PART I: FINANCIAL INFORMATION | PAGE |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
$ | $ | $ | $ | |||||||||
Voyage revenues (notes 6, 10a and 10e) | 123,336 | 104,285 | 360,957 | 306,369 | ||||||||
Voyage expenses | (7,956 | ) | (1,466 | ) | (21,708 | ) | (3,899 | ) | ||||
Vessel operating expenses (note 10a) | (27,621 | ) | (26,724 | ) | (90,057 | ) | (76,113 | ) | ||||
Time-charter hire expense (note 10a) | (1,690 | ) | — | (1,690 | ) | — | ||||||
Depreciation and amortization | (32,238 | ) | (24,980 | ) | (91,299 | ) | (77,894 | ) | ||||
General and administrative expenses (notes 10a, 10e and 14) | (4,183 | ) | (2,793 | ) | (17,850 | ) | (11,592 | ) | ||||
Write-down of vessels (note 15) | (2,201 | ) | (38,000 | ) | (53,863 | ) | (50,600 | ) | ||||
Restructuring charges (note 15b) | (449 | ) | — | (1,845 | ) | — | ||||||
Income from vessel operations | 46,998 | 10,322 | 82,645 | 86,271 | ||||||||
Equity income (note 7d) | 14,679 | 1,417 | 52,597 | 6,797 | ||||||||
Interest expense (notes 8 and 11) | (35,875 | ) | (20,091 | ) | (88,752 | ) | (57,604 | ) | ||||
Interest income | 980 | 602 | 2,796 | 2,035 | ||||||||
Realized and unrealized gain (loss) on non-designated derivative instruments (note 11) | 2,515 | (2,178 | ) | 14,818 | (8,375 | ) | ||||||
Foreign currency exchange gain (loss) (notes 8 and 11) | 1,445 | (5,104 | ) | 8,615 | (24,497 | ) | ||||||
Other income (expense) (note 12c) | 314 | 356 | (51,918 | ) | 1,137 | |||||||
Net income (loss) before income tax expense | 31,056 | (14,676 | ) | 20,801 | 5,764 | |||||||
Income tax expense (note 9) | (1,549 | ) | (750 | ) | (3,171 | ) | (1,143 | ) | ||||
Net income (loss) | 29,507 | (15,426 | ) | 17,630 | 4,621 | |||||||
Non-controlling interest in net income (loss) | 3,557 | 3,470 | (4,160 | ) | 10,533 | |||||||
Preferred unitholders' interest in net income (loss) | 6,425 | 2,813 | 19,276 | 8,438 | ||||||||
General Partner’s interest in net income (loss) | 391 | (434 | ) | 51 | (287 | ) | ||||||
Limited partners’ interest in net income (loss) | 19,134 | (21,275 | ) | 2,463 | (14,063 | ) | ||||||
Limited partners’ interest in net income (loss) per common unit: (note 13) | ||||||||||||
• Basic | 0.24 | (0.27 | ) | 0.03 | (0.18 | ) | ||||||
• Diluted | 0.24 | (0.27 | ) | 0.03 | (0.18 | ) | ||||||
Weighted-average number of common units outstanding: | ||||||||||||
• Basic | 79,687,499 | 79,626,819 | 79,671,051 | 79,614,731 | ||||||||
• Diluted | 79,859,471 | 79,626,819 | 79,832,978 | 79,614,731 | ||||||||
Cash distributions declared per common unit | 0.14 | 0.14 | 0.42 | 0.42 | ||||||||
Related party transactions (note 10) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
$ | $ | $ | $ | ||||||||
Net income (loss) | 29,507 | (15,426 | ) | 17,630 | 4,621 | ||||||
Other comprehensive income: | |||||||||||
Other comprehensive income (loss) before reclassifications | |||||||||||
Unrealized gain (loss) on qualifying cash flow hedging instruments, net of tax (note 11) | 6,940 | (264 | ) | 16,129 | (1,278 | ) | |||||
Amounts reclassified from accumulated other comprehensive income (loss) | |||||||||||
To equity income: | |||||||||||
Realized (gain) loss on qualifying cash flow hedging instruments | (86 | ) | 793 | (703 | ) | 2,085 | |||||
To interest expense: | |||||||||||
Realized (gain) loss on qualifying cash flow hedging instruments (note 11) | (37 | ) | — | 211 | |||||||
Other comprehensive income | 6,817 | 529 | 15,637 | 807 | |||||||
Comprehensive income (loss) | 36,324 | (14,897 | ) | 33,267 | 5,428 | ||||||
Non-controlling interest in comprehensive income (loss) | 3,988 | 3,436 | (2,202 | ) | 10,168 | ||||||
Preferred unitholders' interest in comprehensive income (loss) | 6,425 | 2,813 | 19,276 | 8,438 | |||||||
General and limited partners' interest in comprehensive income (loss) | 25,911 | (21,146 | ) | 16,193 | (13,178 | ) |
As at September 30, 2018 | As at December 31, 2017 | ||||
$ | $ | ||||
ASSETS | |||||
Current | |||||
Cash and cash equivalents | 139,854 | 244,241 | |||
Restricted cash – current (note 16) | 36,429 | 22,326 | |||
Accounts receivable, including non-trade of $14,591 (2017 – $13,203) | 25,732 | 24,054 | |||
Prepaid expenses | 9,277 | 6,539 | |||
Vessels held for sale (note 15a) | 28,482 | 33,671 | |||
Current portion of derivative assets (note 11) | 1,453 | 1,078 | |||
Current portion of net investments in direct financing leases (note 6) | 12,273 | 9,884 | |||
Advances to affiliates (notes 10b and 11) | 5,163 | 7,300 | |||
Other current assets (note 2) | 4,400 | — | |||
Total current assets | 263,063 | 349,093 | |||
Restricted cash – long-term (note 16) | 30,159 | 72,868 | |||
Vessels and equipment | |||||
At cost, less accumulated depreciation of $641,702 (2017 – $681,991) | 1,463,438 | 1,416,381 | |||
Vessels related to capital leases, at cost, less accumulated depreciation of $55,158 (2017 – $25,883) (note 5a) | 1,597,418 | 1,044,838 | |||
Advances on newbuilding contracts (note 10d) | 172,248 | 444,493 | |||
Total vessels and equipment | 3,233,104 | 2,905,712 | |||
Investments in and advances to equity-accounted joint ventures (note 7) | 1,118,361 | 1,094,596 | |||
Net investments in direct financing leases (note 6) | 565,423 | 486,106 | |||
Derivative assets (note 11) | 19,164 | 6,172 | |||
Other assets (note 6) | 9,148 | 8,043 | |||
Intangible assets – net | 54,436 | 61,078 | |||
Goodwill – liquefied gas segment | 35,631 | 35,631 | |||
Total assets | 5,328,489 | 5,019,299 | |||
LIABILITIES AND EQUITY | |||||
Current | |||||
Accounts payable | 4,158 | 3,509 | |||
Accrued liabilities (notes 11 and 15b) | 67,977 | 45,757 | |||
Unearned revenue (note 6) | 23,080 | 25,873 | |||
Current portion of long-term debt (note 8) | 155,261 | 552,404 | |||
Current obligations related to capital leases (note 5a) | 81,149 | 106,946 | |||
Current portion of in-process contracts | 1,803 | 7,946 | |||
Current portion of derivative liabilities (note 11) | 12,224 | 79,139 | |||
Advances from affiliates (note 10b) | 20,061 | 12,140 | |||
Total current liabilities | 365,713 | 833,714 | |||
Long-term debt (note 8) | 1,744,961 | 1,245,588 | |||
Long-term obligations related to capital leases (note 5a) | 1,231,839 | 904,603 | |||
Other long-term liabilities (note 5b) | 41,930 | 58,174 | |||
Derivative liabilities (note 11) | 30,877 | 45,797 | |||
Total liabilities | 3,415,320 | 3,087,876 | |||
Commitments and contingencies (notes 5, 8, 11 and 12) | |||||
Equity | |||||
Limited Partners - common units (79.7 million units and 79.6 million units issued and outstanding at September 30, 2018 and December 31, 2017, respectively) | 1,510,650 | 1,539,248 | |||
Limited Partners - preferred units (11.8 million units issued and outstanding at September 30, 2018 and December 31, 2017) | 285,159 | 285,159 | |||
General Partner | 49,570 | 50,152 | |||
Accumulated other comprehensive income | 18,158 | 4,479 | |||
Partners' equity | 1,863,537 | 1,879,038 | |||
Non-controlling interest | 49,632 | 52,385 | |||
Total equity | 1,913,169 | 1,931,423 | |||
Total liabilities and total equity | 5,328,489 | 5,019,299 |
Nine Months Ended September 30, | |||||
2018 | 2017 | ||||
$ | $ | ||||
Cash and cash equivalents provided by (used for) | |||||
OPERATING ACTIVITIES | |||||
Net income | 17,630 | 4,621 | |||
Non-cash and non-operating items: | |||||
Unrealized gain on non-designated derivative instruments (note 11) | (38,201 | ) | (5,522 | ) | |
Depreciation and amortization | 91,299 | 77,894 | |||
Write-down of vessels | 53,863 | 50,600 | |||
Unrealized foreign currency exchange (gain) loss including the effect of the termination of cross-currency swaps (notes 2 and 11) | (12,313 | ) | 21,525 | ||
Equity income, net of dividends received of $11,583 (2017 - $28,781) | (41,014 | ) | 21,984 | ||
Ineffective portion on qualifying cash flow hedging instruments included in interest expense | (740 | ) | 755 | ||
Other | (5,261 | ) | (1,207 | ) | |
Change in non-cash operating assets and liabilities | 3,422 | (2,445 | ) | ||
Expenditures for dry docking | (10,458 | ) | (17,067 | ) | |
Net operating cash flow | 58,227 | 151,138 | |||
FINANCING ACTIVITIES | |||||
Proceeds from issuance of long-term debt | 685,547 | 249,682 | |||
Scheduled repayments of long-term debt and settlement of related swaps | (173,488 | ) | (162,315 | ) | |
Prepayments of long-term debt | (440,820 | ) | (67,040 | ) | |
Debt issuance costs | (8,534 | ) | (1,765 | ) | |
Proceeds from financing related to sales and leaseback of vessels | 370,050 | 335,830 | |||
Scheduled repayments of obligations related to capital leases | (45,281 | ) | (27,411 | ) | |
Cash distributions paid | (52,535 | ) | (42,462 | ) | |
Dividends paid to non-controlling interests | (1,290 | ) | (658 | ) | |
Other | — | (605 | ) | ||
Net financing cash flow | 333,649 | 283,256 | |||
INVESTING ACTIVITIES | |||||
Expenditures for vessels and equipment | (559,172 | ) | (350,137 | ) | |
Capital contributions and advances to equity-accounted joint ventures | (33,496 | ) | (143,513 | ) | |
Return of capital and repayment of advances from equity-accounted joint ventures | 5,000 | 40,320 | |||
Proceeds from sale of equity-accounted joint venture (note 7d) | 54,438 | — | |||
Receipts from direct financing leases | 8,361 | 9,203 | |||
Proceeds from sale of vessel | — | 20,580 | |||
Net investing cash flow | (524,869 | ) | (423,547 | ) | |
(Decrease) increase in cash, cash equivalents and restricted cash | (132,993 | ) | 10,847 | ||
Cash, cash equivalents and restricted cash, beginning of the period | 339,435 | 243,173 | |||
Cash, cash equivalents and restricted cash, end of the period | 206,442 | 254,020 |
TOTAL EQUITY | |||||||||||||||||||||||
Partners’ Equity | |||||||||||||||||||||||
Limited Partners | |||||||||||||||||||||||
Common Units | Common Units | Preferred Units | Preferred Units | General Partner | Accumulated Other Comprehensive Income | Non- controlling Interest | Total | ||||||||||||||||
# | $ | # | $ | $ | $ | $ | $ | ||||||||||||||||
Balance as at December 31, 2017 | 79,627 | 1,539,248 | 11,800 | 285,159 | 50,152 | 4,479 | 52,385 | 1,931,423 | |||||||||||||||
Net income | — | 2,463 | — | 19,276 | 51 | — | (4,160 | ) | 17,630 | ||||||||||||||
Other comprehensive income | — | — | — | — | — | 13,679 | 1,958 | 15,637 | |||||||||||||||
Distributions declared | — | (33,460 | ) | — | (19,276 | ) | (683 | ) | — | — | (53,419 | ) | |||||||||||
Dividends paid to non-controlling interest | — | — | — | — | — | — | (1,290 | ) | (1,290 | ) | |||||||||||||
Change in accounting policy (note 2) | 1,959 | 41 | 739 | 2,739 | |||||||||||||||||||
Equity based compensation, net of withholding tax of $0.7 million (note 14) | 61 | 440 | — | — | 9 | — | — | 449 | |||||||||||||||
Balance as at September 30, 2018 | 79,688 | 1,510,650 | 11,800 | 285,159 | 49,570 | 18,158 | 49,632 | 1,913,169 |
1. | Basis of Presentation |
• | In certain cases, the Partnership will incur pre-operational costs that relate directly to a specific customer contract, that generate or enhance resources of the Partnership that will be used in satisfying performance obligations in the future, whereby such costs are expected to be recovered via the customer contract. Such costs will be deferred and amortized over the duration of the customer contract. The Partnership previously expensed such costs as incurred unless the costs were directly reimbursable by the contract. This change increased net income by $1.1 million and $0.9 million for the three and nine months ended September 30, 2018, respectively, and increased other assets by $3.4 million, investments in and advances to equity-accounted joint ventures by $0.3 million, and total equity by $3.7 million as at September 30, 2018. The cumulative increase to opening equity as at January 1, 2018 was $2.7 million. |
• | The Partnership previously presented all accrued revenue as a component of accounts receivable. The Partnership has determined that if the right to such consideration is conditioned upon something other than the passage of time, such accrued revenue should be presented apart from accounts receivable. This had the effect of increasing other current assets and decreasing accounts receivable by $4.4 million at September 30, 2018. There was no cumulative impact to opening equity as at January 1, 2018. |
• | The adoption of ASU 2016-02 will result in a change in the accounting method for the lease portion of the daily charter hire accounted for as operating leases with firm periods of greater than one year for certain of the chartered-in vessels of the Partnership and the Partnership’s equity-accounted joint ventures. Under ASU 2016-02, one of the Partnership's in-charter contracts currently accounted for as an operating lease will be treated as a right-of-use asset and a lease liability, which will result in an increase of the Partnership's assets and liabilities. In addition, certain equity-accounted joint ventures will recognize a right-of-use asset and a lease liability on the balance sheet for these charters based on the present value of future minimum lease payments, whereas currently no right-of-use asset or lease liability is recognized. This will have the result of increasing the equity-accounted joint venture’s assets and liabilities. The pattern of expense recognition of chartered-in vessels is expected to remain substantially unchanged, unless the right of use asset becomes impaired. |
• | The adoption of ASU 2016-02 will result in the Partnership's lease classification assessment being determined when a lease commences instead of when the lease is entered into. The Partnership has entered into charters in prior periods for certain of its vessels currently under construction and which are expected to deliver over the period from 2018 to 2020. Historically, for charters that were negotiated concurrently with the construction of the related vessels, the fair value of the constructed asset was presumed to be its newbuilding cost and no gain or loss was recognized on commencement of the charter if such charters were classified as direct finance leases. On the adoption of ASU 2016-02, the fair value of the vessel is determined based on information available at the lease commencement date and any difference in the fair value of the ship upon commencement of the charter and its carrying value is recognized as a gain or loss upon commencement of the charter. |
• | The adoption of ASU 2016-02 will result in the recognition of revenue from the reimbursement of scheduled dry-dock expenditures, where such charter contract is accounted for as an operating lease, occurring upon completion of the scheduled dry-dock, instead of ratably over the period between the previous scheduled dry-dock and the next scheduled dry-dock. |
• | In addition, direct financing lease payments received will be presented as an operating cash inflow instead of an investing cash inflow in the statement of cash flows. |
• | The Partnership is expecting to disclose in its consolidated financial statements for the year ended December 31, 2018 the quantitative impact of adopting ASU 2016-02. |
3. | Financial Instruments |
September 30, 2018 | December 31, 2017 | ||||||||||||
Fair Value Hierarchy Level | Carrying Amount Asset (Liability) $ | Fair Value Asset (Liability) $ | Carrying Amount Asset (Liability) $ | Fair Value Asset (Liability) $ | |||||||||
Recurring: | |||||||||||||
Cash and cash equivalents and restricted cash | Level 1 | 206,442 | 206,442 | 339,435 | 339,435 | ||||||||
Derivative instruments (note 11) | |||||||||||||
Interest rate swap agreements – assets | Level 2 | 7,953 | 7,953 | 878 | 878 | ||||||||
Interest rate swap agreements – liabilities | Level 2 | (32,704 | ) | (32,704 | ) | (73,984 | ) | (73,984 | ) | ||||
Cross-currency swap agreements – assets | Level 2 | 9,682 | 9,682 | 3,758 | 3,758 | ||||||||
Cross-currency swap agreements – liabilities | Level 2 | (10,185 | ) | (10,185 | ) | (54,217 | ) | (54,217 | ) | ||||
Other derivative | Level 3 | 2,160 | 2,160 | 1,648 | 1,648 | ||||||||
Non-recurring: | |||||||||||||
Vessels held for sale (note 15a) | Level 2 | 28,482 | 28,482 | 16,671 | 16,671 | ||||||||
Other: | |||||||||||||
Advances to equity-accounted joint ventures (note 7) | (i) | 127,226 | (i) | 131,685 | (i) | ||||||||
Long-term receivable included in accounts receivable and other assets (ii) | Level 3 | 693 | 689 | 3,476 | 3,459 | ||||||||
Long-term debt – public (note 8) | Level 1 | (371,956 | ) | (382,900 | ) | (376,581 | ) | (384,820 | ) | ||||
Long-term debt – non-public (note 8) | Level 2 | (1,528,266 | ) | (1,517,406 | ) | (1,421,411 | ) | (1,391,524 | ) | ||||
Obligations related to capital leases (note 5a) | Level 2 | (1,312,988 | ) | (1,263,924 | ) | (1,011,549 | ) | (1,001,588 | ) |
(i) | The advances to equity-accounted joint ventures together with the Partnership’s equity investments in the joint ventures form the net aggregate carrying value of the Partnership’s interests in the joint ventures in these consolidated financial statements. The fair values of the individual components of such aggregate interests are not determinable. |
(ii) | As described in Note 3 to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year-ended December 31, 2017, the estimated fair value of the non-interest-bearing receivable from Royal Dutch Shell Plc (or Shell) is based on the remaining future fixed payments as well as an estimated discount rate. The estimated fair value of this receivable as of September 30, 2018 was $0.7 million (December 31, 2017 – $3.5 million) using a discount rate of 8.0%. As there is no market rate for the equivalent of an unsecured non-interest-bearing receivable from Shell, the discount rate is based on unsecured debt instruments of similar maturity held by the Partnership, adjusted for a liquidity premium. A higher or lower discount rate would result in a lower or higher fair value asset. |
Nine Months Ended September 30, | ||||||
2018 | 2017 | |||||
$ | $ | |||||
Fair value at beginning of period | 1,648 | 2,134 | ||||
Realized and unrealized gains included in earnings | 1,649 | 1,410 | ||||
Settlement payments | (1,137 | ) | (1,154 | ) | ||
Fair value at end of period | 2,160 | 2,390 |
September 30, 2018 | December 31, 2017 | |||||
Class of Financing Receivable | Credit Indicator | Grade | $ | $ | ||
Direct financing leases | Payment activity | Performing | 577,696 | 495,990 | ||
Other receivables: | ||||||
Long-term receivable and long-term accrued revenue included in accounts receivable and other assets | Payment activity | Performing | 4,043 | 5,476 | ||
Advances to equity-accounted joint ventures (note 7) | Other internal metrics | Performing | 127,226 | 131,685 | ||
708,965 | 633,151 |
4. | Segment Reporting |
Three Months Ended September 30, | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
Liquefied Gas Segment $ | Conventional Tanker Segment $ | Total $ | Liquefied Gas Segment $ | Conventional Tanker Segment $ | Total $ | |||||||||||||
Voyage revenues | 118,188 | 5,148 | 123,336 | 92,700 | 11,585 | 104,285 | ||||||||||||
Voyage expenses | (5,731 | ) | (2,225 | ) | (7,956 | ) | (716 | ) | (750 | ) | (1,466 | ) | ||||||
Vessel operating expenses | (23,905 | ) | (3,716 | ) | (27,621 | ) | (22,172 | ) | (4,552 | ) | (26,724 | ) | ||||||
Time-charter hire expense | (1,690 | ) | — | (1,690 | ) | — | — | — | ||||||||||
Depreciation and amortization | (31,309 | ) | (929 | ) | (32,238 | ) | (22,580 | ) | (2,400 | ) | (24,980 | ) | ||||||
General and administrative expenses (i) | (3,972 | ) | (211 | ) | (4,183 | ) | (2,330 | ) | (463 | ) | (2,793 | ) | ||||||
Write-down of vessels | — | (2,201 | ) | (2,201 | ) | — | (38,000 | ) | (38,000 | ) | ||||||||
Restructuring charges | — | (449 | ) | (449 | ) | — | — | — | ||||||||||
Income (loss) from vessel operations | 51,581 | (4,583 | ) | 46,998 | 44,902 | (34,580 | ) | 10,322 | ||||||||||
Equity income | 14,679 | — | 14,679 | 1,417 | — | 1,417 |
Nine Months Ended September 30, 2018 | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
Liquefied Gas Segment $ | Conventional Tanker Segment $ | Total $ | Liquefied Gas Segment $ | Conventional Tanker Segment $ | Total $ | |||||||||||||
Voyage revenues | 335,409 | 25,548 | 360,957 | 271,078 | 35,291 | 306,369 | ||||||||||||
Voyage expenses | (12,984 | ) | (8,724 | ) | (21,708 | ) | (1,664 | ) | (2,235 | ) | (3,899 | ) | ||||||
Vessel operating expenses | (79,015 | ) | (11,042 | ) | (90,057 | ) | (62,211 | ) | (13,902 | ) | (76,113 | ) | ||||||
Time-charter hire expense | (1,690 | ) | — | (1,690 | ) | — | — | — | ||||||||||
Depreciation and amortization | (87,191 | ) | (4,108 | ) | (91,299 | ) | (69,639 | ) | (8,255 | ) | (77,894 | ) | ||||||
General and administrative expenses (i) | (15,958 | ) | (1,892 | ) | (17,850 | ) | (9,283 | ) | (2,309 | ) | (11,592 | ) | ||||||
Write-down of vessels | (33,000 | ) | (20,863 | ) | (53,863 | ) | — | (50,600 | ) | (50,600 | ) | |||||||
Restructuring charges | — | (1,845 | ) | (1,845 | ) | — | — | — | ||||||||||
Income (loss) from vessel operations | 105,571 | (22,926 | ) | 82,645 | 128,281 | (42,010 | ) | 86,271 | ||||||||||
Equity income | 52,597 | — | 52,597 | 6,797 | — | 6,797 |
(i) | Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources). |
September 30, 2018 | December 31, 2017 | |||||
$ | $ | |||||
Total assets of the liquefied gas segment | 5,081,219 | 4,624,321 | ||||
Total assets of the conventional tanker segment | 67,244 | 112,844 | ||||
Unallocated: | ||||||
Cash and cash equivalents | 139,854 | 244,241 | ||||
Accounts receivable and prepaid expenses | 35,009 | 30,593 | ||||
Advances to affiliates | 5,163 | 7,300 | ||||
Consolidated total assets | 5,328,489 | 5,019,299 |
5. | Chartered-in Vessels |
Remainder of 2018 | 2019 | 2020 | 2021 | 2022 | |
Vessel Charters | $ | $ | $ | $ | $ |
Charters-in – capital leases (i) | 54,441 | 119,517 | 118,685 | 117,772 | 116,978 |
(i) | As at September 30, 2018, the Partnership was a party, as lessee, to a capital lease on one Suezmax tanker, the Toledo Spirit. Under this capital lease, the owner has the option to require the Partnership to purchase the vessel. The charterer, who is also the owner, also had the option to cancel the charter contract and the cancellation option was first exercisable in August 2018. In May 2018, the charterer of the Toledo Spirit gave formal notification to the Partnership of its intention to terminate its charter contract subject to certain conditions being met and third-party approvals being received. The amounts in the table above assume the owner will not exercise its option to require the Partnership to purchase the vessel from the owner, but rather assume the owner will cancel the charter contract when the owner sells the vessel to a third party, upon which, the remaining lease obligation will be extinguished. Therefore, the table above does not include any amounts after the expected cancellation date of the lease, which is expected to be early-2019. |
Remainder of 2018 | 2019 | 2020 | 2021 | 2022 | |
Vessel Charters (i) | $ | $ | $ | $ | $ |
Charters-in – operating leases (ii) | 5,980 | 23,725 | 16,055 | — | — |
(i) | The Partnership owns 69% of Teekay BLT Corporation (or the Teekay Tangguh Joint Venture), which is a party to operating leases whereby the Teekay Tangguh Joint Venture is leasing the Tangguh Hiri and Tangguh Sago LNG carriers (or the Tangguh LNG Carriers) to a third party, which is in turn leasing the vessels back to the joint venture. The table above does not include the Partnership’s minimum charter hire payments to be paid and received under these leases, which are described in more detail in Note 5 to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2017. Under the terms of the leasing arrangement for the Tangguh LNG Carriers, whereby the Teekay Tangguh Joint Venture is the lessee, the lessor claims tax depreciation on its lease of these vessels. As is typical in these types of leasing arrangements, tax and change of law risks are assumed by the lessee. Lease payments under the lease arrangements are based on certain tax and financial assumptions at the commencement of the leases. If an assumption proves to be incorrect, the lessor is entitled to increase the lease payments to maintain its agreed after-tax margin. |
6. | Revenue |
Three Months Ended September 30, 2018 | |||||||||||||||||
2018 | 2017 | ||||||||||||||||
Liquefied Gas Segment $ | Conventional Tanker Segment $ | Total $ | Liquefied Gas Segment $ | Conventional Tanker Segment $ | Total $ | ||||||||||||
Time charters | 104,342 | 2,820 | 107,162 | 83,101 | 10,376 | 93,477 | |||||||||||
Voyage charters | 6,279 | 2,220 | 8,499 | — | 930 | 930 | |||||||||||
Bareboat charters | 6,001 | — | 6,001 | 6,524 | — | 6,524 | |||||||||||
Management fees and other income | 1,566 | 108 | 1,674 | 3,075 | 279 | 3,354 | |||||||||||
118,188 | 5,148 | 123,336 | 92,700 | 11,585 | 104,285 |
Nine months ended September 30, | |||||||||||||||||
2018 | 2017 | ||||||||||||||||
Liquefied Gas Segment $ | Conventional Tanker Segment $ | Total $ | Liquefied Gas Segment $ | Conventional Tanker Segment $ | Total $ | ||||||||||||
Time charters | 294,658 | 12,534 | 307,192 | 241,019 | 32,073 | 273,092 | |||||||||||
Voyage charters | 16,669 | 12,690 | 29,359 | — | 2,383 | 2,383 | |||||||||||
Bareboat charters | 17,112 | — | 17,112 | 22,359 | — | 22,359 | |||||||||||
Management fees and other income | 6,970 | 324 | 7,294 | 7,700 | 835 | 8,535 | |||||||||||
335,409 | 25,548 | 360,957 | 271,078 | 35,291 | 306,369 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, 2018 $ | September 30, 2017 $ | September 30, 2018 $ | September 30, 2017 $ | |||||||||
Non-lease revenue - related to sales type or direct financing leases | 3,896 | 4,511 | 12,160 | 16,722 | ||||||||
Management fees and other income | 1,674 | 3,354 | 7,294 | 8,535 | ||||||||
Total | 5,570 | 7,865 | 19,454 | 25,257 |
September 30, 2018 $ | December 31, 2017 $ | |||||
Total minimum lease payments to be received | 913,292 | 568,710 | ||||
Estimated unguaranteed residual value of leased properties | 294,127 | 194,965 | ||||
Initial direct costs | 337 | 361 | ||||
Less unearned revenue | (630,060 | ) | (268,046 | ) | ||
Total net investments in direct financing leases | 577,696 | 495,990 | ||||
Less current portion | (12,273 | ) | (9,884 | ) | ||
Net investments in direct financing leases | 565,423 | 486,106 |
September 30, 2018 | December 31, 2017 | |||||
$ | $ | |||||
U.S. Dollar-denominated Revolving Credit Facilities due from 2018 to 2022 | 195,000 | 254,275 | ||||
U.S. Dollar-denominated Term Loans due from 2019 to 2031 | 1,140,299 | 935,286 | ||||
Norwegian Kroner-denominated Bonds due from 2020 to 2023 | 374,040 | 377,856 | ||||
Euro-denominated Term Loans due from 2023 to 2024 | 205,923 | 232,957 | ||||
Other U.S. Dollar-denominated loan | 3,300 | 10,000 | ||||
Total principal | 1,918,562 | 1,810,374 | ||||
Unamortized discount and debt issuance costs | (18,340 | ) | (12,382 | ) | ||
Total debt | 1,900,222 | 1,797,992 | ||||
Less current portion | (155,261 | ) | (552,404 | ) | ||
Long-term debt | 1,744,961 | 1,245,588 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
$ | $ | $ | $ | |||||||||
Current | (1,274 | ) | (750 | ) | (2,348 | ) | (1,224 | ) | ||||
Deferred | (275 | ) | — | (823 | ) | 81 | ||||||
Income tax expense | (1,549 | ) | (750 | ) | (3,171 | ) | (1,143 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
$ | $ | $ | $ | |||||||||
Voyage revenues (i) | — | 9,296 | 9,418 | 26,851 | ||||||||
Vessel operating expenses (ii) | (4,160 | ) | (5,133 | ) | (15,547 | ) | (14,713 | ) | ||||
Time-charter hire expense (iii) | (1,690 | ) | — | (1,690 | ) | — | ||||||
General and administrative expenses (iv) | (1,873 | ) | (901 | ) | (9,202 | ) | (5,363 | ) | ||||
General and administrative expenses deferred and capitalized (v) | (188 | ) | (152 | ) | (583 | ) | (659 | ) |
(i) | Commencing in 2008, the Arctic Spirit and Polar Spirit LNG carriers were time-chartered to Teekay Corporation at fixed-rates for periods of 10 years. The contract periods for the Polar Spirit and for the Arctic Spirit expired in March 2018 and April 2018, respectively. |
(ii) | The Partnership and certain of its operating subsidiaries have entered into service agreements with certain subsidiaries of Teekay Corporation pursuant to which the Teekay Corporation subsidiaries provide to the Partnership and its subsidiaries crew training and technical management services. In addition, as part of the Partnership's acquisition of its ownership interest in the Pan Union Joint Venture in 2014, the Partnership entered into an agreement with a subsidiary of Teekay Corporation whereby Teekay Corporation's subsidiary agreed to provide, on behalf of the Partnership, shipbuilding supervision and crew training services for four LNG carrier newbuildings in the Pan Union Joint Venture, up to their delivery dates from 2017 to 2019. All costs incurred by these Teekay Corporation subsidiaries related to these services are charged to the Partnership and recorded as part of vessel operating expenses. |
(iii) | In September 2018, the Partnership entered into an agreement with its 52%-owned joint venture, the Teekay LNG-Marubeni Joint Venture, to charter in one of Teekay LNG-Maubeni Joint Venture's LNG carriers, the Magellan Spirit, for a period of two years at a fixed-rate. |
(iv) | Includes administrative, advisory, business development, commercial and strategic consulting services charged by Teekay Corporation and reimbursements to Teekay Corporation and the Partnership's General Partner for costs incurred on the Partnership's behalf for the conduct of the Partnership's business. |
(v) | Includes the Partnership's proportionate costs associated with the Bahrain LNG Joint Venture, including pre-operation, engineering and financing-related expenses, of which $0.2 million and $0.8 million was reimbursed by the Bahrain LNG Joint Venture for the three and nine months ended September 30, 2018, respectively ($0.4 million and $0.9 million for the three and nine months ended September 30, 2017, respectively). The net costs are recorded as part of investments in and advances to equity-accounted joint ventures in the Partnership's consolidated balance sheets. |
Floating Rate Receivable | ||||||||||||||||
Principal Amount NOK (in thousands) | Principal Amount $ | Reference Rate | Margin | Fixed Rate Payable | Fair Value / Carrying Amount of Asset (Liability) $ | Weighted- Average Remaining Term (Years) | ||||||||||
1,000,000 | 134,000 | NIBOR | 3.70 | % | 5.92 | % | (10,185 | ) | 1.6 | |||||||
1,200,000 | 146,500 | NIBOR | 6.00 | % | 7.72 | % | 7,393 | 3.1 | ||||||||
850,000 | 102,000 | NIBOR | 4.60 | % | 7.89 | % | 2,289 | 4.9 | ||||||||
(503 | ) |
Interest Rate Index | Principal Amount $ | Fair Value / Carrying Amount of Asset (Liability) $ | Weighted- Average Remaining Term (years) | Fixed Interest Rate (%) (i) | ||||||||
LIBOR-Based Debt: | ||||||||||||
U.S. Dollar-denominated interest rate swaps | LIBOR | 30,000 | (707 | ) | 0.8 | 4.9 | ||||||
U.S. Dollar-denominated interest rate swaps (ii) | LIBOR | 131,250 | (13,671 | ) | 10.3 | 5.2 | ||||||
U.S. Dollar-denominated interest rate swaps (ii) | LIBOR | 32,134 | 70 | 2.8 | 2.8 | |||||||
U.S. Dollar-denominated interest rate swaps (iii) (iv) | LIBOR | 341,097 | (6,908 | ) | 2.3 | 3.4 | ||||||
U.S. Dollar-denominated interest rate swaps (iv) | LIBOR | 93,167 | 333 | 0.3 | 1.7 | |||||||
U.S. Dollar-denominated interest rate swaps (iv) | LIBOR | 186,756 | 7,550 | 8.2 | 2.3 | |||||||
EURIBOR-Based Debt: | ||||||||||||
Euro-denominated interest rate swaps | EURIBOR | 89,873 | (11,418 | ) | 4.9 | 3.8 | ||||||
(24,751 | ) |
(i) | Excludes the margins the Partnership pays on its floating-rate term loans, which, at September 30, 2018, ranged from 0.30% to 3.25%. |
(ii) | Principal amount reduces semi-annually. |
(iii) | These interest rate swaps are subject to mandatory early termination in 2020 and 2021 whereby the swaps will be settled based on their fair value at that time. |
(iv) | Principal amount reduces quarterly. |
Accounts receivable/Advances to affiliates $ | Current portion of derivative assets $ | Derivative assets $ | Accrued liabilities $ | Current portion of derivative liabilities $ | Derivative liabilities $ | ||||||||||||
As at September 30, 2018 | |||||||||||||||||
Interest rate swap agreements | 161 | 982 | 6,842 | (1,872 | ) | (8,284 | ) | (22,580 | ) | ||||||||
Cross-currency swap agreements | — | — | 12,322 | (588 | ) | (3,940 | ) | (8,297 | ) | ||||||||
Toledo Spirit time-charter derivative | 1,689 | 471 | — | — | — | — | |||||||||||
1,850 | 1,453 | 19,164 | (2,460 | ) | (12,224 | ) | (30,877 | ) | |||||||||
As at December 31, 2017 | |||||||||||||||||
Interest rate swap agreements | — | 108 | 1,130 | (4,101 | ) | (34,614 | ) | (35,629 | ) | ||||||||
Interest rate swaption agreements | — | — | — | — | (2 | ) | — | ||||||||||
Cross-currency swap agreements | — | — | 5,042 | (810 | ) | (44,523 | ) | (10,168 | ) | ||||||||
Toledo Spirit time-charter derivative | 678 | 970 | — | — | — | — | |||||||||||
678 | 1,078 | 6,172 | (4,911 | ) | (79,139 | ) | (45,797 | ) |
Three Months Ended September 30, | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
Realized gains (losses) | Unrealized gains (losses) | Total | Realized gains (losses) | Unrealized gains (losses) | Total | |||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||
Interest rate swap agreements | (3,062 | ) | 19,278 | 16,216 | (4,528 | ) | 1,775 | (2,753 | ) | |||||||||
Interest rate swaption agreements | — | — | — | — | 285 | 285 | ||||||||||||
Interest rate swap agreements termination | (13,681 | ) | — | (13,681 | ) | — | — | — | ||||||||||
Toledo Spirit time-charter derivative | 1,689 | (1,709 | ) | (20 | ) | 646 | (356 | ) | 290 | |||||||||
(15,054 | ) | 17,569 | 2,515 | (3,882 | ) | 1,704 | (2,178 | ) |
Nine Months Ended September 30, | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
Realized gains (losses) | Unrealized gains (losses) | Total | Realized gains (losses) | Unrealized gains (losses) | Total | |||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||
Interest rate swap agreements | (11,850 | ) | 38,698 | 26,848 | (13,813 | ) | 4,211 | (9,602 | ) | |||||||||
Interest rate swaption agreements | — | 2 | 2 | — | 427 | 427 | ||||||||||||
Interest rate swap agreements termination | (13,681 | ) | — | (13,681 | ) | (610 | ) | — | (610 | ) | ||||||||
Toledo Spirit time-charter derivative | 2,148 | (499 | ) | 1,649 | 526 | 884 | 1,410 | |||||||||||
(23,383 | ) | 38,201 | 14,818 | (13,897 | ) | 5,522 | (8,375 | ) |
Three Months Ended September 30, | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
Realized gains (losses) | Unrealized gains (losses) | Total | Realized gains (losses) | Unrealized gains (losses) | Total | |||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||
Cross-currency swap agreements | (1,744 | ) | 43,966 | 42,222 | (1,598 | ) | 20,523 | 18,925 | ||||||||||
Cross-currency swap agreements termination | (42,271 | ) | — | (42,271 | ) | — | — | — | ||||||||||
(44,015 | ) | 43,966 | (49 | ) | (1,598 | ) | 20,523 | 18,925 |
Nine Months Ended September 30, | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
Realized gains (losses) | Unrealized gains (losses) | Total | Realized gains (losses) | Unrealized gains (losses) | Total | |||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||
Cross-currency swap agreements | (4,926 | ) | 49,734 | 44,808 | (7,219 | ) | 58,128 | 50,909 | ||||||||||
Cross-currency swap agreements termination | (42,271 | ) | — | (42,271 | ) | (25,733 | ) | — | (25,733 | ) | ||||||||
(47,197 | ) | 49,734 | 2,537 | (32,952 | ) | 58,128 | 25,176 |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | |||||||||||||||||||
Effective Portion Recognized in AOCI (i) $ | Effective Portion Reclassified from AOCI (ii) $ | Ineffective Portion (iii) $ | Effective Portion Recognized in AOCI (i) $ | Effective Portion Reclassified from AOCI (ii) $ | Ineffective Portion (iii) $ | |||||||||||||||
1,437 | 37 | — | Interest expense | (116 | ) | — | (8 | ) | Interest expense | |||||||||||
1,437 | 37 | — | (116 | ) | — | (8 | ) | |||||||||||||
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | |||||||||||||||||||
Effective Portion Recognized in AOCI (i) $ | Effective Portion Reclassified from AOCI (ii) $ | Ineffective Portion (iii) $ | Effective Portion Recognized in AOCI (i) $ | Effective Portion Reclassified from AOCI (ii) $ | Ineffective Portion (iii) $ | |||||||||||||||
6,527 | (211 | ) | 740 | Interest expense | (1,218 | ) | — | (755 | ) | Interest expense | ||||||||||
6,527 | (211 | ) | 740 | (1,218 | ) | — | (755 | ) |
(i) | Effective portion of designated and qualifying cash flow hedges recognized in other comprehensive income (or OCI). |
(ii) | Effective portion of designated and qualifying cash flow hedges recorded in accumulated other comprehensive income (or AOCI) during the term of the hedging relationship and reclassified to earnings. |
(iii) | Ineffective portion of designated and qualifying cash flow hedges recorded in interest expense. |
Total $ | Remainder of 2018 $ | 2019 $ | ||||
Consolidated LNG carrier newbuildings (i) | 250,062 | 2,346 | 247,716 | |||
Equity-accounted joint ventures (ii) | 578,811 | 53,102 | 525,709 | |||
828,873 | 55,448 | 773,425 |
(i) | As at September 30, 2018, the Partnership had two LNG carrier newbuildings on order which are scheduled for delivery during 2019. These commitment amounts are described in more detail in Note 13a of the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year-ended December 31, 2017. The Partnership has secured $119 million of undrawn financing related to the remaining commitments for one of the two LNG carrier newbuildings included in the table above and is in the process of securing financing for its one unfinanced LNG carrier newbuilding prior to its delivery. |
(ii) | The commitment amounts relating to the Partnership’s share of costs for newbuilding and other construction contracts in the Partnership’s equity-accounted joint ventures are based on the Partnership’s ownership percentage in each respective joint venture as of September 30, 2018. These commitments are described in more detail in Note 13a of the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year-ended December 31, 2017. Based on the Partnership's ownership percentage in each respective joint venture, the Partnership's equity-accounted joint ventures have secured $519 million of undrawn financing related to the Partnership's proportionate share of the remaining commitments included in the table above. |
Three Months Ended September 30, | ||||||
2018 | 2017 | |||||
$ | $ | |||||
Limited partners' interest in net income (loss) for basic net income (loss) per common unit | 19,134 | (21,275 | ) | |||
Weighted average number of common units | 79,687,499 | 79,626,819 | ||||
Dilutive effect of unit-based compensation | 171,972 | — | ||||
Weighted average number of common units and common unit equivalents | 79,859,471 | 79,626,819 | ||||
Limited partner's interest in net income (loss) per common unit: | ||||||
Basic | 0.24 | (0.27 | ) | |||
Diluted | 0.24 | (0.27 | ) |
Nine Months Ended September 30, | ||||||
2018 | 2017 | |||||
$ | $ | |||||
Limited partners' interest in net income (loss) for basic net income (loss) per common unit | 2,463 | (14,063 | ) | |||
Weighted average number of common units | 79,671,051 | 79,614,731 | ||||
Dilutive effect of unit-based compensation | 161,927 | — | ||||
Weighted average number of common units and common unit equivalents | 79,832,978 | 79,614,731 | ||||
Limited partner's interest in net income (loss) per common unit: | ||||||
Basic | 0.03 | (0.18 | ) | |||
Diluted | 0.03 | (0.18 | ) |
September 30, 2018 | December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||
$ | $ | $ | $ | ||||||||
Cash and cash equivalents | 139,854 | 244,241 | 161,008 | 126,146 | |||||||
Restricted cash – current | 36,429 | 22,326 | 21,386 | 10,145 | |||||||
Restricted cash – long-term | 30,159 | 72,868 | 71,626 | 106,882 | |||||||
206,442 | 339,435 | 254,020 | 243,173 |
• | lower income from vessel operations from our seven multi-gas carriers and two conventional tankers trading in the spot market in 2018 and the Polar Spirit earning a lower time-charter rate upon redeployment; |
• | higher general and administrative expenses in 2018 and restructuring charges related to the sale of the Teide Spirit in February 2018; and |
• | write-downs of three conventional vessels and four multi-gas carriers in 2018, net of the initial write-downs of four conventional vessels in 2017; |
• | deliveries to us of the Torben Spirit, Macoma, Murex, Magdala, Myrina, Megara and Bahrain Spirit LNG carrier newbuildings between February 2017 and August 2018. |
As at September 30, 2018 | |||
Name | Ownership Percentage | # of Delivered Vessels | Newbuildings/ LNG Terminals Under Construction |
Angola Joint Venture | 33% | 4 | — |
Bahrain LNG Joint Venture | 30% | — | 1 |
Exmar LNG Joint Venture | 50% | 1 | — |
Exmar LPG Joint Venture | 50% | 22 | 1 |
Pan Union Joint Venture | 20%-30% | 3 | 1 |
RasGas 3 Joint Venture | 40% | 4 | — |
Teekay LNG-Marubeni Joint Venture | 52% | 6 | — |
Yamal LNG Joint Venture | 50% | 2 | 4 |
42 | 7 |
(in thousands of U.S. Dollars, except revenue days, calendar-ship-days and percentages) | Three Months Ended September 30, | % Change | |||
2018 | 2017 | ||||
Voyage revenues | 118,188 | 92,700 | 27.5 | ||
Voyage expenses | (5,731 | ) | (716 | ) | 700.4 |
Net voyage revenues | 112,457 | 91,984 | 22.3 | ||
Vessel operating expenses | (23,905 | ) | (22,172 | ) | 7.8 |
Time-charter hire expense | (1,690 | ) | — | 100.0 | |
Depreciation and amortization | (31,309 | ) | (22,580 | ) | 38.7 |
General and administrative expenses(1) | (3,972 | ) | (2,330 | ) | 70.5 |
Income from vessel operations | 51,581 | 44,902 | 14.9 | ||
Operating Data: | |||||
Revenue Days (A) | 2,475 | 2,077 | 19.2 | ||
Calendar-Ship-Days (B) | 2,619 | 2,116 | 23.8 | ||
Utilization (A)/(B) | 94.5 | % | 98.2 | % |
(in thousands of U.S. Dollars, except revenue days, calendar-ship-days and percentages) | Nine Months Ended September 30, | % Change | ||||
2018 | 2017 | |||||
Voyage revenues | 335,409 | 271,078 | 23.7 | |||
Voyage expenses | (12,984 | ) | (1,664 | ) | 680.3 | |
Net voyage revenues | 322,425 | 269,414 | 19.7 | |||
Vessel operating expenses | (79,015 | ) | (62,211 | ) | 27.0 | |
Time-charter hire expense | (1,690 | ) | — | 100.0 | ||
Depreciation and amortization | (87,191 | ) | (69,639 | ) | 25.2 | |
General and administrative expenses(1) | (15,958 | ) | (9,283 | ) | 71.9 | |
Write-down of vessels | (33,000 | ) | — | 100.0 | ||
Income from vessel operations | 105,571 | 128,281 | (17.7 | ) | ||
Operating Data: | ||||||
Revenue Days (A) | 7,044 | 5,997 | 17.5 | |||
Calendar-Ship-Days (B) | 7,338 | 6,108 | 20.1 | |||
Utilization (A)/(B) | 96.0 | % | 98.2 | % |
(1) | Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of resources). |
• | increases of $4.6 million and $11.1 million for the three and nine months ended September 30, 2018, respectively, due to the delivery of the Magdala and charter contract commencing in February 2018; |
• | increases of $4.2 million and $6.6 million for the three and nine months ended September 30, 2018, respectively, due to the delivery of the Myrina and charter contract commencing in May 2018; |
• | increases of $4.1 million and $11.4 million for the three and nine months ended September 30, 2018, respectively, due to the delivery of the Murex and charter contract commencing in November 2017; |
• | an increase of $3.6 million for the three and nine months ended September 30, 2018 due to the delivery of the Megara and charter commencing in July 2018; |
• | increases of $3.4 million and $11.1 million for the three and nine months ended September 30, 2018, respectively, due to the delivery of the Macoma and charter contract commencing in October 2017; |
• | an increase of $2.4 million for the nine months ended September 30, 2018 relating to 35 days of unscheduled off-hire in the second quarter of 2017 due to repairs required for one of our LNG carriers; |
• | increases of $2.0 million and $7.0 million for the three and nine months ended September 30, 2018, respectively, due to the delivery of the Torben Spirit and charter contract commencing in March 2017 and earning an increased charter rate during 2018 upon the charterer extending its original contract in 2017; |
• | an increase of $2.0 million for the nine months ended September 30, 2018, due to the Hispania Spirit being off-hire for 31 days in the first quarter of 2017 for a scheduled dry docking; |
• | an increase of $1.8 million for the nine months ended September 30, 2018 due to the reversal in 2018 of performance claims provisions recorded during 2017; |
• | an increase of $0.9 million for the three and nine months ended September 30, 2018, due to the delivery of the Bahrain Spirit in August 2018 and commencement of its charter contract in September 2018; and |
• | increases of $0.4 million and $4.1 million for the three and nine months ended September 30, 2018, respectively, due to the impact of the appreciation of the Euro compared to the U.S. Dollar on our Euro-denominated revenue; |
• | a decrease of $4.3 million for the nine months ended September 30, 2018, primarily related to additional revenue recognized during the first quarter of 2017 relating to the accelerated dry docking of two LNG carriers in 2017, the costs of which will be recoverable from the charterer; |
• | decreases of $1.5 million and $0.9 million for the three and nine ended September 30, 2018, respectively, relating to lower amortization of in-process contracts recognized into revenue with respect to our shipbuilding and site supervision contract associated with the four LNG newbuilding carriers in the Pan Union Joint Venture due to the deliveries of the Pan Asia, Pan Americas and Pan Europe LNG carrier newbuildings between October 2017 and July 2018 (however, we had corresponding increases in vessel operating expenses); |
• | decreases of $1.3 and $1.7 million for the three and nine ended September 30, 2018, respectively, due to the Polar Spirit earning a lower charter rate upon redeployment after its original charter contract ended during the first quarter of 2018; and |
• | a decrease of $2.0 million for the nine months ended September 30, 2018, due to the Catalunya Spirit being off-hire for 28 days in the second quarter of 2018 for a scheduled dry dock. |
• | increases of $3.8 million and $14.1 million for the three and nine months ended September 30, 2018, respectively, due to six multi-gas carriers, which were previously on bareboat charter contracts, incurring operating expenses following their redelivery to us from I.M. Skaugen SE (or Skaugen) during 2017; |
• | increases of $0.2 million and $2.1 million for the three and nine months ended September 30, 2018, respectively, due to the reactivation of the Arctic Spirit from lay-up during the third quarter of 2017; and |
• | increases of $0.3 million and $1.3 million for the three and nine months ended September 30, 2018, respectively, due to the acquisition of the Sonoma Spirit in the second quarter of 2017; |
• | a decrease of $1.5 million and $0.9 million for the three and nine months ended September 30, 2018 due to lower shipbuilding supervision costs upon the deliveries of Pan Asia, Pan Americas and Pan Europe LNG carrier newbuildings (however, we had corresponding increases in net voyage revenues). |
(in thousands of U.S. Dollars, except revenue days, calendar-ship-days and percentages) | Three Months Ended September 30, | % Change | ||||
2018 | 2017 | |||||
Voyage revenues | 5,148 | 11,585 | (55.6 | ) | ||
Voyage expenses | (2,225 | ) | (750 | ) | 196.7 | |
Net voyage revenues | 2,923 | 10,835 | (73.0 | ) | ||
Vessel operating expenses | (3,716 | ) | (4,552 | ) | (18.4 | ) |
Depreciation and amortization | (929 | ) | (2,400 | ) | (61.3 | ) |
General and administrative expenses(1) | (211 | ) | (463 | ) | (54.4 | ) |
Write-down of vessels | (2,201 | ) | (38,000 | ) | (94.2 | ) |
Restructuring charges | (449 | ) | — | 100.0 | ||
Loss from vessel operations | (4,583 | ) | (34,580 | ) | 86.7 | |
Operating Data: | ||||||
Revenue Days (A) | 344 | 460 | (25.2 | ) | ||
Calendar-Ship-Days (B) | 368 | 460 | (20.0 | ) | ||
Utilization (A)/(B) | 93.5 | % | 100.0 | % |
(in thousands of U.S. Dollars, except revenue days, calendar-ship-days and percentages) | Nine Months Ended September 30, | % Change | ||||
2018 | 2017 | |||||
Voyage revenues | 25,548 | 35,291 | (27.6 | ) | ||
Voyage expenses | (8,724 | ) | (2,235 | ) | 290.3 | |
Net voyage revenues | 16,824 | 33,056 | (49.1 | ) | ||
Vessel operating expenses | (11,042 | ) | (13,902 | ) | (20.6 | ) |
Depreciation and amortization | (4,108 | ) | (8,255 | ) | (50.2 | ) |
General and administrative expenses(1) | (1,892 | ) | (2,309 | ) | (18.1 | ) |
Write-down of vessels | (20,863 | ) | (50,600 | ) | (58.8 | ) |
Restructuring charges | (1,845 | ) | — | 100.0 | ||
Loss from vessel operations | (22,926 | ) | (42,010 | ) | 45.4 | |
Operating Data: | ||||||
Revenue Days (A) | 1,084 | 1,501 | (27.8 | ) | ||
Calendar-Ship-Days (B) | 1,131 | 1,535 | (26.3 | ) | ||
Utilization (A)/(B) | 95.8 | % | 97.8 | % |
(1) | Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources). |
• | decreases of $3.6 million and $7.3 million for the three and nine months ended September 30, 2018, respectively, due to earning lower rates in the spot market for the European Spirit and African Spirit, 29 off-hire days for a scheduled dry docking of the European Spirit in the second quarter of 2018 and 17 off-hire days for repairs on the European Spirit in the third quarter of 2018; |
• | decreases of $2.5 million and $6.7 million for the three and nine months ended September 30, 2018, respectively, due to the sales of the Asian Spirit and Teide Spirit; and |
• | decreases of $1.0 million and $1.6 million for the three and nine months ended September 30, 2018, respectively, due to lower revenues earned by the Toledo Spirit in 2018 relating to the profit-loss-sharing agreement between us and CEPSA (however, we had a corresponding increase in our realized gain on our associated derivative contract with Teekay Corporation, therefore, these decreases and any future increases or decreases related to this agreement did not and will not affect our cash flow or net income (loss)). |
(in thousands of U.S. Dollars) | Three Months Ended | |||||||||||||||||
Angola LNG Carriers | Exmar LNG Carriers | Exmar LPG Carriers | MALT LNG Carriers | RasGas 3 LNG Carriers | Pan Union LNG Carriers | Yamal LNG Carriers | Bahrain LNG Joint Venture | Total Equity Income | ||||||||||
Three months ended September 30, 2018 | 4,295 | 885 | (1,274 | ) | 1,065 | 3,540 | 2,393 | 3,496 | 279 | 14,679 | ||||||||
Three months ended September 30, 2017 | 3,987 | 1,990 | (2,112 | ) | (4,633 | ) | 2,973 | (47 | ) | (478 | ) | (263 | ) | 1,417 | ||||
Difference | 308 | (1,105 | ) | 838 | 5,698 | 567 | 2,440 | 3,974 | 542 | 13,262 |
(in thousands of U.S. Dollars) | Nine Months Ended | |||||||||||||||||
Angola LNG Carriers | Exmar LNG Carriers | Exmar LPG Carriers | MALT LNG Carriers | RasGas 3 LNG Carriers | Pan Union LNG Carriers | Yamal LNG Carriers | Bahrain LNG Joint Venture | Total Equity Income | ||||||||||
Nine Months Ended September 30, 2018 | 17,605 | 8,324 | (3,379 | ) | (647 | ) | 11,045 | 4,970 | 9,135 | 5,544 | 52,597 | |||||||
Nine Months Ended September 30, 2017 | 10,633 | 6,627 | (1,765 | ) | (15,019 | ) | 11,898 | (105 | ) | (1,034 | ) | (4,438 | ) | 6,797 | ||||
Difference | 6,972 | 1,697 | (1,614 | ) | 14,372 | (853 | ) | 5,075 | 10,169 | 9,982 | 45,800 |
• | increases of $13.2 million and $26.9 million for the three and nine months ended September 30, 2018, respectively, relating to interest incurred on the obligations related to capital leases for the Torben Spirit, Murex, Macoma, Magdala, Myrina, Megara, and Bahrain Spirit commencing upon their deliveries; and |
• | increases of $2.2 million and $6.0 million for the three and nine months ended September 30, 2018, respectively, as a result of higher LIBOR rates, net of principal debt repayments, as compared to the same periods of the prior year. |
(in thousands of U.S. Dollars) | Three Months Ended September 30, | |||||||||||
2018 | 2017 | |||||||||||
Realized gains (losses) | Unrealized gains (losses) | Total | Realized gains (losses) | Unrealized gains (losses) | Total | |||||||
Interest rate swap agreements | (3,062 | ) | 19,278 | 16,216 | (4,528 | ) | 1,775 | (2,753 | ) | |||
Interest rate swaption agreements | — | — | — | — | 285 | 285 | ||||||
Interest rate swap agreements termination | (13,681 | ) | — | (13,681 | ) | — | — | — | ||||
Toledo Spirit time-charter derivative | 1,689 | (1,709 | ) | (20 | ) | 646 | (356 | ) | 290 | |||
(15,054 | ) | 17,569 | 2,515 | (3,882 | ) | 1,704 | (2,178 | ) |
(in thousands of U.S. Dollars) | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | |||||||||||
Realized gains (losses) | Unrealized gains (losses) | Total | Realized gains (losses) | Unrealized gains (losses) | Total | |||||||
Interest rate swap agreements | (11,850 | ) | 38,698 | 26,848 | (13,813 | ) | 4,211 | (9,602 | ) | |||
Interest rate swaption agreements | — | 2 | 2 | — | 427 | 427 | ||||||
Interest rate swap agreements termination | (13,681 | ) | — | (13,681 | ) | (610 | ) | — | (610 | ) | ||
Toledo Spirit time-charter derivative | 2,148 | (499 | ) | 1,649 | 526 | 884 | 1,410 | |||||
(23,383 | ) | 38,201 | 14,818 | (13,897 | ) | 5,522 | (8,375 | ) |
(in thousands of U.S. Dollars) | Nine Months Ended September 30, | |||
2018 | 2017 | |||
Net cash flow from operating activities | 58,227 | 151,138 | ||
Net cash flow from financing activities | 333,649 | 283,256 | ||
Net cash flow used for investing activities | (524,869 | ) | (423,547 | ) |
Total | Remainder of 2018 | 2019 | 2020 | 2021 | 2022 | Beyond 2022 | ||||||||||||||
(in millions of U.S. Dollars) | ||||||||||||||||||||
U.S. Dollar-Denominated Obligations: | ||||||||||||||||||||
Long-term debt(1) | ||||||||||||||||||||
Scheduled repayments | 560.6 | 29.3 | 106.4 | 102.6 | 71.4 | 52.3 | 198.6 | |||||||||||||
Repayments at maturity | 778.1 | 20.4 | 3.3 | 338.8 | 164.1 | 5.0 | 246.5 | |||||||||||||
Commitments under capital leases(2) | 1,764.4 | 54.4 | 119.5 | 118.7 | 117.8 | 117.0 | 1,237.0 | |||||||||||||
Commitments under operating leases(3) | 296.6 | 11.9 | 47.6 | 39.9 | 23.9 | 23.9 | 149.4 | |||||||||||||
Newbuilding installments/shipbuilding supervision(4) | 828.9 | 55.5 | 773.4 | — | — | — | — | |||||||||||||
Total U.S. Dollar-denominated obligations | 4,228.6 | 171.5 | 1,050.2 | 600.0 | 377.2 | 198.2 | 1,831.5 | |||||||||||||
Euro-Denominated Obligations(5) | ||||||||||||||||||||
Long-term debt(6) | 205.9 | 9.7 | 25.0 | 26.2 | 27.2 | 28.5 | 89.3 | |||||||||||||
Total Euro-denominated obligations | 205.9 | 9.7 | 25.0 | 26.2 | 27.2 | 28.5 | 89.3 | |||||||||||||
NOK-Denominated Obligations(5) | ||||||||||||||||||||
Long-term debt(7) | 374.0 | — | — | 122.6 | 147.2 | — | 104.2 | |||||||||||||
Total NOK-Denominated obligations | 374.0 | — | — | 122.6 | 147.2 | — | 104.2 | |||||||||||||
Totals | 4,808.5 | 181.2 | 1,075.2 | 748.8 | 551.6 | 226.7 | 2,025.0 |
(1) | Excludes expected interest payments of $13.6 million (remainder of 2018), $51.5 million (2019), $40.3 million (2020), $26.9 million (2021), $21.3 million (2022) and $67.2 million (beyond 2022). Expected interest payments give effect to the debt refinancing completed in November 2018 of one of our debt facilities and are based on the existing interest rates (fixed-rate loans) and LIBOR at September 30, 2018, plus margins on debt that has been drawn that range up to 3.25% (variable-rate loans). The expected interest payments do not reflect the effect of related interest rate swaps that we have used as an economic hedge for certain of our variable-rate debt. In addition, the above table does not reflect scheduled debt repayments in our equity-accounted joint ventures. In addition, the repayment amounts also give effect to the November 2018 refinancing of our $190 million debt facility maturing in November 2018 with a new $225 million debt facility maturing in November 2020. |
(2) | Includes, in addition to lease payments, amounts we may be or are required to pay to purchase a leased vessel at the end of its lease term. For one of our nine obligations related to capital leases, the lessor has the option to sell the Suezmax tanker to us at any time during the remaining lease term; however, in this table we have assumed the lessor will not exercise its right to sell the Suezmax tanker to us until after the lease term expires, which is during early-2019. The purchase price for any Suezmax tanker we are required to purchase would be based on the unamortized portion of the vessel construction financing costs for the vessels, which is included in the table above. We expect to satisfy any such purchase price by assuming the existing vessel financing, although we may be required to obtain separate debt or equity financing to complete any purchases if the lenders do not consent to our assuming the financing obligations. Please read “Item 1 - Financial Statements: Note 5a - Vessel Charters - Chartered-in Vessels - Capital Leases”. |
(3) | For certain of our operating leases, we have corresponding leases whereby we are the lessor and expect to receive approximately $223.1 million under these leases from the remainder of 2018 to 2029. |
(4) | As of September 30, 2018, we had agreements for the construction of two wholly-owned LNG carrier newbuildings, of which the estimated remaining costs totaled $250.1 million. As of September 30, 2018, we had secured $119 million of undrawn financing related to the commitments for one of the two LNG carrier newbuildings included in the table above. |
(5) | Euro-denominated and NOK-denominated obligations are presented in U.S. Dollars and have been converted using the prevailing exchange rates as of September 30, 2018. |
(6) | Excludes expected interest payments of $0.6 million (remainder of 2018), $2.2 million (2019), $1.9 million (2020), $1.5 million (2021), $1.2 million (2022) and $1.1 million (beyond 2022). Expected interest payments are based on EURIBOR at September 30, 2018, plus margins that range up to 1.95%, as well as the prevailing U.S. Dollar/Euro exchange rate as of September 30, 2018. The expected interest payments do not reflect the effect of related interest rate swaps that we have used as an economic hedge of certain of our variable-rate debt. |
(7) | Excludes expected interest payments of $5.5 million (remainder of 2018), $22.1 million (2019), $19.2 million (2020), $11.1 million (2021), $5.9 million (2022), and $2.9 million (beyond 2022). Expected interest payments are based on NIBOR at September 30, 2018, plus margins that range up to 6.00%, as well as the prevailing U.S. Dollar/NOK exchange rate as of September 30, 2018. The expected interest payments do not reflect the effect of the related cross-currency swaps that we have used as an economic hedge of our foreign exchange and interest rate exposure associated with our NOK-denominated long-term debt. |
• | our distribution policy and our ability to make cash distributions on our common units or any increases in quarterly distributions, including the intended quarterly distribution increase for 2019; |
• | our intent to amend our tax structure to elect to be treated as a corporation, instead of a partnership, for U.S. federal income tax purposes and the potential tax effect on and treatment applicable to us and our unitholders of such change, which is subject to common unitholder approval; |
• | our future financial condition and results of operations and our future revenues, expenses and capital expenditures, and our expected financial flexibility to pursue capital expenditures, acquisitions and other expansion opportunities; |
• | our liquidity needs, meeting our going concern requirements and our expectation that we will have sufficient liquidity for the next 12 months; |
• | our expectation that certain of our outstanding NOK bonds will be listed on the Oslo Stock Exchange; |
• | our expected sources of funds for liquidity and working capital needs, our ability to enter into vessel financings and to refinance existing indebtedness and our ability to raise debt or equity financing through public or private offerings; |
• | our expectation that the owner for one of our Suezmax tankers related to capital lease, the Toledo Spirit, will cancel the related charter contract for the vessel in early-2019 and sell it to a third party, rather than requiring us to purchase the vessel related to the capital lease; |
• | our ability to comply with the financial covenants of our credit facilities, term loans and capital leases; |
• | our ability to enter into new or replacement charters for our vessels; |
• | growth prospects and future trends of the markets in which we operate; |
• | LNG, LPG and tanker market fundamentals, including the balance of supply and demand in the LNG, LPG and tanker markets and spot LNG, LPG and tanker charter rates; |
• | the expected lifespan of our vessels, including our expectations as to any impairment of our vessels; |
• | our expectations and estimates regarding future charter business, including with respect to minimum charter hire payments, revenues and our vessels’ ability to perform to specifications and maintain their hire rates in the future; |
• | our expectations regarding the ability of our customers to make charter payments to us, including purchase obligations relating to two of our LNG carriers completing charters with Awilco in 2019; |
• | our ability to maximize the use of our vessels, including the redeployment or disposition of vessels no longer under long-term charter or whose charter contract are expiring; |
• | the expected delivery date of the European Spirit to its buyer; |
• | the future resumption of the LNG plant in Yemen operated by YLNG, the expected repayment of deferred hire amounts on our two 52%-owned vessels, the Marib Spirit and Arwa Spirit, on charter to YLNG, and the expected reduction to our equity income in 2018 as a result of the charter payment deferral; |
• | our expectations regarding the completion of the Yamal LNG project, including the delivery of the project's four remaining newbuildings; |
• | expected purchases and deliveries of newbuilding vessels, the newbuildings’ commencement of service under charter contracts, and estimated costs for newbuilding vessels and timing of delivery; |
• | the ability of us and our joint venture partners to obtain financing for unfinanced newbuilding vessels under construction; |
• | expected financing for capital expenditures, vessel installments and our joint ventures; |
• | our expectations regarding the schedule and performance of the Bahrain LNG Joint Venture and Bahrain LNG project; |
• | the expected cost of supervision and crew training in relation to the Pan Union Joint Venture, and our expected recovery of a portion of those costs; |
• | our ability to maintain long-term relationships with major LNG and LPG importers and exporters and major crude oil companies; |
• | our continued ability to enter into long-term, fixed-rate time-charters with our LNG and LPG customers; |
• | our hedging activities relating to foreign exchange, interest rate and spot market risks, and the effects of fluctuations in foreign exchange, interest rate and spot market rates on our business and results of operations; |
• | the potential impact and timing for adoption of new accounting standards; |
• | our expectations regarding the possibility of goodwill impairment; |
• | anticipated taxation of us and our subsidiaries; and |
• | our business strategy and other plans and objectives for future operations. |
• | REGISTRATION STATEMENT ON FORM S-8 (NO.333-124647) FILED WITH THE SEC ON MAY 5, 2005 |
• | REGISTRATION STATEMENT ON FORM F-3 (NO.333-190783) FILED WITH THE SEC ON AUGUST 22, 2013 |
• | REGISTRATION STATEMENT ON FORM F-3 (NO.333-220967) FILED WITH THE SEC ON OCTOBER 16, 2017 |
• | REGISTRATION STATEMENT ON FORM F-3 (NO.333-225584) FILED WITH THE SEC ON JUNE 12, 2018 |
TEEKAY LNG PARTNERS L.P. | |||||
By: | Teekay GP L.L.C., its general partner | ||||
Date: November 28, 2018 | By: | /s/ Edith Robinson | |||
Edith Robinson | |||||
Secretary | |||||
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Document and Entity Information |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Document And Entity Information [Abstract] | |
Document Type | 6-K |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2018 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | TGP |
Entity Registrant Name | Teekay LNG Partners L.P. |
Entity Central Index Key | 0001308106 |
Current Fiscal Year End Date | --12-31 |
Unaudited Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands, shares in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Non-trade accounts receivable | $ 14,591 | $ 13,203 |
Accumulated depreciation on vessel and equipment | 641,702 | 681,991 |
Accumulated depreciation on vessels under capital leases | $ 55,158 | $ 25,883 |
Limited Partners - common units issued (in shares) | 79.7 | 79.6 |
Limited Partners - common units outstanding (in shares) | 79.7 | 79.6 |
Limited Partners - preferred units issued (in shares) | 11.8 | 11.8 |
Limited Partners - preferred units outstanding (in shares) | 11.8 | 11.8 |
Unaudited Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Cash Flows [Abstract] | ||
Dividends received | $ 11,583 | $ 28,781 |
Unaudited Consolidated Statement of Changes in Total Equity - 9 months ended Sep. 30, 2018 - USD ($) shares in Thousands, $ in Thousands |
Total |
General Partner |
Common Units
Limited Partners
|
Preferred Units
Limited Partners
|
Accumulated Other Comprehensive Income |
Non- controlling Interest |
---|---|---|---|---|---|---|
Beginning balance, units at Dec. 31, 2017 | 79,627 | 11,800 | ||||
Beginning balance at Dec. 31, 2017 | $ 1,931,423 | $ 50,152 | $ 1,539,248 | $ 285,159 | $ 4,479 | $ 52,385 |
Increase (Decrease) in Partners' Capital [Roll Forward] | ||||||
Net income (loss) | 17,630 | 51 | 2,463 | 19,276 | (4,160) | |
Other comprehensive income | 15,637 | 13,679 | 1,958 | |||
Distributions declared | (53,419) | (683) | (33,460) | $ (19,276) | ||
Dividends paid to non-controlling interest | (1,290) | (1,290) | ||||
Change in accounting policy (note 2) | 2,739 | 41 | $ 1,959 | 739 | ||
Equity based compensation, net of withholding tax, units | 61 | |||||
Equity based compensation, net of withholding tax of $0.7 million (note 14) | 449 | 9 | $ 440 | |||
Ending balance, units at Sep. 30, 2018 | 79,688 | 11,800 | ||||
Ending balance at Sep. 30, 2018 | $ 1,913,169 | $ 49,570 | $ 1,510,650 | $ 285,159 | $ 18,158 | $ 49,632 |
Unaudited Consolidated Statement of Changes in Total Equity (Parenthetical) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Statement of Partners' Capital [Abstract] | |
Equity based compensation, tax | $ 0.7 |
Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (or GAAP). These financial statements include the accounts of Teekay LNG Partners L.P. (or the Partnership), which is a limited partnership formed under the laws of the Republic of the Marshall Islands, its wholly-owned and controlled subsidiaries and any variable interest entities (or VIEs) of which it is the primary beneficiary. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these unaudited interim financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements for the year ended December 31, 2017, which are included in the Partnership’s Annual Report on Form 20-F for the year ended December 31, 2017 filed with the U.S. Securities and Exchange Commission (or SEC) on April 16, 2018. In the opinion of management of Teekay GP L.L.C., the general partner of the Partnership (or the General Partner), these unaudited interim consolidated financial statements reflect all adjustments consisting solely of a normal recurring nature, necessary to present fairly, in all material respects, the Partnership’s consolidated financial position, results of operations, changes in total equity and cash flows for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of those for a full fiscal year. Significant intercompany balances and transactions have been eliminated upon consolidation. In addition, because the Partnership has determined that the entities that have financed certain of the Partnership's liquefied natural gas (or LNG) carriers or LNG carrier newbuildings through sale-leaseback transactions are VIEs that should be consolidated, the presentation of the sale-leaseback transactions in the consolidated statements of cash flows has been adjusted to reflect these transactions as financing activities instead of investing activities in the current and comparative period. This has resulted in a decrease in net investing cash flow of $336 million and an increase in net financing cash flow of $336 million for the nine months ended September 30, 2017 as compared to amounts previously presented. |
Accounting Pronouncements |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||
Accounting Pronouncements | Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (or FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, (or ASU 2014-09). ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue as each performance obligation is satisfied. ASU 2014-09 became effective for the Partnership as of January 1, 2018, and may be applied, at the Partnership’s option, retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Partnership adopted ASU 2014-09 as a cumulative-effect adjustment as of such date. The Partnership has elected to apply ASC 2014-09 only to those contracts that were not completed as of January 1, 2018. The Partnership has identified the following differences on adoption of ASU 2014-09:
In February 2016, FASB issued Accounting Standards Update 2016-02, Leases (or ASU 2016-02). ASU 2016-02 establishes a right-of-use model that requires a lessee to record a right of use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. For lessees, leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 requires lessors to classify leases as a sales-type, direct financing, or operating lease. A lease is a sales-type lease if any one of five criteria are met, each of which indicate that the lease, in effect, transfers control of the underlying asset to the lessee. If none of those five criteria are met, but two additional criteria are both met, indicating that the lessor has transferred substantially all of the risks and benefits of the underlying asset to the lessee and a third party, the lease is a direct financing lease. All leases that are not sales-type leases or direct financing leases are operating leases. ASU 2016-02 is effective January 1, 2019, with early adoption permitted. FASB issued an additional accounting standards update in July 2018 that made further amendments to accounting for leases, including allowing the use of a transition approach whereby a cumulative effect adjustment is made as of the effective date, with no retrospective effect. The Partnership will adopt ASU 2016-02 on January 1, 2019. To determine the cumulative effect adjustment, the Partnership will not reassess lease classification, initial direct costs for any existing leases and whether any expired or existing contracts are or contain leases. The Partnership has identified the following differences based on the work performed to date:
In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (or ASU 2016-15), which, among other things, provides guidance on two acceptable approaches of classifying distributions received from equity-method investees in the statements of cash flows and application of the predominance principle on the cash flow statement classification of cash receipts and payments that have aspects of more than one class of cash flows. ASU 2016-15 became effective for the Partnership as of January 1, 2018, with a retrospective approach required on adoption. The Partnership has elected to classify distributions received from equity-method investees in the statement of cash flows based on the nature of the distribution. In addition, the adoption of ASU 2016-15 resulted in $25.7 million of cross-currency swap payments that were related to the principal repayment of long-term debt for the nine months ended September 30, 2017, being reclassified from unrealized foreign currency exchange (gain) loss including the effect of the termination of cross-currency swaps in net operating cash flow to scheduled repayments of long-term debt and settlement of related swaps in net financing cash flow as the amounts related to the termination or final settlement of the cross-currency swap. In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows: Restricted Cash (or ASU 2016-18). ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Entities are also required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. ASU 2016-18 became effective for the Partnership as of January 1, 2018. Adoption of ASU 2016-18 resulted in the Partnership including in the consolidated statements of cash flows changes in cash, cash equivalents and restricted cash. In August 2017, the FASB issued Accounting Standards Update 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities (or ASU 2017-12). ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires, for qualifying hedges, the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also modifies the accounting for components excluded from the assessment of hedge effectiveness, eases documentation and assessment requirements and modifies certain disclosure requirements. ASU 2017-12 will be effective for the Partnership as of January 1, 2019. The Partnership is currently evaluating the effect of adopting this new guidance. In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (or ASU 2016-13). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This update is effective for the Partnership as of January 1, 2020, with a modified-retrospective approach required on adoption. The Partnership is currently evaluating the effect of adopting this new guidance. |
Financial Instruments |
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments a) Fair Value Measurements For a description of how the Partnership estimates fair value and for a description of the fair value hierarchy levels, see Note 3 to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2017. The following table includes the estimated fair value and carrying value of those assets and liabilities that are measured at fair value on a recurring and non-recurring basis, as well as the estimated fair value of the Partnership’s financial instruments that are not accounted for at fair value on a recurring basis.
Changes in fair value during the nine months ended September 30, 2018 and 2017 for the Partnership’s other derivative instrument, the Toledo Spirit time-charter derivative, which is described below and is measured at fair value on a recurring basis using significant unobservable inputs (Level 3), are as follows:
The Partnership’s Suezmax tanker, the Toledo Spirit, operates pursuant to a time-charter contract that increases or decreases the otherwise fixed-hire rate established in the charter depending on the spot charter rates that the Partnership would have earned had it traded the vessel in the spot tanker market. The time-charter contract ends in August 2025, although the charterer had the right to terminate the time-charter contract in August 2018. In May 2018, the charterer gave formal notification to the Partnership of its intention to terminate its charter contract subject to certain conditions being met and third-party approvals being received. As at September 30, 2018, the charterer was marketing the vessel for sale. In order to reduce the variability of its revenue under the Toledo Spirit time-charter, the Partnership entered into an agreement with Teekay Corporation under which Teekay Corporation pays the Partnership any amounts payable to the charterer of the Toledo Spirit as a result of spot rates being below the fixed rate, and the Partnership pays Teekay Corporation any amounts payable to the Partnership by the charterer of the Toledo Spirit as a result of spot rates being in excess of the fixed rate. The estimated fair value of this other derivative is based in part upon the Partnership’s projection of future spot market tanker rates, which has been derived from current spot market tanker rates and long-term historical average rates, as well as an estimated discount rate. The estimated fair value of this other derivative as of September 30, 2018 is based upon an average daily tanker rate of $17,000 (September 30, 2017 – $18,000) over the expected remaining duration of the charter contract, which is expected to be early-2019, and a discount rate of 9.5% (September 30, 2017 – 8.4%). In developing and evaluating this estimate, the Partnership considers the current tanker market fundamentals as well as the short and long-term outlook. A higher or lower average daily tanker rate would result in a higher or lower fair value liability or a lower or higher fair value asset. A higher or lower discount rate would result in a lower or higher fair value asset or liability. b) Financing Receivables The following table contains a summary of the Partnership’s loan receivables and other financing receivables by type of borrower and the method by which the Partnership monitors the credit quality of its financing receivables on a quarterly basis.
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Segment Reporting |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting The following table includes results for the Partnership’s segments for the periods presented in these financial statements.
A reconciliation of total segment assets to total assets presented in the consolidated balance sheets is as follows:
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Chartered-in Vessels |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chartered-in Vessels | Chartered-in Vessels a) Capital Leases The minimum estimated charter hire and rental payments for the remainder of the year and the following four fiscal years, as at September 30, 2018, for the Partnership’s chartered-in vessels accounted for as capital leases were:
The Partnership is also a party to capital leases on eight LNG carriers, the Creole Spirit, the Oak Spirit, the Torben Spirit, the Macoma, the Murex, the Magdala, the Myrina and the Megara. Upon delivery of these eight LNG carriers between February 2016 and July 2018, the Partnership sold these respective vessels to third parties (or the Lessors) and leased them back under 10-year bareboat charter contracts ending in 2026 through to 2028. The bareboat charter contracts are accounted for as obligations related to capital leases and have fixed-price purchase obligations at the end of the lease terms. The Partnership understands that these vessels and lease operations are the only assets and operations of the Lessors. The Partnership operates the vessels during the lease term and as a result, is considered to be, under GAAP, each Lessor's primary beneficiary; therefore, the Partnership consolidates the Lessors for financial reporting purposes as VIEs. The liabilities of the Lessors are loans and are non-recourse to the Partnership. The amounts funded to the Lessors in order to purchase the vessels materially match the funding to be paid by the Partnership's subsidiaries under the sale-leaseback transaction. As a result, the amounts due by the Partnership's subsidiaries to the Lessors have been included in obligations related to capital leases as representing the Lessors' loans. The obligations of the Partnership under the bareboat charter contracts are guaranteed by the Partnership. In addition, the guarantee agreements require the Partnership to maintain minimum levels of tangible net worth and aggregate liquidity, and not to exceed a maximum amount of leverage. As at September 30, 2018, the Partnership was in compliance with all covenants in respect of the obligations related to capital leases. b) Operating Leases The minimum estimated charter hire and rental payments for the remainder of the year and the following four fiscal years, as at September 30, 2018, for the Partnership’s chartered-in vessel accounted for as an operating lease were as follows:
The carrying amount of tax indemnification guarantees of the Partnership relating to the leasing arrangement through the Teekay Tangguh Joint Venture as at September 30, 2018 was $6.7 million (December 31, 2017 – $7.1 million) and is included as part of other long-term liabilities in the Partnership’s consolidated balance sheets. The tax indemnification is for the duration of the lease contracts with the third party plus the years it would take for the lease payments to be statute barred, which will end in 2033 for the vessels. Although there is no maximum potential amount of future payments, the Teekay Tangguh Joint Venture may terminate the lease arrangement on a voluntary basis at any time. If the lease arrangement terminates, the Teekay Tangguh Joint Venture will be required to pay termination sums to the lessor sufficient to repay the lessor’s investment in the vessels and to compensate it for the tax effect of the terminations, including recapture of any tax depreciation. (ii) As at September 30, 2018, the Partnership is chartering in a vessel at a fixed-rate from its 52%-owned joint venture with Marubeni Corporation (or the Teekay LNG-Marubeni Joint Venture) for a period of two years until September 2020. The Partnership recognizes the expense from this charter on a straight-line basis over the firm period of the charter and is presented as time-charter hire expense in the Partnership's consolidated statements of income (loss). |
Equity-Accounted Investments |
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Receivables [Abstract] | |
Equity-Accounted Investments | Equity-Accounted Investments a) As of September 30, 2018, the Partnership had loans outstanding to Exmar LPG BVBA of $47.3 million (December 31, 2017 – $52.3 million), the Partnership's 50/50 joint venture (or the Exmar LPG Joint Venture) with Exmar NV (or Exmar). These advances bear interest at LIBOR plus 0.50% and have no fixed repayment terms. As of September 30, 2018, the interest receivable on the advances was $nil (December 31, 2017 – $0.2 million). Both the advances and the interest receivable on these advances are included in investments and advances to equity-accounted joint ventures in the Partnership’s consolidated balance sheets. b) As of September 30, 2018, the Partnership had loans outstanding to the Bahrain LNG Joint Venture of $79.1 million (December 31, 2017 – $79.1 million). These advances bear interest at LIBOR plus 1.25% and are repayable the earlier of November 2019 or six months after the expected commercial start date, which is expected to occur during the first half of 2019. As of September 30, 2018, the interest accrued on these advances was nominal (December 31, 2017 – $0.1 million). Both the advances and the accrued interest on these advances are included in investments and advances to equity-accounted joint ventures in the Partnership’s consolidated balance sheets. c) As of September 30, 2018, the Partnership had loans outstanding to its 33% owned joint venture servicing the Angola LNG Project (or the Angola Joint Venture) of $0.8 million (December 31, 2017 – $nil). These advances bear interest at LIBOR plus 1.00% and have no fixed repayment terms. As of September 30, 2018, the interest accrued on these advances was nominal (December 31, 2017 – $nil). Both the advances and the accrued interest on these advances are included in investments and advances to equity-accounted joint ventures in the Partnership’s consolidated balance sheets. d) On January 31, 2018, the Partnership sold its 50% ownership interest in its equity-accounted joint venture with Exmar (or the Excelsior Joint Venture) for gross proceeds of approximately $54 million. As a result of the sale, the Partnership recorded a gain of $5.6 million for the nine months ended September 30, 2018, which is included in equity income in the Partnership's consolidated statements of income (loss). |
Revenues |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue The Partnership’s primary source of revenue is chartering its vessels to customers. The Partnership utilizes three primary forms of contracts, consisting of time-charter contracts, voyage charter contracts and bareboat charter contracts. The Partnership also generates revenue from construction supervision and crew-training for the vessels under construction in its joint venture with China LNG Shipping (Holdings) Limited (or China LNG), CETS Investment Management (HK) Co. Ltd. and BW Investments Pte. Ltd (or the Pan Union Joint Venture), in which the Partnership's ownership interests range from 20% to 30%, and from the start-up of an LNG receiving and regasification terminal under construction related to its 30%-owned joint venture with National Oil and Gas Authority (30%), Gulf Investment Corporation (24%), and Samsung C&T (16%) (or the Bahrain LNG Joint Venture). Such services may include the procurement of third party goods and services for the asset’s owner. Time Charters Pursuant to a time charter, the Partnership charters a vessel to a customer for a fixed period of time, generally one year or more. The performance obligations within a time-charter contract, which will include the lease of the vessel to the charterer as well as the operation of the vessel, are satisfied as services are rendered over the duration of such contract, as measured using the time that has elapsed from commencement of performance. In addition, any expenses that are unique to a particular voyage, including any fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions, are the responsibility of the customer, as long as the vessel is not off-hire. Hire is based on a fixed daily hire amount and is typically invoiced monthly in advance for time-charter contracts. However, certain sources of variability exist. Those include penalties, such as those that relate to periods the vessels are off-hire and where minimum speed and performance metrics are not met. In addition, certain time-charter contracts contain provisions that allow the Partnership to be compensated for increases in the Partnerships costs during the term of the charter. Such provisions may be in the form of annual hire rate adjustments for changes in inflation indices or interest rates or in the form of cost reimbursements for vessel operating expenditures or dry-docking expenditures. Finally, in a small number of charters, the Partnership may earn a profit share consideration, which occurs when actual spot tanker rates earned by the vessel exceed certain thresholds for a period of time. Variable consideration of the Partnership’s contracts is typically recognized in the period in which the changes in facts and circumstances on which the variable lease payments are based occur as either such revenue is allocated and accounted for under lease accounting requirements or alternatively such consideration is allocated to distinct periods within a contract that such variable consideration was incurred in. The Partnership does not engage in any specific tactics to minimize residual value risk. As at September 30, 2018, a substantial majority of the Partnership’s consolidated vessels operated under time-charter contracts with the Partnership’s customers. Such contracts are scheduled to expire between 2018 and 2038. The time-charter contracts for many of the Partnership's LNG carriers have options whereby the charterer can extend the contract for periods up to a total extension of between three to 15 years. In addition, each of the Partnership's time-charter contracts are subject to certain termination and purchase provisions. As at September 30, 2018, the Partnership had $19.4 million of advanced payments recognized as contract liabilities included in unearned revenue (December 31, 2017 – $22.2 million) which are expected to be recognized as voyage revenues in the following period and are included in unearned revenue on the Partnership's consolidated balance sheets. Voyage Charters Voyage charters are charters for a specific voyage that are usually priced on a current or “spot” market rate. The performance obligations within a voyage charter contract, which will typically include the lease of the vessel to the charterer as well as the operation of the vessel, are satisfied as services are rendered over the duration of the voyage, as measured using the time that has elapsed from commencement of performance. In addition, any expenses that are unique to a particular voyage, including any fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions, are the responsibility of the vessel owner. The Partnership’s voyage charters will normally contain a lease; however, judgment is necessary to determine this based upon the decision-making rights the charterer has within the contract. Consideration for such contracts are generally fixed, although certain sources of variability exist. Delays caused by the charterer result in additional consideration. Payment for the voyage is not due until the voyage is completed. The duration of a single voyage will typically be less than three months. The Partnership does not engage in any specific tactics to minimize residual value risk due to the short-term nature of the contracts. Bareboat Charters Pursuant to a bareboat charter, the Partnership charters a vessel to a customer for a fixed period of time, generally one year or more, at rates that are generally fixed. However, the customer is responsible for operation and maintenance of the vessel with its own crew as well as any expenses that are unique to a particular voyage, including any fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. If the vessel goes off-hire due to a mechanical issue or any other reason, the monthly hire received by the vessel owner is normally not impacted by such events. The performance obligations within a bareboat charter, which will include the lease of the vessel to the charterer, are satisfied over the duration of such contract, as measured using the time that has elapsed from commencement of the lease. Hire is typically invoiced monthly in advance for bareboat charters, based on a fixed daily hire amount. Revenue Table The following tables contain the Partnership’s revenue for the three and nine months ended September 30, 2018 and 2017, by contract type and by segment.
The following table contains the Partnership’s revenue from contracts that do not contain a lease element and the non-lease element of time-charter contracts accounted for as direct financing leases for the three and nine months ended September 30, 2018 and 2017.
Net Investments in Direct Financing Leases The Tangguh LNG Carriers commenced their time-charters with their charterers in 2009. Both time-charter contracts are accounted for as direct financing leases with 20-year terms. In 2013, the Partnership acquired two 155,900-cubic meter LNG carriers (or Awilco LNG Carriers) from Norway-based Awilco LNG ASA (or Awilco) and chartered them back to Awilco on five- and four-year fixed-rate bareboat charter contracts (plus a one-year extension option), respectively, with Awilco holding fixed-price purchase obligations at the end of the charters. The bareboat charters with Awilco were accounted for as direct financing leases. In June 2017, the Partnership agreed to amend the charter contracts with Awilco to defer a portion of charter hire and extend the bareboat charter contracts and related purchase obligations on both vessels to December 2019. The amendments have the effect of deferring charter hire of between $10,600 per day and $20,600 per day per vessel from July 1, 2017 until December 2019, with such deferred amounts added to the purchase obligation amounts. As a result of the contract amendments, both of the charter contracts with Awilco were reclassified as operating leases upon the expiry of their original contract terms in November 2017 and August 2018. In addition, the 21-year charter contract for the Bahrain Spirit floating storage unit (or FSU) commenced in September 2018 and is accounted for as a direct finance lease. The following table lists the components of the net investments in direct financing leases:
As at September 30, 2018, estimated minimum lease payments to be received by the Partnership related to its direct financing leases in each of the next five succeeding fiscal years are approximately $26.0 million (remainder of 2018), $64.1 million (2019), $64.3 million (2020), $64.1 million (2021), $64.1 million (2022) and an aggregate of $630.6 million thereafter. The leases are scheduled to end between 2029 and 2039. Operating Leases As at September 30, 2018, the minimum scheduled future rentals to be received by the Partnership in each of the next five years for the lease and non-lease elements related to charter contracts that were accounted for as operating leases are approximately $114.5 million (remainder of 2018), $406.2 million (2019), $372.9 million (2020), $333.2 million (2021), $291.9 million (2022), and $765.1 million thereafter. Minimum scheduled future rentals on operating lease contracts do not include rentals generated from new contracts entered into after September 30, 2018, rentals from vessels in the Partnership’s equity-accounted investments, rentals from unexercised option periods of contracts that existed on September 30, 2018, variable or contingent rentals, or rentals from contracts which commenced after September 30, 2018. Therefore, the minimum scheduled future rentals on operating leases should not be construed to reflect total charter hire revenues for any of these periods. The carrying amount of the Partnership's vessels which are employed on these charter contracts as at September 30, 2018, was $2.9 billion (December 31, 2017 – $2.2 billion). The cost and accumulated depreciation of the vessels employed on these charter contracts as at September 30, 2018 were $3.6 billion (December 31, 2017 – $2.9 billion) and $708.0 million (December 31, 2017 – $646.2 million), respectively. Contract Costs In certain cases, the Partnership incurs pre-operational costs that relate directly to a specific customer contract, that generate or enhance resources of the Partnership that will be used in satisfying performance obligations in the future, whereby such costs are expected to be recovered via the customer contract. Those costs include costs incurred to reposition a vessel to a location where a charterer will take delivery of the vessel. In certain cases, the Partnership must make judgments about whether costs relate directly to a specific customer contract or whether costs were factored into the pricing of a customer contract and thus expected to be recovered. Such deferred costs are amortized on a straight-line basis over the duration of the customer contract. Amortization of such costs for the three and nine months ended September 30, 2018 was $0.1 million and $0.2 million, respectively. As at September 30, 2018, repositioning costs of $3.4 million were included as part of other assets in the Partnership's consolidated balance sheets. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt
As at September 30, 2018, the Partnership had two revolving credit facilities available, of which one credit facility was current and one was long-term. The two credit facilities, as at such date, provided for borrowings of up to $365.6 million (December 31, 2017 – $443.7 million), of which $170.6 million (December 31, 2017 – $189.4 million) was undrawn. Interest payments are based on LIBOR plus margins, which margins ranged from 1.25% to 2.25%. In November 2018, the Partnership refinanced its $190 million revolving credit facility, which was scheduled to mature in November 2018, with a new $225 million revolving credit facility maturing in November 2020 (see Note 17b). Giving effect to the November 2018 refinancing, the $190 million revolving credit facility was classified to long-term debt in the Partnership's consolidated balance sheets as of September 30, 2018 and the amount available under the two revolving credit facilities will be reduced by $nil during the remainder of 2018, $22.4 million in 2019, $213.4 million in 2020, $24.4 million in 2021 and $105.4 million in 2022. The revolving credit facilities may be used by the Partnership to fund general partnership purposes. One of the revolving credit facilities is unsecured, while the other revolving credit facility is collateralized by first-priority mortgages granted on two of the Partnership’s vessels, together with other related security, and includes a guarantee from its two subsidiaries of all outstanding amounts. As at September 30, 2018, the Partnership had eight U.S. Dollar-denominated term loans outstanding which totaled $1.1 billion in aggregate principal amount (December 31, 2017 – $935.3 million). Interest payments on the term loans are based on LIBOR plus a margin, which margins ranged from 0.30% to 3.25%. The eight term loans require quarterly interest and principal payments and seven term loans have balloon or bullet repayments due at maturity. The term loans are collateralized by first-priority mortgages on 20 of the Partnership’s vessels to which the loans relate, together with certain other related security. In addition, at September 30, 2018, all of the outstanding term loans were guaranteed by either the Partnership or the Teekay Nakilat Corporation (or the Teekay Nakilat Joint Venture), of which the Partnership has a 70% ownership interest. The Partnership has Norwegian Kroner (or NOK) 3.1 billion of senior unsecured bonds in the Norwegian bond market that mature through 2023. As at September 30, 2018, the total amount of the bonds, which are either listed or will be listed on the Oslo Stock Exchange, was $374.0 million (December 31, 2017 – $377.9 million). The interest payments on the bonds are based on NIBOR plus a margin, which margins ranged from 3.70% to 6.00%. The Partnership has entered into cross-currency rate swaps, to swap all interest and principal payments of the bonds into U.S. Dollars, with the interest payments fixed at rates ranging from 5.92% to 7.89% and the transfer of principal fixed at $382.5 million upon maturity in exchange for NOK 3.1 billion (see Note 11). The Partnership has two Euro-denominated term loans outstanding, which as at September 30, 2018, totaled 177.4 million Euros ($205.9 million) (December 31, 2017 – 194.1 million Euros ($233.0 million)). Interest payments are based on EURIBOR plus margins, which margins ranged from 0.60% to 1.95% as at September 30, 2018, and the loans require monthly and semi-annual interest and principal payments. The term loans have varying maturities through 2024. The term loans are collateralized by first-priority mortgages on two of the Partnership's vessels to which the loans relate, together with certain other related security and are guaranteed by the Partnership and one of its subsidiaries. As at September 30, 2018, the Teekay Nakilat Joint Venture, which the Partnership has a 70% ownership interest, has a $3.3 million loan payable to its 30% non-controlling interest owner. The interest on the loan is based on LIBOR plus 1.0% and is payable on demand. The weighted-average interest rates for the Partnership’s long-term debt outstanding at September 30, 2018 and December 31, 2017 were 4.17% and 3.34%, respectively. These rates do not reflect the effect of related interest rate swaps that the Partnership has used to economically hedge certain of its floating-rate debt (see Note 11). At September 30, 2018, the margins on the Partnership’s outstanding revolving credit facilities and term loans ranged from 0.30% to 3.25%. All Euro-denominated term loans and NOK-denominated bonds are revalued at the end of each period using the then-prevailing U.S. Dollar exchange rate. Due primarily to the revaluation of the Partnership’s NOK-denominated bonds, the Partnership’s Euro-denominated term loans and restricted cash, and the change in the valuation of the Partnership’s cross-currency swaps, the Partnership incurred foreign exchange gains (losses) of $1.4 million and $(5.1) million for the three months ended September 30, 2018 and 2017, respectively, and $8.6 million and $(24.5) million for the nine months ended September 30, 2018 and 2017, respectively. The aggregate annual long-term debt principal repayments required subsequent to September 30, 2018, after giving effect to the November 2018 revolving credit facility refinancing described above, are $59.4 million (remainder of 2018), $134.7 million (2019), $590.2 million (2020), $409.9 million (2021), $85.8 million (2022) and $638.6 million (thereafter). Certain loan agreements require that (a) the Partnership maintain minimum levels of tangible net worth and aggregate liquidity, (b) the Partnership maintain certain ratios of vessel values related to the relevant outstanding loan principal balance, (c) the Partnership not exceed a maximum amount of leverage, and (d) certain of the Partnership’s subsidiaries maintain restricted cash deposits. As at September 30, 2018, the Partnership has four facilities with an aggregate outstanding loan balance of $316.6 million that require it to maintain minimum vessel-value-to-outstanding-loan-principal-balance ratios ranging from 110% to 135%, which as at September 30, 2018, ranged from 122% to 190% which exceeded the required ratios for the four facilities. The vessel values used in calculating these ratios are the appraised values provided by third parties where available, or prepared by the Partnership based on second-hand sale and purchase market data. Since vessel values can be volatile, the Partnership’s estimates of market value may not be indicative of either the current or future prices that could be obtained if the Partnership sold any of the vessels. The Partnership’s ship-owning subsidiaries may not, among other things, pay dividends or distributions if the Partnership's subsidiaries are in default under their term loans or revolving credit facilities and, in addition, one of the term loans in the Teekay Nakilat Joint Venture requires it to satisfy a minimum vessel value to outstanding loan principal balance ratio to pay dividends. As at September 30, 2018, the Partnership was in compliance with all covenants relating to the Partnership’s credit facilities and other long-term debt. |
Income Tax |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax | Income Tax The components of the provision for income taxes were as follows:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions a) The following table and related footnotes provide information about certain of the Partnership's related party transactions for the periods indicated:
b) As at September 30, 2018 and December 31, 2017, non-interest-bearing advances to affiliates totaled $5.2 million and $7.3 million, respectively, and non-interest-bearing advances from affiliates totaled $20.1 million and $12.1 million, respectively. These advances are unsecured and have no fixed repayment terms. Affiliates are entities that are under common control with the Partnership. c) The Partnership’s Suezmax tanker, the Toledo Spirit, operates pursuant to a time-charter contract that increases or decreases the otherwise fixed-hire rate established in the charter depending on the spot charter rates that the Partnership would have earned had it traded the vessel in the spot tanker market. The time-charter contract ends in August 2025, although the charterer had the right to terminate the time-charter in August 2018. The charterer notified the Partnership in May 2018 of its intention to terminate its charter contract subject to certain conditions being met and the receipt of certain third-party approvals. The Partnership has entered into an agreement with Teekay Corporation under which Teekay Corporation pays the Partnership any amounts payable to the charterer as a result of spot rates being below the fixed rate, and the Partnership pays Teekay Corporation any amounts payable to the Partnership as a result of spot rates being in excess of the fixed rate. The amounts receivable or payable to Teekay Corporation are settled annually (see Notes 3 and 11). d) The Partnership entered into services agreements with certain subsidiaries of Teekay Corporation pursuant to which the Teekay Corporation subsidiaries provide the Partnership with shipbuilding and site supervision services related to certain LNG carrier newbuildings the Partnership has ordered. These costs are capitalized and included as part of advances on newbuilding contracts in the Partnership’s consolidated balance sheets. For the three and nine months ended September 30, 2018, the Partnership incurred shipbuilding and site supervision costs of $5.9 million and $12.8 million, respectively ($4.0 million and $13.4 million for the three and nine months ended September 30, 2017, respectively). e) The Partnership entered into an operation and maintenance contract with the Bahrain LNG Joint Venture and an operating and maintenance subcontract with Teekay Marine Solutions (Bermuda) Ltd. (or TMS), an entity wholly-owned by Teekay Tankers Ltd., which is controlled by Teekay Corporation, relating to the LNG regasification terminal in Bahrain. The Partnership, as the contractor, and TMS, as the subcontractor, agreed to provide pre-mobilization services up to August 2018, and mobilization services and other general operational and maintenance services of the facility thereafter. The subcontractor fees from TMS of $nil and $0.2 million for the three and nine months ended September 30, 2018, respectively ($0.1 million and $0.3 million for the three and nine months ended September 30, 2017, respectively), are included in general and administrative expenses in the Partnership’s consolidated statements of income (loss). Cost recoveries from the Bahrain LNG Joint Venture of a nominal amount and $0.2 million for the three and nine months ended September 30, 2018, respectively (nominal and $0.2 million for the three and nine months ended September 30, 2017, respectively), are included in voyage revenues in the Partnership's consolidated statements of income (loss). |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Partnership uses derivative instruments in accordance with its overall risk management policy. Foreign Exchange Risk The Partnership entered into cross-currency swaps concurrently with the issuance of its NOK-denominated senior unsecured bonds (see Note 8), and pursuant to these swaps, the Partnership receives the principal amount in NOK on maturity dates of the swaps in exchange for payments of a fixed U.S. Dollar amount. In addition, the cross-currency swaps exchange a receipt of floating interest in NOK based on NIBOR plus a margin for a payment of U.S. Dollar fixed interest. The purpose of the cross-currency swaps is to economically hedge the foreign currency exposure on the payment of interest and principal of the Partnership’s NOK-denominated bonds due in 2020, 2021 and 2023, and to economically hedge the interest rate exposure. The following table reflects information relating to the cross-currency swaps as at September 30, 2018.
Interest Rate Risk The Partnership enters into interest rate swaps which exchange a receipt of floating interest for a payment of fixed interest to reduce the Partnership’s exposure to interest rate variability on certain of its outstanding floating-rate debt. As at September 30, 2018, the Partnership was committed to the following interest rate swap agreements:
As at September 30, 2018, the Partnership had multiple interest rate swaps and cross-currency swaps with the same counterparty that are subject to the same master agreements. Each of these master agreements provides for the net settlement of all swaps subject to that master agreement through a single payment in the event of default or termination of any one swap. The fair value of these derivative instruments is presented on a gross basis in the Partnership’s consolidated balance sheets. As at September 30, 2018, these interest rate swaps and cross-currency swaps had an aggregate fair value asset of $17.3 million and an aggregate fair value liability of $29.2 million. As at September 30, 2018, the Partnership had $nil (December 31, 2017 – $22.3 million) on deposit as security for swap liabilities under certain master agreements. Credit Risk The Partnership is exposed to credit loss in the event of non-performance by the counterparties to the interest rate swap agreements. In order to minimize counterparty risk, the Partnership only enters into derivative transactions with counterparties that are rated A- or better by Standard & Poor’s or A3 or better by Moody’s at the time of the transactions. In addition, to the extent practical, interest rate swaps are entered into with different counterparties to reduce concentration risk. Other Derivative In order to reduce the variability of its revenue, the Partnership has entered into an agreement with Teekay Corporation under which Teekay Corporation pays the Partnership any amounts payable to the charterer of the Toledo Spirit as a result of spot rates being below the fixed rate, and the Partnership pays Teekay Corporation any amounts payable to the Partnership by the charterer of the Toledo Spirit as a result of spot rates being in excess of the fixed rate. The fair value of the derivative asset at September 30, 2018 was $2.2 million (December 31, 2017 – asset of $1.6 million). The following table presents the classification and fair value amounts of derivative instruments, segregated by type of contract, on the Partnership’s consolidated balance sheets.
Realized and unrealized gains (losses) relating to non-designated interest rate swap agreements, interest rate swaption agreements, and the Toledo Spirit time-charter derivative are recognized in earnings and reported in realized and unrealized gain (loss) on non-designated derivative instruments in the Partnership’s consolidated statements of income (loss). The effect of the gain (loss) on these derivatives on the Partnership’s consolidated statements of income (loss) is as follows:
Realized and unrealized gains (losses) relating to cross-currency swap agreements are recognized in earnings and reported in foreign currency exchange gain (loss) in the Partnership’s consolidated statements of income (loss). The effect of the gain (loss) on these derivatives on the Partnership's consolidated statements of income (loss) is as follows:
For the periods indicated, the following table presents the effective and ineffective portions of gains or losses on interest rate swap agreements designated and qualifying as cash flow hedges. The following table excludes any interest rate swap agreements designated and qualifying as cash flow hedges in the Partnership’s equity-accounted joint ventures.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies a) The Partnership’s share of commitments to fund newbuilding and other construction contract costs as at September 30, 2018 are as follows:
b) Management is required to assess whether the Partnership will have sufficient liquidity to continue as a going concern for the one-year period following the issuance of its financial statements. The Partnership completed a number of financings and refinancings over the past 12 months, as well as the Partnership's refinancing and upsizing of its $190 million revolving credit facility with a new $225 million revolving credit facility in early-November 2018 (see Note 17b). Based on the Partnership’s liquidity at the date these consolidated financial statements were issued and the liquidity it expects to generate from operations over the following year, the Partnership estimates that it will have sufficient liquidity to continue as a going concern for at least the one-year period following the issuance of these consolidated financial statements. c) The Partnership owns a 70% interest in the Teekay Nakilat Joint Venture, which wholly owns a subsidiary that was the lessee under three separate 30-year capital lease arrangements with a third party for three LNG carriers (or the RasGas II LNG Carriers). Under the terms of the leases, the lessor claimed tax depreciation on the capital expenditures it incurred to acquire these vessels. As is typical in these leasing arrangements, tax and change of law risks were assumed by the lessee, in this case the Teekay Nakilat Joint Venture. Lease payments under the lease arrangements were based on certain tax and financial assumptions at the commencement of the leases in 2006 and subsequently adjusted to maintain the lessor's agreed after-tax margin. On December 22, 2014, the Teekay Nakilat Joint Venture terminated the leasing of the RasGas II LNG Carriers; however, the joint venture remained obligated to the lessor for changes in tax treatment. The UK taxing authority (or HMRC) has been challenging the use by third parties of similar lease structures in the United Kingdom courts. One of those challenges was eventually decided in favor of HMRC (Lloyds Bank Equipment Leasing No. 1 or LEL1), with the lessor and lessee choosing not to appeal further. The LEL1 tax case concluded that capital allowances are not available to the lessor. On the basis of this conclusion, HMRC is now asking lessees on other leases, including the Teekay Nakilat Joint Venture, to accept that capital allowances are not available to their lessors. Under the terms of the Teekay Nakilat Joint Venture lease, the lessor is entitled to make a determination that additional rentals are due, even where a court has not made a determination on whether capital allowances are available or where discussions are otherwise ongoing with HMRC on the matter (such that additional rentals paid may be rebated in due course if the final tax position is not as determined by the lessor). On May 10, 2018, the lessor made a determination that additional rentals are due under the leases. As a result, during the nine months ended September 30, 2018, the Teekay Nakilat Joint Venture recognized an additional tax indemnification guarantee liability of GBP 37.9 million or $53.0 million, included as part of other income (expense) in the Partnership's consolidated statements of income (loss). In June 2018, the Teekay Nakilat Joint Venture partially paid the tax indemnification guarantee liability by releasing its $7.0 million deposit it had made with the lessor. In July and August 2018, the Teekay Nakilat Joint Venture paid the remaining balance of the tax indemnification guarantee liability which was $56.0 million, based on the GBP/USD foreign currency exchange rate at the time the payments were made. |
Total Capital and Net Income (Loss) Per Unit |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Capital and Net (Loss) Income Per Unit | Total Capital and Net Income (Loss) Per Common Unit At September 30, 2018, approximately 68.4% of the Partnership’s common units outstanding were held by the public. The remaining common units, as well as the 2% general partner interest, were held by a subsidiary of Teekay Corporation. All of the Partnership's outstanding Series A Cumulative Redeemable Perpetual Preferred Units (or the Series A Preferred Units) and Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (or the Series B Preferred Units) are held by the public. Net Income (Loss) Per Common Unit Limited partners' interest in net income (loss) per common unit is determined by dividing net income (loss), after deducting the amount of net income (loss) attributable to the non-controlling interests, the General Partner’s interest and the distributions on the Series A and Series B Preferred Units by the weighted-average number of common units outstanding during the period. The computation of limited partners’ interest in net income per common unit - diluted assumes the exercise of all dilutive restricted units using the treasury stock method. The computation of limited partners’ interest in net loss per common unit - diluted does not assume such exercises as the effect would be anti-dilutive. The distributions payable on the Series A and Series B Preferred Units for the three and nine months ended September 30, 2018 were $6.4 million and $19.3 million, respectively (three and nine months ended September 30, 2017 were $2.8 million and $8.3 million, respectively).
The General Partner’s and common unitholders’ interests in net income (loss) are calculated as if all net income (loss) was distributed according to the terms of the Partnership’s partnership agreement, regardless of whether those earnings would or could be distributed. The partnership agreement does not provide for the distribution of net income; rather, it provides for the distribution of available cash, which is a contractually defined term that generally means all cash on hand at the end of each quarter after establishment of cash reserves determined by the General Partner’s board of directors to provide for the proper conduct of the Partnership’s business, including reserves for maintenance and replacement capital expenditure and anticipated credit needs. In addition, the General Partner is entitled to incentive distributions if the amount the Partnership distributes to common unitholders with respect to any quarter exceeds specified target levels. Unlike available cash, net income (loss) is affected by non-cash items, such as depreciation and amortization, unrealized gains or losses on derivative instruments and foreign currency translation gains or losses. During the three and nine months ended September 30, 2018 and 2017, quarterly cash distributions were below $0.4625 per common unit and, consequently, the assumed distribution of net income (loss) was based on the limited partners' and General Partner’s ownership percentage for purposes of the net income (loss) per common unit calculation. For more information on the increasing percentages used to calculate the General Partner’s interest in net income (loss), please refer to the Partnership’s Annual Report on Form 20-F for the year ended December 31, 2017. Pursuant to the partnership agreement, allocations to partners are made on a quarterly basis. |
Unit-Based Compensation |
9 Months Ended |
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Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Unit-Based Compensation | Unit-Based Compensation In March 2018, a total of 17,498 common units, with an aggregate value of $0.3 million, were granted to the non-management directors of the General Partner as part of their annual compensation for 2018. The Partnership grants restricted unit awards as incentive-based compensation under the Teekay LNG Partners L.P. 2005 Long-Term Incentive Plan to certain of the Partnership’s employees and to certain employees of Teekay Corporation’s subsidiaries that provide services to the Partnership. The Partnership measures the cost of such awards using the grant date fair value of the award and recognizes that cost, net of estimated forfeitures, over the requisite service period. The requisite service period consists of the period from the grant date of the award to the earlier of the date of vesting or the date the recipient becomes eligible for retirement. For unit-based compensation awards subject to graded vesting, the Partnership calculates the value for the award as if it was one single award with one expected life and amortizes the calculated expense for the entire award on a straight-line basis over the requisite service period. The compensation costs of the Partnership’s unit-based compensation awards are reflected in general and administrative expenses in the Partnership’s consolidated statements of income (loss). During March 2018 and 2017, the Partnership granted 62,283 and 60,809 restricted units, respectively, with grant date fair values of $1.2 million and $1.0 million, respectively, to certain of the Partnership’s employees and to certain employees of Teekay Corporation’s subsidiaries who provide services to the Partnership, based on the Partnership’s closing unit price on the grant date. Each restricted unit is equal in value to one of the Partnership’s common units plus reinvested distributions from the grant date to the vesting date. The restricted units vest equally over three years from the grant date. Any portion of a restricted unit award that is not vested on the date of a recipient’s termination of service is canceled, unless their termination arises as a result of the recipient’s retirement, in which case, the restricted unit award will continue to vest in accordance with the vesting schedule. Upon vesting, the value of the restricted unit awards is paid to each recipient in the form of units, net of withholding tax. During the three and nine months ended September 30, 2018, a total of nil and 60,680 restricted units (three and nine months ended September 30, 2017 – nil and 54,999 restricted units, respectively), with a fair value of $nil and $1.0 million (three and nine months ended September 30, 2017 – $nil and $0.8 million), vested. During the three and nine months ended September 30, 2018, the Partnership recognized expenses of $0.2 million and $1.1 million, respectively (three and nine months ended September 30, 2017 – $0.1 million and $0.9 million, respectively), relating to the restricted units. |
Write-down and Sale of Vessels |
9 Months Ended |
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Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Write-down and Sale of Vessels | Write-down and Sale of Vessels a)In June 2017 and August 2017, the charterer of the European Spirit and African Spirit Suezmax tankers gave formal notices to the Partnership that it would not exercise its one-year extension option under the charter contracts and redelivered the tankers in August 2017 and November 2017, respectively. Upon receiving these notifications, the Partnership commenced marketing the vessels for sale and expects to sell the vessels in 2018 (see Note 17a). Based on second-hand market comparable values at the time, the Partnership wrote-down the vessels to their estimated resale values and recorded aggregate write-downs of $12.5 million and $25.1 million for the three and nine months ended September 30, 2017, respectively, on these two conventional tankers. The Partnership recorded further aggregate write-downs on these two conventional tankers totaling $2.2 million and $7.9 million for the three and nine months ended September 30, 2018, respectively. Both vessels are classified as held for sale in the Partnership’s consolidated balance sheets as at September 30, 2018 and December 31, 2017. b) Under the Partnership's charter contracts for the Teide Spirit and Toledo Spirit Suezmax tankers, the charterer, who is also the owner of the vessels, has the option to cancel the charter contracts 13 years following commencement of the respective charter contracts. In August 2017, the charterer of the Teide Spirit gave formal notification to the Partnership of its intention to terminate its charter contract subject to certain conditions being met and third-party approvals being received. In October 2017, the charterer notified the Partnership that it was marketing the Teide Spirit for sale and, upon sale of the vessel, it would concurrently terminate its existing charter contract with the Partnership. The charterer’s cancellation option for the Toledo Spirit was first exercisable in August 2018. On May 20, 2018, the charterer of the Toledo Spirit gave formal notification to the Partnership of its intention to terminate its charter contract subject to certain conditions being met and the receipt of certain third-party approvals. As at September 30, 2018, the charterer is marketing the vessel for sale. The Partnership wrote-down the Teide Spirit and Toledo Spirit to their estimated fair values based on their expected future discounted cash flows and recorded an aggregate write-down of $25.5 million for the three and nine months ended September 30, 2017. In February 2018, the charterer, who is also the owner, of the Partnership's vessel related to capital lease, the Teide Spirit, sold the vessel to a third party. As a result of this sale, the Partnership returned the vessel to the owner, and the full amount of the associated obligation related to capital lease was concurrently extinguished and no gain or loss was recognized during the nine months ended September 30, 2018. In addition, the Partnership recorded associated restructuring charges of $0.4 million and $1.8 million for the three and nine months ended September 30, 2018, respectively, in the Partnership's consolidated statements of income (loss). The remaining balance of unpaid restructuring charges of $0.6 million as at September 30, 2018, is included in accrued liabilities in the Partnership's consolidated balance sheets. c) In March 2018, the carrying value of the Alexander Spirit conventional tanker was written down to its estimated fair value, using an appraised value, as a result of changes in the Partnership's expectations of the vessel's future opportunities once its current charter contract ends in 2019. The impairment charge of $13.0 million is included in write-down of vessels for the nine months ended September 30, 2018 in the Partnership's consolidated statements of income (loss). d) In June 2018, the carrying values for four of the Partnership's seven wholly-owned multi-gas carriers (the Napa Spirit, Pan Spirit, Camilla Spirit and Cathinka Spirit), were written down to their estimated fair values, taking into consideration vessel appraised values, as a result of the Partnership's evaluation of alternative strategies for these assets, the current charter rate environment and the outlook for charter rates for these vessels at that time. The total impairment charge of $33.0 million is included in write-down of vessels for the nine months ended September 30, 2018 in the Partnership's consolidated statements of income (loss). |
Supplemental Cash Flow Information |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information | Supplemental Cash Flow Information a) The following is a tabular reconciliation of the Partnership's cash, cash equivalents and restricted cash balances for the periods presented in the Partnership's consolidated statements of cash flows:
The Partnership maintains restricted cash deposits relating to certain term loans, collateral for cross-currency swaps (see Note 11), project tenders and amounts received from charterers to be used only for dry-docking expenditures and emergency repairs, which cash totaled $66.6 million and $95.2 million as at September 30, 2018 and December 31, 2017, respectively. b) During the nine months ended September 30, 2017, the Partnership acquired a 100% ownership interest in Skaugen Gulf Petchem Carriers B.S.C.(c) (or the Skaugen LPG Joint Venture), which owned the LPG carrier Norgas Sonoma, from I.M. Skaugen SE (or Skaugen) (35%), The Oil & Gas Holding Company B.S.C.(c) (35%) and Suffun Bahrain W.L.L. (30%) for $13.2 million. The Partnership applied $4.6 million of the outstanding hire owed by Skaugen to the Partnership as a portion of the purchase price to acquire the Skaugen LPG Joint Venture, which was treated as a non-cash transaction in the Partnership’s consolidated statements of cash flows. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events a) On October 9, 2018, the Partnership sold the African Spirit Suezmax tanker for net proceeds of $12.8 million. On November 20, 2018, the Partnership reached an agreement to sell the European Spirit Suezmax tanker for net proceeds of $15.7 million. The Partnership expects to deliver the vessel to the buyer in late-2018. b) On November 5, 2018, the Partnership refinanced its $190 million revolving credit facility, which was scheduled to mature in November 2018, with a new $225 million revolving credit facility maturing in November 2020. |
Accounting Pronouncements (Policies) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||
New accounting pronouncements | In May 2014, the Financial Accounting Standards Board (or FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, (or ASU 2014-09). ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue as each performance obligation is satisfied. ASU 2014-09 became effective for the Partnership as of January 1, 2018, and may be applied, at the Partnership’s option, retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Partnership adopted ASU 2014-09 as a cumulative-effect adjustment as of such date. The Partnership has elected to apply ASC 2014-09 only to those contracts that were not completed as of January 1, 2018. The Partnership has identified the following differences on adoption of ASU 2014-09:
In February 2016, FASB issued Accounting Standards Update 2016-02, Leases (or ASU 2016-02). ASU 2016-02 establishes a right-of-use model that requires a lessee to record a right of use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. For lessees, leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 requires lessors to classify leases as a sales-type, direct financing, or operating lease. A lease is a sales-type lease if any one of five criteria are met, each of which indicate that the lease, in effect, transfers control of the underlying asset to the lessee. If none of those five criteria are met, but two additional criteria are both met, indicating that the lessor has transferred substantially all of the risks and benefits of the underlying asset to the lessee and a third party, the lease is a direct financing lease. All leases that are not sales-type leases or direct financing leases are operating leases. ASU 2016-02 is effective January 1, 2019, with early adoption permitted. FASB issued an additional accounting standards update in July 2018 that made further amendments to accounting for leases, including allowing the use of a transition approach whereby a cumulative effect adjustment is made as of the effective date, with no retrospective effect. The Partnership will adopt ASU 2016-02 on January 1, 2019. To determine the cumulative effect adjustment, the Partnership will not reassess lease classification, initial direct costs for any existing leases and whether any expired or existing contracts are or contain leases. The Partnership has identified the following differences based on the work performed to date:
In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (or ASU 2016-15), which, among other things, provides guidance on two acceptable approaches of classifying distributions received from equity-method investees in the statements of cash flows and application of the predominance principle on the cash flow statement classification of cash receipts and payments that have aspects of more than one class of cash flows. ASU 2016-15 became effective for the Partnership as of January 1, 2018, with a retrospective approach required on adoption. The Partnership has elected to classify distributions received from equity-method investees in the statement of cash flows based on the nature of the distribution. In addition, the adoption of ASU 2016-15 resulted in $25.7 million of cross-currency swap payments that were related to the principal repayment of long-term debt for the nine months ended September 30, 2017, being reclassified from unrealized foreign currency exchange (gain) loss including the effect of the termination of cross-currency swaps in net operating cash flow to scheduled repayments of long-term debt and settlement of related swaps in net financing cash flow as the amounts related to the termination or final settlement of the cross-currency swap. In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows: Restricted Cash (or ASU 2016-18). ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Entities are also required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. ASU 2016-18 became effective for the Partnership as of January 1, 2018. Adoption of ASU 2016-18 resulted in the Partnership including in the consolidated statements of cash flows changes in cash, cash equivalents and restricted cash. In August 2017, the FASB issued Accounting Standards Update 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities (or ASU 2017-12). ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires, for qualifying hedges, the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also modifies the accounting for components excluded from the assessment of hedge effectiveness, eases documentation and assessment requirements and modifies certain disclosure requirements. ASU 2017-12 will be effective for the Partnership as of January 1, 2019. The Partnership is currently evaluating the effect of adopting this new guidance. In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (or ASU 2016-13). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This update is effective for the Partnership as of January 1, 2020, with a modified-retrospective approach required on adoption. The Partnership is currently evaluating the effect of adopting this new guidance. |
Financial Instruments (Tables) |
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Fair Value of Partnership's Financial Instruments on Recurring Basis | The following table includes the estimated fair value and carrying value of those assets and liabilities that are measured at fair value on a recurring and non-recurring basis, as well as the estimated fair value of the Partnership’s financial instruments that are not accounted for at fair value on a recurring basis.
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Changes in Fair Value of Assets Measured on Recurring Basis Using Significant Unobservable Inputs (Level 3) | Changes in fair value during the nine months ended September 30, 2018 and 2017 for the Partnership’s other derivative instrument, the Toledo Spirit time-charter derivative, which is described below and is measured at fair value on a recurring basis using significant unobservable inputs (Level 3), are as follows:
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Summary of Partnership's Loan Receivables and Other Financing Receivables | The following table contains a summary of the Partnership’s loan receivables and other financing receivables by type of borrower and the method by which the Partnership monitors the credit quality of its financing receivables on a quarterly basis.
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Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information | The following table includes results for the Partnership’s segments for the periods presented in these financial statements.
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Reconciliation of Total Segment Assets | A reconciliation of total segment assets to total assets presented in the consolidated balance sheets is as follows:
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Chartered-in Vessels (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | The minimum estimated charter hire and rental payments for the remainder of the year and the following four fiscal years, as at September 30, 2018, for the Partnership’s chartered-in vessel accounted for as an operating lease were as follows:
The carrying amount of tax indemnification guarantees of the Partnership relating to the leasing arrangement through the Teekay Tangguh Joint Venture as at September 30, 2018 was $6.7 million (December 31, 2017 – $7.1 million) and is included as part of other long-term liabilities in the Partnership’s consolidated balance sheets. The tax indemnification is for the duration of the lease contracts with the third party plus the years it would take for the lease payments to be statute barred, which will end in 2033 for the vessels. Although there is no maximum potential amount of future payments, the Teekay Tangguh Joint Venture may terminate the lease arrangement on a voluntary basis at any time. If the lease arrangement terminates, the Teekay Tangguh Joint Venture will be required to pay termination sums to the lessor sufficient to repay the lessor’s investment in the vessels and to compensate it for the tax effect of the terminations, including recapture of any tax depreciation. (ii) As at September 30, 2018, the Partnership is chartering in a vessel at a fixed-rate from its 52%-owned joint venture with Marubeni Corporation (or the Teekay LNG-Marubeni Joint Venture) for a period of two years until September 2020. The Partnership recognizes the expense from this charter on a straight-line basis over the firm period of the charter and is presented as time-charter hire expense in the Partnership's consolidated statements of income (loss). |
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Schedule of Future Minimum Lease Payments for Capital Leases | The minimum estimated charter hire and rental payments for the remainder of the year and the following four fiscal years, as at September 30, 2018, for the Partnership’s chartered-in vessels accounted for as capital leases were:
The Partnership is also a party to capital leases on eight LNG carriers, the Creole Spirit, the Oak Spirit, the Torben Spirit, the Macoma, the Murex, the Magdala, the Myrina and the Megara. Upon delivery of these eight LNG carriers between February 2016 and July 2018, the Partnership sold these respective vessels to third parties (or the Lessors) and leased them back under 10-year bareboat charter contracts ending in 2026 through to 2028. The bareboat charter contracts are accounted for as obligations related to capital leases and have fixed-price purchase obligations at the end of the lease terms. The Partnership understands that these vessels and lease operations are the only assets and operations of the Lessors. The Partnership operates the vessels during the lease term and as a result, is considered to be, under GAAP, each Lessor's primary beneficiary; therefore, the Partnership consolidates the Lessors for financial reporting purposes as VIEs. The liabilities of the Lessors are loans and are non-recourse to the Partnership. The amounts funded to the Lessors in order to purchase the vessels materially match the funding to be paid by the Partnership's subsidiaries under the sale-leaseback transaction. As a result, the amounts due by the Partnership's subsidiaries to the Lessors have been included in obligations related to capital leases as representing the Lessors' loans. The obligations of the Partnership under the bareboat charter contracts are guaranteed by the Partnership. In addition, the guarantee agreements require the Partnership to maintain minimum levels of tangible net worth and aggregate liquidity, and not to exceed a maximum amount of leverage. As at September 30, 2018, the Partnership was in compliance with all covenants in respect of the obligations related to capital leases. |
Revenue (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following tables contain the Partnership’s revenue for the three and nine months ended September 30, 2018 and 2017, by contract type and by segment.
The following table contains the Partnership’s revenue from contracts that do not contain a lease element and the non-lease element of time-charter contracts accounted for as direct financing leases for the three and nine months ended September 30, 2018 and 2017.
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Schedule of Capital Leased Assets | The following table lists the components of the net investments in direct financing leases:
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Long-Term Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Long-Term Debt |
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Income Tax (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Provision for Income Taxes | The components of the provision for income taxes were as follows:
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Related Party Transactions (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | a) The following table and related footnotes provide information about certain of the Partnership's related party transactions for the periods indicated:
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Derivative Instruments and Hedging Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cross Currency Swap Agreements | The following table reflects information relating to the cross-currency swaps as at September 30, 2018.
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Interest Rate Swap Agreements | As at September 30, 2018, the Partnership was committed to the following interest rate swap agreements:
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Location and Fair Value Amounts of Derivative Instruments | The following table presents the classification and fair value amounts of derivative instruments, segregated by type of contract, on the Partnership’s consolidated balance sheets.
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Gain (Loss) for Derivative Instruments Not Designated or Qualifying as Hedging Instruments | The effect of the gain (loss) on these derivatives on the Partnership’s consolidated statements of income (loss) is as follows:
The effect of the gain (loss) on these derivatives on the Partnership's consolidated statements of income (loss) is as follows:
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Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The following table excludes any interest rate swap agreements designated and qualifying as cash flow hedges in the Partnership’s equity-accounted joint ventures.
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Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unrecorded Unconditional Purchase Obligations Disclosure | The Partnership’s share of commitments to fund newbuilding and other construction contract costs as at September 30, 2018 are as follows:
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Total Capital and Net Income (Loss) Per Unit (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted |
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Supplemental Cash Flow Information Schedule (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures | The following is a tabular reconciliation of the Partnership's cash, cash equivalents and restricted cash balances for the periods presented in the Partnership's consolidated statements of cash flows:
|
Basis of Presentation Narrative (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Proceeds from financing related to sales and leaseback of vessels | $ 370,050 | $ 335,830 |
Restatement Adjustment | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Decrease in net investing cash flow | 336,000 | |
Proceeds from financing related to sales and leaseback of vessels | $ 336,000 |
Financial Instruments - Changes in Fair Value of Asset Measured on Recurring Basis Using Significant Unobservable Inputs (Level 3) (Details) - Toledo Spirit time-charter derivative - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Fair Value, Assets Measured on Recurring Basis | ||
Fair value at beginning of period | $ 1,648 | $ 2,134 |
Realized and unrealized gains included in earnings | 1,649 | 1,410 |
Settlement payments | (1,137) | (1,154) |
Fair value at end of period | $ 2,160 | $ 2,390 |
Financial Instruments - Additional Information (Details) - Toledo Spirit time-charter derivative $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2017 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Average daily tanker rate over remaining duration of charter contract | $ 17 | $ 18 | |
Measurement Input, Discount Rate | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Embedded derivative input | 0.095 | 0.084 |
Financial Instruments - Summary of Partnership's Loan Receivables and Other Financing Receivables (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||
Direct financing leases | $ 577,696 | $ 495,990 |
Other receivables: | ||
Total loans receivables and other financing receivables | 708,965 | 633,151 |
Payment activity | Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Direct financing leases | 577,696 | 495,990 |
Other receivables: | ||
Long-term receivable and long-term accrued revenue included in accounts receivable and other assets | 4,043 | 5,476 |
Other internal metrics | Performing | ||
Other receivables: | ||
Advances to equity-accounted joint ventures (note 7) | $ 127,226 | $ 131,685 |
Segment Reporting - Segment Reporting Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Voyage revenues | $ 123,336 | $ 104,285 | $ 360,957 | $ 306,369 |
Voyage expenses | (7,956) | (1,466) | (21,708) | (3,899) |
Vessel operating expenses | (27,621) | (26,724) | (90,057) | (76,113) |
Time-charter hire expense (note 10a) | (1,690) | 0 | (1,690) | 0 |
Depreciation and amortization | (32,238) | (24,980) | (91,299) | (77,894) |
General and administrative expenses | (4,183) | (2,793) | (17,850) | (11,592) |
Write-down of vessels | (2,201) | (38,000) | (53,863) | (50,600) |
Restructuring charges | (449) | 0 | (1,845) | 0 |
Income (loss) from vessel operations | 46,998 | 10,322 | 82,645 | 86,271 |
Equity income | 14,679 | 1,417 | 52,597 | 6,797 |
Operating Segments | Liquefied Gas Segment | ||||
Segment Reporting Information [Line Items] | ||||
Voyage revenues | 118,188 | 92,700 | 335,409 | 271,078 |
Voyage expenses | (5,731) | (716) | (12,984) | (1,664) |
Vessel operating expenses | (23,905) | (22,172) | (79,015) | (62,211) |
Time-charter hire expense (note 10a) | (1,690) | 0 | (1,690) | 0 |
Depreciation and amortization | (31,309) | (22,580) | (87,191) | (69,639) |
General and administrative expenses | (3,972) | (2,330) | (15,958) | (9,283) |
Write-down of vessels | 0 | 0 | (33,000) | 0 |
Restructuring charges | 0 | 0 | 0 | 0 |
Income (loss) from vessel operations | 51,581 | 44,902 | 105,571 | 128,281 |
Equity income | 14,679 | 1,417 | 52,597 | 6,797 |
Operating Segments | Conventional Tanker Segment | ||||
Segment Reporting Information [Line Items] | ||||
Voyage revenues | 5,148 | 11,585 | 25,548 | 35,291 |
Voyage expenses | (2,225) | (750) | (8,724) | (2,235) |
Vessel operating expenses | (3,716) | (4,552) | (11,042) | (13,902) |
Time-charter hire expense (note 10a) | 0 | 0 | 0 | 0 |
Depreciation and amortization | (929) | (2,400) | (4,108) | (8,255) |
General and administrative expenses | (211) | (463) | (1,892) | (2,309) |
Write-down of vessels | (2,201) | (38,000) | (20,863) | (50,600) |
Restructuring charges | (449) | 0 | (1,845) | 0 |
Income (loss) from vessel operations | (4,583) | (34,580) | (22,926) | (42,010) |
Equity income | $ 0 | $ 0 | $ 0 | $ 0 |
Segment Reporting - Reconciliation of Total Segment Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Segment Reporting Information [Line Items] | ||||
Total assets | $ 5,328,489 | $ 5,019,299 | ||
Unallocated: | ||||
Cash and cash equivalents | 139,854 | 244,241 | $ 161,008 | $ 126,146 |
Advances to affiliates | 5,163 | 7,300 | ||
Operating Segments | Liquefied Gas Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 5,081,219 | 4,624,321 | ||
Operating Segments | Conventional Tanker Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 67,244 | 112,844 | ||
Unallocated | ||||
Unallocated: | ||||
Cash and cash equivalents | 139,854 | 244,241 | ||
Accounts receivable and prepaid expenses | 35,009 | 30,593 | ||
Advances to affiliates | $ 5,163 | $ 7,300 |
Chartered-in Vessels - Minimum Estimated Charter Hire Payments (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
vessel
| |
Other Commitments [Line Items] | |
Remainder of 2018 | $ 54,441 |
2019 | 119,517 |
2020 | 118,685 |
2021 | 117,772 |
2022 | $ 116,978 |
Leaseback term (in years) | 10 years |
Suezmax Tankers | |
Other Commitments [Line Items] | |
Number of capital leased assets | vessel | 1 |
LNG Carriers | |
Other Commitments [Line Items] | |
Number of capital leased assets | vessel | 8 |
Chartered-in Vessels - Operating Leases (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Lessee, Lease, Description [Line Items] | ||
Remainder of 2018 | $ 5,980 | |
2019 | 23,725 | |
2020 | 16,055 | |
2021 | 0 | |
2022 | $ 0 | |
Teekay Tangguh Joint Venture | ||
Lessee, Lease, Description [Line Items] | ||
Percentage of ownership interest | 69.00% | |
Teekay Tangguh Joint Venture | ||
Lessee, Lease, Description [Line Items] | ||
Carrying value of guarantee liability | $ 6,700 | $ 7,100 |
Teekay LNG-Marubeni Joint Venture | ||
Lessee, Lease, Description [Line Items] | ||
Joint venture co-owned percentage | 52.00% |
Revenue - Operating leases (Details) - Property Available for Operating Lease - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Property Subject to or Available for Operating Lease [Line Items] | ||
Operating leases, future minimum payments receivable, remainder of fiscal year | $ 114.5 | |
Operating leases, future minimum payments receivable, in two years | 406.2 | |
Operating leases, future minimum payments receivable, in three years | 372.9 | |
Operating leases, future minimum payments receivable, in four years | 333.2 | |
Operating leases, future minimum payments receivable, in five years | 291.9 | |
Operating leases, future minimum payments receivable, thereafter | 765.1 | |
Property subject to or available for operating lease, gross | 3,600.0 | $ 2,900.0 |
Property subject to or available for operating lease, net | 2,900.0 | 2,200.0 |
Property Subject to or Available for Operating Lease, Accumulated Depreciation | $ 708.0 | $ 646.2 |
Revenue - Contract costs (Details) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
|
Capitalized Contract Cost [Line Items] | ||
Capitalized contract cost, amortization | $ 0.1 | $ 0.2 |
Other Noncurrent Assets | ||
Capitalized Contract Cost [Line Items] | ||
Capitalized contract cost | $ 3.4 | $ 3.4 |
Long-Term Debt - USD Term Loans - Additional Information (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018
USD ($)
term_loan
vessel
|
Dec. 31, 2017
USD ($)
|
|
Debt Instrument [Line Items] | ||
Number of term loans | term_loan | 8 | |
Aggregate principal amount | $ 1,918,562 | $ 1,810,374 |
Teekay Nakilat Joint Venture | ||
Debt Instrument [Line Items] | ||
Percentage of ownership interest | 70.00% | |
Minimum | ||
Debt Instrument [Line Items] | ||
Variable interest rate on debt | 0.30% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Variable interest rate on debt | 3.25% | |
Long-term Debt | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount | $ 1,140,299 | $ 935,286 |
Number of vessels | vessel | 20 | |
Long-term Debt | LIBOR | Minimum | ||
Debt Instrument [Line Items] | ||
Variable interest rate on debt | 0.30% | |
Long-term Debt | LIBOR | Maximum | ||
Debt Instrument [Line Items] | ||
Variable interest rate on debt | 3.25% |
Income Tax (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Current | $ (1,274) | $ (750) | $ (2,348) | $ (1,224) |
Deferred | (275) | 0 | (823) | 81 |
Income tax expense | $ (1,549) | $ (750) | $ (3,171) | $ (1,143) |
Related Party Transactions - Non-interest Bearing Advances - Additional Information (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Related Party Transactions [Abstract] | ||
Advances to affiliates | $ 5,163 | $ 7,300 |
Advances from affiliates | $ 20,061 | $ 12,140 |
Related Party Transactions - Shipbuilding and Site Supervision Services - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Asset under Construction | Affiliated Entity | LNG | ||||
Related Party Transaction [Line Items] | ||||
Ship building and site supervision costs | $ 5.9 | $ 4.0 | $ 12.8 | $ 13.4 |
Related Party Transactions - Bahrain LNG and Teekay Marine Solutions - Additional Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Related Party Transaction [Line Items] | ||||
General and administrative expenses | $ 4,183,000 | $ 2,793,000 | $ 17,850,000 | $ 11,592,000 |
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
General and administrative expenses | 1,873,000 | 901,000 | 9,202,000 | 5,363,000 |
Affiliated Entity | TMS | ||||
Related Party Transaction [Line Items] | ||||
General and administrative expenses | $ 0 | 100,000 | 200,000 | 300,000 |
Affiliated Entity | Bahrain LNG Joint Venture | ||||
Related Party Transaction [Line Items] | ||||
Cost recoveries | $ 0 | $ 200,000 | $ 200,000 |
Derivative Instruments and Hedging Activities - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Interest rate swaps and cross currency swaps agreement | ||
Derivative [Line Items] | ||
Fair value of derivative asset | $ 17.3 | |
Fair value of derivative liability | 29.2 | |
Deposit as security for swap liabilities | 0.0 | |
Interest rate swaps and swaptions and cross currency swaps agreement | ||
Derivative [Line Items] | ||
Deposit as security for swap liabilities | $ 22.3 | |
Toledo Spirit time-charter derivative | ||
Derivative [Line Items] | ||
Derivative fair value, net | $ 2.2 | $ 1.6 |
Derivative Instruments and Hedging Activities - Effective Portion of Gains (Losses) on Interest Rate Swap Agreements (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Derivative [Line Items] | ||||
Effective Portion Recognized in AOCI | $ 1,437 | $ (116) | $ 6,527 | $ (1,218) |
Effective Portion Reclassified from AOCI | 37 | 0 | (211) | 0 |
Ineffective Portion | 0 | (8) | 740 | (755) |
Interest expense | ||||
Derivative [Line Items] | ||||
Effective Portion Recognized in AOCI | 1,437 | (116) | 6,527 | (1,218) |
Effective Portion Reclassified from AOCI | 37 | 0 | (211) | 0 |
Ineffective Portion | $ 0 | $ (8) | $ 740 | $ (755) |
Commitments and Contingencies - Commitments to Fund Newbuilding and Other Construction Contract Costs (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
vessel
| |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
Total | $ 828,873 |
Remainder of 2018 | 55,448 |
2019 | $ 773,425 |
Newbuildings | |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
Number of vessels | vessel | 2 |
Debt facility used to finance a portion of estimated fully built-up cost | $ 119,000 |
Number of vessels with secured financing | vessel | 1 |
Consolidated LNG carrier newbuildings | |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
Total | $ 250,062 |
Remainder of 2018 | 2,346 |
2019 | 247,716 |
Equity-accounted joint ventures | |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
Total | 578,811 |
Remainder of 2018 | 53,102 |
2019 | 525,709 |
Debt facility used to finance a portion of estimated fully built-up cost | $ 519,000 |
Total Capital and Net Income (Loss) Per Unit (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Equity [Abstract] | ||||
Limited partners’ interest in net income (loss) | $ 19,134 | $ (21,275) | $ 2,463 | $ (14,063) |
Weighted average number of common units (in units) | 79,687,499 | 79,626,819 | 79,671,051 | 79,614,731 |
Dilutive effect of unit-based compensation (in units) | 171,972 | 0 | 161,927 | 0 |
Weighted average number of common units and common unit equivalents (in units) | 79,859,471 | 79,626,819 | 79,832,978 | 79,614,731 |
Basic (usd per unit) | $ 0.24 | $ (0.27) | $ 0.03 | $ (0.18) |
Diluted (usd per unit) | $ 0.24 | $ (0.27) | $ 0.03 | $ (0.18) |
Total Capital and Net Income (Loss) Per Unit - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Class of Stock [Line Items] | ||||
Managing member or general partner, ownership interest | 2.00% | |||
Partners' capital account, distributions | $ 53,419 | |||
Public | ||||
Class of Stock [Line Items] | ||||
Members or limited partners, ownership interest | 68.40% | |||
Preferred Units | Limited Partners | ||||
Class of Stock [Line Items] | ||||
Partners' capital account, distributions | $ 6,400 | $ 2,800 | $ 19,276 | $ 8,300 |
Common Units | ||||
Class of Stock [Line Items] | ||||
Common stock, dividends, declared (in USD per share) | $ 0.4625 | $ 0.4625 | $ 0.4625 | $ 0.4625 |
Common Units | Limited Partners | ||||
Class of Stock [Line Items] | ||||
Partners' capital account, distributions | $ 33,460 |
Unit-Based Compensation (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Sep. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Restricted Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Restricted unit-based compensation granted to Partnership's employee (in units) | 62,283 | 60,809 | |||||
Grant date fair values | $ 1,200,000 | $ 1,000,000 | |||||
Restricted units, vesting period (in years) | 3 years | ||||||
Number of restricted units vested (in units) | 0 | 0 | 60,680 | 54,999 | |||
Restricted units, vested in period, fair value | $ 0 | $ 0 | $ 1,000,000 | $ 800,000 | |||
Restricted units expense | $ 200,000 | $ 100,000 | $ 1,100,000 | $ 900,000 | |||
Non-management Directors | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of common units granted (in units) | 17,498 | ||||||
Aggregate value of units issued (in units) | $ 300,000 |
Write-down and Sale of Vessels (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Aug. 31, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Property, Plant and Equipment [Line Items] | |||||
Charter contract extension, period | 1 year | ||||
Write-down of vessels | $ 2,201 | $ 38,000 | $ 53,863 | $ 50,600 | |
Restructuring charges | 449 | 0 | 1,845 | 0 | |
Suezmax Tankers | |||||
Property, Plant and Equipment [Line Items] | |||||
Write-down of vessels | 2,200 | 12,500 | 7,900 | 25,100 | |
Teide Spirit and Toledo Spirit | |||||
Property, Plant and Equipment [Line Items] | |||||
Write-down of vessels | $ 25,500 | $ (25,500) | |||
Cancellation option period (in years) | 13 years | ||||
Alexander Spirit | |||||
Property, Plant and Equipment [Line Items] | |||||
Write-down of vessels | 13,000 | ||||
Napa Spirit, Pan Spirit, Camilla Spirit and Cathinka Spirit | |||||
Property, Plant and Equipment [Line Items] | |||||
Write-down of vessels | 33,000 | ||||
Teide Spirit | |||||
Property, Plant and Equipment [Line Items] | |||||
Restructuring charges | 400 | 1,800 | |||
Unpaid restructuring charges | $ 600 | $ 600 |
Subsequent Events (Details) - USD ($) |
9 Months Ended | |||||
---|---|---|---|---|---|---|
Nov. 20, 2018 |
Oct. 09, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Nov. 05, 2018 |
Dec. 31, 2017 |
|
Subsequent Event [Line Items] | ||||||
Proceeds from sale of vessel | $ 0 | $ 20,580,000 | ||||
Line of Credit | Revolving Credit Facilities | ||||||
Subsequent Event [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 365,600,000 | $ 443,700,000 | ||||
Line of Credit | Revolving Credit Facilities | Revolving Credit Facility Maturing 2018 | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 190,000,000 | |||||
Line of Credit | Revolving Credit Facilities | Revolving Credit Facility Maturing 2020 | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 225,000,000 | |||||
African Spirit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Proceeds from sale of vessel | $ 12,800,000 | |||||
European Spirit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Proceeds from sale of vessel | $ 15,700,000 |
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