HAMILTON, BERMUDA--(Marketwired - Aug 3, 2017) -
Highlights
- Reported GAAP net loss attributable to the partners and preferred unitholders of $16.1 million and adjusted net income
attributable to the partners and preferred unitholders(1) of $17.9 million in the second quarter of 2017.
- Generated distributable cash flow(1) of $40.6 million, or $0.51 per common unit, in the second quarter of
2017.
- In June 2017, the Partnership entered into charter contract extensions for two LNG carriers chartered to Awilco LNG to
December 2019; in July 2017, the Partnership extended the loan facilities associated with these vessels to June 2020, which
were previously scheduled to mature in 2018.
- As at June 30, 2017, the Partnership had total liquidity of approximately $350 million.
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, 2017.
|
Three Months Ended |
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
(in thousands of U.S. Dollars) |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
GAAP FINANCIAL COMPARISON |
|
|
|
|
|
Voyage revenues |
100,904 |
|
101,180 |
|
99,241 |
Income from vessel operations |
29,871 |
|
46,078 |
|
47,554 |
Equity (loss) income |
(507 |
) |
5,887 |
|
29,567 |
Net (loss) income attributable to the partners and preferred unitholders |
(16,073 |
) |
29,057 |
|
43,071 |
NON-GAAP FINANCIAL COMPARISON |
|
|
|
|
|
Total cash flow from vessel operations (CFVO) (1) |
106,252 |
|
109,211 |
|
135,127 |
Distributable cash flow (DCF) (1) |
40,623 |
|
43,227 |
|
76,067 |
Adjusted net income attributable to the partners and preferred unitholders(1) |
17,860 |
|
21,093 |
|
53,780 |
(1) |
These are non-GAAP financial measures. Please refer to "Definitions and Non-GAAP Financial Measures" and
the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as
used in this release to the most directly comparable financial measures under United States generally accepted accounting
principles (GAAP). |
GAAP net (loss) income and adjusted net income decreased in the second quarter of 2017 compared to the same period of the
prior year primarily due to a favorable settlement in the second quarter of 2016 of a disputed charter contract termination in
the Partnership's 52 percent-owned joint venture with Marubeni Corporation (the Teekay LNG-Marubeni Joint Venture);
unscheduled off-hire in the second quarter of 2017 related to repairs for an LNG carrier; lower revenues from the Partnership's
six LPG carriers chartered to I.M. Skaugen SE from uncollected hire; sales of three conventional tankers in the second quarter of
2016 through the first quarter of 2017; and lower spot rates earned for certain of the vessels in the Teekay LNG-Marubeni Joint
Venture and in the Partnership's 50-percent owned joint venture with Exmar NV (the Exmar LPG Joint Venture). These
decreases were partially offset by the deliveries of two MEGI LNG carrier newbuildings between August 2016 and March 2017 and
deliveries of three LPG carriers between June 2016 and March 2017 in the Exmar LPG Joint Venture. GAAP net (loss) income was also
affected in the second quarter of 2017 compared to the same period of the prior year by various non-cash items, such as the
write-down of the European Spirit conventional tanker; an increase in unrealized foreign currency exchange losses
relating to the Partnership's Euro and NOK-denominated debt; and a decrease in unrealized losses on non-designated derivative
instruments.
CEO Commentary
"During the second quarter, the Partnership continued to generate stable cash flows supported by a diversified portfolio of
long-term charters totaling $11.4 billion in forward fixed-rate revenues with a weighted-average remaining contract duration of
13 years," commented Mark Kremin, President and CEO of Teekay Gas Group Ltd.
"Since reporting earnings in May 2017, we continued to execute on our portfolio of committed growth projects," Mr. Kremin
continued. "Last week, our Exmar LPG joint venture took delivery of a mid-size LPG carrier newbuilding, the Kruibeke,
and during the quarter, our first joint venture LNG carrier chartered to Shell, the Pan Asia, successfully completed sea
trials and is expected to deliver in the fourth quarter of 2017 at which time it will commence its 20-year charter contract. In
addition, we continue to progress the financing for all our committed growth projects delivering through early-2020."
Mr. Kremin added, "We also continue to focus on our upcoming debt maturities and I am pleased to report that, following our
Awilco LNG charter contract extensions to December 2019 on two modern LNG carriers, we were able to successfully extend
approximately $180 million of 2018 debt maturities to mid-2020."
Summary of Recent Events
Charter Contract Extensions and Loan Refinancings
In June 2017, the Partnership completed charter contract extensions with Awilco LNG ASA (Awilco LNG) relating to the
Wilpride and Wilforce LNG carriers. The contracts, which were previously set to expire in the fourth quarter of
2017 and the second quarter of 2018, have now both been extended to December 2019. Awilco LNG remains obligated to repurchase the
vessels either during or at the end of the charter period. Additionally, as part of this extension, the Partnership has agreed to
defer charter hire payments of an average of $15,600 per day per vessel commencing in July 2017 through the end of the charter
period, with such deferred amounts added to the purchase obligation price.
In July 2017, the Partnership completed loan extensions on the facilities secured by the Wilpride and
Wilforce vessels. The loans associated with these vessels, which were previously scheduled to mature between the second
quarter of 2018 and the fourth quarter of 2018 with balloon amounts totaling approximately $180 million, were both extended to
June 2020 on similar terms.
Teekay LNG-Marubeni Joint Venture Secures Short-term Charter Contracts
In July 2017, the Teekay LNG-Marubeni Joint Venture secured short-term charter contracts on two vessels, the Magellan
Spirit and the Awra Spirit. The Magellan Spirit commenced a six-month contract (plus two three-month
option periods) in July 2017 and the Awra Spirit will commence a 15-month charter contract in the fourth
quarter of 2017.
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 E for further details).
|
Three Months Ended |
|
June 30, 2017 |
|
June 30, 2016 |
(in thousands of U.S. Dollars) |
(unaudited) |
|
(unaudited) |
|
Liquefied
Gas Segment |
|
Conventional
Tanker Segment |
|
Total |
|
Liquefied
Gas Segment |
|
Conventional
Tanker Segment |
|
Total |
GAAP FINANCIAL COMPARISON |
|
|
|
|
|
|
|
|
|
|
|
Voyage revenues |
89,431 |
|
11,473 |
|
100,904 |
|
84,497 |
|
14,744 |
|
99,241 |
Income (loss) from vessel operations |
40,043 |
|
(10,172 |
) |
29,871 |
|
42,484 |
|
5,070 |
|
47,554 |
Equity (loss) income |
(507 |
) |
- |
|
(507 |
) |
29,567 |
|
- |
|
29,567 |
NON-GAAP FINANCIAL COMPARISON |
|
|
|
|
|
|
|
|
|
|
|
|
CFVO from consolidated vessels(i) |
68,456 |
|
4,970 |
|
73,426 |
|
67,572 |
|
8,116 |
|
75,688 |
|
CFVO from equity-accounted vessels(i) |
32,826 |
|
- |
|
32,826 |
|
59,439 |
|
- |
|
59,439 |
|
Total CFVO(i) |
101,282 |
|
4,970 |
|
106,252 |
|
127,011 |
|
8,116 |
|
135,127 |
(i) |
These are non-GAAP financial measures. Please refer to "Definitions and Non-GAAP Financial Measures" and
the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as
used in this release to the most directly comparable financial measures under GAAP. |
Liquefied Gas Segment
Income from vessel operations for the three months ended June 30, 2017, compared to the same quarter of the prior year, was
impacted primarily by unscheduled off-hire in the second quarter of 2017 related to repairs required for an LNG carrier; and
lower revenues from the Partnership's six LPG carriers on charter to I.M. Skaugen SE as a result of uncollected hire. These
decreases were partially offset by the delivery of two MEGI LNG carrier newbuildings, the Oak Spirit and the Torben
Spirit, which commenced their respective charter contracts ranging from 10 months to five years in duration between August
2016 and March 2017 and additional revenue recognized relating to the accelerated drydocking for two LNG carriers, the costs of
which are recoverable from the charterer. Cash flow from vessel operations from consolidated vessels increased for the three
months ended June 30, 2017 compared to the same quarter of the prior year as the effect of the increase in vessel deprecation
from the MEGI LNG carrier newbuilding deliveries did not impact cash flow from vessel operations.
Equity (loss) income and cash flow from vessel operations from equity-accounted vessels for the three months ended June 30,
2017, compared to the same quarter of the prior year, were impacted primarily by a favorable settlement in 2016 of a disputed
charter contract termination related to one of the vessels in the Teekay LNG-Marubeni Joint Venture, of which Teekay LNG's share
was $20.3 million; and lower spot rates earned in 2017 on certain vessels in the Exmar LPG Joint Venture and certain of the LNG
carriers in the Teekay LNG-Marubeni Joint Venture. These decreases were partially offset by deliveries of three LPG carriers in
the Exmar LPG Joint Venture between June 2016 and March 2017. Equity (loss) income was also impacted by a greater amount of
unrealized losses on designated and non-designated derivative instruments during the three months ended June 30, 2017 compared to
the same period of the prior year.
Conventional Tanker Segment
Income (loss) from vessel operations and cash flow from vessel operations for the three months ended June 30, 2017 compared to
the same quarter of the prior year were impacted by the sales of the Bermuda Spirit and Hamilton Spirit in the
second quarter of 2016 and the sale of the Asian Spirit in the first quarter of 2017. Income (loss) from vessel
operations for the three months ended June 30, 2017 was also impacted by the $12.6 million write-down of the European
Spirit.
Teekay LNG's Fleet
The following table summarizes the Partnership's fleet as of August 1, 2017:
|
Number of Vessels |
|
Owned and
In-Chartered
Vessels (i) |
Newbuildings |
Total |
LNG Carrier Fleet |
32(ii) |
18(ii) |
50 |
LPG/Multigas Carrier Fleet |
27(iii) |
3(iv) |
30 |
Conventional Tanker Fleet |
5(v) |
- |
5 |
Total |
64 |
21 |
85 |
(i) |
Owned vessels includes vessels accounted for under capital leases. |
(ii) |
The Partnership's ownership interests in these vessels range from 20 percent to 100 percent. |
(iii) |
The Partnership's ownership interests in these vessels range from 50 percent to 99 percent. |
(iv) |
The Partnership's interest in these vessels is 50 percent. |
(v) |
One of the Partnership's conventional tankers is held for sale. |
Liquidity
As of June 30, 2017, the Partnership had total liquidity of $351.1 million (comprised of $191.1 million in cash and cash
equivalents and $160.0 million in undrawn credit facilities).
Conference Call
The Partnership plans to host a conference call on Thursday, August 3, 2017 at 11:00 a.m. (ET) to discuss the results for the
second quarter of 2017. All unitholders and interested parties are invited to listen to the live conference call by choosing from
the following options:
- By dialing (800) 347-6311 or (416) 204-1064, if outside North America, and quoting conference ID code 9651022.
- By accessing the webcast, which will be available on Teekay LNG's website at www.teekay.com (the archive will remain on the website for a period of one year).
An accompanying Second Quarter 2017 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.
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, fee-based charter contracts through its interests in 50 LNG
carriers (including 18 newbuildings), 30 LPG/Multigas carriers (including three newbuildings) and five conventional tankers. The
Partnership's interests in these vessels range from 20 to 100 percent. In addition, the Partnership owns a 30 percent interest in
a regasification facility, which is currently under construction. 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 unit and preferred units trade on the New York Stock Exchange under the symbol "TGP" and "TGP PR
A", respectively.
Definitions and Non-GAAP Financial Measures
This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the U.S.
Securities and Exchange Commission. These non-GAAP financial measures, which include Cash Flow from Vessel Operations, Adjusted
Net Income, and Distributable Cash Flow, are intended to provide additional information and should not be considered a substitute
for measures of performance prepared in accordance with GAAP. In addition, these measures do not have standardized meanings, and
may not be comparable to similar measures presented by other companies. The Partnership believes that certain investors use this
information to evaluate the Partnership's financial performance, as does management.
Non-GAAP Financial Measures
Cash Flow from Vessel Operations (CFVO) represents income from vessel operations before depreciation and
amortization expense, amortization of in-process revenue contracts, vessel write-downs, losses on the sale of vessels and
adjustments for direct financing leases to a cash basis, but includes realized gains or losses on a derivative charter contract.
CFVO from Consolidated Vessels represents CFVO from vessels that are consolidated on the Partnership's financial
statements. CFVO from Equity-Accounted Vessels represents the Partnership's proportionate share of CFVO from its
equity-accounted vessels. The Partnership does not control its equity-accounted vessels and as a result, the Partnership does not
have the unilateral ability to determine whether the cash generated by its equity-accounted vessels is retained within the
entities in which the Partnership holds the equity-accounted investments or distributed to the Partnership and other owners. In
addition, the Partnership does not control the timing of such distributions to the Partnership and other owners. Consequently,
readers are cautioned when using total CFVO as a liquidity measure as the amount contributed from CFVO from Equity-Accounted
Vessels may not be available to the Company in the periods such CFVO is generated by its equity-accounted vessels. CFVO is a
non-GAAP financial measure used by certain investors and management to measure the operational financial performance of
companies. Please refer to Appendices D and E of this release for reconciliations of these non-GAAP financial
measures to income from vessel operations and income from vessel operations of equity-accounted vessels, respectively, the most
directly comparable GAAP measures reflected in the Partnership's consolidated financial statements.
Adjusted Net Income excludes items of income or loss from GAAP net (loss) income that are typically excluded by
securities analysts in their published estimates of the Partnership's financial results. The Partnership believes that certain
investors use this information to evaluate the Partnership's financial performance, as does management. Please refer to
Appendix A of this release for a reconciliation of this non-GAAP financial measure to net (loss) income, and refer to
footnotes (2) of the statement of (loss) income for a reconciliation of adjusted equity income to equity (loss) income, the most
directly comparable GAAP measure reflected in the Partnership's consolidated financial statements.
Distributable Cash Flow (DCF) represents GAAP net (loss) income adjusted for depreciation and amortization
expense, deferred income tax and other non-cash items, estimated maintenance capital expenditures, unrealized gains and losses
from non-designated derivative instruments, ineffectiveness for derivative instruments designated as hedges for accounting
purposes, distributions relating to equity financing of newbuilding installments, adjustments for direct financing leases to a
cash basis and foreign exchange related items, including the Partnership's proportionate share of such items in equity-accounted
for investments. 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 and by management to assist in evaluating
financial performance. Please refer to Appendix B of this release for a reconciliation of this non-GAAP financial
measure to the most directly comparable GAAP measure reflected in the Partnership's consolidated financial statements.
Teekay LNG Partners L.P. |
Consolidated Statements of (Loss) 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, |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
Voyage revenues |
100,904 |
|
101,180 |
|
99,241 |
|
202,084 |
|
195,012 |
|
|
|
|
|
|
|
|
|
|
|
|
Voyage expenses |
(996 |
) |
(1,437 |
) |
(542 |
) |
(2,433 |
) |
(999 |
) |
Vessel operating expenses |
(26,001 |
) |
(23,388 |
) |
(22,412 |
) |
(49,389 |
) |
(44,265 |
) |
Depreciation and amortization |
(26,794 |
) |
(26,120 |
) |
(22,869 |
) |
(52,914 |
) |
(46,480 |
) |
General and administrative expenses |
(4,642 |
) |
(4,157 |
) |
(5,864 |
) |
(8,799 |
) |
(11,292 |
) |
Write-down and loss on sale of vessels(1) |
(12,600 |
) |
- |
|
- |
|
(12,600 |
) |
(27,439 |
) |
Income from vessel operations |
29,871 |
|
46,078 |
|
47,554 |
|
75,949 |
|
64,537 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity (loss) income(2) |
(507 |
) |
5,887 |
|
29,567 |
|
5,380 |
|
39,065 |
|
Interest expense |
(20,525 |
) |
(16,988 |
) |
(13,269 |
) |
(37,513 |
) |
(27,266 |
) |
Interest income |
579 |
|
854 |
|
545 |
|
1,433 |
|
1,147 |
|
Realized and unrealized (loss) gain on non-designated derivative instruments(3) |
(7,384 |
) |
1,187 |
|
(17,321 |
) |
(6,197 |
) |
(55,410 |
) |
Foreign currency exchange loss(4) |
(15,825 |
) |
(3,568 |
) |
(525 |
) |
(19,393 |
) |
(10,643 |
) |
Other income |
390 |
|
391 |
|
407 |
|
781 |
|
826 |
|
Net (loss) income before tax expense |
(13,401 |
) |
33,841 |
|
46,958 |
|
20,440 |
|
12,256 |
|
Income tax expense |
(236 |
) |
(157 |
) |
(252 |
) |
(393 |
) |
(513 |
) |
Net (loss) income |
(13,637 |
) |
33,684 |
|
46,706 |
|
20,047 |
|
11,743 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest in net (loss) income |
2,436 |
|
4,627 |
|
3,635 |
|
7,063 |
|
5,810 |
|
Preferred unitholders' interest in net (loss) income |
2,813 |
|
2,812 |
|
- |
|
5,625 |
|
- |
|
General Partner's interest in net (loss) income |
(378 |
) |
525 |
|
862 |
|
147 |
|
119 |
|
Limited partners' interest in net (loss) income |
(18,508 |
) |
25,720 |
|
42,209 |
|
7,212 |
|
5,814 |
|
Weighted-average number of common units outstanding: |
|
|
|
|
|
|
|
|
|
|
• Basic |
79,626,819 |
|
79,590,153 |
|
79,571,820 |
|
79,608,587 |
|
79,564,846 |
|
• Diluted |
79,626,819 |
|
79,690,391 |
|
79,695,804 |
|
79,741,256 |
|
79,640,818 |
|
Total number of common units outstanding at end of period |
79,626,819 |
|
79,626,819 |
|
79,571,820 |
|
79,626,819 |
|
79,571,820 |
|
|
|
(1) |
Write-down and loss on sale of vessels for the six months ended June 30, 2016 relates to Centrofin
Management Inc. exercising its purchase options, under the 12-year charter contracts, to acquire the Bermuda
Spirit and Hamilton Spirit Suezmax tankers. In addition, the write-down and loss on sale of vessels also
relates to the European Spirit Suezmax tanker, as the Partnership commenced marketing the vessel for sale upon
receiving notification from the charterer in late-June 2017 that it will redeliver the vessel back to the Partnership in
August 2017. As a result, the vessel was written down to its estimated fair value less costs to sell. |
|
|
(2) |
The Partnership's proportionate share of items within equity (loss) income as identified in Appendix
A of this release is detailed in the table below. By excluding these items from equity (loss) income, the Partnership
believes the resulting adjusted equity income is a normalized amount that can be used to evaluate the financial performance
of the Partnership's equity-accounted investments. Adjusted equity income is a non-GAAP financial measure. |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Equity (loss) income |
(507 |
) |
5,887 |
|
29,567 |
|
5,380 |
|
39,065 |
Proportionate share of unrealized loss (gain) on non-designated derivative instruments |
182 |
|
(1,784 |
) |
1,741 |
|
(1,602 |
) |
5,642 |
Proportionate share of ineffective portion of hedge-accounted interest rate swaps |
4,109 |
|
(543 |
) |
514 |
|
3,566 |
|
674 |
Proportionate share of other items |
211 |
|
30 |
|
(5 |
) |
241 |
|
72 |
Equity income adjusted for items in Appendix A |
3,995 |
|
3,590 |
|
31,817 |
|
7,585 |
|
45,453 |
|
|
(3) |
The realized (losses) gains on non-designated derivative instruments relate to the amounts the Partnership
actually paid or received to settle non-designated derivative instruments and the unrealized (losses) gains on
non-designated derivative instruments relate to the change in fair value of such non-designated derivative instruments, as
detailed in the table below: |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Realized (losses) gains relating to: |
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements |
(4,610 |
) |
(4,675 |
) |
(6,613 |
) |
(9,285 |
) |
(13,256 |
) |
Interest rate swaption agreements termination |
(1,005 |
) |
395 |
|
- |
|
(610 |
) |
- |
|
Toledo Spirit time-charter derivative contract |
(135 |
) |
15 |
|
- |
|
(120 |
) |
630 |
|
|
(5,750 |
) |
(4,265 |
) |
(6,613 |
) |
(10,015 |
) |
(12,626 |
) |
|
|
|
|
|
|
|
|
|
|
|
Unrealized (losses) gains relating to: |
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements |
(1,866 |
) |
4,302 |
|
(6,220 |
) |
2,436 |
|
(26,877 |
) |
Interest rate swaption agreements |
112 |
|
30 |
|
(7,088 |
) |
142 |
|
(18,757 |
) |
Toledo Spirit time-charter derivative contract |
120 |
|
1,120 |
|
2,600 |
|
1,240 |
|
2,850 |
|
|
(1,634 |
) |
5,452 |
|
(10,708 |
) |
3,818 |
|
(42,784 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total realized and unrealized (losses) gains on non-designated derivative instruments |
(7,384 |
) |
1,187 |
|
(17,321 |
) |
(6,197 |
) |
(55,410 |
) |
|
|
(4) |
For accounting purposes, the Partnership is required to revalue all foreign currency-denominated monetary
assets and liabilities based on the prevailing exchange rates 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 (Loss) Income. |
|
|
|
Foreign currency exchange loss includes realized losses relating to the amounts the Partnership paid to
settle or terminate 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 and realized gains on bond
repurchases. Foreign currency exchange (loss) gain also includes unrealized gains (losses) relating to the change in fair
value of such derivative instruments, partially offset by unrealized (losses) gains on the revaluation of the NOK bonds as
detailed in the table below: |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Realized losses on cross-currency swaps |
(2,084 |
) |
(3,537 |
) |
(2,329 |
) |
(5,621 |
) |
(4,620 |
) |
Realized losses on cross-currency swaps termination |
(25,733 |
) |
- |
|
- |
|
(25,733 |
) |
- |
|
Realized gains on repurchase of NOK bonds |
25,733 |
|
- |
|
- |
|
25,733 |
|
- |
|
Unrealized gains (losses) on cross-currency swaps |
34,906 |
|
2,699 |
|
(6,571 |
) |
37,605 |
|
14,741 |
|
Unrealized (losses) gains on revaluation of NOK bonds |
(36,325 |
) |
(606 |
) |
3,567 |
|
(36,931 |
) |
(16,863 |
) |
|
Teekay LNG Partners L.P. |
Consolidated Balance Sheets |
(in thousands of U.S. Dollars) |
|
|
As at
June 30,
2017 |
March 31,
2017 |
As at
December 31,
2016 |
|
(unaudited) |
(unaudited) |
(unaudited) |
ASSETS |
|
|
|
Current |
|
|
|
Cash and cash equivalents |
191,110 |
181,201 |
126,146 |
Restricted cash - current |
5,896 |
9,155 |
10,145 |
Accounts receivable |
20,600 |
24,270 |
25,224 |
Prepaid expenses |
3,484 |
3,889 |
3,724 |
Vessel held for sale |
17,000 |
- |
20,580 |
Current portion of derivative assets |
1,354 |
1,630 |
531 |
Current portion of net investments in direct financing leases |
9,487 |
149,291 |
150,342 |
Advances to affiliates |
2,433 |
11,354 |
9,739 |
Total current assets |
251,364 |
380,790 |
346,431 |
|
|
|
|
Restricted cash - long-term |
102,347 |
97,746 |
106,882 |
|
|
|
|
Vessels and equipment |
|
|
|
At cost, less accumulated depreciation |
1,340,138 |
1,363,980 |
1,374,128 |
Vessels under capital leases, at cost, less accumulated depreciation |
674,771 |
680,430 |
484,253 |
Advances on newbuilding contracts |
388,366 |
361,179 |
357,602 |
Total vessels and equipment |
2,403,275 |
2,405,589 |
2,215,983 |
Investment in and advances to equity-accounted joint ventures |
1,074,430 |
1,077,355 |
1,037,726 |
Net investments in direct financing leases |
624,484 |
488,561 |
492,666 |
Other assets |
3,335 |
4,375 |
5,529 |
Derivative assets |
2,576 |
2,258 |
4,692 |
Intangible assets - net |
65,506 |
67,720 |
69,934 |
Goodwill - liquefied gas segment |
35,631 |
35,631 |
35,631 |
Total assets |
4,562,948 |
4,560,025 |
4,315,474 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current |
|
|
|
Accounts payable |
2,884 |
5,364 |
5,562 |
Accrued liabilities |
39,280 |
36,504 |
35,881 |
Unearned revenue |
18,701 |
20,808 |
16,998 |
Current portion of long-term debt |
205,881 |
187,111 |
188,511 |
Current obligations under capital lease |
95,355 |
81,780 |
40,353 |
Current portion of in-process contracts |
10,527 |
10,262 |
15,833 |
Current portion of derivative liabilities |
42,060 |
57,453 |
56,800 |
Advances from affiliates |
11,474 |
23,690 |
15,492 |
Total current liabilities |
426,162 |
422,972 |
375,430 |
Long-term debt |
1,618,131 |
1,626,968 |
1,602,715 |
Long-term obligations under capital lease |
574,484 |
518,399 |
352,486 |
Long-term unearned revenue |
9,682 |
10,007 |
10,332 |
Other long-term liabilities |
59,338 |
60,646 |
60,573 |
In-process contracts |
4,019 |
6,521 |
8,233 |
Derivative liabilities |
102,165 |
118,187 |
128,293 |
Total liabilities |
2,793,981 |
2,763,700 |
2,538,062 |
|
|
|
|
Equity |
|
|
|
Limited partners - common units |
1,548,935 |
1,578,503 |
1,563,852 |
Limited partners - preferred units |
123,520 |
123,519 |
123,426 |
General partner |
50,348 |
50,952 |
50,653 |
Accumulated other comprehensive income |
1,184 |
486 |
575 |
Partners' equity |
1,723,987 |
1,753,460 |
1,738,506 |
Non-controlling interest |
44,980 |
42,865 |
38,906 |
Total equity |
1,768,967 |
1,796,325 |
1,777,412 |
Total liabilities and total equity |
4,562,948 |
4,560,025 |
4,315,474 |
|
Teekay LNG Partners L.P. |
Consolidated Statements of Cash Flows |
(in thousands of U.S. Dollars) |
|
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
2016 |
|
|
(unaudited) |
|
(unaudited) |
|
Cash and cash equivalents provided by (used for) |
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
Net income |
20,047 |
|
11,743 |
|
Non-cash items: |
|
|
|
|
|
Unrealized (gain) loss on non-designated derivative instruments |
(3,818 |
) |
42,784 |
|
|
Depreciation and amortization |
52,914 |
|
46,480 |
|
|
Write-down and loss on sale of vessels |
12,600 |
|
27,439 |
|
|
Unrealized foreign currency exchange (gain) loss and other |
(10,779 |
) |
4,888 |
|
|
Equity income, net of dividends received of $21,281 (2016 - $4,191) |
15,901 |
|
(34,874 |
) |
|
Ineffective portion on qualifying cash flow hedging instruments included in interest expense |
747 |
|
914 |
|
Change in operating assets and liabilities |
7,395 |
|
(14,590 |
) |
Expenditures for dry docking |
(11,042 |
) |
(2,356 |
) |
Net operating cash flow |
83,965 |
|
82,428 |
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
Proceeds from issuance of long-term debt |
166,663 |
|
131,645 |
|
Financing issuance costs |
(2,077 |
) |
(420 |
) |
Scheduled repayments of long-term debt |
(103,343 |
) |
(108,842 |
) |
Prepayments of long-term debt |
(63,704 |
) |
(157,239 |
) |
Scheduled repayments of capital lease obligations |
(19,045 |
) |
(9,319 |
) |
Decrease in restricted cash |
6,222 |
|
2,284 |
|
Cash distributions paid |
(28,274 |
) |
(22,732 |
) |
Dividends paid to non-controlling interest |
(658 |
) |
(150 |
) |
Other |
(605 |
) |
- |
|
Net financing cash flow |
(44,821 |
) |
(164,773 |
) |
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
Capital contributions to equity-accounted joint ventures |
(96,960 |
) |
(20,167 |
) |
Return of capital from equity-accounted joint ventures |
40,320 |
|
- |
|
Receipts from direct financing leases |
9,037 |
|
12,979 |
|
Proceeds from sale of vessels |
20,580 |
|
94,311 |
|
Proceeds from sale-leaseback of vessels |
297,230 |
|
179,434 |
|
Expenditures for vessels and equipment |
(244,387 |
) |
(159,195 |
) |
Net investing cash flow |
25,820 |
|
107,362 |
|
|
|
|
|
|
Increase in cash and cash equivalents |
64,964 |
|
25,017 |
|
Cash and cash equivalents, beginning of the period |
126,146 |
|
102,481 |
|
Cash and cash equivalents, end of the period |
191,110 |
|
127,498 |
|
|
Teekay LNG Partners L.P. |
Appendix A - Reconciliation of Non-GAAP Financial Measures |
Adjusted Net Income |
(in thousands of U.S. Dollars) |
|
|
Three Months Ended
June 30, |
|
|
2017
(unaudited) |
|
2016
(unaudited) |
|
Net (loss) income - GAAP basis |
(13,637 |
) |
46,706 |
|
Less: Net (loss) income attributable to non-controlling interests |
(2,436 |
) |
(3,635 |
) |
Net (loss) income attributable to the partners and preferred unitholders |
(16,073 |
) |
43,071 |
|
Add (subtract) specific items affecting net income: |
|
|
|
|
|
Unrealized foreign currency exchange losses (gains)(1) |
13,939 |
|
(1,971 |
) |
|
Write-down of vessel(2) |
12,600 |
|
- |
|
|
Unrealized losses on non-designated derivative instruments(3) |
1,634 |
|
10,708 |
|
|
Interest rate swaption agreements termination |
1,005 |
|
- |
|
|
Ineffective portion on qualifying cash flow hedging instruments included in interest expense |
747 |
|
(484 |
) |
|
Unrealized losses on non-designated and designated derivative instruments and other items from
equity-accounted investees(4) |
4,502 |
|
2,250 |
|
|
Non-controlling interests' share of items above(5) |
(494 |
) |
206 |
|
Total adjustments |
33,933 |
|
10,709 |
|
Adjusted net income attributable to the partners and preferred
unitholders |
17,860 |
|
53,780 |
|
(1) |
Unrealized foreign exchange losses (gains) 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 (gains) losses on the cross-currency swaps economically hedging the Partnership's NOK bonds. This
amount excludes the realized losses relating to the cross-currency swaps for the NOK bonds. See Note 4 to the Consolidated
Statements of (Loss) Income included in this release for further details. |
(2) |
Write-down of vessel relate to the Partnership's expected sale of the European Spirit. See note 1
to the Consolidated Statements of (Loss) Income included in this release for further details. |
(3) |
Reflects the unrealized losses due to changes in the mark-to-market value of derivative instruments that
are not designated as hedges for accounting purposes. See Note 3 to the Consolidated Statements of (Loss) Income included
in this release for further details. |
(4) |
Reflects the unrealized 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 derivative instruments designated as
hedges for accounting purposes within the Partnership's equity-accounted investments. See Note 2 to the Consolidated
Statements of (Loss) Income included in this release for further details. |
(5) |
Items affecting net (loss) income include items from the Partnership's consolidated non-wholly-owned
subsidiaries. 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 the other specific items
affecting net (loss) income listed in the table. |
|
Teekay LNG Partners L.P. |
Appendix B - Reconciliation of Non-GAAP Financial Measures |
Distributable Cash Flow (DCF) |
(in thousands of U.S. Dollars, except units outstanding and per unit data) |
|
|
Three Months Ended
June 30, |
|
|
2017
(unaudited) |
|
2016
(unaudited) |
|
|
|
|
|
|
Net (loss) income: |
(13,637 |
) |
46,706 |
|
Add: |
|
|
|
|
|
Depreciation and amortization |
26,794 |
|
22,869 |
|
|
Unrealized foreign currency exchange loss (gain) |
13,939 |
|
(1,971 |
) |
|
Write-down of vessel |
12,600 |
|
- |
|
|
Partnership's share of equity-accounted joint ventures' DCF net of estimated maintenance capital
expenditures(1) |
12,229 |
|
39,442 |
|
|
Direct finance lease payments received in excess of revenue recognized |
5,056 |
|
4,969 |
|
|
Unrealized loss on non-designated derivative instruments |
1,634 |
|
10,708 |
|
|
Distributions relating to equity financing of newbuildings |
1,536 |
|
- |
|
|
Ineffective portion on qualifying cash flow hedging instruments included in interest expense |
747 |
|
(484 |
) |
|
Equity loss (income) |
507 |
|
(29,567 |
) |
|
|
|
|
|
Less: |
|
|
|
|
|
Estimated maintenance capital expenditures |
(13,190 |
) |
(11,968 |
) |
|
Distributions relating to preferred units |
(2,813 |
) |
- |
|
|
Deferred income tax and other non-cash items |
170 |
|
629 |
|
Distributable Cash Flow before Non-controlling interest |
45,572 |
|
81,333 |
|
Non-controlling interests' share of DCF before estimated maintenance capital expenditures |
(4,949 |
) |
(5,266 |
) |
Distributable Cash Flow |
40,623 |
|
76,067 |
|
Amount of cash distributions attributable to the General Partner |
(228 |
) |
(227 |
) |
Limited partners' Distributable Cash Flow |
40,395 |
|
75,840 |
|
Weighted-average number of common units outstanding |
79,626,819 |
|
79,571,820 |
|
Distributable Cash Flow per limited partner common unit |
0.51 |
|
0.95 |
|
(1) |
The estimated maintenance capital expenditures relating to the Partnership's share of equity-accounted
joint ventures were $8.0 million and $7.4 million for the three months ended June 30, 2017 and 2016, respectively. |
|
Teekay LNG Partners L.P. |
Appendix C - Supplemental Segment Information |
(in thousands of U.S. Dollars) |
|
|
Three Months Ended June 30, 2017 |
|
|
(unaudited) |
|
|
Liquefied
Gas Segment |
|
Conventional
Tanker Segment |
|
Total |
|
Voyage revenues |
89,431 |
|
11,473 |
|
100,904 |
|
Voyage expenses |
(602 |
) |
(394 |
) |
(996 |
) |
Vessel operating expenses |
(21,374 |
) |
(4,627 |
) |
(26,001 |
) |
Depreciation and amortization |
(23,839 |
) |
(2,955 |
) |
(26,794 |
) |
General and administrative expenses |
(3,573 |
) |
(1,069 |
) |
(4,642 |
) |
Write-down of vessel |
- |
|
(12,600 |
) |
(12,600 |
) |
Income (loss) from vessel operations |
40,043 |
|
(10,172 |
) |
29,871 |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016 |
|
|
(unaudited) |
|
|
Liquefied
Gas Segment |
|
Conventional
Tanker Segment |
|
Total |
|
Voyage revenues |
84,497 |
|
14,744 |
|
99,241 |
|
Voyage expenses |
(126 |
) |
(416 |
) |
(542 |
) |
Vessel operating expenses |
(16,734 |
) |
(5,678 |
) |
(22,412 |
) |
Depreciation and amortization |
(20,474 |
) |
(2,395 |
) |
(22,869 |
) |
General and administrative expenses |
(4,679 |
) |
(1,185 |
) |
(5,864 |
) |
Income from vessel operations |
42,484 |
|
5,070 |
|
47,554 |
|
|
Teekay LNG Partners L.P. |
Appendix D - Reconciliation of Non-GAAP Financial Measures |
Cash Flow from Vessel Operations from Consolidated Vessels |
(in thousands of U.S. Dollars) |
|
|
Three Months Ended June 30, 2017 |
|
|
(unaudited) |
|
|
Liquefied
Gas Segment |
|
Conventional
Tanker Segment |
|
Total |
|
Income (loss) from vessel operations (See Appendix C) |
40,043 |
|
(10,172 |
) |
29,871 |
|
Depreciation and amortization |
23,839 |
|
2,955 |
|
26,794 |
|
Write-down of vessel |
- |
|
12,600 |
|
12,600 |
|
Amortization of in-process contracts included in voyage revenues |
(482 |
) |
(278 |
) |
(760 |
) |
Direct finance lease payments received in excess of revenue recognized |
5,056 |
|
- |
|
5,056 |
|
Realized loss on Toledo Spirit derivative contract |
- |
|
(135 |
) |
(135 |
) |
Cash flow from vessel operations from consolidated vessels |
68,456 |
|
4,970 |
|
73,426 |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016 |
|
|
(unaudited) |
|
|
Liquefied
Gas Segment |
|
Conventional
Tanker Segment |
|
Total |
|
Income from vessel operations (See Appendix C) |
42,484 |
|
5,070 |
|
47,554 |
|
Depreciation and amortization |
20,474 |
|
2,395 |
|
22,869 |
|
Amortization of in-process contracts included in voyage revenues |
(355 |
) |
(278 |
) |
(633 |
) |
Direct finance lease payments received in excess of revenue recognized |
4,969 |
|
- |
|
4,969 |
|
Cash flow adjustment for two Suezmax tankers(1) |
- |
|
929 |
|
929 |
|
Cash flow from vessel operations from consolidated vessels |
67,572 |
|
8,116 |
|
75,688 |
|
(1) |
The Partnership's charter contracts for two of its former Suezmax tankers, the 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 ended September 30, 2014. The cash effect of the change in hire rates was not fully reflected
in the Partnership's statements of (loss) income as the change in the lease payments was being recognized on a
straight-line basis over the term of the lease. In addition, the charterer of these two Suezmax tankers exercised its
purchase options on these two vessels as permitted under the charter contracts and the vessels were redelivered during the
second quarter of 2016. |
|
Teekay LNG Partners L.P. |
Appendix E - Reconciliation of Non-GAAP Financial Measures |
Cash Flow from Vessel Operations from Equity-Accounted Vessels |
(in thousands of U.S. Dollars) |
|
|
Three Months Ended |
|
|
June 30, 2017
(unaudited) |
|
June 30, 2016
(unaudited) |
|
|
At
100% |
|
Partnership's
Portion(1) |
|
At
100% |
|
Partnership's
Portion(1) |
|
Voyage revenues |
117,326 |
|
52,516 |
|
168,854 |
|
78,956 |
|
Voyage expenses |
(3,760 |
) |
(1,923 |
) |
(3,354 |
) |
(1,682 |
) |
Vessel operating expenses |
(43,070 |
) |
(20,010 |
) |
(42,296 |
) |
(19,669 |
) |
Depreciation and amortization |
(26,156 |
) |
(13,074 |
) |
(25,474 |
) |
(12,744 |
) |
Income from vessel operations of equity-accounted vessels |
44,340 |
|
17,509 |
|
97,730 |
|
44,861 |
|
Other items, including interest expense and realized and unrealized gain (loss) on derivative
instruments |
(45,480 |
) |
(18,016 |
) |
(36,247 |
) |
(15,294 |
) |
Net (loss) income / equity (loss) income of equity-accounted vessels |
(1,140 |
) |
(507 |
) |
61,483 |
|
29,567 |
|
|
|
|
|
|
|
|
|
|
Income from vessel operations of equity-accounted vessels |
44,340 |
|
17,509 |
|
97,730 |
|
44,861 |
|
Depreciation and amortization |
26,156 |
|
13,074 |
|
25,474 |
|
12,744 |
|
Direct finance lease payments received in excess of revenue recognized |
9,303 |
|
3,361 |
|
8,868 |
|
3,219 |
|
Amortization of in-process revenue contracts |
(2,168 |
) |
(1,118 |
) |
(2,704 |
) |
(1,385 |
) |
|
|
|
|
|
|
|
|
|
Cash flow from vessel operations from equity-accounted vessels |
77,631 |
|
32,826 |
|
129,368 |
|
59,439 |
|
(1) |
The Partnership's equity-accounted vessels for the three months ended June 30, 2017 and 2016 include: the
Partnership's 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the
Partnership's ownership interests of 49 percent and 50 percent, respectively, in the Excalibur and Excelsior joint
ventures, which own one LNG carrier and one regasification unit, respectively; the Partnership's 33 percent ownership
interest in four LNG carriers servicing the Angola LNG project; the Partnership's 52 percent ownership interest in the
Teekay LNG-Marubeni LNG Joint Venture, which owns six LNG carriers; the Partnership's 50 percent ownership interest in
Exmar LPG BVBA, which owns and in-charters 23 vessels, including four newbuildings, as at June 30, 2017, compared to 23
vessels owned and in-chartered, including five newbuildings, as at June 30, 2016; the Partnership's 30 percent ownership
interest in two LNG carrier newbuildings and 20 percent ownership interest in two LNG carrier newbuildings for Shell; the
Partnership's 50 percent ownership interest in six ARC7 Ice-Class LNG carrier newbuildings in the joint venture between the
Partnership and China LNG Shipping (Holdings) Limited; and the Partnership's 30 percent ownership interest in Bahrain LNG
W.L.L., which owns an LNG receiving and regasification terminal under construction in Bahrain. |
|
Teekay LNG Partners L.P. |
Appendix F - Summarized Financial Information of Equity-Accounted Joint Ventures |
(in thousands of U.S. Dollars) |
|
|
As at June 30, 2017
(unaudited) |
As at December 31, 2016
(unaudited) |
|
At
100% |
Partnership's
Portion(1) |
At
100% |
Partnership's
Portion(1) |
Cash and restricted cash, current and non-current |
309,235 |
136,971 |
400,090 |
167,813 |
Other current assets |
57,536 |
24,164 |
72,437 |
33,817 |
Vessels and equipment |
2,196,062 |
1,131,149 |
2,174,467 |
1,121,293 |
Advances on newbuilding contracts |
1,021,890 |
367,836 |
824,534 |
303,162 |
Net investments in direct financing leases, current and non-current |
1,798,417 |
659,046 |
1,816,365 |
665,599 |
Other non-current assets |
56,256 |
40,546 |
73,814 |
44,177 |
Total assets |
5,439,396 |
2,359,712 |
5,361,707 |
2,335,861 |
|
|
|
|
|
Current portion of long-term debt and obligations under capital lease |
145,116 |
66,334 |
209,814 |
99,994 |
Current portion of derivative liabilities |
25,764 |
8,753 |
27,388 |
9,622 |
Other current liabilities |
83,847 |
37,363 |
76,480 |
32,068 |
Long-term debt and obligations under capital lease |
2,670,769 |
1,105,072 |
2,677,447 |
1,087,425 |
Shareholders' loans, current and non-current |
720,344 |
307,380 |
545,028 |
272,514 |
Derivative liabilities |
85,558 |
28,279 |
82,738 |
27,526 |
Other long-term liabilities |
76,278 |
39,481 |
80,170 |
41,500 |
Equity |
1,631,720 |
767,050 |
1,662,642 |
765,212 |
Total liabilities and equity |
5,439,396 |
2,359,712 |
5,361,707 |
2,335,861 |
|
|
|
|
|
Investments in equity-accounted joint ventures |
|
767,050 |
|
765,212 |
Advances to equity-accounted joint ventures |
|
307,380 |
|
272,514 |
Investments in and advances to equity-accounted joint ventures |
|
1,074,430 |
|
1,037,726 |
(1) |
The Partnership's equity-accounted joint ventures as at June 30, 2017 and December 31, 2016 include: the
Partnership's 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the
Partnership's ownership interests of 49 percent and 50 percent, respectively, in the Excalibur and Excelsior joint
ventures, which own one LNG carrier and one regasification unit, respectively; the Partnership's 33 percent ownership
interest in four LNG carriers servicing the Angola LNG project; the Partnership's 52 percent ownership interest in the
Teekay LNG-Marubeni Joint Venture, which owns six LNG carriers; the Partnership's 50 percent ownership interest in Exmar
LPG BVBA, which owns and in-charters 23 vessels, including four newbuildings, as at June 30, 2017, compared to 23 vessels
owned and in-chartered, including four newbuildings, as at December 31, 2016; the Partnership's 30 percent ownership
interest in two LNG carrier newbuildings and 20 percent ownership interest in two LNG carrier newbuildings for Shell; the
Partnership's 50 percent ownership interest in six ARC7 Ice-Class LNG carrier newbuildings in the joint venture between the
Partnership and China LNG Shipping (Holdings) Limited; and the Partnership's 30 percent ownership interest in Bahrain LNG
W.L.L., which owns an LNG receiving and regasification terminal under construction in Bahrain. |
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 forward fixed-rate revenues and weighted average remaining contract duration; the expected sale of
the European Spirit; the amount, timing and certainty of completing financings for newbuilding vessels; and the timing
of newbuilding vessel deliveries and the commencement of related contracts. 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 and project construction delays, newbuilding
specification changes or cost overruns; 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; 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 and the Partnership's joint ventures' ability to secure financing for its existing
newbuildings and 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, 2016. 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.