Teekay LNG Partners Reports Fourth Quarter and Annual Results

Thu Feb 23, 2012 8:30am EST

* Reuters is not responsible for the content in this press release.

  HAMILTON, BERMUDA, Feb 23 (MARKET WIRE) --
Teekay LNG Partners L.P. (NYSE:TGP) -

    Highlights


--  Generated distributable cash flow(1) of $44.1 million in the fourth
    quarter of 2011, an increase of 12 percent from the fourth quarter of
    2010. 
--  Declared fourth quarter 2011 cash distribution of $0.63 per unit. 
--  In January 2012, took delivery of the last of four LNG carriers
    servicing the Angola LNG project, all four of which are operating under
    long-term fixed-rate charters. 
--  Expects to complete in February 2012 the previously-announced
    acquisition of A.P. Moller-Maersk A/S' LNG fleet through joint venture
    with Marubeni Corporation. 
--  Management intends to recommend a 7 percent increase to quarterly
    distributions to $0.675 per unit commencing with the first quarter 2012
    distribution payable in May 2012. 


    Teekay GP LLC, the general partner of Teekay LNG Partners L.P. (Teekay
LNG or the Partnership) today reported the Partnership's results for the
quarter ended December 31, 2011. During the fourth quarter of 2011, the
Partnership generated distributable cash flow of $44.1 million, compared
to $39.3 million in the same quarter of the previous year. The increase
primarily reflects the incremental distributable cash flow resulting from
the November 2010 acquisition of a 50 percent interest in two liquefied
natural gas (LNG) carriers; the June and October 2011 acquisitions of two
Multigas carriers; the August, September and October 2011 acquisitions of
a 33 percent interest in three LNG carriers; and the September 2011
acquisition of one liquefied petroleum gas (LPG) carrier; partially
offset by the sale of the Dania Spirit LPG carrier in November 2010.

    On January 19, 2012, the Partnership declared a cash distribution of
$0.63 per unit for the quarter ended December 31, 2011. The cash
distribution was paid on February 14, 2012 to all unitholders of record
on February 1, 2012.

    In October 2011, the Partnership announced that its joint venture with
Marubeni Corporation (Teekay LNG-Marubeni Joint Venture) agreed to
acquire ownership interests in eight LNG carriers from Denmark-based
global conglomerate, A.P. Moller-Maersk A/S (Maersk). Since that time,
there have been a number of developments related to the acquisition which
is scheduled to be completed by the end of February 2012:


--  The majority owners of the two LNG carriers that were 26 percent owned
    by Maersk exercised their rights to acquire the remaining interests in
    the vessels, thereby reducing the number of LNG carriers to be acquired
    by the joint venture from eight to six and the total purchase price from
    approximately $1.4 billion to approximately $1.3 billion. 
--  Teekay LNG and Marubeni Corporation have secured debt financing for
    approximately 80 percent of the purchase price, with the remaining 20
    percent to be funded by each joint venture partner. Teekay LNG's equity
    portion amounts to $138 million which will be sourced from the $179.5
    million in proceeds from the Partnership's November 2011 follow-on
    equity offering. 
--  The charter extension option on the Maersk Meridian was exercised by the
    customer, extending the current contract by an additional 18 years. 
--  A new, three-year charter contract at a fixed-rate of approximately
    $130,000 per day was entered into for the Maersk Methane, commencing in
    April 2012. 


    "I am pleased to announce that we expect the Teekay LNG-Marubeni Joint
Venture to complete its acquisition of the Maersk LNG fleet next week,"
commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "This
acquisition is expected to generate approximately $40 million of
incremental distributable cash flows to the Partnership in 2012, and
builds on the stable, fixed-rate cash flows from the three LPG/Multigas
carriers and interests in the four LNG carriers that we have recently
added to our fleet."

    Mr. Evensen continued, "Given the strong fundamentals that are driving up
spot LNG shipping rates and the compelling outlook for the supply and
demand of LNG, we expect to remain active in our assessment of near-term
acquisition opportunities while continuing to bid on new long-term gas
projects. After completion of the acquisition of the Maersk LNG fleet, we
expect the Partnership will have approximately $400 million of available
liquidity and thus, remain well-positioned to take advantage of future
growth opportunities."

    Teekay LNG's Fleet

    The following table summarizes the Partnership's fleet as of February 1,
2012:


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                                             Number of Vessels              
                               ---------------------------------------------
                               ---------------------------------------------
                                     Delivered                              
                                       Vessels    Pending Acquisitions Total
                               ---------------------------------------------
LNG Carrier Fleet                       21 (i)                 6 (iii)    27
LPG/Multigas Carrier Fleet              5 (ii)                       -     5
Conventional Tanker Fleet                   11                       -    11
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Total                                       37                       6    43
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(i)   The Partnership's ownership percentages in these vessels range from 33
      percent to 100 percent.                                               
(ii)  The Partnership has a 99 percent ownership in these vessels.          
(iii) Represents the Partnerships 52 percent interest in six Maersk LNG     
      Carriers to be acquired.                                              


    In January 2012, Teekay LNG acquired from Teekay Corporation (Teekay),
its 33 percent interest in the last newbuilding LNG carrier for the
Angola LNG Project. Teekay LNG expects to acquire interests in the six
Maersk LNG carriers through its 52 percent interest in the Teekay
LNG-Marubeni Joint Venture by the end of February 2012.

    Financial Summary

    The Partnership reported adjusted net income attributable to the
partners(2) (as detailed in Appendix A to this release) of $29.8 million
for the quarter ended December 31, 2011, compared to $26.2 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 increasing net income by $10.6 million and $50.2 million for the three
months ended December 31, 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 $40.3 million and $76.4
million for the three months ended December 31, 2011 and 2010,
respectively.

    For the year ended December 31, 2011, the Partnership reported adjusted
net income attributable to the partners(1) (as detailed in Appendix A to
this release) of $108.9 million, compared to $95.8 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 $19.0 million and $8.1 million for the year
ended December 31, 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 $89.8 million and $87.6
million for the year ended December 31, 2011 and 2010, respectively.

    For accounting purposes, the Partnership is required to recognize the
changes in the fair value of its derivative instruments on its
consolidated statements of income. This method of accounting does not
affect the Partnership's cash flows or the calculation of distributable
cash flow, but results in the recognition of unrealized gains or losses
on the consolidated statements of income as detailed in footnote 2 of the
Summary Consolidated Statements of Income included in this release.

    The Partnership's consolidated 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).


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                      Three Months Ended            Three Months Ended      
                ------------------------------------------------------------
                       December 31, 2011             December 31, 2010      
                ------------------------------------------------------------
                          (unaudited)                   (unaudited)         
                ------------------------------------------------------------
                ------------------------------------------------------------
                 Liquefied Conventional        Liquefied Conventional       
(in thousands of       Gas       Tanker              Gas       Tanker       
 U.S. dollars)     Segment      Segment  Total   Segment      Segment  Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage                                                                  
 revenues(i)        68,966       28,262 97,228    66,661       30,170 96,831
Vessel operating                                                            
 expenses           11,748       10,737 22,485    10,914        9,631 20,545
Depreciation and                                                            
 amortization       16,995        7,372 24,367    15,173        7,485 22,658
Cash flow from                                                              
 vessel                                                                     
 operations(ii)     55,468       15,428 70,896    53,343       15,002 68,345
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(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 http://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.                            


    Liquefied Gas Segment

    Cash flow from vessel operations from the Partnership's Liquefied Gas
segment increased to $55.5 million in the fourth quarter of 2011 from
$53.3 million in the same quarter of the prior year. This increase is
primarily due the acquisition of two newbuilding Multigas carriers in
June and October 2011, and a newbuilding LPG carrier in September 2011,
partially offset by the sale of the Dania Spirit LPG carrier in November
2010.

    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 $20.0 million and $11.9 million for the three months ended December
31, 2011 and 2010, respectively, from the Partnership's three
equity-accounted joint ventures, RasGas 3, Exmar and Angola. This
increase is primarily due to the acquisition of an interest in the Exmar
Joint Venture in November 2010, and the acquisitions of three LNG
carriers through the Angola joint venture during 2011. The RasGas 3 joint
venture is the Partnership's 40 percent ownership interest in Teekay
Nakilat (III) Corporation, which owns four LNG carriers. The Exmar joint
venture is the Partnership's 50 percent ownership interest in joint
ventures with Exmar NV which, collectively, own two LNG carriers,
including one regasification unit. The Angola joint venture is the
Partnership's 33 percent ownership interest in four LNG carriers that
were delivered in August, September, October 2011 and January 2012
servicing the Angola LNG Project.

    Conventional Tanker Segment

    Cash flow from vessel operations from the Partnership's Conventional
Tanker segment remained consistent with the same quarter of the prior
year.

    Liquidity

    As of December 31, 2011, the Partnership had total liquidity of $538.7
million (comprised of $93.6 million in cash and cash equivalents and
$445.1 million in undrawn credit facilities), compared to total liquidity
of $459.7 million as of December 31, 2010.

    Conference Call

    The Partnership plans to host a conference call on Friday, February 24,
2012 at 11:00 a.m. (ET) to discuss the results for the fourth quarter and
fiscal year 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 5423528. 
--  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 Fourth Quarter and Fiscal Year 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 made available until Friday,
March 2, 2012. This recording can be accessed following the live call by
dialing (888) 203-1112 or (647) 436-0148, if outside North America, and
entering access code 5423528.

    About Teekay LNG Partners L.P.

    Teekay LNG Partners is the world's third largest independent owner and
operator of LNG vessels, providing LNG, LPG and crude oil marine
transportation services primarily under long-term, fixed-rate charter
contracts with major energy and utility companies through its interests
in 21 LNG carriers (including one LNG regasification unit), five
LPG/Multigas carriers and 11 conventional tankers. The Partnership's
interests in these vessels range from 33 to 100 percent. In addition,
Teekay LNG Partners, through its joint venture with Marubeni Corporation,
has agreed to acquire ownership interests in six LNG carriers and expects
this transaction to close in February 2012. 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".


(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).                                                      
(2) 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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TEEKAY LNG PARTNERS L.P.                                                    
SUMMARY CONSOLIDATED STATEMENTS OF INCOME                                   
(in thousands of U.S. dollars, except unit data)                            
----------------------------------------------------------------------------
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                          Three Months Ended                Year Ended      
                 ----------------------------------- -----------------------
                    December   September    December    December    December
                         31,         30,         31,         31,         31,
                 ----------- ----------- ----------- ----------- -----------
                        2011        2011        2010        2011    2010 (1)
                 ----------- ----------- ----------- ----------- -----------
                 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
----------------------------------------------------------------------------
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VOYAGE REVENUES       97,253      97,256      97,516     379,975     374,008
----------------------------------------------------------------------------
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OPERATING                                                                   
 EXPENSES                                                                   
Voyage expenses           25         307         685       1,387       2,042
Vessel operating                                                            
 expenses             22,485      22,366      20,545      89,046      84,577
Depreciation and                                                            
 amortization         24,367      23,032      22,658      91,919      89,347
General and                                                                 
 administrative        5,455       5,804       7,566      24,120      23,247
Gain on sale of                                                             
 vessel                    -           -     (4,340)           -     (4,340)
Restructuring                                                               
 charge                    -           -           -           -         175
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                      52,332      51,509      47,114     206,472     195,048
----------------------------------------------------------------------------
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Income from                                                                 
 vessel                                                                     
 operations           44,921      45,747      50,402     173,503     178,960
----------------------------------------------------------------------------
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OTHER ITEMS                                                                 
Interest expense    (13,861)    (12,129)    (12,217)    (49,880)    (49,019)
Interest income        1,835       1,576       1,805       6,687       7,190
Realized and                                                                
 unrealized                                                                 
 (loss) gain on                                                             
 derivative                                                                 
 instruments(2)      (8,780)    (37,690)      27,064    (63,030)    (78,720)
Foreign exchange                                                            
 gain(3)              10,722      29,480       7,528      10,310      27,545
Equity income(4)       8,189         891      10,526      20,584       8,043
Other income                                                                
 (expense) - net          98         309     (1,435)       (818)     (1,055)
----------------------------------------------------------------------------
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Net income            43,124      28,184      83,673      97,356      92,944
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Net income                                                                  
 attributable                                                               
 to:                                                                        
  Non-                                                                      
   controlling                                                              
   interest            2,777         535       7,301       7,508       3,062
  Dropdown                                                                  
   Predecessor
   (1)                     -           -           -           -       2,258
  Partners            40,347      27,649      76,372      89,848      87,624
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Limited                                                                     
 partners' units                                                            
 outstanding:                                                               
Weighted-average                                                            
 number of                                                                  
 common units                                                               
 outstanding -                                                              
 Basic and                                                                  
 diluted          62,885,074  59,357,900  54,705,598  59,147,422  51,481,035
Weighted-average                                                            
 number of                                                                  
 subordinated                                                               
 units                                                                      
 outstanding -                                                              
 Basic and                                                                  
 diluted                   -           -           -           -   1,816,591
Weighted-average                                                            
 number of total                                                            
 units                                                                      
 outstanding -                                                              
 Basic and                                                                  
 diluted          62,885,074  59,357,900  54,705,598  59,147,422  53,297,626
Total number of                                                             
 units                                                                      
 outstanding at                                                             
 end of period    64,857,900  59,357,900  55,106,100  64,857,900  55,106,100
----------------------------------------------------------------------------
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(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 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         Year Ended   
                               ---------------------------------------------
                               December September December December December
                               31, 2011  30, 2011 31, 2010 31, 2011 31, 2010
                               -------- --------- -------- -------- --------
Realized losses relating to:                                                
Interest rate swaps             (9,795)  (10,022) (10,394) (40,100) (42,495)
Interest rate swap                                                          
 terminations                  (22,560)         -        - (22,560)        -
Toledo Spirit time-charter                                                  
 derivative contract               (40)         -  (1,919)     (93)  (1,919)
                               ---------------------------------------------
                               (32,395)  (10,022) (12,313) (62,753) (44,414)
                               ---------------------------------------------
Unrealized gains (losses)                                                   
 relating to:                                                               
Interest rate swaps             (6,345)  (29,268)   37,277 (32,237) (34,906)
Interest rate swap                                                          
 terminations                    22,560         -        -   22,560        -
Toledo Spirit time-charter                                                  
 derivative contract              7,400     1,600    2,100    9,400      600
                               ---------------------------------------------
                                 23,615  (27,668)   39,377    (277) (34,306)
                               ---------------------------------------------
Total realized and unrealized                                               
 (losses) gains on derivative                                               
 instruments                    (8,780)  (37,690)   27,064 (63,030) (78,720)
                               ---------------------------------------------
                               ---------------------------------------------

(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.                                      
(4) Equity income includes unrealized gains (losses) on derivative          
    instruments of $0.3 million, ($5.5) million and $6.4 million for the    
    three months ended December 31, 2011, September 30, 2011 and December   
    31, 2010, respectively, and ($5.8) million and ($6.5) million for the   
    years ended December 31, 2011 and 2010, respectively.                   

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TEEKAY LNG PARTNERS L.P.                                                    
SUMMARY CONSOLIDATED BALANCE SHEETS(1)                                      
(in thousands of U.S. dollars)                                              
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                                               As at       As at       As at
                                            December   September    December
                                                 31,         30,         31,
                                         ----------- ----------- -----------
                                                2011        2011        2010
                                         ----------- ----------- -----------
                                         (unaudited) (unaudited) (unaudited)
                                         ----------- ----------- -----------
ASSETS                                                                      
Cash and cash equivalents                     93,627     101,499      81,055
Restricted cash - current                          -      85,726      82,576
Other current assets                          18,837      17,586      25,273
Advances to affiliates                        11,922       3,510       6,133
Restricted cash - long-term                  495,634     492,837     489,562
Vessels and equipment                      2,021,125   1,980,613   1,940,041
Advances on newbuilding contracts                  -      41,338      79,535
Net investments in direct financing                                         
 leases                                      409,541     411,158     415,695
Derivative assets                            155,259     152,536      62,283
Investments in and advances to joint                                        
 ventures                                    191,448     190,040     172,898
Other assets                                  34,760      31,724      33,167
Intangible assets                            114,416     116,698     123,546
Goodwill                                      35,631      35,631      35,631
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Total Assets                               3,582,200   3,660,896   3,547,395
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LIABILITIES AND EQUITY                                                      
Accounts payable, accrued liabilities and                                   
 unearned revenue                             60,030      56,244      56,971
Current portion of long-term debt and                                       
 capital leases                              131,925     258,878     343,790
Advances from affiliates and joint                                          
 venture partners                             17,400      78,452     133,410
Long-term debt and capital leases          1,830,353   1,867,631   1,793,459
Derivative liabilities                       293,218     314,110     199,965
Other long-term liabilities                  109,565     108,484     106,477
Equity                                                                      
  Non-controlling interest(2)                 26,242      22,873      17,123
  Partners' equity                         1,113,467     954,224     896,200
----------------------------------------------------------------------------
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Total Liabilities and Total Equity         3,582,200   3,660,896   3,547,395
----------------------------------------------------------------------------
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(1) Due to the Partnership's agreement to acquire Teekay Corporation's 100  
    percent interest in two Multigas carriers, under GAAP it was required to
    consolidate these vessels prior to the actual acquisition date.         
    Acquisitions of the Multigas carriers were in June and October 2011.    
(2) Non-controlling interest includes the 30 percent equity interest of the 
    RasGas II project (which owns three LNG carriers), the 31 percent equity
    interest in the Tangguh Project (which owns two LNG carriers), the 1    
    percent equity interest in the two Kenai LNG carriers, the 1 percent    
    equity interest in the Excalibur joint venture (which owns one LNG      
    carrier), and the 1 percent equity interest in the five LPG/Multigas    
    carriers, which in each case the Partnership does not own.              

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TEEKAY LNG PARTNERS L.P.                                                    
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS                               
(in thousands of U.S. dollars)                                              
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                                                     Year Ended December 31,
                                                     -----------------------
                                                            2011     2010(1)
                                                     ----------- -----------
                                                     (unaudited) (unaudited)
                                                     ----------- -----------
Cash and cash equivalents provided by (used for)                            
OPERATING ACTIVITIES                                                        
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Net operating cash flow                                  122,046     174,970
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FINANCING ACTIVITIES                                                        
Proceeds from issuance of long-term debt                 600,862     100,945
Debt issuance costs                                      (2,578)       (137)
Scheduled repayments of long-term debt                 (290,940)    (76,018)
Prepayments of long-term debt                          (383,000)    (72,000)
Scheduled repayments of capital lease obligations                           
 and other long-term liabilities                        (89,350)    (39,147)
Proceeds from equity offerings net of offering costs     341,178      50,921
Advances to and from affiliates                           27,048      16,545
Advances to and from joint venture partners                    -    (10,200)
Repayment of joint venture partners' advances                  -     (1,235)
Decrease in restricted cash                               76,249      30,741
Cash distributions paid                                (159,380)   (135,514)
Equity contribution from Teekay Corporation to                              
 Dropdown Predecessor                                          -         466
Purchase of Skaugen Multigas Subsidiaries              (114,466)           -
Proceeds on sale of 1% interest in Skaugen LPG                              
 Carriers and Skaugen Multigas Subsidiaries                1,812           -
Distribution to Teekay Corporation for the                                  
 acquisition of Alexander Spirit LLC, Bermuda Spirit                        
 LLC and Hamilton Spirit LLC                                   -    (33,997)
Other                                                      (261)         884
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Net financing cash flow                                    7,174   (167,746)
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INVESTING ACTIVITIES                                                        
Purchase of Excelsior and Excalibur Joint Ventures             -    (35,169)
Purchase of equity investments in three Angola LNG                          
 Carriers                                               (57,287)           -
Proceeds received from the sale of Dania Spirit                -      21,556
Advances to joint venture                                  (830)           -
Receipts from direct financing leases                      6,154       5,746
Expenditures for vessels and equipment                  (64,685)    (26,652)
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Net investing cash flow                                (116,648)    (34,519)
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Increase (decrease) in cash and cash equivalents          12,572    (27,295)
Cash and cash equivalents, beginning of the year          81,055     108,350
----------------------------------------------------------------------------
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Cash and cash equivalents, end of the year                93,627      81,055
----------------------------------------------------------------------------
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(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 January 1, 2010 to March 17, 2010, when the vessels were under the 
    common control of Teekay, but prior to their acquisition by the         
    Partnership.                                                            

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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.


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                                Three Months Ended          Year Ended      
                             ----------------------- -----------------------
                                December    December    December    December
                                     31,         31,         31,         31,
                             ----------- ----------- ----------- -----------
                                    2011        2010        2011        2010
                             ----------- ----------- ----------- -----------
                             (unaudited) (unaudited) (unaudited) (unaudited)
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Net income - GAAP basis           43,124      83,673      97,356      92,944
Less:                                                                       
  Net income attributable to                                                
   Dropdown Predecessor                -           -           -     (2,258)
  Net income attributable to                                                
   non-controlling interest      (2,777)     (7,301)     (7,508)     (3,062)
----------------------------------------------------------------------------
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Net income attributable to                                                  
 the partners                     40,347      76,372      89,848      87,624
Add (subtract) specific                                                     
 items affecting net income:                                                
  Foreign exchange gains(1)     (10,722)     (7,528)    (10,310)    (27,420)
  Unrealized (gains) losses                                                 
   from derivative                                                          
   instruments(2)               (23,615)    (39,377)         277      34,306
  Unrealized (gains) losses                                                 
   from derivative                                                          
   instruments and other                                                    
   items from equity                                                        
   accounted investees(3)            677     (6,384)       6,790       6,453
  Gain on sale of vessel               -     (4,340)           -     (4,340)
  Restructuring charge and                                                  
   other(4)(5)                         -           -         949       2,136
  Acquisition costs related                                                 
   to the purchase of                                                       
   Excelsior and Excalibur                                                  
   Joint Ventures                      -       2,000           -       2,000
  Interest rate swap                                                        
   cancellation costs             22,560           -      22,560           -
  Non-controlling interests'                                                
   share of items above              507       5,424     (1,256)     (4,990)
----------------------------------------------------------------------------
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Total adjustments               (10,593)    (50,205)      19,010       8,145
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Adjusted net income                                                         
 attributable to the                                                        
 partners                         29,754      26,167     108,858      95,769
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) Foreign exchange gains primarily relate to the revaluation of the       
    Partnership's debt, capital leases and restricted cash denominated in   
    Euros. 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.                                      
(2) Reflects the unrealized gain or loss due to changes in the mark-to-     
    market value of derivative instruments that are not designated as hedges
    for accounting purposes.                                                
(3) Reflects the unrealized gain or loss due to changes in the mark-to-     
    market value of derivative instruments that are not designated as hedges
    for accounting purposes within the Partnership's equity-accounted       
    investments and acquisition-related costs, in the amount of $0.8        
    million, relating to the pending acquisition of six Maersk LNG carriers.
(4) Amount for the year ended December 31, 2011 relates to a one-time       
    management fee associated with the portion of stock-based compensation  
    grants to Teekay's former President and Chief Executive Officer that had
    not yet vested prior to the date of his retirement on March 31, 2011.   
(5) Additional crew training charges received, but relating to a prior      
    period, of $2.0 million was recorded during the year ended December 31, 
    2010.                                                                   

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TEEKAY LNG PARTNERS L.P.                                                    
APPENDIX B - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE                   
(in thousands of U.S. dollars)                                              
----------------------------------------------------------------------------
----------------------------------------------------------------------------


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

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


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                          Three Months Ended
                                                          ------------------
                                                           December 31, 2011
                                                          ------------------
                                                                 (unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

  Net income:                                                         43,124
  Add:                                                                      
    Depreciation and amortization                                     24,367
    Partnership's share of joint ventures' DCF before                       
     estimated maintenance capital expenditures                       12,359
    Unamortized amount relating to interest rate swap                       
     cancellation costs                                               21,782
  Less:                                                                     
    Unrealized gain from derivatives and other non-cash                     
     items                                                          (23,130)
    Unrealized foreign exchange gain                                (10,722)
    Estimated maintenance capital expenditures                      (12,045)
    Equity income from joint ventures                                (8,189)

----------------------------------------------------------------------------
----------------------------------------------------------------------------
  Distributable Cash Flow before Non-controlling interest             47,546
  Non-controlling interests' share of DCF before estimated                  
   maintenance capital expenditures                                  (3,442)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
  Distributable Cash Flow                                             44,104
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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

                                        Three Months Ended December 31, 2011
                                       -------------------------------------
                                                    (unaudited)             

                                          Liquefied Conventional            
                                                Gas       Tanker            
                                            Segment      Segment       Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues(1)                       68,966       28,262      97,228
Vessel operating expenses                    11,748       10,737      22,485
Depreciation and amortization                16,995        7,372      24,367
General and administrative                    3,398        2,057       5,455
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from vessel operations                36,825        8,096      44,921
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                                        Three Months Ended December 31, 2010
                                       -------------------------------------
                                                    (unaudited)             

                                          Liquefied Conventional            
                                                Gas       Tanker            
                                            Segment      Segment       Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues(1)                       66,661       30,170      96,831
Vessel operating expenses                    10,914        9,631      20,545
Depreciation and amortization                15,173        7,485      22,658
General and administrative                    3,948        3,618       7,566
Gain on sale of vessel                      (4,340)            -     (4,340)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from vessel operations                40,966        9,436      50,402
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(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 http://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; Teekay LNG-Marubeni Joint Venture's pending
acquisition of six LNG carriers from A.P. Moller-Maersk A/S, including
the timing and certainty of closing of the transaction, expected increase
to the Partnership's distributable cash flow in 2012, the purchase price
for such vessels, and the financing associated with the transaction; the
Partnership's financial position, including available liquidity; the
accretive nature of proposed and recent transactions; the potential
increase to the Partnership's quarterly cash distribution per common unit
commencing for the first quarter of 2012; 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; the inability of
the Teekay LNG-Marubeni Joint Venture to renew or replace charter
contracts; failure to satisfy the closing conditions for the acquisition
of the Maersk LNG carriers, including obtaining approvals from the
charters and relevant regulatory authorities; obtaining financing for the
Maersk LNG carrier transaction; changes in trading patterns significantly
affecting overall vessel tonnage requirements; changes in applicable
industry laws and regulations and the timing of implementation of new
laws and regulations; the potential for early termination of long-term
contracts of existing vessels in the Teekay LNG fleet and inability of
the Partnership to renew or replace long-term contracts; the
Partnership's ability to raise financing to purchase additional vessels
or to pursue other projects; changes to the amount or proportion of
revenues, expenses, or debt service costs denominated in foreign
currencies; and other factors discussed in Teekay LNG Partners' filings
from time to time with the SEC, including its Report on Form 20-F/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

Copyright 2012, Market Wire, All rights reserved.

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