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Teekay releases 4Q15 results

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LNG Industry,

Teekay GP LLC – the general partner of Teekay LNG Partners LP – has announced that the partnership generated distributable cash flow of US$61.5 million in 4Q15. In the same period of the previous year, the partnership had generated US$69 million. This decrease can largely be attributed to the termination of the charter contract for the Magellan Spirit LNG carrier (52% owned by the partnership), and the expiration of the charter for the Methane Spirit LNG carrier (also 52% owned by the partnership). The termination of the charter contract for the Magellan Spirit in March 2015 is still currently being disputed by the partnership’s joint venture (JV) with Marubeni Corp. Lower capitalised distributions relating to equity financing of new-buildings as a result of the temporary decrease in cash distributions on the partnership’s common units also played a role in the decrease in generated distributable cash flow.

Peter Evensen, the CEO of Teekay GP LLC, said: “The partnership generated strong cash flows in the fourth quarter and fiscal 2015, highlighting the stability of our business.

“The cash flows in the fourth quarter were enhanced by higher profit share revenues from the Teide Spirit conventional tanker and the commencement of short-term charters relating to the Magellan Spirit and Methane Spirit LNG carriers during the quarter.

"Teekay LNG continues to operate with high fleet utilisation generating stable cash flows, supported by a large and well diversified portfolio of fee-based contracts with high quality counterparties.

"The decision in December to temporarily reduce Teekay LNG's distributions was a difficult decision and was caused by the inability to access competitively priced capital in the current negative capital market environment and was not caused by a shortfall in the cash flows of our operations.

"We believe the reduction is in the best interests of long-term unit-holders as the reallocation of a significant portion of our internally generated cash flows to fund our profitable growth projects that will deliver over the next several years will result in higher available distributable cash flow per unit.

"In December 2015, we announced a significant milestone – the partnership's first LNG regasification project, which includes an attractive 20 yr charter for one of the partnership's existing MEGI LNG carrier new-buildings, increasing the partnership's total forward fee-based revenues to US$12.1 billion with a weighted average remaining contract duration of 12 yr.

"Our new JV, comprised of strategic and financial sponsors, will develop an LNG regasification terminal under a 20 yr contract for the Government of the Kingdom of Bahrain for start-up in mid-2018.

"Looking ahead to 2016, we remain focused on executing the partnership's portfolio of profitable growth projects, ensuring they remain on time and on budget and securing long term financing for these projects. Our first two MEGI LNG carrier new-buildings, which will be financed with a recently secured US$360 million long term lease facility, are scheduled to commence their respective fee-based contracts with Cheniere Energy in March and the third quarter of 2016, lifting LNG cargoes from Cheniere's Sabine Pass LNG export facility. Including these vessels and our other profitable growth projects that deliver in 2016 through 2020, the partnership is well-positioned to continue growing its cash flows in the future."

Edited from press release by David Rowlands

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