Altera Shuttle Tankers L.L.C: Interim report for the three and six months ended June 30, 2020

Aug 20 2020


As at June 30, 2020, Altera Shuttle Tankers' (or the Company’s) shuttle tanker fleet consisted of 26 vessels that operate under fixed-rate contract of affreightments (CoA)s, time charters and bareboat charters and five shuttle tanker newbuildings which are scheduled for delivery through 2022, one of which was delivered in July 2020.

Of these 31 shuttle tankers, three are owned through 50%-owned subsidiaries and two were chartered-in. The remaining vessels are owned 100% by the Company. All of the Company's operating shuttle tankers, with the exception of two shuttle tankers that are currently trading as conventional tankers and one that is being used for storage, provide transportation services to energy companies in the North Sea, Brazil and the East Coast of Canada.

The Company's shuttle tankers occasionally service the conventional spot tanker market and the Company occasionally charter-in shuttle tankers in the spot market. The strengthening or weakening of the U.S. Dollar relative to the NOK, Euro and Brazilian Real may result in significant decreases or increases, respectively, in the Company's vessel operating expenses, as significant components of vessel operating expenses are incurred in these currencies for the Company's shuttle tankers.

 

Three months ended June 30, 2020 compared with the three months ended June 30, 2019

Net revenues decreased marginally for the three months ended June 30, 2020 primarily due to $5 million resulting from the redelivery of vessels over 20 years, $6 million related repairs and the Bossa Nova off-hire dispute, offset by $7 million due to increased rates in conventional tanker spot market, $4 million related to Aurora Spirit and Rainbow Spirit commencing its contracts and $2 million related to higher utilization of the CoA vessels.

 

Vessel operating expenses increased by $2 million for the three months ended June 30, 2020 primarily due to $3 million in crew costs on E-shuttles, partially offset by $2 million due to the sales of the Navion Hispania and Stena Sirita in the first quarter 2020 and Nordic Spirit and Alexita Spirit in the second quarter 2019.

 

Adjusted EBITDA decreased by $2 million for the three months ended June 30, 2020 primarily due to the Bossa Nova off-hire dispute and changes in the vessel operating expenses.

 

Depreciation and amortization expense decreased by $3 million for the three months ended June 30, 2020 primarily due to three vessels being fully depreciated during 2019, the impairment of one vessel in the first quarter 2020 and the sale of two vessels in January 2020, partially offset by the delivery of the Aurora Spirit and Rainbow Spirit in January 2020 and February 2020, respectively.

 

(Write-down) and (loss) gain on sale of vessels of $2 million for the three months ended June 30, 2020 includes a $2 million write-down of the Navion Bergen classified as held for sale as at June 30, 2020 based on the expected proceeds as a result of the expected sale of the vessel.

 

Six months ended June 30, 2020 compared with the six months ended June 30, 2019

Net revenues increased marginally for the six months ended June 30, 2020 primarily due to an increase of $10 million as a result of higher rates and utilization in the conventional tanker spot market, $4 million related to Aurora Spirit and Rainbow Spirit starting on contract and $4 million related to higher utilization in the of CoA vessels, offset by $8 million relating to redelivery and subsequent sale of certain vessels, $6 million related to repairs and the Bossa Nova off-hire dispute, $2 million related to transit costs from the yard for the Aurora Spirit and Rainbow Spirit, $2 million related to lower rates on bareboat contracts.

 

Adjusted EBITDA decreased by $7 million for the six months ended June 30, 2020 primarily due to the Bossa Nova off-hire dispute, costs related to the delivery and start up operations of the Aurora Spirit and Rainbow Spirit and an increase in spotmarket in-chartered shuttle tankers to service the increased CoA days and to trade in the spot-market during the six months ended June 30, 2020.

 

Depreciation and amortization expense decreased by $10 million for the six months ended June 30, 2020 primarily due to three vessels being fully depreciated during 2019, impairment of one vessel in first quarter 2020 and the sale of two vessels in January 2020, partially offset by the delivery of the Aurora Spirit and Rainbow Spirit in January 2020 and February 2020, respectively.

 

(Write-down) and (loss) gain on sale of vessels of $29 million for the six months ended June 30, 2020 includes a $25 million write-down of the Navion Gothenburg as a result of a change in the expected operating plans for the vessel upon the completion of its charter contract and redelivery to us in July 2020, a $4 million write-down of the Navion Bergen classified as held for sale as at June 30, 2020 based on the expected proceeds as a result of the expected sale of the vessel.

 



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