Teekay''s revenues hit by FPSO problemss

Aug 09 2013


Teekay Corporation has reported an adjusted net loss of $33.3 mill for the second quarter of this year, compared to an adjusted net loss of $17 mill for the same period in 2012.

The adjusted net loss excludes a number of specific items that had the net effect of increasing GAAP net income by $44.7 mill and increasing GAAP net loss by $30.2 mill in 2Q12.

Including these items, the company reported on a GAAP basis, net income of $11.4 mill for 2Q13, compared to net loss of $47.3 mill for the same period in 2012. Net revenues for 2Q13 were $404.6 mill, compared to $447.6 mill for 2Q12.

For the six months ended 30th June, 2013, the company reported an adjusted net loss of $45 mill, compared to an adjusted net loss of $37.8 mill for 2Q12.

Again the adjusted net loss excluded a number of specific items that had the net effect of increasing GAAP net income by $50.2 mill for 1H13 and increasing GAAP net loss by $8.4 mill for 1H12.

Including these items, Teekay Corp reported on a GAAP basis, net income of $5.2 mill, for 1H13, compared to net loss of $46.2 mill for the same period in 2012. Net revenues for 1H13 were $829.3 mill, compared to $910.1 mill for 1H12.

"The second quarter of 2013 was a challenging operational quarter for our FPSO segment, due to near-term production issues, which negatively impacted revenue contribution from the ‘Voyageur Spirit’  and ‘Foinaven‘ FPSO units," said Peter Evensen, Teekay Corp's president and CEO. "On both units, production was reduced by issues related to the gas compressors. Resolving these issues has been a top priority and our FPSO operations teams have been working diligently to get these units back into full production as soon as possible.

“As part of the ‘Voyageur Spirit’ sale and purchase agreement, Teekay Parent has agreed to indemnify Teekay Offshore due to the delayed acceptance by the charterer. Although the ‘Voyageur Spirit’ off-hire has resulted in a reduction of approximately $0.05 per share to Teekay Corp's second quarter adjusted earnings, the indemnification itself will be effectively treated as a reduction to the $540 milli sales price to Teekay Offshore and will not impact Teekay Corp's earnings, or operating cash flows.

“The $540 mill sales price paid by Teekay Offshore was approximately $75 mill higher than Teekay Parent's cost to acquire and upgrade this unit. Since April 13, 2013, the ‘Voyageur Spirit’ FPSO has been operating at partial production levels and is expected to reach full capacity levels by the end of August 2013, following the completion of repairs and testing.

"We continue to make progress on our strategy of selling assets into our publicly-traded daughter entities and supporting their growth through direct acquisitions and newbuilding deliveries at the daughter company level. During the second quarter, we completed the sale of the ‘Voyageur Spirit’ FPSO and a 50% interest in the ‘Cidade de Itajai ‘ FPSO to Teekay Offshore, contributing to a reduction in Teekay Parent's net debt by $334 mill.

"In addition, Teekay Offshore took delivery of its first two shuttle tanker newbuildings, which will operate under 10-year charters for BG Teekay in Brazil, and Teekay Tankers took delivery of a 50% -owned VLCC in June, which commenced a five-year time-charter to a major Chinese charterer.

“In recent months Teekay LNG and Teekay Offshore have been awarded new contracts in the LNG and FSO segments, respectively, and Teekay LNG acquired additional LNG and LPG newbuildings, which will provide further near- and long-term growth.

"Looking ahead, we continue to develop new opportunities and build on the strong existing portfolio of visible growth projects in each of our businesses. So far in 2013, we have seen a strong level of new project tendering activity, specifically in our gas and offshore businesses. As Teekay Offshore and Teekay LNG grow, the cash flows from our general partnership interests in these entities will become an increasingly important component of Teekay Parent's overall cash flows," he concluded.

Cash flow from vessel operations from Teekay Offshore decreased to $91.5 mill in 2Q13 from $109.8 mill in 2Q12. The decrease was primarily due to the lay-up of the ‘Navion Torinita’ and the ‘Navion Clipper ‘ shuttle tankers upon expiration of their timecharter contracts in the second and fourth quarters of 2012, respectively, the sales of the ‘Navion Fennia’  and ‘Navion Savonita ‘ shuttle tankers in the third and fourth quarters of 2012, the sale of five conventional tankers during the past 12 months, higher maintenance costs and higher crew wages from the FPSO units and higher maintenance costs for the ‘Dampier Spirit’.

This decrease was partially offset by the acquisition of the 50% interest in the ‘Cidade de Itajai’  FPSO in June 2013 and higher shuttle tanker revenues from increased rates on both timecharter and contract of affreightment contracts, as well as new contracts.

Including cash flows from equity-accounted vessels, Teekay LNG Partner's total cash flow from vessel operations increased to $112.6 mill in 2Q13, from $109.0 mill in 2Q12.

The increase was primarily due to the February 2013 acquisition of the 50% interest in Exmar LPG, Teekay LNG's LPG joint venture with Exmar, higher rates on charter contracts entered into during 2012 for certain of the LNGCs in Teekay LNG's 52% owned joint venture with Marubeni Corp and the scheduled drydocking of the ‘Hispania Spirit ‘ in 2Q12.

This increase was partially offset by the effect of amendments to two of Teekay LNG's Suezmax charter contracts, which temporarily reduced the daily hire rate for each vessel from October 2012 until September 2014, the scheduled drydocking of the ‘European Spirit’ in 2Q13, and higher vessel operating expenditures due to the scheduled drydockings of the first Tangguh project LNGC and the ‘Catalunya Spirit ‘during 2Q13 and preparations for the drydocking of the second Tangguh project LNGC, scheduled for 4Q13. 

In 2Q13, Teekay Tankers generated cash flow from vessel operations of $10.7 mill, a decrease from $15.4 mill in 2Q12, primarily due to lower TCE rates earned by its spot fleet and the expiration of certain timecharter contracts and the subsequent redeployment of certain vessels on timecharter contracts at lower rates throughout the course of 2012 and early 2013, partially offset by the contribution from 13 vessels acquired from Teekay Corp in June 2012.

Teekay Parent generated negative cash flow from vessel operations of $31.2 mill in 2Q13, compared to negative cash flow of $25.9 mill in 2Q12. The decrease was due to the sale of the 13 conventional tankers to Teekay Tankers in June 2012, the completion of the ‘Petrojarl I’  FPSO timecharter in April 2013 and lower production on the ‘Foinaven’  FPSO, partially offset by lower timecharter hire expense as a result of the redelivery of timechartered in vessels over the course of the past year, including lower termination fees relating to timechartered in vessels.

 



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