September 1, 2010
Teekay Offshore signs shuttle tanker contracts
Teekay Offshore Partners L.P. reports that its 51 percent-owned subsidiary, Teekay Offshore Operating L.P. (OPCO),has signed a master agreement with Statoil ASA that replaces an existing volume-dependent, life-of-field contract of affreightment (CoA), and covers fixed-rate, life-of-field time-charter contracts for seven dedicated shuttle tankers. This new master agreement is effective September 1, 2010.
Under the terms of the master agreement:
the vessels will be chartered under individual fixed-rate, life-of-field time-charter contracts to service Tampen and Haltenbanken fields on the Norwegian Continental Shelf;
the number of shuttle tankers covered by the master agreement may be adjusted annually, mirroring the adjustments in tonnage under the existing CoA;
the fixed-rate nature of time-charter contracts is expected to provide OPCO with more seasonally stable and predictable cash flows compared to the CoA arrangement; and
The vessels chartered under this agreement would include three newbuilding shuttle tankers that Teekay Corporation has recently offered to OPCO.
In addition, OPCO recently signed new time-charter contracts with Petroleo Brasileiro SA (Petrobras) for two shuttle tankers for periods of five years and two years, bringing the total number of Teekay Offshore shuttle tankers operating in Brazil to 13. OPCO also renewed a contract for two shuttle tankers serving the Statoil-operated Heidrun field in the North Sea for an additional four years at a higher charter rate.
The new master agreement with Statoil (before including any contribution from the three newbuilding shuttle tankers), the two new shuttle tankers redeployed in Brazil to Petrobras and the renewed Heidrun contract, in aggregate, are expected to increase the Partnership's consolidated cash flow from vessel operations by approximately $20 million in 2011, of which approximately $10 million is attributable to Teekay Offshore based on its 51 percent interest in OPCO.
The partnership today also announced that it received an offer from Teekay Corporation to acquire:
the Cidade de Rio das Ostras (Rio das Ostras) floating production storage and offloading (FPSO) unit, which is on a long-term charter to Petrobras, at fair market value; and
three newbuilding shuttle tankers at fully built-up cost, for acquisition by OPCO, which would be used to service the new master agreement with Statoil.
If Teekay Corporation's offer for the three newbuilding shuttle tankers is accepted by the partnership, the purchases of the Amundsen Spirit, the Nansen Spirit and the Peary Spirit are expected to coincide with the commencement of their time-charter contracts under the Statoil master agreement in October 2010, January 2011 and July 2011, respectively. If Teekay Corporation's offer of the Rio das Ostras FPSO is accepted by the Partnership, the acquisition of this unit is expected to take place in the fourth quarter of 2010. These offers are currently being reviewed by the Board of Directors of the partnership's general partner and its conflicts committee.
"We are very pleased to announce these significant positive contract developments, which will further increase Teekay Offshore's profitability and the stability of its cash flows," commented Peter Evensen, Chief Executive Officer, Teekay Offshore GP LLC. "The offer to acquire the Rio das Ostras FPSO and three of the most sophisticated and eco-friendly shuttle tankers ever built highlights the built-in fleet growth opportunities available to Teekay Offshore from our sponsor, Teekay Corporation. As a result of our recently completed $130 million follow-on equity offering, we have sufficient liquidity to acquire these assets without the need to raise additional equity."