The Associated Press

Teekay Offshore Partners LP, which provides marine transportation and storage services to petroleum companies, said on Tuesday it will buy the Petrojarl Varg floating production storage and offloading unit from parent company Teekay Corp. for $320 million.

The Bermuda-based partnership said Teekay will loan it $220 million for the purchase. The partnership also raised $104 million with an equity offering last month. Teekay Offshore said it expects to close the transaction in mid-September.

The Petrojarl Varg unit recently started a new four-year contract extension with Talisman Energy on the Varg oil field in the North Sea, where the unit has been operating for more than 10 years.

The Petrojarl Varg unit is expected to generate average annual cash flow from vessel operations of about $55 million, and distributable cash flow of about $30 million. Teekay Offshore's distributable cash flow over the past 12 months was $48.2 million.

Teekay Corp. controls a majority stake in Teekay Offshore and owns its general partner.

Teekay Offshore shares rose 43 cents to $14.73 in morning trading, while Teekay Corp. shares added 9 cents to $19.09.

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