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Altera Infrastructure Reports Third Quarter 2021 Results

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ABERDEEN, United Kingdom, Nov. 05, 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 September 30, 2021.

  • Revenues of $295.8 million and net loss of $26.0 million, or $(0.08) per common unit, in the third quarter of 2021

  • Adjusted EBITDA(1) of $156.3 million in the third quarter of 2021

  • Completed measures to improve its debt maturity profile and enhance its liquidity and financial flexibility, including suspending the quarterly distributions on the Partnership’s preferred units and exchanging $699.3 million of indebtedness with Brookfield.

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

Three Months Ended

September 30,

June 30,

September 30,

2021

2021

2020

In thousands of U.S. Dollars, unaudited

$

$

$

IFRS FINANCIAL RESULTS

Revenues

295,837

266,935

286,590

Net Income (loss)

(25,984

)

(28.488

)

(5,955

)

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

(0.08

)

(0.06

)

(0.03

)

NON-IFRS FINANCIAL MEASURE:

Adjusted EBITDA (1)

156,295

109,595

140,109


(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 $26 million for the three months ended September 30, 2021, compared to a net loss of $6 million for the three months ended September 30, 2020. The results for the recent quarter were mainly impacted by costs associated with the Brookfield debt exchange described below, partially offset by the $17 million improved EBITDA contribution as described below.

Adjusted EBITDA increased to $156 million for the three months ended September 30, 2021, compared to $140 million for the same period last year. The increase was primarily driven by oil price tariff revenue and lower operating costs in the FPSO segment and higher utilization in the Towage segment, partially offset by lower revenues in the FSO and Shuttle Tanker segments.

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 September 30, 2021 to the same period of the prior year.

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

Three Months Ended

September 30,

June 30,

September 30,

2021

2021

2020

In thousands of U.S. Dollars, unaudited

$

$

$

FPSO

83,237

45,364

57,714

Shuttle Tanker

53,835

57,662

62,055

FSO

12,254

9,587

20,667

UMS

(2,100

)

(1,627

)

(1,827

)

Towage

6,655

(1,357

)

1,184

Corporate/Eliminations

2,414

(34

)

316

Partnership Adjusted EBITDA

156,295

109,595

140,109

Third Quarter 2021 Compared with Third Quarter 2020

The Partnership's FPSO segment generated Adjusted EBITDA of $83 million for the three months ended September 30, 2021, compared to $58 million for the three months ended September 30, 2020. The increase of $26 million is mainly driven by oil price tariff revenue related to the Knarr and Petrojarl I units.

The Partnership's Shuttle Tanker segment generated Adjusted EBITDA of $54 million for the three months ended September 30, 2021, compared to $62 million for the three months ended September 30, 2020. The decrease of $8 million is mainly due to generally fewer shuttle tankers in operation and lower contribution from two vessels operating in the conventional tanker spot market following a strong market in 2020.

The Partnership's FSO segment generated Adjusted EBITDA of $12 million for the three months ended September 30, 2021, compared to $21 million in the same period in 2020. The decrease of $9 million is mainly due to a reduction in the Randgrid FSO contract rate from October 2020.

The Partnership's UMS segment generated Adjusted EBITDA loss of $2 million in the most recent quarter, in line with the same period in 2020.

The Partnership's Towage segment generated Adjusted EBITDA of $7 million in the most recent quarter, compared to $1 million in the same period in 2020. The increase in EBITDA is driven by higher day rates and utilization in the current quarter.

Liquidity Update
As at September 30, 2021 the Partnership had total liquidity of $195 million, representing a decrease of $47 million from the prior quarter.

Strategic updates

Measures to improve the Partnership's maturity profile and enhance its liquidity
On August 27, 2021, the Partnership entered into an agreement with Brookfield Business Partners L.P. and certain of its affiliates and institutional partners (collectively, "Brookfield") to exchange at par $699.3 million of indebtedness in Altera GP with interest rates ranging from 5.0% to 11.5% and with maturities ranging from 2022 to 2024 (including $411 million in principal amount of Altera’s 8.5% Senior Notes due 2023 held by Brookfield) for 11.5% Senior Secured PIK Notes due 2026.

On July 29, 2021, the Partnership announced the suspension of the payment of quarterly cash distributions on the Partnership’s outstanding 7.25% Series A Cumulative Redeemable Preferred Units (the “Series A Units”), 8.50% Series B Cumulative Redeemable Preferred Units (the “Series B Units”) and 8.875% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Series E Units” and, together with the Series A Units and Series B Units, the “Preferred Units”) commencing with the distributions payable with respect to the period of May 15, 2021 to August 14, 2021. All distributions on the Preferred Units will continue to accrue and must be paid in full before distributions to Class A and Class B common unitholders can be made. No distributions on the Preferred Units will be permitted without noteholder consent while the new 11.5% PIK notes due 2026 issued in the exchange transaction described above remain outstanding.

Shuttle Tanker newbuildings
The Partnership's newbuild, the Altera Thule, is expected to be delivered early in 2022 and to operate off the East Coast of Canada.

Contract updates
In August 2021, Santos Ltd. announced the award to Altera of the FEED contract for the Floating Production, Storage and Offloading (FPSO) facility for the Dorado project.

Vessel sales
In August 2021, the Navion Anglia shuttle tanker was delivered to its buyer for responsible recycling.

Accounting policy update
In August 2021, the Partnership revised its accounting policy to classify all debt held by Brookfield as Due to related parties. Previously the accounting policy elected by the Partnership reflected its long-term debt within two line items, Borrowings and Due to related parties. The Partnership has reflected this change retrospectively by restating its comparative consolidated statement of financial position. Please refer to the unaudited interim condensed consolidated statements of financial position for further detail.

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 strategic initiatives intended to improve its debt maturity profile and enhance its liquidity and financial flexibility; and the timing of vessel deliveries, the commencement of charter contracts and the employment of newbuilding vessels. 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: delays in vessel deliveries or the commencement of charter contracts or changes in expected employment of newbuilding vessels; 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 $4.2 billion, comprised of 46 vessels, including floating production, storage and offloading (FPSO) units, shuttle tankers (including one newbuilding), 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

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2021

2021

2020

2021

2020

$

$

$

$

$

Revenues

295,837

266,935

286,590

835,526

903,453

Direct operating costs

(154,826

)

(169,937

)

(164,425

)

(486,604

)

(483,896

)

General and administrative expenses

(6,163

)

(8,951

)

(3,035

)

(27,782

)

(20,143

)

Depreciation and amortization

(80,576

)

(81,560

)

(79,049

)

(239,385

)

(235,189

)

Interest expense

(53,961

)

(49,475

)

(48,036

)

(151,120

)

(142,212

)

Interest income

10

21

190

59

900

Equity-accounted income (loss)

10,985

10,229

11,890

40,598

16,263

Impairment expense, net

(4,720

)

(184,997

)

Gain (loss) on dispositions, net

1,397

9,107

(19

)

10,504

(1,969

)

Realized and unrealized gain (loss) on derivative instruments

(403

)

(1,513

)

2,427

11,944

(103,689

)

Foreign currency exchange gain (loss)

(671

)

(302

)

(2,958

)

(648

)

(7,347

)

Other income (expenses), net

(35,910

)

(1,831

)

(4,262

)

(37,767

)

(9,628

)

Income (loss) before income tax (expense) benefit

(24,281

)

(27,277

)

(5,407

)

(44,675

)

(268,454

)

Income tax (expense) benefit

Current

(1,703

)

(1,211

)

(1,639

)

(3,896

)

(5,240

)

Deferred

1,091

560

Net income (loss)

(25,984

)

(28,488

)

(5,955

)

(48,571

)

(273,134

)

Attributable to:

Limited partners - common units

(32,282

)

(33,967

)

(14,129

)

(66,551

)

(288,221

)

General partner

(247

)

(260

)

(106

)

(509

)

(2,156

)

Limited partners - preferred units

7,880

7,880

8,038

23,640

24,114

Non-controlling interests in subsidiaries

(1,335

)

(2,141

)

242

(5,151

)

(6,871

)

(25,984

)

(28,488

)

(5,955

)

(48,571

)

(273,134

)

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

(0.08

)

(0.06

)

(0.03

)

(0.16

)

(0.70

)

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

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2021

2021

2020

2021

2020

$

$

$

$

$

Net income (loss)

(25,984

)

(28,488

)

(5,955

)

(48,571

)

(273,134

)

Other comprehensive income (loss)

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

To interest expense:

Realized gain on qualifying cash flow hedging instruments

(182

)

(196

)

(206

)

(568

)

(622

)

To equity income:

Realized gain on qualifying cash flow hedging instruments

(177

)

(211

)

(251

)

(584

)

(765

)

Total other comprehensive income (loss)

(359

)

(407

)

(457

)

(1,152

)

(1,387

)

Comprehensive income (loss)

(26,343

)

(28,895

)

(6,412

)

(49,723

)

(274,521

)

Attributable to:

Limited partners - common units

(32,638

)

(34,371

)

(14,583

)

(67,694

)

(289,597

)

General partner

(250

)

(263

)

(109

)

(518

)

(2,167

)

Limited partners - preferred units

7,880

7,880

8,038

23,640

24,114

Non-controlling interests in subsidiaries

(1,335

)

(2,141

)

242

(5,151

)

(6,871

)

(26,343

)

(28,895

)

(6,412

)

(49,723

)

(274,521

)

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

September 30,

June 30,

December 31,

2021

2021
Restated(1)

2020
Restated(1)

$

$

$

ASSETS

Current assets

Cash and cash equivalents

194,570

241,132

235,734

Financial assets

36,300

21,061

103,514

Accounts and other receivable, net

177,527

198,080

222,629

Vessels and equipment classified as held for sale

9,900

4,400

7,500

Inventory

20,077

20,968

16,308

Due from related parties

685

707

9,980

Other assets

32,141

32,061

37,326

Total current assets

471,200

518,409

632,991

Non-current assets

Financial assets

45,738

45,755

36,372

Vessels and equipment

3,059,822

3,132,456

3,029,415

Advances on newbuilding contracts

39,595

26,991

127,335

Equity-accounted investments

257,206

249,300

241,731

Deferred tax assets

5,030

5,152

5,153

Other assets

146,351

158,652

185,521

Goodwill

127,113

127,113

127,113

Total non-current assets

3,680,855

3,745,419

3,752,640

Total assets

4,152,055

4,263,828

4,385,631

LIABILITIES

Current liabilities

Accounts payable and other

271,692

329,263

286,295

Other financial liabilities

41,854

45,709

198,985

Borrowings

565,930

335,966

362,079

Due to related parties

69,615

114,637

16,126

Total current liabilities

949,091

825,575

863,485

Non-current liabilities

Accounts payable and other

107,056

111,254

128,671

Other financial liabilities

191,644

195,088

144,350

Borrowings

2,007,639

2,309,270

2,397,638

Due to related parties

706,713

616,028

605,888

Deferred tax liabilities

700

700

700

Total non-current liabilities

3,013,752

3,232,340

3,277,247

Total liabilities

3,962,843

4,057,915

4,140,732

EQUITY

Limited partners - common units

Limited partners - Class A common units

(3,350

)

(2,940

)

(2,505

)

Limited partners - Class B common units

(221,675

)

(189,802

)

(157,897

)

Limited partners - preferred units

384,368

376,488

376,512

General partner

6,319

6,566

6,828

Accumulated other comprehensive income

2,919

3,278

4,071

Non-controlling interests in subsidiaries

20,631

12,323

17,890

Total equity

189,212

205,913

244,899

Total liabilities and equity

4,152,055

4,263,828

4,385,631


(1)

The Partnership has elected to restate its June 30, 2021 and December 31, 2020 consolidated statements of financial position to retrospectively show the change in accounting policy adopted during the three months ended September 30, 2021. The impact of the accounting policy change as at June 30, 2021 and December 31, 2020 is a reclassification of the Partnerships $411.3 million and $411.3 million, respectively, outstanding senior unsecured bonds held by Brookfield from Borrowings (non-current) to Due to related parties (non-current) and $16.0 million and $16.1 million, respectively, in accrued interest on said bonds from Accounts payable and other (current) to Due to related parties (current).


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

Nine Months Ended
September 30,

2021

2020

$

$

Operating Activities

Net income (loss)

(48,571

)

(273,134

)

Adjusted for the following items:

Depreciation and amortization

239,385

235,189

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

(12,348

)

8,919

Impairment expense, net

184,997

(Gain) loss on dispositions, net

(10,504

)

1,969

Unrealized (gain) loss on derivative instruments

(165,989

)

55,363

Deferred income tax expense (benefit)

(560

)

Provisions and other items

(293

)

(3,503

)

Other non-cash items

65,654

19,086

Changes in non-cash working capital, net

51,263

82

Net operating cash flow

118,597

228,408

Financing Activities

Proceeds from borrowings

85,560

291,030

Repayments of borrowings and settlement of related derivative instruments

(282,891

)

(239,910

)

Financing costs related to borrowings

(7,720

)

(6,162

)

Proceeds from borrowings related to sale and leaseback of vessels

71,400

47,673

Repayments of borrowings related to sale and leaseback of vessels

(8,518

)

Financing costs related to borrowings from sale and leaseback of vessels

(584

)

(65

)

Proceeds from borrowings from related parties

147,000

155,000

Prepayment of borrowings from related parties

(30,000

)

Lease liability repayments

(10,861

)

(17,115

)

Capital contribution by non-controlling interests

17,950

Distributions to limited partners and preferred unitholders

(15,760

)

(24,114

)

Distributions to non-controlling interests

(10,058

)

(4,750

)

Repurchase of preferred units

(24

)

Net financing cash flow

(44,506

)

201,587

Investing Activities

Additions:

Vessels and equipment

(198,459

)

(449,916

)

Equity-accounted investments

(3,711

)

(2,812

)

Dispositions:

Vessels and equipment

34,979

18,437

Restricted cash

51,885

39,227

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

6,430

Net investing cash flow

(115,306

)

(388,634

)

Cash and cash equivalents

Change during the period

(41,215

)

41,361

Impact of foreign exchange on cash

51

(3,838

)

Balance, beginning of the period

235,734

199,388

Balance, end of the period

194,570

236,911

Non-IFRS Measures

To supplement the unaudited interim condensed consolidated financial statements, the Partnership uses Adjusted EBITDA, which is a non-IFRS financial measure, as a measure of the Partnership's performance. Adjusted EBITDA represents net income (loss) before interest expense, interest income, income tax (expense) benefit, 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 the Partnership in assessing its performance, views 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; realized gain or loss on foreign currency forward contracts; and equity-accounted income (loss). Adjusted EBITDA also includes the Partnership's proportionate share of Adjusted EBITDA from its equity-accounted investments and excludes the non-controlling interests' proportionate share of Adjusted EBITDA. The Partnership does not have control over the operations of, nor does it have any legal claim to the revenues and expenses of its equity-accounted investments. Consequently, the cash flow generated by the Partnership's equity-accounted investments may not be available for use by the Partnership 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 the Partnership's 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. This non-IFRS measure is used by the Partnership's management, and the Partnership believes that this supplementary metric assists investors and other users of its financial reports in comparing its 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

September 30,

June 30,

September 30,

2021

2021

2020

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

$

$

$

Adjusted EBITDA

156,295

109,595

140,109

Depreciation and amortization

(80,576

)

(81,560

)

(79,049

)

Interest expense

(53,961

)

(49,475

)

(48,036

)

Interest income

10

21

190

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

(9,635

)

(10,606

)

(10,442

)

Impairment expense, net

(4,720

)

Gain (loss) on dispositions, net

1,397

9,107

(19

)

Realized and unrealized gain (loss) on derivative instruments

(403

)

(1,513

)

1,752

Foreign currency exchange gain (loss)

(671

)

(302

)

(2,958

)

Other income (expenses), net

(35,910

)

(1,831

)

(4,262

)

Adjusted EBITDA attributable to non-controlling interests

(827

)

(713

)

2,028

Income (loss) before income tax (expense) benefit

(24,281

)

(27,277

)

(5,407

)

Income tax (expense) benefit:

Current

(1,703

)

(1,211

)

(1,639

)

Deferred

1,091

Net loss

(25,984

)

(28,488

)

(5,955

)

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

September 30,

June 30,

September 30,

2021

2021

2020

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

$

$

$

Equity-accounted income (loss)

10,985

10,229

11,890

Less:

Depreciation and amortization

(7,551

)

(7,551

)

(8,084

)

Interest expense, net

(1,986

)

(1,932

)

(2,273

)

Income tax (expense) benefit

Current

22

21

(43

)

EBITDA

20,500

19,691

22,290

Less:

Realized and unrealized gain (loss) on derivative instruments

387

(2,005

)

298

Foreign currency exchange gain (loss)

(507

)

861

(340

)

Adjusted EBITDA from equity-accounted investments

20,620

20,835

22,332


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