Teekay Offshore awarded new FPSO contract for Petrojarl I FPSO and agrees to acquire Knarr FPSO
Teekay Offshore Partners L.P. announced that it has entered into an agreement with a consortium led by Queiroz Galvão Exploração e Produção SA (QGEP) to provide a floating production, storage and offloading (FPSO) unit for the Atlanta field located in the Santos Basin offshore Brazil, the company said in its press release.
In connection with the contract with QGEP, the Partnership has agreed to acquire the Petrojarl I FPSO from Teekay Corporation for $57 million. Subsequent to the acquisition, the FPSO will undergo upgrades at the Damen Shipyard Group's DSR Schiedam Shipyard in the Netherlands for a fully built-up cost of approximately $240 million, which includes the cost of acquiring the Petrojarl I. The FPSO is scheduled to commence operations in the first half of 2016 under a five-year charter contract with QGEP. The charter contract is expected to generate annual cash flow from vessel operations(1) of approximately $55 to $60 million.
The Petrojarl I FPSO will be used as an early production system (EPS) unit on the Atlanta field which is located 185 kilometers offshore from the Brazil coast at a water depth of approximately 1,550 meters and contains an estimated 260 million recoverable barrels of oil equivalent.
The acquisition of the Petrojarl I has been approved by the Partnership's Conflicts Committee and Board of Directors and the transaction is expected to close by the end of January 2015.
Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense and deferred gains, and includes the realized gains (losses) on the settlement of foreign exchange forward contracts and adjustments for direct financing leases to a cash basis. CFVO is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Cash flow from vessel operations is not defined by U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income of any other indicator of the Partnership's performance required by GAAP.
About Teekay Offshore Partners L.P.
Teekay Offshore Partners L.P. is an international provider of marine transportation, oil production, storage services and floating accommodation to the offshore oil industry focusing on the fast-growing, deepwater offshore oil regions of the North Sea and Brazil. Teekay Offshore is structured as a publicly-traded master limited partnership (MLP) and owns interests in 33 shuttle tankers (including two chartered-in vessels), eight floating production storage and offloading (FPSO) units (including three committed FPSO units), six floating storage and offtake (FSO) units (excluding one committed FSO conversion unit), one HiLoad Dynamic Positioning (DP) unit, ten long-haul towing and anchor handling vessels (including six vessels Teekay Offshore has agreed to acquire and four newbuildings), three floating accommodation unit newbuildings and four conventional oil tankers.
