ENP Newswire - 25 February 2014
Release date- 21022014 - Teekay Corporation today reported adjusted net income attributable to stockholders of Teekay of $1.1 million or $0.02 per share, for the quarter ended December 31, 2013, compared to adjusted net income attributable to stockholders of Teekay of $2.9 million or $0.04 per share, for the same period of the prior year.
Including these items, the Company reported, on a GAAP basis, net loss attributable to stockholders of Teekay of $70.9 million, or $1.00 per share, for the quarter ended December 31, 2013, compared to net loss attributable to stockholders of Teekay of $93.7 million, or $1.35 per share, for the same period of the prior year. Net revenues for the fourth quarter of 2013 were $461.8 million, compared to $492.4 million for the same period of the prior year.
For the year ended December 31, 2013, the Company reported adjusted net loss attributable to stockholders of Teekay of $79.9 million, or $1.13 per share, compared to adjusted net loss attributable to stockholders of Teekay of $54.9 million, or $0.79 per share, for the prior year.
Including these items, the Company reported, on a GAAP basis, net loss attributable to stockholders of Teekay of $114.7 million, or$1.63 per share, for the year ended December 31, 2013, compared to net loss attributable to stockholders of Teekay of $160.2 million, or $2.31 per share, for the same period of the prior year. Net revenues for the year ended December 31, 2013 were $1,717.9 million, compared to$1,842.5 million for the prior year.
On January 3, 2014, the Company declared a cash dividend on its common stock of $0.31625 per share for the quarter ended December 31, 2013. The cash dividend was paid on January 31, 2014to all shareholders of record on January 17, 2014.
'During 2013, we made steady progress towards achieving our strategic objective of becoming a fixed asset-light company primarily focused on creating value by increasing cash flows generated by our publicly-traded daughter entities,' commented Peter Evensen , Teekay Corporation's President and Chief Executive Officer. 'This included completing the sales of the Voyageur Spirit and Cidade de Itajai FPSO units to Teekay Offshore during the second quarter of 2013 and, more recently, working and co-investing with Teekay Tankers to create Tanker Investments Ltd., to which we have agreed to sell Teekay Parent's last four directly-owned conventional tankers.'
'As a result of accretive acquisitions and newbuilding deliveries completed by Teekay Offshore Partners and Teekay LNG Partners, our two master limited partnerships were able to increase their common unit distributions by 2.5 percent for the fourth quarter, which further increases the quarterly cash flows to Teekay Parent based on its general partnership and limited partnership interests,' Mr. Evensen continued.
'With Teekay's general partnership interests in Teekay Offshore and Teekay LNG now both in the 50 percent incentive distribution tier, the fourth quarter distribution increases at these daughter entities have resulted in an annualized increase of approximately $12.7 million, or 8 percent, to Teekay Parent's general partnership and limited partnership cash flows.'
'Looking ahead to the remainder of 2014, efficiently executing on the Petrojarl Knarr FPSO project, our largest FPSO project to date, will continue to be a primary focus. Construction on the unit is progressing well and I am pleased to report that we recently secured an $815 million long-term debt facility for this strategic asset. The Knarr FPSO is expected to commence its ten-year time-charter with the BG Group in the fourth quarter of 2014, following delivery and transport from the shipyard and installation on the Knarr field in the North Sea. At that time, the Knarr FPSO will be eligible for sale to Teekay Offshore under the omnibus agreement between Teekay Parent and Teekay Offshore.'
Teekay Offshore Partners L.P.
Teekay Offshore is an international provider of marine transportation, oil production and storage services to the offshore oil industry through its fleet of 34 shuttle tankers (including two chartered-in vessels), five floating, production, storage and offloading (FPSO) units, six floating storage and offtake (FSO) units (including one FSO unit under conversion), four conventional oil tankers and one HiLoad Dynamic Positioning (DP) unit.
Teekay Offshore's interests in its directly-owned fleet (excluding the two chartered-in shuttle tankers) range from 50 to 100 percent. Teekay Offshore also has the right to participate in certain other FPSO and vessel opportunities pursuant to the omnibus agreement with Teekay. Teekay Parent currently owns a 29.3 percent interest in Teekay Offshore, including the 2 percent sole general partner interest.
Including cash flows from equity-accounted vessels, Teekay Offshore's total cash flow from vessel operations increased to $119.5 million in the fourth quarter of 2013, from $97.9 million in the same period of the prior year. The increase was primarily due to the acquisitions of the Voyageur Spirit FPSO and a 50 percent interest in the Cidade de Itajai FPSO from Teekay Corporation in the second quarter of 2013, the commencement of the time-charter contracts for the first three newbuilding shuttle tankers with the BG Group plc (BG) in June, August and November 2013, respectively, and higher shuttle tanker project revenues.
These increases were partially offset by the redelivery of the Navion Marita upon completion of its time-charter contract in the third quarter of 2013, the lay-up of the Navion Clipper upon expiration of its time-charter contract during the fourth quarter of 2012, and the sale of five conventional tankers since the fourth quarter of 2012.
In December 2013, Teekay Offshore was awarded a six year shuttle tanker contract of affreightment (COA), with extension options up to an additional four years, with BG, which will service the Knarr oil and gas field in the North Sea. The expected start date for the shuttle COA coincides with the expected start-up of the Petrojarl Knarr FPSO in the North Sea in the fourth quarter of 2014.
On August 27, 2013, repairs to the defective gas compressor on the Voyageur Spirit FPSO were completed and the unit achieved full production capacity. Since that time, Teekay Offshore has been receiving full rate either directly from the charterer or through the indemnification from Teekay Corporation. Teekay Offshore expects to receive a certificate of final acceptance from the charterer after completing certain operational tests, which have been temporarily delayed by winter weather issues and an unrelated issue which is the responsibility of the charterer.
During the fourth quarter of 2013 and the period up to December 31, 2013, Teekay Corporation indemnified Teekay Offshore for approximately $4.9 million and $34.9 million, respectively, relating to the Voyageur Spirit FPSO. Teekay Offshore has been, and will continue to be, indemnified by Teekay Corporation for lost revenues and certain uncovered vessel operating expenses up until receipt of the certificate of final acceptance from the charterer, subject to a maximum amount of $54 million.
Teekay LNG Partners L.P.
Teekay LNG provides liquefied natural gas (LNG), liquefied petroleum gas (LPG) and crude oil marine transportation services generally under long-term, fixed-rate charter contracts through its current fleet of 34 LNG carriers (including one LNG regasification unit and five newbuildings under construction), 28 LPG carriers (including 12 newbuildings under construction) and 10 conventional tankers.
Teekay LNG's interests in these vessels range from 33 to 100 percent. In addition, Teekay LNG, through its 50 percent interest in Exmar LPG BVBA, Teekay LNG's LPG joint venture with Exmar NV, charters-in five LPG carriers. Teekay Parent currently owns a 35.3 percent interest in Teekay LNG, including the 2 percent sole general partner interest.
For the fourth quarter of 2013, Teekay LNG increased its common unit quarterly cash distribution by 2.5 percent, or $0.0168 per unit, to $0.6918 per common unit. Including cash flows from equity-accounted vessels, Teekay LNG's total cash flow from vessel operations increased to $126.8 million in the fourth quarter of 2013, from $105.9 million in the same period of the prior year.
The increase was primarily due to the February 2013 acquisition of a 50 percent interest in Exmar LPG BVBA, the acquisition of two LNG carrier newbuildings from Awilco LNG ASA (Awilco) in September and November 2013, an increase in revenue relating to one of the LNG carriers in Teekay LNG's joint venture with Marubeni Corporation, which commenced a new three-year charter contract at a higher rate during the third quarter of 2013, and an increase in the tanker rates relating to two Suezmax tankers in the fourth quarter of 2013.
These increases were partially offset by the sale of the Tenerife Spirit conventional tanker in mid-December 2013 and the scheduled dry docking of two Suezmax tankers, which resulted in 48 days of off-hire in the fourth quarter of 2013.
In November 2013, Teekay LNG exercised an option with Daewoo Shipbuilding & Marine Engineering Co., Ltd. (DSME) of South Korea for the construction of one additional 173,400 cubic meter (cbm) LNG carrier newbuilding. This vessel will be equipped with the M-type, Electronically Controlled, Gas Injection (MEGI) twin engines, which are expected to be significantly more fuel-efficient and have lower emission levels than other engines currently being utilized in LNG shipping.
Teekay LNG intends to secure long-term charter contract employment for the vessel prior to its delivery in 2017. In connection with exercising the option in November 2013, Teekay LNG was also able to delay the delivery dates for the two currently unchartered 173,400 cbm LNG carrier newbuildings ordered in July 2013 from 2016 to 2017, to better coincide with the expected timing of new LNG shipping projects. Currently, Teekay LNG has options with DSME to order up to three additional LNG carrier newbuildings.
In September 2013, Teekay LNG agreed to acquire a second 155,900 cbm LNG carrier newbuilding from Awilco on similar terms as the first vessel. The second vessel was delivered to Teekay LNG in late-November 2013 and bareboat-chartered to Awilco on a four-year fixed-rate charter contract (plus a one-year extension option) with a fixed-price purchase obligation at the end of the initial term (and option period). Similar to the first Awilco vessel, the second vessel's purchase price was $205 million less a $50 million upfront prepayment of charter hire by Awilco, which is in addition to the daily bareboat charter rate.
In late January 2014, Exmar LPG BVBA was awarded two five-year fixed-rate time-charter contracts, up to a maximum of 10 years, with Statoil ASA. The contracts are expected to be serviced by two LPG carrier newbuildings currently under construction at Hanjin Heavy Industries and Construction Co., Ltd., which are scheduled for delivery in 2016.
Also in late January 2014, Exmar LPG BVBA was awarded two 10-year fixed-rate time-charter contracts with Potash Corporation. The contracts will be serviced by two of Exmar LPG BVBA's existing on-the-water LPG carriers.
Teekay Tankers Ltd.
Teekay Tankers currently owns a fleet of 28 vessels, including 11 Aframax tankers, 10 Suezmax tankers, three Long Range 2 (LR2) product tankers, three Medium-Range (MR) product tankers, and a 50 percent interest in a Very Large Crude Carrier (VLCC). In addition, Teekay Tankers currently time-charters in one Aframax tanker and has invested over $115 million in first-priority mortgage loans, secured by two 2010-built VLCCs, which Teekay Tankers currently manages.
Of the 28 vessels currently in operation, 13 are employed on fixed-rate time-charters, generally ranging from one to three years in initial duration, with the remaining vessels trading in spot tanker pools. Based on its current ownership of Teekay Tankers Class A common stock and its ownership of 100 percent of the outstanding Class B stock, Teekay Parent currently owns a 25.1 percent economic interest in and has voting control of Teekay Tankers.
On January 3, 2014, Teekay Tankers declared a fixed fourth quarter 2013 dividend of $0.03 per share, which was paid on January 31, 2014 to all shareholders of record on January 17, 2014. Based on its ownership of Teekay Tankers Class A and Class B shares, the dividend paid to Teekay Parent totaled $0.6 million for the fourth quarter of 2013.
Including cash flows from equity-accounted vessels, Teekay Tankers' total cash flow from vessel operations decreased slightly to $15.6 million in the fourth quarter of 2013, from $16.0 million in the same period of the prior year.
The decrease was primarily due to the change in employment of certain of Teekay Tankers' vessels from fixed rates to lower spot rates on expiry of their fixed-rate charters, lower average realized spot tanker rates from its spot LR2 product tankers, and a reduction in interest income earned from Teekay Tankers' investment in two mortgage loans, which have been in default since the first quarter of 2013, partially offset by higher average realized spot tanker rates from its spot Suezmax and Aframax vessels. In January 2014, crude spot tanker rates for Suezmax and Aframax vessels reached five-year highs, although rates have since softened.
In January 2014, Teekay Tankers and Teekay jointly created Tanker Investments Ltd. (TIL), which will seek to opportunistically acquire, operate, and sell modern secondhand tankers to benefit from an expected recovery in the current cyclical low of the tanker market. TIL completed a $250 million equity private placement in which Teekay Tankers and Teekay co-invested $25 million each for a combined 20 percent ownership interest.
The balance of the privately placed TIL shares, which are listed on the Norwegian over-the-counter exchange under the symbol 'TIL', were purchased by a group of institutional investors. A portion of the net proceeds from the equity private placement will be used to acquire four 2009 and 2010-built Aframax crude oil tankers from a third party seller. In addition, TIL has also agreed to acquire four 2009-built Suezmax crude oil tankers from Teekay in exchange for assuming the indebtedness secured by these vessels, which approximated the market value of these vessels at the time they were agreed to be acquired.
The acquisition of the four Teekay Suezmaxes is expected to be completed in the first quarter of 2014 and the acquisition of the Aframaxes is expected to be completed prior to the end of the second quarter of 2014. The remaining proceeds from the private placement are intended to be used to acquire additional tankers and for general corporate purposes. TIL expects to list its shares on the Oslo Stock Exchange in March 2014.
The Teekay and Teekay Tankers' Boards of Directors have also agreed in principle to the sale to Teekay Tankers of Teekay's conventional tanker commercial and technical management operations (Teekay Operations), including direct ownership in three commercially managed tanker pools, which currently generate income from commercially managing a fleet of 82 vessels and technically managing a fleet of 49 vessels.
In July 2010, Teekay Tankers invested $115 million in two loans maturing in July 2013, secured by first priority mortgages registered on two 2010-built VLCCs. The borrowers have been in default on their interest payment obligations since the first quarter of 2013 and their loan principal repayment since July 2013.
However, due to an increase in tanker vessel values, in the fourth quarter of 2013 Teekay Tankers reversed all of its previously recorded loan loss provisions relating to these loans. Teekay Tankers currently manages these vessels and continues to have discussions with the borrowers and the second priority mortgagees of the vessels to realize on its security for the loans.
In addition to its equity ownership interests in Teekay Offshore, Teekay LNG and Teekay Tankers, Teekay Parent directly owns several vessels, including the four conventional Suezmax tankers to be sold to TIL and four FPSO units. In addition, Teekay Parent currently owns one newbuilding FPSO unit under construction. As at February 1, 2014, Teekay Parent also had five chartered-in conventional tankers (including two Aframax tankers owned by Teekay Offshore), two chartered-in LNG carriers owned by Teekay LNG, and two chartered-in shuttle tankers and two chartered-in FSOs owned by Teekay Offshore.
For the fourth quarter of 2013, Teekay Parent generated negative cash flow from vessel operations of $14.4 million, compared to negative cash flow from vessel operations of $1.8 million in the same period of the prior year. The decrease in cash flow is primarily due to the completion of the Petrojarl I FPSO time-charter in April 2013 and lower production on the Foinaven FPSO, partially offset by increased equity income from Sevan Marine ASA, and lower time-charter hire expense as a result of the redelivery of time-chartered in vessels since the fourth quarter of 2012.
In mid-July 2013, Teekay Parent and the charterer agreed to temporarily stop production to repair the Foinaven FPSO's gas compressor trains and the subsea system, which is the responsibility of the charterer. In late August 2013, one of the Foinaven FPSO's two compressor trains was repaired. Since that time, the unit has been producing between approximately 30,000 and 35,000 barrels of oil per day. The repair of the second compressor train is expected to be completed during the first quarter of 2014, at which time the Foinaven FPSO is expected to be capable of ramping up to its target production level of approximately 43,000 barrels of oil per day.
In December 2013, Teekay Parent agreed to sell its last four owned conventional oil tankers to TIL for a total price of approximately $163 million in exchange for the assumption of related indebtedness, which approximated the fair value of the vessels. At December 31, 2013, these four conventional oil tankers were classified as 'Assets Held for Sale' and were written down to their fair value selling price, resulting in the recognition of a $90.8 million impairment charge in the fourth quarter of 2013.
As at December 31, 2013, the Company had consolidated liquidity of approximately $1.25 billion (consisting of $614.7 million cash and cash equivalents and $635.0 million of undrawn revolving credit facilities), of which $412.5 million of liquidity (consisting of $230.4 million cash and cash equivalents and $182.1 million of undrawn revolving credit facilities) is attributable to Teekay Parent. Including the approximately $162 million of proceeds from Teekay Offshore's Norwegian bond issuance completed in January 2014, Teekay had pro forma total consolidated liquidity of approximately $1.4 billion as at December 31, 2013.
The Company plans to host a conference call on Thursday, February 20, 2014 at 11:00 a.m. (ET) to discuss its results for the fourth quarter and fiscal year of 2013. An accompanying investor presentation will be available on Teekay's website at www.teekay.com prior to the start of the call. All shareholders and interested parties are invited to listen to the live conference call by choosing from the following options:
By dialing (888) 417-8465 or (719) 457-2083, if outside North America, and quoting conference ID code 7889390.
By accessing the webcast, which will be available on Teekay's website at www.teekay.com (the archive will remain on the website for a period of 30 days).
The conference call will be recorded and available until Thursday, February 27, 2014. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 7889390.
Teekay Corporation is an operational leader and project developer in the marine midstream space. Through its general partnership interests in two master limited partnerships, Teekay LNG Partners L.P. (NYSE:TGP) and Teekay Offshore Partners L.P. (NYSE:TOO), its controlling ownership of Teekay Tankers Ltd. (NYSE:TNK), and its fleet of directly-owned vessels, Teekay is responsible for managing and operating consolidated assets of over $11.5 billion, comprised of approximately 164 liquefied gas, offshore, and conventional tanker assets.
With offices in 15 countries and approximately 6,400 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world's leading oil and gas companies, and its reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company.
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 statements regarding: the increase in annualized cash flows to be received by Teekay Parent due to respective 2.5 percent fourth quarter of 2013 Teekay Offshore and Teekay LNG cash distribution increases; Teekay Parent's strategic objective of becoming a fixed asset-light company focused on creating value by increasing cash flows generated by its publicly-traded daughter entities, including completing Teekay Parent's sale of its last four directly owned conventional oil tankers to TIL; the estimated cost and timing of delivery of newbuildings and converted vessels and the commencement of associated time-charter contracts; the timing and certainty of the Knarr FPSO being eligible for sale to Teekay Offshore commencing in the fourth quarter of 2014 under the omnibus agreement; the Voyageur SpiritFPSO achieving the certificate of final acceptance from its charterer and commencing full operations under the charterer contract; securing long-term employment for the LNG carrier newbuilding ordered by Teekay LNG in November 2013; expected fuel-efficiency and emission levels associated with the MEGI engines to be built by DSME; the delayed delivery dates for the two LNG carrier newbuildings ordered by Teekay LNG from 2016 to 2017 to better coincide with the expected timing of new LNG shipping projects; TIL's acquisition of four Aframax vessels and the ability of TIL to secure additional future tanker acquisitions; TIL's listing of its shares on the Oslo Stock Exchange; Teekay Tankers completing the acquisition of the Teekay Operations; the Company realizing on its security in loans secured by three VLCCs; the timing of completion of repairs to the Foinaven FPSO's second compressor train and the FPSO unit achieving target production under its charter contract and the timing of amount of future capital expenditure commitments for Teekay Parent, Teekay LNG and Teekay Offshore.
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 production of or demand for oil, petroleum products, LNG and LPG, either generally or in particular regions; greater or less than anticipated levels of tanker newbuilding orders or greater or less than anticipated rates of tanker scrapping; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; changes in the typical seasonal variations in tanker charter rates; changes in the offshore production of oil or demand for shuttle tankers, FSOs and FPSOs; decreases in oil production by or increased operating expenses for FPSO units; trends in prevailing charter rates for shuttle tanker and FPSO contract renewals; the potential for early termination of long-term contracts and inability of the Company to renew or replace long-term contracts or complete existing contract negotiations; the inability to negotiate new contracts on the three LNG carrier newbuildings ordered in July and November 2013; shipyard production or vessel conversion delays and cost overruns; delays in commencement of operations of FPSO and FSO units at designated fields; changes in the Company's expenses; the Company's future capital expenditure requirements and the inability to secure financing for such requirements; the inability of the Voyageur Spirit FPSO to complete certain operational tests and receive its certificate of final acceptance from the charterer; the inability of the Company to repair the second gas compressor train on the Foinaven FPSO and achieve target production; the inability of the Company to realize on the security of its VLCC term loan investments; the inability of the Company to complete vessel sale transactions to its public-traded subsidiaries or to third parties; potential delays in the construction of the Knarr FPSO and/or commencement of operations under its charter contract; conditions in the capital markets; actual performance of the MEGI engines; failure of TIL to list its shares on the Oslo Stock Exchange or to complete its anticipated vessel acquisitions and other factors discussed in Teekay'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 Company 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 Company's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.
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