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Teekay LNG Partners Reports First Quarter 2014 Results

HAMILTON, BERMUDA -- (Marketwired) -- 05/15/14 --

Highlights


--  Generated distributable cash flow of $60.1 million in the first quarter
    of 2014, an increase of 12 percent from the first quarter of 2013. 
--  Declared first quarter 2014 cash distribution of $0.6918 per unit. 
--  In March 2014, Teekay LNG, through a new 50/50 joint venture, signed a
    letter of intent to provide six icebreaker LNG carriers for the Yamal
    LNG project. 
--  In April 2014, the Exmar LPG joint venture took delivery of the first of
    12 LPG carrier newbuildings. 
--  Total liquidity of approximately $416 million as at March 31, 2014. 

Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP), today reported the Partnership's results for the quarter ended March 31, 2014. During the first quarter of 2014, the Partnership generated distributable cash flow(1) of $60.1 million, compared to $53.7 million in the same quarter of the previous year. The increase in distributable cash flow was primarily due to the Partnership's February 2013 acquisition of a 50 percent interest in Exmar LPG BVBA (Exmar LPG), a liquefied petroleum gas (LPG) carrier joint venture with Exmar N.V. (Exmar), and the Partnership's acquisition and charter-back of two liquefied natural gas (LNG) carriers from Awilco LNG ASA (Awilco) in September and November 2013. The increase was partially offset by reduced cash flow as a result of the sale of two 2000-built conventional tankers, the Tenerife Spirit and the Algeciras Spirit, in December 2013 and February 2014, respectively.

On April 9, 2014, the Partnership declared a cash distribution of $0.6918 per unit for the quarter ended March 31, 2014. The cash distribution was paid on May 9, 2014 to all unitholders of record on April 25, 2014.

"The Partnership's portfolio of long-term fixed-rate contracts generated stable cash flows during the first quarter," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "With 100 percent of Teekay LNG's on-the-water LNG carrier fleet operating under fixed-rate contracts with an average duration of 12 years, the Partnership is largely insulated from short-term shipping rate fluctuations and well-positioned for expected future growth. We expect short-term volatility in the LNG shipping market to continue through 2016, prior to the expected start-up of several new LNG liquefaction projects. During the next three years, Teekay LNG has only limited exposure to potential market weakness with charters for only two of the Partnership's LNG carriers, both of which are 52 percent-owned, scheduled to expire during that period."

"Our LPG carriers also continue to report stable results," Mr. Evensen continued. "We are pleased to report that in early-April 2014, the Partnership's Exmar LPG joint venture took delivery of the Waasmunster, the first of 12 mid-size LPG carrier newbuildings, marking a milestone in the LPG joint venture's growth strategy."

Mr. Evensen added, "Looking ahead, I am pleased to confirm that the Partnership, through a new 50/50 joint venture, signed a letter of intent to provide six icebreaker LNG carriers for the Yamal LNG project. The project, which is being developed by Novatek, Total, and CNPC, is currently scheduled for start-up in late-2017 and is expected to produce 16.5 million metric tons of LNG per annum. Upon finalization of the contracts, these six icebreaker LNG carriers will further complement Teekay LNG's existing pipeline of growth projects scheduled to deliver between 2014 and 2018, which includes 11 LPG carrier newbuildings, through our Exmar LPG joint venture, and five MEGI LNG carrier newbuildings."

Recent Transactions

In late-March 2014, the Partnership, through a new 50/50 joint venture with a China-based liquefied natural gas (LNG) shipping company, signed a letter of intent to provide six internationally-flagged icebreaker LNG carriers for the Yamal LNG project, located on the Yamal Peninsula in Northern Russia. The Yamal LNG project is a joint venture between Russia-based Novatek (60 percent), France-based Total (20 percent) and China-based China National Petroleum Corporation (CNPC) (20 percent), and will consist of three LNG trains for a total capacity of 16.5 million metric tons of LNG per annum, which is currently scheduled to start-up in late-2017. The LNG will be transported from Northern Russia to Europe and Asia. The new 50/50 joint venture is currently in the process of negotiating contract terms, including the shipbuilding contracts and related time-charters, and expects to finalize these agreements during 2014.

Financial Summary

The Partnership reported adjusted net income attributable to the partners(1) (as detailed in Appendix A to this release) of $41.8 million for the quarter ended March 31, 2014, compared to $39.1 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of decreasing net income by $3.6 million and increasing net income by $15.4 million for the three months ended March 31, 2014 and 2013, respectively, as detailed in Appendix A. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $38.2 million and $54.4 million for the three months ended March 31, 2014 and 2013, respectively.

Adjusted net income attributable to the partners for the three months ended March 31, 2014 increased from the same period in the prior year, mainly due to the acquisitions of, and contributions by, the two Awilco LNG carriers in late-2013, and the acquisition of a 50 percent ownership interest in Exmar LPG in February 2013, which was partially offset by the sale of two 2000-built conventional tankers, the Tenerife Spirit and the Algeciras Spirit, in December 2013 and February 2014, respectively.

For accounting purposes, the Partnership is required to recognize the changes in the fair value of its outstanding derivative instruments that are not designated as hedges for accounting purposes in net income. This method of accounting does not affect the Partnership's cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized gains or losses on the consolidated statements of income as detailed in notes 3, 4 and 5 to the Summary Consolidated Statements of Income and Comprehensive Income included in this release.

(1) Adjusted net income attributable to the partners is a non-GAAP financial measure. Please refer to Appendix A to this release for a reconciliation of this non-GAAP measure to the most directly comparable financial measure under GAAP and information about specific items affecting net income which are typically excluded by securities analysts in their published estimates of the Partnership's financial results.

Operating Results

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


----------------------------------------------------------------------------
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                                             Three Months Ended             
                                               March 31, 2014               
                                                (unaudited)                 
                               ---------------------------------------------
                               ---------------------------------------------
                                 Liquefied Gas   Conventional               
(in thousands of U.S. Dollars)         Segment Tanker Segment          Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues(i)                  74,141         26,016        100,157
Vessel operating expenses               14,714          9,542         24,256
Depreciation and amortization           18,113          5,997         24,110
CFVO from consolidated                                                      
 vessels(ii)                            58,565         12,869         71,434
CFVO from equity accounted                                                  
 vessels(iii)                           48,140              -         48,140
Total CFVO(ii)                         106,705         12,869        119,574
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                                             Three Months Ended             
                                               March 31, 2013               
                                                (unaudited)                 
                               ---------------------------------------------
                               ---------------------------------------------
                                 Liquefied Gas   Conventional               
(in thousands of U.S. Dollars)         Segment Tanker Segment          Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues(i)                  68,030         28,686         96,716
Vessel operating expenses               13,993         11,323         25,316
Depreciation and amortization           17,290          6,853         24,143
CFVO from consolidated                                                      
 vessels(ii)                            51,937         13,633         65,570
CFVO from equity accounted                                                  
 vessels(iii)                           41,999              -         41,999
Total CFVO(ii)                          93,936         13,633        107,569
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(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 Appendix
C for a reconciliation of this non-GAAP measure as used in this release to  
the most directly comparable GAAP financial measure.                        
(ii) Cash flow from vessel operations (CFVO) from consolidated vessels      
represents income from vessel operations before (a) depreciation and        
amortization expense, (b) amortization of in-process revenue contracts, and 
includes (c) adjustments for direct financing leases and two Suezmax tankers
to a cash basis. CFVO is included because certain investors use this data to
measure a company's financial performance. CFVO is not required by GAAP and 
should not be considered as an alternative to net income, equity income or  
any other indicator of the Partnership's performance required by GAAP.      
Please see Appendix E for a reconciliation of CFVO from consolidated vessels
(a non-GAAP measure) as used in this release to the most directly comparable
GAAP financial measure.                                                     
(iii) The Partnership's equity accounted investments for the three months   
ended March 31, 2014 and 2013 include the Partnership's 40 percent interest 
in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the      
Partnership's 50 percent interest in the Excalibur and Excelsior joint      
ventures with Exmar, which own one LNG carrier and one regasification unit, 
respectively; the Partnership's 33 percent interest in four LNG carriers    
servicing the Angola LNG Project; the Partnership's 52 percent interest in  
Malt LNG Netherlands Holdings B.V., the joint venture between the           
Partnership and Marubeni Corporation, which owns six LNG carriers (Malt LNG 
Carriers); and the Partnership's equity 50 percent interest in Exmar LPG    
BVBA, the joint venture between the Partnership and Exmar, acquired in      
February 2013, which currently owns and charters-in 26 vessels in the LPG   
carrier segment, including 11 newbuildings. Please see Appendix F for a     
description and reconciliation of CFVO from equity accounted vessels (a non-
GAAP measure) as used in this release to the most directly comparable GAAP  
financial measure.                                                          

Liquefied Gas Segment

Cash flow from vessel operations from the Partnership's Liquefied Gas segment, excluding equity accounted vessels, increased to $58.6 million in the first quarter of 2014 from $51.9 million in the same quarter of the prior year. The increase was primarily the result of the delivery in late-2013 of two LNG carrier newbuildings acquired from Awilco, and was partially offset by 18 days of unscheduled off-hire due to repairs required for one of the Partnership's LNG carriers during the first quarter of 2014.

Cash flow from vessel operations from the Partnership's equity accounted vessels in the Liquefied Gas segment increased to $48.1 million in the first quarter of 2014 from $42.0 million in the same quarter of the prior year, primarily due to the acquisition of a 50 percent ownership interest in Exmar LPG in February 2013.

Conventional Tanker Segment

Cash flow from vessel operations from the Partnership's Conventional Tanker segment decreased to $12.9 million in the first quarter of 2014 from $13.6 million in the same quarter of the prior year, primarily due to the sale of two Suezmax conventional tankers, Tenerife Spirit and Algeciras Spirit, in December 2013 and February 2014, respectively, partially offset by $1.6 million in additional revenues from two of the Partnership's Suezmax conventional tankers as result of higher spot tanker rates. The time-charter contract for these vessels currently includes a fixed component plus a variable component, which is based on the spot Suezmax tanker rates.

Teekay LNG's Fleet

The following table summarizes the Partnership's fleet as of May 1, 2014:


----------------------------------------------------------------------------
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                                        Number of Vessels                   
                     -------------------------------------------------------
                     -------------------------------------------------------
                        Owned     In-Chartered                              
                      Vessels          Vessels     Newbuildings        Total
                     -------------------------------------------------------
LNG Carrier Fleet          29(i)             -                5           34
LPG/Multigas Carrier                                                        
 Fleet                     16(ii)            4(iii)          11(iii)      31
Conventional Tanker                                                         
 Fleet                      9                -                -            9
Total                      54                4               16           74
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(i)The Partnership's ownership interests in these vessels range from 33     
percent to 100 percent.                                                     
(ii)The Partnership's ownership interests in these vessels range from 50    
percent to 99 percent.                                                      
(iii)The Partnership's interest in these vessels is 50 percent.             

Liquidity

As of March 31, 2014, the Partnership had total liquidity of $416.0 million (comprised of $94.8 million in cash and cash equivalents and $321.2 million in undrawn credit facilities).

Availability of 2013 Annual Report

The Partnership filed its 2013 Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (SEC) on April 29, 2014. Copies of this report are available on Teekay LNG's website, under "Financials - Annual Reports", at www.teekaylng.com. Unitholders may request a printed copy of this Annual Report, including the complete audited financial statements, free of charge by contacting Teekay LNG Partners Investor Relations.

Conference Call

The Partnership plans to host a conference call on Friday, May 16, 2014 at 11:00 a.m. (ET) to discuss the results for the first quarter of 2014. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:


--  By dialing (866) 322-2356 or (416) 640-3405, if outside North America,
    and quoting conference ID code 1662980. 
--  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 First Quarter 2014 Earnings Presentation will also be available at www.teekaylng.com in advance of the conference call start time.

The conference call will be recorded and made available until Friday, May 23, 2014. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 1662980.

About Teekay LNG Partners L.P.

Teekay LNG Partners is the world's second largest independent owner and operator of LNG carriers, providing LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts through its interests in 34 LNG carriers (including one LNG regasification unit and five newbuildings), 31 LPG/Multigas carriers (including four chartered-in LPG carriers and 11 newbuildings) and nine conventional tankers. The Partnership's interests in these vessels range from 33 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (NYSE:TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.

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


                          TEEKAY LNG PARTNERS L.P.                          
         CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME         
                                                                            
          (in thousands of U.S. Dollars, except units outstanding)          
                                                                            
                                                Three Months Ended          
                                          March 31, December 31,   March 31,
                                               2014         2013        2013
                                        (unaudited)  (unaudited) (unaudited)
----------------------------------------------------------------------------
VOYAGE REVENUES                           101,490      104,858       97,107 
----------------------------------------------------------------------------
OPERATING EXPENSES                                                          
Voyage expenses                             1,333          869          391 
Vessel operating expenses                  24,256       25,164       25,316 
Depreciation and amortization              24,110       24,145       24,143 
General and administrative                  6,408        5,438        5,469 
Loan loss recovery(1)                           -       (3,804)           - 
Restructuring charge(2)                         -        1,786            - 
----------------------------------------------------------------------------
Total operating expenses                   56,107       53,598       55,319 
----------------------------------------------------------------------------
Income from vessel operations              45,383       51,260       41,788 
----------------------------------------------------------------------------
OTHER ITEMS                                                                 
Equity income(3)                           20,373       28,602       26,424 
Interest expense                          (14,831)     (15,775)     (13,248)
Interest income                               648        1,019          515 
Realized and unrealized loss on                                             
derivative instruments(4)                  (7,521)      (5,238)      (8,285)
Foreign exchange (loss) gain(5)              (779)      (5,188)       8,211 
Other income - net                            218          214          469 
----------------------------------------------------------------------------
                                           (1,892)       3,634       14,086 
----------------------------------------------------------------------------
Net income before tax expense              43,491       54,894       55,874 
Income tax expense                           (395)      (2,722)        (843)
----------------------------------------------------------------------------
Net income                                 43,096       52,172       55,031 
----------------------------------------------------------------------------
Other comprehensive (loss) income:                                          
Unrealized net (loss) gain on                                               
 qualifying                                                                 
cash flow hedging instruments                                               
in equity accounted joint ventures net                                      
 of                                                                         
amounts reclassified to equity income        (552)       1,680            - 
----------------------------------------------------------------------------
Other comprehensive (loss) income            (552)       1,680            - 
----------------------------------------------------------------------------
Comprehensive income                       42,544       53,852       55,031 
----------------------------------------------------------------------------
Non-controlling interest in net income      4,850        4,644          586 
General Partner's interest in net                                           
 income                                     7,155        7,338        5,965 
Limited partners' interest in net                                           
 income                                    31,091       40,190       48,480 
Weighted-average number of common                                           
 units outstanding:                                                         
- Basic                                74,199,534   73,971,294   69,683,763 
- Diluted                              74,226,654   73,995,463   69,686,503 
Total number of units outstanding at                                        
 end of period                         74,211,160   74,196,294   69,683,763 
----------------------------------------------------------------------------
(1)In early-2012, Teekay BLT Corporation (Teekay Tangguh Joint Venture), in 
which the Partnership has a 69 percent ownership interest, advanced amounts 
to P.T. Berlian Laju Tanker, the parent company of the non-controlling      
shareholder of the Teekay Tangguh Joint Venture, as an advance of dividends.
In July 2012, P.T. Berlian Laju Tanker entered into a court-supervised      
restructuring in Indonesia in order to restructure its debts. In September  
2013, the Teekay Tangguh Joint Venture recorded a $3.8 million loan loss    
provision relating to the advances to P.T. Berlian Laju Tanker, as it was   
probable, at that time, that the carrying value of the loan was impaired.   
However, during the fourth quarter of 2013, as P.T. Berlian Laju Tanker had 
sufficiently restructured its business, the Teekay Tangguh Joint Venture    
reassessed the probability of collectability of this advance and reversed   
the loan loss provision previously recorded in September 2013. On February  
1, 2014, the Teekay Tangguh Joint Venture declared dividends of $69.5       
million, of which $14.4 million was used to offset the total advances to its
non-controlling shareholder and P.T. Berlian Laju Tanker.                   
(2)Restructuring charge primarily relates to seafarer severance payments    
upon sale of two conventional tankers under capital lease.                  
(3)Equity income includes unrealized gains on derivative instruments and any
ineffectiveness for any derivative instruments designated as hedges for     
accounting purposes as detailed in the table below:                         
                                                 Three Months Ended         
                                          March 31, December 31,   March 31,
                                               2014         2013        2013
                                        ------------------------------------
Equity income                                20,373     28,602       26,424 
Proportionate share of unrealized loss                                      
 (gains) on derivative instruments            1,053     (5,798)      (4,599)
Proportionate share of ineffective                                          
 portion of hedge accounted                                                 
interest rate swap                                -        514            - 
                                        ------------------------------------
Equity income excluding unrealized gains                                    
 on derivative instruments                                                  
and ineffective portion of hedge                                            
 accounted interest rate swap                21,426     23,318       21,825 
                                        ------------------------------------


(4)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          
                                          March 31, December 31,   March 31,
                                               2014         2013        2013
                                      --------------------------------------
Realized (losses) gains relating to:                                        
Interest rate swaps                        (9,244)      (9,535)      (9,526)
Toledo Spirit time-charter derivative                                       
 contract                                       -          641            - 
                                      --------------------------------------
                                           (9,244)      (8,894)      (9,526)
                                      --------------------------------------
Unrealized gains (losses) relating to:                                      
Interest rate swaps                         4,023        2,556       (1,259)
Toledo Spirit time-charter derivative                                       
 contract                                  (2,300)       1,100        2,500 
                                      --------------------------------------
                                            1,723        3,656        1,241 
                                      --------------------------------------
Total realized and unrealized losses                                        
 on derivative instruments                 (7,521)      (5,238)      (8,285)
                                      --------------------------------------
                                      --------------------------------------
(5)For accounting purposes, the Partnership is required to revalue all      
foreign currency-denominated monetary assets and liabilities based on the   
prevailing exchange rate at the end of each reporting period. This          
revaluation does not affect the Partnership's cash flows or the calculation 
of distributable cash flow, but results in the recognition of unrealized    
foreign currency translation gains or losses in the consolidated statements 
of income and comprehensive income.                                         
                                                                            
Foreign exchange (loss) gain includes realized (losses) gains relating to   
the amounts the Partnership received (paid) to settle the Partnership's non-
designated cross currency swaps that were entered into as economic hedges in
relation to the Partnership's Norwegian Kroner (NOK)-denominated unsecured  
bonds. The Partnership issued NOK 700 million and NOK 900 million of        
unsecured bonds in May 2012 and September 2013 that mature in 2017 and 2018,
respectively. Foreign exchange (loss) gain also includes unrealized (losses)
gains relating to the change in fair value of such derivative instruments,  
partially offset by unrealized gains (losses) on the revaluation of the NOK 
bonds as detailed in the table below:                                       
                                                Three Months Ended          
                                          March 31, December 31,   March 31,
                                               2014         2013        2013
                                      --------------------------------------
Realized (losses) gains on cross-                                           
 currency swaps                              (365)        (216)          58 
Unrealized gains (losses) on cross-                                         
 currency swaps                             3,917       (2,832)      (6,191)
Unrealized (losses) gains on                                                
 revaluation of NOK bonds                  (3,653)       2,512        5,923 
                                                                            
                          TEEKAY LNG PARTNERS L.P.                          
                         CONSOLIDATED BALANCE SHEETS                        
                                                                            
                       (in thousands of U.S. Dollars)                       
                                                                            
                                         As at March 31,  As at December 31,
                                                    2014                2013
                                             (unaudited)         (unaudited)
                                    ----------------------------------------
ASSETS                                                                      
Current                                                                     
Cash and cash equivalents                         94,824             139,481
Accounts receivable                               19,601              19,844
Prepaid expenses                                   7,478               5,756
Current portion of derivative assets              17,921              18,444
Current portion of net investments                                          
 in direct financing leases                       16,886              16,441
Current portion of advances to joint                                        
 venture partner                                       -              14,364
Advances to affiliates                             3,606               6,634
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Total current assets                             160,316             220,964
----------------------------------------------------------------------------
                                                                            
Restricted cash - long-term                      498,208             497,298
                                                                            
Vessels and equipment                                                       
At cost, less accumulated                                                   
 depreciation                                  1,244,537           1,253,763
Vessels under capital leases, at                                            
 cost, less accumulated depreciation             535,700             571,692
Advances on newbuilding contracts                 98,055              97,207
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Total vessels and equipment                    1,878,292           1,922,662
----------------------------------------------------------------------------
Investment in and advances to equity                                        
 accounted joint ventures                        691,804             671,789
Net investments in direct financing                                         
 leases                                          679,013             683,254
Other assets                                      31,162              28,284
Derivative assets                                 84,241              62,867
Intangible assets - net                           94,413              96,845
Goodwill - liquefied gas segment                  35,631              35,631
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Total assets                                   4,153,080           4,219,594
----------------------------------------------------------------------------
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LIABILITIES AND EQUITY                                                      
Current                                                                     
Accounts payable                                   3,498               1,741
Accrued liabilities                               43,615              45,796
Unearned revenue                                  12,819              15,455
Current portion of long-term debt                 97,583              97,114
Current obligations under capital                                           
 lease                                            93,613              31,668
Current portion of derivative                                               
 liabilities                                      78,452              76,980
Advances from affiliates                          25,154              19,270
----------------------------------------------------------------------------
Total current liabilities                        354,734             288,024
----------------------------------------------------------------------------
Long-term debt                                 1,661,435           1,680,393
Long-term obligations under capital                                         
 lease                                           472,990             566,661
Long-term unearned revenue                        35,312              36,689
Other long-term liabilities                       73,705              73,140
Derivative liabilities                           147,628             130,903
----------------------------------------------------------------------------
Total liabilities                              2,745,804           2,775,810
----------------------------------------------------------------------------
                                                                            
Equity                                                                      
Limited partners                               1,319,280           1,338,133
General Partner                                   52,143              52,526
Accumulated other comprehensive                                             
 (loss) income                                     (421)                 131
----------------------------------------------------------------------------
Partners' equity                               1,371,002           1,390,790
Non-controlling interest (1)                      36,274              52,994
----------------------------------------------------------------------------
Total equity                                   1,407,276           1,443,784
----------------------------------------------------------------------------
                                                                            
Total liabilities and total equity             4,153,080           4,219,594
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Non-controlling interest includes a 30 percent equity interest in the   
RasGas II project (which owns three LNG carriers), a 31 percent equity      
interest in the Tangguh Project (which owns two LNG carriers), a 1 percent  
equity interest in two LNG carriers (Arctic Spirit and Polar Spirit), a 1   
percent equity interest in the Excalibur joint venture (which owns one LNG  
carrier), a 1 percent equity interest in the five LPG/Multigas carriers that
are chartered out to I.M. Skaugen ASA, and a 1 percent equity interest in   
two LNG carriers chartered out to Awilco, which in each case represents the 
ownership interest not owned by the Partnership.                            
                                                                            
                          TEEKAY LNG PARTNERS L.P.                          
                    CONSOLIDATED STATEMENTS OF CASH FLOWS                   
                       (in thousands of U.S. Dollars)                       
                                                                            
                                                       Three Months Ended   
                                                       March 31,   March 31,
                                                            2014        2013
                                                               $           $
                                                   -------------------------
Cash and cash equivalents provided by (used for)                            
OPERATING ACTIVITIES                                                        
Net income                                              43,096       55,031 
Non-cash items:                                                             
  Unrealized gain on derivative instruments             (1,723)      (1,241)
  Depreciation and amortization                         24,110       24,143 
  Unrealized foreign currency exchange loss (gain)         332       (9,016)
  Equity income                                        (20,373)     (26,424)
  Amortization of deferred debt issuance costs and                          
   other                                                   285          672 
Change in operating assets and liabilities               1,493        3,639 
Expenditures for dry docking                            (5,821)     (10,243)
----------------------------------------------------------------------------
                                                                            
Net operating cash flow                                 41,399       36,561 
----------------------------------------------------------------------------
                                                                            
FINANCING ACTIVITIES                                                        
Proceeds from issuance of long-term debt                 3,648      178,797 
Scheduled repayments of long-term debt                 (21,421)     (18,785)
Prepayments of long-term debt                           (5,000)     (10,000)
Scheduled repayments of capital lease obligations       (1,779)      (2,592)
Advances to equity accounted joint ventures                  -      (16,785)
Increase in restricted cash                               (564)        (424)
Cash distributions paid                                (58,895)     (52,972)
Novation of derivative liabilities                       2,985            - 
Dividends allocated to non-controlling interest         (7,206)        (144)
----------------------------------------------------------------------------
                                                                            
Net financing cash flow                                (88,232)      77,095 
----------------------------------------------------------------------------
                                                                            
                                                                            
INVESTING ACTIVITIES                                                        
                                                                            
Purchase of equity accounted investments                     -     (136,841)
Receipts from direct financing leases                    3,796        1,591 
Expenditures for vessels and equipment                  (1,620)      (1,001)
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Net investing cash flow                                  2,176     (136,251)
----------------------------------------------------------------------------
                                                                            
Decrease in cash and cash equivalents                  (44,657)     (22,595)
Cash and cash equivalents, beginning of the period     139,481      113,577 
----------------------------------------------------------------------------
                                                                            
Cash and cash equivalents, end of the period            94,824       90,982 
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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   
                                                   -------------------------
                                                        March 31    March 31
                                                            2014        2013
                                                   -------------------------
                                                     (unaudited) (unaudited)
----------------------------------------------------------------------------
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Net income - GAAP basis                                 43,096       55,031 
Less:                                                                       
  Net income attributable to non-controlling                                
   interest                                             (4,850)        (586)
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Net income attributable to the partners                 38,246       54,445 
Add (subtract) specific items affecting net income:                         
  Unrealized foreign currency exchange losses                               
   (gains) (1)                                             306       (8,048)
  Unrealized gains from derivative instruments(2)       (1,723)      (1,241)
  Unrealized losses (gains) from derivative                                 
   instruments and other items from equity                                  
   accounted investees(3)                                2,019       (4,599)
  Non-controlling interests' share of items                                 
   above(4)                                              2,954       (1,506)
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Total adjustments                                        3,556      (15,394)
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Adjusted net income attributable to the partners        41,802       39,051 
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(1) Unrealized foreign exchange losses primarily relate to the Partnership's
revaluation of all foreign currency-denominated monetary assets and         
liabilities based on the prevailing exchange rate at the end of each        
reporting period and unrealized loss on the cross-currency swap economically
hedging the Partnership's NOK bond and excludes the realized gains (losses) 
relating to the cross currency swaps for the NOK bonds.                     
(2) Reflects the unrealized losses (gains) due to changes in the mark-to-   
market value of derivative instruments that are not designated as hedges for
accounting purposes.                                                        
(3) Reflects the unrealized (gains) losses due to changes in the mark-to-   
market value of derivative instruments that are not designated as hedges for
accounting purposes and any ineffectiveness for any derivative instruments  
designated as hedges for accounting purposes within the Partnership's       
equity-accounted investments. Also reflects the Partnership's proportionate 
share of a loss of $1.0 million on the sale of a vessel in Exmar LPG during 
the three months ended March 31, 2014.                                      
(4) Items affecting net income include items from the Partnership's wholly- 
owned subsidiaries, its consolidated non-wholly-owned subsidiaries and its  
proportionate share of items from equity accounted for investments. The     
specific items affecting net income are analyzed to determine whether any of
the amounts originated from a consolidated non-wholly-owned subsidiary. Each
amount that originates from a consolidated non-wholly-owned subsidiary is   
multiplied by the non-controlling interests' percentage share in this       
subsidiary to arrive at the non-controlling interests' share of the amount. 
The amount identified as "non-controlling interests' share of items listed  
above" in the table above is the cumulative amount of the non-controlling   
interests' proportionate share of items listed in the table.                

TEEKAY LNG PARTNERS L.P.

APPENDIX B - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

DISTRIBUTABLE CASH FLOW (DCF)

(in thousands of U.S. Dollars)

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

Distributable cash flow represents net income adjusted for depreciation and amortization expense, non-cash items, estimated maintenance capital expenditures, unrealized gains and losses from derivatives, distributions relating to equity financing of newbuilding installments, equity income, write down of vessels, adjustments for direct financing leases to a cash basis, 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.


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                                                Three Months    Three Months
                                                       Ended           Ended
                                                                            
                                              March 31, 2014  March 31, 2013
                                                 (unaudited)     (unaudited)
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Net income:                                         43,096           55,031 
Add:                                                                        
  Depreciation and amortization                     24,110           24,143 
  Partnership's share of equity accounted                                   
   joint ventures' DCF before estimated                                     
   maintenance and capital expenditures             34,228           31,343 
  Unrealized foreign exchange loss (gain)              306           (8,048)
  Distributions relating to equity                                          
   financing of newbuildings                         1,828                - 
  Direct finance lease payments received in                                 
   excess of revenue recognized                      3,886            1,584 
Less:                                                                       
  Unrealized gain on derivatives and other                                  
   non-cash items                                   (3,916)          (3,725)
  Estimated maintenance capital                                             
   expenditures                                    (19,432)         (16,399)
  Equity income                                    (20,373)         (26,424)
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Distributable Cash Flow before Non-                                         
 controlling interest                               63,733           57,505 
  Non-controlling interests' share of DCF                                   
   before estimated maintenance capital                                     
   expenditures                                     (3,604)          (3,840)
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Distributable Cash Flow                             60,129           53,665 
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TEEKAY LNG PARTNERS L.P.

APPENDIX C - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

NET VOYAGE REVENUES

(in thousands of U.S. Dollars)

Description of Non-GAAP Financial Measure - Net Voyage Revenues

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


                                     Three Months Ended March 31, 2014      
                                                (unaudited)                 
                                                                            
                                     Liquefied   Conventional               
                                           Gas         Tanker               
                                       Segment        Segment          Total
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Voyage revenues                         74,964         26,526        101,490
Voyage expenses                            823            510          1,333
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Net voyage revenues                     74,141         26,016        100,157
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                                     Three Months Ended March 31, 2013      
                                                (unaudited)                 
                                                                            
                                     Liquefied   Conventional               
                                           Gas         Tanker               
                                       Segment        Segment          Total
----------------------------------------------------------------------------
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Voyage revenues                         68,030         29,077         97,107
Voyage expenses                              -            391            391
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Net voyage revenues                     68,030         28,686         96,716
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TEEKAY LNG PARTNERS L.P.

APPENDIX D - SUPPLEMENTAL SEGMENT INFORMATION

(in thousands of U.S. Dollars)


                                     Three Months Ended March 31, 2014      
                               ---------------------------------------------
                                                (unaudited)                 
                                     Liquefied   Conventional               
                                           Gas         Tanker               
                                       Segment        Segment          Total
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Net voyage revenues (See                                                    
 Appendix C)                            74,141         26,016        100,157
Vessel operating expenses               14,714          9,542         24,256
Depreciation and amortization           18,113          5,997         24,110
General and administrative               4,748          1,660          6,408
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Income from vessel operations           36,566          8,817         45,383
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                                     Three Months Ended March 31, 2013      
                               ---------------------------------------------
                                                (unaudited)                 
                                     Liquefied   Conventional               
                                           Gas         Tanker               
                                       Segment        Segment          Total
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Net voyage revenues (See                                                    
 Appendix C)                            68,030         28,686         96,716
Vessel operating expenses               13,993         11,323         25,316
Depreciation and amortization           17,290          6,853         24,143
General and administrative               3,684          1,785          5,469
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Income from vessel operations           33,063          8,725         41,788
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TEEKAY LNG PARTNERS L.P.

APPENDIX E - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CASH FLOW FROM VESSEL OPERATIONS

FROM CONSOLIDATED VESSELS

(in thousands of U.S. Dollars)

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

Cash flow from vessel operations from consolidated vessels represents income from vessel operations before (a) depreciation and amortization expense, (b) amortization of in-process revenue contracts included in voyage revenues, and includes (c) adjustments for direct financing leases and two Suezmax tankers to a cash basis. The Partnership's direct financing leases for the periods indicated relates to the Partnership's 69 percent interest in two LNG carriers, the Tangguh Sago and Tangguh Hiri, and the two LNG carriers acquired from Awilco in September and November 2013. The Partnership's cash flow from vessel operations from consolidated vessels does not include the Partnership's cash flow from vessel operations from its equity accounted joint ventures. Cash flow from vessel operations is included because certain investors use cash flow from vessel operations to measure a company's financial performance, and to highlight this measure for the Partnership's consolidated vessels. Cash flow from vessel operations from consolidated vessels is not required by GAAP and should not be considered as an alternative to net income or any other indicator of the Partnership's performance required by GAAP.


                                     Three Months Ended March 31, 2014      
                                                (unaudited)                 
                                    Liquefied   Conventional                
                                          Gas         Tanker                
                                      Segment        Segment           Total
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Income from vessel operations                                               
 (See Appendix D)                      36,566        8,817           45,383 
Depreciation and amortization          18,113        5,997           24,110 
Amortization of in-process                                                  
 revenue contracts included in                                              
 voyage revenues                            -         (278)            (278)
Direct finance lease payments                                               
 received in excess of revenue                                              
 recognized                             3,886            -            3,886 
Cash flow adjustment for two                                                
 Suezmax tankers(1)                         -       (1,667)          (1,667)
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Cash flow from vessel                                                       
 operations from consolidated                                               
 vessels                               58,565       12,869           71,434 
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                                    Three Months Ended March 31, 2013       
                                               (unaudited)                  
                                    Liquefied Conventional                  
                                          Gas       Tanker                  
                                      Segment      Segment            Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from vessel operations                                               
 (See Appendix D)                      33,063        8,725           41,788 
Depreciation and amortization          17,290        6,853           24,143 
Amortization of in-process                                                  
 revenue contracts included in                                              
 voyage revenues                            -         (278)            (278)
Direct finance lease payments                                               
 received in excess of revenue                                              
 recognized                             1,584            -            1,584 
Cash flow adjustment for two                                                
 Suezmax tankers(1)                         -       (1,667)          (1,667)
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Cash flow from vessel                                                       
 operations from consolidated                                               
 vessels                               51,937       13,633           65,570 
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(1) The Partnership's charter contracts for two of its Suezmax tankers, the 
Bermuda Spirit and Hamilton Spirit, were amended in 2012, which had the     
effect of reducing the daily charter rates by $12,000 per day for a duration
of 24 months commencing October 1, 2012. However, during this period, if    
Suezmax spot tanker rates exceed the amended rates, the charterer will pay  
the Partnership the excess amount up to a maximum of the original daily     
charter rate. The cash impact of the change in hire rates is not fully      
reflected in the Partnership's statements of income and comprehensive income
as the change in the lease payments is being recognized on a straight-line  
basis over the term of the lease.                                           

TEEKAY LNG PARTNERS L.P.

APPENDIX F - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CASH FLOW FROM VESSEL OPERATIONS FROM EQUITY ACCOUNTED VESSELS

(in thousands of U.S. Dollars)

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

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


                            Three Months Ended        Three Months Ended    
                              March 31, 2014            March 31, 2013      
                               (unaudited)                (unaudited)       
                                     Partnership's             Partnership's
                                 At        Portion          At       Portion
                               100%            (1)        100%           (1)
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Voyage revenues           147,941         68,475     127,152         57,962 
Vessel and other                                                            
 operating expenses        44,773         20,896      32,684         15,237 
Depreciation and                                                            
 amortization              21,918         11,111      18,418          9,396 
Loss on sale of vessel      1,931            966           -              - 
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Income from vessel                                                          
 operations of equity                                                       
 accounted vessels         79,319         35,502      76,050         33,329 
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Interest expense - net    (20,302)        (9,452)    (15,517)        (6,885)
Realized and unrealized                                                     
 loss on derivative                                                         
 instruments              (17,133)        (5,825)     (1,094)          (360)
Other income - net            377            148         402            340 
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Other items               (37,058)       (15,129)    (16,209)        (6,905)
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Net income / equity                                                         
 income of equity                                                           
 accounted vessels         42,261         20,373      59,841         26,424 
                                                                            
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Income from vessel                                                          
 operations                79,319         35,502      76,050         33,329 
Depreciation and                                                            
 amortization              21,918         11,111      18,418          9,396 
Loss on sale of vessel      1,931            966           -              - 
Direct finance lease                                                        
 payments received in                                                       
 excess of revenue                                                          
 recognized                 7,462          2,707       6,876          2,495 
Amortization of in-                                                         
 process revenue                                                            
 contracts                 (4,225)        (2,146)     (6,200)        (3,221)
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Cash flow from vessel                                                       
 operations from equity                                                     
 accounted vessels        106,405         48,140      95,144         41,999 
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(1) The Partnership's equity accounted investments for the three months     
ended March 31, 2014 and 2013 include the Partnership's 40 percent interest 
in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the      
Partnership's 50 percent interest in the Excalibur and Excelsior joint      
ventures, which owns one LNG carrier and one regasification unit,           
respectively; the Partnership's 33 percent interest in four LNG carriers    
servicing the Angola LNG Project; the Partnership's 52 percent interest in  
Malt LNG Netherlands Holdings B.V., the joint venture between the           
Partnership and Marubeni Corporation, which owns six LNG carriers; and the  
Partnership's 50 percent interest in Exmar LPG BVBA, the joint venture      
between the Partnership and Exmar, acquired in February 2013, which owns and
charters-in 14 vessels in the LPG carrier segment, excluding 12             
newbuildings, as at March 31, 2014 and 17 vessels, excluding eight          
newbuildings, as at March 31, 2013.                                         

FORWARD LOOKING STATEMENTS

This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: future growth opportunities and expectations, including the Partnership's ability to successfully bid for new LNG shipping and floating regasification projects and the effect of any such projects on the Partnership's results of operations; the expected delivery dates for the Partnership's newbuilding vessels and, if applicable, commencement of their time charter contracts; the potential for the Partnership, through a new 50/50 joint venture with a China-based LNG shipping company, to provide six icebreaker LNG carriers for the Yamal LNG project, and the magnitude of such project, if completed; the average remaining contract length on the Partnership's LNG fleet; the Partnership's exposure to spot and short-term LNG shipping rates; and LNG/LPG shipping market fundamentals. 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: shipyard construction delays or cost overruns; availability of suitable LNG shipping, LPG shipping, floating storage and regasification and other growth project opportunities; changes in production of LNG or LPG, either generally or in particular regions; changes in trading patterns or timing of start-up of new LNG liquefaction and regasification projects significantly affecting overall vessel tonnage requirements; competitive dynamics in bidding for potential LNG, LPG or floating regasification projects;

the Partnership's ability to secure new contracts through bidding on project tenders; failure by Teekay LNG to secure financing for newbuildings; potential failure of the Yamal LNG Project to be completed for any reason, including due to lack of funding as a result of existing or future sanctions against Russia and Russian entities and individuals, which may affect partners in the project; potential inability of the Partnership's joint venture to negotiate acceptable terms and documentation relating to its proposed participation in the Yamal LNG Project; failure by the Partnership to secure the required contracts for the Yamal LNG project for six icebreaker LNG carriers; potential delays or cancellation of the Yamal LNG project; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of long-term contracts of existing vessels in the Teekay LNG fleet; the inability of charterers to make future charter payments; the inability of the Partnership to renew or replace long-term contracts on existing vessels; the Partnership's ability to raise financing for its existing newbuildings or to purchase additional vessels or to pursue other projects; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2013. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

Contacts:
Investor Relations Enquiries
Ryan Hamilton
+1 (604) 609-6442
www.teekaylng.com

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