Altera Infrastructure Reports Second Quarter 2022 Results
08/04/2022 - 04:46 PM
ABERDEEN, United Kingdom, Aug. 04, 2022 (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 June 30, 2022.
Revenues of $296.2 million and net loss of $40.0 million , or $(0.11) per common unit, in the second quarter of 2022. Adjusted EBITDA(1) of $129.1 million in the second quarter of 2022. The following table presents the Partnership's Consolidated Financial Summary:
Three Months Ended June 30, March 31, June 30, 2022 2022 Restated (2) 2021 In thousands of U.S. Dollars, unaudited $ $ $ IFRS FINANCIAL RESULTS Revenues 296,234 323,655 266,935 Net Income (loss) (39,989 ) 52,908 (28,488 ) Limited partners' interest in net income (loss) per common unit - basic (0.11 ) 0.11 (0.08 ) NON-IFRS FINANCIAL MEASURE: Adjusted EBITDA (1) 129,146 179,528 109,595
(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. (2) See the unaudited interim condensed consolidated statements of income (loss) below for additional information.
The Partnership generated net loss of $40 million for the three months ended June 30, 2022, compared to net loss of $28 million for the three months ended June 30, 2021. The decrease of $12 million was primarily due to vessel impairments in the current period, absence of contribution from the Knarr FPSO going off contract May 1, 2022 and higher interest expenses in the second quarter of 2022, partially offset by higher Petrojarl I oil price tariff revenue, higher shuttle tanker utilization and lower depreciation expenses following impairments in the fourth quarter, compared to the same period during the prior year.
Adjusted EBITDA was $129 million for the three months ended June 30, 2022, compared to $110 million for the same period during the prior year. The increase of $19 million was primarily driven by higher Petrojarl I oil price tariff revenue and higher shuttle tanker utilization, partially offset by the absence of contribution from the Knarr FPSO going off contract May 1, 2022.
Operating Results
The following table presents the Partnership's Adjusted EBITDA by segment (1) :
Three Months Ended June 30, March 31, June 30, 2022 2022 Restated (2) 2021 In thousands of U.S. Dollars, unaudited $ $ $ FPSO 53,424 99,533 45,364 Shuttle Tanker 69,494 63,590 57,662 FSO 10,565 10,659 9,587 UMS (3,940 ) (1,760 ) (1,627 ) Towage 3,649 8,990 (1,357 ) New Ventures (678 ) (129 ) — Corporate/Eliminations (3,368 ) (1,355 ) (34 ) Partnership's Adjusted EBITDA 129,146 179,528 109,595
(1) These operating segments are regularly reviewed by the Partnership's chief operating decision maker (CODM ) for the purpose of allocating resources to the segment and to assess its performance. The key measure used by the CODM in assessing performance and in making resource allocation decisions is Adjusted EBITDA, which is defined in this release under the heading “Non-IFRS Measures." Adjusted EBITDA is also used by external users of the Partnership's consolidated financial statements, such as investors and the Partnership’s controlling unitholder. (2) See the unaudited interim condensed consolidated statements of income (loss) below for additional information.
Second Quarter 2022 Compared with Second Quarter 2021 FPSO segment generated Adjusted EBITDA of $53 million for the three months ended June 30, 2022, compared to $45 million for the three months ended June 30, 2021. The increase of $8 million was primarily due to Petrojarl I higher uptime and oil price tariff revenues, partially offset by an absence of contribution from the Knarr FPSO going off contract May 1, 2022.
The Partnership's Shuttle Tanker segment generated Adjusted EBITDA of $69 million for the three months ended June 30, 2022, compared to $58 million for the three months ended June 30, 2021. The increase of $11 million was primarily due to higher shuttle tanker utilization.
The Partnership's FSO segment generated Adjusted EBITDA of $11 million for the three months ended June 30, 2022, compared to $10 million for the three months ended June 30, 2021.
The Partnership's UMS segment generated an Adjusted EBITDA loss of $4 million for the three months ended June 30, 2022, compared to $2 million for the three months ended June 30, 2021. The $2 million increased loss was primarily due to mobilization costs for the Arendal Spirit UMS for its current contract as compared to being in lay-up in the prior year.
The Partnership's Towage segment generated Adjusted EBITDA of $4 million for the three months ended June 30, 2022, compared to an Adjusted EBITDA loss of $1 million for the three months ended June 30, 2021. The improvement of $5 million was primarily due to higher average day rates and utilization.
Strategic Updates
Liquidity Update $186 million , compared to $241 million as at June 30, 2021, representing a decrease of $55 million .(1)
Financings Brookfield ) as secured lender to address its secured debt. The Partnership also anticipates engaging with its unsecured corporate level lenders to address its unsecured debt. As part of these efforts, the Partnership entered into extension agreements with certain of its lenders on June 16, 2022 to defer certain required payments until August 12, 2022. Furthermore, in July 2022, the Partnership opted not to make the interest payment due on July 15, 2022 for its 8.50% senior unsecured bonds with a principal amount outstanding of $276 million that mature in July 2023, and has elected to enter into a 30-day grace period for this interest payment.
Contract Updates Arendal Spirit UMS for 32 additional days.
In June 2022, Equinor ASA exercised a one-year extension option for the Randgrid FSO. The extended firm contract is effective until October 2023.
In May 2022, the Knarr FPSO ceased production on the Knarr field in the North Sea, after which decommissioning activities related to the field commenced.
Shuttle Tanker Newbuildings
Vessel Sales ALP Ace and ALP Ippon towage vessels for continued use in a non-competing industry for a total of $14 million .
In July 2022, the Partnership entered into an agreement to sell its 50% owned vessel, the Navion Gothenburg shuttle tanker for continued use for approximately $25 million (100% ). Delivery is expected in August 2022.
In July 2022, the Partnership entered into an agreement to sell the Petronordic shuttle tanker for recycling for approximately $7 million . Delivery is expected in September 2022.
In May 2022, the Partnership completed the sale of the Petrojarl Varg FPSO unit for $22 million to an energy company for re-use as a production facility as part of a new field development opportunity.
In May 2022, the Partnership entered into an agreement to sell the Falcon Spirit FSO for recycling for $10 million ; the vessel is expected to be delivered to the buyer in the third quarter of 2022.
(1) Total liquidity is defined as Cash and cash equivalents (excluding Cash deposits with third-party restrictions).
Forward Looking Statements About Altera Infrastructure L.P . $3.8 billion comprised of 44 vessels, including floating production, storage and offloading (FPSO) units, shuttle tankers, 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 inquiries contact:
Jan Rune Steinsland, Chief Financial Officerinvestor.relations@alterainfra.com www.alterainfra.com
ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands of U.S. Dollars)
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2022 2022 Restated (1) 2021 2022 2021 $ $ $ $ $ Revenues 296,234 323,655 266,935 619,889 539,689 Direct operating costs (171,082 ) (159,206 ) (169,937 ) (330,288 ) (331,778 ) General and administrative expenses (12,135 ) (6,703 ) (8,951 ) (18,838 ) (21,619 ) Depreciation and amortization (70,150 ) (71,882 ) (81,560 ) (142,032 ) (158,809 ) Interest expense (59,490 ) (56,208 ) (49,475 ) (115,698 ) (97,159 ) Interest income 355 58 21 413 49 Equity-accounted income (loss) 9,826 22,262 10,229 32,088 29,613 Impairment expense, net (38,040 ) — — (38,040 ) — Gain (loss) on dispositions, net 15,700 — 9,107 15,700 9,107 Realized and unrealized gain (loss) on derivative instruments (3,108 ) 10,231 (1,513 ) 7,123 12,347 Foreign currency exchange gain (loss) 630 1,024 (302 ) 1,654 23 Other income (expenses), net (8,795 ) (10,834 ) (1,831 ) (19,629 ) (1,857 ) Income (loss) before income tax (expense) benefit (40,055 ) 52,397 (27,277 ) 12,342 (20,394 ) Income tax (expense) benefit Current 66 511 (1,211 ) 577 (2,193 ) Net income (loss) (39,989 ) 52,908 (28,488 ) 12,919 (22,587 ) Attributable to: Limited partners - common units (46,277 ) 45,410 (33,967 ) (867 ) (34,269 ) General partner (354 ) 347 (260 ) (7 ) (262 ) Limited partners - preferred units 7,880 7,880 7,880 15,760 15,760 Non-controlling interests in subsidiaries (1,238 ) (729 ) (2,141 ) (1,967 ) (3,816 ) (39,989 ) 52,908 (28,488 ) 12,919 (22,587 ) Basic and diluted earnings (loss) per limited partner common unit (0.11 ) 0.11 (0.08 ) 0.00 (0.08 )
(1) The Partnership has restated its March 31, 2022 unaudited interim condensed consolidated statement of income (loss) to retrospectively show costs within Other income (expense), net that are not indicative of ongoing operations. The impact of the change as at March 31, 2022 is a reclassification of $9.8 million of General and administrative expenses to Other income (expenses), net. For additional information, please refer to Part I, Item 1. – Financial Statements: Note 2c iii) – Significant Accounting Policies in the Partnership's Report on Form 6-K for the period ended June 30, 2022.
ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands of U.S. Dollars)
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2022 2022 2021 2022 2021 $ $ $ $ $ Net income (loss) (39,989 ) 52,908 (28,488 ) 12,919 (22,587 ) Other comprehensive income (loss) Items that will not be reclassified subsequently to net income (loss): To interest expense: Realized gain on qualifying cash flow hedging instruments (182 ) (179 ) (196 ) (361 ) (386 ) To equity-accounted income (loss): Realized gain on qualifying cash flow hedging instruments (158 ) (159 ) (211 ) (317 ) (407 ) Total other comprehensive income (loss) (340 ) (338 ) (407 ) (678 ) (793 ) Comprehensive income (loss) (40,329 ) 52,570 (28,895 ) 12,241 (23,380 ) Attributable to: Limited partners - common units (46,614 ) 45,075 (34,371 ) (1,540 ) (35,056 ) General partner (357 ) 344 (263 ) (12 ) (268 ) Limited partners - preferred units 7,880 7,880 7,880 15,760 15,760 Non-controlling interests in subsidiaries (1,238 ) (729 ) (2,141 ) (1,967 ) (3,816 ) (40,329 ) 52,570 (28,895 ) 12,241 (23,380 )
ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands of U.S. Dollars)
As at As at As at June 30, March 31, December 31, 2022 2021 2022 Restated (1) Restated (1) $ $ $ ASSETS Current assets Cash and cash equivalents 185,561 171,305 190,942 Cash deposits with third-party restrictions 98,205 78,912 58,566 Financial assets 9,520 6,933 5,856 Accounts and other receivable, net 127,305 147,049 127,453 Vessels and equipment classified as held for sale 52,530 5,800 5,800 Inventory 42,472 31,775 26,601 Due from related parties 773 830 978 Other assets 30,504 30,706 43,668 Total current assets 546,870 473,310 459,864 Non-current assets Financial assets 1,049 969 718 Vessels and equipment 2,786,196 2,928,453 2,869,395 Advances on newbuilding contracts — — 51,918 Equity-accounted investments 246,628 243,904 237,469 Other assets 122,137 128,082 138,247 Goodwill 127,113 127,113 127,113 Total non-current assets 3,283,123 3,428,521 3,424,860 Total assets 3,829,993 3,901,831 3,884,724 LIABILITIES Current liabilities Accounts payable and other 194,793 190,249 249,297 Other financial liabilities 16,136 14,029 34,679 Borrowings 900,574 572,842 407,274 Due to related parties 10,424 32,485 — Total current liabilities 1,121,927 809,605 691,250 Non-current liabilities Accounts payable and other 45,323 47,501 49,253 Other financial liabilities 182,596 185,363 188,658 Borrowings 1,519,966 1,882,204 2,056,753 Due to related parties 843,562 820,210 797,432 Deferred tax liabilities 700 700 700 Total non-current liabilities 2,592,147 2,935,978 3,092,796 Total liabilities 3,714,074 3,745,583 3,784,046 EQUITY Limited partners - Class A common units (4,550 ) (3,963 ) (4,539 ) Limited partners - Class B common units (315,009 ) (269,319 ) (314,153 ) Limited partners - preferred units 408,008 400,128 392,248 General partner 5,596 5,950 5,603 Accumulated other comprehensive income 2,133 2,473 2,811 Non-controlling interests in subsidiaries 19,741 20,979 18,708 Total equity 115,919 156,248 100,678 Total liabilities and equity 3,829,993 3,901,831 3,884,724
(1) The Partnership has restated its March 31, 2022 and December 31, 2021 unaudited interim condensed consolidated statement of financial position to retrospectively show the change in accounting policy adopted during the three months ended June 30, 2022. The impact of the change as at March 31, 2022 and December 31, 2021 is a reclassification of $33.9 million and $13.5 million , respectively, of restricted cash from Financial assets (current) to Cash deposits with third-party restrictions and $45.0 million and $45.0 million , respectively, of restricted cash from Financial assets (non-current) to Cash deposits with third-party restrictions. For additional information, please refer to Part I, Item 1. – Financial Statements: Note 2c ii) – Significant Accounting Policies in the Partnership's Report on Form 6-K for the period ended June 30, 2022.
ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. Dollars)
Three Months Ended March 31, Six Months Ended June 30, 2022 2021 2021 Restated (2) Restated (2) 2022 Restated (2) $ $ $ $ Operating Activities Net income (loss) 52,908 5,901 12,919 (22,587 ) Adjusted for the following items: Depreciation and amortization 71,882 77,249 142,032 158,809 Equity-accounted (income) loss, net of distributions received of $24.9 million (2021 - $24.0 million ) (5,441 ) (990 ) (7,171 ) (5,639 ) Impairment expense, net — — 38,040 — (Gain) loss on dispositions, net — — (15,700 ) (9,107 ) Unrealized (gain) loss on derivative instruments (25,373 ) (162,257 ) (21,375 ) (163,207 ) Provisions and other items (645 ) (193 ) (3,786 ) 188 Other non-cash items 15,821 12,086 34,173 22,985 Changes in non-cash working capital, net (50,324 ) 39,239 (20,923 ) 79,464 Net operating cash flow 58,828 (28,965 ) 158,209 60,906 Financing Activities Proceeds from borrowings 63,195 75,000 63,195 75,000 Repayments of borrowings (75,140 ) (99,367 ) (112,595 ) (195,767 ) Financing costs related to borrowings — (750 ) — (884 ) Proceeds from borrowings related to sale and leaseback of vessels — 71,400 — 71,400 Repayments of borrowings related to sale and leaseback of vessels (2,818 ) (2,881 ) (5,636 ) (5,700 ) Financing costs related to borrowings from sale and leaseback of vessels — — — (584 ) Proceeds from borrowings from related parties 32,000 75,000 32,000 130,000 Prepayment of borrowings from related parties — — (22,000 ) (30,000 ) Lease liability repayments (3,341 ) (3,392 ) (9,108 ) (6,961 ) Capital contribution by non-controlling interests 3,000 — 3,000 — Distributions to limited partners and preferred unitholders — (7,880 ) — (15,760 ) Distributions to non-controlling interests — (1,750 ) — (1,750 ) Repurchase of preferred units — (24 ) — (24 ) Net financing cash flow 16,896 105,356 (51,144 ) 18,970 Investing Activities Additions Vessels and equipment (75,387 ) (156,317 ) (87,046 ) (168,979 ) Equity-accounted investments (1,153 ) (1,172 ) (2,305 ) (2,336 ) Dispositions Vessels and equipment — — 21,500 28,835 Changes in restricted cash 697 71,826 (3,813 ) 77,445 Net investing cash flow (75,843 ) (85,663 ) (71,664 ) (65,035 ) Total Cash and cash equivalents (1) Change during the period (119 ) (9,272 ) 35,401 14,841 Impact of foreign exchange on cash 828 240 (1,143 ) 369 Balance, beginning of the period 249,508 284,486 249,508 284,486 Balance, end of the period 250,217 275,454 283,766 299,696
(1) Total Cash and cash equivalents includes Cash and cash equivalents and Cash deposits with third-party restrictions. (2) The Partnership has restated its three months ended March 31, 2022 and March 31, 2021 and its six months ended June 30, 2021 unaudited interim condensed consolidated statements of cash flows to retrospectively show the change in accounting policy adopted during the three months ended June 30, 2022. For additional information, please refer to Part I, Item 1. – Financial Statements: Note 2c ii) – Significant Accounting Policies in the Partnership's Report on Form 6-K for the period ended June 30, 2022.
Non-IFRS Measures
Adjusted EBITDA is intended to provide additional information and should not be considered as the sole measure of the Partnership's 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. This non-IFRS measure is used by the Partnership's management, and the Partnership believes that this supplementary metric assists investors and other users of its financial reports in comparing its financial and operating performance across reporting periods and with other companies.
Non-IFRS Financial Measures
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2022 2022 Restated (1) 2021 2022 2021 (in thousands of U.S. Dollars, unaudited) $ $ $ $ $ Adjusted EBITDA 129,146 179,528 109,595 308,674 229,865 Depreciation and amortization (70,150 ) (71,882 ) (81,560 ) (142,032 ) (158,809 ) Interest expense (59,490 ) (56,208 ) (49,475 ) (115,698 ) (97,159 ) Interest income 355 58 21 413 49 Expenses and gains (losses) relating to equity-accounted investments (5,932 ) 526 (10,606 ) (5,406 ) (15,475 ) Impairment expense, net (38,040 ) — — (38,040 ) — Gain (loss) on dispositions, net 15,700 — 9,107 15,700 9,107 Realized and unrealized gain (loss) on derivative instruments (3,108 ) 10,231 (1,513 ) 7,123 12,347 Foreign currency exchange gain (loss) 630 1,024 (302 ) 1,654 23 Other income (expenses), net (8,795 ) (10,834 ) (1,831 ) (19,629 ) (1,857 ) Adjusted EBITDA attributable to non-controlling interests (371 ) (46 ) (713 ) (417 ) 1,515 Income (loss) before income tax (expense) benefit (40,055 ) 52,397 (27,277 ) 12,342 (20,394 ) Income tax (expense) benefit Current 66 511 (1,211 ) 577 (2,193 ) Net income (loss) (39,989 ) 52,908 (28,488 ) 12,919 (22,587 )
(1) See the unaudited interim condensed consolidated statements of income (loss) above for additional information.
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 Six Months Ended June 30, June 30, June 30, June 30, 2022 2021 2022 2021 (in thousands of U.S. Dollars, unaudited) $ $ $ $ Equity-accounted income (loss) 9,826 10,229 32,088 29,613 Less: Depreciation and amortization (6,823 ) (7,551 ) (13,951 ) (15,116 ) Interest expense, net (1,481 ) (1,932 ) (2,594 ) (4,000 ) Income tax (expense) benefit Current — 21 (36 ) (26 ) 18,130 19,691 48,669 48,755 Less: Realized and unrealized gain (loss) on derivative instruments 2,939 (2,005 ) 11,052 3,522 Foreign currency exchange gain (loss) (567 ) 861 123 145 Adjusted EBITDA from equity-accounted investments 15,758 20,835 37,494 45,088
