TEEKAY OFFSHORE PARTNERS INVESTOR DAY September 30, 2014 Photo Credit: John Mikal Torgersen
KENNETH HVID Chief Strategy Officer 2 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. All statements included in or accompanying this presentation, other than statements of historical fact, are forward-looking statements. Forward-looking statements are not guarantees and actual results could differ materially from those expressed or implied in the forward-looking statements. Forward- looking statements in this presentation include, among others, statements regarding: the fundamentals in and growth potential of the offshore industry; future growth opportunities for the Partnership and its various segments, including the Partnership’s ability to participate in new offshore projects or to grow organically; the accretive nature of any acquisitions and any future increases in the Partnership’s distributable cash flows; the amount of the Partnership’s forward fee-rate revenues; estimated future total assets of the Partnership and its segments; estimated capital expenditures for existing growth projects; illustrative annual distribution growth of the Partnership; the cost and timing of delivery of new and converted vessels and commencement of their time-charter contracts; the timing of completion of operational testing on the HiLoad DP vessel; the status, timing, cost and expected distributable cash flow to be generated from the potential acquisition by the Partnership of the Knarr FPSO; the timing and certainty of entering into long-term financing and charter contracts for the FAU newbuildings prior to their deliveries; the timing and certainty of the Partnership’s joint venture with Odebrecht completing negotiations for the Libra FPSO project with Petrobras, and the expected related cost and charter period; expected additional project bidding by the Partnership; the Partnership’s FPSO deal execution capacity; and the potential for Teekay Corporation or third parties to offer additional vessels or projects to the Partnership and the Partnership agreeing to acquire such vessels or projects. 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; significant changes in oil prices; variations in expected levels of field maintenance; increased operating expenses; levels of oil production in the North Sea and Brazil offshore fields; potential early termination of contracts; shipyard delivery or vessel conversion delays and cost overruns; failure by the Partnership to secure financing or charter contracts for FAU newbuildings; changes in exploration, production and storage of offshore oil and gas, either generally or in particular regions; 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 the Partnership to acquire the Knarr FPSO unit; failure to complete negotiations with Petrobras for the Libra FPSO project; potential delays in the commencement of operations of the Knarr FPSO unit; the Partnership’s ability to raise adequate financing to purchase additional assets; and other factors discussed in the Partnership’s filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2013. 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. 3
Teekay Offshore Partners • Broadening our offshore service offering and growth potential • Strong industry fundamentals will continue • Two main business platforms: ○ Floating production ○ Offshore logistics 4
INVESTMENT HIGHLIGHTS Leading Strong Strong, Stable Market Industry Visible Operating Positions Fundamentals Growth Model Deepwater $3.2 billion Market leader in $7.8 billion offshore oil of built-in harsh weather of forward FPSOs and production is set growth fee-based shuttle tankers to double by 2025 revenues 5
Teekay TEEKAY Offshore 6% OFFSHORE at a Distribution CAGR Since IPO in 2006 AT A GLANCE glance 2014 15% per annum 2006 Total Shareholder $3B Market Cap. Return Since IPO Blue-Chip Fee-based 54 Offshore Units Customers Contracts Avg. contract $ duration of 5.3 years (excluding options) 6
Core Regions: Brazil & North Sea North Sea • 19 shuttle tankers • 6 FPSOs (2 TOO + 4 TK Corp) • 2 FSOs Falcon Spirit FSO Suksan Salamander FSO Pattani Spirit FSO Dampier Spirit FSO Brazil • 13 shuttle tankers + 1 Hi-Load • 3 FPSOs + 1 future FPSO • 1 future accommodation unit 7
Teekay Offshore’s Business Mix Continues to Evolve • Enhancing service offering to the customer • With roll-off of conventional tanker contracts, Teekay Offshore is becoming a true “pure-play” in the build-out of offshore crude oil production Total Assets 2007 Total Assets 2013 Total Assets 2013 PF* by Segment by Segment by Segment 49% 80% Total Total Total 37% 56% Assets Assets Assets $2.0B $3.9B $7.1B* 6% 7% 30% 2% 3% 9% 13% 4% 4% Conventional Tankers FSOs Shuttle Tankers FPSOs FAUs Towing 8 * December 2013 pro forma to include known growth projects delivering through 2017.
Stable Portfolio of Fee-Based Contracts With Strong Customer Base Forward Fee-Based Revenues Average Remaining Contract Length by Segment* by Segment* 6 years FPSO 5 years FSO 56% $7.8B Shuttle 31% 4 years Total Forward Tankers Fee-Based Revenues Conventional 4 years Tankers 1% 9% 3% 3 years FAU 9 * Excludes extension options and includes the Knarr FPSO which has been offered to Teekay Offshore
Solidifying our Position in the Value Chain Teekay Offshore’s growth driven by: 1. Strong fundamentals 2. Responding to needs of our common customers 3. Leveraging our competitive advantages 4. Pursuit of higher returns Ocean HiLoad DP Towage FPSO (Cylindrical) Shuttle Floating Tankers Accommodation FPSO (Shipshape) FSO Offshore Offshore Production Logistics 10
Providing Services to Meet Customers’ Offshore Oil Production Needs FPSO TERMINAL OFFSHORE SHUTTLE PLATFORM FLOATING ACCOMMODATION FSO OFFSHORE PLATFORM OFFSHORE UNITS HI-LOAD + TOWAGE & REFINERY INSTALLATION CONVENTIONAL 11 11
Oil Production Moving Offshore With deepwater taking an increasing share • The world needs 50 mb/d Deepwater Oil Production by Company of new oil by 2035 just to 12 offset existing field decline Noble • Easy-to-find oil is 10 Others Statoil Eni disappearing; new supply ExxonMobil Statoil 8 will increasingly come from Eni Noble Million boe/d ExxonMobil unconventional plays Statoil Shell Eni 6 BP • Deepwater offshore oil ExxonMobil Total production is set to double 4 Chevron by 2025 2 • Teekay’s core customers Petrobras are at the forefront of 0 these new developments Source: IHS 12
Deepwater Accounts for 23% of New Production for the Top 26 IOCs Rising to 31% when Petrobras is Added 2020 New Production Sources Top 26 IOCs Top 26 IOCs + Petrobras 8% 7% 25% 28% 18% Oil Sands 20% Total Conventional Onshore Total Conventional Shallow 16 mb/d 18 mb/d Deepwater Unconventional 19% 21% 23% 31% Overall production volume growth of the top IOCs requires a balanced production portfolio, despite an increased focus on unconventional sources by many Independents 13 Source: IHS
Growth Across Multiple Offshore Segments Known Growth Capex by Segment 2014 2015 2016 2017 Dropdown FPSOs (Estimated) FPSO 14% 49% $3.2B Shuttle 2% / Hi-Load Known Growth 7% Projects FSO FAUs 19% 9% Towage Vessels 14
Over 80% of Growth Capex Already Booked to Achieve Illustrative Growth Through 2017 Actively bidding on 2017 / 2018 Offshore projects and on-the-water acquisitions to drive future distribution growth TOO Growth CAPEX - Committed vs. Illustrative Target 4,000 Annual Capital Investment ($millions) 83% of Capex Illustrative Distribution Growth 3,500 to achieve 5% illustrative 3,000 growth already 2,500 committed 5% 2,000 1,500 7.5% 1,000 500 - 2015 2016 2017 2018 Cumulative Capital Investments (Known) Cumulative CAPEX Required for Illustrative Distribution Growth TOO Known Annual Asset Deliveries 15
Well Positioned to Capture Significant Share of Offshore Production Market Growth $80 billion market opportunity in our segments Offshore Unit Demand 2015-2020 200 100 FPSO FSO Shuttle FAU 180 90 $80B 160 80 140 70 Number of units 120 60 $ Billions 100 50 $56 billion 80 40 60 30 40 20 20 10 0 0 Offshore Unit Capex Requirement 16 Source: Internal Estimates
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