However, Teekay Corp’s results include the three publicly-listed subsidiaries (Teekay Offshore Partners, Teekay LNG Partners and Teekay Tankers), all of which are consolidated in the company's financial statements,.
Teekay Parent cash flow, which included distributions and dividends received on an accrual basis from Teekay's publicly-listed subsidiaries less corporate general and administrative expenses, increased to $53.8 mill for 3Q15, compared to $41.2 mill for 2Q15.
The distributions and dividends received from Teekay's publicly-listed subsidiaries for 3Q15 increased to $57.4 mill, compared to $45.3 mill for the previous quarter. This rise was primarily due to Teekay Parent's $300 mill investment in Teekay Offshore common units in connection with the sale of the ‘Petrojarl Knarr FPSO’ to Teekay Offshore in early-July and Teekay Offshore's 4% cash distribution increase for 3Q15.
Total Teekay Parent free cash flow was $59.8 mill during 3Q15, compared to $49.5 mill in 2Q15.
Teekay Corp’s consolidated cash flow from vessel operations decreased to $341.3 mill in 3Q15, compared to $352.2 mill for 2Q15, primarily due to the scheduled maintenance of the ‘Foinaven FPSO’, a seasonal decrease in shuttle tanker utilisation, lower towage fleet utilisation and lower average spot tanker rates.
On a GAAP basis, the company's consolidated net loss was $12.2 mill, compared to net income of $65.9 mill for 2Q15.
As at 30th September, 2015, Teekay Parent had total liquidity of $303.9 mill and, on a consolidated basis, Teekay Corp had total liquidity of about $1 bill - consisting of $789.7 mill of cash and cash equivalents and $231.9 mill of undrawn revolving credit facilities.
"Teekay Parent's free cash flow for the third quarter increased by 21% over the prior quarter to $59.8 mill, or $0.82 per share, as our general partner and limited partner cash flows benefited from the dropdown of the ‘Knarr FPSO’ and the associated 4% distribution increase declared by Teekay Offshore, resulting in a strong coverage ratio of 1.49x for the quarter," said Peter Evensen, Teekay Corp's president and CEO.
"In addition, the Knarr dropdown allowed us to increase Teekay Parent's dividend by approximately 75% in the second quarter of 2015 and helped reduce Teekay Parent's net debt by approximately $900 mill to $652 mill at 30th September, 2015, which further strengthens Teekay Parent's balance sheet.
"Teekay Parent's free cash flow is supported primarily by the stable and growing cash flows received from our two master limited partnerships. Teekay LNG's and Teekay Offshore's diversified portfolios of long-term fee-based contracts, which total approximately $11.3 bill and $8.2 bill, respectively, of forward revenues, are not directly-linked to commodity prices and service our customers' oil production and oil and gas transportation needs,” he said.
As for the daughter entities, Teekay Offshore's distributable cash flow during 3Q15 was relatively consistent with the previous quarter. The higher contributions from the acquisition of the ‘Knarr FPSO’ in early-July 2015, the commencement of operations of the ‘Arendal Spirit’ UMS in early-June 2015 and a full quarter contribution from the start-up of Teekay Offshore's shuttle tanker operations on the East Coast of Canada.
These were offset by the scheduled expiration of certain shuttle tanker charter contracts, a temporary shut-down of the ‘Piranema Spirit FPSO’ for unscheduled repairs completed during the quarter, a seasonal decrease in shuttle tanker utilisation and lower towage fleet utilisation.
On 1st June, 2015, Teekay Offshore commenced 15-year contracts, plus extension options, with a group of companies, including Chevron Canada, ExxonMobil, Husky Energy, Mosbachar Operating, Murphy Oil, Nalcor Energy, Statoil and Suncor Energy, to provide shuttle tanker services on the East Coast of Canada.
These contracts were initially serviced by three third-party owned shuttle tankers, which were chartered-in by Teekay Offshore. One of these vessels was subsequently replaced by a Teekay Offshore shuttle tanker - the Navion Hispania - during 3Q15.
To cover the 15-year contracts, Teekay Offshore ordered three Suezmax-size, DP2 shuttle tankers from a South Korean shipyard for a fully built-up cost of around $370 mill, with an option to order another vessel should a fourth be required. The three vessels ordered are expected to be delivered in 4Q17 through 1H18.
Teekay LNG's distributable cash flow decreased during the quarter, compared to 2Q15, primarily due to the effect of a one-time cumulative catch-up payment by the charterer in the second quarter upon finalisation of amended charter contracts for four LNGCs in Teekay LNG's Angola LNG joint venture, higher off-hire for scheduled drydockings and lower revenue days for two 52% owned LNGCs - ‘Methane Spirit’ and ‘Magellan Spirit’, currently operating on short-term contracts.
Teekay Tankers reported adjusted net income of $40.3 mill for 3Q15, compared to $2.6 mill for the same period in 2014.
This increase was primarily due to stronger spot tanker rates seen in 3Q15, compared with 3Q14 and an increase in fleet size due to the acquisition of 10 Suezmaxes during the period, four LR2s and one Aframax in 1Q15 and the addition of eight chartered-in vessels over the past 12 months.
Net revenues were $122.8 mill and $50.6 mill for 3Q15 and 3Q14, respectively.
During the period, Teekay Tankers generated $59.4 mill of free cash flow, compared to $16.2 mill in 3Q14.
"Teekay Tankers generated strong free cash flow of $59.4 mill, or $0.44 per share, despite the seasonally weaker third quarter", said Kevin Mackay, Teekay Tankers' CEO. "However, our third quarter results were negatively impacted by a significantly heavier than normal drydocking schedule, which included the repositioning and scheduled drydocking of five of the Principal Maritime Suezmax tankers that delivered during the quarter, as well as the timing difference related to the issuance of new common shares early in the third quarter in connection with our recent acquisitions.
"Since reporting our second quarter results in early-August, the integration of our recent acquisitions, which is now largely complete, has been one of our primary focuses and we expect to begin to see significant commercial and financial benefits starting in the fourth quarter.
“Teekay is now one of the largest owners of modern Suezmax tankers at the right point in the tanker market cycle when positive fundamentals continue to support strong spot tanker rates. The significant increase in our scale will allow us to further optimise our fleet while enhancing our service offerings to both existing and new customers across more regions. Importantly, the Company has continued to de-lever its balance sheet with a net debt to book capitalisation of 53% at the end of 3Q15, compared to 65% one year ago.
"During the fourth quarter to-date, crude spot tanker rates have strengthened and remained firm. We expect crude spot tanker rates to increase further for the remainder of 2015 and into the first quarter of 2016, mainly due to higher expected oil demand related to colder weather in the Northern Hemisphere, the continued building of strategic and commercial petroleum reserves in China and India, and the potential for weather and transit delays that could further support rates. With an expanded fleet, we expect our free cash flow generation will mirror the expected strong rate environment in the fourth quarter of 2015 and into 2016," he concluded.
In late-July, 2015, Teekay Tankers acquired SPT, a joint venture between Teekay Corp and IM Skaugen, for $45.5 mill. SPT provides ship-to-ship (STS) transfer services in the oil, gas and drybulk industries. In addition to lightering and lightering support, SPT also provides consultancy, terminal management and project development services.
This acquisition establishes Teekay Tankers as a global player in the STS transfer business, which is expected to increase the company's fee-based revenue and its overall fleet utilisation, the company said. SPT owns and operates a fleet of six STS support vessels and has one chartered-in Aframax - SPT Explorer.