Teekay Corporation Reports Third Quarter 2016 Results
(firmenpresse) - HAMILTON, BERMUDA -- (Marketwired) -- 11/03/16 -- Highlights
Teekay Corporation (Teekay or the Company) (NYSE: TK) today reported the Company''s results for the quarter ended September 30, 2016. These results include the Company''s three publicly-listed subsidiaries (Teekay Offshore Partners L.P. (Teekay Offshore) (NYSE: TOO), Teekay LNG Partners L.P. (Teekay LNG) (NYSE: TGP), and Teekay Tankers Ltd. (Teekay Tankers) (NYSE: TNK)) (collectively, the Daughter Entities), all of which are consolidated in the Company''s financial statements, and all remaining subsidiaries of the Company, which are referred to in this release as Teekay Parent. Please refer to the third quarter 2016 earnings releases of Teekay Offshore, Teekay LNG and Teekay Tankers, which are available on the Company''s website at , for additional information on their respective results.
Summary Financial Information
CEO Commentary
"On a consolidated basis, Teekay''s results for the third quarter of 2016 were partially affected by seasonal factors in our conventional tanker and shuttle tanker segments, as well as the scheduled redelivery of the Varg FPSO at the end of July 2016," commented Peter Evensen, Teekay''s President and Chief Executive Officer. "Looking ahead, we expect a stronger fourth quarter primarily as a result of the reversal of some of the previous quarter''s seasonal factors, lower operating costs, and higher revenues from our FPSO business."
Mr. Evensen continued, "In October 2016, Teekay Parent completed the sale of its last remaining directly-owned conventional tanker, the Shoshone Spirit VLCC, which will reduce our financial leverage by $63 million in the fourth quarter of 2016."
"During the recent quarter, we successfully secured key commercial contracts in each of our businesses," commented Mr. Evensen. "Teekay Offshore secured its largest shuttle tanker contract award in five years, Teekay LNG entered into charter contracts for its two remaining previously-unchartered LNG carrier newbuildings, and Teekay Tankers secured two new ship-to-ship lightering contracts. Including these contracts, Teekay''s consolidated portfolio of forward fee-based revenues totals over $20 billion."
"The execution of our existing growth projects at Teekay Offshore and Teekay LNG continues to be a major focus," commented Mr. Evensen. "Teekay Offshore''s projects are progressing well except that we are expecting a delay and additional costs associated with the upgrade of the Petrojarl I FPSO unit for the Atlanta project in Brazil, which we are currently discussing with the charterer, shipyard and our lenders. Teekay LNG''s growth projects are progressing as scheduled and significant progress has been made on securing the financing for these projects, including approximately $1.3 billion(1) of new long-term loan and lease facilities expected to be secured over the next few months. In addition, Teekay LNG has again demonstrated its access to the capital markets and has bolstered its liquidity position through the recent issuances of $125 million in preferred equity and $110 million of five-year Norwegian Kroner (NOK) denominated unsecured bonds in an over-subscribed offering. Once Teekay Offshore''s and Teekay LNG''s projects are delivered, these growth projects are expected to add significantly to our annual cash flow from vessel operations."
Mr. Evensen added, "As announced last week, I have decided to retire after 13 years with the Company, including five years as President and CEO of Teekay, and I am confident that Kenneth Hvid is the right person with the required experience to be my successor to lead Teekay into the next phase of its strategy. Kenneth has had multiple roles in his 16 years at Teekay, including leadership positions in offshore, LNG, tankers, strategy, operations, and his current role as President and CEO of Teekay Offshore Group Ltd. The Company is well-positioned with market-leading businesses, a pipeline of growth projects at Teekay LNG and Teekay Offshore which are expected to provide significant cash flow growth, and a great team now led by Kenneth, including Teekay''s corporate finance team, led by our CFO Vince Lok, which will continue to be responsible for the Teekay Group''s financings."
(1) Based on Teekay LNG''s proportionate ownership interests in the projects.
Summary of Results
Teekay Corporation Consolidated
The Company''s consolidated results decreased during the quarter ended September 30, 2016, compared to the same period of the prior year, primarily due to lower revenues from Teekay Parent related to lower utilization on the Polar Spirit and Arctic Spirit LNG carriers as one vessel was on a 23-day charter during the quarter while the other vessel was in lay-up; a new contract in place for the Hummingbird Spirit FPSO at a lower fixed charter rate that took effect on July 1, 2016; lower income and cash flows in Teekay LNG mainly as a result of the sales of two conventional tankers in April and May 2016 and lower income from Teekay LNG''s Exmar LPG joint venture; lower income and cash flows in Teekay Offshore due to the redelivery of a shuttle tanker upon completion of its time-charter-out contact and higher operating expenses related to preparing this vessel for operations in the North Sea, higher operating expenses for the Knarr FPSO related to completion of the final performance test (FPT) in August 2016, the redelivery of the Varg FPSO in July 2016, and lower towage fleet charter rates and utilization; and lower income and cash flows in Teekay Tankers due to lower spot tanker rates. Consolidated income from vessel operations was also reduced in the third quarter of 2016 due to an asset impairment relating to one MR product tanker that is expected to be delivered to buyers in November 2016. Please refer to footnote (2) of the summary consolidated statements of income (loss) included in this release for further details.
These decreases were partially offset by higher income and cash flows as a result of Teekay Tankers'' acquisition of 19 modern conventional tankers during 2015 and higher income and cash flows from Teekay LNG as a result of the deliveries of the Creole Spirit and Oak Spirit MEGI LNG carrier newbuildings, which commenced their five-year charter contracts with Cheniere Energy in late-February 2016 and early-August 2016, respectively, and higher income and cash flows from Teekay Offshore as a result of an increase in charter rates under certain shuttle tanker contracts.
Teekay Parent
Teekay Parent GPCO Cash Flow, which includes distributions and dividends paid to Teekay Parent from Teekay''s publicly-listed subsidiaries in the following quarter, less Teekay Parent''s corporate general and administrative expenses, was $6.4 million for the quarter ended September 30, 2016, compared to $53.8 million for the same period of the prior year. The distributions and dividends received from Teekay''s publicly-listed subsidiaries for the quarter ended September 30, 2016 decreased to $10.3 million, compared to $57.4 million for the same period of the prior year, primarily due to the reductions in quarterly general partner and limited partner cash distributions received from Teekay Offshore and Teekay LNG as a result of the temporary reductions in cash distributions on Teekay Offshore''s and Teekay LNG''s common units announced in December 2015. In addition, in connection with the financing initiatives completed by Teekay Offshore in June 2016, Teekay Parent agreed with Teekay Offshore that, until Teekay Offshore''s Norwegian Kroner bonds maturing in late-2018 have been repaid, all cash distributions to be paid to Teekay Corporation, including the general partner of Teekay Offshore, will instead be paid in common units of Teekay Offshore.
Teekay Parent OPCO Cash Flow, which includes cash flow attributable to assets directly-owned by, or chartered-in to, Teekay Parent, net of interest expense and dry-dock expenditures, decreased to negative $13.1 million for the quarter ended September 30, 2016, from positive $6.0 million for the same period of the prior year. The decrease was primarily due to lower utilization on the Polar Spirit and Arctic Spirit LNG carriers, the new contract in place for the Hummingbird Spirit FPSO at a lower fixed charter rate and lower average spot tanker rates, partially offset by higher revenues from the Foinaven FPSO during the quarter ended September 30, 2016.
Total Teekay Parent Free Cash Flow, which is the total of GPCO and OPCO cash flows, was negative $6.8 million during the third quarter of 2016, compared to positive $59.8 million for the same period of the prior year. Please refer to Appendix D of this release for additional information about Teekay Parent Free Cash Flow.
Summary Results of Daughter Entities
Teekay LNG Partners
Teekay LNG''s results increased during the quarter ended September 30, 2016, compared to the same period of the prior year, primarily due to the deliveries of the Creole Spirit and Oak Spirit MEGI LNG carrier newbuildings, which commenced their five-year charter contracts with Cheniere Energy in late-February 2016 and early-August 2016, respectively. These increases were partially offset by lower revenues from two vessels in the Partnership''s 52 percent-owned LNG joint venture with Marubeni Corporation as the charterer temporarily closed its LNG operations in 2015, lower revenues from Teekay LNG''s 50 percent-owned joint ventures with Exmar LPG due to a reduction in mid-sized LPG carrier spot rates and unscheduled off-hire days related to certain of the LPG carriers and the redelivery of an older in-chartered LPG carrier (net of the additions of three LPG carrier newbuildings delivered from September 2015 to June 2016), lower revenues from two Suezmax tankers upon the charterer exercising its one-year extension options between September 2015 and January 2016, and the sales of two conventional tankers in April and May 2016. Please refer to Teekay LNG''s third quarter 2016 earnings release for additional information on the financial results for this entity.
Teekay Offshore Partners
Teekay Offshore''s results decreased during the quarter ended September 30, 2016, compared to the same period of the prior year, primarily due to the redelivery of the Varg FPSO (which left its field at the end of July 2016), the redelivery of a shuttle tanker upon completion of its time-charter-out contract and higher operating expenses related to preparing this vessel for operations in the North Sea as it joins the contract of affreightment (CoA) fleet to add needed capacity, higher operating expenses for the Knarr FPSO related to the successful completion of the final performance test (FPT) in August 2016 as required under the charter contract, lower towage fleet charter rates and utilization, and the sale of two conventional tankers and sale-leaseback transactions on two conventional tankers in 2015 and 2016. These decreases were partially offset by an increase in charter rates under certain shuttle tanker contracts. Please refer to Teekay Offshore''s third quarter 2016 earnings release for additional information on the financial results for this entity.
Teekay Tankers
Teekay Tankers'' results decreased during the quarter ended September 30, 2016, compared to the same period of the prior year, primarily due to lower average spot tanker rates in the third quarter of 2016 compared to the same period of the prior year, partially offset by an increase in fleet size as a result of the acquisition of 19 modern, mid-size tankers during 2015. The spot tanker market during the quarter was affected by various factors, including normal seasonality, reduced oil supply due to temporary outages in key export regions, and lower refinery throughput. Many of the seasonal factors and temporary outages have now diminished or passed, resulting in higher tanker rates so far in the fourth quarter of 2016 compared with this past August. Please refer to Teekay Tankers'' third quarter 2016 earnings release for additional information on the financial results for this entity.
Summary of Recent Events
Teekay Parent
In early-October 2016, Teekay Parent completed the sale of its 2011-built Shoshone Spirit VLCC for gross proceeds of approximately $63 million.
Teekay LNG
In September 2016, Teekay LNG entered into a 15-year charter contract with the Yamal LNG project, sponsored by Novatek OAO, Total SA, China National Petroleum Corporation and Silk Road Fund (the Yamal LNG Project), to provide the Yamal LNG Project with conventional LNG transportation services. The Yamal LNG Project, which is now fully-financed, is currently scheduled to start production in late-2017. The charter contract will be serviced by one of Teekay LNG''s previously unchartered 174,000 cubic meter (cbm) LNG carrier newbuildings that is scheduled for delivery in early-2019.
Additionally, in November 2016, Teekay LNG entered into a 10-month plus one-year option charter contract with a major energy company. The charter contract will be serviced by Teekay LNG''s previously unchartered 173,400 cbm LNG carrier newbuilding that is scheduled for delivery in late-February 2017. Prior to the conclusion of this charter, Teekay LNG will seek to secure a long-term contract for this vessel.
Teekay Offshore
In September 2016, Teekay Offshore was awarded a new three-year shuttle tanker CoA, plus extension options, with BP plc, Royal Dutch Shell and OMV Group, to service the new Glen Lyon FPSO unit located west of Shetland in the North Sea. This CoA is expected to commence in early-2017 and require the use of approximately two shuttle tankers from Teekay Offshore''s existing CoA shuttle tanker fleet.
In September 2016, Teekay Offshore took delivery of the ALP Striker, the first of four state-of-the-art SX-157 Ulstein Design ultra-long distance towing and offshore installation newbuildings being constructed by Niigata Shipbuilding & Repair in Japan. In connection with the delivery, Teekay Offshore received cash compensation from the shipyard totaling $7.0 million due to the delayed delivery.
Teekay Tankers
In October 2016, Teekay Tankers agreed to sell its remaining Medium-Range (MR) product tanker and two 2002-built Suezmax tankers for aggregate proceeds of approximately $47.0 million. The MR product tanker is expected to be delivered in November 2016 and the two Suezmax tankers are expected to be delivered between late-2016 and early-2017.
Since August 2016, Teekay Tankers has secured two significant ship-to-ship lightering contracts with major oil companies for up to 24 months commencing in the fourth quarter of 2016. These contracts are expected to utilize up to three ship Aframax vessel-equivalents at a premium to current spot market rates.
Liquidity
As at September 30, 2016, Teekay Parent had total liquidity of $287.9 million (consisting of $154.8 million of cash and cash equivalents and $133.1 million of undrawn revolving credit facilities) and, on a consolidated basis, Teekay Corporation had total liquidity of approximately $1.1 billion (consisting of $705.3 million of cash and cash equivalents and $415.7 million of undrawn revolving credit facilities). Giving pro-forma effect to Teekay LNG''s $125 million preferred unit issuance and NOK 900 million bond issuance (net of associated bond repurchase of NOK 292 million) in October 2016, on a consolidated basis Teekay Corporation''s total liquidity at September 30, 2016 would have been approximately $1.3 billion.
Conference Call
The Company plans to host a conference call on Friday, November 4, 2016 at 11:00 a.m. (ET) to discuss its results for the third quarter of 2016. An accompanying investor presentation will be available on Teekay''s website at prior to the start of the call. All shareholders and interested parties are invited to listen to the live conference call by choosing from the following options:
The conference call will be recorded and available until Friday, November 18, 2016. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 205721.
About Teekay
Teekay Corporation operates in the marine midstream space through its ownership of the general partners and a portion of the outstanding limited partner interests in Teekay LNG Partners L.P. (NYSE: TGP) and Teekay Offshore Partners L.P. (NYSE: TOO). The general partners own all of the outstanding incentive distribution rights of these entities. In addition, Teekay has a controlling ownership interest in Teekay Tankers Ltd. (NYSE: TNK) and directly owns a fleet of vessels. The combined Teekay entities manage and operate consolidated assets of approximately $13 billion, comprised of approximately 220 liquefied gas, offshore, and conventional tanker assets. With offices in 14 countries and approximately 7,900 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world''s leading oil and gas companies.
Teekay''s common stock is listed on the New York Stock Exchange where it trades under the symbol "TK".
Definitions and Non-GAAP Financial Measures
This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the U.S. Securities and Exchange Commission. These non-GAAP financial measures, which include Cash Flow From Vessel Operations, Adjusted Net (Loss) Income, and Teekay Parent Free Cash Flow and Net Interest Expense, are intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP. In addition, although these measures are used consistently among entities in the Teekay Group of companies, they may not be comparable to similar measures presented by other companies. The Company believes that certain investors use this information to evaluate the Company''s financial performance.
Consolidated Financial Measures
Cash flow from vessel operations (CFVO) represents income from vessel operations before depreciation and amortization expense, amortization of in-process revenue contracts, vessel write-downs, gains or losses on the sale of vessels and adjustments for direct financing leases to a cash basis, but includes realized gains or losses on the settlement of foreign currency forward contracts and a derivative charter contract. CFVO - Consolidated represents CFVO from vessels that are consolidated on the Company''s financial statements. CFVO - Equity Investments represents the Company''s proportionate share of CFVO from its equity-accounted vessels and other investments. CFVO is a non-GAAP financial measure used by certain investors to measure the financial performance of companies. Please refer to Appendices C and E of this release for reconciliations of these non-GAAP financial measures to income (loss) from vessel operations and income from vessel operations of equity accounted vessels, respectively, the most directly comparable GAAP measures reflected in the Company''s consolidated financial statements.
Adjusted net (loss) income excludes items of income or loss from GAAP net income (loss) that are typically excluded by securities analysts in their published estimates of the Company''s financial results. The Company believes that certain investors use this information to evaluate the Company''s financial performance. Please refer to Appendix A of this release for a reconciliation of this non-GAAP financial measure to net income (loss), the most directly comparable GAAP measure reflected in the Company''s consolidated financial statements.
Teekay Parent Financial Measures
Teekay Parent Free Cash Flow represents the sum of (a) distributions received as a result of ownership interests in its publicly-traded subsidiaries (Teekay LNG, Teekay Offshore, and Teekay Tankers) net of Teekay Parent''s corporate general and administrative expenditures in the respective period (collectively, Teekay Parent GPCO Cash Flow) plus (b) CFVO attributed to Teekay Parent''s directly-owned and chartered-in assets, less Teekay Parent''s net interest expense and dry-dock expenditures in the respective period (collectively, Teekay Parent OPCO Cash Flow). Net interest expense includes interest expense, interest income and realized gains and losses on interest rate swaps. Please refer to Appendices B, C, D and E of this release for further details and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures reflected in the Company''s consolidated financial statements.
Teekay Corporation
Summary Consolidated Statements of Income (Loss)
(in thousands of U.S. dollars, except share and per share data)
Teekay Corporation
Summary Consolidated Balance Sheets
(in thousands of U.S. dollars)
Teekay Corporation
Summary Consolidated Statements of Cash Flows
(in thousands of U.S. dollars)
Teekay Corporation
Appendix A - Specific Items Affecting Net Income (Loss)
(in thousands of U.S. dollars, except per share data)
Teekay Corporation
Appendix B - Supplemental Financial Information
Summary Statement of Income (Loss) for the Three Months Ended
September 30, 2016
(in thousands of U.S. dollars)
(unaudited)
Teekay Corporation
Appendix C - Supplemental Financial Information
Teekay Parent Summary Operating Results
For the Three Months Ended September 30, 2016
(in thousands of U.S. dollars)
(unaudited)
Teekay Corporation
Appendix D - Reconciliation of Non-GAAP Financial Measures
Teekay Parent Free Cash Flow
(in thousands of U.S. dollars, except share and per share data)
Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Cash Flow from Vessel Operations - Consolidated
(in thousands of U.S. dollars)
Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Cash Flow from Vessel Operations - Equity Accounted Vessels
(in thousands of U.S. dollars)
Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Cash Flow from Vessel Operations - Teekay Parent
(in thousands of U.S. dollars)
Teekay Corporation
Appendix E - Reconciliation of Non-GAAP Financial Measures
Net Interest Expense - Teekay Parent
(in thousands of U.S. dollars)
Forward Looking Statements
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management''s current views with respect to certain future events and performance, including statements regarding: the Company''s expectations for its fourth quarter of 2016 results; the Company''s forward fee-based revenues; the timing of newbuilding vessel and conversion deliveries and the commencement of related contracts, including potential delays and additional costs on the Petrojarl I FPSO and the outcome of associated discussions with the charterer, shipyard and lenders; the amount, timing and certainty of securing financing for Teekay LNG''s committed growth projects; the impact of Teekay Offshore''s and Teekay LNG''s growth projects on future cash flow from vessel operations; the timing of the Yamal LNG project start-up; Teekay LNG''s intent to secure a long-term charter for one of its newbuildings; the timing of start-up and the voyage requirements of Teekay Offshore''s new shuttle tanker CoA; Teekay Tankers'' expected vessel sales; and the timing and impact of Teekay Tankers'' lightering contracts. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement:
changes in production of, or demand for oil, petroleum products, LNG and LPG, either generally or in particular regions; greater or less than anticipated levels of newbuilding orders or greater or less than anticipated rates of vessel scrapping; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; changes in the typical seasonal variations in tanker charter rates; changes in the offshore production of oil or demand for shuttle tankers, FSOs, FPSOs, UMS, and towage vessels; changes in oil production and the impact on the Company''s tankers and offshore units; fluctuations in global oil prices; trends in prevailing charter rates for the Company''s vessels and offshore unit contract renewals; the potential for early termination of long-term contracts and inability of the Company to renew or replace long-term contracts; the inability of charterers to make future charter payments; the inability of the Company to negotiate acceptable terms with the charterer, shipyard and lenders related to the delay of the Petrojarl I FPSO; potential shipyard and project construction delays, newbuilding specification changes or cost overruns; costs relating to projects; delays in commencement of operations of FPSO and FSO units at designated fields; Teekay LNG''s and Teekay LNG''s joint ventures'' ability to secure financing for its existing newbuildings and projects; changes in the Company''s expenses; and other factors discussed in Teekay''s filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2015. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company''s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.
Contacts:
Teekay Corporation
Ryan Hamilton
Investor Relations Enquiries
+1 (604) 844-6654
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Datum: 02.11.2016 - 23:34 Uhr
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