Teekay Offshore Partners Reports Earnings-Updated

We have reviewed the quarterly financials of TeeKay Offshore and we need to note a large chunk of revenue (and thus earnings) came from a settlement with Brazil oil company Petrobras. This amounts to about $96 million. This is a significant chunk of their improvement, but the balance of the quarter remains relatively strong–although there is much improvement yet to do and I believe Brookfield will bring some disciplined management to the company.

TeeKay Offshore Partners (NYSE:TOO) has reported earnings and they appear to be quite stellar.

We have not had the opportunity to review the release closely, but kind of the headlines numbers.

We had mentioned before that TeeKay Corp no longer controlled TOO and that Canadian asset manager Brookfield Business Partners had taken control of the company from TeeKay. If we recall Brookfield had plowed quite a chunk of change into the company and the balance sheet is being improved.

The press release can be seen here.

We are not advocating a purchase of the 3 preferred issues of the company (TOO-A, TOO-B and TOO-E), but they are all trading in the 11.5% current yield and there may be opportunity for investors with the ability to manage the risk of owning these issues.

9 thoughts on “Teekay Offshore Partners Reports Earnings-Updated”

  1. Teekay Offshore Partners shares got a nice bump from their Q4 earnings report on Friday. The A shares were up 8.35%, the B shares were up 6.71%, and the E shares gained 3.52%. Overall it was a strong performance for a week in which all three went ex-dividend…although it remains to be seen whether they can hold onto these gains. The B shares look strongest to my eye.

    https://seekingalpha.com/article/4239414-teekay-offshore-partners-l-p-2018-q4-results-earnings-call-slides

  2. Seems the ‘plank’ we walk is getting shaved thinner and thinner: lower quality reaching/mixing esp in funds, calls or low volume of IGs, rapid bid ups, cyclical-industry new issues, chasing divs., risk…The bankers are butting right in at the top of the balance sheet instead of good new issues for the public to participate without biting their lips.
    Been swimming in the portfolio qualities of mid-sized insurance, annuity, pension managers and holding companies. It is a trudge but sometimes I feel that I have to be my own analyst of internal ‘quality’ and take many small positions. Almost nothing that is legacy holdings to lean on. I can see why BBT is reaching for the legacy holdings of Sun: instant combined quality upgrade and like the Fed run off the crap.
    Found a few candidate like an old multi-line ins company that has 91% IG legacy holdings and a duration of under 5 years in their internal portfolio. I can imaging these are archives holdings from decades ago that are winding into low maturity years. Have not seen a good enrty point…yet. Watch…waiting… for the bigger buck. (No I am not a gun or hunter freak, but am from the Midwest!)
    I have to wonder about foreign deep value companies like Jap Ins Cos that I really can not access or understand. The world is NOT our investing oyster as an individual with home country bias and limited access. Happy Research and send me any reading glasses you don’t need! JA
    I know this is a sharing site and have participated in MRC-c, ACGLO, PWCDF, FRHLF during the downturn now looking to hold or sell. Usually share after the fact.
    It’s kind of like a support group here…Hi, My name is Joel…Thanks Dr. Tim.

  3. I believe the $96 million settlement from Petrobras is going to be spread out into three payments, so there will be more money coming in 2020 and 2021.

    Nice bump in share prices today…

  4. I wouldn’t put any shipping stocks in my fixed income IRA because of the risk but I did just pick up a 2% position in my stock account where I’m willing to accept more risk. Couldn’t decide on which issue so I split the difference and bought A and E shares. But not before going to the company website where it was stated they report on a 1099. A k-1 would have killed the deal.

    1. Jerseyvinny–it is my belief they will likely be ok for now. A big operator like Brookfield brings management and moola. Brookfield is not looking at tossing their money down a rat hole.

      1. Tim,

        This is good news indeed. I took a small position back on 9/2018 on TOO-E in my retirement account paid way too much. Then my 10/16/2016 on TOO Senior note has seen good unrealized gain in another IRA account. TOO was an issue favored by Richard Lejeune.

        1. johnkcal–I held a position in 2 issues for 4 hours today–I’m out with a few free steak dinners of gains. That is called kind of a boredoom trade.

    2. For those that it might make a difference, the dividends are treated as ROC for tax purposes. I hold some TOO-A.

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