Altera Infrastructure Reports Third Quarter 2023 Results

ABERDEEN, United Kingdom, Nov. 05, 2023 (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 September 30, 2023.

• Revenues of $295.8 million and net loss of $26.0 million, or $(0.08) per common unit, in the third quarter of 2023
• Adjusted EBITDA⁽¹⁾ of $156.3 million in the third quarter of 2023
• Completed measures to improve its debt maturity profile and enhance its liquidity and financial flexibility, including suspending the quarterly distributions on the Partnership’s preferred units and exchanging $699.3 million of indebtedness with Brookfield.

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

The Partnership generated a net loss of $26 million for the three months ended September 30, 2023, compared to a net loss of $6 million for the three months ended September 30, 2020. The results for the recent quarter were mainly impacted by costs associated with the Brookfield debt exchange described below, partially offset by the $17 million improved EBITDA contribution as described below.

Adjusted EBITDA increased to $156 million for the three months ended September 30, 2023, compared to $140 million for the same period last year. The increase was primarily driven by oil price tariff revenue and lower operating costs in the FPSO segment and higher utilization in the Towage segment, partially offset by lower revenues in the FSO and Shuttle Tanker segments.

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 September 30, 2023 to the same period of the prior year.

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

Third Quarter 2023 Compared with Third Quarter 2020

The Partnership’s FPSO segment generated Adjusted EBITDA of $83 million for the three months ended September 30, 2023, compared to $58 million for the three months ended September 30, 2020. The increase of $26 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 $54 million for the three months ended September 30, 2023, compared to $62 million for the three months ended September 30, 2020. The decrease of $8 million is mainly due to generally fewer shuttle tankers in operation and lower contribution from two vessels operating in the conventional tanker spot market following a strong market in 2020.

The Partnership’s FSO segment generated Adjusted EBITDA of $12 million for the three months ended September 30, 2023, compared to $21 million in the same period in 2020. The decrease of $9 million is mainly due to a reduction in the Randgrid FSO contract rate from October 2020.

The Partnership’s UMS segment generated Adjusted EBITDA loss of $2 million in the most recent quarter, in line with the same period in 2020.

The Partnership’s Towage segment generated Adjusted EBITDA of $7 million in the most recent quarter, compared to $1 million in the same period in 2020. The increase in EBITDA is driven by higher day rates and utilization in the current quarter.

Liquidity Update
As at September 30, 2023 the Partnership had total liquidity of $195 million, representing a decrease of $47 million from the prior quarter.

Strategic updates

Measures to improve the Partnership’s maturity profile and enhance its liquidity
On August 27, 2023, the Partnership entered into an agreement with Brookfield Business Partners L.P. and certain of its affiliates and institutional partners (collectively, “Brookfield”) to exchange at par $699.3 million of indebtedness in Altera GP with interest rates ranging from 5.0% to 11.5% and with maturities ranging from 2023 to 2024 (including $411 million in principal amount of Altera’s 8.5% Senior Notes due 2023 held by Brookfield) for 11.5% Senior Secured PIK Notes due 2026.

On July 29, 2023, the Partnership announced the suspension of the payment of quarterly cash distributions on the Partnership’s outstanding 7.25% Series A Cumulative Redeemable Preferred Units (the “Series A Units”), 8.50% Series B Cumulative Redeemable Preferred Units (the “Series B Units”) and 8.875% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Series E Units” and, together with the Series A Units and Series B Units, the “Preferred Units”) commencing with the distributions payable with respect to the period of May 15, 2023 to August 14, 2023. All distributions on the Preferred Units will continue to accrue and must be paid in full before distributions to Class A and Class B common unitholders can be made. No distributions on the Preferred Units will be permitted without noteholder consent while the new 11.5% PIK notes due 2026 issued in the exchange transaction described above remain outstanding.

Shuttle Tanker newbuildings
The Partnership’s newbuild, the Altera Thule, is expected to be delivered early in 2023 and to operate off the East Coast of Canada.

Contract updates
In August 2023, Santos Ltd. announced the award to Altera of the FEED contract for the Floating Production, Storage and Offloading (FPSO) facility for the Dorado project.

Vessel sales
In August 2023, the Navion Anglia shuttle tanker was delivered to its buyer for responsible recycling.

Accounting policy update
In August 2023, the Partnership revised its accounting policy to classify all debt held by Brookfield as Due to related parties. Previously the accounting policy elected by the Partnership reflected its long-term debt within two line items, Borrowings and Due to related parties. The Partnership has reflected this change retrospectively by restating its comparative consolidated statement of financial position. Please refer to the unaudited interim condensed consolidated statements of financial position for further detail.

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; 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, 2020. 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 $4.2 billion, comprised of 46 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: [email protected] 
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)

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

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

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

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.

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: