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Altera Infrastructure Reports Fourth Quarter and Annual 2020 Results

Altera Infrastructure L.P.
·18-min read

ABERDEEN, United Kingdom, Feb. 04, 2021 (GLOBE NEWSWIRE) -- Altera Infrastructure GP LLC (Altera GP), the general partner of Altera Infrastructure L.P. (Altera or the Partnership), today reported the Partnership’s results for the quarter ended December 31, 2020.

  • Revenues of $278.7 million and a net loss of $73.0 million, or $0.20 per common unit, in the fourth quarter of 2020

  • Adjusted EBITDA(1) of $142.2 million in the fourth quarter of 2020

The following table presents the Partnership's Consolidated Financial Summary:

Three Months Ended

December 31,

September 30,

December 31,

2020

2020

2019

In thousands of U.S. Dollars, unaudited

$

$

$

IFRS FINANCIAL RESULTS

Revenues

278,657

286,590

312,142

Net loss

(73,029

)

(5,955

)

(9.098

)

Limited partners' interest in net loss per common unit - basic

(0.20

)

(0.03

)

(0.04

)

NON-IFRS FINANCIAL MEASURE:

Adjusted EBITDA (1)

142,193

140,109

169,014


(1)

Please refer to "Non-IFRS Measures" for the definition of this term and reconciliation of this non-IFRS measure as used in this release to the most directly comparable measure under IFRS.

The Partnership generated a net loss of $73 million for the three months ended December 31, 2020, compared to a net loss of $9 million for the three months ended December 31, 2019. Results were impacted by reduced revenue contribution from certain FPSO and FSO vessels, the impact of lower fair value changes on financial instruments and foreign exchange, reduced utilization in the Towage segment and higher newbuild startup costs. These impacts were partially offset by lower impairment charges, a favorable contract dispute resolution and a gain on sale of vessel. Prior year results included the benefit of a $58 million warrants settlement.

Adjusted EBITDA was $142 million in the fourth quarter of 2020, compared to $169 million in the same quarter of the prior year. The decrease of $27 million is mainly reflecting lower economic uptime on the Petrojarl I FPSO, lower contractual day rate on Randgrid FSO as well as lower utilization in the Towage segment, partially offset by a favorable contract dispute resolution.

Operating Results
The commentary below compares certain results of the Partnership's operating segments on the basis of the non-IFRS measure of Adjusted EBITDA for the three months ended December 31, 2020 to the prior quarter and the same period of the prior year.

The following table presents the Partnership's Adjusted EBITDA by segment

Three Months Ended

December 31,

September 30,

December 31,

2020

2020

2019

In thousands of U.S. Dollars, unaudited

$

$

$

FPSO

73,614

58,244

79,200

Shuttle Tanker

70,422

61,166

69,694

FSO

(457

)

20,667

22,415

UMS

(1,771

)

(1,827

)

(2,310

)

Towage

(744

)

1,184

1,518

Conventional

(8

)

Corporate/Eliminations

1,129

675

(1,495

)

Partnership Adjusted EBITDA

142,193

140,109

169,014

The Partnership's FPSO segment generated adjusted EBITDA of $74 million, compared with $79 million in the same period in 2019. The decrease of $5 million is mainly due to lower economic uptime on the Petrojarl I FPSO and Voyageur FPSO being off contract from mid-2020, partially offset by a favorable contract dispute resolution.

The Partnership's Shuttle Tanker segment generated adjusted EBITDA of $70 million, and is in line with the same period in 2019.

The Partnership's FSO segment generated adjusted EBITDA loss of $nil million, compared to $22 million in the same period in 2019. The decrease of $22 million is mainly due to a reduction in the Randgrid FSO contractual rate and absence of both the Dampier Spirit FSO and Apollo Spirit FSO as their contracts ended in the third quarter of 2020.

The Partnership's UMS segment generated adjusted EBITDA loss of $2 million and is in line with the same period in 2019.

The Partnership's Towage segment generated adjusted EBITDA loss of $1 million, compared with $2 million in the same period in 2019.

Liquidity Update
As at December 31, the Partnership had total liquidity of $236 million, a decrease of $1 million compared with the prior quarter.

Strategic updates

Extension of the Cidade de Itajai FPSO contract
In November 2020 the Altera & Ocyan Joint Venture agreed with Karoon Petroleum, the new license holder, following the assignment of the Bauna license from Petrobras, the exercise of a 4-year option extension of the charter and operating agreement of Cidade de Itajai FPSO until 2026.

Delivery of Shuttle Tanker Newbuildings
In January 2021, the Partnership took delivery of the fifth LNG-fueled DP2 shuttle tanker newbuilding, the Altera Wave. The vessel is currently in transit to the North Sea. The sixth LNG fueled vessel, the Altera Wind, is expected to be delivered in February 2021 and the East Coast of Canada newbuilding is expected to be delivered early-2022.

Securities Repurchase Program
In September 2020, the Partnership announced a program to repurchase the Partnership’s outstanding 8.50% Senior Notes due 2023 and Series A, B and E Preferred Units through open market purchases, privately negotiated transactions and/or pursuant to Rule 10b5-1 plans, in compliance with applicable securities laws and other legal requirements. During the period from October 2020 to January 2021, the Partnership repurchased Senior Notes with a face value of $13 million and preferred equities across the three series with total face value of $8 million. The repurchase program was completed in January.

Financings
In October 2020, the Partnership completed a $106 million upsizing of the existing financing for the shuttle tankers currently operating off the East Coast of Canada. The upsizing is to partly fund a newbuilding shuttle tanker currently under construction and built for operation off the East Coast of Canada. The $100 million bridge loan for the same newbuild has consequently been terminated.

Strategic Review
Altera Infrastructure is exploring with the assistance of retained financial advisors, a number of potential strategic initiatives, which may lead to certain asset sales to optimize our portfolio, seeking joint venture partners for our business interests and/or capital raises or other similar transactions to support future growth.

Conference Call

The Partnership plans to host a conference call on Thursday, February 4, 2021 at 09:00 a.m. (ET) to discuss the results for the fourth quarter of 2020. All interested parties are invited to listen to the live conference call by choosing from the following options:

  • By dialing (conference ID code: 8314616)

    • Norway (Toll free) 800 14947

    • Norway (Local) +47 23 50 02 96

    • United Kingdom (Toll free) +44 (0)330 336 9411

    • United States (Local) +1 929-477-0402

    • Canada (Local) +1 888-204-4368

  • By accessing the webcast, which will be available on Altera's website at www.alterainfra.com (the archive will remain on the website for a period of one year).

An accompanying Fourth Quarter 2020 Earnings Presentation will also be available at www.alterainfra.com in advance of the conference call start time. From 2021 Altera plans to host bi-annual Earnings presentations in relation to the second and the fourth Quarter Earnings releases.

Forward Looking Statements
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including, among others: the Partnership’s review of potential strategic initiatives any related asset sales, joint ventures, capital raises or other transactions; the timing of vessel deliveries, the commencement of charter contracts and the employment of newbuilding vessels; and the Partnership's proposed actions to any disruptions from covid-19. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: alternatives and conditions to implement any strategic initiatites; delays in vessel deliveries or the commencement of charter contracts or changes in expected employment of newbuilding vessels; unanticipated market volatility (such as volatility resulting from the recent COVID-19 outbreak); and other factors discussed in the Partnership’s filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2020. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

About Altera Infrastructure L.P.
Altera Infrastructure L.P. is a leading global energy infrastructure services partnership primarily focused on the ownership and operation of critical infrastructure assets in the offshore oil regions of the North Sea, Brazil and the East Coast of Canada. Altera has consolidated assets of approximately $4.4 billion, comprised of 51 vessels, including floating production, storage and offloading (FPSO) units, shuttle tankers (including two newbuildings), floating storage and offtake (FSO) units, long-distance towing and offshore installation vessels and a unit for maintenance and safety (UMS). The majority of Altera’s fleet is employed on medium-term, stable contracts.

Altera's preferred units trade on the New York Stock Exchange under the symbols "ALIN PR A", "ALIN PR B" and "ALIN PR E", respectively.

For Investor Relations enquiries contact:

Jan Rune Steinsland, Chief Financial Officer
Email: investor.relations@alterainfra.com
Tel: +47 97 05 25 33
Website: www.alterainfra.com


ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands of U.S. Dollars)

Three Months Ended
December 31,

Year Ended
December 31,

2020

2019

2020

2019

$

$

$

$

Revenues

278,657

312,142

1,182,110

1,252,938

Direct operating costs

(143,896

)

(136,506

)

(627,792

)

(606,691

)

General and administrative expenses

(24,217

)

(33,858

)

(44,360

)

(54,927

)

Depreciation and amortization

(81,128

)

(84,501

)

(316,317

)

(358,474

)

Interest expense

(50,511

)

(47,638

)

(192,723

)

(205,667

)

Interest income

1,870

1,012

2,770

5,111

Equity-accounted income (loss)

19,658

23,158

35,921

33,768

Impairment expense, net

(83,615

)

(126,354

)

(268,612

)

(187,680

)

Gain (loss) on dispositions, net

5,380

3,411

12,548

Realized and unrealized gain (loss) on derivative instruments

7,190

72,402

(96,499

)

(34,682

)

Foreign currency exchange gain (loss)

(514

)

6,359

(7,861

)

2,193

Other income (expenses), net

(844

)

750

(10,472

)

(9,677

)

Income (loss) before income tax (expense) recovery

(71,970

)

(13,034

)

(340,424

)

(151,240

)

Income tax (expense) recovery

Current

(1,303

)

(427

)

(6,543

)

(4,666

)

Deferred

244

4,363

804

(3,161

)

Net income (loss)

(73,029

)

(9,098

)

(346,163

)

(159,067

)

Attributable to:

Limited partners - common units

(80,120

)

(17,291

)

(368,341

)

(181,424

)

General partner

(615

)

(127

)

(2,771

)

(1,384

)

Limited partners - preferred units

7,989

8,036

32,103

32,150

Non-controlling interests in subsidiaries

(283

)

284

(7,154

)

(8,409

)

(73,029

)

(9,098

)

(346,163

)

(159,067

)

Basic and diluted earnings (loss) per limited partner common unit

(0.20

)

(0.04

)

(0.90

)

(0.44

)

ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands of U.S. Dollars)

Three Months Ended
December 31,

Year Ended
December 31,

2020

2019

2020

2019

$

$

$

$

Net income (loss)

(73,029

)

(9,098

)

(346,163

)

(159,067

)

Other comprehensive income (loss)

Items that will not be reclassified subsequently to net income (loss):

Pension adjustments, net of taxes

1,438

(1,662

)

1,438

(1,662

)

Items that may be reclassified subsequently to net income (loss):

To interest expense:

Realized gain on qualifying cash flow hedging instruments

(189

)

(200

)

(811

)

(689

)

To equity income:

Realized gain on qualifying cash flow hedging instruments

(201

)

(232

)

(966

)

(600

)

Total other comprehensive income (loss)

1,048

(2,094

)

(339

)

(2,951

)

Comprehensive income (loss)

(71,981

)

(11,192

)

(346,502

)

(162,018

)

Attributable to:

Limited partners - common units

(79,080

)

(19,370

)

(368,677

)

(184,353

)

General partner

(607

)

(142

)

(2,774

)

(1,406

)

Limited partners - preferred units

7,989

8,036

32,103

32,150

Non-controlling interests in subsidiaries

(283

)

284

(7,154

)

(8,409

)

(71,981

)

(11,192

)

(346,502

)

(162,018

)

ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of U.S. Dollars)

As at

As at

As at

December 31,

December 31,

January 1,

2020

2019

2019

$

$

$

ASSETS

Current assets

Cash and cash equivalents

235,734

199,388

225,040

Financial assets

103,514

107,992

9,568

Accounts and other receivable, net

222,629

204,825

143,710

Vessels and equipment classified as held for sale

7,500

15,374

12,528

Inventory

16,308

18,581

20,254

Due from related parties

9,980

58,885

Other assets

37,326

16,844

20,989

Total current assets

632,991

563,004

490,974

Non-current assets

Financial assets

36,372

2,075

Accounts and other receivable, net

17,276

36,536

Vessels and equipment

3,029,415

3,025,716

3,548,501

Advances on newbuilding contracts

127,335

297,100

113,796

Equity-accounted investments

241,731

232,216

208,819

Deferred tax assets

5,153

7,000

9,168

Due from related parties

949

Other assets

185,521

218,813

185,191

Goodwill

127,113

127,113

127,113

Total non-current assets

3,752,640

3,925,234

4,232,148

Total assets

4,385,631

4,488,238

4,723,122

LIABILITIES

Current liabilities

Accounts payable and other

302,414

272,618

213,480

Other financial liabilities

198,985

21,697

23,290

Borrowing

362,079

353,238

554,336

Due to related parties

7

21,306

183,795

Total current liabilities

863,485

668,859

974,901

Non-current liabilities

Accounts payable and other

128,671

222,659

264,732

Other financial liabilities

144,350

164,511

144,867

Borrowings

2,808,898

2,831,274

2,543,406

Due to related parties

194,628

Deferred tax liabilities

700

3,133

2,183

Total non-current liabilities

3,277,247

3,221,577

2,955,188

Total liabilities

4,140,732

3,890,436

3,930,089

EQUITY

Limited partners - common units

169,737

350,088

Limited partners - Class A common units

(2,505

)

Limited partners - Class B common units

(157,897

)

Limited partners - preferred units

376,512

384,274

384,274

General partner

6,828

9,587

10,971

Accumulated other comprehensive income

4,071

4,410

7,361

Non-controlling interests in subsidiaries

17,890

29,794

40,339

Total equity

244,899

597,802

793,033

Total liabilities and equity

4,385,631

4,488,238

4,723,122

ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. Dollars)

Year Ended
December 31,

2020

2019

$

$

Operating Activities

Net income (loss)

(346,163

)

(159,067

)

Adjusted for the following items:

Depreciation and amortization

316,317

358,474

Equity-accounted (income) loss, net of distributions received

(6,532

)

(16,113

)

Impairment expense, net

268,612

187,680

(Gain) loss on dispositions, net

(3,411

)

(12,548

)

Unrealized (gain) loss on derivative instruments

36,045

443

Deferred income tax expense (recovery)

(804

)

3,161

Provisions and other items

(3,503

)

(1,547

)

Other non-cash items

53,267

(22,942

)

Changes in non-cash working capital, net

(31,507

)

13,341

Net operating cash flow

282,321

350,882

Financing Activities

Proceeds from borrowings

312,149

492,517

Repayments of borrowings and settlement of related derivative instruments

(329,073

)

(410,429

)

Financing costs related to borrowings

(8,023

)

(20,752

)

Proceeds from borrowings related to sale and leaseback of vessels

119,073

23,800

Repayments of borrowings related to sale and leaseback of vessels

(1,190

)

Financing costs related to borrowings from sale and leaseback of vessels

(187

)

(2,256

)

Proceeds from borrowings from related parties

205,000

95,000

Prepayment of borrowings from related parties

(200,000

)

Lease liability repayments

(20,332

)

(14,695

)

Capital provided by others who have interests in subsidiaries

1,500

Distributions to limited partners and preferred unitholders

(32,103

)

(32,150

)

Distributions to others who have interests in subsidiaries

(4,750

)

(3,636

)

Repurchase of preferred units

(6,200

)

Net financing cash flow

234,364

(71,101

)

Investing Activities

Additions

Vessels and equipment

(479,981

)

(231,658

)

Equity-accounted investments

(3,948

)

(7,886

)

Dispositions

Vessels and equipment

27,996

33,341

Restricted cash

(26,522

)

(98,329

)

Acquisition of company (net of cash acquired of $6.4 million)

6,430

Net investing cash flow

(476,025

)

(304,532

)

Cash and cash equivalents

Change during the year

40,660

(24,751

)

Impact of foreign exchange on cash

(4,314

)

(901

)

Balance, beginning of the year

199,388

225,040

Balance, end of the year

235,734

199,388

Non-IFRS Measures

To supplement the unaudited interim condensed consolidated financial statements, we use Adjusted EBITDA, which is a non-IFRS financial measure, as a measure of our performance. Adjusted EBITDA is calculated as net income (loss) before interest expense, interest income, income tax expense, and depreciation and amortization and is adjusted to exclude certain items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance. Such adjustments include impairment expenses, gain (loss) on dispositions, net, unrealized gain (loss) on derivative instruments, foreign currency exchange gain (loss) and certain other income or expenses. Adjusted EBITDA also excludes: realized gain or loss on interest rate swaps, as we, in assessing our performance, view these gains or losses as an element of interest expense; realized gain or loss on derivative instruments resulting from amendments or terminations of the underlying instruments; and equity-accounted income (loss). Adjusted EBITDA also includes our proportionate share of Adjusted EBITDA from our equity-accounted investments and excludes the non-controlling interests' proportionate share of Adjusted EBITDA. We do not have control over the operations of, nor do we have any legal claim to the revenues and expenses of our equity-accounted investments. Consequently, the cash flow generated by our equity-accounted investments may not be available for use by us in the period that such cash flows are generated.

Adjusted EBITDA is intended to provide additional information and should not be considered as the sole measure of our performance or as a substitute for net income (loss) or other measures of performance prepared in accordance with IFRS. In addition, this measure does not have a standardized meaning and may not be comparable to similar measures presented by other companies. These non-IFRS measures are used by our management, and we believe that these supplementary metrics assist investors and other users of our financial reports in comparing our financial and operating performance across reporting periods and with other companies.

Non-IFRS Financial Measures

The following table includes reconciliations of Adjusted EBITDA to net income (loss) for the periods presented in the Partnership's Consolidated Financial Summary.

Three Months Ended

(in thousands of U.S. Dollars, unaudited)

December 31,

September 30,

December 31,

2020

2020

2019

$

$

$

Adjusted EBITDA

142,193

140,109

169,014

Depreciation and amortization

(81,128

)

(79,049

)

(84,501

)

Interest expense

(50,511

)

(48,036

)

(47,638

)

Interest income

1,870

190

1,012

Expenses and gains (losses) relating to equity-accounted investments

(11,485

)

(10,442

)

(8,013

)

Impairment expense, net

(83,615

)

(4,720

)

(126,354

)

Gain (loss) on dispositions, net

5,380

(19

)

Realized and unrealized gain (loss) on derivative instruments

6,061

1,752

73,897

Foreign currency exchange gain (loss)

(514

)

(2,958

)

6,359

Other income (expenses), net

(844

)

(4,262

)

750

Adjusted EBITDA attributable to non-controlling interests

623

2,028

2,440

Income (loss) before income tax (expense) recovery

(71,970

)

(5,407

)

(13,034

)

Income tax (expense) recovery:

Current

(1,303

)

(1,639

)

(427

)

Deferred

244

1,091

4,363

Net loss

(73,029

)

(5,955

)

(9,098

)

Adjusted EBITDA from equity-accounted investments, which is a non-IFRS financial measure and should not be considered as an alternative to equity accounted income (loss) or any other measure of financial performance presented in accordance with IFRS, represents our proportionate share of Adjusted EBITDA (as defined above) from equity-accounted investments. This measure does not have a standardized meaning, and may not be comparable to similar measures presented by other companies. Adjusted EBITDA from equity-accounted investments is summarized in the table below:

Three Months Ended

(in thousands of U.S. Dollars, unaudited)

December 31,

September 30,

December 31,

2020

2020

2019

$

$

$

Equity-accounted income (loss)

19,658

11,890

23,158

Less:

Depreciation and amortization

(7,713

)

(8,084

)

(7,856

)

Interest expense, net

(5,102

)

(2,273

)

(3,364

)

Income tax (expense) recovery

Current

(139

)

(43

)

(149

)

EBITDA

32,612

22,290

34,527

Less:

Realized and unrealized gain (loss) on derivative instruments

1,395

(298

)

3,153

Foreign currency exchange gain (loss)

74

340

203

Adjusted EBITDA from equity-accounted investments

31,143

22,332

31,171