Teekay GP LLC, the general partner of Teekay LNG Partners LP (Teekay LNG or the Partnership) today reported the Partnership's results for the quarter ended September 30, 2013. During the third quarter of 2013, the Partnership generated distributable cash flow of US$ 64.6 million, compared to US$ 57.8 million in the same quarter of the previous year. The increase in distributable cash flow was primarily due to the Partnership's acquisition of a 50% interest in Exmar LPG BVBA, a liquefied petroleum gas (LPG) carrier joint venture with Exmar, in February 2013, and its acquisition and charter-back of a liquefied natural gas (LNG) carrier from Awilco LNG ASA (Awilco) in September 2013. The increase was partially offset by lower charter rates on two of the Partnership's conventional tankers as a result of renegotiated rates effective October 2012 for a period of two years.
On October 11, 2013, the Partnership declared a cash distribution of US$ 0.675 per unit for the quarter ended September 30, 2013. The cash distribution is payable on November 8, 2013 to all unitholders of record on October 23, 2013.
Peter Evensen, Chief Executive Officer of Teekay GP LLC, sad: "With the Partnership's recent accretive transactions with Awilco, we are pleased to announce today that management intends to recommend to the board of directors an increase to the Partnership's quarterly distribution by 2.5%, commencing with the fourth quarter distribution payable in February 2014. The two Awilco acquisition-leaseback transactions combined with the two, five-year time- charters with Cheniere Marketing LLC secured in June 2013, increase the Partnership's estimated forward fixed-rate revenues to approximately US$ 6.9 billion, while further diversifying our fixed-rate contract portfolio."
Mr. Evensen continued: "Looking ahead, the Partnership has a number of visible growth projects, including the four LNG carrier newbuildings scheduled to be delivered in 2016 and the 12 LPG newbuildings scheduled to be delivered between 2014 and 2018 in our 50% joint venture with Exmar NV, including two vessel options that were exercised last week. In addition, the Partnership is currently involved in several LNG shipping and floating regasification project tenders with expected start-up dates in early 2016 through 2017."
Acquisition and bareboat charter-back of two LNG carrier newbuildings
In August 2013, Teekay LNG agreed to acquire a 155 900 m3 LNG carrier newbuilding from Awilco. The vessel was delivered to the Partnership in mid-September 2013, at which time Awilco bareboat-chartered the vessel on a five year fixed-rate charter contract (plus a one year extension option) with a fixed price purchase obligation at the end of the initial term (and option period). The vessel purchase price was US$ 205 million less a US$ 50 million upfront prepayment of charter hire by Awilco, which is in addition to the daily bareboat charter rate.
In September 2013, Teekay LNG agreed to acquire a second 155 900 m3 LNG carrier newbuilding from Awilco on similar terms as the first vessel. This second vessel is currently under construction by Daewoo Shipbuilding & Marine Engineering Co., Ltd, (DSME) of South Korea, and the Partnership expects to take delivery in late November 2013. Upon delivery of the second vessel to the Partnership, Awilco will bareboat-charter the vessel on a four year fixed-rate charter contract (plus a one year extension option) with a fixed-price purchase obligation at the end of the initial term (and option period). As with the first Awilco vessel, the second vessel's purchase price is US$ 205 million less a US$ 50 million upfront prepayment of charter hire by Awilco, which is in addition to the daily bareboat charter rate.
Exercised options for additional newbuilding LNG/LPG carriers
In July 2013, Teekay LNG exercised a portion of its existing options with DSME for two additional 173 400 m3 LNG carrier newbuildings. These newbuilding vessels will be equipped with the M-type, electronically controlled, gas injection (MEGI) twin engines, which are expected to be significantly more fuel-efficient and have lower emission levels than other engines currently being utilised in LNG shipping. The Partnership intends to secure long term contract employment for both vessels prior to their deliveries in 2016. In connection with the exercise of these two newbuilding options, the Partnership secured additional options with DSME for up to five additional LNG carrier newbuildings.
In addition, in July and October 2013, Exmar LPG BVBA, the Partnership's 50/50 LPG joint venture with Belgium-based Exmar NV, exercised its options to order four additional midsize gas carrier (MGC) newbuildings, which will be constructed by Hanjin Heavy Industries and Construction Co., Ltd, and scheduled for delivery in 2017 and 2018.
Adapted from press release by Ted Monroe
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