Altera Infrastructure Reports Fourth Quarter and Annual 2020 Results

February 4, 2021 1:45 AM EST

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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,
 202020202019
In thousands of U.S. Dollars, unaudited$$$
IFRS FINANCIAL RESULTS   
Revenues278,657 286,590 312,142 
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 ResultsThe 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,
 202020202019
In thousands of U.S. Dollars, unaudited$$$
FPSO73,614 58,244 79,200 
Shuttle Tanker70,422 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/Eliminations1,129 675 (1,495)
Partnership Adjusted EBITDA142,193 140,109 169,014 
       

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 NewbuildingsIn 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.

FinancingsIn 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 ReviewAltera 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 OfficerEmail: investor.relations@alterainfra.comTel:  +47 97 05 25 33Website: www.alterainfra.com

ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIESUNAUDITED 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
 $ $ $ $
Revenues278,657  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 income1,870  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, net5,380    3,411  12,548 
Realized and unrealized gain (loss) on derivative instruments7,190  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)
Deferred244  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 units7,989  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 SUBSIDIARIESUNAUDITED 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 taxes1,438  (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 units7,989  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 SUBSIDIARIESUNAUDITED 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 equivalents235,734  199,388  225,040 
Financial assets103,514  107,992  9,568 
Accounts and other receivable, net222,629  204,825  143,710 
Vessels and equipment classified as held for sale7,500  15,374  12,528 
Inventory16,308  18,581  20,254 
Due from related parties9,980    58,885 
Other assets37,326  16,844  20,989 
Total current assets 632,991  563,004  490,974 
Non-current assets       
Financial assets36,372    2,075 
Accounts and other receivable, net  17,276  36,536 
Vessels and equipment3,029,415  3,025,716  3,548,501 
Advances on newbuilding contracts127,335  297,100  113,796 
Equity-accounted investments241,731  232,216  208,819 
Deferred tax assets5,153  7,000  9,168 
Due from related parties    949 
Other assets185,521  218,813  185,191 
Goodwill127,113  127,113  127,113 
Total non-current assets3,752,640  3,925,234  4,232,148 
Total assets4,385,631  4,488,238  4,723,122 
LIABILITIES       
Current liabilities       
Accounts payable and other302,414  272,618  213,480 
Other financial liabilities198,985  21,697  23,290 
Borrowing362,079  353,238  554,336 
Due to related parties7  21,306  183,795 
Total current liabilities863,485  668,859  974,901 
Non-current liabilities       
Accounts payable and other128,671  222,659  264,732 
Other financial liabilities144,350  164,511  144,867 
Borrowings2,808,898  2,831,274  2,543,406 
Due to related parties194,628     
Deferred tax liabilities700  3,133  2,183 
Total non-current liabilities3,277,247  3,221,577  2,955,188 
Total liabilities4,140,732  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 units376,512  384,274  384,274 
General partner6,828  9,587  10,971 
Accumulated other comprehensive income4,071  4,410  7,361 
Non-controlling interests in subsidiaries17,890  29,794  40,339 
Total equity244,899  597,802  793,033 
Total liabilities and equity4,385,631  4,488,238  4,723,122 
         

ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIESUNAUDITED 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 amortization316,317  358,474 
Equity-accounted (income) loss, net of distributions received(6,532) (16,113)
Impairment expense, net268,612  187,680 
(Gain) loss on dispositions, net(3,411) (12,548)
Unrealized (gain) loss on derivative instruments36,045  443 
Deferred income tax expense (recovery)(804) 3,161 
Provisions and other items(3,503) (1,547)
Other non-cash items53,267  (22,942)
Changes in non-cash working capital, net(31,507) 13,341 
Net operating cash flow282,321  350,882 
Financing Activities   
Proceeds from borrowings312,149  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 vessels119,073  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 parties205,000  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 flow234,364  (71,101)
Investing Activities   
Additions   
Vessels and equipment(479,981) (231,658)
Equity-accounted investments(3,948) (7,886)
Dispositions   
Vessels and equipment27,996  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 year40,660  (24,751)
Impact of foreign exchange on cash(4,314) (901)
Balance, beginning of the year199,388  225,040 
Balance, end of the year235,734  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 EBITDA142,193  140,109  169,014 
Depreciation and amortization(81,128) (79,049) (84,501)
Interest expense(50,511) (48,036) (47,638)
Interest income1,870  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, net5,380  (19)  
Realized and unrealized gain (loss) on derivative instruments6,061  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 interests623  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)
Deferred244  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)
EBITDA32,612  22,290  34,527 
Less:     
Realized and unrealized gain (loss) on derivative instruments1,395  (298) 3,153 
Foreign currency exchange gain (loss)74  340  203 
Adjusted EBITDA from equity-accounted investments31,143  22,332  31,171 

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Source: Altera Infrastructure L.P.


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