Q1 2017 Teekay Offshore Partners LP Earnings Call

May 18, 2017 AM EDT
TOO - Teekay Offshore Partners LP
Q1 2017 Teekay Offshore Partners LP Earnings Call
May 18, 2017 / 04:00PM GMT 

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Corporate Participants
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   *  David Wong
      Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd
   *  Ingvild Saether
      Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd
   *  Ryan Hamilton

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Conference Call Participants
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   *  Benjamin Preston Brownlow
      Raymond James & Associates, Inc., Research Division - Research Analyst
   *  Fotis Giannakoulis
      Morgan Stanley, Research Division - VP, Research
   *  Michael Webber
      Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst
   *  Spiro M. Dounis
      UBS Investment Bank, Research Division - Director and Equity Research Analyst of Shipping

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Presentation
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Operator   [1]
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 Good day, and welcome to Teekay Offshore Partners First Quarter 2017 Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded. Now for opening remarks and introduction, I would like to turn the call over to Ingvild Saether, Teekay Offshore Group's President and Chief Executive Officer. Please go ahead.

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 Ryan Hamilton,    [2]
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 Before Ms. Saether begins, I'd like to direct all participants to our website at www.teekayoffshore.com, where you'll find a copy of the first quarter 2017 earnings presentation. Ms. Saether will review this presentation during today's conference call.

 Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information containing factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the first quarter 2017 earnings release and earnings presentation available on our website.

 I'll now turn the call over to Ms. Saether to begin.

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [3]
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 Thank you, Ryan. Hello, everyone, and thank you for joining us on our first quarter 2017 investor conference call. I'm joined today by David Wong, the CFO of Teekay Offshore Group; as well as Kenneth Hvid, Teekay Corporation's President and CEO; and Vince Lok, Teekay Corporation's CFO.

 During our call today, I will be taking you through the earnings presentation, which can be found on our website.

 Turning to Slide 3 of the presentation. I will briefly review some of Teekay Offshore's recent highlights. In the first quarter of 2017, the partnership generated distributable cash flow or DCF of $30.6 million or $0.20 on a per unit basis. Results for the quarter were better than our expectations and were generally in line with market projections. This is driven mainly by the stronger than expected performance of our shuttle tankers and FPSO segment.

 There were a number of positive events during the quarter. I'm pleased to announce that we took delivery of the 50% owned Libra FPSO in late March, which actually arrived in Brazil waters today to commence commissioning on the field for its scheduled startup at the end of June or early July.

 Since reporting earnings last quarter, our shuttle tanker business continues to perform strongly, and we recently secured 2 new multiyear contracts of affreightment in the North Sea. We completed a 5-year extension of the charter contract for the Falcon Spirit FSO unit. And finally, in early April, we entered into a customer funded front-end engineering and design, or FEED study, for the Varg FPSO unit on the Cheviot field in the North Sea.

 However, despite our strong start to the year, the partnership's results for the first quarter were negatively impacted by the continued nonpayment of charter hire on the Arendal Spirit unit for maintenance and safety or UMS. In addition, we have now received notice from Petrobras, the charter, instructing us to demobilize the unit and thereafter terminating the charter contract. We are disputing this termination, which I will discuss later in my presentation.

 Turning to Slide 4. We continue to push forward to deliver on our pipeline of committed growth projects. This is a slide we have shown you in previous quarters, updated to reflect the latest remaining CapEx and financing figures as of March 31, 2017. We are pleased to announce the delivery of the largest of these projects, the jointly owned Libra FPSO, which I will touch on in a moment.

 Updating you on a couple of the other large projects on this slide. Our Gina Krog FSO project has experienced some delays and cost increases with the unit now expected to be hooked up on the field during the third quarter of 2017. We are providing Statoil with an interim solution using shuttle tankers that will enable Statoil to start up the Gina Krog field when they are ready.

 Last quarter, I discussed the delays and additional cost we experienced on the Petrojarl I FPSO upgrade project, and we continue to work constructively with the charter, shipyard and our lenders to deliver this unit into operation as soon as possible. Progress at the shipyard continues with over 90% of pipe welding now completed and 99% of electrical cabling now [pulled], both key measures of progress to sail away. We are targeting an early 2018 time frame for the FPSO to commence the contract on the Atlanta Field offshore Brazil. As a reminder, once all these projects have delivered, they are projected to contribute an additional $200 million per year of run rate CFVO.

 Turning to Slide 5. I will provide a few more details on the Libra FPSO conversion, which is getting closer to startup. The Libra FPSO unit, which is a 50-50 joint venture with Odebrecht Oil & Gas was converted as Jurong Shipyard in Singapore. The mechanical completion and delivery of this $1 billion conversion project on time and on budget is a great example of how a project of this scale and scope can be effectively executed. As you can see from the chronological photos down at the right side of the slide, a significant amount of work and materials went into this project, which are reflected in the statistics shown on the slide. And most importantly are the 20 million man hours worked without a loss time injury.

 The Libra FPSO unit actually arrived in Brazilian water this morning, where it will soon commence commissioning on the Libra field for a 12-year contract with the consortium of oil companies led by Petrobras. The charter complex is expected to commence by late June or early July.

 Turning to Slide 6. Through inbound inquiry, discussions with our diverse customer base and reports in the media, there has been increasing evidence to suggest that we are beginning to see some green shots in our core offshore market, as captured in the recent headline on this slide. Positive progress is being made in bridging offshore field development and bringing offshore field development costs down, which may enable further new field developments to proceed towards final investment decision in the coming months. We are still in early days, but already, the headlines are translating into tangible results for Teekay Offshore's business in the form of new shuttle tanker contracts, existing charter expansions and potential new offshore productions contracts.

 Turning to Slide 7. Since reporting earnings in February 2017, our business development teams have continued to successfully secure new charter contracts and extensions. In addition to finalizing the 5-year shuttle tanker CoA contract I mentioned last quarter, we have also recently secured another new 3-year shuttle tanker CoA contract, both done at successively higher rate. The contracts, which will service the Kraken and the Catcher field in the U.K. sector of the North Sea, will commence between the third quarter of 2017 and the first quarter of 2018.

 Our shuttle tanker fleet continues to perform strongly, and these new contracts will only add to the approximately $270 million of annualized cash flow from vessel operations, or CFVO, reported in the first quarter. Combined with the new Glen Lyon shuttle tanker CoA contract, the 3 recent contract awards will require approximately an additional 3.3 vessel equivalent per annum over the next 8 months, which will increase utilization of our CoA fleet. And these 3 contracts will add $230 million to our fixed forward revenues.

 With the delivery of the 3 Suezmax class shuttle tanker newbuildings, servicing our existing East Coast Canada operations, our shuttle tanker CFVO is expected to grow even further as these vessels deliver between Q3 '17 and Q1 '18.

 Turning to Slide 8. The offshore production market is also starting to see early signs of an uptick in direct investment. In March, Teekay Offshore entered into a customer-funded front end engineering and design, FEED study, for the Varg FPSO with Alpha Petroleum. During the 6-month FEED study, we will define the required field-specific FPSO modifications and negotiate terms of a potential FPSO lease and operate contract for the development of the Cheviot field, which is one of the largest undeveloped fields in the U.K. sector of the North Sea.

 In addition, the partnership finalized a 5-year contract extension plus extension options for the Falcon Spirit FSO unit with no material capital investment. The extension will commence on June 1, 2017. This extension demonstrates the continued economic viability of the Falcon Spirit FSO unit, which has been operating on the Al Rayyan field, located offshore Qatar, since 2009.

 Turning to Slide 9. In late April, we've received a termination notice from Petrobras for the Arendal Spirit UMS charter contract. As a reminder, in early November 2016, the Arendal Spirit UMS experienced an operational incident relating to its dynamic positioning or DP system. Following the November incident, the charter, Petrobras, initiated an operational review and concurrently suspended charter hire payments to the partnership.

 In response to that incident, we worked with GE, the supplier of the DP system, and upgrades were made to the software control system. The unit meets all class requirements, has been thoroughly tested, and has been fully operational and ready for service since November 11, 2016.

 While I'm not currently able to get into specifics of the termination notification and our response, I can confirm that we are disputing the termination and reviewing all of our legal options. This includes our ability to collect all charter hiring -- charter hire owing to the partnership since November 11, 2016, when the unit was, once again, available for operations by Petrobras as required under the charter contract. At the same time, we are seeking alternative employment opportunities for the unit in the event that we are unable to resolve our differences with Petrobras.

 We are working with our lenders under the loan facility secured by the Arendal Spirit to grant an extension of the facility while we obtain new employment for the unit. This is one of our highest near-term priorities.

 Wrapping up, I believe the recent contract awards represent what is an improving trend in the offshore sector. Although we have certain challenges to deal with, notably, the Arendal Spirit termination and completing the Petrojarl I project, we remain committed to the priorities I highlighted last quarter: remaining focused on continually striving for high standards for safety and operational excellence; maintaining a team focus on project execution and delivering these projects to contract startup to drive continued growth in the partnership's operating cash flow; working diligently to extend or secure new contract for our assets; optimizing our asset portfolio, which may include certain asset sales and/or seeking joint venture partners; and finally, continuing to strengthen our balance sheet and liquidity position.

 Thank you all for listening. Operator, we are now available to take questions.

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Questions and Answers
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Operator   [1]
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 We'll take our first question from Michael Webber with Wells Fargo.

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 Michael Webber,  Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst   [2]
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 Ingvild, I wanted just to start with Petrobras and the Arendal Spirit. The notification period -- is there a notification period or any degree of notification required to start the 180-day period, after which the banks can potentially call the loan on the Arendal Spirit? Does that start from the date that you actually got the notification from Petrobras and they were canceling the charter?

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [3]
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 Mike, it's David here. The loan with -- the 180 days would start with the date that we receive the letter from Petrobras, so that would've been late April.

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 Michael Webber,  Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst   [4]
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 Got you. And I know it's somewhat sensitive, but can you give any color to how the conversations have gone with your lending banks around the loans on that asset? And then also the Petrojarl I? And then, David, from a management perspective or from a cash perspective, are capital calls associated with those loans something that you think is likely enough that you're budgeting in for, for the remainder of the year and/or kind of looking at, I guess, liquidity levers to be able to handle? Or are they far enough out on the window that it's not something that's consuming your time right now?

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [5]
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 Okay. So just to give you -- to address your questions. Related to talking to our lenders. Right now, it's early days. I mean we just received the notification, but we are in active dialogue with our lenders on the Arendal loan to seek an extension or amendment associated with that. With the Petrojarl I loan, we continue to discuss with our lenders as well. They've been fully briefed on the dialogues we're having with the charter and the yard. And we had, as you've probably seen, several extensions of that loan and we'll continue to work with them on that. Related to capital calls, certainly looking at the Arendal loan. We are looking at that, how it impacts our liquidity and incorporate all those related to refinancing as well in our sort of medium- to long-term financing and liquidity requirements. And as we've mentioned, and Ingvild mentioned in the presentation, we are looking at various alternatives to address liquidity in addition to looking at the partial asset sales or joint ventures, which we feel will fulfill our needs over the long term.

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 Michael Webber,  Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst   [6]
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 Right. And I guess just one more and I'll turn it over. But along those lines, David, can you maybe -- can you weigh out maybe specifically the tools you guys have from a liquidity perspective? And then how you prioritize those, be it asset sales within the FPSO or the shuttle side? Or are there other segments, new equity, be it [preferred, comm]? Just maybe kind of lay out the toolkit you guys have to kind of handle some of these smaller [rushfires]?

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [7]
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 Well, as I mentioned, we're looking at partial asset sales or joint ventures, building upon things that we've been doing throughout the Teekay organization, which you see is successful in TGP. At this point, we can't get into details related to the specific assets or areas that we're looking at. But certainly, when we get closer to completion, we'll be excited to talk about that.

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Operator   [8]
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 We'll go next to Spiro Dounis with UBS Securities.

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 Spiro M. Dounis,  UBS Investment Bank, Research Division - Director and Equity Research Analyst of Shipping   [9]
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 Just sticking with the Arendal Spirit. Trying to get a sense for your ability to recharter that asset. I know you had 2 other UMS at 1 point that were in the order book and canceled. So can you give us a sense for the demand for these types of assets and how quickly you could, theoretically, get that back on charter?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [10]
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 Yes. Well, the accommodation market is a -- quite a niche market with only 30, 31 units worldwide. And there has actually been quite healthy activity in the last 5, 6 months with several contracts concluded. We have seen both sites doing [a couple of] contracts. And we do see some requirements in the market, both in West Africa and in the U.K. sector. Mexico is also a typical market for the accommodation unit. And with the oil companies cutting back on maintenance over the last couple of years as a result of preserving cash, we are quite hopeful that we will be able to find employment for this unit in the event that we are not able to come to a agreement with Petrobras.

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 Spiro M. Dounis,  UBS Investment Bank, Research Division - Director and Equity Research Analyst of Shipping   [11]
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 Okay. And just as I'm thinking about, I guess, obviously, this is now your main focus. Is there a concern that this may be spread into the other initiatives you got in front of you? And specifically, what I'm getting at is you guys have debt that you need to refinance, you mentioned potential sales or partial sales or joint ventures. But then also, you've got FPSOs coming off charter next year with Petrobras. Does this impact any of those negotiations? Is there any sort of contagion that occurs as a result of this?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [12]
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 We have a very good and constructive dialogue with Petrobras on several assets. They are a big customer of ours, as we mentioned, on the FPSO side as well. And we don't have any indication that this is impacting other parts of the Petrobras relationship.

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 Spiro M. Dounis,  UBS Investment Bank, Research Division - Director and Equity Research Analyst of Shipping   [13]
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 Okay. And just last one for me. Just on the Alpha FEED study. Certainly, a lot of positive news there. Just ballpark figures, if you think you can provide any, I think the Varg before was earning about $49 million in EBITDA. Can you give a sense for maybe how much CapEx you might have to spend on this project? And then maybe how to think about EBITDA in that context?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [14]
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 It's early days on that project and we are going through the FEED study now. So that will determine the level of investment that needs to be made and then the subsequent charter hire. So it's too early to say.

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Operator   [15]
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 We'll go next to Fotis Giannakoulis with Morgan Stanley.

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 Fotis Giannakoulis,  Morgan Stanley, Research Division - VP, Research   [16]
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 Just to follow up on the Arendal Spirit. If I calculate well, the expenses in G&A the last 12 months for the UMS segment was around $38 million. Now that the vessel is without a contractor, if we assume that the vessel will stay idle for a period of time, how shall we think of the expenses of this vessel?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [17]
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 So our main focus will, of course, be to marketing the unit and get it on a new contract. And it's difficult to say what level that will be at. So if we are -- if we would have an idle period between now and the possible new contracts, we will, of course, be focused on limiting the cost as much as possible in that period.

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 Fotis Giannakoulis,  Morgan Stanley, Research Division - VP, Research   [18]
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 And regarding the debt repayment, can you firstly remind us what is the debt outstanding on this unit? And what happens with the debt repayments during the period that the unit is between contracts?

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [19]
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 The debt total amount is $120 million as of March 31, and it will continue to amortize down during the period, whether the unit is on hire, off hire.

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 Fotis Giannakoulis,  Morgan Stanley, Research Division - VP, Research   [20]
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 Okay. I saw some -- you mentioned about some cost overruns for the Gina Krog. I saw that your estimated CapEx between the previous quarter and this quarter went down $12 million. It seems that you repaid in this quarter $55 million for the owned vessels. Are these cost overruns all related to the Gina Krog, or there were some other vessels involved in this number? And also, can you explain to us what were the component of this overruns, at which part of their construction that the budget was exceeded?

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [21]
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 Maybe just to address the cost overruns. The cost overruns are both within the Gina Krog project and the Petrojarl I project, but not significant in magnitude but just related to some of the extensions associated with the -- at the yard, a little longer for Gina Krog and then just taking over some more additional work with the Petrojarl I.

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 Fotis Giannakoulis,  Morgan Stanley, Research Division - VP, Research   [22]
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 Were there any upgrades on the vessels or changes in the specifications? And I was wondering if this increase in the cost will be even partially reimbursed by a modification on the contract?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [23]
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 So there are a number of reasons for the cost increases throughout the projects. Some is related to scope increases and also related to the time so that the expense is being driven by time, like project management and commissioning. These are not costs that will be compensated by the customer. But we are very, very close to finalizing and sailing, so we feel we have a relatively good overview of what's left and are keen to get the vessel on contract with Statoil.

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 Fotis Giannakoulis,  Morgan Stanley, Research Division - VP, Research   [24]
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 That's very helpful. One last question for me. You mentioned that you are looking for JV partners and potential candidates for sales within your fleet. I was wondering if these discussions may include the possibility of a spinoff of any of your segments or the Shuttle Tanker segment or any other segment into a new entity that would facilitate this kind of transactions?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [25]
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 Yes. We're not in a position to provide any details at this time, and we will update the market at the appropriate time. But as you have seen, we are working with partnership and joint ventures across many parts of Teekay, and that is the model that we see works well. So it is one of our priorities to look at that.

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Operator   [26]
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 We'll go next to Ben Brownlow with Raymond James.

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 Benjamin Preston Brownlow,  Raymond James & Associates, Inc., Research Division - Research Analyst   [27]
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 On the Gina Krog, what -- can you -- that bridging solution with shuttle tankers, can you just give a little color around what that revenue and fee structure would look like?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [28]
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 Yes. That will be basically shuttle tanker rights for the shuttle tanker. So this is a solution that we have put in place in order to be sure that we are not delaying the startup of the field, which is, of course, very important for Statoil. So this will be a short-term, couple-of-months solution where we will just be earning a regular shuttle tanker rate for the shuttle tanker.

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 Benjamin Preston Brownlow,  Raymond James & Associates, Inc., Research Division - Research Analyst   [29]
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 Okay. That's helpful. And one more for me. On the Towage segment, I think you had a reimbursement from some of the delivery delays. Can you talk about the accounting there or when that will flow through?

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [30]
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 Yes. So we did get -- we get liquidated damages from the yards due to the delays. We received the money in April and, from an accounting perspective, it really just nets against the capital cost of the unit.

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 Benjamin Preston Brownlow,  Raymond James & Associates, Inc., Research Division - Research Analyst   [31]
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 Okay, that's helpful. And any update around the trends within that segment that you're seeing?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [32]
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 Well, the towage market is quite challenging with relatively low utilization and low rates. And we expect that to last for some time. The activity in this segment is, as you know, driven by the number of rig moves. So it can be new units, movement of existing units and movement of units sold for scrap. We have a fleet of new vessels that provide good customer value. So we are quite confident that, when the market does pick up, we will be one of the first to benefit from that.

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Operator   [33]
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 We'll go next to [Andy Gupta] with HITE Hedge.

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Unidentified Analyst   [34]
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 A couple of quick questions here. On the FSO Falcon Spirit, any color on the rates for that?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [35]
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 What we can say is that this has been a discussion that has gone on for quite some time with this extension. So the -- and we have done a rate adjustment to get a longer contract, but that has already taken effect. So the income will be in line with previous quarters.

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [36]
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 So it's about $7 million -- sorry, it's just about $7 million EBITDA annually. And as Ingvild said, it's already incorporated into our cash flow as we have always had that amount over the past year.

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Unidentified Analyst   [37]
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 Understood. And then it's positive to see the CFVO from the shuttles. This number, $270 million, that you put out, that is -- just confirming, this is before the East Canada, East Coast Canada shuttles, right? This is your existing fleet?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [38]
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 That is correct. That's the Q1 annualized cash flow. So there will be a number of new contracts coming in over the next couple of quarters to increase that.

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [39]
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 Sorry, the $270 million doesn't include the new builds being added to the fleet, so that would add additional cash flow once those deliver.

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Unidentified Analyst   [40]
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 Understood. And can you disclose approximately what the margin is, revenue minus OpEx? I know you've got some time charters, some CoAs and bareboats, so it will vary. But what's sort of a good number to use for revenue and OpEx for the variety of contracts?

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [41]
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 Well, the -- for the new contracts, there will be a number of factors influencing. So when they start up, how quickly they ramp up. So it's a bit difficult to give guidance exactly how that will play out in the next couple of quarters. But as I said, it is $230 million of fixed forward revenue, so it's significant future cash flow to the partnership.

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Unidentified Analyst   [42]
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 Yes. Final question for me. On the $210 million loan to Arendal Spirit, is that effectively nonrecourse to TOO and Teekay?

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [43]
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 The loan, which is, just to clarify, $120 million loan will be guaranteed by Teekay Offshore, stay with -- it's within the Teekay Offshore.

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Unidentified Analyst   [44]
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 So it is guaranteed by the -- you can't just hand over the Arendal Spirit to the banks? Worst scenario?

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [45]
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 No.

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Operator   [46]
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 We'll go next to Michael Webber with Wells Fargo.

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 Michael Webber,  Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst   [47]
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 Just have one follow-up along those lines. Can you remind us who's in the lending syndicates for the Arendal Spirit and the Petrojarl I? And maybe what kind of overlaps there may be there with the rest of your book? Trying to get a sense on kind of how intertwined your lending base is.

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [48]
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 Mike, it's David. Yes, the loan of the Arendal is with a couple of our key banks, including an ECA. So it's a small group of banks in that facility.

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 Michael Webber,  Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst   [49]
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 Is it relatively isolated? Is there exposure there across kind of the entire TOO structure?

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 David Wong,  Teekay Offshore Partners L.P. - CFO of Teekay Offshore Group Ltd   [50]
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 Well, they are lenders to other Teekay entities and other loans, so it is -- they are part of other facilities within the Teekay Group. But as you know, we have very supportive bank group amongst the Teekay Group and we are in discussions with them and keeping them informed as we have over the past several months.

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Operator   [51]
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 And that will conclude our question-and-answer session. I'd like to turn the conference back over to Ms. Saether for any additional or closing remarks.

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 Ingvild Saether,  Teekay Offshore Partners L.P. - CEO of Teekay Offshore Group Ltd and President of Teekay Offshore Group Ltd   [52]
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 Thank you. Well, as you heard, there's a lot going on across the partnership. And over the next couple of quarters, we will have delivered all our major projects and they will contribute to our cash flow. So our focus will then be to focus on the -- redeploying our assets, that's coming off contracts and repositioning us for the strengthening shuttle market in what we believe will be a recovering offshore market. So thank you.

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Operator   [53]
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 That does conclude today's conference. We thank you for your participation. You may now disconnect.




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