Andres Rueda
Value, long-term horizon

Teekay Offshore Partners L.P. - A Midstream Operator Mistakenly Punished By The Market As An Oil Extractor?

On December 16, 2015, Teekay Offshore Partners L.P. (NYSE:TOO) announced that it would cut the distributions to its common unitholders from $0.56 per quarter to $0.11 per quarter. The partnership intends to apply the cash savings towards its capital expenses and to pay down debt. The yield on the units is now 10.45%, which appears respectable but, of course, only for investors coming in at current unit prices (US$4.21 per unit, as of Feb. 5, 2016). There is, however, not an insubstantial risk that the partnership will be compelled to suspend its distributions altogether.

Prior to the announcement, the units of Teekay Offshore, in fact, had been on a long downward trend; more or less in tandem with

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