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Teekay Offshore Secures 7-Year Charter for FPSO Unit

Teekay Offshore Partners has signed a conditional seven-year charter contract for the floating production, storage and offloading (FPSO) unit, Petrojarl Varg.

Under the deal, agreed with Alpha Petroleum Resources Limited (Alpha) in October 2018, the FPSO would be deployed in the Cheviot oil field in the UK sector of the North Sea.

The contract is for a seven-year fixed term from first oil, which is targeted for the second quarter of 2021, after completion of a life extension and upgrade phase for the Petrojarl Varg FPSO taking place at Sembcorp Marine’s shipyard in Singapore.

Teekay Offshore Partners said that the life extension and upgrade costs for the Petrojarl Varg FPSO would be funded predominantly by Alpha in advance. The Petrojarl Varg FPSO is intended to be used for the entire expected life of the Cheviot field.

The company revealed the contract in its financial report for the quarter ended September 30, 2018. For the three-month period, Teekay Offshore Partners managed to narrow its net loss to USD 38.6 million, compared to a net loss of USD 317.5 million seen in the same period in 2017.

The change was attributed to vessel write-downs during the third quarter of 2017, partially offset by losses on repurchases of bonds maturing in 2019 and a promissory note maturing in 2022 incurred in the third quarter of 2018.

The company’s revenues climbed to USD 327.7 million for the third quarter of 2018 from USD 273.6 million reported in the corresponding period of 2017.

“For the third quarter of 2018, our total cash flow from vessel operations increased significantly from the same quarter of the prior year primarily driven by stronger earnings from our shuttle tanker fleet, a full quarter contribution from the contract start-up of the Petrojarl I FPSO and our third East Coast Canada shuttle tanker newbuilding and lower operating costs in our shuttle and FPSO fleets,” Ingvild Sæther, President and CEO of Teekay Offshore Group, said.