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Teekay LNG Partners Reports First Quarter Results

HAMILTON, BERMUDA — (Marketwire) — 05/17/12 — Teekay GP LLC, the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE: TGP) –

Highlights

Teekay GP LLC, the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) today reported the Partnership–s results for the quarter ended March 31, 2012. During the first quarter of 2012, the Partnership generated distributable cash flow(1) of $50.8 million, compared to $39.1 million in the same quarter of the previous year. The increase primarily reflects the incremental distributable cash flow resulting from the following acquisitions: Multigas carriers delivered in June and October 2011; a 33 percent interest in four liquefied natural gas (LNG) carriers delivered between August 2011 and January 2012; one liquefied petroleum gas (LPG) carrier delivered in September 2011; and a 52 percent interest in six LNG carriers completed in February 2012.

On April 12, 2012, the Partnership declared a cash distribution of $0.675 per unit for the quarter ended March 31, 2012. The cash distribution was paid on May 14, 2012 to all unitholders of record on April 23, 2012.

“The Partnership–s distributable cash flows increased in the first quarter due to a month of contribution from our interest in the Maersk LNG fleet, in addition to incremental contributions from the newbuilding Multigas carrier and two newbuilding Angola LNG carriers which delivered during the past two quarters,” noted Peter Evensen, Chief Executive Officer of Teekay GP L.L.C. “These additional cash flows enabled us to raise our first quarter distribution by 7 percent, while maintaining our coverage ratio above 1.0.”

“The delivery of the fourth and final Angola LNG carrier in January completed our latest newbuilding program; however, we continue to actively pursue new acquisition opportunities and organic growth projects,” Mr. Evensen continued. “Given the positive market fundamentals in the LNG sector and our financial strength, we believe there will continue to be attractive growth opportunities for the Partnership.”

(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 financial measure under United States generally accepted accounting principles (GAAP).

Teekay LNG–s Fleet

The following table summarizes the Partnership–s fleet as of May 1, 2012:

Financial Summary

The Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $35.6 million for the quarter ended March 31, 2012, compared to $25.9 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 $10.9 million and $0.9 million for the three months ended March 31, 2012 and 2011, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $24.7 million and $25.0 million for the three months ended March 31, 2012 and 2011, respectively.

For accounting purposes, the Partnership is required to recognize the changes in the fair value of its derivative instruments on its consolidated statements of income. 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 consolidated statements of income as detailed in footnote 1 of the Summary Consolidated Statements of Income included in this release.

(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 which are typically excluded by securities analysts in their published estimates of the Partnership–s financial results.

Operating Results

The following table highlights certain financial information for Teekay LNG–s two segments: the Liquefied Gas segment and the Conventional Tanker segment (please refer to the “Teekay LNG–s Fleet” section of this release above and Appendix C for further details).

Liquefied Gas Segment

Cash flow from vessel operations from the Partnership–s Liquefied Gas segment, excluding equity-accounted vessels, increased to $56.8 million in the first quarter of 2012 from $52.7 million in the same quarter of the prior year. This increase was primarily due to higher voyage revenues as a result of the acquisition of two newbuilding Multigas carriers in June and October 2011, and a newbuilding LPG carrier in September 2011.

Cash flow from vessel operations from the Partnership–s equity-accounted vessels in the Liquefied Gas segment increased to $26.2 million in the first quarter of 2012 from $12.9 million in the same quarter of the prior year. This increase was primarily due to the Teekay LNG-Marubeni joint venture–s acquisition of six LNG carriers from A.P. Moller Maersk A/P (the MALT LNG Carriers) in February 2012 and the acquisition of a 33 percent interest in the four Angola LNG Carriers from Teekay between August 2011 and January 2012.

Conventional Tanker Segment

Cash flow from vessel operations from the Partnership–s Conventional Tanker segment increased to $15.8 million for the first quarter of 2012 from $14.3 million for the same quarter of the prior year. This increase was primarily due to an additional revenue day as a result of the 2012 leap year and interest rate and inflation adjustments on contracts for five of the Partnership–s Suezmax tankers.

Liquidity

As of March 31, 2012, the Partnership had total liquidity of $318.1 million (comprised of $83.9 million in cash and cash equivalents and $234.2 million in undrawn credit facilities), compared to total liquidity of $538.7 million as of December 31, 2011. Subsequent to March 31, 2012, the Partnership–s liquidity balance increased by approximately $125.0 million due to the NOK 700 million Norwegian bond offering completed in early May 2012.

Availability of 2011 Annual Report

Teekay LNG filed its 2011 Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (SEC) on April 11, 2012. Copies are available on Teekay LNG–s web site, under “Investor Briefcase”, at . Unitholders may request a printed copy of this annual report, including the complete audited financial statements free of charge by contacting Teekay LNG Investor Relations.

Conference Call

The Partnership plans to host a conference call on Friday, May 18, 2012 at 10:00 a.m. (ET) to discuss the results for the first quarter of 2012. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

A supporting First Quarter 2012 Earnings Presentation will also be available at in advance of the conference call start time.

The conference call will be recorded and made available until Friday, May 24, 2012. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 7421187.

About Teekay LNG Partners L.P.

Teekay LNG Partners is the world–s third largest independent owner and operator of LNG vessels, providing LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts with major energy and utility companies through its interests in 27 LNG carriers (including one LNG regasification unit), five LPG/Multigas carriers and 11 conventional tankers. The Partnership–s ownership interests in these vessels range from 33 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) 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– common units trade on the New York Stock Exchange under the symbol “TGP”.

The equity income from the Teekay LNG-Marubeni joint venture is based on a preliminary purchase price allocation and actual results may differ. Any revisions to the preliminary purchase price allocation are not expected to have a material impact to equity income or to the distributable cash flow of the Partnership.

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 attributable to the partners as determined in accordance with GAAP. The Partnership believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Partnership–s financial performance. The items below are also typically excluded by securities analysts in their published estimates of the Partnership–s financial results. Adjusted net income attributable to the partners is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.

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, unrealized gains and losses from derivatives, deferred 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 GAAP and should not be considered as an alternative to net income or any other indicator of the Partnership–s performance required by GAAP. The table below reconciles distributable cash flow to net income.

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 opportunities; the Partnership–s financial position, including available liquidity; and the Partnership–s ability to secure additional growth opportunities. 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: availability of LNG shipping, floating storage regasification and other growth opportunities; changes in production of LNG or LPG, either generally or in particular regions; development of LNG and LPG projects; 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 of existing vessels in the Teekay LNG fleet and inability of the Partnership to renew or replace long-term contracts; the Partnership–s ability to raise financing to purchase additional vessels or to pursue other 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, 2011. 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.

Contacts:
Teekay LNG Partners L.P.
Kent Alekson
Investor Relations Enquiries
+1 (604) 609-6442

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