Teekay LNG Cash Flow Increases

Teekay LNG Partners generated distributable cash flow of $60.1 million during the first quarter of 2014, compared to $53.7 million in the same quarter of the previous year.

The increase in distributable cash flow was primarily due to the Partnership’s February 2013 acquisition of a 50 percent interest in Exmar LPG, a liquefied petroleum gas carrier joint venture with Exmar N.V., and the Partnership’s acquisition and charter-back of two liquefied natural gas carriers from Awilco LNG in September and November 2013. The increase was partially offset by reduced cash flow as a result of the sale of two 2000-built conventional tankers, the Tenerife Spirit and the Algeciras Spirit, in December 2013 and February 2014, respectively.

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

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

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

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

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Press Release, May 15, 2014