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

For the quarterly period ended September 30, 2005

Commission file number 1- 32479

TEEKAY LNG PARTNERS L.P.

(Exact name of Registrant as specified in its charter)

TK House
Bayside Executive Park
West Bay Street & Blake Road
P.O. Box AP-59212, Nassau, Bahamas
(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   þ		Form 40-F   o

     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   o		No   þ

     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   o		No   þ

     Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes   o		No   þ

     If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-                         

 

 

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005

INDEX

		PAGE
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Report of Independent Registered Public Accounting Firm			3
Unaudited Consolidated Statements of Income (Loss) for the three and nine months ended September 30, 2005 and 2004			4
Unaudited Consolidated Balance Sheets as at September 30, 2005 and December 31, 2004			5
Unaudited Consolidated Statement of Partners’ Equity/Stockholder Deficit for the nine months ended September 30, 2005			6
Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004			7
Notes to the Unaudited Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3. Quantitative and Qualitative Disclosures about Market Risk			37
PART II: OTHER INFORMATION			39
SIGNATURES			40

ITEM 1 — FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Unitholders of
Teekay LNG Partners L.P.

We have reviewed the consolidated balance sheet of Teekay LNG Partners L.P. (successor to Teekay Luxembourg S.a.r.l) and subsidiaries (or the Partnership) as of September 30, 2005 and the related consolidated statements of income (loss) for the three and nine months ended September 30, 2005 and 2004 aggregated as follows:

Three months ended September 30, 2005

•

July 1 to September 30, 2005

Three months ended September 30, 2004

•

July 1 to September 30, 2004

Nine months ended September 30, 2005

•		January 1 to May 9, 2005
•		May 10 to September 30, 2005

Nine months ended September 30, 2004

•		January 1 to April 30, 2004
•		May 1 to September 30, 2004

We have also reviewed the consolidated statements of cash flows for the nine months ended September 30, 2005 and 2004, and the changes in partners’ equity/stockholder deficit for the nine months ended September 30, 2005 aggregated as follows:

Nine months ended September 30, 2005

•		December 31, 2004 to May 9, 2005
•		May 10 to September 30, 2005

These financial statements are the responsibility of the Partnership’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Teekay Luxembourg S.a.r.l (predecessor of Teekay LNG Partners L.P.) and subsidiaries as of December 31, 2004, the related consolidated statements of loss, changes in stockholders’ deficit and cash flows for the nine months ended December 31, 2004 (not presented herein) and in our report dated February 28, 2005, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2004, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Vancouver, Canada,		/s/ ERNST & YOUNG LLP
November 2, 2005 (except Note 16 which is as of November 23, 2005)		Chartered Accountants

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES (Note 1)
(Successor to Teekay Luxembourg S.a.r.l.)
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands of U.S. dollars, except unit and per unit data)

										Nine Months Ended
										September 30,
		Three Months Ended
		September 30,								2005								2004
										January 1				May 10				January 1				May 1
										to				to				to				to
										May 9,				Sept 30,				April 30,				Sept 30,
		2005				2004				2005				2005				2004				2004
		$				$				$				$				$				$
VOYAGE REVENUES			34,760				33,400				50,129				55,124				40,718				50,853
OPERATING EXPENSES
Voyage expenses			135				1,385				251				208				1,842				2,847
Vessel operating expenses			6,571				8,176				10,771				10,503				10,302				12,760
Depreciation and amortization			10,607				11,193				14,751				16,459				8,585				17,619
General and administrative			2,733				862				2,928				4,008				2,103				1,716
Total operating expenses			20,046				21,616				28,701				31,178				22,832				34,942
Income from vessel operations			14,714				11,784				21,428				23,946				17,886				15,911
OTHER ITEMS
Interest expense (notes 8 and 9)			(14,382	)			(19,550	)			(35,679	)			(22,578	)			(21,475	)			(30,620	)
Interest income			5,638				5,251				9,098				8,641				8,692				8,742
Foreign currency exchange gain (loss) (note 9)			1,347				(10,102	)			52,295				24,340				18,010				(20,077	)
Other income (loss) — net (note 10)			1,587				1,107				(17,927	)			3,259				(6,949	)			1,711
Total other items			(5,810	)			(23,294	)			7,787				13,662				(1,722	)			(40,244	)
Net income (loss)			8,904				(11,510	)			29,215				37,608				16,164				(24,333	)
General partner’s interest in net income			178				—				—				9,411				—				—
Limited partners’ interest: (note 15)
Net income (loss)			8,726				(11,510	)			29,215				28,197				16,164				(24,333	)
Net income (loss) per:
— Common unit (basic and diluted)			0.41				(0.49	)			1.24				1.05				0.69				(1.04	)
— Subordinated unit (basic and diluted)			0.15				(0.49	)			1.24				0.79				0.69				(1.04	)
— Total unit (basic and diluted)			0.29				(0.49	)			1.24				0.93				0.69				(1.04	)
Weighted-average number of units outstanding:
— Common units (basic and diluted)			15,638,072				8,734,572				8,734,572				15,638,072				8,734,572				8,734,572
— Subordinated units (basic and diluted)			14,734,572				14,734,572				14,734,572				14,734,572				14,734,572				14,734,572
— Total units (basic and diluted)			30,372,644				23,469,144				23,469,144				30,372,644				23,469,144				23,469,144

The accompanying notes are an integral part of the unaudited interim consolidated financial statements.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES (Note 1)
(Successor to Teekay Luxembourg S.a.r.l.)
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)

		As at				As at
		September 30,				December 31,
		2005				2004
		$				$
ASSETS
Current
Cash and cash equivalents			59,934				156,410
Restricted cash — current (note 5)			87,725				82,387
Accounts receivable			4,345				7,197
Prepaid expenses and other assets			4,989				3,449
Total current assets			156,993				249,443
Restricted cash — long-term (note 5)			302,397				352,725
Vessels and equipment (note 9)
At cost, less accumulated depreciation of $13,505 (December 31, 2004 — $5,829)			358,658				366,334
Vessels under capital leases, at cost, less accumulated depreciation of $25,968 (December 31, 2004 — $9,597) (note 5)			682,496				629,569
Advances on newbuilding contracts (note 14)			175,920				49,165
Total vessels and equipment			1,217,074				1,045,068
Other assets			11,029				20,394
Intangible assets — net (note 6)			171,476				178,457
Goodwill (note 6)			39,279				39,279
Total assets			1,898,248				1,885,366
LIABILITIES AND PARTNERS’ EQUITY/STOCKHOLDER DEFICIT
Current
Accounts payable and accrued liabilities			22,344				19,651
Current portion of long-term debt (note 9)			8,081				22,368
Current obligation under capital leases (note 5)			83,029				87,687
Advances from affiliate (note 8)			1,208				465,695
Total current liabilities			114,662				595,401
Long-term debt (note 9)			376,875				764,758
Long-term obligation under capital leases (note 5)			530,676				513,361
Other long-term liabilities (note 13)			14,701				134,848
Total liabilities			1,036,914				2,008,368
Commitments and contingencies (notes 12 and 14)
Minority interest (note 14)			175,920				—
Partners’ equity/Stockholder deficit
Partners’ equity			746,735				—
Capital stock			—				180
Accumulated deficit			—				(79,504	)
Accumulated other comprehensive loss (note 11)			(61,321	)			(43,678	)
Total partners’ equity/stockholder deficit			685,414				(123,002	)
Total liabilities and partners’ equity/stockholder deficit			1,898,248				1,885,366

The accompanying notes are an integral part of the unaudited interim consolidated financial statements.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES (Note 1)
(Successor to Teekay Luxembourg S.a.r.l.)
UNAUDITED CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY/STOCKHOLDER DEFICIT
(in thousands of U.S. dollars and units)

						PARTNERS' EQUITY
						Limited Partners
																										Accumulated
		Stockholder																								Other
		Deficit																				General				Comprehensive
		(Predecessor)				Common								Subordinated								Partner				Loss				Total
		$				Units				$				Units				$				$				$				$
Balance as at December 31, 2004			(123,002	)			—				1				—				—				—				—				(123,001	)
Net income (January 1 to May 9, 2005)			29,215				—				—				—				—				—				—				29,215
Unrealized loss on derivative instruments (note 13)			(22,874	)			—				—				—				—				—				—				(22,874	)
Reclassification adjustment for loss on derivative instruments included in net income (note 13)			14,359				—				—				—				—				—				—				14,359
Sale of the Santiago Spirit (note 12)			(3,115	)			—				—				—				—				—				—				(3,115	)
Balance as at May 9, 2005			(105,417	)			—				1				—				—				—				—				(105,416	)
Equity contribution by Teekay Shipping Corporation (note 1)			105,417				8,734				211,788				14,735				357,318				11,614				(52,194	)			633,943
Proceeds from initial public offering of limited partnership interests, net of offering costs of $16,087 (note 2)			—				6,900				135,711				—				—				—				—				135,711
Issuance of units to non-employee directors (note 2)			—				4				—				—				—				—				—				—
Net income (May 10 to September 30, 2005)			—				—				16,477				—				11,720				9,411				—				37,608
Cash distributions			—				—				(3,686	)			—				(3,473	)			(146	)			—				(7,305	)
Unrealized loss on derivative instruments (note 13)			—				—				—				—				—				—				(13,138	)			(13,138	)
Reclassification adjustment for loss on derivative instruments included in net income (note 13)			—				—				—				—				—				—				4,011				4,011
Balance as at September 30, 2005			—				15,638				360,291				14,735				365,565				20,879				(61,321	)			685,414

The accompanying notes are an integral part of the unaudited interim consolidated financial statements.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES (Note 1)
(Successor to Teekay Luxembourg S.a.r.l.)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)

		Nine Months Ended September 30,
		2005				2004
		$				$
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net income (loss)			66,823				(8,169	)
Non-cash items:
Depreciation and amortization			31,210				26,204
Gain on sale of marketable securities			—				(85	)
Loss (gain) on sale of assets			(186	)			11,922
Deferred income tax expense (recovery)			1,418				(2,926	)
Foreign currency exchange loss (gain)			(81,567	)			2,425
Interest rate swaps gain			—				(3,985	)
Loss from settlement of interest rate swaps			7,820				—
Write-off of capitalized loan costs			7,462				—
Accrued interest and other — net			9,337				6,054
Change in non-cash working capital items related to operating activities			(396	)			2,738
Expenditures for drydocking			(1,353	)			(4,085	)
Net operating cash flow			40,568				30,093
FINANCING ACTIVITIES
Proceeds from long-term debt			45,307				44,923
Scheduled repayments of long-term debt			(7,555	)			(18,304	)
Scheduled repayments of capital lease obligations			(5,175	)			(3,785	)
Prepayments of long-term debt			(388,307	)			(20,575	)
Proceeds from issuance of common units			141,327				—
Interest rate swap settlement costs			(143,295	)			—
Advances from affiliate			353,069				321,426
Advances to affiliate			(184,302	)			—
Decrease in restricted cash			10,044				—
Cash distributions paid			(7,305	)			—
Other			—				3,626
Net financing cash flow			(186,192	)			327,311
INVESTING ACTIVITIES
Expenditures for vessels and equipment			(84,120	)			(46,953	)
Purchase of Teekay Shipping Spain, S.L.			—				(298,045	)
Proceeds from sale of vessels and equipment			133,268				—
Proceeds from sale of marketable securities			—				899
Proceeds from sale of other assets			—				6,251
Other			—				(727	)
Net investing cash flow			49,148				(338,575	)
(Decrease) increase in cash and cash equivalents			(96,476	)			18,829
Cash and cash equivalents, beginning of the period			156,410				21,328
Cash and cash equivalents, end of the period			59,934				40,157

The accompanying notes are an integral part of the unaudited interim consolidated financial statements.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

1.		Basis of Presentation
		On April 30, 2004, Teekay Shipping Corporation through its subsidiary, Teekay Luxembourg S.a.r.l (or Luxco), acquired all of the outstanding shares of Naviera F. Tapias S.A. and its subsidiaries (or Tapias) and renamed it Teekay Shipping Spain S.L. (or Teekay Spain). Teekay Shipping Corporation acquired Teekay Spain for $298.2 million in cash, plus the assumption of debt and remaining newbuilding commitments.
		On November 3, 2004, Teekay Shipping Corporation formed Teekay LNG Partners L.P., a Marshall Islands limited partnership (or the Partnership), to own and operate the liquefied natural gas (or LNG) and Suezmax crude oil marine transportation businesses conducted by Luxco and its subsidiaries (collectively, the Predecessor). On May 6, 2005, Teekay Shipping Corporation contributed all of the outstanding shares of Luxco, all but $54.9 million of the notes receivable from Luxco, and all of the equity interests of Granada Spirit L.L.C., which owns the Suezmax tanker, the Granada Spirit, to the Partnership in connection with the Partnership’s initial public offering of common units, which represent limited partner interests in the Partnership. The Partnership subsequently repaid the $54.9 million note receivable.
		In exchange for these shares, equity interests and assets, Teekay Shipping Corporation received 8,734,572 common units and 14,734,572 subordinated units, which represented a 75.7% limited partner interest in the Partnership. The Partnership’s general partner, Teekay GP L.L.C. (or the General Partner) received a 2% general partner interest and all of the incentive distribution rights in the Partnership. Teekay GP L.L.C. is a wholly-owned subsidiary of Teekay Shipping Corporation.
		The accompanying unaudited consolidated interim financial statements include the accounts of Teekay Spain and its subsidiaries for periods prior to April 30, 2004. The consolidated financial statements include the accounts of Luxco and its subsidiaries, which includes Teekay Spain, for periods subsequent to April 30, 2004 and prior to May 10, 2005. The results for the periods subsequent to April 30, 2004 reflect the comprehensive revaluation of all assets (including intangible assets and goodwill) and liabilities of Teekay Spain at their fair values on the date of acquisition. For periods subsequent to May 10, 2005, the accompanying unaudited consolidated interim financial statements include the accounts of Teekay LNG Partners L.P., its subsidiaries (which include, among others, Luxco and Teekay Spain), and Teekay Nakilat Corporation (or Teekay Nakilat), a variable interest entity for which the Partnership is the primary beneficiary (please see Note 14). The transfer to the Partnership of the shares of and notes receivable from Luxco and equity interests of Granada Spirit L.L.C. represented a reorganization of entities under common control and consequently was recorded at historical cost. The book value of these assets on their transfer was $633.9 million.
		Prior to the acquisition of Teekay Spain by Teekay Shipping Corporation on April 30, 2004, Teekay Spain disposed of three businesses previously held in subsidiaries and unrelated to the marine transportation operations purchased by Teekay Shipping Corporation. The accompanying unaudited consolidated interim financial statements do not include the results of these three unrelated businesses. Proceeds received by Teekay Spain from the sale of these businesses have been accounted for as an equity contribution. In addition, immediately preceding the closing of the acquisition, Teekay Spain sold to its then controlling stockholder marketable securities, real estate, a yacht and other assets. The accompanying unaudited consolidated interim financial statements include results related to these assets.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

		The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States. Certain information and footnote disclosures required by generally accepted accounting principles in the United States for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with the consolidated financial statements of Luxco for the nine months ended December 31, 2004 and Teekay Spain for the year ended December 31, 2004 contained in the Partnership’s Prospectus filed with the U.S. Securities and Exchange Commission on November 18, 2005 in connection with a public offering of common units. In the opinion of the General Partner’s management, these interim statements reflect all adjustments (consisting only of normal recurring accruals) necessary to present fairly, in all material respects, the Partnership’s consolidated financial position, results of operations, changes in partners’ equity/stockholder deficit and cash flows for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of those for a full fiscal year. Significant intercompany balances and transactions have been eliminated.
2.		Initial Public Offering
		On May 10, 2005, the Partnership completed its initial public offering (or the Offering) of 6.9 million common units at a price of $22.00 per unit. This included 0.9 million common units sold to the underwriters in connection with the exercise of their over-allotment option. The proceeds received by the Partnership from the Offering and the use of those proceeds are summarized as follows:

Proceeds received:
Sale of 6,900,000 common units at $22.00 per unit		$	151,800
Use of proceeds from sale of common units:
Underwriting and structuring fees		$	10,473
Professional fees and other offering expenses to third parties			5,614
Repayment of advances from Teekay Shipping Corporation			129,400
Working capital			6,313
		$	151,800

		Concurrently with the Offering, the Partnership awarded 700 common units as compensation to each of the Partnership’s five non-employee directors. These common units reverse vest equally over a three-year period.
3.		Acquisition of Teekay Shipping Spain S.L.
		On April 30, 2004, the Predecessor acquired all of the outstanding shares of Tapias and renamed it Teekay Shipping Spain S.L. The Predecessor acquired Teekay Spain for $298.2 million in cash, plus the assumption of debt and remaining newbuilding commitments. Management of the General Partner believes the acquisition of Teekay Spain’s business has provided the Partnership with a strategic platform from which to expand its presence in the LNG shipping sector and immediate access to reputable LNG operations. The Partnership anticipates this will benefit it in acquiring future LNG projects. These benefits contributed to the recognition of goodwill. Teekay Spain’s results of operations have been consolidated with the Partnership’s results commencing May 1, 2004.
		As at September 30, 2005, the Partnership’s LNG fleet consisted of seven vessels, including three vessels currently under construction that Teekay Shipping Corporation has agreed to sell its 70% interest in to the Partnership upon delivery of the first vessel, which is scheduled for the fourth quarter of 2006 (please see Note 14). All seven vessels are contracted under long-term, fixed-rate time charters to international energy companies. As at September 30, 2005, the Partnership’s conventional crude oil tanker fleet consisted of five Suezmax tankers. All five Suezmax tankers are contracted under long-term, fixed-rate time charters with a major Spanish oil company.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

The following table summarizes the fair value of the assets acquired and liabilities of the Partnership at April 30, 2004.

		As at
		April 30, 2004
		$
ASSETS
Cash, cash equivalents and short-term restricted cash			85,092
Other current assets			7,415
Vessels and equipment			821,939
Restricted cash — long-term			311,664
Other assets — long-term			15,355
Intangible assets subject to amortization:
Time-charter contracts (weighted-average useful life of 19.2 years)			183,052
Goodwill ($3.6 million Suezmax tanker segment and $35.7 million LNG carrier segment)			39,279
Total assets acquired			1,463,796
LIABILITIES
Current liabilities			98,428
Long-term debt			668,733
Obligations under capital leases			311,011
Other long-term liabilities			87,439
Total liabilities assumed			1,165,611
Net assets acquired (cash consideration)			298,185

4.		Segment Reporting
		The Partnership has two reportable segments: its Suezmax tanker segment and its LNG carrier segment. The Partnership’s Suezmax tanker segment consists of conventional crude oil tankers operating on fixed-rate time-charter contracts. Prior to December 2004, it also included one Suezmax tanker operating on the spot market. The Partnership’s LNG carrier segment consists of LNG carriers subject to fixed-rate time charters. Segment results are evaluated based on income from vessel operations. The accounting policies applied to the reportable segments are the same as those used in the preparation of the Partnership’s consolidated financial statements.
		The following tables include results for these segments for the interim periods presented in these financial statements.

		Three Months Ended September 30,
		2005												2004
		Suezmax				LNG								Suezmax				LNG
		Tanker				Carrier								Tanker				Carrier
		Segment				Segment				Total				Segment				Segment				Total
		$				$				$				$				$				$
Voyage revenues			10,257				24,503				34,760				16,076				17,324				33,400
Voyage expenses			135				—				135				1,331				54				1,385
Vessel operating expenses			2,957				3,614				6,571				5,069				3,107				8,176
Depreciation and amortization			3,085				7,522				10,607				6,414				4,779				11,193
General and administrative (1)			1,471				1,262				2,733				572				290				862
Income from vessel operations			2,609				12,105				14,714				2,690				9,094				11,784
Expenditures for vessels and equipment			35,199				—				35,199				4,557				31,909				36,466

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

		Nine Months Ended September 30, 2005
		January 1 to May 9, 2005												May 10 to Sept 30, 2005
		Suezmax				LNG								Suezmax				LNG
		Tanker				Carrier								Tanker				Carrier
		Segment				Segment				Total				Segment				Segment				Total
		$				$				$				$				$				$
Voyage revenues			15,246				34,883				50,129				16,461				38,663				55,124
Voyage expenses			202				49				251				207				1				208
Vessel operating expenses			4,800				5,971				10,771				4,720				5,783				10,503
Depreciation and amortization			4,005				10,746				14,751				4,639				11,820				16,459
General and administrative (1)			1,464				1,464				2,928				2,139				1,869				4,008
Income from vessel operations			4,775				16,653				21,428				4,756				19,190				23,946
Expenditures for vessels and equipment			43,962				—				43,962				40,158				—				40,158

		Nine Months Ended September 30, 2004
		January 1 to April 30, 2004												May 1 to Sept 30, 2004
		Suezmax				LNG								Suezmax				LNG
		Tanker				Carrier								Tanker				Carrier
		Segment				Segment				Total				Segment				Segment				Total
		$				$				$				$				$				$
Voyage revenues			24,708				16,010				40,718				25,530				25,323				50,853
Voyage expenses			1,809				33				1,842				2,678				169				2,847
Vessel operating expenses			7,196				3,106				10,302				8,016				4,744				12,760
Depreciation and amortization			6,047				2,538				8,585				10,093				7,526				17,619
General and administrative (1)			1,577				526				2,103				1,210				506				1,716
Income from vessel operations			8,079				9,807				17,886				3,533				12,378				15,911
Expenditures for vessels and equipment			5,039				483				5,522				9,208				32,223				41,431

A reconciliation of total segment assets to total assets presented in the unaudited consolidated interim balance sheet is as follows:

		As at				As at
		September 30,				December 31,
		2005				2004
		$				$
Total assets of the Suezmax tanker segment			298,728				287,058
Total assets of the LNG carrier segment			1,523,808				1,423,191
Cash and cash equivalents and marketable securities			59,934				156,410
Accounts receivable and other assets			15,778				18,707
Consolidated total assets			1,898,248				1,885,366

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

5.		Capital Lease Obligations and Restricted Cash
		Capital Leases
		Suezmax Tankers. As at September 30, 2005, the Partnership was a party to capital leases on five Suezmax tankers. Under the terms of the lease arrangements, which include the Partnership’s contractual right to full operation of the vessels pursuant to bareboat charters, the Partnership is required to purchase these vessels after the end of their respective lease terms for a fixed price. The weighted-average interest rate implicit in these capital leases at the inception of the leases was 7.5%. These capital leases are variable-rate capital leases; however, any change in our lease payments resulting from changes in interest rates is offset by a corresponding change in the charter hire payments received by the Partnership. As at September 30, 2005, the remaining commitments under these capital leases, including the purchase obligations, approximated $271.1 million, including imputed interest of $38.1 million, repayable as follows:

Year		Commitment
2005		$     6.5 million
2006		150.7 million
2007		8.7 million
2008		8.6 million
2009		8.5 million
Thereafter		88.1 million

LNG Carriers. As at September 30, 2005, the Partnership was a party to capital leases on two LNG carriers, which are structured as “Spanish tax leases.” Under the terms of the Spanish tax leases, the Partnership will purchase these vessels at the end of their respective lease terms in 2006 and 2011, both of which purchase obligations have been fully funded with restricted cash deposits described below. As at September 30, 2005, the weighted-average interest rate implicit in the Spanish tax leases was 5.7%. As at September 30, 2005, the commitments under these capital leases, including the purchase obligations, approximated 365.3 million Euros ($439.3 million), including imputed interest of 48.7 million Euros ($58.6 million), repayable as follows:

Year		Commitment
2005		77.1 million Euros ($92.7 million)
2006		123.2 million Euros ($148.1 million)
2007		23.3 million Euros ($28.0 million)
2008		24.4 million Euros ($29.4 million)
2009		25.6 million Euros ($30.8 million)
Thereafter		91.7 million Euros ($110.3 million)

		Restricted cash
		Under the terms of the Spanish tax leases for the two LNG carriers, the Partnership is required to have on deposit with financial institutions an amount of cash that, together with interest earned on the deposits, will equal the remaining amounts owing under the leases, including the obligations to purchase the LNG carriers at the end of the lease periods. This amount was 321.9 million Euros ($387.2 million) and 309.5 million Euros ($421.6 million) as at September 30, 2005 and December 31, 2004, respectively. These cash deposits are restricted to being used for capital lease payments and have been fully funded with term loans (please see Note 9) and a Spanish government grant. The interest rates earned on the deposits approximate the interest rates implicit in the Spanish tax leases. As at September 30, 2005 and December 31, 2004, the weighted-average interest rate earned on the deposits was 5.3%.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

		The Partnership also maintains restricted cash deposits relating to certain term loans, which cash totaled $2.9 million and $13.5 million as at September 30, 2005 and December 31, 2004, respectively.
6.		Intangible Assets and Goodwill
		As at September 30, 2005, intangible assets consisted of:

Weighted-

Average

Gross

Net

Amortization

Carrying

Accumulated

Carrying

Period

Amount

Amortization

Amount

(years)

$

$

$

Time-charter contracts

19.2

182,552

11,076

171,476

All intangible assets were recognized on April 30, 2004 (please see Note 3). Amortization expense of intangible assets for the interim periods presented is as follows:

Three Months Ended						Nine Months Ended
September 30,						September 30,
2005		2004				2005								2004
July 1		July 1				January 1				May 10				January 1				May 1
to		to				to				to				to				to
Sept 30,		Sept 30,				May 9,				Sept 30,				April 30,				Sept 30,
2005		2004				2005				2005				2004				2004
$		$				$				$				$				$
2,316			3,010				3,369				3,612				—				4,773

		The Partnership’s intangible assets are being amortized on a straight-line basis over the term of the time- charter contracts.
		The carrying amount of goodwill as at September 30, 2005 and December 31, 2004 for the Partnership’s reporting segments is as follows:

		Suezmax				LNG
		Tanker				Carrier
		Segment				Segment				Total
		$				$				$
Balance as at September 30, 2005 and December 31, 2004 (note 3)			3,648				35,631				39,279

7.		Cash Flows
		Cash interest paid by the Partnership during the nine months ended September 30, 2005 and 2004 totaled $49.3 million and $32.7 million, respectively.
		Income taxes paid by the Partnership during the nine months ended September 30, 2005 and 2004 totaled $5.7 million and $1.1 million, respectively.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

8.

Advances from Affiliate

		September 30,				December 31,
		2005				2004
		$				$
Euro-denominated Demand Promissory Notes			—				371,073
Euro-denominated Participating Loan			—				94,622
Other (non-interest bearing)			1,208				—
Total			1,208				465,695

		During the period from January 1, 2004 to May 10, 2005, Teekay Shipping Corporation made loans, net of repayments, to a subsidiary of the Partnership totaling 574.7 million Euros ($740.2 million) for the purchase of Teekay Spain (please see Note 3), for the repayment of terms loans associated with two of the Partnership’s LNG carriers (please see Note 9) and to settle interest rate swaps (please see Note 13). These loans, including 2.0 million Euros ($2.6 million) of unpaid accrued interest, were contributed by Teekay Shipping Corporation to the Partnership in connection with the Offering.
		Interest payments on these Euro-denominated loans were based on the 12-month EURIBOR plus a margin with the exception of one loan of 67.1 million Euros ($86.5 million), which was based on a fixed rate of 5.4%. As at December 31, 2004, these margins ranged between 1.7% and 2.5%. The interest expense incurred on these loans for the interim periods presented is as follows:

Three Months Ended				Nine Months Ended
September 30,				September 30,
2005		2004		2005				2004
July 1		July 1		January 1		May 10		January 1		May 1
to		to		to		to		to		to
Sept 30,		Sept 30,		May 9,		Sept 30,		April 30,		Sept 30,
2005		2004		2005		2005		2004		2004
$		$		$		$		$		$
—		3,603		7,325		—		—		6,041

9.

Long-Term Debt

		September 30,				December 31,
		2005				2004
		$				$
U.S. Dollar-denominated Term Loans due through 2005			—				343,390
Euro-denominated Term Loans due through 2023			384,956				443,736
			384,956				787,126
Less current portion			8,081				22,368
Total			376,875				764,758

The Partnership has term loans outstanding, which, as at September 30, 2005, totaled 320.1 million Euros ($385.0 million) of Euro-denominated loans. These loans were used to make restricted cash deposits that fully fund payments under capital leases (please see Note 5). Prior to the Offering, the Partnership repaid $337.3 million of term loans associated with two LNG carriers.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

		In connection with the Offering, one of the Partnership’s LNG carrier-owning subsidiaries amended its term loan agreement to provide for a $100 million senior secured revolving credit facility (or the Revolver). As at September 30, 2005, this facility was undrawn. The Revolver may be used by the Partnership for general partnership purposes and to fund cash distributions. Under the Revolver, the Partnership is required to reduce all borrowings used to fund cash distributions to zero for a period of at least 15 consecutive days during any 12-month period. The Revolver is available to the Partnership until September 2009.
		The Partnership’s obligations under the Revolver are secured by a first-priority mortgage on one of its LNG carriers, the Hispania Spirit, and a pledge of certain shares of the subsidiary operating the carrier.
		All Euro-denominated term loans and Euro-denominated advances from affiliates (please see Note 8) are revalued at the end of each period using the then prevailing Euro/U.S. Dollar exchange rate. Due substantially to this revaluation, the Partnership recognized foreign exchange gains (losses) during the interim periods presented as follows:

Three Months Ended				Nine Months Ended
September 30,				September 30,
2005		2004		2005				2004
July 1		July 1		January 1		May 10		January 1		May 1
to		to		to		to		to		to
Sept 30,		Sept 30,		May 9,		Sept 30,		April 30,		Sept 30,
2005		2004		2005		2005		2004		2004
$		$		$		$		$		$
1,347		(10,102)		52,295		24,340		18,010		(20,077)

		Interest payments on the U.S. Dollar-denominated term loans and the Revolver are based on LIBOR plus a margin. Interest payments on the Euro-denominated term loans are based on EURIBOR plus a margin. At September 30, 2005, these margins ranged between 1.1% and 1.3%. At December 31, 2004, these margins ranged between 0.5% and 1.3%.
		The weighted-average effective interest rate for the Euro-denominated debt outstanding at September 30, 2005 was 3.3%. This rate does not reflect the effect of related interest rate swaps that the Partnership has used to hedge certain of its floating-rate debt (please see Note 13).
		The term loans reduce in monthly payments with varying maturities through 2023. All term loans of the Partnership are collateralized by first-preferred mortgages on the vessels to which the loans relate, together with certain other collateral and guarantees from Teekay Spain.
		The aggregate long-term debt principal repayments required for periods subsequent to September 30, 2005 are $2.0 million (2005), $8.2 million (2006), $8.8 million (2007), $9.5 million (2008), $10.2 million (2009) and $346.3 million (thereafter).
		All of the Partnership’s existing vessel financing is arranged on a vessel-by-vessel basis, and each financing is secured by the applicable vessel. The Partnership’s capital leases do not contain financial or restrictive covenants other than those relating to operation and maintenance of the vessels. The Partnership’s term loans relating to its LNG carriers contain covenants that require the maintenance of restricted cash deposits and unencumbered liquidity. In addition, the Partnership’s ship owning subsidiaries may not, in addition to other things, pay dividends or distributions if the Partnership is in default under the term loans.
		The Partnership’s term loan for one of its LNG carriers, the Catalunya Spirit, contains covenants that require the maintenance of a minimum liquidity of 5.0 million Euros and annual restricted cash deposits of 1.2 million Euros.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

10.

Other Income (Loss) — Net

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2005				2004				2005								2004
		July 1				July 1				January 1				May 10				January 1				May 1
		to				to				to				to				to				to
		Sept 30,				Sept 30,				May 9,				Sept 30,				April 30,				Sept 30,
		2005				2004				2005				2005				2004				2004
		$				$				$				$				$				$
Interest rate swaps gain			—				—				—				—				3,985				—
Loss on cancellation of interest rate swaps			—				—				(7,820	)			—				—				—
Gain (loss) on sale of assets			—				—				—				186				(11,922	)			—
Write-off of capitalized loan costs			—				—				(7,462	)			—				—				—
Income tax recovery (expense)			1,587				1,049				(2,648	)			3,259				645				1,622
Miscellaneous			—				58				3				(186	)			343				89
Other income (loss) — net			1,587				1,107				(17,927	)			3,259				(6,949	)			1,711

11.

Comprehensive Income (Loss)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2005				2004				2005								2004
		July 1				July 1				January 1				May 10				January 1				May 1
		to				to				to				to				to				to
		Sept 30,				Sept 30,				May 9,				Sept 30,				April 30,				Sept 30,
		2005				2004				2005				2005				2004				2004
		$				$				$				$				$				$
Net income (loss)			8,904				(11,510	)			29,215				37,608				16,164				(24,333	)
Other comprehensive income (loss):
Unrealized loss on derivative instruments			(1,222	)			(24,096	)			(22,874	)			(13,138	)			—				(33,516	)
Reclassification adjustment for loss on derivative instruments included in net income			2,409				3,185				14,359				4,011				—				7,613
Unrealized gain on available-for- sale securities			—				—				—				—				467				—
Reclassification adjustment for gain on available-for- sale securities included in net income			—				—				—				—				(55	)			—
Comprehensive income (loss)			10,091				(32,421	)			20,700				28,481				16,576				(50,236	)

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

12.

Related Party Transactions

	a)		On May 6, 2005, Teekay Shipping Corporation contributed all of the outstanding shares of Luxco, all but $54.9 million of the notes receivable from Luxco, and all of the outstanding equity interests of Granada Spirit L.L.C., which owns the Suezmax tanker, the Granada Spirit, to the Partnership in connection with the Offering on May 10, 2005 of common units, which represent limited partner interests in the Partnership. The Partnership subsequently repaid the $54.9 million note receivable.
	b)		The Partnership has entered into an omnibus agreement with Teekay Shipping Corporation, the General Partner and others governing, among other things, when the Partnership and Teekay Shipping Corporation may compete with each other and certain rights of first offer on LNG carriers and Suezmax tankers.
	c)		The Partnership and certain of its operating subsidiaries have entered into services agreements with certain subsidiaries of Teekay Shipping Corporation pursuant to which the Teekay Shipping Corporation subsidiaries provide the Partnership with administrative, advisory, technical and strategic consulting services for a reasonable, arms-length fee. During the period from May 10, 2005 to September 30, 2005, the Partnership incurred $0.6 million of these costs.
	d)		The Partnership reimburses the General Partner for all expenses necessary or appropriate for the conduct of the Partnership’s business. During the period from May 10, 2005 to September 30, 2005, the Partnership incurred $0.2 million of these costs.
	e)		The Partnership has agreed to acquire from Teekay Shipping Corporation its 100% ownership interest in Teekay Nakilat Holdings Corporation (or Teekay Nakilat Holdings). Teekay Nakilat Holdings owns 70% of Teekay Nakilat, which in turns owns three subsidiaries, each of which has contracted to have built one of three LNG newbuildings. The estimated purchase price for the 70% interest in Teekay Nakilat is $92.8 million, plus the assumption of approximately $327.7 million of long-term debt. The purchase will occur upon the delivery of the first carrier, which is scheduled for the fourth quarter of 2006. The remaining two carriers are scheduled for delivery in the first half of 2007. Upon their deliveries, these vessels will provide transportation services under 20-year, fixed-rate time charters to Ras Laffan Liquefied Natural Gas Co. Limited (II) (or RasGas II), a joint venture between Qatar Petroleum and ExxonMobil RasGas Inc., a subsidiary of ExxonMobil Corporation, established for the purpose of expanding LNG production in Qatar.
	f)		Following Teekay Shipping Corporation’s contribution of the Granada Spirit LLC to the Partnership on the closing of the Offering, the Partnership entered into a short-term, fixed-rate time charter and vessel sales agreement with a subsidiary of Teekay Shipping Corporation for the Granada Spirit.
			On May 26, 2005, the Partnership sold the Granada Spirit to a subsidiary of Teekay Shipping Corporation for $20.6 million, resulting in a gain on sale of $0.2 million. Net voyage revenues earned under the time-charter agreement with Teekay Shipping Corporation were $0.5 million.
	g)		In early 2005, the Partnership completed the sale of the Santiago Spirit (a newly constructed, double-hulled Suezmax tanker delivered in March 2005) to a subsidiary of Teekay Shipping Corporation for $70.0 million. The resulting $3.1 million loss on sale, net of income taxes, has been accounted for as an equity distribution.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

13.		Derivative Instruments and Hedging Activities
		The Partnership uses derivatives only for hedging purposes.
		As at September 30, 2005, the Partnership was committed to the following interest rate swap agreements related to its EURIBOR-based debt whereby certain of the Partnership’s floating-rate debt was swapped with fixed-rate obligations:

Fair Value /

Weighted-

Carrying

Average

Fixed

Interest

Principal

Amount of

Remaining

Interest

Rate

Amount

Liability

Term

Rate

Index

$

$

(years)

(%) (1)

Euro-denominated interest rate swaps (2)

EURIBOR

384,956

14,701

18.7

3.8

		During April 2005, the Predecessor repaid term loans of $337.3 million on two LNG carriers and settled related interest rate swaps. The Predecessor recognized a loss of $7.8 million as a result of these interest rate swap settlements. During April 2005, the Predecessor also settled interest rate swaps associated with 322.8 million Euros ($390.5 million) of term loans and entered into new swaps of the same amount with a lower fixed interest rate. A loss of 39.2 million Euros ($50.4 million) relating to these interest rate swap settlements has been deferred in accumulated other comprehensive income and is being recognized over the remaining term of the term loans. The cost to settle all of these interest rate swaps was $143.3 million.
		Changes in the fair value of the designated interest rate swaps (cash flow hedges) are recognized in other comprehensive income until the hedged item is recognized in income. The ineffective portion of a derivative’s change in fair value is immediately recognized into income.
		The Partnership is exposed to credit loss in the event of non-performance by the counter parties to the interest rate swap agreements; however, counterparties to these agreements are major financial institutions and the Partnership considers the risk of loss due to non-performance to be minimal. The Partnership requires no collateral from these institutions.
14.		Commitments and Contingencies
		The Partnership has entered into an agreement with Teekay Shipping Corporation to purchase its 70% interest in Teekay Nakilat, which owns three LNG newbuildings and the related 20-year time charters. The purchase will occur upon the delivery of the first newbuilding, which is scheduled during the fourth quarter of 2006. The estimated purchase price for the 70% interest in Teekay Nakilat is $92.8 million, plus the assumption of $327.7 million of long-term debt.
		In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 (FIN 46). In general, a variable interest entity (or VIE) is a corporation, partnership, limited-liability corporation, trust, or any other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. If a party with an ownership, contractual or other financial interest in the VIE (a variable interest holder) is obligated to absorb a majority of the risk of loss from the VIE’s activities, is entitled to receive a majority of

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

		the VIE’s residual returns (if no party absorbs a majority of the VIE’s losses), or both, then FIN 46 requires that this party consolidate the VIE.
		The Partnership has consolidated Teekay Nakilat in its September 30, 2005 balance sheet, as Teekay Nakilat was determined to be a VIE and the Partnership is its primary beneficiary. The Partnership’s maximum exposure to loss at September 30, 2005, as a result of its commitment to purchase Teekay Shipping Corporation’s interest in Teekay Nakilat, is limited to Teekay Shipping Corporation’s costs related to the construction and delivery of the three LNG newbuildings and the cost of capital on construction payments made to the shipyard.
		As at September 30, 2005, the assets of Teekay Nakilat consisted of the three LNG newbuildings, which had a carrying value of $175.9 million. These assets have been financed by equity investments in Teekay Nakilat by Teekay Shipping Corporation. The assets and liabilities of Teekay Nakilat were recorded at historical cost as the Partnership and Teekay Nakilat are under common control. The equity investments in Teekay Nakilat are accounted for as minority interest in the Partnership’s September 30, 2005 balance sheet.
15.		Net Income (Loss) Per Unit
		Net income (loss) per unit is determined by dividing net income (loss), after deducting the amount of net income allocated to the General Partner’s interest from the issuance date of the units of May 10, 2005, as described below, by the weighted average number of units outstanding during the period. For periods prior to May 10, 2005, such units are deemed equal to the common and subordinated units (or the limited partnership units) received by Teekay Shipping Corporation in exchange for net assets contributed to the Partnership, or 23,469,144 units.
		As required by Emerging Issues Task Force Issue No. 03-6, Participating Securities and Two-Class Method under FASB Statement No. 128, Earnings Per Share, the general partner’s, common unit holders’ and subordinated unitholders’ interests in net income are calculated as if all net income for the periods subsequent to May 10, 2005 was distributed according to the terms of the Partnership Agreement, regardless of whether those earnings would or could be distributed. The Partnership Agreement does not provide for the distribution of net income; rather, it provides for the distribution of available cash, which is a contractually defined term that generally means all cash on hand at the end of each quarter after establishment of cash reserves. Unlike available cash, net income is affected by non-cash items. Net income for the period from July 1 to September 30, 2005 was $8.9 million, which included a $1.3 million foreign currency translation gain relating primarily to long-term debt denominated in Euros. The limited partners’ interest in net income for this period was $8.7 million. The actual cash distributions made to the limited partners for this period totaled $12.5 million.
		Under the Partnership Agreement, the holder of the incentive distribution rights in the Partnership, which is currently the General Partner, has the right to receive an increasing percentage of cash distributions after the minimum quarterly distribution. Assuming there are no cumulative arrearages on common unit distributions, the target distribution levels entitle the General Partner to receive 2% of quarterly cash distributions up to $0.4625 per unit, 15% of quarterly cash distributions between $0.4625 and $0.5375 per unit, 25% of quarterly cash distributions between $0.5375 and $0.65 per unit, and 50% of quarterly cash distributions in excess of $0.65 per unit. During the period from July 1 to September 30, 2005, net income did not exceed $0.4625 per unit and consequently the assumed distribution of net income did not result in the use of the increasing percentages to calculate the General Partner’s interest in net income.
		Under the Partnership Agreement, during the subordination period the common units will have the right to receive distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $0.4125 per quarter, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. During the period from July 1 to September 30, 2005, net income

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
(Successor to Teekay Luxembourg S.a.r.l.)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. dollars, except unit and per unit data)

		did not exceed the minimum quarterly distribution of $0.4125 per unit and, consequently, the assumed distribution of net income resulted in an unequal distribution of net income between the subordinated unit holders and common unit holders.
16.		Subsequent Events
		On November 23, 2005, the Partnership completed its follow-on public offering of 4.0 million common units at a price of $27.40 per unit. On November 29, 2005, the Partnership completed the sale and issuance of 0.6 million common units at a price of $27.40 per unit, upon the exercise in full of the over-allotment option granted to the underwriters. Total net proceeds from the offering were $120.3 million, net of an estimated $5.7 million of offering expenses. In addition, the General Partner contributed $2.6 million to the Partnership to maintain a 2% general partner interest.
		Concurrent with the closing of the offering, the Partnership completed the acquisition from Teekay Shipping Corporation of three Suezmax tankers and related long-term, fixed-rate time charter contracts for $180.0 million. The vessels are chartered to a subsidiary of ConocoPhillips, an international, integrated energy company. Each time charter has a remaining scheduled term of approximately 10 years, subject to termination and vessel sale and purchase rights. In addition, ConocoPhillips has the option to extend the charters for up to an additional six years. The acquisition was funded with the net proceeds from the offering, together with borrowings under the Partnership’s Revolver and cash balances. If ConocoPhillips declines to exercise its option to extend the terms of the charters, the Partnership has granted Teekay Shipping Corporation the right to charter the vessels for up to six years under the same pricing terms and conditions as those in the time charters with ConocoPhillips.
		In connection with the acquisition of these vessels, the Partnership entered into a $137.5 million nine-year revolving credit facility, which was modified from an existing credit facility of Teekay Shipping Corporation relating to these three Suezmax tankers. This facility may be used by the Partnership for general partnership purposes. The Partnership’s obligations under this facility are secured by, among other things, mortgages on the three Suezmax tankers and the related time charters.
17.		Other Information

a)

In July 2005, Teekay Shipping Corporation (or TSC) announced that it had been awarded long-term, fixed-rate contracts to charter two LNG carriers to the Tangguh LNG project in Indonesia. The carriers will be chartered for a period of 20 years to The Tangguh Production Sharing Contractors, a consortium led by BP Berau, a subsidiary of BP plc. In connection with this award, TSC has exercised shipbuilding options with Hyundai Heavy Industries Co. Ltd. to construct two 155,000 cubic meter LNG carriers at a total delivered cost of approximately $450 million. The charters will commence upon vessel deliveries, which are scheduled for late 2008 and early 2009. TSC is entering into these transactions with an Indonesian partner that has taken a 30% interest in the vessels and related contracts. In accordance with an existing agreement, TSC is required to offer to the Partnership its ownership interest in these vessels and related charter contracts.

b)

In August 2005, TSC announced that it had been awarded long-term, fixed-rate contracts to charter four LNG carriers to Ras Laffan Liquefied Natural Gas Co. Limited (3) (or RasGas 3), a joint venture company between a subsidiary of ExxonMobil Corporation and Qatar Petroleum. The vessels will be chartered to RasGas 3 at fixed rates, with inflation adjustments, for a period of 25 years (with options exercisable by the customer to extend up to an additional 10 years). In connection with this award, TSC has entered into agreements with Samsung Heavy Industries Co. Ltd. to construct four 217,000 cubic meter LNG carriers at a total delivered cost of approximately $1.1 billion. The charters will commence

upon vessel deliveries, which are scheduled for the first half of 2008. TSC is entering into these transactions with Qatar Gas Transport Company, which has taken a 60% interest in the vessels and related contracts. In accordance with an existing agreement, TSC is required to offer to the Partnership its ownership interest in these vessels and related charter contracts.

TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES
SEPTEMBER 30, 2005
PART I — FINANCIAL INFORMATION

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Teekay LNG Partners L.P. is an international provider of liquefied natural gas (or LNG) and crude oil marine transportation services. Our growth strategy focuses on expanding our fleet of LNG carriers under long-term, fixed-rate time charters. We intend to continue our practice of acquiring LNG carriers as needed for approved projects only after the long-term charters for the projects have been awarded to us, rather than ordering vessels on a speculative basis. We seek to capitalize on opportunities emerging from the global expansion of the LNG sector by selectively targeting long-term, fixed-rate time charters. We may enter into joint ventures and partnerships with companies that may provide increased access to these opportunities or may engage in vessel or business acquisitions. We plan to leverage the expertise, relationships and reputation of Teekay Shipping Corporation and its affiliates to pursue these growth opportunities in the LNG sector. We view our Suezmax tanker fleet primarily as a source of stable cash flow as we expand our LNG operations.

We manage our business and analyze and report our results of operations on the basis of the following two business segments:

		LNG Carrier Segment. We have four LNG carriers, including one vessel delivered in July 2004 and one vessel delivered in December 2004, all of which operate under long-term, fixed-rate charters.
		In the three and nine months ended September 30, 2005, our LNG carrier segment generated 70.8% and 70.1%, respectively, of our total net voyage revenues. In the three and nine months ended September 30, 2004, this segment generated 53.9% and 47.3%, respectively, of our total net voyage revenue.
		In addition, we have entered into an agreement with Teekay Shipping Corporation to purchase its 70% interest in Teekay Nakilat Corporation (or Teekay Nakilat), which owns three LNG newbuilding carriers. The estimated purchase price for the 70% interest in Teekay Nakilat is $92.8 million, plus the assumption of $327.7 million of long-term debt. We anticipate that Teekay Shipping Corporation will complete U.K. lease arrangements to finance these vessels, which would significantly reduce the estimated $92.8 million payment. The purchase will occur upon the delivery of the first carrier, which is scheduled for the fourth quarter of 2006. The remaining two carriers are scheduled for delivery in the first half of 2007. Upon their deliveries, these vessels will commence service under existing charters with Ras Laffan Liquefied Natural Gas Co. Limited (II) (or RasGas II), a joint venture between Qatar Petroleum and ExxonMobil RasGas Inc., a subsidiary of ExxonMobil Corporation, established for the purpose of expanding LNG production in Qatar.
		Suezmax Tanker Segment. We have five Suezmax class crude oil tankers, including a new tanker, the Toledo Spirit, that delivered in July 2005. In May 2005, we sold our only single-hulled Suezmax tanker, the Granada Spirit. During most of 2004, we had six Suezmax tankers, while during most of the first nine months of 2005, we had four Suezmax tankers. Subsequent to September 30, 2005, we acquired three double-hulled Suezmax tankers from Teekay Shipping Corporation. Please read “—Follow-On Offering and Acquisition of Three Suezmax Tankers” below. We describe our Suezmax tanker dispositions and deliveries in more detail under “—Results of Operations” below. All of our Suezmax tankers operate under long-term, fixed-rate time charters.
		In the three and nine months ended September 30, 2005, our Suezmax tanker segment generated 29.2% and 29.9%, respectively, of our total net voyage revenues. In the three and nine months ended September 30, 2004, this segment generated 46.1% and 52.7%, respectively, of our total net voyage revenue.

Our original fleet was established by Naviera F. Tapias S.A. (or Tapias), a Spanish company founded in 1991. Teekay Shipping Corporation, through its subsidiary Teekay Luxembourg S.a.r.l. (or Luxco), acquired Tapias on April 30, 2004 and changed its name to Teekay Shipping Spain S.L. (or Teekay Spain). Teekay Shipping Corporation acquired Tapias for $298.2 million in cash, plus the assumption of existing debt and newbuilding commitments. Please read Item 1 — Financial Statements: Note 3 — Acquisition of Teekay Shipping Spain S.L.

Our Initial Public Offering

On November 3, 2004, Teekay Shipping Corporation formed us to own and operate the LNG and Suezmax crude oil marine transportation businesses conducted by Luxco and its subsidiaries. On May 6, 2005, Teekay Shipping Corporation contributed to us all of the outstanding shares of Luxco, all but $54.9 million of notes receivable from Luxco, and all of the outstanding equity interests of Granada Spirit L.L.C., which owns the Granada Spirit. We subsequently repaid the $54.9 million note receivable. In exchange for these shares and assets, we issued to Teekay Shipping Corporation 8,734,572 of our common units and 14,734,572 of our subordinated units. Our general partner, Teekay GP L.L.C., also received a 2% general partner interest and all of the incentive distribution rights in us. Teekay GP L.L.C. is a wholly-owned subsidiary of Teekay Shipping Corporation. On May 10, 2005, we sold 6.9 million of our common units in our initial public offering at a price of $22.00 per unit, for proceeds of $151.8 million before underwriting costs and offering expenses. Please read Item 1 — Financial Statements: Note 2 — Initial Public Offering.

New Long-Term, Fixed-Rate LNG Contracts Awarded

In July and August 2005, Teekay Shipping Corporation announced that it has been awarded long-term, fixed-rate time charter contracts and has entered into agreements to construct a total of six LNG carriers in connection with these awards. Two of the LNG carriers will be chartered for a period of 20 years to The Tangguh Production Sharing Contractors, and four will be chartered for a period of 25 years (with options to extend up to an additional 10 years) to Ras Laffan Liquefied Natural Gas Co. Limited (3). Partners in each of these projects will participate in the ownership of the time charters and related vessels, and Teekay Shipping Corporation will offer to us its interest in these charters and vessels. Please read Item 1 — Financial Statements: Note 17 — Other Information.

Follow-On Offering and Acquisition of Three Suezmax Tankers

On November 23, 2005, we completed our follow-on public offering of 4.0 million common units at a price of $27.40 per unit. On November 29, 2005, we completed the sale and issuance of an additional 0.6 million common units at a price of $27.40 per unit, upon the exercise in full of the over-allotment option granted to the underwriters. Net proceeds from the offering were $120.3 million, net of an estimated $5.7 million of offering expenses. In addition, our general partner contributed $2.6 million to us to maintain its 2% general partner interest.

Concurrent with the closing of the offering, we acquired from Teekay Shipping Corporation three double-hulled Suezmax oil tankers and related long-term, fixed-rate time charters for an aggregate price of $180.0 million. These vessels, the African Spirit, the Asian Spirit and the European Spirit (collectively, the ConocoPhillips Tankers), are similar in size to the Partnership’s five existing crude oil tankers. The vessels have an average age of two years and are chartered to a subsidiary of ConocoPhillips, an international, integrated energy company. Each time charter has a remaining scheduled term of approximately 10 years, subject to termination and vessel sale and purchase rights. In addition, ConocoPhillips has the option to extend the charters for up to an additional six years. Please read Item 1 — Financial Statements: Note 16 — Subsequent Events.

Our Charters

We generate revenues by charging customers for the transportation of their LNG and crude oil using our vessels. Historically, we generally have provided these services under the following basic types of contractual relationships:

	•		Time charters, where vessels are chartered to customers for a fixed period of time at rates that are generally fixed but may contain a variable component, based on inflation, interest rates or current market rates; and
	•		Voyage charters, which are charters for shorter intervals, usually a single round trip, that are priced on a current, or “spot,” market rate.

For the three and nine months ended September 30, 2005, we derived 100.0% of our revenues from time charters. For the three and nine months ended September 30, 2004, we derived 86.2% and 83.9% of our revenues from time charters and 13.8% and 16.1% of our revenues from voyage charters, respectively. During these periods, all our vessels were employed on long-term time charters, except the Granada Spirit, which operated under voyage charters in the spot market during 2004. We do not anticipate earning revenues from voyage charters in 2005 or in the foreseeable future.

“Hire” rate refers to the basic payment from the customer for the use of a vessel. Hire is payable monthly, in advance, in U.S. Dollars or Euros, as specified in the charter. The hire rate generally includes two components — a capital cost component and an operating expense component. The capital component typically approximates the amounts we are required to pay under vessel financing obligations and, for our existing Suezmax tankers (other than the ConocoPhillips Tankers), adjusts for changes in the floating interest rates relating to the underlying vessel financing. The operating component, which adjusts annually for inflation, is intended to compensate us for vessel operating expenses and provide us a profit.

The time charters for the ConocoPhillips Tankers include a fixed monthly rate for their initial 12-year term, which increases to another fixed amount for any extensions of the initial term. These time charters do not include capital or operating components or adjust for inflation.

For our charters, other than the RasGas II charters and the charters for the ConocoPhillips Tankers, we earn a profit from a margin built into the operating component. Under the RasGas II charters, this margin is built into the capital component.

In addition, we may receive additional revenues beyond the fixed hire rate when current market rates exceed specified amounts under our time charter for our Suezmax tanker the Teide Spirit.

When a vessel is “off-hire”—or not available for service—the customer generally is not required to pay the hire rate and we are responsible for all costs. Prolonged off-hire may lead to vessel substitution or termination of the time charter. A vessel will be deemed to be off-hire if it is in drydock. We must periodically drydock each of our vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. In addition, a vessel generally will be deemed off-hire if there is a loss of time due to, among other things: operational deficiencies; equipment breakdowns; delays due to accidents, crewing strikes, certain vessel detentions or similar problems; or our failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the required crew.

The average remaining term of our existing long-term, fixed-rate time charters is approximately 20 years for our LNG carriers and 14 years for our Suezmax tankers (including the ConocoPhillips Tankers), subject, in certain circumstances, to termination or purchase rights. The initial term of each of our three LNG newbuilding charters is 20 years, in each case from delivery of the vessel.

Our customers include major energy companies and their affiliates. We derive a substantial majority of our revenues from a limited number of customers. During the nine months ended September 30, 2005 and 2004, we derived 99% and 84%, respectively, of our revenues from four customers — Compania Espanola de Petroleos, S.A. (29% and 37%), Repsol YPF, S.A. (34% and 19%), Gas Natural SDG, S.A. (19% and 22%) and Unión Fenosa Gas, S.A (17% and 6%). With the acquisition of the ConocoPhillips Tankers and related time charters from Teekay Shipping Corporation upon the closing of our follow-on public offering on November 23, 2005 and after delivery of the three RasGas II LNG newbuildings and commencement of the related charters, we expect to derive a significant amount of revenues from a subsidiary of ConocoPhillips and RasGas II, respectively. The loss of any customer or time charter, or a significant decline in payments under any of our time charters, could materially and adversely affect our revenues, cash flows and operating results.

Important Financial and Operational Terms and Concepts

We use a variety of financial and operational terms and concepts when analyzing our performance. These include the following:

Voyage Revenues. Voyage revenues currently include revenues only from time charters. Prior to our transfer of the Granada Spirit to Teekay Shipping Corporation in December 2004, our voyage revenues also included some revenues from voyage charters. Voyage revenues are affected by hire rates and the number of calendar-ship-days a vessel operates. Voyage revenues are also affected by the mix of business between time and voyage charters. Hire rates for voyage charters are more volatile, as they are typically tied to prevailing market rates at the time of a voyage.

Voyage Expenses. Voyage expenses are all expenses unique to a particular voyage, including any bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Voyage expenses are typically paid by the customer under time charters and by us under voyage charters. When we pay voyage expenses, we typically add them to our hire rates at an approximate cost.

Net Voyage Revenues. Net voyage revenues represent voyage revenues less voyage expenses. Because the amount of voyage expenses we incur for a particular charter depends upon the form of the charter, we use net voyage revenues to improve the comparability between periods of reported revenues that are generated by the different forms of charters. We principally use net voyage revenues, a non-GAAP financial measure, because it provides more meaningful information to us about the deployment of our vessels and their performance than voyage revenues, the most directly comparable financial measure under accounting principles generally accepted in the United States (or GAAP).

Vessel Operating Expenses. We are responsible for vessel operating expenses, which include crewing, repairs and maintenance, insurance, stores, lube oils and communication expenses.

Income from Vessel Operations. To assist us in evaluating our operations by segment, we analyze our income from vessel operations for each segment, which represents the income we receive from the segment after deducting operating expenses and depreciation and amortization, but prior to the deduction of net interest expense, income taxes, foreign currency and interest rate swap gains or losses, and other income and losses.

Drydocking. We must periodically drydock each of our vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. Generally, we drydock each of our vessels every five years. In addition, a shipping society classification intermediate survey is performed on our LNG carriers between the second and third year of a five-year drydocking period. We capitalize a substantial portion of the costs incurred during drydocking and for the survey and amortize those costs on a straight-line basis from the completion of a drydocking or intermediate survey to the estimated completion of the next drydocking. We expense costs related to routine repairs and maintenance incurred during drydocking or intermediate survey that do not improve or extend the useful lives of the assets. The number of drydockings undertaken in a given period, and the nature of the work performed determine the level of drydocking expenditures.

Depreciation and Amortization. Our depreciation and amortization expense typically consists of:

	•		charges related to the depreciation of the historical cost of our fleet (less an estimated residual value) over the estimated useful lives of our vessels;
	•		charges related to the amortization of drydocking expenditures over the estimated number of years to the next scheduled drydocking; and
	•		charges related to the amortization of the fair value of the time charters acquired in the Teekay Spain acquisition (over the remaining terms of the charters), which was initially determined at approximately $183 million in April 2004 when Teekay Shipping Corporation acquired Teekay Spain.

Revenue Days. Revenue days are the total number of calendar days our vessels were in our possession during a period less the total number of off-hire days during the period associated with major repairs, drydockings or special or intermediate surveys.

Calendar-Ship-Days. Calendar-ship-days are equal to the total number of calendar days that our vessels were in our possession during a period.

Utilization. An indicator of the use of our fleet during a given period, which is determined by dividing our revenue days by our calendar-ship-days for the period.

Restricted Cash Deposits. Under capital lease arrangements for two of our LNG carriers, we (a) borrowed under term loans and deposited the proceeds into restricted cash accounts and (b) entered into capital leases, also referred to as “bareboat charters,” for the vessels. The restricted cash deposits, together with interest earned on the deposits, will equal the remaining amounts we owe under the lease arrangements, including our obligation to purchase the vessels at the end of the lease terms. During vessel construction, we borrowed under the term loans and made restricted cash deposits equal to construction installment payments. We also maintain restricted cash deposits relating to certain term loans and other obligations.

For more information, please read Item 1 — Financial Statements: Note 5 — Capital Lease Obligations and Restricted Cash.

Foreign Currency Fluctuations. Our results of operations are affected by fluctuations in currency exchange rates. The volatility in our financial results due to currency exchange rate fluctuations can be attributed to the following factors:

	•		Unrealized end of period revaluations. Under U.S. accounting guidelines, all foreign currency-denominated monetary assets and liabilities, such as cash and cash equivalents, restricted cash, long-term debt and capital lease obligations, are revalued and reported based on the prevailing exchange rate at the end of the period. A substantial majority of our foreign currency gains and losses are attributable to this revaluation in respect of our Euro-denominated term loans. Substantially all of these gains and losses are unrealized.
	•		Foreign currency revenues and expenses. A portion of our voyage revenues are denominated in Euros. A substantial majority of our vessel operating expenses and general and administrative expenses are denominated in Euros, which is primarily a function of the nationality of our crew and administrative staff. We also have Euro-denominated interest expense and interest income related to our Euro-denominated loans and Euro-denominated restricted cash deposits, respectively. As a result, fluctuations in the Euro relative to the U.S. Dollar have caused, and are likely to continue to cause, fluctuations in our reported voyage revenues, vessel operating expenses, general and administrative expenses, interest expense and interest income.

For more information, please read Item 3 — Quantitative and Qualitative Disclosures About Market Risk.

Items You Should Consider When Evaluating Our Results of Operations

Some factors that have affected our historical financial performance or will affect our future performance are listed below:

	•		Our financial results reflect changes in our capital structure. Prior to the closing of our initial public offering on May 10, 2005, we repaid $337.3 million of term loans on two LNG carriers and settled related interest rate swaps. We also settled other interest rate swaps associated with 322.8 million Euros ($390.5 million) of other term loans and entered into new swaps of the same amount with a lower fixed interest rate. In addition, on May 6, 2005, Teekay Shipping Corporation contributed to us all but $54.9 million of its notes receivable from Luxco, among other assets. We subsequently repaid the $54.9 million note receivable. These reductions in our debt and effective interest rates have decreased the amount of our interest expense.
	•		Our financial results reflect the revaluation of our assets and liabilities. On April 30, 2004, Teekay Shipping Corporation acquired 100% of the issued and outstanding shares of Teekay Spain through Luxco, which Teekay Shipping Corporation subsequently contributed to us in May 2005. Results for periods subsequent to April 30, 2004 reflect the comprehensive revaluation of all assets, including intangible assets and goodwill, and liabilities of Teekay Spain at their fair values on the date of acquisition by Teekay Shipping Corporation. This revaluation primarily increased depreciation and amortization expense. Please read Item 1 — Financial Statements: Note 1 — Basis of Presentation.
	•		The size of our LNG carrier and Suezmax tanker fleets has changed. Our historical results of operations reflect changes in the size and composition of our fleet due to certain vessel deliveries and vessel dispositions. In particular, during most of 2004, we had six Suezmax tankers, while during most of the first nine months of 2005, we had four Suezmax tankers, and we have increased the size of our LNG carrier fleet from two carriers in early 2004 to four in 2005. Please read “Results of Operations — LNG Carrier Segment” and “ — Suezmax Tanker Segment” below for further details about our vessel dispositions and deliveries. In addition, we acquired the three ConocoPhillips Tankers in November 2005, as discussed above.
	•		We do not anticipate earning revenues from voyage charters in the foreseeable future. Since December 2004, all of our vessels have operated under fixed-rate time charters, and we do not anticipate earning revenues from voyage charters in the foreseeable future. Our 2004 results reflect relatively high voyage charter rates earned by the Granada Spirit, which operated under voyage charters based on spot market rates and which was part of our fleet until December 2004, when we sold it to Teekay Shipping Corporation. Teekay Shipping Corporation contributed the Granada Spirit back to us on May 6, 2005 and we concurrently chartered it to Teekay Shipping Corporation under a short-term, fixed-rate time charter until we disposed of it on May 26, 2005.

			The time charters for two of our Suezmax tankers, the Sevilla Spirit, prior to being sold in the fourth quarter of 2004, and the Teide Spirit, which began operating in the fourth quarter of 2004, contain a component providing for additional revenues to us beyond the fixed hire rate when current market rates exceed certain threshold amounts. Accordingly, even though declining spot market rates will not result in our receiving less than the fixed hire rate, our results will continue to be influenced, in part, by the variable component of the Teide Spirit charter.
	•		We are incurring additional general and administrative expenses following our initial public offering. At the closing of our initial public offering, we and certain of our subsidiaries entered into services agreements with certain subsidiaries of Teekay Shipping Corporation pursuant to which those subsidiaries provide us and our subsidiaries certain services, including strategic consulting, advisory, ship management, technical and administrative services. Our cost for these services depends on the amount and type of services provided during each period. We also reimburse our general partner for all expenses it incurs on our behalf. We may also pay “incentive fees” to Teekay Shipping Corporation to reward and motivate it for pursuing LNG projects that we may elect to undertake, and we may grant equity compensation that would result in an expense to us. In addition, since our initial public offering on May 10, 2005, we have begun to incur expenses as a result of being a publicly traded limited partnership, including costs associated with annual reports to unitholders and SEC filings, investor relations, incremental director and officer liability insurance costs and director compensation.

Results of Operations

The following tables present our operating results by reportable segment for the three and nine months ended September 30, 2005 and 2004, and compare our net voyage revenues for those periods to the most directly comparable GAAP financial measure. For ease of comparison for the nine months ended September 30, 2005 and 2004, we combined the results of the various time periods set forth in our consolidated statements of income (loss) into nine-month comparison periods.

		Three Months Ended												Three Months Ended
		September 30, 2005												September 30, 2004
		(Unaudited)												(Unaudited)
		Suezmax				LNG								Suezmax				LNG
		Tanker				Carrier								Tanker				Carrier
(in thousands of U.S. dollars, except Operating Data)		Segment				Segment				Total				Segment				Segment				Total
Voyage revenues			10,257				24,503				34,760				16,076				17,324				33,400
Voyage expenses			135				—				135				1,331				54				1,385
Net voyage revenues			10,122				24,503				34,625				14,745				17,270				32,015
Vessel operating expenses			2,957				3,614				6,571				5,069				3,107				8,176
Depreciation and amortization			3,085				7,522				10,607				6,414				4,779				11,193
General and administrative(1)			1,471				1,262				2,733				572				290				862
Income from vessel operations			2,609				12,105				14,714				2,690				9,094				11,784
Operating Data:
Revenue Days (A)			423				368				791				516				262				778
Calendar-Ship-Days (B)			435				368				803				547				262				809
Utilization (A)/(B)			97.2	%			100.0	%			98.5	%			94.3	%			100.0	%			96.2	%