Teekay Offshore GP LLC reported the Partnership's results for the quarter and year ended December 31, 2009. During the fourth quarter of 2009, the Partnership generated distributable cash flow(1) of $18.2 million, an increase from $13.4 million in the previous quarter, primarily as a result of the acquisition of the Petrojarl Varg floating production, storage and offloading (FPSO) unit on September 10, 2009.
On January 27, 2010, the Partnership declared a cash distribution of $0.45 per unit for the quarter ended December 31, 2009. The cash distribution was paid on February 12, 2010, to all unitholders of record on February 5, 2010.
"2009 was a challenging year operationally for Teekay Offshore Partners," commented Peter Evensen, Chief Executive Officer of Teekay Offshore GP L.L.C. "Distributable cash flow from our shuttle tanker segment was weaker than expected because of lower revenues caused primarily by new oil fields coming on line later than planned and higher operating expenses. We moved aggressively to manage costs and in the fourth quarter, distributable cashflow rebounded from the depressed levels of the second and third quarter as shuttle tanker operating expenses began to reduce and we completed the acquisition of the Varg FPSO. In 2010, we expect higher cashflows from both the existing shuttle tanker fleet as we continue to improve profitability and the Varg FPSO because of higher oil production.
Future Growth Opportunities
Pursuant to an Omnibus Agreement that Teekay Offshore entered into in connection with its initial public offering in December 2006, Teekay Corporation (Teekay) is obligated to offer to the Partnership its interest in certain shuttle tankers, floating storage and sffloading (FSO) units and FPSO units and joint ventures it may acquire in the future, provided the vessels are servicing contracts in excess of three years in length. Teekay Offshore also may acquire additional limited partner interests in OPCO or other vessels that Teekay may offer the Partnership from time to time in the future. Teekay currently owns 49 percent of OPCO and Teekay Offshore owns the remaining 51 percent, including a general partner interest.
The Partnership reported adjusted net income attributable to the partners of $14.7 million for the quarter ended December 31, 2009, compared to $8.4 million for the quarter ended September 30, 2009. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of increasing net income by $12.0 million and decreasing net income by $21.8 million for the quarters ended December 31 and September 30, 2009, respectively. Including these items, the Partnership reported, on a GAAP basis, net income attributable to the partners of $26.7 million for the fourth quarter of 2009, compared to a net loss of $13.4 million in the previous quarter. Net voyage revenues for the fourth quarter of 2009 increased to $178.8 million from $175.1 million in the previous quarter.
The Partnership reported adjusted net income attributable to the partners (as detailed in Appendix A to this release) of $37.6 million for the year ended December 31, 2009, compared to $34.5 million for the year ended December 31, 2008. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of increasing net income by $26.1 million and decreasing net income by $53.5 million for the years ended December 31, 2009 and 2008, respectively, the Partnership reported, on a GAAP basis, net income attributable to the partners of $63.7 million for the year ended December 31, 2009, compared to a net loss of $19.0 million. Net voyage revenues for the year ended December 31, 2009 decreased to $710.8 million from $743.9 million in the previous year.
For accounting purposes, the Partnership is required to recognize, through the consolidated statements of income (loss), changes in the fair value of certain derivative instruments as unrealized gains or losses, through the consolidated statements of income (loss). This revaluation does not affect the economics of any hedging transactions or have any impact on the Partnership's actual cash flows or the calculation of its distributable cash flow.
In accordance with GAAP, business acquisitions of entities under common control that have begun operations are required to be accounted for in a manner whereby the Partnership's financial statements are retroactively adjusted to include the historical results of the acquired vessels from the date the vessels were originally under the control of Teekay. Accordingly, the Partnership has recast its historical financial results to include the results of the Petrojarl Varg FPSO for the periods prior to its September 10, 2009 acquisition, which pre-acquisition results are referred to in this release as the Dropdown Predecessor.
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