6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

 

 

Date of Report: May 14, 2015

Commission file number 1-32479

 

 

TEEKAY LNG PARTNERS L.P.

(Exact name of Registrant as specified in its charter)

 

 

4th Floor, Belvedere Building

69 Pitts Bay Road

Hamilton, HM 08 Bermuda

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).

Yes  ¨            No   x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).

Yes  ¨            No   x

 

 

 


Item 1 — Information Contained in this Form 6-K Report

Attached as Exhibit 1 is a copy of an announcement of Teekay LNG Partners L.P. dated May 14, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

TEEKAY LNG PARTNERS L.P.

Date: May 14, 2015

By:

/s/ Peter Evensen

Peter Evensen

Chief Executive Officer and Chief Financial Officer

(Principal Financial and Accounting Officer)


LOGO

TEEKAY LNG PARTNERS L.P.

4th Floor, Belvedere Building, 69 Pitts Bay Road

Hamilton, HM 08, Bermuda

EARNINGS RELEASE

TEEKAY LNG PARTNERS

REPORTS FIRST QUARTER 2015 RESULTS

Highlights

 

   

Generated distributable cash flow of $66.2 million in the first quarter of 2015, up 10 percent from the same period of the previous year.

 

   

In February 2015, ordered one LNG carrier newbuilding and received options to order up to four additional LNG carriers.

 

   

In January 2015, the Exmar LPG joint venture took delivery of the fourth of its 12 LPG carrier newbuildings.

 

   

Total liquidity of approximately $370 million as at March 31, 2015, giving pro-forma effect to the USD equivalent $130 million Norwegian Kroner bond offering completed in early-May 2015.

Hamilton, Bermuda, May 14, 2015 – Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE: TGP), today reported the Partnership’s results for the quarter ended March 31, 2015. During the first quarter of 2015, the Partnership generated distributable cash flow(1) of $66.2 million, compared to $60.1 million in the same period of the prior year. The increase in distributable cash flow was primarily due to lower interest expense resulting from the December 2014 termination of capital leases and the subsequent refinancing of three 70 percent-owned liquefied natural gas (LNG) carriers, fewer scheduled dry-dockings and unscheduled off-hire days compared to the first quarter of 2014, the acquisition of the Norgas Napa liquefied petroleum gas (LPG) carrier in November 2014, and an increase in charter rates for two of the Partnership’s Suezmax tankers. These increases were partially offset by a grounding incident and related disputed off-hire for the 52 percent-owned Magellan Spirit during the first quarter of 2015, the scheduled expiration of the time-charter contract for the 52 percent-owned Methane Spirit in mid-March 2015 and the sale of a 2000 and 2001-built conventional tanker, including related restructuring charges, in February 2014 and August 2014, respectively.

On April 2, 2015, the Partnership declared a cash distribution of $0.70 per unit for the quarter ended March 31, 2015. The cash distribution will be paid on May 15, 2015 to all unitholders of record on April 13, 2015.

“The Partnership’s diversified portfolio of long-term fixed-rate contracts continued to generate stable cash flow, resulting in a positive coverage ratio for the quarter,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. Mr. Evensen continued, “With approximately $11.2 billion of forward fixed-rate revenues with an average duration of 13 years, the Partnership is largely insulated from short-term LNG shipping rate fluctuations and remains well-positioned for expected future growth. Spot and short-term LNG shipping rates continued to decline since the start of 2015 due to low Asian LNG prices, production outages at various liquefaction plants and the delivery of speculative LNG carriers ahead of corresponding LNG supply growth. With LNG liquefaction export growth expected to occur from the second half of 2015 onwards, mostly located in the U.S. and Australia, and the restart of certain existing liquefaction plants, the Partnership expects the supply/demand balance to tighten.”

“Our LPG business also continues to produce stable results, underpinned by strong realized rates and utilization in our LPG joint venture with Exmar,” Mr. Evensen continued. “During the quarter, the Partnership’s LPG joint venture took delivery of the fourth of 12 mid-size LPG carrier newbuildings, which will contribute to fleet renewal and future growth within our LPG carrier fleet.”

Mr. Evensen added, “Looking ahead, in addition to our current growth project pipeline of $3.4 billion, we continue to see strong long-term fundamentals for marine-based liquefied gas transportation, as reflected in our recently announced transaction to provide Shell with five MEGI LNG carrier newbuildings, for delivery onto fixed-rate contracts, commencing in 2017 and 2018.”

 

(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).

 

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Recent Transactions

LNG Carrier Newbuilding Order with Options

In February 2015, Teekay LNG entered into an agreement with Daewoo Shipbuilding & Marine Engineering Co., Ltd., (DSME) of South Korea for the construction of one additional 173,400 cubic meter (cbm) LNG carrier newbuilding, for a total fully built-up cost of approximately $225 million, with options to order up to four additional vessels. This vessel, and the optional newbuildings, will be constructed with M-type, Electronically Controlled, Gas Injection (MEGI) twin engines, which are designed to be significantly more fuel-efficient and have lower emission levels than engines currently used in LNG shipping. The Partnership intends to secure long-term contract employment for the vessel prior to its scheduled delivery in the fourth quarter of 2018.

Charter Contracts for Two 52 Percent-Owned LNG carriers

In January 2015, the Magellan Spirit, in which the Partnership has a 52 percent ownership interest through its joint venture with Marubeni Corporation (Teekay LNG-Marubeni Joint Venture), was involved in a grounding incident. The vessel was subsequently refloated and returned to service with a majority of the costs of the grounding expected to be covered by insurance, less an applicable deductible. As a result of this incident, the charterer claimed 59 days of vessel off-hire during the first quarter of 2015, which in the view of the charterer, permitted the charterer to terminate the charter contract, which it claimed to do effective in late-March 2015. The Teekay LNG-Marubeni Joint Venture has disputed both the charterer’s aggregate off-hire claims as well as the charterer’s ability to terminate the charter contract, which would have otherwise expired in September 2016. The Teekay LNG-Marubeni Joint Venture has obtained legal assistance in resolving this dispute.

In mid-March 2015, the charter contract for the Partnership’s 52 percent-owned LNG carrier Methane Spirit expired as scheduled.

The Teekay LNG-Marubeni Joint Venture has secured short-term employment, commencing in September 2015, for both the Magellan Spirit and the Methane Spirit at significantly lower charter rates and continues to seek medium-term to long-term employment for both vessels.

Other Committed Growth Projects

LNG Carriers

Cheniere MEGI LNG Carrier Newbuildings

In December 2012, Teekay LNG entered into an agreement with DSME of South Korea for the construction of two 173,400 cbm MEGI LNG carrier newbuildings for an aggregate fully built-up cost of approximately $420 million. In June 2013, the Partnership was awarded two five-year time-charter contracts with Cheniere Marketing LLC (Cheniere) for these vessels. Upon deliveries in the first half of 2016, the vessels will each commence five-year charters with Cheniere exporting LNG primarily from Cheniere’s Sabine Pass LNG liquefaction facility in Louisiana.

Shell MEGI LNG Carrier Newbuildings

In December 2014, Teekay LNG secured time-charter contracts with a wholly-owned subsidiary of Royal Dutch Shell plc (Shell) for five newbuilding LNG carriers. The new contracts will be serviced by two MEGI LNG carrier newbuildings ordered in 2013 and three MEGI LNG carrier newbuildings ordered in December 2014 which are being constructed for an aggregate fully built-up cost of approximately $1.1 billion. Upon deliveries, which are expected to occur from the second half of 2017 into 2018, the vessels will operate as part of Shell’s global LNG fleet under time-charters ranging in duration from six to eight years, plus extension options.

Four LNG Carrier Newbuildings for BG

In June 2014, Teekay LNG acquired from BG Group (BG) its 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 an aggregate estimated 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 time-charter contracts with BG for initial periods of 20 years, plus extension options.

 

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Through this transaction, the Partnership acquired a 30 percent ownership interest in the first two LNG carrier newbuildings, with the balance of ownership held by CETS Investment Management (HK) Co. Ltd. (CETS) (an affiliate of China National Offshore Oil Corporation (CNOOC)) and China LNG Shipping (Holdings) Limited (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.

Six Icebreaker LNG Carrier Newbuildings

In July 2014, Teekay LNG, through a 50/50 joint venture with China LNG, finalized agreements to provide six internationally-flagged icebreaker LNG carriers for the Yamal LNG Project in Northern Russia. The project, located on the Yamal Peninsula, is a joint venture between Novatek OAO, Total SA and China National Petroleum Corporation, and will consist of three LNG trains with a total capacity of 16.5 million metric tonnes per annum, currently scheduled to start-up in early-2018. LNG from the project is expected to be transported from Northern Russia to Europe and Asia. The Yamal LNG joint venture has publicly indicated 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.

The joint venture between Teekay LNG and China LNG will provide to the Yamal LNG project six 172,000 cbm ARC7 LNG carrier newbuildings to be constructed by DSME for an aggregate fully built-up cost of approximately $2.1 billion. Each vessel will be constructed with maximum 2.1 meter icebreaking capabilities in both the forward and reverse direction. The six vessels, which are scheduled to deliver between the first quarter of 2018 and the first quarter of 2020, will operate under time-charter contracts until December 31, 2045, plus extension options.

LPG Carriers

Exmar LPG Carrier Newbuildings

Exmar LPG BVBA, the Partnership’s 50/50 LPG joint venture with Belgium-based Exmar NV, currently has eight mid-size gas carrier newbuildings under construction, which are scheduled to deliver between the third quarter of 2015 and the first quarter of 2018. The eight LPG carrier newbuildings have an aggregate cost of approximately $345 million, of which the Partnership’s 50 percent portion is approximately $173 million. Upon deliveries, four of the LPG carrier newbuildings will commence charter contracts ranging from three to ten years.

 

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Financial Summary

The Partnership reported adjusted net income attributable to the partners(1) of $43.9 million for the quarter ended March 31, 2015, compared to $41.8 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 $19.1 million and decreasing net income by $3.6 million for the three months ended March 31, 2015 and 2014, respectively, primarily relating to unrealized gains and losses on derivative instruments and foreign currency exchange gains and losses, as detailed in Appendix A to this release. Including these items, the Partnership reported net income attributable to the partners, on a GAAP basis, of $63.1 million and $38.2 million for the three months ended March 31, 2015 and 2014, respectively.

Adjusted net income attributable to the partners for the quarter ended March 31, 2015 increased from the prior year, primarily due to the termination of capital leases and the subsequent refinancing at a lower interest rate of three LNG carriers owned by the Partnership’s RasGas II Joint Venture in December 2014, scheduled dry-dockings for two of the Partnership’s vessels and unscheduled off-hire days for one of the Partnership’s LNG carriers for repairs during same quarter of the prior year, and the acquisition of one LPG carrier from Skaugen, the Norgas Napa, in November 2014, partially offset by the Magellan Spirit grounding incident and related disputed off-hire during the first quarter of 2015, the scheduled expiration of the time-charter contract for the Methane Spirit in mid-March 2015 and the sale of two conventional tankers in February 2014 and August 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 2, 3 and 4 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.

 

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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
March 31, 2015
    Three Months Ended
March 31, 2014
 
     (unaudited)     (unaudited)  

(in thousands of U.S. Dollars)

   Liquefied
Gas
Segment
    Conventional
Tanker
Segment
    Total     Liquefied
Gas
Segment
    Conventional
Tanker
Segment
    Total  

Net voyage revenues(i)

     75,934       21,074       97,008       74,141       26,016       100,157  

Vessel operating expenses

     (14,306     (7,328     (21,634     (14,714     (9,542     (24,256

Depreciation and amortization

     (18,306     (5,263     (23,569     (18,113     (5,997     (24,110
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CFVO from consolidated vessels(ii)

  60,704     12,001     72,705     58,565     12,869     71,434  

CFVO from equity accounted vessels(iii)

  46,304     —       46,304     48,140     —       48,140  

Total CFVO(ii)(iii)

  107,008     12,001     119,009     106,705     12,869     119,574  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 included in voyage revenues, (c) adjustments for direct financing leases to a cash basis, realized gains or losses on the Toledo Spirit derivative contract and the revenue for two Suezmax tankers recognized on a cash basis. CFVO is included because certain investors use this measure to assess a company’s financial performance. CFVO is not required by GAAP and should not be considered as an alternative to net income, equity income or any other indicator of the Partnership’s performance required by GAAP. Please see Appendix E for a reconciliation of CFVO from consolidated vessels (a non-GAAP measure) as used in this release to the most directly comparable GAAP financial measure.

(iii)

The Partnership’s equity accounted investments for the three months ended March 31, 2015 and 2014 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 NV, 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); the Partnership’s 30 percent interest in two LNG carrier newbuildings and 20 percent interest in two LNG carrier newbuildings for BG; the Partnership’s 50 percent interest in six LNG newbuildings in the joint venture between the Partnership and China LNG; and the Partnership’s 50 percent interest in Exmar LPG BVBA, which currently owns and charters-in 24 vessels in the LPG carrier segment, including eight 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 $60.7 million in the first quarter of 2015 compared to $58.6 million in the same quarter of the prior year. The increase was primarily due to the acquisition of the LPG carrier, Norgas Napa, in November 2014 and fewer off-hire days during the first quarter of 2015, compared to the same quarter of the prior year.

Cash flow from vessel operations from the Partnership’s equity accounted vessels in the Liquefied Gas segment decreased to $46.3 million in the first quarter of 2015 from $48.1 million in the same quarter of the prior year. The decrease was primarily due to the grounding incident and related off-hire dispute involving the Magellan Spirit during the first quarter of 2015 and the scheduled expiration of the time-charter contract for the Methane Spirit in mid-March 2015. Both the Magellan Spirit and Methane Spirit are owned through the Partnership’s 52 percent interest in the Teekay LNG-Marubeni Joint Venture. The aforementioned decreases were partially offset by increased cash flows from the Partnership’s 50 percent-owned LPG joint venture, Exmar LPG BVBA, as a result of higher charter rates from the addition of four LPG newbuildings delivered during 2014 and early 2015, net of the sale of four older LPG carriers during 2014.

Conventional Tanker Segment

Cash flow from vessel operations from the Partnership’s Conventional Tanker segment decreased to $12.0 million in the first quarter of 2015 compared to $12.9 million in the same quarter of the prior year. The decrease was primarily due to the sale of two Suezmax tankers, the 2000-built Algeciras Spirit and the 2001-built Huelva Spirit, in February 2014 and August 2014, respectively.

 

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Teekay LNG’s Fleet

The following table summarizes the Partnership’s fleet as of May 1, 2015:

 

     Number of Vessels  
     Owned
Vessels
    In-Chartered
Vessels
    Newbuildings     Total  

LNG Carrier Fleet

     29 (i)      —          19 (i)      48   

LPG/Multigas Carrier Fleet

     19 (ii)      3 (iii)      8 (iii)      30   

Conventional Tanker Fleet

     8        —          —          8   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  56      3      27      86   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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.

Liquidity and Continuous Offering Program Update

In 2013, the Partnership implemented a continuous offering program (COP) under which the Partnership may issue new common units at market prices up to a maximum aggregate amount of $100 million. Since initiation of the program, the Partnership has sold an aggregate of 1,334,534 common units under the COP, generating net proceeds of approximately $53.4 million (including the general partner’s 2 percent contribution and net of offering costs) of which $6.8 million was settled in the first quarter of 2015.

In May 2015, the Partnership issued NOK 1,000 million in senior unsecured bonds in the Norwegian bond market that mature in May 2020. The aggregate principal amount of the bonds was equivalent to approximately USD 130 million and all interest and principal payments have been swapped into U.S. Dollars at a fixed rate of 5.92 percent. The net proceeds from the bonds are expected to be used for general partnership purposes, including funding of newbuilding installments. The Partnership is applying to list the bonds on the Oslo Stock Exchange.

As of March 31, 2015, the Partnership had total liquidity of $239.6 million (comprised of $106.4 million in cash and cash equivalents and $133.2 million in undrawn credit facilities). Giving pro-forma effect to the $130 million of net proceeds from the Partnership’s NOK bond offering completed in early-May 2015, the Partnership’s total liquidity at March 31, 2015 would have been approximately $370 million.

 

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2014 Audited Financial Statements

Teekay LNG Partners L.P. filed its 2014 Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (SEC) on April 23, 2015. Copies are available on Teekay LNG’s website, under “Investors – Teekay LNG Partners L.P. – Financials & Presentations”, at www.teekay.com. Unitholders may request a printed copy of this annual report, including the complete audited financial statements free of charge by contacting Teekay LNG’s Investor Relations.

Conference Call

The Partnership plans to host a conference call on Friday, May 15, 2015 at 11:00 a.m. (ET) to discuss the results for the first quarter of 2015. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

 

   

By dialing (800) 524-8950 or (416) 260-0113, if outside North America, and quoting conference ID code 2036708.

 

   

By accessing the webcast, which will be available on Teekay LNG’s website at www.teekay.com (the archive will remain on the web site for a period of 30 days).

A supporting First Quarter 2015 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.

The conference call will be recorded and made available until Friday, May 29, 2015. 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 2036708.

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 48 LNG carriers (including one LNG regasification unit and 19 newbuildings), 30 LPG/Multigas carriers (including three in-chartered LPG carriers and eight newbuildings) and eight 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”.

For Investor Relations enquiries contact:

Ryan Hamilton

Tel: +1 (604) 609-6442

Website: www.teekay.com

 

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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  
     March 31,
2015
    December 31,
2014
    March 31,
2014
 
     (unaudited)     (unaudited)     (unaudited)  

Voyage revenues

     97,326       99,339       101,490  

Voyage expenses

     (318     (373     (1,333

Vessel operating expenses

     (21,634     (23,694     (24,256

Depreciation and amortization

     (23,569     (23,178     (24,110

General and administrative

     (6,708     (5,619     (6,408

Restructuring recovery(1)

     —         242       —    
  

 

 

   

 

 

   

 

 

 

Income from vessel operations

  45,097     46,717     45,383  

Equity income(2)

  18,058     23,471     20,373  

Interest expense

  (10,104   (15,768   (14,831

Interest income

  734     302     648  

Realized and unrealized loss on derivative instruments(3)

  (14,032   (23,114   (7,521

Foreign exchange gain (loss)(4)

  25,930     5,769     (779

Other income

  443     200     218  
  

 

 

   

 

 

   

 

 

 

Net income before tax recovery (expense)

  66,126     37,577     43,491  

Income tax recovery (expense)

  225     (6,427   (395
  

 

 

   

 

 

   

 

 

 

Net income

  66,351     31,150     43,096  
  

 

 

   

 

 

   

 

 

 

Other comprehensive loss:

Unrealized loss on qualifying cash flow hedging instrument in equity accounted joint ventures net of amounts reclassified to equity income, net of tax

  (611   (801   (552
  

 

 

   

 

 

   

 

 

 

Comprehensive income

  65,740     30,349     42,544  
  

 

 

   

 

 

   

 

 

 

Non-controlling interest in net income

  3,283     (1,806   4,850  

General Partner’s interest in net income

  8,642     8,035     7,155  

Limited partners’ interest in net income

  54,426     24,921     31,091  

• Basic

  78,514,335     77,470,251     74,199,534  

• Diluted

  78,553,194     77,514,907     74,226,654  

Total number of common units outstanding at end of period

  78,537,584     78,353,354     74,211,160  
  

 

 

   

 

 

   

 

 

 

 

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(1)

Restructuring recovery primarily relates to an adjustment on the restructuring provision on the sale of the Huelva Spirit conventional tanker in August 2014.

 

(2)

Equity income includes unrealized gains/losses on non-designated derivative instruments, any ineffectiveness for derivative instruments designated as hedges for accounting purposes and loss on sale of vessel as detailed in the table below:

 

     Three Months Ended  
     March 31,
2015
     December 31,
2014
     March 31,
2014
 

Equity income

     18,058        23,471        20,373  

Proportionate share of unrealized losses on non-designated derivative instruments

     1,126        1,257        1,053  

Proportionate share of ineffective portion of hedge accounted interest rate swap

     394        —          —    

Proportionate share of loss on sale of vessel

     —          —          966  
  

 

 

    

 

 

    

 

 

 

Equity income excluding unrealized gains/losses on designated and non-designated derivative instruments and loss on sale of vessel

  19,578     24,728     22,392  
  

 

 

    

 

 

    

 

 

 

 

(3)

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

 

     Three Months Ended  
     March 31,
2015
     December 31,
2014
     March 31,
2014
 

Realized losses relating to:

        

Interest rate swaps

     (7,305      (10,050      (9,244

Interest rate swap agreements termination

     —          (2,319      —    

Toledo Spirit time-charter derivative contract

     (570      (637      —    
  

 

 

    

 

 

    

 

 

 
  (7,875   (13,006   (9,244
  

 

 

    

 

 

    

 

 

 

Unrealized (losses) gains relating to:

Interest rate swaps

  (4,357   (8,308   4,023  

Toledo Spirit time-charter derivative contract

  (1,800   (1,800   (2,300
  

 

 

    

 

 

    

 

 

 
  (6,157   (10,108   1,723  
  

 

 

    

 

 

    

 

 

 

Total realized and unrealized losses on derivative instruments

  (14,032   (23,114   (7,521
  

 

 

    

 

 

    

 

 

 

 

(4)

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 gain (loss) 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 gain (loss) also includes unrealized (losses) gains relating to the change in fair value of such derivative instruments, partially offset by unrealized gains (losses) on the revaluation of the NOK bonds as detailed in the table below:

 

     Three Months Ended  
     March 31,
2015
    December 31,
2014
    March 31,
2014
 

Realized losses on cross-currency swaps

     (1,401     (1,124     (365

Unrealized (losses) gains on cross-currency swaps

     (17,045     (37,946     3,917  

Unrealized gains (losses) on revaluation of NOK bonds

     16,216       34,277       (3,653

 

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TEEKAY LNG PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. Dollars)

 

     As at
March 31,

2015
    As at
December 31,

2014
 
     (unaudited)     (unaudited)  

ASSETS

    

Current

    

Cash and cash equivalents

     106,410       159,639  

Restricted cash – current

     8,999       3,000  

Accounts receivable

     12,536       11,265  

Prepaid expenses

     5,390       3,975  

Current portion of net investments in direct financing leases

     19,350       15,837  

Advances to affiliates

     17,254       11,942  
  

 

 

   

 

 

 

Total current assets

  169,939     205,658  
  

 

 

   

 

 

 

Restricted cash – long-term

  47,633     42,997  

Vessels and equipment

At cost, less accumulated depreciation

  1,641,227     1,659,807  

Vessels under capital leases, at cost, less accumulated depreciation

  90,500     91,776  

Advances on newbuilding contracts

  298,362     237,647  
  

 

 

   

 

 

 

Total vessels and equipment

  2,030,089     1,989,230  
  

 

 

   

 

 

 

Investment in and advances to equity accounted joint ventures

  851,807     891,478  

Net investments in direct financing leases

  661,764     666,658  

Other assets

  42,897     44,679  

Derivative assets

  —       441  

Intangible assets – net

  85,433     87,646  

Goodwill – liquefied gas segment

  35,631     35,631  
  

 

 

   

 

 

 

Total assets

  3,925,193     3,964,418  
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

Current

Accounts payable

  1,200     643  

Accrued liabilities

  31,161     39,037  

Unearned revenue

  18,271     16,565  

Current portion of long-term debt

  117,677     157,235  

Current obligations under capital lease

  62,456     4,422  

Current portion of in-process contracts

  8,084     4,736  

Current portion of derivative liabilities

  36,562     57,678  

Advances from affiliates

  52,749     43,205  
  

 

 

   

 

 

 

Total current liabilities

  328,160     323,521  
  

 

 

   

 

 

 

Long-term debt

  1,735,394     1,766,889  

Long-term obligations under capital lease

  —       59,128  

Long-term unearned revenue

  32,561     33,938  

Other long-term liabilities

  73,546     74,734  

In-process contracts

  28,246     32,660  

Derivative liabilities

  170,055     126,177  
  

 

 

   

 

 

 

Total liabilities

  2,367,962     2,417,047  
  

 

 

   

 

 

 

Equity

Limited partners

  1,489,685     1,482,647  

General Partner

  56,658     56,508  

Accumulated other comprehensive loss

  (2,014   (1,403
  

 

 

   

 

 

 

Partners’ equity

  1,544,329     1,537,752  

Non-controlling interest (1)

  12,902     9,619  
  

 

 

   

 

 

 

Total equity

  1,557,231     1,547,371  
  

 

 

   

 

 

 

Total liabilities and total equity

  3,925,193     3,964,418  
  

 

 

   

 

 

 

 

(1)

Non-controlling interest includes a 30 percent equity interest in the RasGas II Joint Venture (which owns three LNG carriers); a 31 percent equity interest in Teekay BLT Corporation (a joint venture which owns two LNG carriers); and a one percent equity interest in two LNG carriers (Arctic Spirit and Polar Spirit), the Excalibur joint venture (which owns one LNG carrier), six LPG/Multigas carriers that are chartered out to Skaugen, and two LNG carriers chartered out to Awilco LNG ASA (Awilco), which in each case represents the ownership interest not owned by the Partnership.

 

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TEEKAY LNG PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. Dollars)

 

     Three Months Ended  
     March 31,
2015
    March 31,
2014
 
     (unaudited)     (unaudited)  

Cash and cash equivalents provided by (used for)

    

OPERATING ACTIVITIES

    

Net income

     66,351       43,096  

Non-cash items:

    

Unrealized loss (gain) on derivative instruments

     6,157       (1,723

Depreciation and amortization

     23,569       24,110  

Unrealized foreign currency exchange (gain) loss

     (29,176     332  

Equity income, net of dividends received of $45,000 (2014 – nil)

     26,942       (20,373

Amortization of deferred debt issuance costs and other

     262       285  

Change in operating assets and liabilities

     (6,097     1,493  

Expenditures for dry docking

     (511     (5,821
  

 

 

   

 

 

 

Net operating cash flow

  87,497     41,399  
  

 

 

   

 

 

 

FINANCING ACTIVITIES

Proceeds from issuance of long-term debt

  38,967     3,648  

Scheduled repayments of long-term debt

  (21,733   (21,421

Prepayments of long-term debt

  (40,000   (5,000

Scheduled repayments of capital lease obligations

  (1,094   (1,779

Proceeds from equity offering, net of offering costs

  6,753     —    

Repayments of advances from equity accounted joint ventures

  13,987     —    

Increase in restricted cash

  (12,146   (564

Cash distributions paid

  (63,609   (58,895

Novation of derivative liabilities

  —       2,985  

Dividends paid to non-controlling interest

  —       (7,206
  

 

 

   

 

 

 

Net financing cash flow

  (78,875   (88,232
  

 

 

   

 

 

 

INVESTING ACTIVITIES

Additional capital contributions in equity accounted investments

  (1,533   —    

Receipts from direct financing leases

  1,381     3,796  

Expenditures for vessels and equipment

  (61,699   (1,620
  

 

 

   

 

 

 

Net investing cash flow

  (61,851   2,176  
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

  (53,229   (44,657

Cash and cash equivalents, beginning of the period

  159,639     139,481  
  

 

 

   

 

 

 

Cash and cash equivalents, end of the period

  106,410     94,824  
  

 

 

   

 

 

 

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX A – SPECIFIC ITEMS AFFECTING NET INCOME

(in thousands of U.S. Dollars)

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

 

     Three Months Ended  
     March 31,
2015
     March 31,
2014
 
     (unaudited)      (unaudited)  

Net income – GAAP basis

     66,351        43,096  

Less:

     

Net income attributable to non-controlling interest

     (3,283      (4,850
  

 

 

    

 

 

 

Net income attributable to the partners

  63,068     38,246  

Add (subtract) specific items affecting net income:

Unrealized foreign currency exchange (gains) losses(1)

  (27,262   306  

Unrealized losses (gains) from derivative instruments(2)

  6,157     (1,723

Unrealized losses from non-designated derivative instruments and other items from equity accounted investees(3)

  1,520     2,019  

Non-controlling interests’ share of items above(4)

  436     2,954  
  

 

 

    

 

 

 

Total adjustments

  (19,149   3,556  
  

 

 

    

 

 

 

Adjusted net income attributable to the partners

  43,919     41,802  
  

 

 

    

 

 

 

 

(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 (gains) losses on the cross-currency swaps economically hedging the Partnership’s NOK bonds 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 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 derivative instruments designated as hedges for accounting purposes within the Partnership’s equity-accounted investments. Also reflects the Partnership’s proportionate share of a loss on the sale of a vessel from the Exmar LPG BVBA joint venture during the three months ended March 31, 2014. See note 2 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 consolidated non-wholly-owned subsidiaries. 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.

 

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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
Ended

March 31,
2015
     Three Months
Ended

March 31,
2014
 
     (unaudited)      (unaudited)  

Net income:

     66,351        43,096  

Add:

     

Depreciation and amortization

     23,569        24,110  

Partnership’s share of equity accounted joint ventures’ DCF net of estimated maintenance and capital expenditures(1)

     25,209        26,300  

Unrealized loss (gain) on derivatives

     6,157        (1,723

Direct finance lease payments received in excess of revenue recognized

     4,401        1,828  

Distributions relating to equity financing of newbuildings

     3,916        3,886  

Less:

     

Unrealized foreign exchange (gain) loss

     (27,262      306  

Estimated maintenance capital expenditures

     (11,662      (11,504

Equity income

     (18,058      (20,373

Deferred income tax and other non-cash items

     (1,068      (2,193
  

 

 

    

 

 

 

Distributable Cash Flow before Non-controlling interest

  71,553     63,733  

Non-controlling interests’ share of DCF before estimated maintenance capital expenditures

  (5,352   (3,604
  

 

 

    

 

 

 

Distributable Cash Flow

  66,201     60,129  
  

 

 

    

 

 

 

 

(1)

The estimated maintenance capital expenditures relating to the Partnership’s share of equity accounted joint ventures for the three months ended March 31, 2015 and 2014 were $7.0 million and $7.9 million, respectively. The decrease in estimated maintenance capital expenditures is due to the sales of four older LPG carriers in 2014 in the Exmar LPG BVBA joint venture.

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX C – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

NET VOYAGE REVENUES

(in thousands of U.S. Dollars)

Description of Non-GAAP Financial Measure – Net Voyage Revenues

Net voyage revenues represents voyage revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, 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 March 31, 2015  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker Segment
     Total  

Voyage revenues

     75,934        21,392        97,326  

Voyage expenses

     —           (318      (318
  

 

 

    

 

 

    

 

 

 

Net voyage revenues

  75,934     21,074     97,008  
  

 

 

    

 

 

    

 

 

 
     Three Months Ended March 31, 2014  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker Segment
     Total  

Voyage revenues

     74,964        26,526        101,490  

Voyage expenses

     (823      (510      (1,333
  

 

 

    

 

 

    

 

 

 

Net voyage revenues

  74,141     26,016     100,157  
  

 

 

    

 

 

    

 

 

 

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX D – SUPPLEMENTAL SEGMENT INFORMATION

(in thousands of U.S. Dollars)

 

     Three Months Ended March 31, 2015  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker

Segment
     Total  

Net voyage revenues (See Appendix C)

     75,934        21,074        97,008  

Vessel operating expenses

     (14,306      (7,328      (21,634

Depreciation and amortization

     (18,306      (5,263      (23,569

General and administrative

     (5,325      (1,383      (6,708
  

 

 

    

 

 

    

 

 

 

Income from vessel operations

  37,997     7,100     45,097  
  

 

 

    

 

 

    

 

 

 
     Three Months Ended March 31, 2014  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker

Segment
     Total  

Net voyage revenues (See Appendix C)

     74,141        26,016        100,157  

Vessel operating expenses

     (14,714      (9,542      (24,256

Depreciation and amortization

     (18,113      (5,997      (24,110

General and administrative

     (4,748      (1,660      (6,408
  

 

 

    

 

 

    

 

 

 

Income from vessel operations

  36,566     8,817     45,383  
  

 

 

    

 

 

    

 

 

 

 

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TEEKAY LNG PARTNERS L.P.

APPENDIX E – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CASH FLOW FROM VESSEL OPERATIONS

FROM CONSOLIDATED VESSELS

(in thousands of U.S. Dollars)

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

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

 

     Three Months Ended March 31, 2015  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker Segment
     Total  

Income from vessel operations (See Appendix D)

     37,997        7,100        45,097  

Depreciation and amortization

     18,306        5,263        23,569  

Amortization of in-process revenue contracts included in voyage revenues

     —          (278      (278

Direct finance lease payments received in excess of revenue recognized

     4,401        —          4,401  

Realized loss on Toledo Spirit derivative contract

     —          (570      (570

Cash flow adjustment for two Suezmax tankers(1)

     —          486        486  
  

 

 

    

 

 

    

 

 

 

Cash flow from vessel operations from consolidated vessels

  60,704     12,001     72,705  
  

 

 

    

 

 

    

 

 

 
     Three Months Ended March 31, 2014  
     (unaudited)  
     Liquefied Gas
Segment
     Conventional
Tanker Segment
     Total  

Income from vessel operations (See Appendix D)

     36,566        8,817        45,383  

Depreciation and amortization

     18,113        5,997        24,110  

Amortization of in-process revenue contracts included in voyage revenues

     —          (278      (278

Direct finance lease payments received in excess of revenue recognized

     3,886        —          3,886  

Cash flow adjustment for two Suezmax tankers(1)

     —          (1,667      (1,667
  

 

 

    

 

 

    

 

 

 

Cash flow from vessel operations from consolidated vessels

  58,565     12,869     71,434  
  

 

 

    

 

 

    

 

 

 

 

  (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 ending September 30, 2014. 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.

 

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

 

     Three Months Ended
March 31, 2015
     Three Months Ended
March 31, 2014
 
     (unaudited)      (unaudited)  
     At
100%
     Partnership’s
Portion(1)
     At
100%
     Partnership’s
Portion(1)
 

Net voyage revenues

     139,031        63,745        147,718        68,358  

Vessel operating expenses

     (39,686      (18,562      (44,550      (20,779

Depreciation and amortization

     (23,477      (11,904      (21,918      (11,111

Loss on sale of vessel

     —          —          (1,931      (966
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from vessel operations of equity accounted vessels

  75,868     33,279     79,319     35,502  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest expense – net

  (20,219   (9,456   (20,302   (9,452

Realized and unrealized loss on derivative instruments

  (17,262   (5,736   (17,133   (5,825

Other income (expense) – net

  690     (29   377     148  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income / equity income of equity accounted vessels

  39,077     18,058     42,261     20,373  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from vessel operations

  75,868     33,279     79,319     35,502  

Depreciation and amortization

  23,477     11,904     21,918     11,111  

Loss on sale of vessel

  —       —       1,931     966  

Direct finance lease payments received in excess of revenue recognized

  8,584     3,134     7,462     2,707  

Amortization of in-process revenue contracts

  (3,959   (2,013   (4,225   (2,146
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash flow from vessel operations from equity accounted vessels

  103,970     46,304     106,405     48,140  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

The Partnership’s equity accounted vessels for the three months ended March 31, 2015 and 2014 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 the Teekay LNG-Marubeni Joint Venture, which owns six LNG carriers; the Partnership’s 50 percent interest in Exmar LPG BVBA, which owns and in-charters 24 vessels, including eight newbuildings, as at March 31, 2015, and 26 vessels, including 12 newbuildings, as at March 31, 2014; the Partnership’s 30 percent interest in two LNG carrier newbuildings and 20 percent interest in two LNG carrier newbuildings for BG acquired in June 2014; and the Partnership’s 50 percent interest in six LNG newbuildings in the joint venture between the Partnership and China LNG acquired in July 2014.

 

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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: the Partnership’s expected future revenues and ability of its portfolio of fixed-rate contracts to largely insulate it from fluctuations in spot LNG shipping rates; the Partnership’s current project pipeline; the long-term fundamentals in the liquefied gas industry, including expected future growth in LNG supply and LNG vessel supply/demand balance; the delivery timing and total cost of the newbuilding vessels, either directly ordered by the Partnership or through its joint venture subsidiaries, the commencement of related time charter contracts and the effect of these contracts on the Partnership’s distributable cash flows; future growth opportunities and the effect on the Partnership’s operational results and distributable cash flow; expected fuel-efficiency and emission levels associated with the MEGI engines; the Partnership’s ability to secure charter contract employment for currently unchartered vessels prior to their deliveries; the timing and certainty of exercising any of the Partnership’s existing options to order up to four additional MEGI LNG carrier newbuildings; the outcome of the Partnership’s dispute over the Magellan Spirit offhire incident and claimed charter contract termination; and the timing of the start-up of the Yamal LNG project and the expected total LNG production capacity of the project, if completed. 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 on time or at all for any reason, including due to lack of funding as a result of existing or future sanctions against Russian entities and individuals, which may affect partners in the 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; actual performance of the MEGI engines; failure by the Partnership to secure charter contracts for unchartered vessels; factors affecting the outcome of the Partnership’s dispute over the Magellan Spirit; the Partnership’s ability to raise financing for its existing newbuildings or to purchase additional vessels or to pursue other projects; actual capital expenditures under the Partnership’s project pipeline; 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, 2014. 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.

 

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