Business context and reporting period
Seapeak LLC’s Form 20-F is an annual report for the fiscal year ended December 31, 2022, not a standalone fourth-quarter report. Accordingly, the filing does not provide a clear set of Q4-only financial results. Seapeak operates LNG and natural gas liquid (NGL) carriers, primarily under medium- to long-term charters, and holds an interest in an LNG receiving terminal in Bahrain. Figures below are in U.S. dollars unless indicated otherwise.
In January 2022, Stonepeak acquired the company; Seapeak converted from a limited partnership to an LLC in February. In December, Seapeak acquired Evergas, adding NGL vessels and related charter commitments.
Financial and operating performance
| Metric | 2022 | 2021 |
|---|---|---|
| Voyage revenue | $624.5 million | $597.8 million |
| Income from vessel operations | $177.3 million | $246.5 million |
| Equity income | $118.4 million | $115.4 million |
| Net income | $241.6 million | $255.5 million |
| Net cash from operating activities | $276.8 million | $198.9 million |
| EBITDA (non-GAAP) | $507.2 million | $505.9 million |
| Cash and cash equivalents at year-end | $215.7 million | $92.1 million |
| Total debt, including finance leases | $3.10 billion | $2.65 billion |
Revenue rose 4.5%, while vessel operating income declined about 28%. The decline included $54.4 million of net vessel write-downs and gains (principally LNG vessel impairments), lower LNG utilization, and higher vessel operating expenses. Interest expense increased to $137.1 million from $118.6 million, mainly as LIBOR rose. Higher derivative and foreign-exchange gains partly supported reported net income; these items can be volatile and include non-cash effects.
Operating cash flow improved by $77.9 million, principally from higher distributions received from joint ventures and working-capital timing. Investing cash outflow was $280.1 million, chiefly reflecting the Evergas acquisition and LNG newbuilding installments. Financing cash flow was positive $127.2 million, including a $180.0 million revolver draw and Stonepeak equity funding.
Year-end total liquidity was $260.7 million, comprising cash, cash equivalents and undrawn credit capacity; the company reported $45.0 million available under its revolving facility. Restricted cash was $50.2 million. Working capital was negative $363.4 million, including $477.2 million of debt maturities and repayments due within 12 months. The company reported compliance with its own debt covenants, but two Angola joint-venture vessels breached debt-service coverage requirements; the JV expected a waiver.
LNG segment utilization fell to 92.3% from 96.3%; NGL utilization was 90.4% versus 91.2%. The reported LNG and NGL segment revenue and operating results reflect different fleet sizes and accounting treatment, including equity-accounted vessels.
Material changes versus prior year
- Evergas was acquired for a stated cash purchase price of approximately $241.4 million, funded partly with a $180.0 million revolver draw. Its 10 owned operating vessels have fixed-rate charters with Ineos through 2027–2031; six additional LPG vessels are in-chartered through 2024. The acquisition closed December 29, so it had no material impact on 2022 revenue or earnings.
- Seapeak ordered five LNG carriers for a total fully built-up cost of approximately $1.2 billion, scheduled for delivery throughout 2027. They have 10-year fixed-rate charters, with two three-year extension options. Stonepeak contributed $215.5 million toward initial installments by February 2023.
- Year-end debt and finance lease obligations increased about $453 million. The $250 million revolving facility matures in December 2023; management considered refinancing probable and expected liquidity to cover obligations for at least one year after issuance.
- Seapeak sold its 50% interest in the Excalibur LNG joint venture in September 2022 and sold the Sonoma Spirit in June. Two additional NGL vessels were contracted for sale, with deliveries expected in 2023.
- Common-unit distributions ceased after Stonepeak’s acquisition. Preferred-unit distributions were declared and paid during the year; the filing reports $25.6 million of preferred distributions for 2022.
Outlook, risks and unusual items
Management’s strategy remains centered on long-term, largely fixed-rate charters and selective fleet growth. The filing does not provide numerical earnings or revenue guidance. Management stated that liquidity, expected operating cash flows, joint-venture distributions, Stonepeak funding for installments and anticipated refinancing of the December 2023 revolver were expected to be sufficient for at least one year after the financial statements were issued. This outlook depends on operating performance, access to refinancing and credit-market conditions.
- Accounting restatement and control weakness: In February 2023, Seapeak identified and restated 2022 interim results to move unrealized interest-rate-swap gains in two equity-accounted joint ventures from equity income to other comprehensive income. The correction did not change total comprehensive income, assets, liabilities, equity, cash flows or liquidity. Management concluded that a material weakness existed and that internal control over financial reporting and disclosure controls were ineffective at December 31, 2022. Remediation had begun but was not yet demonstrated through sufficient testing. KPMG’s financial-statement opinion was unqualified; KPMG was not engaged to audit internal control effectiveness.
- Impairments and estimates: Seapeak recorded $54.0 million of LNG vessel write-downs and an $86.9 million impairment of its MALT joint-venture investment. The MALT valuation depended on estimated future charter rates and an 8% discount rate; management disclosed material sensitivity to both assumptions.
- Charter and counterparty exposure: A significant share of revenue comes from a limited number of LNG customers. Two MALT vessels’ Yemen LNG charters remained suspended amid the shutdown of the Yemen plant; deferred hire recovery is uncertain. Some vessels face near-term charter expirations or spot-market exposure.
- Geopolitical and market risks: The Russia–Ukraine conflict and sanctions had not caused a material adverse operational or financial impact through the filing date, but could affect energy trading, customers and the Yamal project. Vessel oversupply, weaker charter rates, fuel and crew costs, and customer defaults could pressure results.
- Financing, rates and regulation: Floating-rate debt, LIBOR transition, foreign exchange movements and refinancing needs affect cash costs. Environmental rules, including ballast-water and greenhouse-gas requirements, may require additional spending. The company also identified climate-transition, insurance, joint-venture, tax and litigation risks.
- Preferred-unit considerations: Debt covenants can restrict distributions. Series B distributions are fixed through October 15, 2027, then are scheduled to reset by reference to three-month LIBOR or a successor rate, subject to the governing terms.
Most important facts for investors to verify
- Confirm the 2022 interim restatements, the scope of the material weakness and whether remediation was subsequently tested and found effective.
- Review the December 2023 revolver refinancing and subsequent debt maturities, covenant compliance, and the expected Angola JV waiver.
- Track cash generation and distributions from equity-accounted joint ventures, including the uncertain Yemen deferred hire and charter outlook.
- Assess Evergas integration, the economics and funding of the $1.2 billion LNG newbuilding program, and any related debt or equity financing.
- Check preferred-unit distribution status and restrictions, including the Series B benchmark transition and the company’s ability to meet distribution obligations.