Teekay Offshore Partners L.P. (NYSE:TOO) announced an agreement with Statoil to provide a floating storage and offtake (FSO) unit for the Gina Krog oil and gas field located in North Sea.
The contract will be serviced by a new FSO unit converted from the 1995-built shuttle tanker, Randgrid, which is currently 67 percent owned by Teekay Offshore. TOO will finance the $200 million conversion and acquire the remaining 33 percent ownership of the vessel in the process.
Upon delivery in Q1 2017, the newly converted FSO unit will commence operations under a 3-year firm period time-charter contract to Statoil, which includes 12 additional one-year extension options.
“This strategically important conversion project represents another milestone in Teekay Offshore’s expanding FSO franchise,” commented Ingvild SÃ¦ther, President, Teekay Shuttle and Offshore Services. “The Gina Krog FSO project highlights how Teekay Offshore can combine its growing offshore project development capability and financial resources to provide an FSO solution to Statoil while repurposing an existing shuttle tanker asset to generate distributable cash flow accretion.”
At the beginning of May, Teekay Offshore signed an agreement with Salamander Energy to convert one of their shuttle tankers, the Navion Clipper, to an FSO unit. Once converted in 2H 2014, this vessel will operate offshore Thailand under a 10-year charter contract commencing in the third quarter of 2014. According to TOO’s market filing this month, the capital cost of the Navion Clipper conversion is approximately $50 million with and estimated associated annual cash flow of approximately $6.5 million.