Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P., has reported adjusted net income attributable to the partners of US$39.5 million for 2Q15, compared to US$42.6 million for the corresponding period of last year. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of increasing net income by US$18.6 million and US$1.1 million for the three months ended 30 June 2015 and 2014, respectively, primarily relating to unrealised gains and losses on derivative instruments and foreign currency exchange gains and losses.
Adjusted net income attributable to the partners for 2Q15 decreased from the same period in the prior year, primarily due to the Magellan Spirit LNG carrier grounding incident and disputed off-hire and related charter contract termination during 1Q15, the scheduled expiration of the charter contract for the Methane Spirit LNG carrier in mid-March 2015 and the sale of one conventional tanker in August 2014, partially offset by the termination of capital leases for, and the subsequent refinancing at a lower interest rate of, three LNG carriers owned by the Partnership's RasGas II Joint Venture in December 2014, and the acquisition of one LPG carrier, the Norgas Napa, in November 2014.
Distributable cash flow
The Partnership reported an increase in distributable cash flow during 2Q15 to US$65.8 million compared to US$61.5 million in the corresponding period of last year. The increase has been attributed to lower interest expense resulting from the December 2014 termination of capital leases for, and the subsequent refinancing of, three 70% owned LNG carriers and an increase in the charter rates for the Partnership's four 33% owned LNG carriers servicing the Angola LNG project and two of the Partnership's Suezmax tankers.
These increases were partially offset by the termination of the charter contract for the Partnership's 52% owned Magellan Spirit LNG carrier in March 2015, the scheduled expiration of the charter contract for the Partnership's 52% owned Methane Spirit LNG carrier in March 2015 and the sale of one 2001-built conventional tanker in August 2014.
Peter Evensen, Chief Executive Officer of Teekay GP LLC, said: "The Partnership generated stronger than expected cash flow coverage for the second quarter, primarily due to higher than expected revenues from our Exmar LPG and Angola joint ventures […] We also successfully secured contracts with BP for its Freeport LNG volumes. This is our second US LNG export project and will add to the Partnership's strong portfolio of long-term fee-based contracted cash flows with up to two vessels operating under fixed-rate contracts commencing in 2019. This transaction further supports our belief that fuel-efficient MEGI LNG carriers are becoming the new standard in global LNG shipping."
Mr Evensen continued: "The Partnership's cash flows are stable and growing, supported by a large and diversified portfolio of long-term fee-based contracts of US$11.4 billion with an average remaining contract duration of approximately 13 years and no direct commodity price exposure. Despite the current volatility in the energy markets, the long-term fundamentals in the LNG market remain attractive. With a strong pipeline of contracted growth projects and access to competitive bank financing and multiple capital markets, we believe the Partnership is well-positioned for further distributable cash flow growth."
Edited from press release by Callum O'Reilly
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