Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

Date of Report: August 7, 2014

Commission file number 1- 32479

 

 

TEEKAY LNG PARTNERS L.P.

(Exact name of Registrant as specified in its charter)

 

 

4th Floor

Belvedere Building

69 Pitts Bay Road

Hamilton, HM08 Bermuda

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.    

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).    

Yes  ¨            No   x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).    

Yes  ¨            No   x

 

 

 


Item 1 — Information Contained in this Form 6-K Report

Attached as Exhibit I is a copy of an announcement of Teekay LNG Partners L.P. dated August 7, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    TEEKAY LNG PARTNERS L.P.
Date: August 7, 2014     By:   /s/ Peter Evensen
      Peter Evensen
     

Chief Executive Officer and Chief Financial Officer

(Principal Financial and Accounting Officer)


LOGO

 

TEEKAY LNG PARTNERS L.P.

4th Floor, Belvedere Building, 69 Pitts Bay Road

Hamilton, HM 08, Bermuda

EARNINGS RELEASE

TEEKAY LNG PARTNERS

REPORTS SECOND QUARTER 2014 RESULTS

Highlights

 

  Generated distributable cash flow(1) of $61.5 million in the second quarter of 2014, an increase of 11 percent from the second quarter of 2013.

 

  Declared second quarter 2014 cash distribution of $0.6918 per unit.

 

  In July 2014, Teekay LNG, through a new 50/50 joint venture, finalized agreements to provide six icebreaker LNG carrier newbuildings for the Yamal LNG project.

 

  In June 2014, Teekay LNG acquired ownership interests in four LNG carrier newbuildings from BG Group.

 

  In April and June 2014, the Exmar LPG joint venture took delivery of two of its 12 LPG carrier newbuildings.

 

  Total liquidity of approximately $498 million as at June 30, 2014, giving pro-forma effect to proceeds from the $141 million common unit equity offering completed in mid-July 2014.

Hamilton, Bermuda, August 7, 2014 – Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE: TGP), today reported the Partnership’s results for the quarter ended June 30, 2014. During the second quarter of 2014, the Partnership generated distributable cash flow(1) of $61.5 million, compared to $55.4 million in the same quarter of the previous year. The increase in distributable cash flow was primarily due the Partnership’s acquisition and charter-back of two liquefied natural gas (LNG) carriers from Awilco LNG ASA (Awilco) in September and November 2013, respectively, and higher earnings from the Partnership’s LPG carriers within Exmar LPG BVBA (Exmar LPG Joint Venture), which were partially offset by reduced cash flow as a result of the sale of two 2000-built conventional tankers, Tenerife Spirit and Algeciras Spirit, in December 2013 and February 2014, respectively.

On July 9, 2014, the Partnership declared a cash distribution of $0.6918 per unit for the quarter ended June 30, 2014. The cash distribution is payable on August 8, 2014 to all unitholders of record on July 25, 2014.

“In June and July, we finalized two notable transactions that we have been working on for some time that will provide future distributable cash flow growth for the Partnership and which highlight our new strategic relationships with China-based partners,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “Through our new 50/50 joint venture with China LNG Shipping, we agreed to provide six icebreaker LNG carrier newbuildings for the Yamal LNG project which are scheduled to deliver in 2018 through 2020 and operate under fixed-rate contracts until 2045. And the Partnership acquired ownership interests, together with two China-based energy and shipping companies and one international shipping company, in four LNG carrier newbuildings to be built in China. These LNG carriers are scheduled to deliver in 2017 through 2019 at which time they will commence 20-year fixed-rate charter contracts with BG Group. Together, these two transactions provide additional diversification of the Partnership’s fixed-rate contract portfolio and increase its total forward fixed-rate revenues to approximately $11 billion, while also extending the remaining weighted-average contract duration for our LNG carrier fleet to approximately 14 years. Looking ahead, the addition of these new vessels will further complement the Partnership’s existing pipeline of growth projects, which includes 10 LPG carrier newbuildings, through our Exmar LPG joint venture, and five MEGI LNG carrier newbuildings, all scheduled for delivery between 2014 and 2018.”

Mr. Evensen added, “We continue to see strong long-term fundamentals for marine-based liquefied gas transportation, which is already creating new opportunities for LNG and LPG shipping. In the United States alone, the expected start-up of several LNG liquefaction projects from 2016 onwards is expected to create demand for over 80 additional LNG carriers. With a solid operating track record, a steadily expanding fleet of modern fuel-efficient vessels, and a strong financial foundation, we believe Teekay LNG is well-positioned for future growth.”

 

(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).

 

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Recent Transactions

Finalized Contracts for Six Yamal LNG Carrier Newbuildings

In early-July 2014, the Partnership, through a new 50/50 joint venture with China LNG Shipping (Holdings) Limited (China LNG), finalized agreements to provide six internationally-flagged icebreaker LNG carriers for the Yamal LNG project located on the Yamal Peninsula in Northern Russia. The Yamal LNG project is a joint venture between Novatek, Total and China National Petroleum Corporation, and will consist of three LNG trains with a total capacity of 16.5 million metric tonnes per annum, and is currently scheduled to start-up in early-2018. The LNG is expected to be transported from Northern Russia to Europe and Asia. The Yamal LNG joint venture has announced that nearly all of the expected LNG production output of the project has already been agreed to be purchased by affiliates of the Yamal LNG project sponsors and other third parties.

Under the agreements, the joint venture will provide six 172,000 cubic meter (cbm) ARC7 LNG carrier newbuildings to be constructed by Daewoo Shipbuilding & Marine Engineering Co., Ltd. of South Korea for a total fully built-up cost of approximately $2.1 billion, which are scheduled to deliver between the first quarter of 2018 and the first quarter of 2020. The vessels, which will be constructed with maximum 2.1 meter icebreaking capabilities in both the forward and reverse direction, will each operate under time-charter contracts until December 31, 2045, plus extension options, following their respective deliveries.

Acquired Ownership Interests in Four LNG Carrier Newbuildings

In late-June 2014, the Partnership acquired from BG Group (BG) ownership interests in four 174,000 cbm Tri-Fuel Diesel Electric LNG carrier newbuildings, which will be constructed by Hudong-Zhonghua Shipbuilding (Group) Co., Ltd. in China for a total fully built-up cost of approximately $1.0 billion. The vessels, which are scheduled to deliver between September 2017 and January 2019, will each operate under 20-year time-charter contracts, plus extension options, with BG. The Partnership is responsible for the construction supervision services for the newbuildings and Teekay Corporation will provide the technical management of the vessels upon their respective deliveries.

Through this transaction, the Partnership acquired a 30 percent ownership in the first two LNG carrier newbuildings with the balance of ownership by CETS (an affiliate of China National Offshore Oil Corporation (CNOOC)) and China LNG, and a 20 percent ownership interest in the second two LNG carrier newbuildings with the balance of ownership held by CETS, China LNG and BW Group.

The Partnership expects to finance its pro rata equity interest in future shipyard installment payments using a portion of its available liquidity with the balance of the total cost of the vessels financed with equity contributions by the other partners and a new $787 million long-term debt facility secured by the vessels.

 

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Financial Summary

The Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $42.6 million for the quarter ended June 30, 2014, compared to $41.5 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of increasing net income by $1.1 million and $28.1 million for the three months ended June 30, 2014 and 2013, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $43.6 million and $69.7 million for the three months ended June 30, 2014 and 2013, respectively.

For the six months ended June 30, 2014, the Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $84.4 million, compared to $80.6 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of decreasing net income by $2.5 million and increasing net income by $43.5 million for the six months ended June 30, 2014 and 2013, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $81.9 million and $124.1 million for the six months ended June 30, 2014 and 2013, respectively.

Adjusted net income attributable to the partners for the three and six months ended June 30, 2014 increased from the same period in the prior year, mainly due to the acquisitions of, and contributions by, the two Awilco LNG carriers in late-2013, and higher earnings from the Partnership’s LPG carriers in the Exmar LPG Joint Venture, which were partially offset by the sale of two 2000-built conventional tankers, Tenerife Spirit and Algeciras Spirit, in December 2013 and February 2014, respectively.

For accounting purposes, the Partnership is required to recognize the changes in the fair value of its outstanding derivative instruments that are not designated as hedges for accounting purposes in net 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 notes 1, 2 and 3 to the Consolidated Statements of Income and Comprehensive 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.

 

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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 below and Appendices C through F for further details).

 

     Three Months Ended      Three Months Ended  
     June 30, 2014      June 30, 2013  
     (unaudited)      (unaudited)  

(in thousands of U.S. Dollars)

   Liquefied Gas
Segment
     Conventional
Tanker
Segment
     Total      Liquefied Gas
Segment
     Conventional
Tanker
Segment
     Total  

Net voyage revenues(i)

     76,897        23,259        100,156        67,863        27,532        95,395  

Vessel operating expenses

     14,746        9,574        24,320        13,683        11,131        24,814  

Depreciation and amortization

     17,888        5,642        23,530        18,329        6,827        25,156  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

CFVO from consolidated vessels(ii)

     61,947        9,703        71,650        52,581        12,892        65,473  

CFVO from equity accounted vessels(iii)

     50,894        —          50,894        47,162        —          47,162  

Total CFVO(ii)

     112,841        9,703        122,544        99,743        12,892        112,635  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(i) Net voyage revenues represents voyage revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net voyage revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see Appendix C for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure.
(ii) Cash flow from vessel operations (CFVO) from consolidated vessels represents income from vessel operations before (a) depreciation and amortization expense, (b) amortization of in-process revenue contracts, (c) gains or losses on derivative contracts and includes (d) adjustments for direct financing leases and two Suezmax tankers to a cash basis. CFVO is included because certain investors use this data to measure a company’s financial performance. CFVO is not required by GAAP and should not be considered as an alternative to net income, equity income or any other indicator of the Partnership’s performance required by GAAP. Please see Appendix E for a reconciliation of CFVO from consolidated vessels (a non-GAAP measure) as used in this release to the most directly comparable GAAP financial measure.
(iii) The Partnership’s equity accounted investments for the three months ended June 30, 2014 and 2013 include: the Partnership’s 40 percent interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnership’s 50 percent interest in the Excalibur and Excelsior joint ventures with Exmar, which own one LNG carrier and one regasification unit, respectively; the Partnership’s 33 percent interest in four LNG carriers servicing the Angola LNG Project; the Partnership’s 52 percent interest in Malt LNG Netherlands Holdings B.V., the joint venture between the Partnership and Marubeni Corporation, which owns six LNG carriers (the Malt LNG Carriers); and the Partnership’s 50 percent interest in Exmar LPG BVBA, which currently owns and charters-in 25 vessels in the LPG carrier segment, including 10 newbuildings. Please see Appendix F for a description and reconciliation of CFVO from equity accounted vessels (a 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, excluding equity accounted vessels, increased to $61.9 million in the second quarter of 2014 from $52.6 million in the same quarter of the prior year. The increase was primarily due to the delivery in late-2013 of two LNG carrier newbuildings acquired from Awilco LNG, and the scheduled dry docking of one LNG carrier which resulted in 21 days of off-hire in the second quarter of 2013.

Cash flow from vessel operations from the Partnership’s equity accounted vessels in the Liquefied Gas segment increased to $50.9 million in the second quarter of 2014 from $47.2 million in the same quarter of the prior year, primarily due to higher revenues generated by the Exmar LPG Joint Venture fleet as a result of newbuilding deliveries and higher Very Large Gas Carrier (VLGC) spot rates in the second quarter of 2014 compared to the same period in the prior year. This was partially offset by fewer revenue generating days as a result of the sale of two older vessels in the Exmar LPG Joint Venture during the first half of 2014 and scheduled drydockings for two of the Malt LNG carriers and one LPG carrier during the second quarter of 2014.

Conventional Tanker Segment

Cash flow from vessel operations from the Partnership’s Conventional Tanker segment decreased to $9.7 million in the second quarter of 2014 from $12.9 million in the same quarter of the prior year, primarily due to the sale of two Suezmax conventional tankers, the Tenerife Spirit and Algeciras Spirit, in December 2013 and February 2014, respectively.

 

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Teekay LNG’s Fleet

The following table summarizes the Partnership’s fleet as of August 1, 2014:

 

     Number of Vessels  
     Owned
Vessels
    In-Chartered
Vessels
    Newbuildings     Total  

LNG Carrier Fleet

     29 (i)      —          15 (i)      44   

LPG/Multigas Carrier Fleet

     16 (ii)      4 (iii)      10 (iii)      30   

Conventional Tanker Fleet

     9 (iv)      —          —          9   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     54        4        25        83   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(i) The Partnership’s ownership interests in these vessels range from 20 percent to 100 percent.
(ii) The Partnership’s ownership interests in these vessels range from 50 percent to 99 percent.
(iii) The Partnership’s interest in these vessels is 50 percent.
(iv) The 2001-built Suezmax conventional tanker, Huelva Spirit, is expected to be sold in August 2014.

Liquidity

In mid-July 2014, the Partnership completed an equity offering of 3.1 million common units raising net proceeds of $140.5 million (including the general partner’s contribution). The net proceeds from the offering were used to fund the first shipyard installment payments for the six icebreaker LNG carrier newbuildings for the Yamal LNG project, with the remaining proceeds intended to be used to fund a portion of the Partnership’s five M-type, Electronically Controlled, Gas Injection (MEGI) LNG carrier newbuildings currently under construction.

As of June 30, 2014, the Partnership had total liquidity of $357.3 million (comprised of $121.7 million in cash and cash equivalents and $235.6 million in undrawn credit facilities). Giving pro-forma effect to the $140.5 million equity issuance completed in mid-July 2014, the Partnership’s liquidity at June 30, 2014 would have been $497.8 million.

 

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Conference Call

The Partnership plans to host a conference call on Friday, August 8, 2014 at 11:00 a.m. (ET) to discuss the results for the second quarter of 2014. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

 

    By dialing (800) 499-4035 or (416) 204-9269, if outside North America, and quoting conference ID code 5119193.

 

    By accessing the webcast, which will be available on Teekay LNG’s website at www.teekaylng.com (the archive will remain on the web site for a period of 30 days).

A supporting Second Quarter 2014 Earnings Presentation will also be available at www.teekaylng.com in advance of the conference call start time.

The conference call will be recorded and made available until Friday, August 15, 2014. 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 5119193.

About Teekay LNG Partners L.P.

Teekay LNG Partners is one of the world’s largest independent owners and operators of LNG carriers, providing LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts through its interests in 44 LNG carriers (including one LNG regasification unit and 15 newbuildings), 30 LPG/Multigas carriers (including four chartered-in LPG carriers and 10 newbuildings) and nine conventional tankers. The Partnership’s interests in these vessels range from 20 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”.

For Investor Relations enquiries contact:

Ryan Hamilton

Tel: +1 (604) 609-6442

Website: www.teekaylng.com

 

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TEEKAY LNG PARTNERS L.P.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands of U.S. Dollars, except units outstanding)

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,     June 30,     June 30,  
   2014     2014     2013     2014     2013  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

VOYAGE REVENUES

     101,323       101,490       96,619       202,813       193,726  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES

          

Voyage expenses

     1,167       1,333       1,224       2,500       1,615  

Vessel operating expenses

     24,320       24,256       24,814       48,576       50,130  

Depreciation and amortization

     23,530       24,110       25,156       47,640       49,299  

General and administrative

     6,254       6,408       4,744       12,662       10,213  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     55,271       56,107       55,938       111,378       111,257  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from vessel operations

     46,052       45,383       40,681       91,435       82,469  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OTHER ITEMS

          

Equity income(1)

     32,924       20,373       39,425       53,297       65,849  

Interest expense

     (15,068     (14,831     (13,132     (29,899     (26,380

Interest income

     572       648       782       1,220       1,297  

Realized and unrealized (loss) gain on derivative instruments(2)

     (16,335     (7,521     10,666       (23,856     2,381  

Foreign exchange (loss) gain(3)

     (66     (779     (2,787     (845     5,424  

Other income – net

     208       218       407       426       876  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2,235       (1,892     35,361       343       49,447  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income before tax expense

     48,287       43,491       76,042       91,778       131,916  

Income tax expense

     (375     (395     (800     (770     (1,643
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     47,912       43,096       75,242       91,008       130,273  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss:

          

Unrealized loss on qualifying cash flow hedging instruments in equity accounted joint ventures net of amounts reclassified to equity income

     (730     (552     —         (1,282     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss attributable to General and limited partners

     (730     (552     —         (1,282     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

     47,182       42,544       75,242       89,726       130,273  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-controlling interest in net income

     4,263       4,850       5,581       9,113       6,167  

General Partner’s interest in net income

     7,528       7,155       6,278       14,683       12,243  

Limited partners’ interest in net income

     36,121       31,091       63,383       67,212       111,863  

Weighted-average number of common units outstanding:

          

• Basic

     74,212,834       74,199,534       69,713,500       74,206,221       69,698,714  

• Diluted

     74,255,543       74,226,654       69,732,097       74,252,842       69,709,382  

Total number of units outstanding at end of period

     74,212,891       74,211,160       69,813,899       74,212,891       69,813,899  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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(1) Equity income includes unrealized losses (gains) on non-designated derivative instruments and (gains) losses on sale of vessels as detailed in the table below:

 

     Three Months Ended     Six Months Ended  
     June 30,
2014
    March 31,
2014
     June 30,
2013
    June 30,
2014
    June 30,
2013
 

Equity income

     32,924       20,373        39,425       53,297       65,849  

Proportionate share of unrealized losses (gains) on non-designated derivative instruments

     979       1,053        (14,135     2,032       (18,734

Proportionate share of (gains) losses on sale of vessels

     (9,772     966        —         (8,806     —    
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Equity income excluding unrealized losses (gains) on non-designated derivative instruments and (gains) losses on sale of vessels

     24,131       22,392        25,290       46,523       47,115  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

(2) The realized losses relate to the amounts the Partnership actually paid to settle derivative instruments and the unrealized (losses) gains 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,
2014
    March 31,
2014
    June 30,
2013
    June 30,
2014
    June 30,
2013
 

Realized losses relating to:

          

Interest rate swaps

     (10,020     (9,244     (9,496     (19,264     (19,022

Toledo Spirit time-charter derivative contract

     (224     —         (23     (224     (23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (10,244     (9,244     (9,519     (19,488     (19,045
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unrealized (losses) gains relating to:

          

Interest rate swaps

     (5,391     4,023       19,885       (1,368     18,626  

Toledo Spirit time-charter derivative contract

     (700     (2,300     300       (3,000     2,800  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (6,091     1,723       20,185       (4,368     21,426  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total realized and unrealized (losses) gains on derivative instruments

     (16,335     (7,521     10,666       (23,856     2,381  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(3) 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 consolidated statements of income and comprehensive income.

Foreign exchange (loss) gain includes realized (losses) gains relating to the amounts the Partnership (paid) received to settle the Partnership’s non-designated cross currency swaps that were entered into as economic hedges in relation to the Partnership’s Norwegian Kroner (NOK)-denominated unsecured bonds. The Partnership issued NOK 700 million and NOK 900 million of unsecured bonds in May 2012 and September 2013 that mature in 2017 and 2018, respectively. Foreign exchange (loss) gain also includes unrealized (losses) gains relating to the change in fair value of such derivative instruments, partially offset by unrealized gains (losses) on the revaluation of the NOK bonds as detailed in the table below:

 

     Three Months Ended     Six Months Ended  
     June 30,
2014
    March 31,
2014
    June 30,
2013
    June 30,
2014
    June 30,
2013
 

Realized (losses) gains on cross-currency swaps

     (275     (365     (67     (640     (9

Unrealized (losses) gains on cross-currency swaps

     (7,729     3,917       (2,731     (3,812     (8,922

Unrealized gains (losses) on revaluation of NOK bonds

     6,307       (3,653     4,545       2,654       10,468  

 

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TEEKAY LNG PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. Dollars)

 

     As at June 30,     As at March 31,     As at December 31,  
     2014     2014     2013  
     (unaudited)     (unaudited)     (unaudited)  

ASSETS

      

Current

      

Cash and cash equivalents

     121,658       94,824       139,481  

Accounts receivable

     20,068       19,601       19,844  

Prepaid expenses

     6,219       7,478       5,756  

Current portion of derivative assets

     17,500       17,921       18,444  

Current portion of net investments in direct financing leases

     18,105       16,886       16,441  

Current portion of advances to joint venture partner

     —         —         14,364  

Advances to affiliates

     21,036       3,606       6,634  
  

 

 

   

 

 

   

 

 

 

Total current assets

     204,586       160,316       220,964  
  

 

 

   

 

 

   

 

 

 

Restricted cash – long-term

     498,400       498,208       497,298  

Vessels and equipment

      

At cost, less accumulated depreciation

     1,231,216       1,244,537       1,253,763  

Vessels under capital leases, at cost, less accumulated depreciation

     530,195       535,700       571,692  

Advances on newbuilding contracts

     117,778       98,055       97,207  
  

 

 

   

 

 

   

 

 

 

Total vessels and equipment

     1,879,189       1,878,292       1,922,662  
  

 

 

   

 

 

   

 

 

 

Investment in and advances to equity accounted joint ventures

     735,171       691,804       671,789  

Net investments in direct financing leases

     676,476       679,013       683,254  

Other assets

     48,394       31,162       28,284  

Derivative assets

     101,255       84,241       62,867  

Intangible assets – net

     92,124       94,413       96,845  

Goodwill – liquefied gas segment

     35,631       35,631       35,631  
  

 

 

   

 

 

   

 

 

 

Total assets

     4,271,226       4,153,080       4,219,594  
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND EQUITY

      

Current

      

Accounts payable

     1,942       3,498       1,741  

Accrued liabilities

     46,876       43,615       45,796  

Unearned revenue

     14,295       11,706       14,342  

Current portion of long-term debt

     161,596       97,583       97,114  

Current obligations under capital lease

     65,716       93,613       31,668  

Current portion of in-process contracts

     6,234       1,113       1,113  

Current portion of derivative liabilities

     86,626       78,452       76,980  

Advances from affiliates

     46,271       25,154       19,270  
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     429,556       354,734       288,024  
  

 

 

   

 

 

   

 

 

 

Long-term debt

     1,642,859       1,661,435       1,680,393  

Long-term obligations under capital lease

     499,458       472,990       566,661  

Long-term unearned revenue

     34,929       35,312       36,689  

Other long-term liabilities

     70,974       70,323       69,480  

In-process contracts

     28,147       3,382       3,660  

Derivative liabilities

     169,867       147,628       130,903  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     2,875,790       2,745,804       2,775,810  
  

 

 

   

 

 

   

 

 

 

Equity

      

Limited partners

     1,304,036       1,319,280       1,338,133  

General Partner

     52,103       52,143       52,526  

Accumulated other comprehensive (loss) income

     (1,151     (421     131  
  

 

 

   

 

 

   

 

 

 

Partners’ equity

     1,354,988       1,371,002       1,390,790  

Non-controlling interest (1)

     40,448       36,274       52,994  
  

 

 

   

 

 

   

 

 

 

Total equity

     1,395,436       1,407,276       1,443,784  
  

 

 

   

 

 

   

 

 

 

Total liabilities and total equity

     4,271,226       4,153,080       4,219,594  
  

 

 

   

 

 

   

 

 

 

 

(1) Non-controlling interest includes a 30 percent equity interest in the RasGas II project (which owns three LNG carriers), a 31 percent equity interest in the Tangguh Project (which owns two LNG carriers), a 1 percent equity interest in two LNG carriers (Arctic Spirit and Polar Spirit), a 1 percent equity interest in the Excalibur joint venture (which owns one LNG carrier), a 1 percent equity interest in the five LPG/Multigas carriers that are chartered out to I.M. Skaugen ASA, and a 1 percent equity interest in two LNG carriers chartered out to Awilco, which in each case represents the ownership interest not owned by the Partnership.

 

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TEEKAY LNG PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. Dollars)

 

     Six Months Ended  
   June 30,     June 30,  
     2014     2013  
     $     $  

Cash and cash equivalents provided by (used for)

    

OPERATING ACTIVITIES

    

Net income

     91,008       130,273  

Non-cash items:

    

Unrealized loss (gain) on derivative instruments

     4,368       (21,426

Depreciation and amortization

     47,640       49,299  

Unrealized foreign currency exchange gain

     (66     (5,993

Equity income, net of dividends received of $2.6 million (2013 – nil)

     (50,690     (65,849

Amortization of deferred debt issuance costs and other

     742       1,494  

Change in operating assets and liabilities

     9,452       5,748  

Expenditures for dry docking

     (7,931     (17,796
  

 

 

   

 

 

 

Net operating cash flow

     94,523       75,750  
  

 

 

   

 

 

 

FINANCING ACTIVITIES

    

Proceeds from issuance of long-term debt

     209,215       219,748  

Scheduled repayments of long-term debt

     (48,320     (42,999

Prepayments of long-term debt

     (130,000     (10,000

Scheduled repayments of capital lease obligations

     (3,396     (5,205

Proceeds from units issued out of continuous offering program, net of offering costs

     —         4,924  

Advances to equity accounted joint ventures

     —         (16,785

Increase in restricted cash

     (1,197     (952

Cash distributions paid

     (117,803     (105,943

Novation of derivative liabilities

     2,985       —    

Dividends paid to non-controlling interest

     (7,295     (144
  

 

 

   

 

 

 

Net financing cash flow

     (95,811     42,644  
  

 

 

   

 

 

 

INVESTING ACTIVITIES

    

Purchase of equity accounted investments

     (1     (135,790

Receipts from direct financing leases

     5,114       3,233  

Expenditures for vessels and equipment

     (21,648     (1,793
  

 

 

   

 

 

 

Net investing cash flow

     (16,535     (134,350
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (17,823     (15,956

Cash and cash equivalents, beginning of the period

     139,481       113,577  
  

 

 

   

 

 

 

Cash and cash equivalents, end of the period

     121,658       97,621  
  

 

 

   

 

 

 

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX A – SPECIFIC ITEMS AFFECTING NET INCOME

(in thousands of U.S. Dollars)

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.

 

     Three Months Ended     Six Months Ended  
     June 30     June 30     June 30     June 30  
     2014     2013     2014     2013  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Net income – GAAP basis

     47,912       75,242       91,008       130,273  

Less:

        

Net income attributable to non-controlling interest

     (4,263     (5,581     (9,113     (6,167
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to the partners

     43,649       69,661       81,895       124,106  

Add (subtract) specific items affecting net income:

        

Unrealized foreign currency exchange (gains) losses(1)

     (265     2,960       41       (5,088

Unrealized losses (gains) from derivative instruments(2)

     6,091       (20,185     4,368       (21,426

Unrealized gains and losses from non-designated derivative instruments and net gain on vessel sales from equity accounted investees(3)

     (8,793     (14,135     (6,774     (18,734

Non-controlling interests’ share of items above(4)

     1,906       3,219       4,860       1,713  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments

     (1,061     (28,141     2,495       (43,535
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income attributable to the partners

     42,588       41,520       84,390       80,571  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Unrealized foreign exchange (gains) losses primarily relate to the Partnership’s revaluation of all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rate at the end of each reporting period and unrealized losses (gains) on the cross-currency swap economically hedging the Partnership’s NOK bond and excludes the realized gains/losses relating to the cross currency swaps for the NOK bonds.
(2) Reflects the unrealized losses (gains) due to changes in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes.
(3) Reflects the unrealized (gains) losses due to changes in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes and any ineffectiveness for any derivative instruments designated as hedges for accounting purposes within the Partnership’s equity-accounted investments. Also reflects the Partnership’s proportionate share of a net gain of $9.8 million and $8.8 million on the sale of vessels from the Exmar LPG BVBA joint venture during the three and six months ended June 30, 2014, respectively. See note 1 to the Consolidated Statements of Income and Comprehensive Income included in this release for further details.
(4) Items affecting net income include items from the Partnership’s wholly-owned subsidiaries, its consolidated non-wholly-owned subsidiaries and its proportionate share of items from equity accounted for investments. The specific items affecting net income are analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests’ percentage share in this subsidiary to arrive at the non-controlling interests’ share of the amount. The amount identified as “non-controlling interests’ share of items listed above” in the table above is the cumulative amount of the non-controlling interests’ proportionate share of items listed in the table.

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX B – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

DISTRIBUTABLE CASH FLOW (DCF)

(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, unrealized gains and losses from derivatives, distributions relating to equity financing of newbuilding installments, equity income, adjustments for direct financing leases to a cash basis, 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.

 

     Three Months
Ended
June 30, 2014
(unaudited)
    Three Months
Ended
June 30, 2013
(unaudited)
 

Net income:

     47,912       75,242  

Add:

    

Depreciation and amortization

     23,530       25,156  

Partnership’s share of equity accounted joint ventures’ DCF net of estimated maintenance and capital expenditures

     29,411       26,254  

Unrealized loss (gain) on derivatives and other non-cash items

     3,644       (22,914

Direct finance lease payments received in excess of revenue recognized

     4,256       1,633  

Distributions relating to equity financing of newbuildings

     1,822       —    

Less:

    

Unrealized foreign exchange (gain) loss

     (265     2,960  

Estimated maintenance capital expenditures

     (11,632     (9,423

Equity income

     (32,924     (39,425
  

 

 

   

 

 

 

Distributable Cash Flow before Non-controlling interest

     65,754       59,483  

Non-controlling interests’ share of DCF before estimated maintenance capital expenditures

     (4,258     (4,083
  

 

 

   

 

 

 

Distributable Cash Flow

     61,496       55,400  
  

 

 

   

 

 

 

 

(1) The estimated maintenance capital expenditures relating to the Partnership’s share of equity accounted joint ventures for the three months ended June 30, 2014 and 2013 were $7.3 million and $8.6 million, respectively.

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX C – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

NET VOYAGE REVENUES

(in thousands of U.S. Dollars)

Description of Non-GAAP Financial Measure – Net Voyage Revenues

Net voyage revenues represents voyage revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net voyage revenues is included because certain investors use this data to measure the financial performance of shipping companies. Net voyage revenues is not required by GAAP and should not be considered as an alternative to voyage revenues or any other indicator of the Partnership’s performance required by GAAP.

 

     Three Months Ended June 30, 2014  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker Segment
     Total  

Voyage revenues

     77,602        23,721        101,323  

Voyage expenses

     705        462        1,167  
  

 

 

    

 

 

    

 

 

 

Net voyage revenues

     76,897        23,259        100,156  
  

 

 

    

 

 

    

 

 

 
     Three Months Ended June 30, 2013  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker Segment
     Total  

Voyage revenues

     68,270        28,349        96,619  

Voyage expenses

     407        817        1,224  
  

 

 

    

 

 

    

 

 

 

Net voyage revenues

     67,863        27,532        95,395  
  

 

 

    

 

 

    

 

 

 

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX D – SUPPLEMENTAL SEGMENT INFORMATION

(in thousands of U.S. Dollars)

 

     Three Months Ended June 30, 2014  
     Liquefied Gas
Segment
     (unaudited)
Conventional
Tanker
Segment
     Total  

Net voyage revenues (See Appendix C)

     76,897        23,259        100,156  

Vessel operating expenses

     14,746        9,574        24,320  

Depreciation and amortization

     17,888        5,642        23,530  

General and administrative

     4,460        1,794        6,254  
  

 

 

    

 

 

    

 

 

 

Income from vessel operations

     39,803        6,249        46,052  
  

 

 

    

 

 

    

 

 

 
     Three Months Ended June 30, 2013  
     Liquefied Gas
Segment
     (unaudited)
Conventional
Tanker
Segment
     Total  

Net voyage revenues (See Appendix C)

     67,863        27,532        95,395  

Vessel operating expenses

     13,683        11,131        24,814  

Depreciation and amortization

     18,329        6,827        25,156  

General and administrative

     3,233        1,511        4,744  
  

 

 

    

 

 

    

 

 

 

Income from vessel operations

     32,618        8,063        40,681  
  

 

 

    

 

 

    

 

 

 

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX E – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CASH FLOW FROM VESSEL OPERATIONS

FROM CONSOLIDATED VESSELS

(in thousands of U.S. Dollars)

Description of Non-GAAP Financial Measure – Cash Flow from Vessel Operations from Consolidated Vessels

Cash flow from vessel operations from consolidated vessels represents income from vessel operations before (a) depreciation and amortization expense, (b) amortization of in-process revenue contracts included in voyage revenues, (c) gains or losses on derivative contracts and includes (d) adjustments for direct financing leases and two Suezmax tankers to a cash basis. The Partnership’s direct financing leases for the periods indicated relates to the Partnership’s 69 percent interest in two LNG carriers, Tangguh Sago and Tangguh Hiri, and the two newbuilding LNG carriers acquired from Awilco in September and November 2013. The Partnership’s cash flow from vessel operations from consolidated vessels does not include the Partnership’s cash flow from vessel operations from its equity accounted joint ventures. Cash flow from vessel operations is included because certain investors use cash flow from vessel operations to measure a company’s financial performance, and to highlight this measure for the Partnership’s consolidated vessels. Cash flow from vessel operations from consolidated vessels 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.

 

     Three Months Ended June 30, 2014  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker
Segment
    Total  

Income from vessel operations (See Appendix D)

     39,803        6,249       46,052  

Depreciation and amortization

     17,888        5,642       23,530  

Amortization of in-process revenue contracts included in voyage revenues

     —          (278     (278

Direct finance lease payments received in excess of revenue recognized

     4,256        —         4,256  

Realized loss on Toledo Spirit derivative contract

     —          (224     (224

Cash flow adjustment for two Suezmax tankers(1)

     —          (1,686     (1,686
  

 

 

    

 

 

   

 

 

 

Cash flow from vessel operations from consolidated vessels

     61,947        9,703       71,650  
  

 

 

    

 

 

   

 

 

 
     Three Months Ended June 30, 2013  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker
Segment
    Total  

Income from vessel operations (See Appendix D)

     32,618        8,063       40,681  

Depreciation and amortization

     18,329        6,827       25,156  

Amortization of in-process revenue contracts included in voyage revenues

     —          (278     (278

Direct finance lease payments received in excess of revenue recognized

     1,634        —         1,634  

Realized loss on Toledo Spirit derivative contract

     —          (23     (23

Cash flow adjustment for two Suezmax tankers(1)

     —          (1,697     (1,697
  

 

 

    

 

 

   

 

 

 

Cash flow from vessel operations from consolidated vessels

     52,581        12,892       65,473  
  

 

 

    

 

 

   

 

 

 

 

  (1) The Partnership’s charter contracts for two of its Suezmax tankers, Bermuda Spirit and Hamilton Spirit, were amended in 2012, which had the effect of reducing the daily charter rates by $12,000 per day for a duration of 24 months commencing October 1, 2012. However, during this period, if Suezmax spot tanker rates exceed the amended rates, the charterer will pay the Partnership the excess amount up to a maximum of the original daily charter rate. The cash impact of the change in hire rates is not fully reflected in the Partnership’s statements of income and comprehensive income as the change in the lease payments is being recognized on a straight-line basis over the term of the lease.

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX F – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CASH FLOW FROM VESSEL OPERATIONS FROM EQUITY ACCOUNTED VESSELS

(in thousands of U.S. Dollars)

Description of Non-GAAP Financial Measure – Cash Flow from Vessel Operations from Equity Accounted Vessels

Cash flow from vessel operations from equity accounted vessels represents income from vessel operations before (a) depreciation and amortization expense, (b) amortization of in-process revenue contracts, and (c) gain on sale of vessel, and includes (d) adjustments for direct financing leases to a cash basis. Cash flow from vessel operations from equity accounted vessels is included because certain investors use cash flow from vessel operations to measure a company’s financial performance, and to highlight this measure for the Partnership’s equity accounted joint ventures. Cash flow from vessel operations from equity-accounted vessels is not required by GAAP and should not be considered as an alternative to equity income or any other indicator of the Partnership’s performance required by GAAP.

 

     Three Months Ended June 30, 2014     Three Months Ended June 30, 2013  
     (unaudited)     (unaudited)  
     At
100%
    Partnership’s
Portion(1)
    At
100%
    Partnership’s
Portion(1)
 

Net voyage revenues

     154,330       71,534       149,178       68,893  

Vessel operating expenses

     45,505       21,398       42,272       20,037  

Depreciation and amortization

     22,970       11,643       21,284       10,837  

Gain on sale of vessels

     (19,543     (9,772     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from vessel operations of equity accounted vessels

     105,398       48,265       85,622       38,019  
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense – net

     (19,888     (9,250     (17,634     (7,962

Realized and unrealized (loss) gain on derivative instruments

     (17,355     (5,793     26,693       8,926  

Other (expense) income – net

     (501     (298     140       442  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other items

     (37,744     (15,341     9,199       1,406  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income / equity income of equity accounted vessels

     67,654       32,924       94,821       39,425  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from vessel operations

     105,398       48,265       85,622       38,019  

Depreciation and amortization

     22,970       11,643       21,284       10,837  

Gain on sale of vessel

     (19,543     (9,772     —         —    

Direct finance lease payments received in excess of revenue recognized

     7,697       2,792       7,161       2,603  

Amortization of in-process revenue contracts

     (4,002     (2,034     (8,386     (4,297
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flow from vessel operations from equity accounted vessels

     112,520       50,894       105,681       47,162  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

  (1) The Partnership’s equity accounted vessels for the three months ended June 30, 2014 and 2013 include: the Partnership’s 40 percent interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnership’s 50 percent interest in the Excalibur and Excelsior joint ventures, which owns one LNG carrier and one regasification unit, respectively; the Partnership’s 33 percent interest in four LNG carriers servicing the Angola LNG Project; the Partnership’s 52 percent interest in Malt LNG Netherlands Holdings B.V., the joint venture between the Partnership and Marubeni Corporation, which owns six LNG carriers; and the Partnership’s 50 percent interest in Exmar LPG BVBA, which owns and charters-in 15 vessels in the LPG carrier segment, excluding 10 newbuildings, as at June 30, 2014 and 16 vessels, excluding 10 newbuildings, as at June 30, 2013.

 

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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: future growth opportunities and expectations and the effect of any growth on the Partnership’s results of operations; the expected delivery dates for the Partnership’s newbuilding vessels and commencement of related time charter contracts; the Partnership’s agreement to provide, through a new 50/50 joint venture with China LNG, six icebreaker LNG carriers for the Yamal LNG project including the timing of delivery and total cost to construct the vessels; the timing of the start-up of the Yamal LNG project and the expected total LNG production capacity of the project, if completed; the impact of the transactions with Yamal LNG and BG on the Partnership’s future cash flows; anticipated financing for the four LNG carrier newbuildings for BG; the cost to construct the four LNG carrier newbuildings for BG; the total amount of the Partnership’s forward fixed-rate revenues and the average remaining contract length on the Partnership’s LNG fleet; and LNG/LPG shipping market fundamentals and projects. 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: potential shipyard construction delays, newbuilding specification changes or cost overruns; availability of suitable LNG shipping, LPG shipping, floating storage and regasification and other growth project opportunities; changes in production of LNG or LPG, either generally or in particular regions; changes in trading patterns or timing of start-up of new LNG liquefaction and regasification projects significantly affecting overall vessel tonnage requirements; competitive dynamics in bidding for potential LNG, LPG or floating regasification projects; potential failure of the Yamal LNG Project to be completed for any reason, including due to lack of funding as a result of existing or future sanctions against Russia and Russian entities and individuals, which may affect partners in the project; potential delays or cancellation of the Yamal LNG project; 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; the inability of charterers to make future charter payments; the inability of the Partnership to renew or replace long-term contracts on existing vessels; the Partnership’s ability to raise financing for its existing newbuildings or to purchase additional vessels or to pursue other projects; 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, 2013. 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.

 

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