Teekay Offshore Partners LP (NYSE:TOO) Q3 2019 Earnings Conference Call Transcript

Nov 07, 2019 • 12:00 pm ET

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Teekay Offshore Partners LP (NYSE:TOO) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Welcome to Teekay Offshore Partners Third Quarter 2019 Earnings Results Conference Call. During the call, all participants will be in a listen-only mode. Afterwards you will be invited to participate in a question-and-answer session. [Operator Instructions] As a reminder this call is being recorded.

Now for opening remarks and introductions, I would like to turn the call over to Ingvild Saether, Teekay Offshore Group's President and Chief Executive Officer. Please go ahead.

Executive
Jan Rune Steinsland

Before Ingvild begins, I would like to direct all participants to our website at teekayoffshore.com, where you will find a copy of the third quarter 2019 earnings presentation. We will review this presentation during today's conference call.

Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the third quarter 2019 earnings release and earnings presentation that are available on our website.

I will now turn the call over to Ingvild to begin.

Executive
Ingvild Saether

Thank you, Jan Rune. Hello, everyone, and thank you for joining us on our third quarter 2019 earnings call. With me today I have Jan Rune Steinsland, CFO of Teekay Offshore Group and Duncan Donaldson, General Counsel of the Teekay Offshore Group.

Starting with Slide 3. Our large and diversified portfolio of forward revenues stands at approximately $4.9 billion at the end of third quarter. This provides significant cash flow stability to Teekay Offshore and this is before including any contract options or upside from the oil price and production tariffs of certain FPSO contracts. On top of this stable portfolio, we have additional upside to earnings from re-deployment opportunities, Towage spot market operations and improving market fundamentals. As an example, we have two of our DP1 shuttle tankers currently trading in the conventional tanker segment, where we see very strong rates at the moment. I would also like to underline that relatively low counterparty risk from working with the strong customer base.

Turning to Slide 4. In the third quarter Teekay Offshore delivered solid results both operationally and financially. We generated adjusted EBITDA of $158 million in the quarter, consistent with the second quarter 2019. In August, we agreed with the group of East Coast Canada oil companies to expand our contract for the charter of a fourth newbuild shuttle tanker, which we also ordered in August. We have executed several financing initiatives in third quarter and into October. I would like to highlight that we in October placed $125 million of senior unsecured green bonds that will partly finance of first four shuttle tankers newbuilds that are under construction at Samsung. And this was the first ever green bond in the maritime sector in the Western Hemisphere. In May, the Partnership received an unsolicited non-binding proposal for Brookfield to acquire all common units, they do not already own. On October 1 the Partnership entered into an agreement and