Teekay LNG Partners L.P.

NYSE : TGP


Teekay LNG Partners L.P.

September 03, 2009 08:01 ET

Teekay LNG Partners Reports Second Quarter Results

Highlights - Generated distributable cash flow of $31.7 million in the second quarter of 2009, up 30% from the second quarter of 2008. - Declared and paid cash distribution of $0.57 per unit for the second quarter of 2009. - First of five Skaugen LPG carriers delivered in April 2009. - Completed acquisition of Tangguh Joint Venture from Teekay Corporation in August 2009.

HAMILTON, BERMUDA--(Marketwire - Sept. 3, 2009) - Teekay GP LLC, the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP) today reported its results for the quarter ended June 30, 2009. During the second quarter of 2009, the Partnership generated distributable cash flow(1) of $31.7 million, compared to $24.4 million in the same quarter of the previous year. The increase was mainly due to the acquisition of the four RasGas 3 LNG carriers during the second and third quarters of 2008, the acquisition of the first of five Skaugen LPG carriers in April 2009, and lower operating costs compared to the same quarter of the previous year. On July 23, 2009, the Partnership declared a cash distribution of $0.57 per unit for the quarter ended June 30, 2009. The cash distribution was paid on August 14, 2009 to all unitholders of record on July 29, 2009.

(1) Distributable cash flow is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other master limited partnerships. Please see Appendix B for a reconciliation of this non-GAAP measure to the most directly comparable GAAP financial measure.

"We experienced another strong quarter, with our distributable cash flow increasing to reflect the deliveries of the vessels throughout the preceding year, and the delivery of the first of five Skaugen LPG vessels," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "In addition, we have begun to see the benefit of our cost reduction initiatives as demonstrated in our second quarter results. Our fully-financed newbuildings, in addition to the recently acquired Tangguh LNG carriers, will continue to increase our distributable cash flow and contribute to the stability of our diversified portfolio of fixed-rate long-term contracts."

Teekay LNG's Fleet

In April 2009, the Partnership took delivery of the first of five Skaugen LPG/Multigas vessels, and concurrently commenced a 15-year fixed-rate charter.

In August 2009, the Partnership acquired Teekay Corporation's 70 percent interest in two 155,000 cubic meter LNG carriers (the Tangguh LNG Carriers). These vessels have commenced their 20 year time-charters.

The following table summarizes the Partnership's fleet as of August 31, 2009:



------------------------------------------------------------
Number of Vessels
-------------------------------------
Delivered Committed
Vessels Vessels Total
------------------------------------------------------------
LNG Carrier Fleet(i) 15 0 15
------------------------------------------------------------
LPG Carrier Fleet 2 4 (ii) 6
------------------------------------------------------------
Suezmax Tanker Fleet 8 - 8
------------------------------------------------------------
------------------------------------------------------------
Total 25 4 29
------------------------------------------------------------
------------------------------------------------------------
(i) Excludes Teekay's 33 percent interest in the four
Angola LNG newbuildings, as described below.
(ii) Represents the four Skaugen LPG carriers currently
under construction, as described below.


Future LNG/LPG Projects

Below is a summary of LNG and LPG newbuildings that the Partnership has agreed to, or has the right to, acquire:

Skaugen LPG

The Partnership has agreed to acquire a total of five LPG carriers from subsidiaries of IM Skaugen ASA (Skaugen), four of which are currently under construction and will be purchased upon their deliveries from the shipyard or from Teekay Corporation scheduled in 2009 and 2010. Upon their delivery, the vessels will commence service under 15-year fixed-rate charters to Skaugen. The first of the five vessels was delivered in April 2009.

Angola LNG

As previously announced, a consortium in which Teekay has a 33 percent interest, has agreed to charter four newbuilding LNG carriers for a period of 20 years to the Angola LNG Project, which is being developed by subsidiaries of Chevron, Sonangol, BP, Total and ENI. The vessels will be chartered at fixed rates, with inflation adjustments, following their deliveries, which are scheduled to commence in 2011. In accordance with an agreement between Teekay and Teekay LNG, Teekay is obligated to offer the Partnership its interest in these vessels and related charter contracts no later than 180 days before delivery of the second of these newbuilding LNG carriers.

Financial Summary

The Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $19.0 million for the quarter ended June 30, 2009, compared to $6.1 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items which had the net effect of decreasing net income by $14.6 million and increasing net income by $25.6 million for the three months ended June 30, 2009 and 2008, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis(2), of $4.4 million and $31.7 million for the three months ended June 30, 2009 and 2008, respectively.

(1) Adjusted net income attributable to the partners is a non-GAAP financial measure. Please refer to Appendix A to this release for a reconciliation of this non-GAAP measure to the most directly comparable financial measure under GAAP and information about specific items affecting net income (loss) which are typically excluded by securities analysts in their published estimates of the Partnership's financial results.

(2) Commencing in 2009 and applied retroactively, in accordance with SFAS 160, the Partnership's GAAP net income (loss) is presented before non-controlling interest on the Statements of Income (Loss). Net income (loss) attributable to the partners represents net income (loss) attributable to the limited partners and general partner of Teekay LNG.

For accounting purposes, the Partnership is required to recognize the changes in the fair value of its derivative instruments on the statements of income (loss). This method of accounting does not affect the Partnership's cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized gains or losses on the statements of income (loss).

The Partnership's financial statements for the prior periods include historical results of vessels acquired by the Partnership from Teekay, referred to herein as the Dropdown Predecessor, for the period when these vessels were owned and operated by Teekay.

Operating Results

The following table highlights certain financial information for Teekay LNG's segments: the liquefied gas segment and the Suezmax tanker segment (please refer to the "Teekay LNG's Fleet" section of this release above and Appendix C for further details).



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Three Months Ended Three Months Ended
June 30, 2009 June 30, 2008
(unaudited) unaudited)
----------------------------- -----------------------------
(in thousands Liquefied Suezmax Liquefied Suezmax
of U.S. Gas Tanker Gas Tanker
dollars) Segment Segment Total Segment Segment Total
---------------------------------------------------------------------------

Net voyage
revenues(1)(2) 61,967 17,935 79,902 53,045 17,898 70,943

Vessel operating
expenses 12,144 6,034 18,178 13,207 7,585 20,792
Depreciation and
amortization 15,193 4,967 20,160 14,234 4,638 18,872

Cash flow
from vessel
operations(3) 43,062 9,849 52,911 36,790 7,616 44,406
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(1) Net voyage revenues represents voyage revenues less voyage expenses,
which comprise all expenses relating to certain voyages, including
bunker fuel expenses, port fees, canal tolls and brokerage commissions.
Net voyage revenues is a non-GAAP financial measure used by certain
investors to measure the financial performance of shipping companies.
Please see the Partnership's web site at www.teekaylng.com for a
reconciliation of this non-GAAP measure as used in this release to the
most directly comparable GAAP financial measure.
(2) Commencing in 2009, and applied retroactively, the gains and losses
related to derivative instruments that are not designated as hedges for
accounting purposes have been reclassified to a separate line item in
the statements of income (loss) and are no longer included in the
amounts above.
(3) Cash flow from vessel operations represents income from vessel
operations before depreciation and amortization expense, excluding the
cash flow from vessel operations relating to the Partnership's Variable
Interest Entities and Dropdown Predecessors. Cash flow from vessel
operations is a non-GAAP financial measure used by certain investors
to measure the financial performance of shipping companies. Please see
the Partnership's web site at www.teekaylng.com for a reconciliation
of this non-GAAP measure as used in this release to the most directly
comparable GAAP financial measure.


Liquefied Gas Segment

Cash flow from vessel operations from the Partnership's liquefied gas segment increased to $43.1 million in the second quarter of 2009 from $36.8 million in the same quarter of the prior year, primarily due to lower operating expenses, the scheduled drydockings of two LNG carriers and one LPG carrier during the second quarter of 2008, and the delivery of the first of five Skaugen LPG carriers in April 2009.

Suezmax Tanker Segment

Cash flow from vessel operations from the Partnership's Suezmax tanker segment increased to $9.8 million for the second quarter of 2009 from $7.6 million in the same quarter of the prior year. This increase is primarily due to lower vessel operating expenses as a result of having no scheduled drydockings in the second quarter of 2009, whereas two Suezmax vessels were drydocked during the same quarter of the prior year, and a decrease in general and administrative expenses.

Liquidity

As of June 30, 2009, the Partnership had total liquidity of $520.0 million, comprised of $94.2 million in cash and cash equivalents (of which $47.4 million is only available to the Tangguh joint venture) and $425.8 million in undrawn medium-term revolving credit facilities.

About Teekay LNG Partners L.P.

Teekay LNG Partners L.P. is a publicly-traded master limited partnership formed by Teekay Corporation (NYSE:TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors. Teekay LNG Partners L.P. provides LNG, LPG and crude oil marine transportation services under long-term, fixed-rate time-charter contracts with major energy and utility companies through its fleet of fifteen LNG carriers, six LPG carriers and eight Suezmax class crude oil tankers. Two of the fifteen LNG carriers were acquired by the Partnership during the third quarter of 2009. Four of the six LPG carriers are newbuildings scheduled for delivery in late-2009 and 2010.

Teekay LNG Partners' common units trade on the New York Stock Exchange under the symbol "TGP".



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TEEKAY LNG PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands of U.S. dollars, except unit data)
--------------------------------------------------------------------------

Three Months Ended Six Months Ended
--------------------------------- ---------------------
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
--------- --------- --------- --------- ---------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
--------- --------- --------- --------- ---------

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VOYAGE
REVENUES 80,124 75,673 71,592 155,797 147,897
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OPERATING
EXPENSES

Voyage
expenses 222 518 649 740 1,057
Vessel operating
expenses 18,178 18,741 20,792 36,919 39,199
Depreciation
and
amortization 20,160 19,326 18,872 39,486 37,662
General and
administrative 4,056 3,555 5,745 7,611 10,200
Restructuring
charge (1) 709 1,951 - 2,660 -
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43,325 44,091 46,058 87,416 88,118
--------------------------------------------------------------------------
Income from
vessel
operations 36,799 31,582 25,534 68,381 59,779
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OTHER ITEMS
Interest
expense (16,115) (17,119) (31,385) (33,234) (68,600)
Interest
income 3,508 3,975 14,895 7,483 30,967
Realized and
unrealized
gain (loss)
on derivative
instruments
(2) 8,642 (16,236) 41,585 (7,594) (2,711)
Income tax
recovery
(expense) 49 250 (8) 299 (88)
Foreign
exchange
(loss)
gain (3) (22,379) 20,428 (29) (1,951) (33,920)
Equity income
(loss) (4) 10,133 3,873 (1,627) 14,006 (1,691)
Other (expense)
income - net (40) (81) 1,093 (121) 1,092
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Net income
(loss) 20,597 26,672 50,058 47,269 (15,172)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net income
(loss)
attributable
to:
Non-controlling
interest (5) 16,191 4,691 18,342 20,882 (4,664)
Dropdown
Predecessor - - - - 894
Partners 4,406 21,981 31,716 26,387 (11,402)
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Limited
partners' units
outstanding:
Weighted-average
number of common
units
outstanding
- Basic and
diluted 39,078,943 33,382,764 29,494,930 36,246,589 26,017,738
Weighted-average
number of
subordinated
units
outstanding
- Basic and
diluted 9,310,306 11,050,929 13,034,429 9,178,580 13,884,501
Weighted-average
number of total
units
outstanding
- Basic and
diluted 48,389,249 44,433,693 42,529,359 45,425,169 39,902,239
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--------------------------------------------------------------------------
(1) The total estimated cost to be incurred in connection with the
Partnership's restructuring plan to move certain ship management
functions from the Partnership's office in Spain to a subsidiary of
Teekay is approximately $3 million, of which $0.7 million and $2.0
million was incurred for the three months ended June 30, and March 31,
2009, respectively. The remaining $0.3 million is expected to be
incurred during the remainder of the year.
(2) For the three and six months ended June 30, 2009, and applied
retroactively, the realized and unrealized gains and losses related
to derivative instruments that are not designated as hedges for
accounting purposes have been reclassified to a separate line item in
the statements of income (loss). The realized gains (losses) relate to
the amounts the Partnership actually paid to settle such derivative
instruments and the unrealized gains (losses) relate to the change in
fair value of such derivative instruments as detailed in the table
below.


Three Months Ended Six Months Ended
--------------------------------- ---------------------
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
--------- --------- --------- --------- ---------
Realized
(losses)
relating to:
Interest rate
swaps (8,736) (5,901) (2,202) (14,637) (2,706)
---------------------------------------------------------

Unrealized gains
(losses)
relating to:
Interest rate
swaps 16,801 (15,413) 53,063 1,388 11,965
Toledo Spirit
time-charter
derivative
contract 577 5,078 (9,276) 5,655 (11,970)
---------------------------------------------------------
17,378 (10,335) 43,787 7,043 (5)
---------------------------------------------------------

Total realized
and unrealized
gains (losses)
on derivative
instruments 8,642 (16,236) 41,585 (7,594) (2,711)
---------------------------------------------------------
(3) The Partnership's Euro-denominated revenues currently approximate its
Euro-denominated expenses and debt service costs. As a result, the
Partnership currently is not exposed materially to foreign currency
fluctuations. However, for accounting purposes, the Partnership is
required to revalue all foreign currency-denominated monetary assets
and liabilities based on the prevailing exchange rate at the end of
each reporting period. This revaluation does not affect the
Partnership's cash flows or the calculation of distributable cash flow,
but results in the recognition of unrealized foreign currency
translation gains or losses in the statements of income (loss).
(4) Equity income (loss) includes unrealized gains on derivative
instruments of $8.3 million, $2.8 million and nil for the three months
ended June 30, 2009, March 31, 2009 and June 30, 2008, respectively,
and $11.1 million and nil for the six months ended June 30, 2009 and
June 30, 2008, respectively.
(5) Commencing in 2009, and applied retroactively in accordance with
SFAS 160, net income (loss) is shown before non-controlling interest.


TEEKAY LNG PARTNERS L.P.
SUMMARY CONSOLIDATED BALANCE SHEETS (1)
(in thousands of U.S. dollars)

---------------------------------------------------------------------------
As at
As at June As at March December
30, 2009 31, 2009 31, 2008
---------- ----------- ---------
(unaudited) (unaudited) (unaudited)
---------- ----------- ---------
ASSETS
Cash and cash equivalents 94,199 200,960 117,641
Restricted cash - current 32,221 28,671 28,384
Other current assets 14,928 16,348 18,388
Advances to affiliates 10,176 9,980 9,583
Restricted cash - long-term 610,373 603,544 614,565
Vessels and equipment 1,801,459 1,989,536 2,007,321
Advances on newbuilding contracts 55,661 54,871 200,557
Net investments in direct
financing leases 406,177 204,292 -
Derivative assets 51,239 121,318 167,326
Investment in and advances to
joint venture 79,611 68,167 64,382
Other assets 26,593 26,300 27,266
Intangible assets 137,240 139,522 141,805
Goodwill 35,631 35,631 35,631
---------------------------------------------------------------------------
Total Assets 3,355,508 3,499,140 3,432,849
---------------------------------------------------------------------------
---------------------------------------------------------------------------
LIABILITIES AND EQUITY
Accounts payable, accrued
liabilities and unearned revenue 45,235 46,593 44,614
Current portion of long-term debt
and capital leases 186,720 183,023 184,971
Current portion of long-term debt
related to vessels to be
delivered to the Partnership (2) 28,182 19,143 39,446
Advances from affiliates and joint
venture partners 100,959 93,904 74,300
Long-term debt and capital leases 1,613,253 1,666,449 1,699,231
Long-term debt related to vessels
to be delivered to the
Partnership (2) 320,594 331,288 276,304
Derivative liabilities 139,109 224,929 260,602
Other long-term liabilities 54,389 56,591 44,668
Equity
Non-controlling interest (3) 23,744 7,553 2,862
Partners' equity 843,323 869,667 805,851
---------------------------------------------------------------------------
Total Liabilities and Total Equity 3,355,508 3,499,140 3,432,849
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(1) Although the acquisition of the Tangguh LNG carriers did not occur
until August 2009, due to the Partnership's agreement to acquire Teekay
Corporation's 70 percent interest in the Tangguh LNG Project, it is
required to consolidate the Tangguh vessels (prior to the actual
acquisition date) under U.S. generally accepted accounting principles.
Due to the Partnership's acquisition of a 40 percent interest in the
four RasGas 3 LNG carriers on May 6, 2008, it is required to equity
account for its investment in the RasGas 3 joint venture under U.S.
generally accepted accounting principles.
(2) As at June 30, 2009, current portion of long-term debt related to
vessels to be delivered to the Partnership includes the debt associated
with the Tangguh LNG Carriers, which the Partnership had not yet
acquired from Teekay Corporation as of that date.
(3) As at June 30, 2009, non-controlling interest includes the 30 percent
portion of Teekay Nakilat (RasGasII Project) which the Partnership
does not own and 100 percent of the equity interest in the Tangguh
project as the Partnership had not yet acquired the interest in the
Tangguh project and is consolidating the Tangguh project as described
in Note (1) above.


TEEKAY LNG PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
--------------------------------------------------------------------------
Six Months Ended June 30,
------------------------
2009 2008
--------- ---------
(unaudited) (unaudited)
--------- ---------
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
--------------------------------------------------------------------------
Net operating cash flow 89,487 65,261
--------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 88,519 615,796
Scheduled repayments of long-term debt (45,493) (18,433)
Scheduled repayments of capital lease and other
long-term liabilities (4,711) (4,495)
Prepayments of long-term debt (95,900) (245,000)
Proceeds from follow-on equity offering 68,532 202,519
Advances to and from affiliates 25,246 362
Decrease in restricted cash 972 1,228
Cash distributions paid (55,993) (45,026)
Debt issuance costs - (1,329)
Advances from joint venture partners - 593
Excess of purchase price over the contributed
basis of Teekay Nakilat (III) Holdings
Corporation - (12,192)
Distribution to Teekay Corporation for the
purchase of Kenai LNG Carriers - (230,000)
Equity distribution from Teekay Corporation - 3,281
--------------------------------------------------------------------------
Net financing cash flow (18,828) 267,304
--------------------------------------------------------------------------
INVESTING ACTIVITIES
Receipts from direct financing leases 3,259 -
Advances to joint venture (2,610) (211,491)
Purchase of Teekay Nakilat (III) Holdings
Corporation - (36,903)
Return of capital from Teekay BLT Corporation to
its joint venture partners - (19,600)
Receipt of Spanish re-investment tax credit - 5,431
Expenditures for vessels and equipment (94,750) (83,082)
--------------------------------------------------------------------------
Net investing cash flow (94,101) (345,645)
--------------------------------------------------------------------------

Decrease in cash and cash equivalents (23,442) (13,080)
Cash and cash equivalents, beginning of the
period 117,641 91,891
--------------------------------------------------------------------------
Cash and cash equivalents, end of the period 94,199 78,811
--------------------------------------------------------------------------
--------------------------------------------------------------------------


TEEKAY LNG PARTNERS L.P.

APPENDIX A - SPECIFIC ITEMS AFFECTING NET INCOME

(in thousands of U.S. dollars, except per share data)

Set forth below is a reconciliation of the Partnership's unaudited adjusted net income attributable to the partners, a non-GAAP financial measure, to net income as determined in accordance with GAAP, adjusted for some of the significant items of income and expense that affected the Partnership's net income for the three months ended June 30, 2009 and 2008, all of which items are typically excluded by securities analysts in their published estimates of the Partnership's financial results:



---------------------------------------------------------------------------
Three Months Three Months
Ended Ended
June 30, June 30,
2009 2008
------------ ------------
(unaudited) (unaudited)
---------------------------------------------------------------------------
Net income - GAAP basis 20,597 50,058
Less:
Net income attributable to non-controlling
interest (16,191) (18,342)
---------------------------------------------------------------------------
Net income attributable to the partners 4,406 31,716
Add (subtract) specific items affecting net
income:
Foreign currency exchange losses (1) 22,379 29
Unrealized gains from derivative instruments (2) (17,378) (43,787)
Unrealized gains from derivative instruments
from equity accounted investees (2) (8,265) -
Restructuring charge (3) 709 -
Non-controlling interests' share of items above 17,149 18,136
---------------------------------------------------------------------------
Total adjustments 14,594 (25,622)
---------------------------------------------------------------------------
Adjusted net income attributable to the partners 19,000 6,094
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(1) Foreign currency exchange gains and losses primarily relate to the
revaluation of the Partnership's debt denominated in Euros.
(2) Reflects the unrealized gain or loss due to changes in the
mark-to-market value of derivative instruments that are not designated
as hedges for accounting purposes.
(3) Restructuring charges were incurred in connection with the
Partnership's restructuring plan to move certain ship management
functions from the Partnership's office in Spain to a subsidiary of
Teekay Corporation.


TEEKAY LNG PARTNERS L.P.

APPENDIX B - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

(in thousands of U.S. dollars)

Description of Non-GAAP Financial Measure - Distributable Cash Flow (DCF)

Distributable cash flow represents net income adjusted for depreciation and amortization expense, non-cash items, estimated maintenance capital expenditures, gains and losses on vessel sales, unrealized gains and losses from derivatives, income from variable interest entity, income taxes and foreign exchange related items. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by the Partnership's capital assets. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Distributable cash flow is not required by accounting principles generally accepted in the United States and should not be considered as an alternative to net income or any other indicator of the Partnership's performance required by accounting principles generally accepted in the United States. The table below reconciles distributable cash flow to net income.



--------------------------------------------------------------------------
Three Months
Ended
June 30, 2009
-------------
(unaudited)
--------------------------------------------------------------------------

Net income 20,597
Add:
Depreciation and amortization 20,160
Partnership's share of RasGas 3 DCF before estimated
maintenance capital expenditures 4,518
Unrealized foreign exchange loss 22,379
Less:
Unrealized gains from derivatives and other non-cash items (15,193)
Income tax recovery (49)
Estimated maintenance capital expenditures (8,854)
Equity income of RasGas 3 joint venture (10,133)
--------------------------------------------------------------------------
Distributable Cash Flow before Non-controlling interest 33,425
--------------------------------------------------------------------------
Non-controlling interests' share of DCF before estimated
maintenance capital expenditures (1,747)
--------------------------------------------------------------------------
Distributable Cash Flow 31,678
--------------------------------------------------------------------------
--------------------------------------------------------------------------


TEEKAY LNG PARTNERS L.P.

APPENDIX C - SUPPLEMENTAL SEGMENT INFORMATION

(in thousands of U.S. dollars)



Three Months Ended June 30, 2009
--------------------------------
(unaudited)

Liquefied Suezmax Tanker
Gas Segment Segment Total
---------------------------------------------------------------------------
Net voyage revenues (1)(2) 61,967 17,935 79,902
Vessel operating expenses 12,144 6,034 18,178
Depreciation and amortization 15,193 4,967 20,160
General and administrative 2,398 1,658 4,056
Restructuring charge 315 394 709
---------------------------------------------------------------------------
Income from vessel operations 31,917 4,882 36,799
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Three Months Ended June 30, 2008
--------------------------------
(unaudited)

Liquefied Suezmax Tanker
Gas Segment Segment Total
---------------------------------------------------------------------------
Net voyage revenues (1)(2) 53,045 17,898 70,943
Vessel operating expenses 13,207 7,585 20,792
Depreciation and amortization 14,234 4,638 18,872
General and administrative 3,048 2,697 5,745
---------------------------------------------------------------------------
Income from vessel operations 22,556 2,978 25,534
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(1) Net voyage revenues represents voyage revenues less voyage expenses,
which comprise all expenses relating to certain voyages, including
bunker fuel expenses, port fees, canal tolls and brokerage commissions.
Net voyage revenues is a non-GAAP financial measure used by certain
investors to measure the financial performance of shipping companies.
Please see the Partnership's web site at www.teekaylng.com for a
reconciliation of this non-GAAP measure as used in this release to the
most directly comparable GAAP financial measure.
(2) Commencing in 2009, and applied retroactively, the gains and losses
related to derivative instruments that are not designated as hedges for
accounting purposes have been reclassified to a separate line item in
the statements of income (loss) and are no longer included in the
amounts above.


FORWARD LOOKING STATEMENTS

This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: the Partnership's future growth prospects; Teekay Corporation offering its interest in the Angola LNG Project vessels to the Partnership; the timing of LNG and LPG newbuilding deliveries and incremental cash flows relating to such newbuildings; the stability of the Partnership's distributable cash flows; and potential future cash distribution increases. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: the unit price of equity offerings to finance acquisitions; changes in production of LNG or LPG, either generally or in particular regions; required approvals by the conflicts committee of the board of directors of the Partnership's general partner to acquire any LNG projects offered to the Partnership by Teekay Corporation; less than anticipated revenues or higher than anticipated costs or capital requirements; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of long-term contracts and inability of the Partnership to renew or replace long-term contracts; LNG and LPG project delays, shipyard production delays; the Partnership's ability to raise financing to purchase additional vessels or to pursue LNG or LPG projects; changes to the amount or proportion of revenues, expenses, or debt service costs denominated in foreign currencies; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2008. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

Contact Information

  • Teekay LNG Partners L.P.
    Investor Relations Enquiries
    Kent Alekson
    +1 (604) 609-6442
    or
    Teekay LNG Partners L.P.
    Media Enquiries
    Nicole Breuls
    +1 (604) 844-6631
    www.teekaylng.com