Teekay Corporation
NYSE : TK

Teekay Corporation

June 30, 2015 09:00 ET

Teekay Corporation to Complete Sale of the Knarr FPSO and Announces Dividend Increase of 75 Percent

HAMILTON, BERMUDA--(Marketwired - June 30, 2015) - Teekay Corporation (NYSE:TK) -

Highlights:

  • Completing dropdown sale of the Knarr FPSO to Teekay Offshore on July 1, 2015 for approximately $1.26 billion.
    • Agreed to invest $300 million in common units of Teekay Offshore.
    • Results in a reduction in Teekay Parent's net debt by approximately $1 billion.
  • Increased quarterly cash dividend by 75 percent to $0.55 per share, from $0.31625 per share.
  • Targeting 15 to 20 percent annual dividend growth over the next three years.

Teekay Corporation (Teekay or the Company) announced today that its Board of Directors has declared a cash dividend on its common stock of $0.55 per share for the quarter ended June 30, 2015, an increase of approximately 75 percent over the previous cash dividend of $0.31625 per share. The cash dividend is payable on July 31, 2015 to all shareholders of record as at July 17, 2015.

Teekay also announced today that it will complete the sale of the Petrojarl Knarr (Knarr) floating production, storage and offloading (FPSO) unit to Teekay Offshore Partners L.P. (NYSE:TOO) (Teekay Offshore) for its fully built-up cost of approximately $1.26 billion on July 1, 2015, subject to customary closing conditions. The FPSO has now completed the required operational testing to commence full charter rate under its long-term contract on the Knarr oil and gas field in the North Sea where BG Norge Limited (BG) is the operator.

In connection with sale of the Knarr FPSO, Teekay has agreed to invest $300 million in Teekay Offshore common units (and associated general partner interest) at a price of $20.83 per unit, which is based upon a volume-weighted average price mechanism. The common units will be received in mid-July 2015, subject to customary closing conditions and after the record date for Teekay Offshore's second quarter of 2015 cash distribution.

"We are pleased to announce these important milestones as Teekay Parent transitions into a pure-play general partner, which is largely complete with the expected consummation of our largest dropdown sale to-date and the implementation of Teekay Parent's new dividend policy," commented Peter Evensen, Teekay Corporation's President and Chief Executive Officer. Mr. Evensen continued, "The anticipated dropdown sale will result in a reduction of Teekay Parent's net debt by almost $1 billion. In addition, we are implementing Teekay Parent's new dividend policy with an initial increase of approximately 75 percent to $0.55 per share, or $2.20 per share annualized, with future increases linked to the growth in the dividend cash flows we receive from our daughter entities."

Mr. Evensen added, "Based on a robust pipeline of approximately $6.3 billion of known committed growth projects at Teekay LNG and Teekay Offshore and with both partnerships continuing to pursue new growth opportunities, we are targeting Teekay's dividend to grow by an average of 15 to 20 percent per annum for at least the next three years."

About Teekay Corporation

Teekay Corporation is a portfolio manager and project developer in the marine midstream space that owns a 2 percent general partner interest, all of the outstanding incentive distributions rights 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). In addition, Teekay has a controlling ownership interest in Teekay Tankers Ltd. (NYSE:TNK) and a fleet of directly-owned vessels. The combined Teekay entities manage and operate consolidated assets of over $12 billion, comprised of approximately 200 liquefied gas, offshore, and conventional tanker assets. With offices in 15 countries and approximately 6,700 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".

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 timing and certainty of completing the sale of the Knarr FPSO; the pricing, timing of completing, and the amount of, the investment by Teekay in Teekay Offshore's common units; the impact of the Knarr FPSO dropdown on Teekay Parent's net debt; the targeted growth rate of Teekay Parent's dividend over the next three years and distribution increases by its daughter entities; and Teekay LNG and Teekay Offshore's growth projects, including the impact of these projects on Teekay Parent's cash flows and dividend. 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, FSO and FPSO units and UMS; decreases in oil production by, or increased operating expenses for, FPSO units; fluctuations in global oil prices; trends in prevailing charter rates for the Company's vessels and offshore units; the potential for early termination of long-term contracts and inability to renew or replace long-term contracts or complete existing contract negotiations; delays in commencement of operations of vessels and offshore units at designated fields; changes in the Company's expenses; failure by the Company to complete the sale of the Knarr FPSO; the Company and its publicly-traded subsidiaries' future capital expenditure requirements and the inability to secure financing for such requirements; the amount of future distributions by the Company's daughter companies to the Company; the inability of the Company to complete vessel sale transactions to its publicly-traded subsidiaries or to third parties, including obtaining Board of Directors and Conflicts Committee approvals; failure by the Board of Directors of the Company to approve future dividend increases; failure of the respective Board of Directors of the general partners of Teekay Offshore and Teekay LNG to approve future distribution increases; conditions in the United States capital markets; 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, 2014. 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.

Contact Information

  • Teekay Corporation
    Investor Relations Enquiries
    Ryan Hamilton
    +1 (604) 844-6654
    www.teekay.com