Teekay LNG Partners Orders Two LNG Newbuildings; Intends to Charter on Long-Term Contracts
HAMILTON, BERMUDA--(Marketwire - December 13, 2012) - Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE: TGP) today announced that it has entered into an agreement with Daewoo Shipbuilding & Marine Engineering CO., LTD., (DSME) of South Korea for the construction of two 173,400 cubic meter Liquefied Natural Gas (LNG) carrier newbuildings, with options to order up to three additional vessels. The Partnership intends to secure long-term contract employment for both vessels prior to their delivery in the first half of 2016. The newbuildings will be constructed with M-type, Electronically Controlled, Gas Injection (MEGI) twin engines, which are expected to be significantly more fuel-efficient and have lower emission levels than other engines currently being utilized in LNG shipping.
The contract with DSME includes a favorable installment payment schedule, with the majority of the purchase price due upon delivery. The Partnership intends to finance the installment payments during construction with a portion of its existing liquidity, which was approximately $420 million as of September 30, 2012 (after deducting the equity required to complete the recently announced Exmar LPG joint venture acquisition), and expects to secure long-term debt financing for the two vessels prior to their scheduled delivery.
"The delivery of these vessels is timed to coincide with the next wave of increased demand for LNG carriers which is expected when a large number of new LNG export projects come on-stream commencing from late-2015. They are also among the largest LNG carriers that will be able to transit the Panama Canal after its expansion project is complete, which makes them ideal for U.S. LNG exports. The recent U.S. Department of Energy study supported the export of LNG from the U.S.," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "In addition, we are confident these newbuildings will be especially attractive to our customers given their fuel-efficient engines as well as being built to a high specification at DSME." Mr. Evensen continued, "With scheduled delivery in 2016, we believe that we are well-positioned to charter these LNG newbuildings on fixed-rate charter contracts prior to their delivery, thereby providing Teekay LNG with visible built-in growth."
About Teekay LNG Partners L.P.
Teekay LNG Partners L.P. is a publicly-traded master limited partnership formed by Teekay Corporation (NYSE: TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors. Teekay LNG Partners L.P. provides LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts with major energy and utility companies through its fleet of 27 LNG carriers (including one LNG regasification unit), five LPG/Multigas carriers and 11 conventional tankers. Teekay LNG Partners' interests in these vessels ranges from 33 to 100 percent. In addition, Teekay LNG Partners has agreed in principal to acquire a 50 percent interest in a new joint venture with EXMAR NV, which will own and in-charter LPG carriers and expects this transaction to close by late-2012 or early-2013; and has entered into an agreement for the construction of two LNG carrier newbuildings from DSME of South Korea, which are expected to be delivered in 2016. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (NYSE: TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.
Teekay LNG Partners' common units trade on the New York Stock Exchange under the symbol "TGP".
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 statements regarding: the timing and certainty of completion of the Partnership's two LNG carrier newbuildings; timing and certainty of entering into long-term charter contracts and long-term financing for the two LNG newbuildings; the higher fuel-efficiency and lower emissions levels associated with the MEGI engines; the effect of the newbuildings on the Partnership's fleet size and cash flows; the potential for the Partnership to exercise its options to order up to three additional newbuildings from DSME; and the anticipated increase in demand for LNG shipping commencing from late-2015 due to new LNG export projects as well as potentially more exports of LNG from the United States. 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: less than anticipated revenues or higher than anticipated costs or capital requirements related to the newbuildings in which the Partnership has agreed to construct; shipyard construction delays; increased cost to construct the two LNG carriers; failure of the MEGI engine to provide the expected efficiency and emission specifications; failure by the Partnership to secure charter contracts and/or financing prior to the delivery for the two LNG carrier newbuildings, and for any additional vessels that the Partnership may order through exercise of its newbuilding options; changes in production of LNG, either generally or in particular regions that would impact the expected future growth in the global LNG transportation and regasification markets, and spot LNG shipping rates; changes in trading patterns or timing of the start-up of new LNG liquefaction projects significantly impacting overall LNG shipping requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2011. The Partnership expressly disclaims any obligation 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.
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Source: Teekay LNG Partners L.P. via Thomson Reuters ONE