Teekay LNG Posts Q1 Results (Bermuda)

Teekay GP LLC, the general partner of Teekay LNG Partners L.P. today reported its results for the quarter ended March 31, 2011.

During the first quarter of 2011, the Partnership generated distributable cash flow of $39.1 million, compared to $33.9 million in the same quarter of the previous year. The increase primarily reflects the incremental distributable cash flow resulting from a full quarter of revenue from the Partnership’s acquisition of three vessels in March 2010, the Partnership’s November 2010 acquisition of a 50 percent interest in two LNG carriers, and reduced off-hire days relating to scheduled drydockings.

On April 21, 2011, the Partnership declared a cash distribution of $0.63 per unit for the quarter ended March 31, 2011. The cash distribution is payable on May 13, 2011 to all unitholders of record on May 6, 2011.

“The Partnership’s first quarter results reflect the stable cash flows generated by our fixed-rate contract portfolio of vessels and include a full quarter contribution from the Exmar vessel interests we acquired in November 2010,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “We look forward to further distributable cash flow growth as the Partnership takes delivery of new gas carriers supported by long-term fixed-rate contracts in the near future, including the 33 percent interest in four Angola LNG carrier newbuildings which will begin delivering in the second half of 2011.”

Mr. Evensen continued, “After a period of slower growth in the LNG sector, activity is picking up with an increasing number of projects for both traditional LNG transportation and floating storage and regasification units, or FSRUs, coming up for tender. In addition, with its substantial level of available liquidity, the Partnership will continue to evaluate opportunities to acquire high quality third party assets servicing long-term contracts, which should further drive distributable cash flow growth.”

Teekay LNG’s Fleet

The following table summarizes the Partnership’s fleet as of May 1, 2011:

Future Projects

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

Skaugen LPG/Multigas

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

Angola LNG

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

Financial Summary

The Partnership reported adjusted net income attributable to the partners of $25.9 million for the quarter ended March 31, 2011, compared to $21.4 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items which had the net effect of decreasing net income by $0.9 million and increasing net income by $7.1 million for the three months ended March 31, 2011 and 2010, respectively. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $25.0 million and $28.5 million for the three months ended March 31, 2011 and 2010, respectively.

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

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

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Source: Teekay LNG, May 12, 2011;