Teekay Offshore Partners Third Quarter 2013 Earnings Presentation
-
Upload
teekay-offshore-partners-lp -
Category
Investor Relations
-
view
865 -
download
1
Transcript of Teekay Offshore Partners Third Quarter 2013 Earnings Presentation
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
Third Quarter 2013
Earnings Presentation November 8, 2013
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
This presentation contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as
amended) which reflect management’s current views with respect to certain future events and performance, including statements
regarding: the fundamentals in the offshore industry; the amount, timing and certainty of future increases to the Partnership’s
common unit distributions, including the 2.5 percent distribution increase intended to be recommended by management for the
fourth quarter 2013 distribution payable in February 2014; the change in distributable cash flow as a result of recent acquisitions
and commencement of newbuilding time-charter contracts; future growth opportunities, including the Partnership’s ability to
successfully bid for new offshore projects; the timing of the Voyageur Spirit receiving its certificate of final acceptance from E.ON;
the timing of the new and converted vessels commencing their time charter contracts; the potential for the Partnership to acquire
future HiLoad projects developed by Remora; the cost of converting vessels into FSO units; the potential for Teekay Corporation to
offer additional vessels to the Partnership and the certainty of the Partnership agreeing to acquire such vessels; the timing of
delivery of vessels under construction or conversion; the potential for the Partnership to acquire other vessels or offshore projects
from Teekay Corporation or directly from third parties; and increases to the Partnership’s future adjusted net income as a result of
the commencement of newbuilding time-charter contracts in the fourth quarter of 2013 and first quarter of 2014. 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: vessel operations and oil production volumes;
the potential inability of the Voyageur Spirit FPSO to complete operational testing and receive its certificate of final acceptance from
E.ON; Teekay Corporation’s indemnification of the Partnership for the Voyageur Spirit FPSO exceeding the maximum
indemnification amount; significant changes in oil prices; variations in expected levels of field maintenance; increased operating
expenses; different-than-expected levels of oil production in the North Sea and Brazil offshore fields; potential early termination of
contracts; shipyard delivery or vessel conversion delays; delays in the commencement of time-charters; the inability to successfully
complete the operational testing of the HiLoad DP unit; failure of Teekay Corporation to offer to the Partnership additional vessels or
of Remora or Odebrecht to develop new vessels or projects; failure to obtain required approvals by the Conflicts Committee of
Teekay Offshore’s general partner to approve the acquisition of vessels offered from Teekay Corporation, or third parties; failure of
the Board of Directors of the Partnership’s general partner to approve distribution increases recommended by management; the
Partnership’s ability to raise adequate financing to purchase additional assets; 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, 2012. 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.
Forward Looking Statements
2
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
Recent Highlights
• Generated distributable Q3-13 cash flow of $43.0 million
• Declared Q3-13 cash distribution of $0.5253 per unit
• Took delivery of the third (of four) shuttle tanker newbuilding for long-
term charter to BG in Brazil
• Completed accretive acquisition of HiLoad Dynamic Positioning (DP)
unit from Remora AS
• Expected to commence 10-yr contract with Petrobras in Brazil in early
Q2-2014; annual DCF1 of approximately $7.5 million
• Intend to increase Q4-13 cash distributions by 2.5%, for a
total of 5% in 2013
• Several offshore projects in development
3
1) Distributable cash flow (DCF) 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 in the Q3-2013 Earnings Release for a reconciliation
of this non-GAAP measure to the most directly comparable financial measure under United States generally accepted accounting
principles (GAAP).
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
Voyageur Spirit FPSO Update
• Repairs to the defective gas compressor have been
completed and the Voyageur Spirit FPSO achieved full
production capacity
• The FPSO unit has been on full charter-hire since August 27th
• TOO was fully indemnified by Teekay Corporation prior to
August 27th
• Certificate of Final Acceptance subject to completing
certain operational tests
• Operational tests have been delayed due to an issue that
is the responsibility of the charterer
4
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
Accretive 2013 Projects
5
Cidade de Itajai FPSO
Voyageur Spirit FPSO
BG Shuttle
Tankers
Management intends to increase cash distribution by 2.5% for
Q4-13 (total of 5% distribution growth in 2013)
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
Adjusted Operating Results for Q3 2013 vs. Q2 2013
6
(1) See Appendix A to the Partnership's Q3-13 earnings release for a description of Appendix A items.
(2) Reallocating the realized gains/losses to their respective line as if hedge accounting had applied. Please refer to footnotes (5) and (6) to the Summary Consolidated Statements of (Loss) Income in the Q3-13 earnings release.
UNAUDITED
(in thousands of US dollars)As Reported
Appendix A items
(1)
Reclass for
Realized
Gains/Losses on
Derivatives
(2)
TOO Adjusted
Income Statement
TOO Adjusted
Income Statement
NET REVENUES
Revenues 235,561 - - 235,561 221,322
Voyage expenses 28,249 - - 28,249 23,273
Net revenues 207,312 - - 207,312 198,049
OPERATING EXPENSESVessel operating expenses 89,035 - 193 89,228 84,947 Time-charter hire expense 14,142 - - 14,142 14,093
Depreciation and amortization 51,920 - - 51,920 49,170 General and administrative 12,600 (1,000) 165 11,765 10,180
Write-down of vessels 57,502 (57,502) - - - Restructuring charge 449 (449) - - -
Total operating expenses 225,648 (58,951) 358 167,055 158,390
(Loss) income from vessel operations (18,336) 58,951 (358) 40,257 39,659
OTHER ITEMS
Interest expense (16,789) - (14,023) (30,812) (30,476) Interest income 467 - - 467 1,465 Realized and unrealized (loss) gain on - - derivative instruments (7,952) (6,760) 14,712 - -
Equity income from joint venture 1,199 62 - 1,261 413
Foreign exchange (loss) gain (2,730) 3,061 (331) - -
Other income – net 310 109 - 419 390 Income tax expense (107) - - (107) (456)
Total other items (25,602) (3,528) 358 (28,772) (28,664)
Net (loss) income from continuing operations (43,938) 55,423 - 11,485 10,995
Net (loss) income from discontinued operations (333) (565) - (898) 1,168 Less: Net loss (income) attributable to
non-controlling interests 18,483 (18,553) - (70) (2,466)
ADJUSTED NET (LOSS) INCOME
ATTRIBUTABLE TO THE PARTNERSHIP (25,788) 36,305 - 10,517 9,697
The above provides a Normalized Income Statement by adjusting for the following:
September 30, 2013 June 30, 2013
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
Distributable Cash Flow and Cash Distribution
7
(1) Indemnification of revenues is effectively treated as a reduction to estimated maintenance capital expenditures.
Three Months Ended Three Months Ended
September 30, 2013 June 30, 2013
(unaudited) (unaudited)
Net (loss) income (44,271) 58,604
Net loss attributable to Dropdown Predecessor - 2,225
(44,271) 60,829
Add (subtract):
Write-down of vessels 57,502 -
Depreciation and amortization 51,920 49,169
Realized loss on termination of interest rate swap 31,798 -
Distributions relating to equity financing of newbuilding installments 3,331 2,813
Partnership's share of equity accounted joint ventures' distributable cash flow
before estimated maintenance capital expenditures 3,068 814
Foreign exchange and other, net 916 (3,382)
Non-cash items in discontinued operations/writedown of vessel (565) 8,179
Equity income from joint venture (1,199) (1,598)
Distributions relating to preferred units (2,718) (1,817)
Indemnification from Teekay Corporation relating to Voyageur Spirit FPSO(1) 13,000 12,505
Estimated maintenance capital expenditures (1) (27,971) (26,808)
Unrealized gains on non-designated derivative instruments (37,478) (50,618)
Distributable Cash Flow before Non-Controlling Interest 47,333 50,086
Non-controlling interests’ share of DCF (4,354) (7,046)
Distributable Cash Flow 42,979 43,040 A
Total Distributions 47,640 47,639 B
Coverage Ratio 0.90x 0.90x =A/B
Note: Distributable cash flow represents net (loss) income adjusted for depreciation and amortization expense, non-controlling interest, non-cash items, distributions relating to equity financing of
newbuilding installments and on our preferred units, certain realized gains on forward contracts, vessel acquisition costs, estimated maintenance capital expenditures, unrealized gains and losses from
derivatives, non-cash income taxes, foreign currency and unrealized foreign exchange related items. Maintenance capital expenditures represent those capital expenditures required to maintain over the
long-term the operating capacity of, or the revenue generated by, the Partnership's capital assets. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment
community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Distributable cash flow is not defined by GAAP and should not be considered as an alternative to net (loss)
income or any other indicator of the Partnership’s performance required by GAAP.
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
Visible Existing and Potential Growth Opportunities for TOO
8
2013
SH
UT
TL
E &
FS
O BG Shuttle Tanker
Remora HiLoad DP Unit
Salamander FSO Project
2014
FP
SO
Petrojarl Knarr
Q4 1H 2H
2016 2015 2017
Gina Krog FSO Project
Petrojarl I
FPSO
Petrojarl Banff
FPSO
Hummingbird
Spirit FPSO
Petrojarl
Foinaven FPSO
Agreements with Sevan and Remora expected to provide
additional growth opportunities
Directly bidding on several offshore projects
Visible Growth
Potential Future Growth
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
Appendix
9
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE
2013 and 2014 Drydock Schedule
10
Note: In the case that a vessel drydock straddles between quarters, the drydock has been allocated to the quarter in which the majority of drydock days occur.
Entity Segment
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Teekay Offshore Spot Tanker - - - - 1 26 - - 1 26 - -
Fixed-Rate Tanker - - - - - - - - - - 1 26
FSO - - - - - - - - - - - -
Shuttle Tanker 1 32 1 32 2 48 1 32 5 144 7 245
1 32 1 32 3 74 1 32 6 170 8 271
Total 2014March 31, 2013 (A) June 30, 2013 (A) September 30, 2013 (A) December 31, 2013 (E) Total 2013
SAFE ZONE : PLACE TEXT OR IMAGE WITHIN THIS AREA
TEEKAY OFFSHORE
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
FOOTER: DO NOT ADD TEXT BEYOND THIS POINT
TEEKAY OFFSHORE