Teekay Offshore Partners LP (NYSE:TOO) Q2 2020 Earnings Conference Call - Final Transcript

Aug 06, 2020 • 09:00 am ET

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Teekay Offshore Partners LP (NYSE:TOO) Q2 2020 Earnings Conference Call - Final Transcript

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Executive
Ingvild Saether

teams have been very busy over the summer in developing solutions and robust cost estimates that will assist our customers in maturing these projects to a decision stage.

Turning to Slide 5. Like all businesses around the world, we continue to closely monitor and assess the challenges and the risks related to the COVID-19 unprecedented global impact. During this time, our priority continues to be safe and reliable operations for which we have introduced a number of proactive measures to protect the health and safety of both our vessel crew and our onshore staff.

One work stream has been to have mitigating plans for outbreaks onboard our vessels and FPSOs. So far we have managed to avoid further spreading on the few occasions where we have had confirmed COVID cases amongst our seafarers and offshore workers. The second work stream has been to find ways to carryout crew changes. Carrying out crew changes in a world that has closed down is very challenging, especially for the crew who have to travel between continents.

We are working through national and international associations, including IMO to find ways to make this happen. And I must say I am very proud and extremely impressed by the flexibility and constructed attitudes of our crew and our offshore workers in this situation. We keep a very close dialogue between offshore and onshore, and as an example, we have created a COVID-19 hotline to support them and address any concerns that may arise. I must also say that it has worked remarkably well to work-from-home, and in some ways, it has brought the global team closer together.

As mentioned previously, the majority of our revenues are secured under the medium-term contracts, and we do not expect these to be materially impacted by short-term volatility in oil prices. To date, we have not experienced any material interruption to our business and the financial impact is limited to our Towage segment. We are actively monitoring our counterparty risk associated with all contract. At this time, there are no significant payments owed to us which are materially overdue, and we have not identified any creditor enforcement actions or insolvencies that will affect payment of outstanding receivables.

I will now turn it over to Jan Rune to discuss the financial results in more detail.

Executive
Jan Rune Steinsland

Thank you, Ingvild. Turning to Slide 6. Adjusted EBITDA for the second quarter 2020 came in at $143 million, which is down $11 million from the first quarter 2020. This decrease is related to a $7 million one-time non-cash revenue adjustments and a $4 million one-time provision related to the Dampier Spirit FSO as the vessel is now expected to seize operations in September. As a result of this, our FSO segment delivered an adjusted EBITDA of $11 million down from $24 million in the first quarter.

Our FPSO segment adjusted EBITDA came in at $74 million, down $2 million from the first quarter, mainly driven by lower uptime on the Petrojarl I FPSO as certain