Teekay nears breakeven as daughter company revenues rise

The result improves on a $6.1m loss in the first quarter last year as consolidated revenues across the group rose 11% to $471.5m.

For Teekay Offshore Partners, revenues rose from $201.1m to $225.7m as FPSO acquisitions and shuttle tanker fleet renewal bore fruit. Teekay Offshore also signed a letter of intent to buy norwegian offshore accommodation specialist Logitel Offshore Holdings, which has two floating accommodation units (FAU) under construction at Cosco Nantong shipyard in China as well as options for a further six units. Expected to be closed in the third quarter, the acquisition will be financed through existing funds, with long-term debt found for the FAUs.

The offshore arm also received a final acceptance notice for the Voyageur Spirit FPSO, which places it back on-hire and ends Teekay Corporations indemnification payments to its offshore daughter which totalled over $40m since May 2013. Outside of the quarter, Apache Energy confirmed a 10-year extension for Teekay Offshore's Dampier Spirit FSO in Western Australia.

Teekayy LNG’s small increase in revenue was attributed to the purchase of a 50% stake in Exmar LPG in February 2013, the delivery of two newbuilds from Awilco LNG and a rate increase for two suezmax tankers during the quarter.

Just before the end of the period, Teekay LNG signed an LOI to provide six Icebreaker LNG carriers for the Russian Yamal LNG project through a 50/50 joint venture with a Chinese LNG shipping company. The venture expects to finalise negotiations including shipbuilding contracts and charters by the end of 2014 to prepare for Yamal’s start-up in 2017.

Outside of the quarter, Exmar LPG took delivery of the first of 12 newbuilds, delivery dates for which stretch to 2018.

Teekay Tankers opened the year by jointly creating Tanker Investments Ltd (TIL) with its parent company, and snapping up a combined 20% stake in the firm during its $250m January private offering. TIL is to use those finds and the $175m from its Oslo IPO to buy, operate and sell secondhand tankers. Teekay Corp has already sold four suezmax tankers to TIL.

"During the quarter, we co-created and invested in Tanker Investments Ltd., or TIL, to which we sold our last four directly owned suezmax tankers in February,” commented Peter Evensen , Teekay Corporation's president and ceo.

"In addition, we recently agreed to sell an ownership interest in our conventional tanker commercial and technical management operations to Teekay Tankers. As a result of these transactions, we have further reduced our direct exposure to the volatility of the conventional tanker market, while still maintaining an interest in the upside from a tanker market recovery through Teekay Tankers and TIL."

Evensen added, "Looking ahead, in addition to our existing project pipeline, the efforts of our offshore and gas business development teams have resulted in the recent signing of letters of intent by our two MLP daughter entities, Teekay Offshore and Teekay LNG, for exciting new accretive projects which, if finalised, we expect will further contribute to the value of our general partnerships."

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