Welcome to Teekay Corporation's Second Quarter 2013 Earnings Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. Now for opening remarks and introductions, I would like to turn the call over to Mr. Peter Evensen, Teekay's President and Chief Executive Officer. Please go ahead.

Before Mr. Evensen begins, I would like to direct all participants to our website at www.teekay.com, where you will find a copy of the second quarter 2013 earnings presentation. Mr. Evensen and Mr. Lok will review this presentation during today's conference call. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the second quarter 2013 earnings release and earnings presentation available on our website. I will now turn the call over to Mr. Evensen to begin.

Thank you, Kent. Good morning, everyone, and thank you for joining us today for Teekay Corporation's Second Quarter of 2013 Earnings Call. I'm joined this morning by our CFO, Vince Lok. And for the Q&A session, we also have our Chief Strategy Officer, Kenneth Hvid; and our Group Controller, Brian Fortier. During our call today, I'll be walking through the second quarter 2013 earnings presentation, which can be found on our website. Beginning on Slide 3 of the presentation, I'll briefly review some recent highlights for Teekay Corporation and our 3 publicly traded daughter entities. For the second quarter, Teekay Corporation generated $184 million of total consolidated cash flow from vessel operations, or CFVO. Teekay Corporation reported a consolidated adjusted net loss of $33 million or $0.47 per share for the second quarter, compared to a consolidated adjusted net loss of $0.25 per share reported in the second quarter of 2012. The increase in our adjusted net loss for the quarter is mainly attributable to lower revenues in our FPSO fleet, partially offset by contributions from strategic acquisitions and organic projects that delivered throughout the past year and savings from the redelivery of 13 chartered-in conventional tanker since the start of 2012 and other cost reduction initiatives. Unfortunately, we had anticipated and unanticipated operational issues in our FPSO fleet. We had anticipated the expiry of the Petrojarl I FPSO charter in April and its subsequent off-hire for the rest of the quarter, as well as the lost cash flow of approximately $9 million per quarter due to the Banff FPSO being off-hire, while it undergoes repairs following damage from a December 2011 storm event. What we had not anticipated was the lower production on the Foinaven and the inability to book revenue on the Voyageur Spirit from first oil, both…

Thanks, Peter, and good morning, everyone. Starting with Slide 7, I will review our consolidated results for the second quarter. In order to present the results on a comparative basis, as we do each quarter, we have shown an adjusted income statement for the second quarter against an adjusted income statement for the first quarter, which exclude the items listed in Appendix A to our release. As we did in the first quarter, we have removed the pre-ownership activity of the Voyageur Spirit FPSO, which is treated as a variable interest entity for accounting purposes until the unit was acquired from Sevan on May 2. Later on, I will also provide our outlook for the third quarter. Starting at the top of the page, net revenues decreased by $21 million, most of which related to the FPSO fleet. $10 million of this decrease was from the Petrojarl I FPSO since its charter contract expired in April of 2013. Revenues from the Foinaven FPSO declined due to the lower oil production as discussed earlier and due to other revenue adjustments. The Hummingbird FPSO reviews declined due to FEED study revenues included in the first quarter, as well as a reduction in the amortization of noncash revenues. These decreases were partially offset by OpEx recovery revenue from the Voyageur Spirit FPSO, which we will continue to receive even during the period when the unit is considered off-hire. As Peter mentioned, the indemnification to Teekay Offshore for the loss of Voyageur Spirit revenues did not have any effect on our consolidated income or operating cash flows. However, the off-hire of the Voyageur Spirit did result in a $12.5 million reduction of external revenues during the second quarter. We are in negotiations with the charterer to recover some of the lost revenue in respect…

Thank you, Vince. Turning to Slide 9. Despite the temporary FPSO operational issues experienced in the second and third quarter to date, Teekay Corporation's strategy remains on course. Our FPSO operation teams continue to work diligently to bring the Voyageur Spirit and Foinaven FPSO units back to full production levels and recommence operations under their respective contracts. And the current operational issues are expected to be resolved fully during the second half of 2013. We're also still on track for the Banff FPSO to return to the Banff field and restart production later in the fourth quarter. With the drop-down of the Voyageur Spirit FPSO and the Cidade de Itajai FPSO to Teekay Offshore completed and the continuing progress on the construction of the Petrojarl Knarr FPSO, Teekay Parent remains on track to further deleverage its balance sheet in the coming quarters. Finally, we continue to bid for and secure accretive acquisitions and organic growth opportunities directly at the daughter level without the need for Teekay Parent's balance sheet. Successful projects at our daughter entities will contribute to future growth in Teekay Parent's cash flows as a result of its general partner and limited partnership and interest in these entities, especially with the incentive distribution rights of our GP interest in Teekay Offshore and Teekay LNG, both now in the 50% high splits. Thank you for joining us on the call today. And, operator, we are now ready to take questions.

[Operator Instructions] And our first question today comes from Michael Webber with Wells Fargo Securities.

You did a pretty thorough job in covering the downtime for the FPSOs, but -- and it seems like they're a bit compounded by the fact that it happened on top of the drop-down. But I'm just curious, Peter, as to maybe the thought process and the structure around disclosing the downtime on the Voyageur, considering that it was down prior to the sale to TOO. Maybe just some conversation there.

Well, actually it wasn't down previous to its dropdown to TOO. As I said a moment prepared remarks, it's commenced first oil in April. It was dropped down in May, and we only received the notice from E.ON in -- at the beginning of July.

Beginning of July. Okay.

So unfortunately, if not reduced in commercial negotiations, it goes back retroactively to April. So that's the timing.

No, I was just looking at -- it's just the dates that overlap. [indiscernible] was post drop. Okay. Just kind of along those lines, you've got, I guess, 4 FPSOs now that are either down or not at full strength, and they all seem to be kind of shorter term issues. But does that color your view in terms of the kind of EBITDA concentration that you've got at the Knarr and at the Voyageur in terms of the JV partners or revenue insurance? And maybe just some conversation there?

Well, we'd probably -- given the size of Petrojarl Knarr, we probably will take out lots of higher insurance. That's a decision we had already made. But I think we're -- what we found is that it's easier to be with a contract that you've started from inception. And so when you take over FPSO midway, that always has certain issues that come up. We haven't got a full root cause analysis, but I would say that has complicated things.

Okay, that's helpful. Just one more thing, and I'll turn it over. You kind of mentioned at the end of your prepared remarks, talking around new business and doing them indirectly at the daughter's. I think as of the last quarter, there's about, I guess, $2.7 billion in new offshore projects you guys were looking at to some degree. Can you maybe talk to where that figure is? And then just maybe kind of reiterate your conviction level around those being done directly at the daughter and not at the parent?

Yes, our plan is for all the projects to be done down at the daughter level, and that remains what we're doing. I think the best indication is the 3 FPSO FEED studies that were doing, as well as the new FEED study we're doing for the Remora unit technology that we're doing. It's always hard to gauge the timing of when the awards get put together, but with the exception of losing one FPSO unit, we haven't so far lost on any of our FPSO opportunities. So those are still in process.

Got you. And then I think the timing on those was for some time kind of mid to late 2013 in terms of some sort of resolution. Is that still the case? Are they dragging along?

That is still the case. So we were bidding on 2 FPSO project. We won 1 of them. Actually, sorry, we bid on 3 FPSO projects, and we won 2 of them. I was only thinking of the North Sea ones. I'm looking at our head of FPSOs here, so he reminded me that. And the -- but so I feel good about our hit rate or win rate, whatever you want to talk about, as it relates to that. And so I'm feeling good about that.

Our next question comes from Justin Yagerman with Deutsche Bank.

Wanted to just touch on the VLCC launch for a second here. It looks like there was a small write-down on those values. Was that just asset-value driven? Or is there anything going on with second lien lenders complicated issues, or anything else going on there?

Yes, the total loss provision on the VLCC loans was about $7 million for the second quarter. About $4.5 million of that is in Teekay Tankers, and the rest is at the parent. And it's basically an accounting loss provision based on our expected cash flows and recovery from the security of those loans, which are the 3 VLCCs. So that provision could actually move up and down depending on any changes to our expected cash flows. I just also wanted to point out that, that provision was taken after we had accrued the second quarter interest income for the Teekay Tankers loans. So our principal remains intact, so the provision effectively is taking a provision on the accrued interest not received today.

Okay. That makes sense. I guess moving on to the various different LNG projects that are out there. Was curious, it looks like Golar recently won an FSRU project, and I just wanted to get a little bit of color on what the competitive nature of that environment is like right now? I know that there aren't too many projects, but there also aren't too many folks out there who are bidding on those projects. So I wanted to get a sense of how you guys feel those tenders or bids are going.

Well, first of all, we always look and see which projects meet our requirements. So for example, I think it's good Golar won Jordan and Kuwait, but we didn't bid on them. And so we are bidding, as I said in my prepared remarks, on FSRU projects, and we encounter some of the usual suspects, but not everybody bids on all the projects. And once again, having an early time or being part of the engineering and realizing what advantage you have comes in gives you an advantage and makes you go toward some projects and not toward other projects. We haven't won one yet, and we've possibly been more conservative. I would definitely say we've been more conservative than other people, but again I'm fully convinced that we will get some FSRUs. Part of our conservatism was that we didn't jump in with both feet. We waited for the design unit that we think is going to stabilize, and that's the 170,000 class. And so we're quite comfortable having those units be FSRUs. And that's what we've seen in the FSRUs as well as the LNGs, which is as the size component went up and people are asking for this cubic that can go through the Panama Canal. And that's true with FSRUs because if you have an undersized FSRU and you're coming with 170,000 cubic, you'll have to stay on station a little longer, and time is money. So that's a little bit more color on how we see the market.

That's really helpful. Moving on to something a little more conceptual and maybe just using the Cheniere LNGs as an example. With these projects, as all the different pieces actually come together, the asset, the contracts and the project itself, how does it work if, say, Cheniere isn't able to produce on time yet you guys take delivery of the asset. Is there anything from a contingency standpoint that can disrupt how that contract comes on to cover you guys from an asset return standpoint?

I think it all depends on the nature of why you have an interruption. We have seen, for example, with our Angola LNG that we delivered the vessels, and it's taken over 2 years for the Angola LNG transportation -- or the Angola LNG liquefaction to come online. We've continued to be paid during those 2 years. And Angola LNG, who didn't need the vessels, sub-chartered them to other operators. And I would expect the same thing to happen. In fact, for the 10 years we've been in the LNG market, every single liquefaction project has been on time. What I think is great about the Cheniere project is it's actually coming in ahead of schedule. And that's been confirmed by other people who have volumes there. So they're actually showing an earlier start-up, and maybe that's because of where they're building it and the fact that it's a brownfield start rather than a greenfield start.

Okay. And I guess lastly, I'll turn it over to somebody else, just another kind of conceptual question. When you guys look out over the next couple of years, do you have a soft deadline for having everything dropped out of Teekay Parent and down to the daughters? And then as a kind of tag on to that, is there -- I know you just said to Mike that there basically is any project you're looking to do it, is to do it at the daughter level, but is there a price tag at which you guys feel like, well, Teekay Parent is going to have to step in. So you get 3 FSRUs at once, and all of a sudden it's too much for one day. I know that's arbitrary number, but is there a price tag that the parent needs to step in and help out the daughters?

So you're talking conceptually. So on the one hand, you worry about the fact that you won't get projects, and then you're saying what happens if you get too many projects? And so you can either be too fat or too thin. But the fact of the matter is that we actually have another way that we go when we have too many projects is we usually invite in other joint venture partners. And we did that when we were acquiring Sevan and Maersk LNG. We sold half of it or invited Marubeni to take half of that. And I think we would do the same thing if we had too many projects that were at the daughter company level. Rather than have them up at Teekay Corporation, we would invite in other partners who, by the way, we get a lot of reverse inquiry from. And so that's our plan, but I want to emphasize, we don't feel that we have too many.

Okay. And then a soft deadline for Teekay Parent to be clean from a project standpoint.

Sure. The -- we look at each asset and one -- at Teekay Corporation, we will sell the assets for what it's worth. So we're optimizing each one of these assets. For example, the Petrojarl I, we want to get a contract for. The Petrojarl Banff will turn on a better contract in 2015. And the Hummingbird Spirit, as we get a longer contract, then we think it will fit better inside of Teekay Offshore. So we're optimizing the asset so that the value that we create up in Teekay Corporation is the maximum. Rather than just saying here's an arbitrary timeline and cost, and as I like to tell everybody, $1.00 is $1.00 is $1.00.

Our next question comes from Brandon Oglenski with Barclays.

This is Keith Mori on for Brandon. Just want to kind of follow up on the operational issues that have been going in the past 2 quarters with the 2 FPSOs. Are you guys are putting any risk mitigants in place on the operation side to kind of, I guess, address these types of events earlier?

Ultimately, we will, of course, conduct an investigation, so that we can make sure our processes are better going forward. As I said in my remarks, we -- unfortunately, there isn't like one cause, and the causes we've had in the Foinaven are different from the causes that we've had on the Voyageur. But near term, our focus is on getting things back to production. But certainly, medium-term, we will be looking at are the things we can do better. That's just a natural course of our continuous self-improvement.

Okay, that's fine. I guess, kind of going back to Justin's questions around the dropdown schedule. Understand that you don't want to maybe commit to a pipeline per se. But going back to your Analyst Day and prior quarters, you had mentioned that you'd like to be run rate profitable at the parent level sometime this year, I believe. How do these 2 FPSO being impacted? And the Foinaven for the fourth quarter, the tariff not being as high, kind of impacting your outlook on that end? And can you maybe give us some time [indiscernible]

First of all, the dropdowns are not affecting our ability to get run rate profitable by this year. But I would have to say that the revenue shortfalls we've experienced on the Voyageur Spirit and the Foinaven, as well as the premature termination of the Petrojarl I, is going to mean that we will have to delay the run rate profitability into 2014.

Okay. That's helpful. And I guess, one last one for me. Looking at the sum of the parts evaluation in your appendix, and about $45 a share, that's relatively similar to what was presented at the Analyst Day about 12 months ago. When you look across your business segments, is there any particular ones that you think can kind of -- you can derive -- express your value from and derive maybe a higher sum of the parts value from your end or -- maybe if you could just speak to that.

Well, I would -- once -- I think you hit the nail on the head. We have to execute better. We didn't execute well in our FPSO operations, and that's cost us money. So my focus actually isn't on gaining new projects. I can already see that our net asset value per share is going to go up as we redeliver some of these units and get like Petrojarl Knarr coming in 2014. So I can already see the run rate of these projects that I've talked about increasing our net asset value per share. That isn't what worries me. I'm focused in on the near-term execution right now. But we are getting new FPSOs, particularly the Knarr, coming in. We will get back the Banff. And so those operational issues, I think, are important, not only to increase the net asset value per share, but to turn to us to profitability, which is part of our strategy to close the sum-of-the-parts gap.

And our next question comes from Fotis Giannakoulis with Morgan Stanley.

A couple more questions about the 2 FPSOs. You mentioned that they are going to come back to operation pretty soon. I just want to make sure that -- how to model future revenue. Shall we still expect something like $70 million for the Voyageur Spirit in terms of EBITDA, and another $40 million for Foinaven? And then also are there any risk of seeing any contract renegotiations because of these operational issues?

First of all, in your questions about the impact on the EBITDA. Well, Voyageur -- the Voyageur EBITDA is roughly -- the foregone amount is roughly about $6.5 million per month. So as we mentioned in the second quarter, that amount was about $12.5 million. If we get back into full production by the end of August, then that's probably another $12.5 million. So that would be the reduction about $25 million for this year. On the Foinaven, obviously, it's a little hard to estimate that because the revenue, as you know, is based on production partly and all prices and all that. But clearly, given this incident, it is coming in below our budget. But if you were to compare it actually to last year's revenues, it's actually slightly even higher than last year's, given that last year's production was also relatively low. So not a big change from last year on the Foinaven.

And can you comment if there are any risks of being forced to renegotiate the levels of the contracts?

We don't see that.

Okay. I want to go a little bit on the tanker side. You have still a number of tankers chartered in right now, if I count correctly, around 13 to 15 vessels. What is the plan for these vessels? Is the plan to let their contracts rollover and transfer the entire tanker business to TNK?

Well, first of all, we don't have 13 to 15. In the appendix, we outlined that we have 8 that are in charter. And so that continues to reduce, and in fact, we have 3 rolling off at the end of this year. And so we're -- that continues to be a legacy business that we're getting out of up at Teekay Parent. And in addition, we have the 4 Bohais that we own upstairs, and at the appropriate time, we'll sell them. But as we've said, and as Bruce Chan will talk about at Teekay Tanker's call, we continue to see the tanker market having a better future, and so now is not the time to sell some of our modern Suezmaxes. Again, I'm in the business of maximizing all the dollars that we can get upstairs, and so now isn't the time to sell those vessels.

Very clear. I want to move on the LNG space. And you mentioned earlier about the newly ordered vessels, they kind of enjoy certain efficiencies in terms of fuel consumption compared even to existing modern vessels. Can you give us a little bit more color, and compare what would be the effective time charter rate differential between the newbuilding vessels and the existing vessels?

I don't think, for competitor reasons, I'm going to get drawn on that. But I can say that what happens is that our ships get preferred. So although we ordered them in December, we get preferred as being a better ship, both because of the propulsion, in other words, it's a simpler engine and it has lower OpEx; as well as the size that we have. So it's actually the whole vessel design, not just the engine. People focus in on the engine because everybody's hot on eco-ships, and of course that saves money. But the big thing is you can save money by being able to take a bigger lot, 173,000 versus 155,000 or 160,000. And so these are preferred for going through the Panama Canal. It's the biggest that can go through the Panama Canal. So those are, as we like to say, take us to the head of the line. But we're not going to get drawn on what's happening because we're bidding them right now against TFTE and DFTE vessels. So I'm sorry, Fotis, I can't give you better color on that.

I understand. Can you also, please, comment on the state of the LNG shipping market? We would expect that the rates -- spot rates will drop below $100,000 given the number of newbuildings as they are coming the next -- these few months. Rates -- spot rates have stayed strong. How long do you think that they will stay at such a high premium compared to long-term rates? And the fact that you ordered 2 more vessels, does this mean that you have become a little bit more optimistic about the LNG market?

I think it's a function of a few things. First of all, we're sold out. We don't have any ships for the next 3 years. We don't have any open ships. So we don't have a ship open until 2015. So it's rather an academic discussion on our side. But as I have said previously, we like the idea that LNG is going to take off in post-2016 because you actually need more gas to come on, and that's more liquefaction plants coming on. so when we placed our order, we strategically placed it for 2016 to get the timing right. Obviously, there's about 29 ships that are sitting without contracts. And as you pointed out, they're going to be coming starting later this year and into 2014. And so we ultimately will compete against those in 2016 timeframe. I like our chances with bigger ships that are less thirsty, in other words, more fuel friendly, and so that's what we're looking at. And we've been consistent with that. We've been consistent with that. And the other thing I would just add, if you want some color on today's market, is you also have to look at the utilization. What we've seen is that some -- it costs a lot to have a vessel that you keep cold. And so some people have elected to put those in warm layup. And therefore it costs a lot of money to bring them out. And so that's why you also see some inherent tightness because some of the older ships have actually just gone into layup, and it takes a lot to get them out. They're not going to come out for one voyage. And so that's what we're seeing on that market. But we're focused in not on the spot market. We're focused in on the charter market. And we're seeing lots of people, who want our ships in the 2016, 2017 timeframe. So we feel good about where our ships are delivering. We were happy about the deal we did with Awilco that had 2 open ships. We think that's the right kind of deal for us, but it ends up with us having a fixed rate charter. But it also gives us the opportunity to cooperate with Awilco LNG if there's some near-term charter opportunities. I hate not to have a ship if there's an opportunity. I always like to give a customer an opportunity, and our deal with Awilco does do that without giving us the financial exposure.

One more question about the FSRU market. We saw very recently that you started a corporation, a joint venture on the LPG side, a sector that you were not so much involved. Do you feel that on the FSRU side, you have the operational capabilities to grow and win a number of contracts that they might become available the next few years? Or you believe that you might try to strengthen your expertise with some additional JVs?

Well, those are 2 different things. One, you're talking about the Exmar LPG. Then you're asking about the FSRUs. We already own 50% of an FSRU in another joint venture we have with Exmar. So we're already getting a lot of experience. Although Exmar operates it, we get a lot of experience on the operation of FSRUs. But given the talent that we have on land and our engineers and their past experience with FSRU, both building and operations, yes, we have the manuals, we have the knowledge in order to do it. And that's acknowledged by the bids that we're working on that we have that. And we have continued to work with the yards on the new designs for FSRUs. And in the usual Teekay way, we're taking a conservative way of looking at it and testing our designs with customers rather than just ordering it going forward. And so I'm happy with our position, and I think it will resolve in FSRU contracts, most probably by the end of this year.

Our next question comes from TJ Schultz with RBC Capital Markets.

The timeline on the obligation for the Foinaven for offer at TOO I think isn't at July of '14. Just any update on the ability to affect the transfer prior to that timeframe, or how some of these recent issues have impacted that process?

Yes, I would say the recent impact has meant that total focus that we have, both with the charter and internally, is to get the Foinaven back up and operating. And clearly, we don't want to offer it for sale unless it's at full production going forward. There isn't a buyer who wants to buy something that has uncertain cash flows. So even before that, we had -- we were waiting approval from the charterer for the -- to allow the sales. So we've had to extend it by 1 year. But clearly, TOO was going do their numbers, and they want to make sure that it's back to full production and that the charterer is happy with what's going on. And as we said, the charterer is also doing some work on the subsea, so I anticipate when it gets back to full production, we will return to our ultimate goal, which is to have -- which is to drop the Foinaven FPSO down to Teekay Offshore.

Okay. The Petrojarl I, you have a pretty broad window for expectation on redeployment. Just any information on how that process is going, and the potential to redeploy sometime this year?

Yes. And the reason it has a long redeployment period is because we're looking at numerous opportunities. If we -- there are some opportunities where we don't have to do any upgrade work where we could just go down and hook up and really use the unit as more of an early well test unit. And so that way, we would get it employed earlier, like Q4 2013, as opposed to other projects we're looking at, which would necessitate going into the yard and doing some upgrades on the topsides, as well as on the hull, because it would go on to a longer contract. In that case, they would have a longer yard stay, so that's why you see anywhere from Q4 2013 to first half 2014 that we're looking at it. But we do have numerous opportunities that we're looking at, as well as people who are interested in buying it. So we're going down multiple avenues.

Okay. Just lastly, the commentary that the GP cash flows continue to become more meaningful. Certainly, growth in MLP distributions is in focus. So with that and given some of the Voyageur issues, is it still your plan for at least another 2.5% increase on TOO distribution later this year?

Yes, it is. And in addition, we added some accretive growth at TGP with the Awilco sale leaseback. We just don't know if it's 1 or 2 vessels. So we haven't changed course on that.

[Operator Instructions] Our next question comes from Will Frohnhoefer with BTIG.

So it's a couple of questions, I guess, to follow up on the LNG tankers and TGP option exercises. So would it be fair to say that using the MEGI technology here that the goal probably of most of the new entrants into the export market being largely in the Gulf are going to want to optimize vessels for the Asian trade or Pacific rim trade, therefor fuel efficiency is going to be a more important focus going forward than it traditionally has been?

Yes. Fuel efficiency and to take the maximum cargoes through the Panama canal, which is 173,000 that we've ordered. It's both.

Okay. That's fair. And there's another factor as well. Most of these new entrants are also operators that used to have import facilities. And they built docking facilities more for the 155,000 size vessels. So having a vessel that size is kind of optimal for them in terms of their goal and in the market they want to appeal to, at the same time still being the proper size for their existing docking facilities that were built close to a decade ago in many case.

Actually, that's not true that they were optimized out there. The U.S. import facilities, for example, we're sized up to take up to Q-Flex and Q-Max, which were 210,000, and some could go all the way to 250,000 cubic, like for instance the Exxon Qatar plant that it is. So actually, the sizing to go from 155,000 to 173,000 isn't an issue as it relates to the ports.

Excellent. And then I guess along same kind of further lines. When talking about the take rate in the western market and what it looks like in 2016, 2017, then you guys said, you're not looking to exploit the spot market, you're looking to do charter business. And I guess the spot risk then would probably shift to the exporters themselves, where they would charter those vessels out to exploit the excess capacity of their own facilities. And they would enter the spot market and take that risk, while you guys would simply service them. Is that kind of the plan?

I'm not sure I understood the question. I'm sorry.

If I'm one of these export projects, and I want to go out and use the excess capacity that I have over and above my existing long-term contracts to go out to the spot market and market it, I'd probably want to have a vessel chartered out that I could use for that purpose when those opportunities for marketing present themselves. So I'm wondering if that's kind of the -- are you getting that sort of interest for those kind of contracts or discussions from exporters?

No, and the reason is it takes a while to debottleneck a liquefaction plant. So when you're starting with a liquefaction plant, you want some paying revenue. So you enter into contracts either to sell it yourself or to have some of the normal players buy your volumes up to a contracted amount, whether it's 90%, 95% or 100%. And then you look to debottleneck. But that debottlenecking, which gives you up in extra cargo, that's very spot oriented. And so that is -- that's nothing that you would probably take and look to charter a ship against. Because by the time you get the cargo, the ship isn't in the right place. So we see that as a spot market. We're fully fine with the fact that there will be a spot market for LNG that continues to grow every year. But we are focused in on the U.S. export. I would also say we're focused in on the Australian export. And that -- those are also coming on. And so it isn't just about the U.S. I know we're talking here in North America, but there's other liquefaction plants that are coming in and being planned, and some of the projects that we're looking at for charter revolve around other areas of the world.

Speaking of which, how about in your neck of the woods, the British Columbia area?

Well, absolutely. We're having -- on the West Coast of Canada, we definitely see that. And Kitimat is one of the places that is ground zero as it relates to that. But those volumes aren't going to come in at 2016, 2017. They were looking 2018 to 2020. So the great part about our business is we have a chance to look forward to it. But we monitor a whole bunch of projects from Russia to Australia to Canada, and we're monitoring what their transportation requirements will be, as well as for example Exxon with their plants in Papua New Guinea.

That's very good color. And then I guess just one follow-up on the issues with the gas compressors. Now you said there was 2 really different issues for the 2 different vessels for the Spirit and for Foinaven. And I'm wondering if the issues of the compressors were due more to external factors like subsea or resource quality and less to do with the equipment itself, or -- and is there a common manufacturer of equipment running through this as a thread? Or any further color there?

I don't really want to give too much color on that. I would just say that you have one FPSO that you're bringing through a commissioning phase, so you have brand new equipment that you're bringing through. On the other hand, on the Foinaven, we have a unit that's been operating for many years, and so you're looking at compressors that have been proven with themselves. And so they're unrelated issues. Unfortunately, they're both gas compression issues, but it is wrong to draw a common thread between them.

Thank you. And there are no further questions at this time. Please continue.

All right. Thank you all very much. As I said, it was a tough quarter operationally, and we look forward to reporting better news next quarter. Thank you.

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your line and have a great day.