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Teekay LNG Partners Reports Second Quarter 2014 Results

HAMILTON, BERMUDA -- (Marketwired) -- 08/07/14 -- Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP) -

Highlights


--  Generated distributable cash flow(1) of $61.5 million in the second
    quarter of 2014, an increase of 11 percent from the second quarter of
    2013. 
--  Declared second quarter 2014 cash distribution of $0.6918 per unit. 
--  In July 2014, Teekay LNG, through a new 50/50 joint venture, finalized
    agreements to provide six icebreaker LNG carrier newbuildings for the
    Yamal LNG project. 
--  In June 2014, Teekay LNG acquired ownership interests in four LNG
    carrier newbuildings from BG Group. 
--  In April and June 2014, the Exmar LPG joint venture took delivery of two
    of its 12 LPG carrier newbuildings. 
--  Total liquidity of approximately $498 million as at June 30, 2014,
    giving pro-forma effect to proceeds from the $141 million common unit
    equity offering completed in mid-July 2014. 

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

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

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

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

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

Recent Transactions

Finalized Contracts for Six Yamal LNG Carrier Newbuildings

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

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

Acquired Ownership Interests in Four LNG Carrier Newbuildings

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

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

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

Financial Summary

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

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

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

For accounting purposes, the Partnership is required to recognize the changes in the fair value of its outstanding derivative instruments that are not designated as hedges for accounting purposes in net income. This method of accounting does not affect the Partnership's cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized gains or losses on the consolidated statements of income as detailed in notes 1, 2 and 3 to the Consolidated Statements of Income and Comprehensive Income included in this release.

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

Operating Results

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


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                            Three Months Ended        Three Months Ended    
                               June 30, 2014             June 30, 2013      
                                (unaudited)               (unaudited)       
                        ----------------------------------------------------
                        ----------------------------------------------------
                                   Conven-                   Conven-        
                        Liquefied   tional        Liquefied   tional        
(in thousands of U.S.         Gas   Tanker              Gas   Tanker        
 Dollars)                 Segment  Segment   Total  Segment  Segment   Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues(i)     76,897   23,259 100,156   67,863   27,532  95,395
Vessel operating                                                            
 expenses                  14,746    9,574  24,320   13,683   11,131  24,814
Depreciation and                                                            
 amortization              17,888    5,642  23,530   18,329    6,827  25,156
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CFVO from consolidated                                                      
 vessels(ii)               61,947    9,703  71,650   52,581   12,892  65,473
CFVO from equity                                                            
 accounted vessels(iii)    50,894        -  50,894   47,162        -  47,162
Total CFVO(ii)            112,841    9,703 122,544   99,743   12,892 112,635
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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, cargo loading and unloading expenses,
    canal tolls, agency fees and commissions. Net voyage revenues is a non-
    GAAP financial measure used by certain investors to measure the
    financial performance of shipping companies. Please see Appendix C for a
    reconciliation of this non-GAAP measure as used in this release to the
    most directly comparable GAAP financial measure. 
ii. Cash flow from vessel operations (CFVO) from consolidated vessels
    represents income from vessel operations before (a) depreciation and
    amortization expense, (b) amortization of in-process revenue contracts,
    (c) gains or losses on derivative contracts and includes (d) adjustments
    for direct financing leases and two Suezmax tankers to a cash basis.
    CFVO is included because certain investors use this data to measure a
    company's financial performance. CFVO is not required by GAAP and should
    not be considered as an alternative to net income, equity income or any
    other indicator of the Partnership's performance required by GAAP.
    Please see Appendix E for a reconciliation of CFVO from consolidated
    vessels (a non-GAAP measure) as used in this release to the most
    directly comparable GAAP financial measure. 
iii.The Partnership's equity accounted investments for the three months
    ended June 30, 2014 and 2013 include: the Partnership's 40 percent
    interest in Teekay Nakilat (III) Corporation, which owns four LNG
    carriers; the Partnership's 50 percent interest in the Excalibur and
    Excelsior joint ventures with Exmar, which own one LNG carrier and one
    regasification unit, respectively; the Partnership's 33 percent interest
    in four LNG carriers servicing the Angola LNG Project; the Partnership's
    52 percent interest in Malt LNG Netherlands Holdings B.V., the joint
    venture between the Partnership and Marubeni Corporation, which owns six
    LNG carriers (the Malt LNG Carriers); and the Partnership's 50 percent
    interest in Exmar LPG BVBA, which currently owns and charters-in 25
    vessels in the LPG carrier segment, including 10 newbuildings. Please
    see Appendix F for a description and reconciliation of CFVO from equity
    accounted vessels (a non-GAAP measure) as used in this release to the
    most directly comparable GAAP financial measure. 

Liquefied Gas Segment

Cash flow from vessel operations from the Partnership's Liquefied Gas segment, excluding equity accounted vessels, increased to $61.9 million in the second quarter of 2014 from $52.6 million in the same quarter of the prior year. The increase was primarily due to the delivery in late-2013 of two LNG carrier newbuildings acquired from Awilco LNG, and the scheduled dry docking of one LNG carrier which resulted in 21 days of off-hire in the second quarter of 2013.

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

Conventional Tanker Segment

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

Teekay LNG's Fleet

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


                                                                            
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----------------------------------------------------------------------------
                                             Number of Vessels              
                              ----------------------------------------------
                              ----------------------------------------------
                                 Owned   In-Chartered                       
                               Vessels        Vessels   Newbuildings   Total
                              ----------------------------------------------
LNG Carrier Fleet               29 (i)              -          15(i)      44
LPG/Multigas Carrier Fleet     16 (ii)        4 (iii)       10 (iii)      30
Conventional Tanker Fleet       9 (iv)              -              -       9
----------------------------------------------------------------------------
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Total                               54              4             25      83
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----------------------------------------------------------------------------

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

Liquidity

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

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

Conference Call

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


--  By dialing (800) 499-4035 or (416) 204-9269, if outside North America,
    and quoting conference ID code 5119193. 
--  By accessing the webcast, which will be available on Teekay LNG's
    website at www.teekaylng.com (the archive will remain on the web site
    for a period of 30 days). 

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

The conference call will be recorded and made available until Friday, August 15, 2014. This recording can be accessed following the live call by dialing (888) 203-1112 or (647) 436-0148, if outside North America, and entering access code 5119193.

About Teekay LNG Partners L.P.

Teekay LNG Partners is one of the world's largest independent owners and operators of LNG carriers, providing LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts through its interests in 44 LNG carriers (including one LNG regasification unit and 15 newbuildings), 30 LPG/Multigas carriers (including four chartered-in LPG carriers and 10 newbuildings) and nine conventional tankers. The Partnership's interests in these vessels range from 20 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (NYSE:TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.

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


                                                                            
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                          TEEKAY LNG PARTNERS L.P.                          
         CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME         
          (in thousands of U.S. Dollars, except units outstanding)          
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                         Three Months Ended             Six Months Ended    
                   June 30,   March 31,    June 30,    June 30,    June 30, 
                       2014        2014        2013        2014        2013 
                (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) 
----------------------------------------------------------------------------
VOYAGE REVENUES     101,323     101,490      96,619     202,813     193,726 
----------------------------------------------------------------------------
OPERATING                                                                   
 EXPENSES                                                                   
Voyage expenses       1,167       1,333       1,224       2,500       1,615 
Vessel operating                                                            
 expenses            24,320      24,256      24,814      48,576      50,130 
Depreciation and                                                            
 amortization        23,530      24,110      25,156      47,640      49,299 
General and                                                                 
 administrative       6,254       6,408       4,744      12,662      10,213 
----------------------------------------------------------------------------
Total operating                                                             
 expenses            55,271      56,107      55,938     111,378     111,257 
----------------------------------------------------------------------------
Income from                                                                 
 vessel                                                                     
 operations          46,052      45,383      40,681      91,435      82,469 
----------------------------------------------------------------------------
OTHER ITEMS                                                                 
Equity income(1)     32,924      20,373      39,425      53,297      65,849 
Interest expense    (15,068)    (14,831)    (13,132)    (29,899)    (26,380)
Interest income         572         648         782       1,220       1,297 
Realized and                                                                
 unrealized                                                                 
 (loss) gain on                                                             
 derivative                                                                 
 instruments(2)     (16,335)     (7,521)     10,666     (23,856)      2,381 
Foreign exchange                                                            
 (loss) gain(3)         (66)       (779)     (2,787)       (845)      5,424 
Other income -                                                              
 net                    208         218         407         426         876 
----------------------------------------------------------------------------
                      2,235      (1,892)     35,361         343      49,447 
----------------------------------------------------------------------------
Net income                                                                  
 before tax                                                                 
 expense             48,287      43,491      76,042      91,778     131,916 
Income tax                                                                  
 expense               (375)       (395)       (800)       (770)     (1,643)
----------------------------------------------------------------------------
Net income           47,912      43,096      75,242      91,008     130,273 
----------------------------------------------------------------------------
Other                                                                       
 comprehensive                                                              
 loss:                                                                      
Unrealized loss                                                             
 on qualifying                                                              
 cash flow                                                                  
 hedging                                                                    
 instruments in                                                             
 equity                                                                     
 accounted joint                                                            
 ventures net of                                                            
 amounts                                                                    
 reclassified to                                                            
 equity income         (730)       (552)          -      (1,282)          - 
----------------------------------------------------------------------------
Other                                                                       
 comprehensive                                                              
 loss                                                                       
 attributable to                                                            
 General and                                                                
 limited                                                                    
 partners              (730)       (552)          -      (1,282)          - 
----------------------------------------------------------------------------
Comprehensive                                                               
 income              47,182      42,544      75,242      89,726     130,273 
----------------------------------------------------------------------------
Non-controlling                                                             
 interest in net                                                            
 income               4,263       4,850       5,581       9,113       6,167 
General                                                                     
 Partner's                                                                  
 interest in net                                                            
 income               7,528       7,155       6,278      14,683      12,243 
Limited                                                                     
 partners'                                                                  
 interest in net                                                            
 income              36,121      31,091      63,383      67,212     111,863 
Weighted-average                                                            
 number of                                                                  
 common units                                                               
 outstanding:                                                               
- Basic          74,212,834  74,199,534  69,713,500  74,206,221  69,698,714 
- Diluted        74,255,543  74,226,654  69,732,097  74,252,842  69,709,382 
Total number of                                                             
 units                                                                      
 outstanding at                                                             
 end of period   74,212,891  74,211,160  69,813,899  74,212,891  69,813,899 
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(1) Equity income includes unrealized losses (gains) on non-designated derivative instruments and (gains) losses on sale of vessels as detailed in the table below:


                                                                            
                                Three Months Ended        Six Months Ended  
                            June 30, March 31, June 30,  June 30,  June 30, 
                                2014      2014     2013      2014      2013 
                           -------------------------------------------------
Equity income                 32,924    20,373   39,425    53,297    65,849 
Proportionate share of                                                      
 unrealized losses (gains)                                                  
 on non-designated                                                          
 derivative instruments          979     1,053  (14,135)    2,032   (18,734)
Proportionate share of                                                      
 (gains) losses on sale of                                                  
 vessels                      (9,772)      966        -    (8,806)        - 
                           -------------------------------------------------
Equity income excluding                                                     
 unrealized losses (gains)                                                  
 on non-designated                                                          
 derivative instruments and                                                 
 (gains) losses on sale of                                                  
 vessels                      24,131    22,392   25,290    46,523    47,115 
                           -------------------------------------------------

(2) The realized losses relate to the amounts the Partnership actually paid to settle derivative instruments and the unrealized (losses) gains relate to the change in fair value of such derivative instruments as detailed in the table below:


                                                                            
                                   Three Months Ended      Six Months Ended 
                               June 30, March 31, June 30, June 30, June 30,
                                   2014      2014     2013     2014     2013
                              ----------------------------------------------
Realized losses relating to:                                                
Interest rate swaps            (10,020)   (9,244)  (9,496) (19,264) (19,022)
Toledo Spirit time-charter                                                  
 derivative contract              (224)         -     (23)    (224)     (23)
                              ----------------------------------------------
                               (10,244)   (9,244)  (9,519) (19,488) (19,045)
                              ----------------------------------------------
Unrealized (losses) gains                                                   
 relating to:                                                               
Interest rate swaps             (5,391)     4,023   19,885  (1,368)   18,626
Toledo Spirit time-charter                                                  
 derivative contract              (700)   (2,300)      300  (3,000)    2,800
                              ----------------------------------------------
                                (6,091)     1,723   20,185  (4,368)   21,426
                              ----------------------------------------------
Total realized and unrealized                                               
 (losses) gains on derivative                                               
 instruments                   (16,335)   (7,521)   10,666 (23,856)    2,381
                              ----------------------------------------------
                              ----------------------------------------------

(3) For accounting purposes, the Partnership is required to revalue all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rate at the end of each reporting period. This revaluation does not affect the Partnership's cash flows or the calculation of distributable cash flow, but results in the recognition of unrealized foreign currency translation gains or losses in the consolidated statements of income and comprehensive income.

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


                                                                            
                               Three Months Ended         Six Months Ended  
                          June 30,  March 31,  June 30,  June 30,  June 30, 
                              2014       2014      2013      2014      2013 
                         ---------------------------------------------------
Realized (losses) gains                                                     
 on cross-currency swaps      (275)      (365)      (67)     (640)       (9)
Unrealized (losses) gains                                                   
 on cross-currency swaps    (7,729)     3,917    (2,731)   (3,812)   (8,922)
Unrealized gains (losses)                                                   
 on revaluation of NOK                                                      
 bonds                       6,307     (3,653)    4,545     2,654    10,468 
                                                                            
                                                                            
                                                                            
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                          TEEKAY LNG PARTNERS L.P.                          
                        CONSOLIDATED BALANCE SHEETS                         
                       (in thousands of U.S. Dollars)                       
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                           As at June 30, As at March 31, As at December 31,
                                     2014            2014               2013
                              (unaudited)     (unaudited)        (unaudited)
                          --------------------------------------------------
ASSETS                                                                      
Current                                                                     
Cash and cash equivalents         121,658          94,824            139,481
Accounts receivable                20,068          19,601             19,844
Prepaid expenses                    6,219           7,478              5,756
Current portion of                                                          
 derivative assets                 17,500          17,921             18,444
Current portion of net                                                      
 investments in direct                                                      
 financing leases                  18,105          16,886             16,441
Current portion of                                                          
 advances to joint venture                                                  
 partner                                -               -             14,364
Advances to affiliates             21,036           3,606              6,634
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Total current assets              204,586         160,316            220,964
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Restricted cash - long-                                                     
 term                             498,400         498,208            497,298
                                                                            
Vessels and equipment                                                       
At cost, less accumulated                                                   
 depreciation                   1,231,216       1,244,537          1,253,763
Vessels under capital                                                       
 leases, at cost, less                                                      
 accumulated depreciation         530,195         535,700            571,692
Advances on newbuilding                                                     
 contracts                        117,778          98,055             97,207
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Total vessels and                                                           
 equipment                      1,879,189       1,878,292          1,922,662
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Investment in and advances                                                  
 to equity accounted joint                                                  
 ventures                         735,171         691,804            671,789
Net investments in direct                                                   
 financing leases                 676,476         679,013            683,254
Other assets                       48,394          31,162             28,284
Derivative assets                 101,255          84,241             62,867
Intangible assets - net            92,124          94,413             96,845
Goodwill - liquefied gas                                                    
 segment                           35,631          35,631             35,631
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Total assets                    4,271,226       4,153,080          4,219,594
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LIABILITIES AND EQUITY                                                      
Current                                                                     
Accounts payable                    1,942           3,498              1,741
Accrued liabilities                46,876          43,615             45,796
Unearned revenue                   14,295          11,706             14,342
Current portion of long-                                                    
 term debt                        161,596          97,583             97,114
Current obligations under                                                   
 capital lease                     65,716          93,613             31,668
Current portion of in-                                                      
 process contracts                  6,234           1,113              1,113
Current portion of                                                          
 derivative liabilities            86,626          78,452             76,980
Advances from affiliates           46,271          25,154             19,270
----------------------------------------------------------------------------
Total current liabilities         429,556         354,734            288,024
----------------------------------------------------------------------------
Long-term debt                  1,642,859       1,661,435          1,680,393
Long-term obligations                                                       
 under capital lease              499,458         472,990            566,661
Long-term unearned revenue         34,929          35,312             36,689
Other long-term                                                             
 liabilities                       70,974          70,323             69,480
In-process contracts               28,147           3,382              3,660
Derivative liabilities            169,867         147,628            130,903
----------------------------------------------------------------------------
Total liabilities               2,875,790       2,745,804          2,775,810
----------------------------------------------------------------------------
                                                                            
                                                                            
Equity                                                                      
Limited partners                1,304,036       1,319,280          1,338,133
General Partner                    52,103          52,143             52,526
Accumulated other                                                           
 comprehensive (loss)                                                       
 income                            (1,151)           (421)               131
----------------------------------------------------------------------------
Partners' equity                1,354,988       1,371,002          1,390,790
Non-controlling interest                                                    
 (1)                               40,448          36,274             52,994
----------------------------------------------------------------------------
                                                                            
Total equity                    1,395,436       1,407,276          1,443,784
----------------------------------------------------------------------------
Total liabilities and                                                       
 total equity                   4,271,226       4,153,080          4,219,594
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                          TEEKAY LNG PARTNERS L.P.                          
                    CONSOLIDATED STATEMENTS OF CASH FLOWS                   
                       (in thousands of U.S. Dollars)                       
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                       Six Months Ended     
                                                      June 30,     June 30, 
                                                          2014         2013 
                                                             $            $ 
                                                  --------------------------
Cash and cash equivalents provided by (used for)                            
OPERATING ACTIVITIES                                                        
Net income                                              91,008      130,273 
Non-cash items:                                                             
  Unrealized loss (gain) on derivative instruments       4,368      (21,426)
  Depreciation and amortization                         47,640       49,299 
  Unrealized foreign currency exchange gain                (66)      (5,993)
  Equity income, net of dividends received of $2.6                          
   million (2013 - nil)                                (50,690)     (65,849)
  Amortization of deferred debt issuance costs and                          
   other                                                   742        1,494 
Change in operating assets and liabilities               9,452        5,748 
Expenditures for dry docking                            (7,931)     (17,796)
----------------------------------------------------------------------------
Net operating cash flow                                 94,523       75,750 
----------------------------------------------------------------------------
                                                                            
FINANCING ACTIVITIES                                                        
                                                                            
Proceeds from issuance of long-term debt               209,215      219,748 
Scheduled repayments of long-term debt                 (48,320)     (42,999)
Prepayments of long-term debt                         (130,000)     (10,000)
Scheduled repayments of capital lease obligations       (3,396)      (5,205)
Proceeds from units issued out of continuous                                
 offering program, net of offering costs                     -        4,924 
Advances to equity accounted joint ventures                  -      (16,785)
Increase in restricted cash                             (1,197)        (952)
Cash distributions paid                               (117,803)    (105,943)
Novation of derivative liabilities                       2,985            - 
Dividends paid to non-controlling interest              (7,295)        (144)
----------------------------------------------------------------------------
                                                                            
Net financing cash flow                                (95,811)      42,644 
----------------------------------------------------------------------------
                                                                            
                                                                            
INVESTING ACTIVITIES                                                        
                                                                            
Purchase of equity accounted investments                    (1)    (135,790)
Receipts from direct financing leases                    5,114        3,233 
Expenditures for vessels and equipment                 (21,648)      (1,793)
----------------------------------------------------------------------------
                                                                            
Net investing cash flow                                (16,535)    (134,350)
----------------------------------------------------------------------------
                                                                            
Decrease in cash and cash equivalents                  (17,823)     (15,956)
Cash and cash equivalents, beginning of the period     139,481      113,577 
----------------------------------------------------------------------------
                                                                            
Cash and cash equivalents, end of the period           121,658       97,621 
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                          TEEKAY LNG PARTNERS L.P.                          
              APPENDIX A - SPECIFIC ITEMS AFFECTING NET INCOME              
                       (in thousands of U.S. Dollars)                       
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Set forth below is a reconciliation of the Partnership's unaudited adjusted net income attributable to the partners, a non-GAAP financial measure, to net income attributable to the partners as determined in accordance with GAAP. The Partnership believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Partnership's financial performance. The items below are also typically excluded by securities analysts in their published estimates of the Partnership's financial results. Adjusted net income attributable to the partners is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                            Three Months Ended         Six Months Ended     
                             June 30      June 30      June 30      June 30 
                                2014         2013         2014         2013 
                         (unaudited)  (unaudited)  (unaudited)  (unaudited) 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income - GAAP basis       47,912       75,242       91,008      130,273 
Less:                                                                       
  Net income                                                                
   attributable to non-                                                     
   controlling interest       (4,263)      (5,581)      (9,113)      (6,167)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable                                                     
 to the partners              43,649       69,661       81,895      124,106 
Add (subtract) specific                                                     
 items affecting net                                                        
 income:                                                                    
  Unrealized foreign                                                        
   currency exchange                                                        
   (gains) losses(1)            (265)       2,960           41       (5,088)
  Unrealized losses                                                         
   (gains) from                                                             
   derivative                                                               
   instruments(2)              6,091      (20,185)       4,368      (21,426)
  Unrealized gains and                                                      
   losses from non-                                                         
   designated derivative                                                    
   instruments and net                                                      
   gain on vessel sales                                                     
   from equity accounted                                                    
   investees(3)               (8,793)     (14,135)      (6,774)     (18,734)
  Non-controlling                                                           
   interests' share of                                                      
   items above(4)              1,906        3,219        4,860        1,713 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total adjustments             (1,061)     (28,141)       2,495      (43,535)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted net income                                                         
 attributable to the                                                        
 partners                     42,588       41,520       84,390       80,571 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) Unrealized foreign exchange (gains) losses primarily relate to the Partnership's revaluation of all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rate at the end of each reporting period and unrealized losses (gains) on the cross-currency swap economically hedging the Partnership's NOK bond and excludes the realized gains/losses relating to the cross currency swaps for the NOK bonds.

(2) Reflects the unrealized losses (gains) due to changes in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes.

(3) Reflects the unrealized (gains) losses due to changes in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes and any ineffectiveness for any derivative instruments designated as hedges for accounting purposes within the Partnership's equity-accounted investments. Also reflects the Partnership's proportionate share of a net gain of $9.8 million and $8.8 million on the sale of vessels from the Exmar LPG BVBA joint venture during the three and six months ended June 30, 2014, respectively. See note 1 to the Consolidated Statements of Income and Comprehensive Income included in this release for further details.

(4) Items affecting net income include items from the Partnership's wholly-owned subsidiaries, its consolidated non-wholly-owned subsidiaries and its proportionate share of items from equity accounted for investments. The specific items affecting net income are analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests' percentage share in this subsidiary to arrive at the non-controlling interests' share of the amount. The amount identified as "non-controlling interests' share of items listed above" in the table above is the cumulative amount of the non-controlling interests' proportionate share of items listed in the table.


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                          TEEKAY LNG PARTNERS L.P.                          
         APPENDIX B - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES         
                        DISTRIBUTABLE CASH FLOW (DCF)                       
                       (in thousands of U.S. Dollars)                       
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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

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


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                  Three Months Three Months 
                                                         Ended        Ended 
                                                      June 30,     June 30, 
                                                          2014         2013 
                                                   (unaudited)  (unaudited) 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income:                                             47,912       75,242 
Add:                                                                        
  Depreciation and amortization                         23,530       25,156 
  Partnership's share of equity accounted joint                             
   ventures' DCF net of estimated maintenance and                           
   capital expenditures                                 29,411       26,254 
  Unrealized loss (gain) on derivatives and other                           
   non-cash items                                        3,644      (22,914)
  Direct finance lease payments received in excess                          
   of revenue recognized                                 4,256        1,633 
  Distributions relating to equity financing of                             
   newbuildings                                          1,822            - 
Less:                                                                       
  Unrealized foreign exchange (gain) loss                 (265)       2,960 
  Estimated maintenance capital expenditures           (11,632)      (9,423)
  Equity income                                        (32,924)     (39,425)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Distributable Cash Flow before Non-controlling                              
 interest                                               65,754       59,483 
Non-controlling interests' share of DCF before                              
 estimated maintenance capital expenditures             (4,258)      (4,083)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Distributable Cash Flow                                 61,496       55,400 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                          TEEKAY LNG PARTNERS L.P.                          
         APPENDIX C - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES         
                             NET VOYAGE REVENUES                            
                       (in thousands of U.S. Dollars)                       
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Description of Non-GAAP Financial Measure - Net Voyage Revenues

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


                                                                            
                                   Three Months Ended June 30, 2014         
                                              (unaudited)                   
                          --------------------------------------------------
                                Liquefied Gas  Conventional Tanker          
                                       Segment             Segment     Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Voyage revenues                         77,602              23,721   101,323
Voyage expenses                            705                 462     1,167
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues                     76,897              23,259   100,156
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                   Three Months Ended June 30, 2013         
                                              (unaudited)                   
                          --------------------------------------------------
                                Liquefied Gas  Conventional Tanker          
                                       Segment             Segment     Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Voyage revenues                         68,270              28,349    96,619
Voyage expenses                            407                 817     1,224
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues                     67,863              27,532    95,395
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                          TEEKAY LNG PARTNERS L.P.                          
                APPENDIX D - SUPPLEMENTAL SEGMENT INFORMATION               
                       (in thousands of U.S. Dollars)                       
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                        Three Months Ended June 30, 2014    
                                                   (unaudited)              
                                    ----------------------------------------
                                                      Conventional          
                                     Liquefied Gas         Tanker           
                                            Segment        Segment     Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues (See Appendix C)         76,897         23,259   100,156
Vessel operating expenses                    14,746          9,574    24,320
Depreciation and amortization                17,888          5,642    23,530
General and administrative                    4,460          1,794     6,254
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from vessel operations                39,803          6,249    46,052
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
                                        Three Months Ended June 30, 2013    
                                                   (unaudited)              
                                    ----------------------------------------
                                                      Conventional          
                                     Liquefied Gas         Tanker           
                                            Segment        Segment     Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues (See Appendix C)         67,863         27,532    95,395
Vessel operating expenses                    13,683         11,131    24,814
Depreciation and amortization                18,329          6,827    25,156
General and administrative                    3,233          1,511     4,744
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from vessel operations                32,618          8,063    40,681
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                          TEEKAY LNG PARTNERS L.P.                          
         APPENDIX E - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES         
                      CASH FLOW FROM VESSEL OPERATIONS                      
                          FROM CONSOLIDATED VESSELS                         
                       (in thousands of U.S. Dollars)                       
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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

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


                                                                            
                                        Three Months Ended June 30, 2014    
                                                  (unaudited)               
                                    ----------------------------------------
                                      Liquefied Gas   Conventional          
                                            Segment Tanker Segment    Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from vessel operations (See                                          
 Appendix D)                                 39,803          6,249   46,052 
Depreciation and amortization                17,888          5,642   23,530 
Amortization of in-process revenue                                          
 contracts included in voyage                                               
 revenues                                         -           (278)    (278)
Direct finance lease payments                                               
 received in excess of revenue                                              
 recognized                                   4,256              -    4,256 
Realized loss on Toledo Spirit                                              
 derivative contract                              -           (224)    (224)
Cash flow adjustment for two Suezmax                                        
 tankers(1)                                       -         (1,686)  (1,686)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flow from vessel operations                                            
 from consolidated vessels                   61,947          9,703   71,650 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                        Three Months Ended June 30, 2013    
                                                  (unaudited)               
                                    ----------------------------------------
                                      Liquefied Gas   Conventional          
                                            Segment Tanker Segment    Total 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from vessel operations (See                                          
 Appendix D)                                 32,618          8,063   40,681 
Depreciation and amortization                18,329          6,827   25,156 
Amortization of in-process revenue                                          
 contracts included in voyage                                               
 revenues                                         -           (278)    (278)
Direct finance lease payments                                               
 received in excess of revenue                                              
 recognized                                   1,634              -    1,634 
Realized loss on Toledo Spirit                                              
 derivative contract                              -            (23)     (23)
Cash flow adjustment for two Suezmax                                        
 tankers(1)                                       -         (1,697)  (1,697)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flow from vessel operations                                            
 from consolidated vessels                   52,581         12,892   65,473 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                          TEEKAY LNG PARTNERS L.P.                          
         APPENDIX F - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES         
       CASH FLOW FROM VESSEL OPERATIONS FROM EQUITY ACCOUNTED VESSELS       
                       (in thousands of U.S. Dollars)                       
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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

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


                                                                            
                                Three Months Ended     Three Months Ended   
                                   June 30, 2014          June 30, 2013     
                                    (unaudited)            (unaudited)      
                              ----------------------------------------------
                                    At Partnership's       At Partnership's 
                                  100%    Portion(1)     100%    Portion(1) 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net voyage revenues            154,330        71,534  149,178        68,893 
Vessel operating expenses       45,505        21,398   42,272        20,037 
Depreciation and amortization   22,970        11,643   21,284        10,837 
Gain on sale of vessels        (19,543)       (9,772)       -             - 
----------------------------------------------------------------------------
Income from vessel operations                                               
 of equity accounted vessels   105,398        48,265   85,622        38,019 
----------------------------------------------------------------------------
Interest expense - net         (19,888)       (9,250) (17,634)       (7,962)
Realized and unrealized (loss)                                              
 gain on derivative                                                         
 instruments                   (17,355)       (5,793)  26,693         8,926 
Other (expense) income - net      (501)         (298)     140           442 
----------------------------------------------------------------------------
Other items                    (37,744)      (15,341)   9,199         1,406 
----------------------------------------------------------------------------
                                                                            
Net income / equity income of                                               
 equity accounted vessels       67,654        32,924   94,821        39,425 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income from vessel operations  105,398        48,265   85,622        38,019 
Depreciation and amortization   22,970        11,643   21,284        10,837 
Gain on sale of vessel         (19,543)       (9,772)       -             - 
Direct finance lease payments                                               
 received in excess of revenue                                              
 recognized                      7,697         2,792    7,161         2,603 
Amortization of in-process                                                  
 revenue contracts              (4,002)       (2,034)  (8,386)       (4,297)
----------------------------------------------------------------------------
Cash flow from vessel                                                       
 operations from equity                                                     
 accounted vessels             112,520        50,894  105,681        47,162 
----------------------------------------------------------------------------

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


                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                         FORWARD LOOKING STATEMENTS                         
----------------------------------------------------------------------------
----------------------------------------------------------------------------

This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: future growth opportunities and expectations and the effect of any growth on the Partnership's results of operations; the expected delivery dates for the Partnership's newbuilding vessels and commencement of related time charter contracts; the Partnership's agreement to provide, through a new 50/50 joint venture with China LNG, six icebreaker LNG carriers for the Yamal LNG project including the timing of delivery and total cost to construct the vessels; the timing of the start-up of the Yamal LNG project and the expected total LNG production capacity of the project, if completed; the impact of the transactions with Yamal LNG and BG on the Partnership's future cash flows; anticipated financing for the four LNG carrier newbuildings for BG; the cost to construct the four LNG carrier newbuildings for BG; the total amount of the Partnership's forward fixed-rate revenues and the average remaining contract length on the Partnership's LNG fleet; and LNG/LPG shipping market fundamentals and projects.

The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: potential shipyard construction delays, newbuilding specification changes or cost overruns; availability of suitable LNG shipping, LPG shipping, floating storage and regasification and other growth project opportunities; changes in production of LNG or LPG, either generally or in particular regions; changes in trading patterns or timing of start-up of new LNG liquefaction and regasification projects significantly affecting overall vessel tonnage requirements; competitive dynamics in bidding for potential LNG, LPG or floating regasification projects; potential failure of the Yamal LNG Project to be completed for any reason, including due to lack of funding as a result of existing or future sanctions against Russia and Russian entities and individuals, which may affect partners in the project; potential delays or cancellation of the Yamal LNG project; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of long-term contracts of existing vessels in the Teekay LNG fleet; the inability of charterers to make future charter payments; the inability of the Partnership to renew or replace long-term contracts on existing vessels; the Partnership's ability to raise financing for its existing newbuildings or to purchase additional vessels or to pursue other projects; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2013. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

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

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DevOps is all about agility. However, you don't want to be on a high-speed bus to nowhere. The right DevOps approach controls velocity with a tight feedback loop that not only consists of operational data but also incorporates business context. With a business context in the decision making, the right business priorities are incorporated, which results in a higher value creation. In his session at DevOps Summit, Todd Rader, Solutions Architect at AppDynamics, discussed key monitoring techniques...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
One of the biggest challenges when developing connected devices is identifying user value and delivering it through successful user experiences. In his session at Internet of @ThingsExpo, Mike Kuniavsky, Principal Scientist, Innovation Services at PARC, described an IoT-specific approach to user experience design that combines approaches from interaction design, industrial design and service design to create experiences that go beyond simple connected gadgets to create lasting, multi-device exp...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect...
High-performing enterprise Software Quality Assurance (SQA) teams validate systems that are ready for use - getting most actively involved as components integrate and form complete systems. These teams catch and report on defects, making sure the customer gets the best software possible. SQA teams have leveraged automation and virtualization to execute more thorough testing in less time - bringing Dev and Ops together, ensuring production readiness. Does the emergence of DevOps mean the end of E...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...