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Teekay LNG Partners Reports Second Quarter Results

08/11/2011

Download this Press Release (PDF 228 KB)

HAMILTON, BERMUDA -- (MARKET WIRE) -- 08/11/11 -- Teekay LNG Partners L.P. (NYSE: TGP) -

Highlights

--  Generated distributable cash flow of $37.6 million in the second quarter
    of 2011, an increase of 4 percent from the second quarter of 2010.
--  Declared second quarter 2011 cash distribution of $0.63 per unit.
--  Took delivery of first of two Multigas carriers, which commenced a 15-
    year fixed-rate charter.
--  Total liquidity of $551 million as at June 30, 2011, including $162
    million of net proceeds from April 2011 follow-on equity offering.

Teekay GP LLC, the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) today reported its results for the quarter ended June 30, 2011. During the second quarter of 2011, the Partnership generated distributable cash flow(1) of $37.6 million, compared to $36.0 million in the same quarter of the previous year. The increase primarily reflects the incremental distributable cash flow resulting from the Partnership's November 2010 acquisition of a 50 percent interest in two LNG carriers and the Partnership's June 2011 acquisition of one Multigas carrier, partially offset by the sale of the Dania Spirit LPG carrier in November 2010 and increased off-hire days relating to scheduled drydockings during the second quarter of 2011.

On July 22, 2011, the Partnership declared a cash distribution of $0.63 per unit for the quarter ended June 30, 2011. The cash distribution is payable on August 12, 2011 to all unitholders of record on August 5, 2011.

"The Partnership posted another quarter of consistent results highlighting the stability of the cash flow generated by our diversified mix of long-term, fixed-rate LNG, LPG and crude oil shipping charters," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "In mid-June, the Partnership took delivery of the first of two Multigas newbuildings which commenced operations under a 15-year fixed-rate charter contract with Skaugen. This and other scheduled fleet additions, including the remaining LPG and Multigas carriers and 33 percent interest in four Angola LNG carriers scheduled to commence operations in the second half of 2011 and early 2012, should result in steady growth in the Partnership's distributable cash flows over the next few quarters. The Partnership completed a $162 million common unit offering in April to fund the equity portion of these acquisitions."

Mr. Evensen continued, "The level of project activity in the LNG sector has remained high, reflecting the strong LNG market fundamentals. With over $550 million of available liquidity, the Partnership remains well positioned financially to pursue additional projects and acquisitions."

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

Teekay LNG's Fleet

The following table summarizes the Partnership's fleet as of August 1, 2011:

---------------------------------------------------------------------------
                                                 Number of Vessels
                                       ------------------------------------
                                          Delivered   Committed
                                            Vessels     Vessels       Total
                                       ------------------------------------
LNG Carrier Fleet                             17 (1)       4 (2)         21
LPG/Multigas Carrier Fleet                        3        2 (3)          5
Conventional Tanker Fleet                        11           -          11
---------------------------------------------------------------------------
Total                                            31           6          37
---------------------------------------------------------------------------

(1) The Partnership's ownership percentages in these vessels range from 40
    percent to 100 percent.
(2) Represents the 33 percent interest in four Angola LNG carriers under
    construction, as described below.
(3) Represents the LPG and Multigas carriers currently under construction,
    as described below.

Future Projects

Below is a summary of LNG and LPG/Multigas newbuildings that the Partnership has agreed to acquire:

Skaugen LPG/Multigas

The Partnership has agreed to acquire one LPG carrier from a subsidiary of IM Skaugen ASA (Skaugen) and two Multigas carriers from Teekay Corporation (Teekay). The Partnership took delivery of one of the Multigas carriers on June 15, 2011 and the remaining two carriers are currently under construction and are expected to be delivered during the second half of 2011. Upon delivery, the vessels will commence service under 15-year fixed-rate charters to Skaugen.

Angola LNG

A consortium in which Teekay has a one-third interest, has agreed to charter four newbuilding LNG carriers for a period of 20 years to the Angola LNG Project, which is being developed by subsidiaries of Chevron, Sonangol, BP, Total and ENI. The vessels will be chartered at fixed rates, with inflation adjustments, following their deliveries. The vessels are currently under construction and are expected to deliver during 2011 and 2012, with the first vessel expected to deliver during the third quarter of 2011. In March 2011, the Partnership agreed to purchase Teekay's 33 percent interest in these vessels and related charter contracts concurrent with their respective deliveries.

Financial Summary

The Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $23.6 million for the quarter ended June 30, 2011, compared to $24.3 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items which had the net effect of decreasing net income by $26.7 million and decreasing net income by $1.5 million for the three months ended June 30, 2011 and 2010, respectively, as detailed in Appendix A. Including these items, the Partnership reported net (loss) income attributable to the partners, on a GAAP basis, of ($3.1) million and $22.8 million for the three months ended June 30, 2011 and 2010, respectively.

During the six months ended June 30, 2011, the Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $49.4 million, compared to $45.7 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items which had the net effect of decreasing net income by $27.6 million and increasing net income by $5.6 million for the six months ended June 30, 2011 and 2010, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $21.9 million and $51.2 million for the six months ended June 30, 2011 and 2010, respectively.

For accounting purposes, the Partnership is required to recognize the changes in the fair value of its derivative instruments on the consolidated statements of (loss) 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 (loss) income as detailed in footnote 2 of the Summary Consolidated Statements of (Loss) Income.

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

Operating Results

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

---------------------------------------------------------------------------
                     Three Months Ended            Three Months Ended
                        June 30, 2011                 June 30, 2010
                         (unaudited)                   (unaudited)
               ------------------------------------------------------------
(in thousands   Liquefied Conventional        Liquefied Conventional
 of U.S.              Gas       Tanker              Gas       Tanker
 dollars)         Segment      Segment  Total   Segment      Segment  Total
---------------------------------------------------------------------------
Net voyage
 revenues(i)       65,824       25,738 91,562    65,700       25,653 91,353
Vessel
 operating
 expenses          13,145       10,243 23,388    12,744        9,297 22,041
Depreciation
 and
 amortization      15,081        7,090 22,171    15,394        7,013 22,407
Cash flow from
 vessel
 operations(ii)    50,229       12,901 63,130    51,609       13,819 65,428
---------------------------------------------------------------------------

(i)  Net voyage revenues represents voyage revenues less voyage expenses,
     which comprise all expenses relating to certain voyages, including
     bunker fuel expenses, port fees, canal tolls and brokerage
     commissions. Net voyage revenues is a non-GAAP financial measure used
     by certain investors to measure the financial performance of shipping
     companies. Please see the Partnership's website at www.teekaylng.com
     for a reconciliation of this non-GAAP measure as used in this release
     to the most directly comparable GAAP financial measure.
(ii) Cash flow from vessel operations represents income from vessel
     operations before (a) depreciation and amortization expense and (b)
     adjusting for direct financing leases to a cash basis. However, the
     Partnership's cash flow from vessel operations does not include the
     Partnership's portion of cash flow from vessel operations for joint
     ventures accounted for by the Partnership on an equity basis. Cash
     flow from vessel operations is included because certain investors use
     this data to measure a company's financial performance. Cash flow from
     vessel operations 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.

(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.

Liquefied Gas Segment

Cash flow from vessel operations from the Partnership's Liquefied Gas segment decreased slightly to $50.2 million in the second quarter of 2011 from $51.6 million in the same quarter of the prior year. This decrease is primarily due to the sale of the Dania Spirit LPG carrier in November 2010 and increased off-hire days in the second quarter of 2011 relating to scheduled drydockings, partially offset by the acquisition of the first Multigas carrier in mid-June 2011. Cash flow from vessel operations, as reported in the above table, does not include the Partnership's share of cash flow from vessel operations of $14.5 million for the three months ended June 30, 2011 from the Partnership's two equity-accounted joint ventures, RasGas 3 and Exmar. The RasGas 3 Joint Venture is the Partnership's 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers, and the Exmar Joint Venture is the Partnership's 50 percent ownership interest in the joint ventures with Exmar NV which, collectively, own two LNG carriers.

Conventional Tanker Segment

Cash flow from vessel operations from the Partnership's Conventional Tanker segment decreased to $12.9 million in the second quarter of 2011 from $13.8 million in the same quarter of the prior year. This decrease is primarily due to increased off-hire days in the second quarter of 2011 relating to scheduled drydockings.

Liquidity

As of June 30, 2011, the Partnership had total liquidity of $551.1 million (comprised of $74.5 million in cash and cash equivalents and $476.6 million in undrawn credit facilities), compared to total liquidity of $437.6 million as of March 31, 2011. Total liquidity increased primarily as a result of the Partnership's equity offering completed in April 2011, which provided net proceeds to the Partnership of $161.7 million.

Conference Call

The Partnership plans to host a conference call on August 12, 2011 at 11:00 a.m. (ET) to discuss the results for the second quarter of 2011. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

--  By dialing (866) 322-2356 or (416) 640-3405, if outside North America,
    and quoting conference ID code 8743134.
--  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 2011 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 available until Friday, August 19, 2011. 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 8743134.

About Teekay LNG Partners L.P.

Teekay LNG Partners L.P. is a publicly-traded master limited partnership formed by Teekay Corporation (NYSE: TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors. Teekay LNG Partners L.P. provides LNG, LPG and crude oil marine transportation services under long-term, fixed-rate charter contracts with major energy and utility companies through its fleet of 21 LNG carriers (including one LNG regasification unit), five LPG/Multigas carriers and 11 conventional tankers. Four of the 21 LNG carriers are newbuildings scheduled for delivery in 2011 and 2012. Two of the five LPG/Multigas carriers are newbuildings scheduled for delivery in 2011.

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

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

                        Three Months Ended             Six Months Ended
                    June 30,   March 31,    June 30,    June 30,    June 30,
                       2011        2011        2010        2011     2010 (1)
                 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
---------------------------------------------------------------------------
VOYAGE REVENUES      92,247      93,219      91,846     185,466     184,338
---------------------------------------------------------------------------
OPERATING
 EXPENSES
Voyage expenses         685         370         493       1,055         634
Vessel
 operating
 expenses            23,388      20,807      22,041      44,195      43,069
Depreciation
 and
 amortization        22,171      22,349      22,407      44,520      44,563
General and
 administrative       6,535       6,326       5,037      12,861      10,429
Restructuring
 charge                   -           -         126           -         175
---------------------------------------------------------------------------
                     52,779      49,852      50,104     102,631      98,870
---------------------------------------------------------------------------
Income from
 vessel
 operations          39,468      43,367      41,742      82,835      85,468
---------------------------------------------------------------------------
OTHER ITEMS
Interest
 expense            (12,136)    (11,754)    (11,320)    (23,890)    (24,094)
Interest income       1,698       1,578       1,429       3,276       3,302
Realized and
 unrealized
 (loss) gain on
 derivative
 instruments(2)     (27,329)     10,769     (45,549)    (16,560)    (72,361)
Foreign
 exchange
 (loss) gain(3)      (8,859)    (21,033)     36,635     (29,892)     59,856
Equity income
 (loss)(4)            3,447       8,057      (2,930)     11,504      (1,613)
Other income
 (expense) -
 net                     22      (1,247)       (116)     (1,225)        354
---------------------------------------------------------------------------
Net (loss)
 income              (3,689)     29,737      19,891      26,048      50,912
---------------------------------------------------------------------------
Net (loss)
 income
 attributable
 to:
 Non-
  controlling
  interest             (561)      4,757      (2,875)      4,196      (2,574)
 Dropdown
  Predecessor
  (1)                     -           -           -           -       2,258
 Partners            (3,128)     24,980      22,766      21,852      51,228
---------------------------------------------------------------------------
Limited
 partners'
 units
 outstanding:
Weighted-
 average number
 of common
 units
 outstanding     59,152,816  55,106,100  52,339,849  57,140,637  48,676,558
 - Basic and
  diluted
Weighted-
 average number
 of
 subordinated
 units
 outstanding              -           -           -           -   3,663,291
 - Basic and
  diluted
Weighted-
 average number
 of total units
 outstanding     59,152,816  55,106,100  52,339,849  57,140,637  52,339,849
 - Basic and
  diluted
Total number of
 units
 outstanding at
 end of period   59,357,900  55,106,100  52,339,849  59,357,900  52,339,849
---------------------------------------------------------------------------

(1) Results for the Alexander Spirit, Hamilton Spirit and Bermuda Spirit
    for the periods prior to their acquisition in March 2010 by the
    Partnership when they were owned and operated by Teekay Corporation are
    referred to as the Dropdown Predecessor.
(2) The realized losses relate to the amounts the Partnership actually paid
    to settle such 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
                                           March
                                June 30,      31, June 30, June 30, June 30,
                                   2011     2011     2010     2011     2010
Realized losses relating to:
Interest rate swaps             (10,046) (10,237) (10,581) (20,283) (21,795)
Toledo Spirit time-charter
 derivative contract                (53)       -        -      (53)       -
                              ---------------------------------------------
                                (10,099) (10,237) (10,581) (20,336) (21,795)
                              ---------------------------------------------
Unrealized (losses) gains
 relating to:
Interest rate swaps             (16,430)  19,806  (32,868)   3,376  (48,266)
Toledo Spirit time-charter
 derivative contract               (800)   1,200   (2,100)     400   (2,300)
                              ---------------------------------------------
                                (17,230)  21,006  (34,968)   3,776  (50,566)
                              ---------------------------------------------
Total realized and unrealized
 (losses) gains on derivative
 instruments                    (27,329)  10,769  (45,549) (16,560) (72,361)
                              ---------------------------------------------

(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 (loss) income.
(4) Equity income (loss) includes unrealized (losses) gains on derivative
    instruments of ($3.2) million, $2.6 million and ($6.3) million for the
    three months ended June 30, 2011, March 31, 2011 and June 30 2010,
    respectively, and ($0.6) million and ($8.5) million for the six months
    ended June 30, 2011 and 2010, respectively.


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

                                              As at       As at       As at
                                               June       March    December
                                           30, 2011    31, 2011    31, 2010
                                         (unaudited) (unaudited) (unaudited)
ASSETS
Cash and cash equivalents                    74,508      72,612      81,055
Restricted cash - current                    91,723      88,443      82,576
Other current assets                         16,955      23,448      25,273
Advances to affiliates                        3,157       7,238       6,133
Restricted cash - long-term                 493,820     493,483     489,562
Vessels and equipment                     1,962,794   1,922,164   1,940,041
Advances on newbuilding contracts            40,835      80,933      79,535
Net investments in direct financing
 leases                                     412,828     414,327     415,695
Derivative assets                            67,529      50,688      62,283
Investments in joint ventures               184,229     180,868     172,898
Other assets                                 31,978      32,389      33,167
Intangible assets                           118,981     121,263     123,546
Goodwill                                     35,631      35,631      35,631
---------------------------------------------------------------------------
Total Assets                              3,534,968   3,523,487   3,547,395
---------------------------------------------------------------------------
LIABILITIES AND EQUITY
Accounts payable, accrued liabilities
 and unearned revenue                        59,847      53,594      56,971
Current portion of long-term debt and
 capital leases                             561,591     557,567     343,790
Advances from affiliates and joint
 venture partners                            83,721     132,210     133,410
Long-term debt and capital leases         1,501,098   1,600,770   1,793,459
Derivative liabilities                      201,435     167,364     199,965
Other long-term liabilities                 107,580     106,563     106,477
Equity
  Non-controlling interest(2)                21,191      21,828      17,123
  Partners' equity                          998,505     883,591     896,200
---------------------------------------------------------------------------
Total Liabilities and Total Equity        3,534,968   3,523,487   3,547,395
---------------------------------------------------------------------------

(1) Due to the Partnership's agreement to acquire Teekay Corporation's 100
    percent interest in the two Skaugen Multigas Carriers, it is required
    to consolidate these vessels prior to the actual acquisition date under
    GAAP. Acquisition of one carrier occurred June 15, 2011.
(2) Non-controlling interest includes the 30 percent portion of the
    RasGasII Project, 31 percent of the equity interest in the Tangguh
    project and 1 percent of the equity interest in both the Kenai LNG
    carriers and the Excalibur Joint Venture, which in each case the
    Partnership does not own.


TEEKAY LNG PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
                                                   Six Months Ended June 30,
Cash and cash equivalents provided by (used for)           2011      2010(1)
OPERATING ACTIVITIES                                 (unaudited) (unaudited)
---------------------------------------------------------------------------
Net operating cash flow                                  96,719      91,858
---------------------------------------------------------------------------
FINANCING ACTIVITIES
Distribution to Teekay Corporation for the
 acquisition of the Bermuda Spirit, Hamilton Spirit
 and Alexander Spirit                                         -     (33,997)
Proceeds from issuance of long-term debt                100,640      35,049
Scheduled repayments of long-term debt                  (38,129)    (40,427)
Prepayments of long-term debt                          (173,000)     (9,000)
Scheduled repayments of capital lease obligations
 and other long-term liabilities                         (4,983)     (1,854)
Proceeds from follow-on offering net of offering
 costs                                                  161,682           -
Advances to and from affiliates                           1,443      (4,223)
Repayment of joint venture partners' advances               (59)     (1,264)
Equity contribution from Teekay Corporation to
 Dropdown Predecessor                                         -         466
Cash distributions paid                                 (78,238)    (65,269)
Purchase of Skaugen Multigas Subsidiary                 (55,313)          -
(Increase) decrease in restricted cash                   (3,227)        495
Other                                                      (128)       (131)
---------------------------------------------------------------------------
Net financing cash flow                                 (89,312)   (120,155)
---------------------------------------------------------------------------
INVESTING ACTIVITIES
Receipts from direct financing leases                     2,867       2,666
Expenditures for vessels and equipment                  (16,821)     (4,820)
Advances to joint venture partner and joint venture           -      (6,900)
---------------------------------------------------------------------------
Net investing cash flow                                 (13,954)     (9,054)
---------------------------------------------------------------------------

Decrease in cash and cash equivalents                    (6,547)    (37,351)
Cash and cash equivalents, beginning of the period       81,055      70,999
---------------------------------------------------------------------------
Cash and cash equivalents, end of the period             74,508      33,648
---------------------------------------------------------------------------

(1) In accordance with GAAP, the Consolidated Statements of Cash Flows
    includes the cash flows relating to the Dropdown Predecessor for the
    Alexander Spirit, Hamilton Spirit and Bermuda Spirit, for the period
    from September 3, 2009, June 24, 2009 and May 27, 2009, respectively to
    March 17, 2010, when the vessels were under the common control of
    Teekay, but prior to their acquisition by the Partnership.

TEEKAY LNG PARTNERS L.P.

APPENDIX A - SPECIFIC ITEMS AFFECTING NET (LOSS) 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 (loss) 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,
                                   2011        2010        2011        2010
                             (unaudited) (unaudited) (unaudited) (unaudited)
---------------------------------------------------------------------------
Net (loss) income - GAAP
 basis                           (3,689)     19,891      26,048      50,912
Less:
  Net (income) attributable
   to Dropdown Predecessor            -           -           -      (2,258)
  Net loss (income)
   attributable to non-
   controlling interest             561       2,875      (4,196)      2,574
---------------------------------------------------------------------------
Net (loss) income
 attributable to the
 partners                        (3,128)     22,766      21,852      51,228
Add (subtract) specific
 items affecting net (loss)
 income:
  Foreign exchange loss
   (gain)(1)                      8,859     (36,635)     29,892     (59,731)
  Unrealized losses (gains)
   from derivative
   instruments(2)                17,230      34,968      (3,776)     50,566
  Unrealized losses from
   derivative instruments
  from equity accounted
   investees(2)                   3,154       6,337         600       8,519
  Restructuring charge and
   other                              -         126         949         175
  Additional crew training
   charges received
   relating to prior
   periods                            -       1,597           -       1,597
  Non-controlling
   interests' share of
   items above                   (2,554)     (4,894)        (70)     (6,698)
---------------------------------------------------------------------------
Total adjustments                26,689       1,499      27,595      (5,572)
---------------------------------------------------------------------------
Adjusted net income
 attributable to the
 partners                        23,561      24,265      49,447      45,656
---------------------------------------------------------------------------

(1) Foreign exchange gains primarily relate to the revaluation of the
    Partnership's debt, capital leases and restricted cash denominated in
    Euros.
(2) Reflects the unrealized gain (loss) due to changes in the
    mark-to-market value of derivative instruments that are not designated
    as hedges for accounting purposes.

TEEKAY LNG PARTNERS L.P.

APPENDIX B - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

(in thousands of U.S. dollars)

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

Distributable cash flow represents net loss adjusted for depreciation and amortization expense, non-cash items, estimated maintenance capital expenditures, gains and losses on vessel sales, unrealized gains and losses from derivatives, income from variable interest entity, deferred income taxes, 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 loss.

---------------------------------------------------------------------------
                                                               Three Months
                                                                      Ended
                                                                    June 30,
                                                                       2011
                                                                 (unaudited)
---------------------------------------------------------------------------

Net loss                                                             (3,689)
Add:
  Depreciation and amortization                                      22,171
  Partnership's share of joint ventures' DCF before estimated
   maintenance capital expenditures                                   9,453
  Non-cash tax expense                                                  119
  Unrealized foreign exchange loss                                    8,859
  Unrealized loss from derivatives and other non-cash items          18,825
Less:
  Estimated maintenance capital expenditures                        (11,193)
  Equity income from joint ventures                                  (3,447)

---------------------------------------------------------------------------
Distributable Cash Flow before Non-controlling interest              41,098
Non-controlling interests' share of DCF before estimated
 maintenance capital expenditures                                    (3,541)
---------------------------------------------------------------------------
Distributable Cash Flow                                              37,557
---------------------------------------------------------------------------


TEEKAY LNG PARTNERS L.P.
APPENDIX C - SUPPLEMENTAL SEGMENT INFORMATION
(in thousands of U.S. dollars)

                                          Three Months Ended June 30, 2011
                                                     (unaudited)
                                          Liquefied   Conventional
                                                Gas         Tanker
                                            Segment        Segment    Total
---------------------------------------------------------------------------
Net voyage revenues(1)                       65,824         25,738   91,562
Vessel operating expenses                    13,145         10,243   23,388
Depreciation and amortization                15,081          7,090   22,171
General and administrative                    3,941          2,594    6,535
---------------------------------------------------------------------------
Income from vessel operations                33,657          5,811   39,468
---------------------------------------------------------------------------


                                          Three Months Ended June 30, 2010
                                                     (unaudited)
                                          Liquefied   Conventional
                                                Gas         Tanker
                                            Segment        Segment    Total
---------------------------------------------------------------------------
Net voyage revenues(1)                       65,700         25,653   91,353
Vessel operating expenses                    12,744          9,297   22,041
Depreciation and amortization                15,394          7,013   22,407
General and administrative                    2,626          2,411    5,037
Restructuring charge                              -            126      126
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Income from vessel operations                34,936          6,806   41,742
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(1) Net voyage revenues represents voyage revenues less voyage expenses,
    which comprise all expenses relating to certain voyages, including
    bunker fuel expenses, port fees, canal tolls and brokerage commissions.
    Net voyage revenues is a non-GAAP financial measure used by certain
    investors to measure the financial performance of shipping companies.
    Please see the Partnership's website at www.teekaylng.com for a
    reconciliation of this non-GAAP measure as used in this release to the
    most directly comparable GAAP financial measure.

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: the Partnership's future growth opportunities; level of project activity in the LNG sector; the timing of LNG and LPG/Multigas newbuilding deliveries and incremental cash flows relating to these newbuildings; the Partnership's financial position, including available liquidity; and the ability of the Partnership to pursue additional projects and acquisitions. 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: changes in production of LNG or LPG, either generally or in particular regions; development of LNG and LPG projects; required approvals by the Conflicts Committee of the Board of Directors of the Partnership's general partner to acquire any projects offered to the Partnership by Teekay Corporation; less than anticipated revenues or higher than anticipated costs or capital requirements; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of long-term contracts and inability of the Partnership to renew or replace long-term contracts; LNG and LPG/Multigas project delays or shipyard production delays which would change the expected timing and cost of newbuilding vessel deliveries; the Partnership's ability to raise financing to purchase additional vessels or to pursue other projects; changes to the amount or proportion of revenues, expenses, or debt service costs denominated in foreign currencies; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F/A for the fiscal year ended December 31, 2010. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

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

Source: Teekay LNG Partners L.P.