HAMILTON, BERMUDA — (Marketwire) — 02/23/12 — Teekay LNG Partners L.P. (NYSE: TGP) –
Highlights
Teekay GP LLC, the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) today reported the Partnership–s results for the quarter ended December 31, 2011. During the fourth quarter of 2011, the Partnership generated distributable cash flow of $44.1 million, compared to $39.3 million in the same quarter of the previous year. The increase primarily reflects the incremental distributable cash flow resulting from the November 2010 acquisition of a 50 percent interest in two liquefied natural gas (LNG) carriers; the June and October 2011 acquisitions of two Multigas carriers; the August, September and October 2011 acquisitions of a 33 percent interest in three LNG carriers; and the September 2011 acquisition of one liquefied petroleum gas (LPG) carrier; partially offset by the sale of the Dania Spirit LPG carrier in November 2010.
On January 19, 2012, the Partnership declared a cash distribution of $0.63 per unit for the quarter ended December 31, 2011. The cash distribution was paid on February 14, 2012 to all unitholders of record on February 1, 2012.
In October 2011, the Partnership announced that its joint venture with Marubeni Corporation (Teekay LNG-Marubeni Joint Venture) agreed to acquire ownership interests in eight LNG carriers from Denmark-based global conglomerate, A.P. Moller-Maersk A/S (Maersk). Since that time, there have been a number of developments related to the acquisition which is scheduled to be completed by the end of February 2012:
“I am pleased to announce that we expect the Teekay LNG-Marubeni Joint Venture to complete its acquisition of the Maersk LNG fleet next week,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “This acquisition is expected to generate approximately $40 million of incremental distributable cash flows to the Partnership in 2012, and builds on the stable, fixed-rate cash flows from the three LPG/Multigas carriers and interests in the four LNG carriers that we have recently added to our fleet.”
Mr. Evensen continued, “Given the strong fundamentals that are driving up spot LNG shipping rates and the compelling outlook for the supply and demand of LNG, we expect to remain active in our assessment of near-term acquisition opportunities while continuing to bid on new long-term gas projects. After completion of the acquisition of the Maersk LNG fleet, we expect the Partnership will have approximately $400 million of available liquidity and thus, remain well-positioned to take advantage of future growth opportunities.”
Teekay LNG–s Fleet
The following table summarizes the Partnership–s fleet as of February 1, 2012:
In January 2012, Teekay LNG acquired from Teekay Corporation (Teekay), its 33 percent interest in the last newbuilding LNG carrier for the Angola LNG Project. Teekay LNG expects to acquire interests in the six Maersk LNG carriers through its 52 percent interest in the Teekay LNG-Marubeni Joint Venture by the end of February 2012.
Financial Summary
The Partnership reported adjusted net income attributable to the partners(2) (as detailed in Appendix A to this release) of $29.8 million for the quarter ended December 31, 2011, compared to $26.2 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items which had the net effect of increasing net income by $10.6 million and $50.2 million for the three months ended December 31, 2011 and 2010, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $40.3 million and $76.4 million for the three months ended December 31, 2011 and 2010, respectively.
For the year ended December 31, 2011, the Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $108.9 million, compared to $95.8 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items which had the net effect of decreasing net income by $19.0 million and $8.1 million for the year ended December 31, 2011 and 2010, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $89.8 million and $87.6 million for the year ended December 31, 2011 and 2010, respectively.
For accounting purposes, the Partnership is required to recognize the changes in the fair value of its derivative instruments on its consolidated statements of income. This method of accounting does not affect the Partnership–s cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized gains or losses on the consolidated statements of income as detailed in footnote 2 of the Summary Consolidated Statements of Income included in this release.
The Partnership–s consolidated financial statements for prior periods include historical results of vessels acquired by the Partnership from Teekay, referred to herein as the Dropdown Predecessor, for the period when these vessels were owned and operated by Teekay.
Operating Results
The following table highlights certain financial information for Teekay LNG–s two segments: the Liquefied Gas segment and the Conventional Tanker segment (please refer to the “Teekay LNG–s Fleet” section of this release above and Appendix C for further details).
Liquefied Gas Segment
Cash flow from vessel operations from the Partnership–s Liquefied Gas segment increased to $55.5 million in the fourth quarter of 2011 from $53.3 million in the same quarter of the prior year. This increase is primarily due the acquisition of two newbuilding Multigas carriers in June and October 2011, and a newbuilding LPG carrier in September 2011, partially offset by the sale of the Dania Spirit LPG carrier in November 2010.
Cash flow from vessel operations, as reported in the above table, does not include the Partnership–s share of cash flow from vessel operations of $20.0 million and $11.9 million for the three months ended December 31, 2011 and 2010, respectively, from the Partnership–s three equity-accounted joint ventures, RasGas 3, Exmar and Angola. This increase is primarily due to the acquisition of an interest in the Exmar Joint Venture in November 2010, and the acquisitions of three LNG carriers through the Angola joint venture during 2011. The RasGas 3 joint venture is the Partnership–s 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers. The Exmar joint venture is the Partnership–s 50 percent ownership interest in joint ventures with Exmar NV which, collectively, own two LNG carriers, including one regasification unit. The Angola joint venture is the Partnership–s 33 percent ownership interest in four LNG carriers that were delivered in August, September, October 2011 and January 2012 servicing the Angola LNG Project.
Conventional Tanker Segment
Cash flow from vessel operations from the Partnership–s Conventional Tanker segment remained consistent with the same quarter of the prior year.
Liquidity
As of December 31, 2011, the Partnership had total liquidity of $538.7 million (comprised of $93.6 million in cash and cash equivalents and $445.1 million in undrawn credit facilities), compared to total liquidity of $459.7 million as of December 31, 2010.
Conference Call
The Partnership plans to host a conference call on Friday, February 24, 2012 at 11:00 a.m. (ET) to discuss the results for the fourth quarter and fiscal year 2011. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
A supporting Fourth Quarter and Fiscal Year 2011 Earnings Presentation will also be available at in advance of the conference call start time.
The conference call will be recorded and made available until Friday, March 2, 2012. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 5423528.
About Teekay LNG Partners L.P.
Teekay LNG Partners is the world–s third largest independent owner and operator of LNG vessels, providing LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts with major energy and utility companies through its interests in 21 LNG carriers (including one LNG regasification unit), five LPG/Multigas carriers and 11 conventional tankers. The Partnership–s interests in these vessels range from 33 to 100 percent. In addition, Teekay LNG Partners, through its joint venture with Marubeni Corporation, has agreed to acquire ownership interests in six LNG carriers and expects this transaction to close in February 2012. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (NYSE: TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.
Teekay LNG Partners– common units trade on the New York Stock Exchange under the symbol “TGP”.
Set forth below is a reconciliation of the Partnership–s unaudited adjusted net income attributable to the partners, a non-GAAP financial measure, to net income attributable to the partners as determined in accordance with GAAP. The Partnership believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Partnership–s financial performance. The items below are also typically excluded by securities analysts in their published estimates of the Partnership–s financial results. Adjusted net income attributable to the partners is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.
Description of Non-GAAP Financial Measure – Distributable Cash Flow (DCF)
Distributable cash flow represents net income adjusted for depreciation and amortization expense, non-cash items, estimated maintenance capital expenditures, gains and losses on vessel sales, unrealized gains and losses from derivatives, swap cancellation costs, income from variable interest entity, deferred income taxes, and 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 required by GAAP and should not be considered as an alternative to net income or any other indicator of the Partnership–s performance required by GAAP. The table below reconciles distributable cash flow to net income.
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 Partnership–s future growth opportunities; Teekay LNG-Marubeni Joint Venture–s pending acquisition of six LNG carriers from A.P. Moller-Maersk A/S, including the timing and certainty of closing of the transaction, expected increase to the Partnership–s distributable cash flow in 2012, the purchase price for such vessels, and the financing associated with the transaction; the Partnership–s financial position, including available liquidity; the accretive nature of proposed and recent transactions; the potential increase to the Partnership–s quarterly cash distribution per common unit commencing for the first quarter of 2012; and the ability of the Partnership to pursue additional projects and acquisitions. 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 LNG or LPG, either generally or in particular regions; development of LNG and LPG projects; the inability of the Teekay LNG-Marubeni Joint Venture to renew or replace charter contracts; failure to satisfy the closing conditions for the acquisition of the Maersk LNG carriers, including obtaining approvals from the charters and relevant regulatory authorities; obtaining financing for the Maersk LNG carrier transaction; 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; the potential for early termination of long-term contracts of existing vessels in the Teekay LNG fleet and inability of the Partnership to renew or replace long-term contracts; the Partnership–s ability to raise financing to purchase additional vessels or to pursue other projects; changes to the amount or proportion of revenues, expenses, or debt service costs denominated in foreign currencies; and other factors discussed in Teekay LNG Partners– filings from time to time with the SEC, including its Report on Form 20-F/A for the fiscal year ended December 31, 2010. The Partnership expressly disclaims any obligation 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.
Contacts:
Teekay LNG Partners L.P.
Kent Alekson
Investor Relations Enquiries
+1 (604) 609-6442