Teekay renegotiates terms for Foinaven floater

Teekay Corp. has signed an agreement with the partners in the west of Shetland Foinaven oil development to amend its operating contract for the field’s FPSO, which includes offtake services provided by two shuttle tankers.

Offshore staff


HAMILTON, Bermuda -- Teekay Corp. has signed an agreement with the partners in the west of Shetland Foinaven oil development to amend its operating contract for the field’s FPSO, which includes offtake services provided by two shuttle tankers.

The FPSO serves under an `evergreen’ contract on the BP-operated Foinaven field, where it has been located since 1997. The amended contract extends the provision of operating services for the field through at least 2021.

The new terms, effective from Jan. 1, include:
• Daily rate, part of this being based on agreed operating performance incentives (adjusted annually according to industry indices)
• Production tariff based on the volume of oil produced
• Supplemental tariff based on oil produced and the annual average Brent Crude Oil price.

As a result, the FPSO should generate incremental operating cash flow and net income of around $30-40 million/yr over the anticipated remainder of the contract period.

Under the amended contract, Teekay will also receive two payments this year totaling around $60 million, related to the FPSO’s operations in previous years.

4/16/2010

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