Teekay Offshore Partners L.P.

Teekay Offshore Partners L.P.

October 18, 2010 19:59 ET

Teekay Offshore Partners Completes Acquisition of FPSO and Newbuilding Shuttle Tanker

HAMILTON, BERMUDA--(Marketwire - Oct. 18, 2010) - Teekay Offshore Partners L.P. (NYSE:TOO) -


  • Completed the acquisition of the Rio das Ostras FPSO unit and newbuilding shuttle tanker, the Amundsen Spirit¸ from Teekay Corporation for a purchase price of approximately $286 million.
  • Agreed to acquire two additional newbuilding shuttle tankers, the Nansen Spirit and the Peary Spirit, from Teekay Corporation for a total purchase price of approximately $260 million upon commencement of their time-charters in January and July 2011.

Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE:TOO) today announced that is has completed the acquisition of the Cidade de Rio das Ostras (Rio das Ostras) floating production storage and offloading (FPSO) unit from Teekay Corporation (Teekay) (NYSE:TK) for a purchase price of approximately $158 million. The Partnership also announced that its 51 percent-owned subsidiary, Teekay Offshore Operating L.P. (OPCO), has acquired the newbuilding shuttle tanker, the Amundsen Spirit, from Teekay for approximately $128 million and has agreed to acquire two additional newbuilding shuttle tankers, the Nansen Spirit and the Peary Spirit, from Teekay for a total purchase price of $260 million. 

The Partnership has financed the acquisition of the Rio das Ostras FPSO and Amundsen Spirit newbuilding shuttle tanker through the assumption of $187 million of debt secured by these assets, with the remainder of the purchase price financed from available capacity under the Partnership's revolving credit facilities.

The transactions are expected to increase the Partnership's Cash Flow from Vessel Operations1 by approximately $60 million per annum in 2011, and Distributable Cash Flow2, which includes only 51 percent of OPCO, of approximately $20 million.

The Rio das Ostras FPSO operates under a fixed-rate contract with Petroleo Brasileiro SA (Petrobras) servicing the Aruana field, located in Brazil's Campos Basin, through 2017. The Amundsen Spirit operates as part of a Master Agreement with Statoil ASA (Statoil), under a fixed-rate, life-of-field time-charter contract to service the Tampen and Haltenbanken fields on the Norwegian Continental Shelf.

The acquisitions of the Nansen Spirit and Peary Spirit are expected to be completed upon the commencement of their life-of-field, time-charter contracts, under the same Statoil Master Agreement, which is expected to occur in January 2011 and July 2011, respectively.

The Board of Directors of the Partnership's General Partner and its Conflicts Committee have approved the transactions. The Conflicts Committee retained independent legal and financial advisors to assist it in evaluating the transactions. 

1 Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense, vessel/goodwill write-downs, gains and losses on the sale of vessels and unrealized gains and losses relating to derivatives, but includes realized gains and losses on the settlement of foreign currency forward contracts. Cash flow from vessel operations is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies.

2 Distributable cash flow represents net income adjusted for depreciation and amortization expense, non-controlling interest, non-cash items, estimated maintenance capital expenditures, gains and losses on vessel sales, unrealized gains and losses from derivatives, non-cash income taxes and unrealized 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 defined by U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income or any other indicator of the Partnership's performance required by GAAP.

"We are excited to complete these strategically significant acquisitions, which includes our second FPSO unit," commented Peter Evensen, Teekay Offshore's Chief Executive Officer. "The Rio das Ostras FPSO allows us to build on our existing franchise in Brazil, where we currently operate 13 shuttle tankers, and the three newbuilding shuttle tankers help to renew our shuttle tanker fleet operating in the North Sea." Mr. Evensen continued, "These accretive transactions further enhance the Partnership's profitability and portfolio of fixed-rate cash flows which will support future distribution increases. The long-term, fixed-rate nature of these time-charters will also reduce the seasonal variability of our cash flows going forward."

About Teekay Offshore

Teekay Offshore Partners L.P., a publicly-traded master limited partnership formed by Teekay Corporation (NYSE:TK), is an international provider of marine transportation, production and storage services to the offshore oil industry. Teekay Offshore owns a 51 percent interest in and controls Teekay Offshore Operating L.P., a Marshall Islands limited partnership with a fleet of 33 shuttle tankers (including six chartered-in vessels), four FSO units, eleven conventional oil tankers. Teekay Offshore Operating L.P has also agreed to acquire two newbuilding shuttle tankers from Teekay Corporation upon the commencement of their respective time-charter contracts in 2011. In addition, Teekay Offshore has direct ownership interests in two shuttle tankers, two FSO units, and two FPSO units. Teekay Offshore also has rights to participate in certain other FPSO and FSO opportunities of Teekay Corporation.

Teekay Offshore Partners' common units trade on the New York Stock Exchange under the symbol "TOO".


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 effect of the acquisition of the Rio das Ostras FPSO unit, and three newbuilding shuttle tankers (the Amundsen Spirit, the Nansen Spirit and the Peary Sprit) on the amount and seasonal variability of Partnership's future cash flows and in particular, the established increase to the Partnership's 2011 cash flow from vessel operations and distributable cash flow; and the purchase price and the timing of delivery and commencement of time-charter contracts for the Nansen Spirit and Peary Spirit. 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: variability in shuttle tanker tonnage requirements under the Statoil Master Agreement which covers the time-charter contracts for the Amundsen Spirit, Nansen Spirit and Peary Spirit; different-than-expected levels of oil production in the North Sea offshore fields where the Amundsen Spirit, Nansen Spirit and Peary Spirit operate; potential delays in the delivery of the Nansen Spirit and Peary Spirit from the shipyard; potential early termination of the Rio das Ostras FPSO time-charter contract and/or Statoil Master Agreement; increased operating expenses; and other factors discussed in Teekay Offshore's filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2009. The Partnership 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 Partnership's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

Contact Information

  • Teekay Offshore Partners L.P.
    Kent Alekson
    Investor Relations Enquiries
    + 1 (604) 609-6442
    Teekay Offshore Partners L.P.
    Alana Duffy
    Media Enquiries
    + 1 (604) 844-6631