2. Forward Looking Statements
This presentation 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 statements
regarding: the fundamentals in the offshore industry; the amount, timing and certainty of future increases to the Partnership’s
common unit distributions, including the 2.5 percent distribution increase intended to be recommended by management for the
fourth quarter 2013 distribution payable in February 2014; the change in distributable cash flow as a result of recent acquisitions
and commencement of newbuilding time-charter contracts; future growth opportunities, including the Partnership’s ability to
successfully bid for new offshore projects; the timing of the Voyageur Spirit receiving its certificate of final acceptance from E.ON;
the timing of the new and converted vessels commencing their time charter contracts; the potential for the Partnership to acquire
future HiLoad projects developed by Remora; the cost of converting vessels into FSO units; the potential for Teekay Corporation to
offer additional vessels to the Partnership and the certainty of the Partnership agreeing to acquire such vessels; the timing of
delivery of vessels under construction or conversion; the potential for the Partnership to acquire other vessels or offshore projects
from Teekay Corporation or directly from third parties; and increases to the Partnership’s future adjusted net income as a result of
the commencement of newbuilding time-charter contracts in the fourth quarter of 2013 and first quarter of 2014. 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: vessel operations and oil production volumes;
the potential inability of the Voyageur Spirit FPSO to complete operational testing and receive its certificate of final acceptance from
E.ON; Teekay Corporation’s indemnification of the Partnership for the Voyageur Spirit FPSO exceeding the maximum
indemnification amount; significant changes in oil prices; variations in expected levels of field maintenance; increased operating
expenses; different-than-expected levels of oil production in the North Sea and Brazil offshore fields; potential early termination of
contracts; shipyard delivery or vessel conversion delays; delays in the commencement of time-charters; the inability to successfully
complete the operational testing of the HiLoad DP unit; failure of Teekay Corporation to offer to the Partnership additional vessels or
of Remora or Odebrecht to develop new vessels or projects; failure to obtain required approvals by the Conflicts Committee of
Teekay Offshore’s general partner to approve the acquisition of vessels offered from Teekay Corporation, or third parties; failure of
the Board of Directors of the Partnership’s general partner to approve distribution increases recommended by management; the
Partnership’s ability to raise adequate financing to purchase additional assets; and other factors discussed in Teekay Offshore’s
filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2012. 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.
TEEKAY OFFSHORE
2
3. Recent Highlights
• Generated distributable Q3-13 cash flow of $43.0 million
• Declared Q3-13 cash distribution of $0.5253 per unit
• Took delivery of the third (of four) shuttle tanker newbuilding for longterm charter to BG in Brazil
• Completed accretive acquisition of HiLoad Dynamic Positioning (DP)
unit from Remora AS
•
Expected to commence 10-yr contract with Petrobras in Brazil in early
Q2-2014; annual DCF1 of approximately $7.5 million
• Intend to increase Q4-13 cash distributions by 2.5%, for a
total of 5% in 2013
• Several offshore projects in development
1)
Distributable cash flow (DCF) is a non-GAAP financial measure used by certain investors to measure the financial performance of
the Partnership and other master limited partnerships. Please see Appendix B in the Q3-2013 Earnings Release for a reconciliation
of this non-GAAP measure to the most directly comparable financial measure under United States generally accepted accounting
principles (GAAP).
TEEKAY OFFSHORE
3
4. Voyageur Spirit FPSO Update
• Repairs to the defective gas compressor have been
completed and the Voyageur Spirit FPSO achieved full
production capacity
• The FPSO unit has been on full charter-hire since August 27th
• TOO was fully indemnified by Teekay Corporation prior to
August 27th
• Certificate of Final Acceptance subject to completing
certain operational tests
• Operational tests have been delayed due to an issue that
is the responsibility of the charterer
TEEKAY OFFSHORE
4
5. Accretive 2013 Projects
Cidade de Itajai FPSO
BG Shuttle
Tankers
Voyageur Spirit FPSO
Management intends to increase cash distribution by 2.5% for
Q4-13 (total of 5% distribution growth in 2013)
TEEKAY OFFSHORE
5
6. Adjusted Operating Results for Q3 2013 vs. Q2 2013
UNAUDITED
(in thousands of US dollars)
NET REVENUES
Revenues
Voyage expenses
As Reported
September 30, 2013
Reclass for
Realized
Appendix A items
Gains/Losses on
(1)
Derivatives
(2)
June 30, 2013
TOO Adjusted
Income Statement
TOO Adjusted
Income Statement
235,561
28,249
-
-
235,561
28,249
221,322
23,273
Net revenues
OPERATING EXPENSES
Vessel operating expenses
Time-charter hire expense
Depreciation and amortization
General and administrative
Write-down of vessels
Restructuring charge
Total operating expenses
207,312
-
-
207,312
198,049
89,035
14,142
51,920
12,600
57,502
449
225,648
(1,000)
(57,502)
(449)
(58,951)
193
165
358
89,228
14,142
51,920
11,765
167,055
84,947
14,093
49,170
10,180
158,390
(Loss) income from vessel operations
(18,336)
58,951
(358)
40,257
39,659
(16,789)
467
-
(14,023)
-
(7,952)
1,199
(2,730)
310
(107)
(25,602)
(6,760)
62
3,061
109
(3,528)
14,712
(331)
358
(30,812)
467
1,261
419
(107)
(28,772)
(30,476)
1,465
413
390
(456)
(28,664)
(43,938)
(333)
55,423
(565)
-
11,485
(898)
10,995
1,168
18,483
(18,553)
-
(70)
(2,466)
(25,788)
36,305
-
OTHER ITEMS
Interest expense
Interest income
Realized and unrealized (loss) gain on
derivative instruments
Equity income from joint venture
Foreign exchange (loss) gain
Other income – net
Income tax expense
Total other items
Net (loss) income from continuing operations
Net (loss) income from discontinued operations
Less: Net loss (income) attributable to
non-controlling interests
ADJUSTED NET (LOSS) INCOME
ATTRIBUTABLE TO THE PARTNERSHIP
10,517
9,697
The above provides a Normalized Income Statement by adjusting for the following:
(1)
(2)
See Appendix A to the Partnership's Q3-13 earnings release for a description of Appendix A items.
Reallocating the realized gains/losses to their respective line as if hedge accounting had applied. Please refer to footnotes (5) and (6) to the Summary Consolidated
Statements of (Loss) Income in the Q3-13 earnings release.
TEEKAY OFFSHORE
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7. Distributable Cash Flow and Cash Distribution
Three Months Ended Three Months Ended
September 30, 2013
June 30, 2013
(unaudited)
(unaudited)
Net (loss) income
(44,271)
Net loss attributable to Dropdown Predecessor
-
58,604
2,225
(44,271)
60,829
Write-down of vessels
57,502
-
Depreciation and amortization
51,920
49,169
Realized loss on termination of interest rate swap
31,798
-
3,331
2,813
Add (subtract):
Distributions relating to equity financing of newbuilding installments
Partnership's share of equity accounted joint ventures' distributable cash flow
before estimated maintenance capital expenditures
3,068
Foreign exchange and other, net
814
916
(565)
Non-cash items in discontinued operations/writedown of vessel
(3,382)
8,179
Equity income from joint venture
(1,199)
(1,598)
Distributions relating to preferred units
(2,718)
(1,817)
13,000
12,505
(27,971)
(26,808)
(37,478)
(50,618)
47,333
50,086
(1)
Indemnification from Teekay Corporation relating to Voyageur Spirit FPSO
(1)
Estimated maintenance capital expenditures
Unrealized gains on non-designated derivative instruments
Distributable Cash Flow before Non-Controlling Interest
Non-controlling interests’ share of DCF
(4,354)
(7,046)
Distributable Cash Flow
42,979
43,040
A
Total Distributions
47,640
47,639
B
0.90x
0.90x
Coverage Ratio
=A/B
(1) Indemnification of revenues is effectively treated as a reduction to estimated maintenance capital expenditures.
Note: Distributable cash flow represents net (loss) income adjusted for depreciation and amortization expense, non-controlling interest, non-cash items, distributions relating to equity financing of
newbuilding installments and on our preferred units, certain realized gains on forward contracts, vessel acquisition costs, estimated maintenance capital expenditures, unrealized gains and losses from
derivatives, non-cash income taxes, foreign currency and unrealized foreign exchange related items. Maintenance capital expenditures represent those capital expenditures required to maintain over the
long-term the operating capacity of, or the revenue generated by, the Partnership's capital assets. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment
community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Distributable cash flow is not defined by GAAP and should not be considered as an alternative to net (loss)
income or any other indicator of the Partnership’s performance required by GAAP.
TEEKAY OFFSHORE
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8. Visible Existing and Potential Growth Opportunities for TOO
Visible Growth
2013
1H
Q4
2016
2017
2H
BG Shuttle Tanker
Remora HiLoad DP Unit
Salamander FSO Project
Gina Krog FSO Project
FPSO
SHUTTLE & FSO
2015
2014
Petrojarl Knarr
Potential Future Growth
Hummingbird
Spirit FPSO
Petrojarl I
FPSO
Petrojarl Banff
FPSO
Petrojarl
Foinaven FPSO
Directly bidding on several offshore projects
Agreements with Sevan and Remora expected to provide
additional growth opportunities
TEEKAY OFFSHORE
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10. 2013 and 2014 Drydock Schedule
March 31, 2013 (A)
Vessels
Off-hire
Entity
Teekay Offshore
June 30, 2013 (A)
Total
Off-hire
Days
September 30, 2013 (A)
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
December 31, 2013 (E)
Total
Off-hire
Days
Vessels
Off-hire
Total 2013
Total 2014
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Segment
Spot Tanker
-
-
-
-
1
26
-
-
1
26
-
-
Fixed-Rate Tanker
-
-
-
-
-
-
-
-
-
-
1
26
FSO
-
-
-
-
-
-
-
-
-
-
-
-
Shuttle Tanker
1
32
1
32
2
48
1
32
5
144
7
245
1
32
1
32
3
74
1
32
6
170
8
271
Note: In the case that a vessel drydock straddles between quarters, the drydock has been allocated to the quarter in which the majority of drydock days occur.
TEEKAY OFFSHORE
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