore Partners L.P.
Consolidated Statements of Cash Flows
| Six Months Ended | ||||
| June 30, 2019 | June 30, 2018 | |||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | ||
| Cash, cash equivalents and restricted cash provided by (used for) | ||||
| OPERATING ACTIVITIES | ||||
| Net loss | (30,577 | ) | (152,432 | ) |
| Adjustments to reconcile net loss to net operating cash flow: | ||||
| Unrealized loss (gain) on derivative instruments | 63,468 | (67,795 | ) | |
| Equity income | 550 | (17,644 | ) | |
| Depreciation and amortization | 178,132 | 189,744 | ||
| (Gain) on sale and write-down of vessels | (11,756 | ) | 207,291 | |
| Deferred income tax expense | 2,351 | 5,435 | ||
| Amortization of in-process revenue contracts | (15,062 | ) | (6,101 | ) |
| Expenditures for dry docking | (10,593 | ) | (9,995 | ) |
| Other | (19,415 | ) | (992 | ) |
| Change in non-cash working capital items related to operating activities | 30,148 | (70,456 | ) | |
| Net operating cash flow | 187,246 | 77,055 | ||
| FINANCING ACTIVITIES | ||||
| Proceeds from long-term debt | 148,480 | 226,520 | ||
| Scheduled repayments of long-term debt and settlement of related swaps | (169,214 | ) | (345,970 | ) |
| Prepayments of long-term debt | — | (40,000 | ) | |
| Debt issuance costs | (13,208 | ) | (8,346 | ) |
| Proceeds from issuance of preferred units | — | 120,000 | ||
| Expenses relating to equity offerings | — | (3,997 | ) | |
| Proceeds from credit facility due to related parties | — | 125,000 | ||
| Prepayments of credit facility due to related parties | (75,000 | ) | — | |
| Cash distributions paid by the Partnership | (16,075 | ) | (22,330 | ) |
| Cash distributions paid by subsidiaries to non-controlling interests | (2,583 | ) | (664 | ) |
| Cash contributions paid from non-controlling interests to subsidiaries | 1,500 | — | ||
| Other | (864 | ) | (715 | ) |
| Net financing cash flow | (126,964 | ) | 49,498 | |
| INVESTING ACTIVITIES | ||||
| Net payments for vessels and equipment, including advances on newbuilding contracts and conversion costs | (112,849 | ) | (160,175 | ) |
| Proceeds from sale of vessels and equipment | 33,341 | 10,410 | ||
| Investment in equity accounted joint ventures | (3,824 | ) | (1,700 | ) |
| Direct financing lease payments received | — | 2,991 | ||
| Acquisition of companies from Teekay Corporation (net of cash acquired of $26.6 million) | — | 25,254 | ||
| Net investing cash flow | (83,332 | ) | (123,220 | ) |
| Decrease in cash, cash equivalents and restricted cash | (23,050 | ) | 3,333 | |
| Cash, cash equivalents and restricted cash, beginning of the period | 233,580 | 250,294 | ||
| Cash, cash equivalents and restricted cash, end of the period | 210,530 | 253,627 | ||
Definitions and Non-GAAP Financial Measures
This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the U.S. Securities and Exchange Commission (SEC). These non-GAAP financial measures, including Consolidated Adjusted EBITDA, Adjusted EBITDA and Adjusted Net Income, are intended to provide additional information and should not be considered substitutes for measures of performance prepared in accordance with GAAP. In addition, these measures do not have standardized meanings, and may not be comparable to similar measures presented by other companies. These non-GAAP measures are used by management, and the Partnership believes that these supplementary metrics assist investors and other users of its financial reports in comparing financial and operating performance of the Partnership across reporting periods and with other companies.
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA represents net loss before interest, taxes, and depreciation and amortization and is adjusted to exclude certain items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance. Such adjustments include vessel write-downs, gains or losses on the sale of vessels, unrealized gains or losses on derivative instruments, foreign exchange gains or losses, losses on debt repurchases, and certain other income or expenses. Consolidated Adjusted EBITDA also excludes realized gains or losses on interest rate swaps as management, in assessing the Partnership's performance, views these gains or losses as an element of interest expense, and realized gains or losses on derivative instruments resulting from amendments or terminations of the underlying instruments. Consolidated Adjusted EBITDA also excludes equity income as the Partnership does not control its equity-accounted investments, and as a result, the Partnership does not have the unilateral ability to determine whether the cash generated by its equity-accounted investments is retained within the entity in which the Partnership holds the equity-accounted investment or distributed to the Partnership and other owners. In addition, the Partnership does not control the timing of any such distributions to the Partnership and other owners.
Adjusted EBITDA represents Consolidated Adjusted EBITDA further adjusted to include the Partnership's proportionate share of consolidated adjusted EBITDA from its equity-accounted joint ventures and to exclude the non-controlling interests' proportionate share of the consolidated adjusted EBITDA from the Partnership's consolidated joint ventures. Readers are cautioned when using Adjusted EBITDA as a liquidity measure as the amount contributed from Adjusted EBITDA from the equity-accounted investments may not be available or distributed to the Partnership in the periods such Adjusted EBITDA is generated by the equity-accounted investments. Please refer to Appendices A and C of this release for reconciliations of Adjusted EBITDA to net loss and equity income, respectively, the most directly comparable GAAP measures reflected in the Partnership’s consolidated financial statements.
Adjusted Net Income represents net loss adjusted to exclude the impact of certain items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance consistent with the calculation of Adjusted EBITDA. Adjusted Net Income includes realized gains or losses on interest rate swaps as an element of interest expense and excludes income tax expenses or recoveries from changes in valuation allowance or uncertain tax provisions. Please refer to Appendix B of this release for a reconciliation of this non-GAAP financial measure to net loss, the most directly comparable GAAP measure reflected in the Partnership’s consolidated financial statements.
Teekay Offshore Partners L.P.
Appendix A - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
| Three Months Ended | Six Months Ended | |||||||||
| June 30, | June 30, | |||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||
| Net loss | (27,979 | ) | (168,492 | ) | (30,577 | ) | (152,432 | ) | ||
| Depreciation and amortization | 88,666 | 95,440 | 178,132 | 189,744 | ||||||
| Interest expense, net of interest income | 50,190 | 48,928 | 101,534 | 89,843 | ||||||
| Income tax expense | 3,178 | 880 | 5,447 | 6,638 | ||||||
| EBITDA | 114,055 | (23,244 | ) | 254,536 | 133,793 | |||||
| Add (subtract) specific income statement items affecting EBITDA: | ||||||||||
| (Gain) on sale and write-down of vessels | (11,756 | ) | 178,795 | (11,756 | ) | 207,291 | ||||
| Realized and unrealized loss (gain) on derivative instruments | 40,839 | (9,441 | ) | 72,229 | (43,892 | ) | ||||
| Equity income | (2,388 | ) | (8,346 | ) | (3,274 | ) | (22,344 | ) | ||
| Foreign currency exchange (gain) loss | (1,789 | ) | 3,860 | (1,221 | ) | 5,803 | ||||
| Other expense - net | 1,640 | 592 | 1,994 | 3,863 | ||||||
| Realized (loss) gain on foreign currency forward contracts | (1,142 | ) | 370 | (2,317 | ) | 990 | ||||
| Total adjustments | 25,404 | 165,830 | 55,655 | 151,711 | ||||||
| Consolidated Adjusted EBITDA | 139,459 | 142,586 | 310,191 | 285,504 | ||||||
| Add: Adjusted EBITDA from equity-accounted vessels (See Appendix C) | 22,619 | 22,556 | 43,415 | 44,485 | ||||||
| Less: Adjusted EBITDA attributable to non-controlling interests (1) | (3,137 | ) | (4,944 | ) | (6,515 | ) | (9,344 | ) | ||
| Adjusted EBITDA | 158,941 | 160,198 | 347,091 | 320,645 | ||||||
- Adjusted EBITDA attributable to non-controlling interests is summarized in the table below.
| Three Months Ended | Six Months Ended | |||||||||
| June 30, | June 30, | |||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||
| Net loss attributable to non-controlling interests | 1 | 8 | 286 | (7,852 | ) | |||||
| Depreciation and amortization | 2,749 | 4,104 | 5,433 | 8,668 | ||||||
| Interest expense, net of interest income | 381 | 528 | 793 | 1,105 | ||||||
| EBITDA attributable to non-controlling interests | 3,131 | 4,640 | 6,512 | 1,921 | ||||||
| Add (subtract) specific income statement items affecting EBITDA: | ||||||||||
| Write-down of vessels | — | 290 | — | 7,386 | ||||||
| Foreign currency exchange loss | 6 | 14 | 3 | 37 | ||||||
| Total adjustments | 6 | 304 | 3 | 7,423 | ||||||
| Adjusted EBITDA attributable to non-controlling interests | 3,137 | 4,944 | 6,515 | 9,344 | ||||||
Teekay Offshore Partners L.P.
Appendix B - Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income (Loss)
| Three Months Ended | Six Months Ended | |||||||||
| June 30, | June 30, | |||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||
| (in thousands of U.S. Dollars, except per unit data) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||
| Net loss | (27,979 | ) | (168,492 | ) | (30,577 | ) | (152,432 | ) | ||
| Adjustments: | ||||||||||
| Net loss attributable to non-controlling interests | 1 | 8 | 286 | (7,851 | ) | |||||
| Net loss attributable to the partners and preferred unitholders | (27,980 | ) | (168,500 | ) | (30,863 | ) | (144,581 | ) | ||
| Add (subtract) specific items affecting net loss: | ||||||||||
| (Gain) on sale and write-down of vessels | (11,757 | ) | 178,795 | (11,757 | ) | 207,291 | ||||
| Unrealized loss (gain) on derivative instruments | 36,225 | (14,914 | ) | 63,468 | (65,890 | ) | ||||
| Realized loss on interest rate swap amendments | — | — | — | 10,000 | ||||||
| Foreign currency exchange (gain) loss (1) | (1,789 | ) | 2,416 | (1,657 | ) | 3,066 | ||||
| Other expense - net | 1,639 | 592 | 1,993 | 3,863 | ||||||
| Deferred income tax expense relating to Norwegian tax structure | 1,523 | 735 | 1,957 | 5,409 | ||||||
| Other adjustments (2) | — | 161 | — | 973 | ||||||
| Adjustments related to equity-accounted vessels (3) | 6,868 | 287 | 11,101 | (5,145 | ) | |||||
| Adjustments related to non-controlling interests (4) | 6 | (304 | ) | 3 | (7,422 | ) | ||||
| Total adjustments | 32,715 | 167,768 | 65,108 | 152,145 | ||||||
| Adjusted net income (loss) attributable to the partners and preferred unitholders | 4,735 | (732 | ) | 34,245 | 7,564 | |||||
| Preferred unitholders' interest in adjusted net income (loss) | 8,038 | 8,038 | 16,076 | 15,409 | ||||||
| General Partner's interest in adjusted net income (loss) | (25 | ) | (67 | ) | 138 | (60 | ) | |||
| Limited partners' interest in adjusted net income (loss) | (3,278 | ) | (8,703 | ) | 18,031 | (7,785 | ) | |||
| Limited partners' interest in adjusted net income (loss) per common unit, basic | (0.01 | ) | (0.02 | ) | 0.04 | (0.02 | ) | |||
| Weighted-average number of common units outstanding, basic | 410,595,551 | 410,310,586 | 410,469,820 | 410,206,610 | ||||||
- Foreign currency exchange (gain) loss primarily relates to the Partnership's revaluation of all foreign currency-denominated assets and liabilities based on the prevailing exchange rate at the end of each reporting period and unrealized gain or loss related to the Partnership's cross-currency swaps related to the Partnership's Norwegian Krone (NOK) bonds, and excludes the realized gain or loss relating to the Partnership's cross-currency swaps and NOK bonds.
- Other adjustments primarily reflects voyage expenses, vessel operating expense, depreciation and amortization expense, general and administrative expenses relating to the Petrojarl I FPSO unit while undergoing upgrades.
- Reflects the Partnership's proportionate share of specific items affecting the net income of the Cidade de Itajai FPSO unit and Pioneiro de Libra FPSO unit equity-accounted joint ventures, including the unrealized gain or loss on derivative instruments and the foreign exchange gain or loss.
- 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 adjustments relate to the gain on sale or write-down of vessels and foreign currency exchange gain or loss within the Partnership's consolidated non-wholly-owned subsidiaries.
Teekay Offshore Partners L.P.
Appendix C - Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA From Equity-Accounted Vessels
| Three Months Ended | Three Months Ended | ||||||||
| June 30, 2019 | June 30, 2018 | ||||||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | |||||||
| At 100% | Partnership's 50% | At 100% | Partnership's 50% | ||||||
| Revenues | 57,719 | 28,860 | 61,794 | 30,897 | |||||
| Vessel and other operating expenses | (12,481 | ) | (6,241 | ) | (16,682 | ) | (8,341 | ) | |
| Depreciation and amortization | (16,294 | ) | (8,146 | ) | (15,455 | ) | (7,728 | ) | |
| Operating income of equity-accounted vessels | 28,944 | 14,473 | 29,657 | 14,828 | |||||
| Net interest expense | (10,604 | ) | (5,302 | ) | (11,849 | ) | (5,925 | ) | |
| Realized and unrealized (loss) gain on derivative instruments (1) | (13,957 | ) | (6,979 | ) | 357 | 179 | |||
| Foreign currency exchange gain (loss) | 326 | 163 | (987 | ) | (494 | ) | |||
| Total other items | (24,235 | ) | (12,118 | ) | (12,479 | ) | (6,240 | ) | |
| Net income / equity income of equity-accounted vessels before income tax expense | 4,709 | 2,355 | 17,178 | 8,588 | |||||
| Income tax recovery (expense) | 66 | 33 | (484 | ) | (242 | ) | |||
| Net income / equity income of equity-accounted vessels | 4,775 | 2,388 | 16,694 | 8,346 | |||||
| Depreciation and amortization | 16,294 | 8,146 | 15,455 | 7,728 | |||||
| Net interest expense | 10,604 | 5,302 | 11,849 | 5,925 | |||||
| Income tax (recovery) expense | (66 | ) | (33 | ) | 484 | 242 | |||
| EBITDA | 31,607 | 15,803 | 44,482 | 22,241 | |||||
| Add (subtract) specific items affecting EBITDA: | |||||||||
| Realized and unrealized loss (gain) on derivative instruments (1) | 13,957 | 6,979 | (357 | ) | (179 | ) | |||
| Foreign currency exchange (gain) loss | (326 | ) | (163 | ) | 987 | 494 | |||
| Adjusted EBITDA from equity-accounted vessels | 45,238 | 22,619 | 45,112 | 22,556 | |||||
- Realized and unrealized (loss) gain on derivative instruments includes an unrealized loss of $14.1 million ($7.0 million at the Partnership’s 50% share) for the three months ended June 30, 2019 related to interest rate swaps for the Cidade de Itajai and Pioneiro de Libra FPSO units and an unrealized gain of $0.4 million ($0.2 million at the Partnership’s 50% share) for the three months ended June 30, 2018 related to interest rate swaps for the Cidade de Itajai FPSO unit.
| Six Months Ended | Six Months Ended | ||||||||
| June 30, 2019 | June 30, 2018 | ||||||||
| (in thousands of U.S. Dollars) | (unaudited) | (unaudited) | |||||||
| At 100% | Partnership's 50% | At 100% | Partnership's 50% | ||||||
| Revenues | 117,444 | 58,722 | 121,451 | 60,726 | |||||
| Vessel and other operating expenses | (30,614 | ) | (15,307 | ) | (32,482 | ) | (16,241 | ) | |
| Depreciation and amortization | (33,464 | ) | (16,732 | ) | (30,181 | ) | (15,090 | ) | |
| Operating income of equity-accounted vessels | 53,366 | 26,683 | 58,788 | 29,395 | |||||
| Net interest expense (1) | (22,684 | ) | (11,342 | ) | (13,368 | ) | (6,684 | ) | |
| Realized and unrealized (loss) gain on derivative instruments (2) | (24,222 | ) | (12,111 | ) | 1,725 | 863 | |||
| Foreign currency exchange gain (loss) | 324 | 162 | (1,643 | ) | (822 | ) | |||
| Total other items | (46,582 | ) | (23,291 | ) | (13,286 | ) | (6,643 | ) | |
| Net income / equity income of equity-accounted vessels before income tax expense | 6,784 | 3,392 | 45,502 | 22,752 | |||||
| Income tax expense | (238 | ) | (118 | ) | (815 | ) | (408 | ) | |
| Net income / equity income of equity-accounted vessels | 6,546 | 3,274 | 44,687 | 22,344 | |||||
| Depreciation and amortization | 33,464 | 16,732 | 30,181 | 15,090 | |||||
| Net interest expense (1) | 22,684 | 11,342 | 13,368 | 6,684 | |||||
| Income tax expense | 238 | 118 | 815 | 408 | |||||
| EBITDA | 62,932 | 31,466 | 89,051 | 44,526 | |||||
| Add (subtract) specific items affecting EBITDA: | |||||||||
| Realized and unrealized loss on derivative instruments (2) | 24,222 | 12,111 | (1,725 | ) | (863 | ) | |||
| Foreign currency exchange (gain) loss | (324 | ) | (162 | ) | 1,643 | 822 | |||
| Adjusted EBITDA from equity-accounted vessels | 86,830 | 43,415 | 88,969 | 44,485 | |||||
- Net interest expense for the six months ended June 30, 2018 includes an unrealized gain of $9.7 million ($4.9 million at the Partnership's 50% share) related to interest rate swaps designated and qualifying as cash flow hedges for the Pioneiro de Libra FPSO unit.
- Realized and unrealized (loss) gain on derivative instruments includes an unrealized loss of $22.6 million ($11.3 million at the Partnership’s 50% share) for the six months ended June 30, 2019 related to interest rate swaps for the Cidade de Itajai and Pioneiro de Libra FPSO units and an unrealized gain of $2.2 million ($1.1 million at the Partnership’s 50% share) for the six months ended June 30, 2018 related to interest rate swaps for the Cidade de Itajai FPSO unit.