Teekay Corporation Releases First Quarter Results (Canada)

Teekay Corporation  reported an adjusted net loss attributable to stockholders of Teekay(1) of $27.9 million, or $0.39 per share, for the quarter ended March 31, 2011, compared to adjusted net loss of $3.9 million, or $0.05 per share, attributable to the stockholders of Teekay for the same period of the prior year.

Adjusted net loss attributable to stockholders of Teekay excludes a number of specific items that had the net effect of decreasing GAAP net income by $1.8 million (or $0.02 per share) for the three months ended March 31, 2011 and decreasing GAAP net income by $10.1 million (or $0.14 per share) for the three months ended March 31, 2010, as detailed in Appendix A to this release. Including these items, the Company reported on a GAAP basis, net loss attributable to the stockholders of Teekay of $29.7 million, or $0.41 per share, for the quarter ended March 31, 2011, compared to net loss attributable to the stockholders of Teekay of $14.0 million, or $0.19 per share, for the same period of the prior year. Net revenues(2) for the first quarter of 2011 were $442.9 million, compared to $498.9 million for the same period of the prior year.

On April 4, 2011, the Company declared a cash dividend on its common stock of $0.31625 per share for the quarter ended March 31, 2011. The cash dividend was paid on April 29, 2011, to all shareholders of record on April 15, 2011.

“During the first quarter and second quarter to date we have seen strong business development activity across all of our businesses, led by our offshore business,” commented Peter Evensen, Teekay Corporation’s President and Chief Executive Officer. “Based on the recent high pace of offshore project tendering and asset acquisition opportunities, we remain optimistic about the prospects of our offshore business and are actively pursuing several opportunities in the North Sea and Brazil offshore markets. Earlier this week, we signed a conditional contact with Samsung to construct a newbuilding FPSO, subject to finalizing an operating contract with a major oil and gas company for a new North Sea FPSO project. In Brazil, we recently entered into a joint venture agreement with Brazil-based Odebrecht to jointly pursue FPSO opportunities in the growing Brazilian offshore market.”

“We have also seen a pick-up in the global LNG trade with several new projects scheduled to come on-line in the next few years after a quiet period following the global financial crisis,” Mr. Evensen continued. “The devastating earthquake and tsunami in Japan has resulted in a renewed global focus on LNG and an increase in LNG carrier spot rates, which has helped us to secure new short-term charter contracts on our two smaller LNG carriers, the Arctic Spirit and Polar Spirit, at attractive rates. While all our other gas carriers are chartered-out on long-term fixed-rate contracts, we believe that a tighter LNG spot vessel supply-demand balance will lead to an increase in LNG contract opportunities.”

“Finally, in our conventional tanker business, we realized a slight improvement in average spot tanker rates in the first quarter compared to the previous quarter, due primarily to the short-term rate spikes that occurred in late February at the onset of the conflict in Libya. However, based on the projected tanker supply growth, we continue to expect that 2011 will be a challenging year for spot tanker rates. We believe that a period of weak spot tanker rates in the near-term will be a positive for the longer-term balance of tanker supply and demand. In anticipation of this near-term weakness, Teekay has reduced its spot tanker exposure significantly over the past two years and additional in-chartered vessels are scheduled to redeliver over the next 18 months, further reducing our spot tanker exposure and our cash flow breakeven level.”

Mr. Evensen added, “I am also pleased to note that we continue to return capital to shareholders, making steady progress under our share repurchase program. Since November 2010, we have repurchased over $82 million of our shares under our existing $200 million authorization, of which approximately $38 million has occurred since the end of February 2011.”

Recent Offshore Business Developments

Teekay recently entered into a joint venture agreement with Odebrecht Oil & Gas S.A. (a member of the Odebrecht group) to jointly pursue FPSO projects in Brazil. Teekay is currently working with Odebrecht on potential project opportunities and intends for Odebrecht to be a 50 percent partner in the Tiro Sidon FPSO project. Odebrecht is a well-established Brazilbased company that operates in the engineering and construction, petrochemical, bioenergy, energy, oil and gas, real estate and environmental engineering sectors, with over 120,000 employees and a presence in over 20 countries. In addition, Teekay has signed a Letter of Intent with a major oil and gas company to provide a new harsh weather FPSO which will operate in the North Sea. Over the past several months, the Company has been involved in the front-end engineering and design (FEED) study for this project and is currently working torwards finalizing a contract with the customer. In connection with this project, Teekay recently signed a conditional contract with Samsung Heavy Industries (Samsung) to construct a newbuilding FPSO unit.

Teekay Offshore Partners L.P.

Teekay Offshore is an international provider of marine transportation, oil production and storage services to the offshore oil industry through its fleet of 36 shuttle tankers (including five chartered-in vessels and one committed newbuilding under construction), two floating, production, storage and offloading (FPSO) units, five floating storage and offtake (FSO) units and 11 conventional oil tankers. Teekay Offshore also has the right to participate in certain other FPSO and vessel opportunities. As at March 31, 2011, Teekay Parent owned a 36.9 percent interest in Teekay Offshore (including the 2 percent sole general partner interest).

Cash flow from vessel operations from Teekay Offshore increased to $92.0 million in the first quarter of 2011, from $89.1 million in the same period of the prior year. This increase was primarily due to the acquisition of the Amundsen Spirit, the Nansen Spirit and the Cidade de Rio das Ostras FPSO unit on October 1, 2010, and lower time-charter hire expenses resulting from the redelivery of two in-chartered vessels to their owners. This was partially offset by lower revenue resulting from fewer revenue days from vessels operating under contracts of affreightment and $3.9 million of restructuring charges incurred during the quarter in connection with the sale of a FSO unit and a redelivered vessel.

On March 8, 2011, Teekay Offshore acquired from Teekay the remaining 49 percent interest in Teekay Offshore Operating L.P. (OPCO) for $390 million. Teekay Offshore financed the acquisition through a combination of $175 million in cash (less $15 million in distributions made by OPCO to Teekay between December 31, 2010 and the date of acquisition), and the remainder in the form of the issuance of 7.6 million common units and associated General Partner interest to Teekay in a private placement.

For the first quarter of 2011, Teekay Offshore increased its quarterly distribution by 5.3 percent, to $0.50 per unit. As a result, the cash distribution received by Teekay Parent based on its common unit ownership and general partnership interest in Teekay Offshore totaled $13.4 million for the first quarter of 2011, as detailed in Appendix D to this release.

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Source: teekay ,May 12, 2011;