Teekay Offshore Reports Quarterly Results

Teekay Offshore reported its fourth quarter and annual results for 2008. The Partnership generated distributable cash flow(1) of $11.7 million in the fourth quarter of 2008, an increase from $6.5 million for the fourth quarter of 2007, primarily as a result of the Partnership's acquisition of an additional 25 percent interest in Teekay Offshore Operating Partners L.P. (OPCO) in June 2008.

On February 2, 2009, the Partnership declared a cash distribution of $0.45 per unit for the quarter ended December 31, 2008 which represents $1.80 per unit on an annualized basis. The cash distribution was paid on February 13, 2009, to all unitholders of record on February 6, 2009.

On May 4, 2009, the Partnership declared a cash distribution of $0.45 per unit for quarter ended March 31, 2009. The cash distribution is payable on May 15, 2009, to all unitholders of record on May 8, 2009.

"Our distributable cash flow is supported by our large portfolio of medium-term fixed-rate contracts with strong counterparties and is not exposed to oil price risk," commented Peter Evensen, Chief Executive Officer of Teekay Offshore GP LLC. Mr. Evensen continued, "We remain excited about the Partnership's opportunities for growth in the next several years. In particular, we have the options to acquire five existing FPSOs and four shuttle tanker newbuildings from our sponsor, Teekay Corporation, which, if acquired, will add to our distributable cash flow."

Future Growth Opportunities

Teekay Corporation (Teekay) is obligated to offer Teekay Offshore shuttle tankers, FSO units, and Floating Production Storage and Offloading (FPSO) units it may acquire in the future, provided the vessels are servicing fixed-rate contracts of three or more years in length.

FPSO Units

On July 9, 2008, Teekay completed the acquisition of the remaining 35.3 percent of Teekay Petrojarl ASA it did not previously own. Teekay Petrojarl is a leading operator of FPSO units, with four units operating in the North Sea and one unit operating in Brazil.
Based on a pre-existing agreement, Teekay is obligated to offer Teekay Offshore its interests in Teekay Petrojarl's existing FPSO units that operate under charter contracts with remaining terms greater than three years. Teekay is also obligated to offer Teekay Offshore its interest in future FPSO projects with charter contracts greater than three years.

Financial Summary

The Partnership reported a net loss of $50.7 million for the quarter ended December 31, 2008, compared to a net loss of $6.0 million for the same period of the prior year. The results for the quarters ended December 31, 2008 and December 31, 2007 included a number of specific non-cash items which had the net effect of decreasing net income by $55.6 million and $11.1 million, respectively, as detailed in Appendix A to this release. Excluding these items, net income for the quarters ended December 31, 2008 and December 31, 2007 would have been $4.9 million and $5.0 million, respectively. Net voyage revenues(1) for the fourth quarter of 2008 increased to $164.8 million from $160.2 million for the same period of the prior year.

The Partnership reported a net loss for the year ended December 31, 2008 of $17.6 million, compared to net income of $4.0 million for the same period of the prior year. The results for the years ended December 31, 2008 and December 31, 2007 included a number of specific non-cash items which had the net effect of decreasing net income by $56.2 million and $24.2 million, respectively, as detailed in Appendix A to this release. Excluding these items, net income for the years ended December 31, 2008 and December 31, 2007 would have been $38.6 million and $28.2 million, respectively. Net voyage revenues(1) for the year ended December 31, 2008 increased to $647.5 million from $633.6 million for the prior year.
 

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