Bermuda: Teekay Offshore GP Acquires Remaining 49 pct Interest in OPCO for $390 Million

Teekay Offshore GP L.L.C., the general partner of Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) announced today that the Partnership has agreed to acquire the remaining 49 percent interest in Teekay Offshore Operating L.P. (OPCO) from Teekay Corporation (Teekay) for a total purchase price of $390 million.

OPCO currently operates a fleet of 33 shuttle tankers (including five chartered-in vessels), four Floating Storage and Offtake (FSO) units, nine double-hull conventional oil tankers and two lightering vessels. Upon the completion of this transaction, Teekay Offshore will own 100 percent of OPCO, including all general partner interests.

Teekay Offshore will finance the acquisition through a combination of $175 million in cash and by issuing approximately 7.6 million new common units (and associated general partner interest) to Teekay Corporation. The number of common units issued to Teekay was determined based on the 10-day volume-weighted average price, or $27.86 per unit, preceding the date of Teekay’s offer to sell its remaining 49 percent interest in OPCO to the Partnership. The Partnership expects to complete this acquisition during the week of March 7, 2011.

The Board of Directors of the Partnership’s general partner and its Conflicts Committee have approved the transaction. The Conflicts Committee retained independent legal and financial advisors to assist it in evaluating the transaction.

“We are pleased to acquire the remaining 49 percent of OPCO which we expect will be accretive to the Partnership’s distributable cash flow per unit and will also simplify its ownership structure,” commented Peter Evensen, Chief Executive Officer of Teekay Offshore GP L.L.C.. “As the world’s largest owner and operator of shuttle tankers, the outlook for OPCO is positive due to increased offshore oil production activity in our core markets of the North Sea and Brazil, which is augmented by higher oil prices.” Mr. Evensen continued, “In addition, with 100 percent ownership of OPCO, the Partnership will fully benefit from the shuttle tanker contract amendments completed in 2010, which increased the amount and stability of OPCO’s cash flows.”

About Teekay Offshore

Teekay Offshore Partners L.P., a publicly-traded master limited partnership formed by Teekay Corporation (NYSE: TK), is an international provider of marine transportation, production and storage services to the offshore oil industry. Following the acquisition of the remaining interests in OPCO, Teekay Offshore will own a 100 percent interest in and control Teekay Offshore Operating L.P., a Marshall Islands limited partnership with a fleet of 33 shuttle tankers (including five chartered-in vessels), four Floating Storage and Offtake (FSO) units, nine double-hull conventional tankers and two lightering vessels. Teekay Offshore Operating L.P has also agreed to acquire one newbuilding shuttle tanker from Teekay Corporation upon the commencement of its time-charter contract in 2011. In addition, Teekay Offshore has direct ownership interests in two shuttle tankers, two FSO units, and two Floating Production, Storage and Offloading (FPSO) units. Teekay Offshore also has rights to participate in certain other FPSO and FSO opportunities of Teekay Corporation.

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Source:Teekay Offshore, March  3, 2011;