Altera Infrastructure Reports Fourth Quarter and Annual 2021 Results

Rhea-AI Summary

Altera Infrastructure GP reported its fourth quarter 2021 results, revealing revenues of $315.7 million but a net loss of $87.9 million or $(0.23) per common unit. Adjusted EBITDA increased to $165.8 million, driven by higher oil price tariff revenue and improved utilization in the Towage segment. The Partnership faced $152 million in vessel impairments contributing to the net loss. Liquidity at year-end was $191 million, slightly down from the previous quarter. Contract extensions and a newbuild delivery in 2022 were also announced.

Positive

• Adjusted EBITDA increased to $165.8 million, up from $142.2 million YoY.
• FPSO segment Adjusted EBITDA rose to $94 million, driven by oil price tariffs.
• Liquidity remains strong at $191 million, showing stability.

Negative

• Net loss was $87.9 million, worsened from $73 million YoY.
• Vessel impairments amounted to $152 million, significantly impacting net results.
• Shuttle Tanker segment Adjusted EBITDA fell to $59 million, down from $72 million YoY.

ABERDEEN, United Kingdom, Feb. 03, 2022 (GLOBE NEWSWIRE) -- Altera Infrastructure GP LLC (Altera GP), the general partner of Altera Infrastructure L.P. (Altera or the Partnership), today reported the Partnership’s results for the quarter ended December 31, 2021.

• Revenues of 315.7 million and net loss of $87.9 million, or $(0.23) per common unit, in the fourth quarter of 2021
• Adjusted EBITDA⁽¹⁾ of $165.8 million in the fourth quarter of 2021

The following table presents the Partnership's Consolidated Financial Summary:

		Three Months Ended
		December 31,		September 30,		December 31,
		2021		2021		2020
In thousands of U.S. Dollars, unaudited		$		$		$
IFRS FINANCIAL RESULTS
Revenues		315,734		295,837		278,657
Net Income (loss)		(87,879	)	(25,984	)	(73,029	)
Limited partners' interest in net income (loss) per common unit - basic		(0.23	)	(0.08	)	(0.20	)
NON-IFRS FINANCIAL MEASURE:
Adjusted EBITDA (1)		165,801		156,295		142,193

(1)   Please refer to "Non-IFRS Measures" for the definition of this term and reconciliation of this non-IFRS measure as used in this release to the most directly comparable measure under IFRS.

The Partnership generated a net loss of $88 million for the three months ended December 31, 2021, compared to a net loss of $73 million for the three months ended December 31, 2020. Net loss for the quarter reflects the impact of $152 million of vessel impairments.

Adjusted EBITDA increased to $166 million for the three months ended December 31, 2021, compared to $142 million for the same period last year. The increase was mainly driven by oil price tariff revenue in the FPSO segment and higher utilization in the Towage segment, partially offset by lower utilization in the Shuttle Tanker segment and FPSO assets in lay-up.

Operating Results

The commentary below compares certain results of the Partnership's operating segments on the basis of the non-IFRS measure of Adjusted EBITDA for the three months ended December 31, 2021 to the same period of the prior year.


The following table presents the Partnership's Adjusted EBITDA by segment:

	Three Months Ended
	December 31,		September 30,		December 31,
	2021		2021		2020
In thousands of U.S. Dollars, unaudited	$		$		$
FPSO	94,191		83,237		72,352
Shuttle Tanker	59,033		53,835		71,822
FSO	11,516		12,254		(456	)
UMS	(2,004	)	(2,100	)	(1,772	)
Towage	7,208		6,655		(743	)
Corporate/Eliminations	(4,143	)	2,414		990
Partnership Adjusted EBITDA	165,801		156,295		142,193

Fourth Quarter 2021 Compared with Fourth Quarter 2020

The Partnership's FPSO segment generated Adjusted EBITDA of $94 million for the three months ended December 31, 2021, compared to $72 million for the three months ended December 31, 2020. The increase of $22 million is mainly driven by oil price tariff revenue related to the Knarr and Petrojarl I units.

The Partnership's Shuttle Tanker segment generated Adjusted EBITDA of $59 million for the three months ended December 31, 2021, compared to $72 million for the three months ended December 31, 2020. The decrease of $13 million is mainly driven by lower utilization and the termination of the Foinaven CoA contract in May 2021.

The Partnership's FSO segment generated Adjusted EBITDA of $12 million for the three months ended December 31, 2021, compared to $nil for the three months ended December 31, 2020. The increase of $12 million is mainly driven by the absence of decommissioning and operating costs for certain vessels which left the fleet in the same quarter prior year.

The Partnership's UMS segment generated an Adjusted EBITDA loss of $(2) million for the three months ended December 31, 2021, which was in line with the same quarter prior year.

The Partnership's Towage segment generated Adjusted EBITDA of $7 million for the three months ended December 31, 2021, compared to $(1) million for the three months ended December 31, 2020. The increase of $8 million is mainly driven by higher day rates and utilization in the current quarter.

Strategic updates

Shuttle Tanker newbuildings
The Partnership's newbuild, the Altera Thule, is expected to be delivered in March 2022 and will operate off the East Coast of Canada.

Contract updates
In January 2022, a 1-year firm contract extension to May 2024 and a further 1-year option for the Petrojarl I FPSO was signed with Enauta.

The Knarr FPSO is expected to cease production on the Knarr field in the North Sea around May, 1 2022 and commence decommissioning activities.

Vessel sales
In November 2021, the Navion Stavanger shuttle tanker was delivered to its buyer for responsible recycling.

Liquidity Update
As at December 31, 2021 the Partnership had total liquidity of $191 million, compared to $195 million in the prior quarter, representing a decrease of $4 million.

In December 2021, the Partnership's subsidiary, Altera Shuttle Tankers, issued a new $180 million bond due in 2025. The proceeds were used to repay bonds due in 2022.

In relation to the above bond issue, the $70 million Shuttle revolving credit facility was cancelled and replaced by a new $70 million PIK loan by Brookfield Business Partners L.P. (or Brookfield).

Forward Looking Statements
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including, among others: the Partnership’s strategic initiatives intended to improve its debt maturity profile and enhance its liquidity and financial flexibility; and the timing of vessel deliveries, the commencement of charter contracts and the employment of newbuilding vessels. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: delays in vessel deliveries or the commencement of charter contracts or changes in expected employment of newbuilding vessels; the potential ineffectiveness of measures taken to improve the Partnership’s maturity profile and enhance its liquidity; and other factors discussed in the Partnership’s filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2021. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

About Altera Infrastructure L.P.

Altera Infrastructure L.P. is a leading global energy infrastructure services partnership primarily focused on the ownership and operation of critical infrastructure assets in the offshore oil regions of the North Sea, Brazil and the East Coast of Canada. Altera has consolidated assets of approximately $3.9 billion, comprised of 45 vessels, including floating production, storage and offloading (FPSO) units, shuttle tankers (including one newbuilding), floating storage and offtake (FSO) units, long-distance towing and offshore installation vessels and a unit for maintenance and safety (UMS). The majority of Altera’s fleet is employed on medium-term, stable contracts.

Altera's preferred units trade on the New York Stock Exchange under the symbols "ALIN PR A", "ALIN PR B" and "ALIN PR E", respectively.

For Investor Relations enquiries contact:

Jan Rune Steinsland, Chief Financial Officer
Email: investor.relations@alterainfra.com
Tel: +47 97 05 25 33
Website: www.alterainfra.com

ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands of U.S. Dollars)

		Three Months Ended						Year Ended
		December 31,						December 31,
		2021			2020			2021			2020
		$			$			$			$
Revenues		315,734			278,657			1,151,260			1,182,110
Direct operating costs		(167,976	)		(143,896	)		(654,580	)		(627,792	)
General and administrative expenses		(12,988	)		(24,217	)		(40,770	)		(44,360	)
Depreciation and amortization		(73,735	)		(81,128	)		(313,120	)		(316,317	)
Interest expense		(55,056	)		(50,511	)		(206,176	)		(192,723	)
Interest income		32			1,870			91			2,770
Equity-accounted income (loss)		(15,536	)		19,658			25,062			35,921
Impairment expense, net		(116,420	)		(83,615	)		(116,420	)		(268,612	)
Gain (loss) on dispositions, net		(2	)		5,380			10,502			3,411
Realized and unrealized gain (loss) on derivative instruments		3,788			7,190			15,732			(96,499	)
Foreign currency exchange gain (loss)		(177	)		(514	)		(825	)		(7,861	)
Gain (loss) on modification of financial liabilities, net		(10,694	)		—			(45,920	)		—
Other income (expenses), net		50,864			(844	)		48,323			(10,472	)
Income (loss) before income tax (expense) benefit		(82,166	)		(71,970	)		(126,841	)		(340,424	)
Income tax (expense) benefit
Current		(707	)		(1,303	)		(4,603	)		(6,543	)
Deferred		(5,006	)		244			(5,006	)		804
Net income (loss)		(87,879	)		(73,029	)		(136,450	)		(346,163	)
Attributable to:
Limited partners - common units		(93,667	)		(80,120	)		(160,218	)		(368,341	)
General partner		(716	)		(615	)		(1,225	)		(2,771	)
Limited partners - preferred units		7,880			7,989			31,520			32,103
Non-controlling interests in subsidiaries		(1,376	)		(283	)		(6,527	)		(7,154	)
		(87,879	)		(73,029	)		(136,450	)		(346,163	)
Basic and diluted earnings (loss) per limited partner common unit		(0.23	)		(0.20	)		(0.39	)		(0.90	)

ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands of U.S. Dollars)

		Three Months Ended						Year Ended
		December 31,						December 31,
		2021			2020			2021			2020
		$			$			$			$
Net income (loss)		(87,879	)		(73,029	)		(136,450	)		(346,163	)
Other comprehensive income (loss)
Items that will not be reclassified subsequently to net income (loss):
Pension adjustments, net of taxes		233			1,438			233			1,438
Items that may be reclassified subsequently to net income (loss):
To interest expense:
Realized gain on qualifying cash flow hedging instruments		(182	)		(189	)		(750	)		(811	)
To equity-accounted income (loss):
Realized gain on qualifying cash flow hedging instruments		(159	)		(201	)		(743	)		(966	)
Total other comprehensive income (loss)		(108	)		1,048			(1,260	)		(339	)
Comprehensive income (loss)		(87,987	)		(71,981	)		(137,710	)		(346,502	)
Attributable to:
Limited partners - common units		(93,774	)		(79,080	)		(161,468	)		(368,677	)
General partner		(717	)		(607	)		(1,235	)		(2,774	)
Limited partners - preferred units		7,880			7,989			31,520			32,103
Non-controlling interests in subsidiaries		(1,376	)		(283	)		(6,527	)		(7,154	)
		(87,987	)		(71,981	)		(137,710	)		(346,502	)

ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of U.S. Dollars)

		As at			As at			As at
		December 31,			December 31,			January 1,
		2021			2020 Restated(1)			2020 Restated(1)
		$			$			$
ASSETS
Current assets
Cash and cash equivalents		190,942			235,734			199,388
Financial assets		19,400			103,514			107,992
Accounts and other receivable, net		127,453			222,629			204,825
Vessels and equipment classified as held for sale		5,800			7,500			15,374
Inventory		26,601			16,308			18,581
Due from related parties		978			9,980			—
Other assets		43,668			37,326			16,844
Total current assets		414,842			632,991			563,004
Non-current assets
Financial assets		45,740			36,372			—
Accounts and other receivable, net		—			—			17,276
Vessels and equipment		2,869,395			3,029,415			3,025,716
Advances on newbuilding contracts		51,918			127,335			297,100
Equity-accounted investments		237,469			241,731			232,216
Deferred tax assets		—			5,153			7,000
Other assets		138,247			185,521			218,813
Goodwill		127,113			127,113			127,113
Total non-current assets		3,469,882			3,752,640			3,925,234
Total assets		3,884,724			4,385,631			4,488,238
LIABILITIES
Current liabilities
Accounts payable and other		249,297			286,295			256,114
Other financial liabilities		34,679			198,985			21,697
Borrowings		407,274			362,079			353,238
Due to related parties		—			16,126			37,810
Total current liabilities		691,250			863,485			668,859
Non-current liabilities
Accounts payable and other		49,253			128,671			222,659
Other financial liabilities		188,658			144,350			164,511
Borrowings		2,056,753			2,397,638			2,407,649
Due to related parties		797,432			605,888			423,625
Deferred tax liabilities		700			700			3,133
Total non-current liabilities		3,092,796			3,277,247			3,221,577
Total liabilities		3,784,046			4,140,732			3,890,436
EQUITY
Limited partners - common units		—			—			169,737
Limited partners - Class A common units		(4,539	)		(2,505	)		—
Limited partners - Class B common units		(314,153	)		(157,897	)		—
Limited partners - preferred units		392,248			376,512			384,274
General partner		5,603			6,828			9,587
Accumulated other comprehensive income		2,811			4,071			4,410
Non-controlling interests in subsidiaries		18,708			17,890			29,794
Total equity		100,678			244,899			597,802
Total liabilities and equity		3,884,724			4,385,631			4,488,238

(1)   The Partnership has restated its December 31, 2020 and January 1, 2020 consolidated statements of financial position to retrospectively show the change in accounting policy adopted during the year ended December 31, 2021. The impact of the accounting policy change as at December 31, 2020 and January 1, 2020 is a reclassification of the Partnerships $411.3 million and $423.6 million, respectively, outstanding senior unsecured bonds held by Brookfield from Borrowings (non-current) to Due to related parties (non-current) and $16.1 million and $16.5 million, respectively, in accrued interest on said bonds from Accounts payable and other (current) to Due to related parties (current).

 

ALTERA INFRASTRUCTURE L.P. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. Dollars)

		Year Ended December 31,
		2021			2020
		$			$
Operating Activities
Net income (loss)		(136,450	)		(346,163	)
Adjusted for the following items:
Depreciation and amortization		313,120			316,317
Equity-accounted (income) loss, net of distributions received		8,368			(6,532	)
Impairment expense, net		116,420			268,612
(Gain) loss on dispositions, net		(10,502	)		(3,411	)
Unrealized (gain) loss on derivative instruments		(173,195	)		36,045
Deferred income tax expense (recovery)		5,006			(804	)
Provisions and other items		(54,698	)		(3,503	)
Other non-cash items		59,937			34,629
Changes in non-cash working capital, net		87,289			(12,871	)
Net operating cash flow		215,295			282,319
Financing Activities
Proceeds from borrowings		276,120			312,149
Repayments of borrowings and settlement of related derivative instruments		(579,180	)		(329,073	)
Financing costs related to borrowings		(7,720	)		(8,023	)
Proceeds from borrowings related to sale and leaseback of vessels		71,400			119,073
Repayments of borrowings related to sale and leaseback of vessels		(11,335	)		(1,190	)
Financing costs related to borrowings from sale and leaseback of vessels		(584	)		(187	)
Proceeds from borrowings from related parties		147,000			205,000
Prepayment of borrowings from related parties		(30,000	)		—
Lease liability repayments		(14,506	)		(20,332	)
Capital provided by others who have interests in subsidiaries		17,950			—
Distributions to limited partners and preferred unitholders		(15,760	)		(32,103	)
Distributions to others who have interests in subsidiaries		(10,605	)		(4,750	)
Repurchase of preferred units		(24	)		(6,200	)
Net financing cash flow		(157,244	)		234,364
Investing Activities
Additions:
Vessels and equipment		(211,448	)		(479,981	)
Equity-accounted investments		(4,847	)		(3,948	)
Dispositions:
Vessels and equipment		44,894			27,996
Restricted cash		68,575			(26,520	)
Acquisition of company (net of cash acquired of $6.4 million)		—			6,430
Net investing cash flow		(102,826	)		(476,023	)
Cash and cash equivalents
Change during the year		(44,775	)		40,660
Impact of foreign exchange on cash		(17	)		(4,314	)
Balance, beginning of the year		235,734			199,388
Balance, end of the year		190,942			235,734

Non-IFRS Measures

To supplement the unaudited interim condensed consolidated financial statements, the Partnership uses Adjusted EBITDA, which is a non-IFRS financial measure, as a measure of the Partnership's performance. Adjusted EBITDA represents net income (loss) before interest expense, interest income, income tax (expense) benefit, and depreciation and amortization and is adjusted to exclude certain items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance. Such adjustments include impairment expenses, gain (loss) on dispositions, net, unrealized gain (loss) on derivative instruments, foreign currency exchange gain (loss) and certain other income or expenses. Adjusted EBITDA also excludes: realized gain or loss on interest rate swaps (as the Partnership in assessing its performance, views these gains or losses as an element of interest expense); realized gain or loss on derivative instruments resulting from amendments or terminations of the underlying instruments; realized gain or loss on foreign currency forward contracts; and equity-accounted income (loss). Adjusted EBITDA also includes the Partnership's proportionate share of Adjusted EBITDA from its equity-accounted investments and excludes the non-controlling interests' proportionate share of Adjusted EBITDA. The Partnership does not have control over the operations of, nor does it have any legal claim to the revenues and expenses of its equity-accounted investments. Consequently, the cash flow generated by the Partnership's equity-accounted investments may not be available for use by the Partnership in the period that such cash flows are generated.

Adjusted EBITDA is intended to provide additional information and should not be considered as the sole measure of the Partnership's performance or as a substitute for net income (loss) or other measures of performance prepared in accordance with IFRS. In addition, this measure does not have a standardized meaning and may not be comparable to similar measures presented by other companies. This non-IFRS measure is used by the Partnership's management, and the Partnership believes that this supplementary metric assists investors and other users of its financial reports in comparing its financial and operating performance across reporting periods and with other companies.

Non-IFRS Financial Measures

The following table includes reconciliations of Adjusted EBITDA to net income (loss) for the periods presented in the Partnership's Consolidated Financial Summary.

	Three Months Ended
	December 31,			September 30,			December 31,
	2021			2021			2020
(in thousands of U.S. Dollars, unaudited)	$			$			$
Adjusted EBITDA	165,801			156,295			142,193
Depreciation and amortization	(73,735	)		(80,576	)		(81,128	)
Interest expense	(55,056	)		(53,961	)		(50,511	)
Interest income	32			10			1,870
Expenses and gains (losses) relating to equity-accounted investments	(45,708	)		(9,635	)		(11,485	)
Impairment expense, net	(116,420	)		—			(83,615	)
Gain (loss) on dispositions, net	(2	)		1,397			5,380
Realized and unrealized gain (loss) on derivative instruments	3,788			(403	)		6,061
Foreign currency exchange gain (loss)	(177	)		(671	)		(514	)
Gain (loss) on modification of financial liabilities, net	(10,694	)		—			—
Other income (expenses), net	50,864			(35,910	)		(844	)
Adjusted EBITDA attributable to non-controlling interests	(859	)		(827	)		623
Income (loss) before income tax (expense) benefit	(82,166	)		(24,281	)		(71,970	)
Income tax (expense) benefit:
Current	(707	)		(1,703	)		(1,303	)
Deferred	(5,006	)		—			244
Net loss	(87,879	)		(25,984	)		(73,029	)

Adjusted EBITDA from equity-accounted investments, which is a non-IFRS financial measure and should not be considered as an alternative to equity accounted income (loss) or any other measure of financial performance presented in accordance with IFRS, represents our proportionate share of Adjusted EBITDA (as defined above) from equity-accounted investments. This measure does not have a standardized meaning, and may not be comparable to similar measures presented by other companies. Adjusted EBITDA from equity-accounted investments is summarized in the table below:

	Three Months Ended
	December 31,			September 30,			December 31,
	2021			2021			2020
(in thousands of U.S. Dollars, unaudited)	$			$			$
Equity-accounted income (loss)	(15,536	)		10,985			19,658
Less:
Depreciation and amortization	(8,937	)		(7,551	)		(7,713	)
Interest expense, net	(1,719	)		(1,986	)		(5,102	)
Income tax (expense) benefit
Current	(480	)		22			(139	)
EBITDA	(4,400	)		20,500			32,612
Less:
Impairment expense, net	(36,096	)		—			—
Realized and unrealized gain (loss) on derivative instruments	1,752			387			1,395
Foreign currency exchange gain (loss)	(228	)		(507	)		74
Adjusted EBITDA from equity-accounted investments	30,172			20,620			31,143

 

FAQ

What were Altera Infrastructure's Q4 2021 financial results?

Altera reported revenues of $315.7 million, a net loss of $87.9 million, and Adjusted EBITDA of $165.8 million.

How did Altera Infrastructure's Adjusted EBITDA change in Q4 2021?

Adjusted EBITDA increased to $165.8 million, up from $142.2 million in Q4 2020.

What were the key factors affecting Altera's Q4 2021 performance?

The net loss was affected by $152 million in vessel impairments and lower utilization in the Shuttle Tanker segment.

What is Altera Infrastructure's liquidity status as of December 31, 2021?

As of December 31, 2021, Altera had total liquidity of $191 million.

What strategic updates were announced in Altera's Q4 2021 report?

The announcement included a newbuild delivery expected in March 2022 and contract extensions for the Petrojarl I FPSO.