Filing summary
Period and entity: The supplied filing is Teekay LNG Partners L.P.’s Form 20-F for the fiscal year ended December 31, 2015, filed April 27, 2016. It is an annual report, not a standalone fourth-quarter filing. The request identifies Seapeak LLC and 2015 Q4, which do not match the filing; the figures below are for Teekay LNG Partners’ full fiscal year unless otherwise stated.
The partnership provides marine transportation for LNG, LPG and crude oil, principally under long-term charters. Its fleet at year-end included LNG and LPG carriers and conventional tankers, plus vessels under construction and equity-accounted joint ventures.
Key financial and operating metrics
| Metric | FY 2015 | FY 2014 |
|---|---|---|
| Voyage revenues | $398.0 million | $402.9 million |
| Net voyage revenues | $396.8 million | $399.6 million |
| Income from vessel operations | $181.4 million | $183.8 million |
| Equity income from joint ventures | $84.2 million | $115.5 million |
| Net income | $217.5 million | $218.9 million |
| Limited partners’ net income per common unit | $2.21 | $2.30 |
| EBITDA / Adjusted EBITDA | $353.2 million / $464.4 million | $378.0 million / $469.0 million |
| Net cash provided by operating activities | $239.7 million | $191.1 million |
| Capital expenditures for vessels and equipment | $192.0 million | $194.3 million |
| Cash and cash equivalents at year-end | $102.5 million | $159.6 million |
| Total debt and capital lease obligations | $2.06 billion | $1.97 billion |
Net income was supported by $84.2 million of equity income and included foreign-exchange gains and derivative losses; it should not be read as a direct measure of operating cash generation. EBITDA and Adjusted EBITDA are non-GAAP measures. The filing reports operating cash flow of $239.7 million and total liquidity of $232.5 million, consisting of cash and undrawn credit facilities. It also reports a $179.6 million working-capital deficit and $130 million available under revolving facilities.
Changes versus the prior year
- Revenue declined about 1% and income from vessel operations declined about 1%; net income was nearly flat. Per-unit earnings fell from $2.30 to $2.21.
- Equity income fell by $31.3 million, primarily reflecting lower results from the MALT LNG and Exmar LPG joint ventures. Operating cash flow rose by $48.6 million, in part because of higher joint-venture dividends and timing-related items.
- Interest expense declined to $43.3 million from $60.4 million, while derivative losses narrowed to $20.0 million from $44.7 million. Foreign-exchange gains were $13.9 million versus $28.4 million; these gains were substantially unrealized.
- Year-end cash declined by $57.2 million. Restricted cash rose to $111.5 million from $46.0 million, including project and collateral deposits.
- Management temporarily reduced the quarterly common-unit distribution for Q4 2015 to $0.14 from $0.70, citing committed project spending, debt repayments, and constrained capital markets. The filing separately lists annual distributions declared per unit of $2.80; the differing presentation and timing should be checked against the distribution record.
Outlook, risks and unusual items
- Management’s near-term priority was to fund committed growth projects and repay or refinance scheduled debt, rather than pursue additional projects. It expected operating cash flow, existing liquidity and joint-venture dividends to cover near-term needs, assuming financing for committed capital spending and refinancing of maturities. These are expectations, not assurances.
- Debt maturities and refinancing are material: $70.4 million of debt facilities matured in 2016, and the filing expected a $50.4 million facility to be refinanced with a new $60 million term loan. The partnership also had significant scheduled repayments and maturities in 2017–2018.
- Committed construction obligations are substantial. The partnership reported $3.21 billion of newbuilding and supervision obligations overall, including its shares of joint ventures. Financing remained to be arranged for the Yamal LNG vessels and Bahrain project assets. In February 2016, it secured sale-leaseback financing of about $179 million per vessel for two MEGI LNG carriers.
- The Bahrain LNG terminal was planned as a 20-year project commencing in 2018, with estimated project cost of about $872 million; Teekay’s ownership was 30%, and it planned to provide a modified LNG carrier as the floating storage unit.
- Yemen hostilities disrupted the LNG plant serving two MALT joint-venture carriers. A portion of charter payments was deferred for 2016; management estimated an approximately $18 million reduction in its share of equity income in 2016. Repayment depends on plant resumption and YLNG’s ability to pay.
- The Magellan Spirit grounding led to a disputed charter termination and lower-rate short-term employment for the Magellan Spirit and Methane Spirit. Insurance was expected to cover grounding-related costs, subject to a deductible; charter and redeployment outcomes remained uncertain.
- Two Suezmax charterers exercised purchase options after year-end. The partnership expected losses of approximately $14 million per vessel in 2016; the Bermuda Spirit was sold in April 2016 and the Hamilton Spirit was expected to be sold in May.
- A UK tax challenge to similar leasing structures could expose the partnership’s 70% share of the relevant joint venture to an estimated $60 million. Vessel values below carrying value were disclosed for seven vessels, but no impairment was recorded; two listed tankers were subsequently sold under charter purchase options.
- Other material risks include dependence on a limited number of customers, joint-venture and counterparty exposure, market access and covenant constraints, interest-rate and currency volatility, regulatory costs, and potential delays or cost overruns on newbuildings. The partnership reported compliance with debt covenants at year-end.
Important facts for investors to verify
- Confirm the intended issuer and period: this is Teekay LNG Partners’ 2015 annual Form 20-F, not a Seapeak LLC filing or a standalone Q4 report.
- Reconcile the $2.80 annual distribution-per-unit figure with the stated Q4 reduction to $0.14, including declaration and payment dates.
- Check actual completion and terms of 2016 refinancing, committed-project financing, and remaining Yamal and Bahrain funding.
- Track Yemen plant operations, deferred hire recovery, and the MALT charter dispute and vessel employment.
- Verify the realized sale losses on the Bermuda Spirit and Hamilton Spirit and use of proceeds, and monitor covenant headroom, liquidity and maturities.
- Review the UK leasing-tax contingency, vessel impairment indicators, and the assumptions behind Adjusted EBITDA and other non-GAAP measures.
KPMG issued an unqualified opinion on the consolidated financial statements and reported effective internal control over financial reporting as of December 31, 2015.