Seapeak LLC (formerly Teekay LNG Partners L.P.) — FY 2021 Form 20-F
Business context and reporting period. This is an annual report for the fiscal year ended December 31, 2021—not a standalone fourth-quarter report. Seapeak provides marine transportation focused on LNG and LPG, primarily through medium- and long-term charters. At year-end, its fleet comprised 47 LNG carriers and 28 LPG/multi-gas carriers, including equity-accounted vessels, plus a 30% interest in a Bahrain LNG receiving and regasification terminal. Financial statements are prepared under U.S. GAAP.
Key financial and operating metrics
| Metric (US$ millions, except per-unit data) | 2021 | 2020 | Change |
|---|---|---|---|
| Voyage revenue | 597.8 | 591.1 | +1.1% |
| Income from vessel operations | 246.5 | 226.1 | +9.0% |
| Net income | 255.5 | 97.3 | +162.6% |
| Operating margin (income from vessel operations / revenue) | 41.2% | 38.2% | +3.0 percentage points |
| Net margin (net income / revenue) | 42.7% | 16.5% | +26.2 percentage points |
| Operating cash flow | 198.9 | 613.5 | −67.6% |
| Adjusted EBITDA (non-GAAP) | 718.9 | 757.9 | −5.1% |
| Cash and cash equivalents at year-end | 92.1 | 206.8 | −55.5% |
| Total debt and finance lease obligations | 2,648.6 | 2,813.1 | −5.8% |
| Total equity at year-end | 1,929.0 | 1,746.3 | +10.5% |
Year-end total liquidity was $327.5 million, comprising cash and cash equivalents and undrawn revolving credit capacity; $49.988 million of restricted cash is reported separately. Undrawn revolver capacity was $235.4 million. The filing reports common-unit distributions declared of $1.11 per unit for 2021, versus $0.94 in 2020. Preferred distributions declared were $25.7 million in each year.
Material changes versus 2020
- Net income increased substantially, while adjusted EBITDA declined. Results included a $30.0 million impairment of the Excalibur LNG joint-venture investment; the 2020 comparison included $51.0 million of multi-gas vessel write-downs.
- Equity income rose to $115.4 million from $72.2 million, reflecting, among other factors, derivative valuation changes and lower prior-year impairment and credit-loss effects. Unrealized derivative movements contributed to reported earnings.
- Operating cash flow fell by $414.6 million, principally because 2020 included $260.4 million of receipts from the WilForce and WilPride lease sales, alongside working-capital timing, swap settlements and additional LNG off-hire in 2021.
- LNG utilization fell to 96.3% from 99.1%, and LPG-segment utilization fell to 95.0% from 97.6%, mainly due to additional scheduled dry-docking and repair days. LNG segment income from vessel operations declined to $250.4 million from $279.9 million; the LPG segment’s operating loss narrowed to $3.9 million from $53.8 million.
- Interest expense declined to $118.6 million from $132.8 million, primarily due to debt repayments and lower LIBOR. General and administrative expense rose to $41.0 million from $26.9 million, primarily reflecting Stonepeak transaction-related costs.
Outlook, risks, contingencies and unusual items
- Management expected year-end liquidity, together with anticipated 2022 operating cash flow, to cover obligations due in 2022, assuming refinancing of a revolving facility maturing in 2022. Longer-term refinancing depends on charter performance, the company’s financial condition and credit-market access. Contractual obligations totalled $3.21 billion, including finance-lease purchase obligations.
- Seapeak reported $2.6 billion of consolidated debt and finance-lease obligations and $235.4 million of undrawn revolver capacity. Debt covenants restrict distributions in specified default or breach circumstances. The company said it was in compliance with its own debt covenants at December 31, 2021.
- The company guarantees its proportionate share of certain joint-venture debt and swap obligations, reported at approximately $1.3 billion. Three Angola JV vessels breached debt-service coverage covenants at year-end; the JV expected a waiver through the next test in June 2022. A called guarantee could materially affect Seapeak.
- Two MALT JV vessels chartered to Yemen LNG have been affected by the shutdown of the Yemen LNG plant. Their contracts were suspended through April 2025 under a 2022 agreement; deferred hire repayment depends on the plant resuming operations, for which there is no assurance.
- Other key risks include charter expirations and rechartering rates, customer concentration, vessel impairment and residual values, interest-rate and foreign-exchange volatility, LIBOR transition, regulatory and decarbonization costs, and sanctions and geopolitical disruption. Russia’s invasion of Ukraine and related sanctions were identified as emerging risks in early 2022.
- Post-period, Stonepeak completed its acquisition on January 13, 2022; common units were cashed out for $17.00 each and delisted. On February 25, the partnership converted to a Marshall Islands LLC and changed its name to Seapeak LLC. The Series A and B preferred units remained outstanding and NYSE-listed under SEAL PRA and SEAL PRB.
- KPMG issued an unqualified audit opinion on the financial statements and internal controls. Management also reported effective disclosure controls and internal control over financial reporting at year-end.
Important facts for investors to verify
- Whether 2022 revolver refinancing was completed and liquidity remained sufficient as scheduled debt and lease obligations came due.
- The status and terms of the Angola JV covenant waiver, and any changes in Seapeak’s contingent guarantee exposure.
- Actual charter renewals or redeployments for vessels with near-term expirations, and realized rates and off-hire after year-end.
- Developments in Yemen LNG operations and the collectability of deferred hire from YLNG.
- Whether reported earnings and equity income translate into cash distributions, given derivative valuation effects and the limited control over JV cash.
- Impacts of the Stonepeak transaction, including governance, related-party arrangements, and the company’s capacity and policy for preferred-unit distributions or repurchases.