2009-11-13 14:13:09 -
HAMILTON, BERMUDA -- (Marketwire) -- 11/13/09 -- Teekay LNG Partners L.P. (NYSE: TGP) -
Highlights
- Generated distributable cash flow of $29.2 million in the third quarter of 2009, up from $28.9 million in the third quarter of 2008.
- Declared and paid cash distribution of $0.57 per unit for the third quarter of 2009.
- Completed acquisition of two Tangguh LNG carriers from Teekay Corporation in August 2009.
- Entered into a new $122.0 million credit facility in late-October 2009 that will be secured by the five newbuilding Skaugen LPG/Multigas carriers.
- Took delivery of the second of five Skaugen LPG/Multigas carriers in November 2009.
Teekay GP LLC, the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE: TGP) today reported its results for the quarter ended September 30, 2009. During the third quarter of 2009, the Partnership generated distributable cash flow(1) of $29.2 million, compared to $28.9 million in the same quarter of the previous year. The increase was mainly due to the acquisition of the first of five Skaugen LPG/Multigas carriers in April 2009 and the acquisition of the Tangguh LNG carriers in August 2009, partially offset by the scheduled drydockings of two LNG carriers which resulted in 53 off-hire days as compared to none in the third quarter of 2008. On October 20, 2009, the Partnership declared a cash distribution of $0.57 per unit for the quarter ended September 30, 2009. The cash distribution is payable on November 13, 2009 to all unitholders of record on October 27, 2009.
"Our distributable cash flow during the third quarter of 2009 remained stable due to the Partnership's diversified portfolio of long-term fixed-rate contracts. Despite a higher than normal number of scheduled drydock days during the third quarter, our coverage ratio was maintained and distributable cash flow was slightly higher than the same period in 2008," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "Our distributable cash flow is expected to increase in the fourth quarter as we will have the benefit of the Tangguh vessels for a full quarter and the second Skaugen vessel for two months as well as fewer off-hire days due to drydocking." Mr. Evensen added, "The Partnership remains financially well-positioned with over $440 million of total liquidity, a fully-financed newbuilding program, and no debt covenant concerns."
Teekay LNG's Fleet
On November 3, 2009, the Partnership took delivery of the second of five Skaugen LPG/Multigas vessels which concurrently commenced a 15-year fixed-rate charter. The first of these vessels was delivered to the Partnership in April 2009. In August 2009, the Partnership acquired Teekay Corporation's 70 percent interest in two 155,000 cubic meter LNG carriers (the Tangguh LNG Carriers). These vessels have commenced their 20-year time-charters.
The following table summarizes the Partnership's fleet as of November 3, 2009:
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Number of Vessels
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Delivered Committed
Vessels Vessels Total
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LNG Carrier Fleet(i) 15 - 15
LPG/Multigas Carrier Fleet 3 3(ii) 6
Suezmax Tanker Fleet 8 - 8
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Total 26 3 29
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(i) Excludes Teekay's 33 percent interest in the four Angola LNG
newbuildings, as described below.
(ii) Represents the three Skaugen LPG/Multigas carriers currently under
construction, as described below.
(1) Distributable cash flow is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other master limited partnerships. Please see Appendix B for a reconciliation of this non-GAAP measure to the most directly comparable GAAP financial measure.
Future Projects
Below is a summary of LNG and LPG/Multigas newbuildings that the Partnership has agreed to, or has the right to, acquire:
Skaugen LPG/Multigas
The Partnership has agreed to acquire a total of five LPG/Multigas carriers from subsidiaries of IM Skaugen ASA (Skaugen), three of which are currently under construction and will be purchased upon their deliveries from the shipyard scheduled in 2010. Upon their delivery, the vessels will commence service under 15-year fixed-rate charters to Skaugen. Two of the five vessels were delivered in April 2009 and November 2009, respectively.
Angola LNG
As previously announced, a consortium in which Teekay has a 33 percent interest, has agreed to charter four newbuilding LNG carriers for a period of 20 years to the Angola LNG Project, which is being developed by subsidiaries of Chevron, Sonangol, BP, Total and ENI. The vessels will be chartered at fixed rates, with inflation adjustments, following their deliveries, which are scheduled to commence in 2011. In accordance with an agreement between Teekay and Teekay LNG, Teekay is obligated to offer the Partnership its interest in these vessels and related charter contracts no later than 180 days before delivery of these newbuilding LNG carriers.
Financial Summary
The Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $15.0 million for the quarter ended September 30, 2009, compared to $16.3 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items which had the net effect of decreasing net income by $45.0 million and increasing net income by $29.6 million for the three months ended September 30, 2009 and 2008, respectively, as detailed in Appendix A. Including these items, the Partnership reported net loss attributable to the partners, on a GAAP basis(2), of $30.1 million and net income attributable to the partners, on a GAAP basis(2), of $45.9 million for the three months ended September 30, 2009 and 2008, respectively.
For accounting purposes, the Partnership is required to recognize the changes in the fair value of its derivative instruments on the statements of income (loss). This method of accounting does not affect the Partnership's cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized gains or losses on the statements of income (loss).
The Partnership's financial statements for the prior periods include historical results of vessels acquired by the Partnership from Teekay, referred to herein as the Dropdown Predecessor, for the period when these vessels were owned and operated by Teekay.
Teekay LNG's annual results on Form 20-F for the year ended December 31, 2008, as filed with the United States Securities and Exchange Commission (SEC), can be found on the Partnership's Web site www.teekaylng.com :
or alternatively can be requested free of charge by contacting Teekay LNG Investor Relations.
(1) Adjusted net income attributable to the partners is a non-GAAP financial measure. Please refer to Appendix A to this release for a reconciliation of this non-GAAP measure to the most directly comparable financial measure under GAAP and information about specific items affecting net income (loss) which are typically excluded by securities analysts in their published estimates of the Partnership's financial results.
(2) Commencing in 2009 and applied retroactively, the Partnership's GAAP net income (loss) is presented before non-controlling interest on the Statements of Income (Loss). Net income (loss) attributable to the partners represents net income (loss) attributable to the limited partners and general partner of
Teekay LNG.
Operating Results
The following table highlights certain financial information for Teekay LNG's segments: the liquefied gas segment and the Suezmax tanker segment (please refer to the "Teekay LNG's Fleet" section of this release above and Appendix C for further details).
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Three Months Ended Three Months Ended
September 30, 2009 September 30, 2008
(unaudited) (unaudited)
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(in thousands Liquefied Suezmax Liquefied Suezmax
of U.S. Gas Tanker Gas Tanker
dollars) Segment Segment Total Segment Segment Total
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Net voyage
revenues(1)(2) 61,429 17,611 79,040 57,479 19,420 76,899
Vessel
operating
expenses 12,760 6,366 19,126 10,776 6,724 17,500
Depreciation
and
amortization 13,989 4,912 18,901 14,310 4,795 19,105
Cash flow from
vessel
operations(3) 44,735 9,193 53,928 44,342 10,890 55,232
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(1) Net voyage revenues represents voyage revenues less voyage expenses,
which comprise all expenses relating to certain voyages, including
bunker fuel expenses, port fees, canal tolls and brokerage commissions.
Net voyage revenues is a non-GAAP financial measure used by certain
investors to measure the financial performance of shipping companies.
Please see the Partnership's web site at www.teekaylng.com : for a
reconciliation of this non-GAAP measure as used in this release to the
most directly comparable GAAP financial measure.
(2) Commencing in 2009 and applied retroactively, the gains and losses
related to derivative instruments that are not designated as hedges for
accounting purposes have been reclassified to a separate line item in
the statements of income (loss) and are no longer included in the
amounts above.
(3) Cash flow from vessel operations represents income from vessel
operations before depreciation and amortization expense, excluding
the cash flow from vessel operations relating to the Partnership's
Variable Interest Entities and Dropdown Predecessors and adjusting
for direct financing leases on a cash flow basis. Cash flow from vessel
operations is a non-GAAP financial measure used by certain investors
to measure the financial performance of shipping companies. Please see
the Partnership's web site at www.teekaylng.com : for a reconciliation
of this non-GAAP measure as used in this release to the most directly
comparable GAAP financial measure.
Liquefied Gas Segment
Cash flow from vessel operations from the Partnership's liquefied gas segment increased to $44.7 million in the third quarter of 2009 from $44.3 million in the same quarter of the prior year. This increase is primarily due the delivery of the first of five Skaugen LPG/Multigas carriers in April 2009 and the acquisition of the Tangguh LNG carriers in August 2009, partially offset by the scheduled drydockings of two LNG carriers during the third quarter of 2009.
Suezmax Tanker Segment
Cash flow from vessel operations from the Partnership's Suezmax tanker segment decreased to $9.2 million for the third quarter of 2009 from $10.9 million in the same quarter of the prior year. This decrease is due to a reduction in revenue as the decrease in LIBOR affected the daily charter rates that are adjusted for changes in LIBOR under the time-charter contracts for five Suezmax tankers. Under the terms of the capital leases relating to these vessels, there was a corresponding decrease in the Partnership's lease payments, which is reflected as a decrease to interest expense. Accordingly, these and future interest rate adjustments do not impact the Partnerships' current or future cash flows or net income. The decrease in revenue is partially offset by lower vessel operating expenses.
Liquidity
As of September 30, 2009, the Partnership had total liquidity of $441.2 million, comprised of $90.5 million in cash and cash equivalents and $350.7 million in undrawn medium-term revolving credit facilities. In addition, the Partnership entered into a new $122 million credit facility in late-October 2009 to finance the five newbuilding Skaugen LPG/Multigas carriers.
About Teekay LNG Partners L.P.
Teekay LNG Partners L.P. is a publicly-traded master limited partnership formed by Teekay Corporation (NYSE: TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors. Teekay LNG Partners L.P. provides LNG, LPG and crude oil marine transportation services under long-term, fixed-rate time-charter contracts with major energy and utility companies through its fleet of fifteen LNG carriers, six LPG/Multigas carriers and eight Suezmax class crude oil tankers. Two of the fifteen LNG carriers were acquired by the Partnership during the third quarter of 2009. Three of the six LPG/Multigas carriers are newbuildings scheduled for delivery in 2010.
Teekay LNG Partners' common units trade on the New York Stock Exchange under the symbol "TGP".
###PRECONTENT2### TEEKAY LNG PARTNERS L.P.
APPENDIX A - SPECIFIC ITEMS AFFECTING NET (LOSS) INCOME
(in thousands of U.S. dollars, except per share data)
Set forth below is a reconciliation of the Partnership's unaudited adjusted net (loss) income attributable to the partners, a non-GAAP financial measure, to net (loss) income as determined in accordance with GAAP, adjusted for some of the significant items of income and expense that affected the Partnership's net (loss) income for the three months ended September 30, 2009 and 2008, all of which items are typically excluded by securities analysts in their published estimates of the Partnership's financial results:
###PRECONTENT3### TEEKAY LNG PARTNERS L.P.
APPENDIX B - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(in thousands of U.S. dollars)
Description of Non-GAAP Financial Measure - Distributable Cash Flow (DCF)
Distributable cash flow represents net loss adjusted for depreciation and amortization expense, non-cash items, estimated maintenance capital expenditures, gains and losses on vessel sales, unrealized gains and losses from derivatives, income from variable interest entity, income taxes and foreign exchange related items. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by the Partnership's capital assets. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Distributable cash flow is not required by accounting principles generally accepted in the United States and should not be considered as an alternative to net loss or any other indicator of the Partnership's performance required by accounting principles generally accepted in the United States. The table below reconciles distributable cash flow to net loss.
###PRECONTENT4### 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 Partnership's future growth prospects; Teekay Corporation offering its interest in the Angola LNG Project vessels to the Partnership; the timing of LNG and LPG/Multigas newbuilding deliveries and incremental cash flows relating to such newbuildings; the stability of the Partnership's distributable cash flows; the Partnership's financial position; and the expected increase in the Partnership's distributable cash flow in the fourth quarter of 2009. 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: the unit price of equity offerings to finance acquisitions; changes in production of LNG or LPG, either generally or in particular regions; required approvals by the conflicts committee of the board of directors of the Partnership's general partner to acquire any LNG projects offered to the Partnership by Teekay Corporation; less than anticipated revenues or higher than anticipated costs or capital requirements; 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; the potential for early termination of long-term contracts and inability of the Partnership to renew or replace long-term contracts; LNG and LPG/Multigas project delays, shipyard production delays; the Partnership's ability to raise financing to purchase additional vessels or to pursue LNG or LPG/Multigas projects; changes to the amount or proportion of revenues, expenses, or debt service costs denominated in foreign currencies; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2008. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.
Contacts:
Teekay LNG Partners L.P.
Kent Alekson
Investor Relations Enquiries
+1 (604) 609-6442
Teekay LNG Partners L.P.
Alana Duffy
Media Enquiries
+1 (604) 844-6631
www.teekaylng.com :
