GlobeNewswire Inc | Aug 13, 2020 02:00AM EDT

August 13, 2020

Highlights

-- GAAP net income attributable to the partners and preferred unitholders of $44.9million and GAAP net income per common unit of $0.46 in the second quarter of 2020. -- Adjusted net income(1) attributable to the partners and preferred unitholders of $62.6 million and adjusted net income per common unit of $0.67 in the second quarter of 2020 (excluding other items listed in Appendix A to this release). -- Total adjusted EBITDA(1) of $192.3 million in the second quarter of 2020, representing another quarterly record and up nearly 19 percent from the same quarter of the prior year. -- Eighth consecutive quarterly increase in total adjusted EBITDA(1). -- Fixed-rate charters performing as expected; reaffirming 2020 financial guidance(2).

HAMILTON, Bermuda, Aug. 13, 2020 (GLOBE NEWSWIRE) -- Teekay GP L.L.C., the general partner (the General Partner) of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE: TGP), today reported the Partnerships results for the quarter ended June30, 2020.

Consolidated Financial Summary

Three Months Ended June 30, 2020 March 31, June 30, 2020 2019(in thousands of U.S. Dollars, except per (unaudited) (unaudited) (unaudited)unit data)GAAP FINANCIAL COMPARISON Voyage revenues 148,205 139,887 153,060 Income from vessel operations 69,589 21,738 74,677 Equity income 32,155 373 1,738 Net income (loss) attributable to the 44,934 (32,994 ) 16,435 partners and preferred unitholdersLimited partners? interest in net income 0.46 (0.50 ) 0.12 per common unitNON-GAAP FINANCIAL COMPARISON Total adjusted revenues^(1) 254,001 244,268 221,926 Total adjusted EBITDA^(1) 192,340 188,388 162,069 Distributable cash flow (DCF)^(1) 83,170 74,877 56,330 Adjusted net income attributable to the 62,643 52,236 34,435 partners and preferred unitholders^(1)Limited partners? interest in adjusted net 0.67 0.58 0.35 income per common unit

(1) These are non-GAAP financial measures. Please refer to Definitions and Non-GAAP Financial Measures and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under United States generally accepted accounting principles (GAAP).(2) The previously provided 2020 Guidance Range for Earnings per unit has been recalibrated to account for the timing of the issuance of new units to Teekay Corporation in exchange for eliminating its Incentive Distribution Rights.

Second Quarter of 2020 Compared to Second Quarter of 2019

GAAP net income and non-GAAP adjusted net income attributable to the partners and preferred unitholders were positively impacted for the three months ended June30, 2020, compared to the same quarter of the prior year, by: earnings from six liquefied natural gas (LNG) carrier newbuildings which delivered into the Partnerships consolidated fleet and equity-accounted joint ventures last year; fewer dry docking and repair off-hire days; and higher earnings by certain of the Partnership's joint ventures as their individual projects commenced or certain of their vessels commenced charters at, or earned, higher rates. These increases were partially offset by a reduction in earnings upon the sales of two LNG carriers in January 2020, and an oil tanker in October 2019.

Second Quarter of 2020 Compared to First Quarter of 2020

GAAP net income and non-GAAP adjusted net income attributable to the partners and preferred unitholders were positively impacted for the three months ended June30, 2020, compared to the three months ended March 31, 2020, by a reduction in operational performance claims; higher earnings in one of the Partnership's joint ventures due to higher LPG rates; and a decrease in income tax expense. These decreases were partially offset by an increase in vessel operating expenses due to the timing of repairs and maintenance and an increase in general and administrative expenses due to additional professional fees incurred in the second quarter of 2020. In addition, GAAP net income was higher in the second quarter of 2020 as a result of a write-down recorded in the first quarter of 2020 and decreases in unrealized losses on non-designated derivative instruments and credit loss provision adjustments in the second quarter of 2020, including within the Partnership's equity-accounted joint ventures. These increases were partially offset by unrealized foreign currency exchange losses incurred in the second quarter of 2020 as compared to gains in the first quarter of 2020.

CEO Commentary

We are pleased to report that this was another record quarter for Teekay LNG, commented Mark Kremin, President and Chief Executive Officer of Teekay Gas Group Ltd. While COVID-19 continues to have an unprecedented impact on the world and is a major focus for us, we have been able to fully service our charter contracts and have continued to receive contracted cash flows from our high quality customers. As a result of the pandemic, the overall maritime industry has experienced significant challenges related to crew changes, but I am pleased to report that we have safely changed-out a number of crew members on all of our vessels. We continue to work hard with both the industry and inter-governmental organizations to tackle this challenge and bring our remaining overdue colleagues home safely as soon as possible. I am truly proud of how our seafarers and onshore colleagues have responded to ensure safe and successful transitions with no reported COVID-19 cases, while providing uninterrupted service to our customers.

Mr. Kremin continued, Following the completion of our growth program late last year, our focus has been primarily on delevering our balance sheet, which also reduces interest costs, and maximizing our fleet utilization, which provides us with stable, predictable cash flows.This focus, in combination with consistent operational performance and competitive costs, driven by our economies of scale, has resulted in record Adjusted Net Income(1) and Total Adjusted EBITDA(1) for Teekay LNG this quarter.

Mr. Kremin continued, Our LNG fleet is fully-fixed for the remainder of 2020 and 94 percent fixed for 2021, largely insulating Teekay LNG from the current weak short-term LNG shipping market. Furthermore, all of our charter contracts are currently operating in-line with our expectations, which allows us to reaffirm our previously provided financial guidance for 2020.

(1) These are non-GAAP financial measures. Please refer to Definitions and Non-GAAP Financial Measures and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under United States generally accepted accounting principles (GAAP).

Summary of Recent Events

In July 2020, the Partnership entered into a new commercial management agreement with the current manager of its seven wholly-owned multi-gas vessels. The new agreement has a two-year term effective September 2020 and is in direct continuation of the expiry of the current commercial management agreement.

In May 2020, Teekay Corporation and the Partnership eliminated all of the Partnership's incentive distribution rights held by the General Partner in exchange for 10.75 million newly-issued common units. Following the completion of this transaction on May 11, 2020, Teekay Corporation now beneficially owns approximately 36 million of the Partnership's common units and remains the sole owner of the General Partner, which together represents an economic interest of approximately 42 percent in the Partnership.

In May 2020, on maturity, the Partnership repaid its 1 billion Norwegian Krone (NOK) -denominated bonds and the associated cross currency swap arrangement. This repayment amounted to $111 million, net of $23 million of cash collateral released on the associated cross currency swap.

In May 2020, the Partnership's 52 percent-owned joint venture with Marubeni Corporation (the MALT Joint Venture) chartered the Marib Spirit to an international trading company for a period of six months, which commenced in mid-June 2020.

In April 2020, the MALT Joint Venture secured new charters for the Arwa Spirit and the Methane Spirit for periods of 12 and eight months, respectively. The new charters commenced upon completion and in direct continuation of their existing charters in May and July 2020, respectively.

Operating Results

The following table highlights certain financial information for Teekay LNGs segments: the Liquefied Natural Gas Segment, the Liquefied Petroleum Gas Segment and until the sale of our last conventional tanker in October 2019, the Conventional Tanker Segment (please refer to the Teekay LNGs Fleet section of this release below and Appendices D and E for further details).

Three Months Ended June 30, 2020 June 30, 2019(in thousands of (unaudited) (unaudited)U.S. Dollars) Liquefied Conventional Liquefied Liquefied Conventional Liquefied Natural Petroleum Tanker Total Natural Petroleum Tanker Total Gas Segment Gas Segment Gas Gas Segment Segment Segment SegmentGAAP FINANCIAL COMPARISONVoyage revenues 137,822 10,383 ? 148,205 141,833 8,858 2,369 153,060 Income fromvessel 69,232 357 ? 69,589 73,933 311 433 74,677 operationsEquity income 27,795 4,360 ? 32,155 3,377 (1,639 ) ? 1,738 (loss)NON-GAAPFINANCIAL COMPARISONConsolidatedadjusted EBITDA^ 103,190 1,420 ? 104,610 111,109 2,341 602 114,052 (i)Adjusted EBITDAfrom 75,824 11,906 ? 87,730 40,095 7,922 ? 48,017 equity-accountedvessels^(i)Total adjusted 179,014 13,326 ? 192,340 151,204 10,263 602 162,069 EBITDA^(i)

(i) These are non-GAAP financial measures. Please refer to Definitions and Non-GAAP Financial Measures and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under GAAP.

Liquefied Natural Gas Segment

Income from vessel operations and consolidated adjusted EBITDA(1) for the liquefied natural gas segment for the three months ended June30, 2020, compared to the same quarter of the prior year, decreased primarily by a reduction in earnings upon the sales of the WilForce and WilPride LNG carriers in January 2020. This decrease was partially offset by fewer off-hire days in the second quarter of 2020 due to scheduled dry dockings for certain of the Partnership's LNG carriers.

Equity income and adjusted EBITDA from equity-accounted vessels(1) for the liquefied natural gas segment for the three months ended June30, 2020, compared to the same quarter of the prior year, increased primarily due to: the deliveries of four ARC7 LNG carrier newbuildings between June and December 2019 to the Partnerships 50 percent-owned joint venture with China LNG Shipping (Holdings) Limited (Yamal LNG Joint Venture); commencement of terminal use payments in January 2020 to the Partnership's 30 percent-owned joint venture with National Oil & Gas Authority, Gulf Investment Corporation and Samsung C&T (the Bahrain LNG Joint Venture); higher earnings from the MALT Joint Venture as a result of the one-year charter contracts that were secured at higher rates for the Arwa Spirit and Marib Spirit in June and July 2019, respectively; and fewer off-hire days due to scheduled dry dockings and main engine overhauls for certain vessels in the second quarter of 2019.

Liquefied Petroleum Gas Segment

Income from vessel operations and consolidated adjusted EBITDA(1) for the liquefied petroleum gas segment for the three months ended June30, 2020, compared to the same quarter of the prior year, was relatively stable.

Equity income (loss) and adjusted EBITDA from equity-accounted vessels(1) for the liquefied petroleum gas segment for the three months ended June30, 2020, compared to the same quarter of the prior year, were positively impacted by higher LPG rates earned and fewer off-hire days in the Partnerships 50 percent-owned LPG joint venture with Exmar NV (the Exmar LPG Joint Venture).

Conventional Tanker Segment

There were no results from vessel operations for the conventional tanker segment for the three months ended June30, 2020, as the last of the Partnership's conventional tankers, the Toledo Spirit and Alexander Spirit, were sold in January and October of 2019, respectively.

(1) These are non-GAAP financial measures. Please refer to Definitions and Non-GAAP Financial Measures and the Appendices to this release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in this release to the most directly comparable financial measures under GAAP.

Teekay LNG's Fleet

The following table summarizes the Partnerships fleet as of August 1, 2020. In addition, the Partnership owns a 30 percent interest in a regasification terminal in Bahrain.

Number of Vessels Owned and In-Chartered Vessels^(i)LNG Carrier Fleet 47^(ii) LPG/Multi-gas Carrier Fleet 30^(iii) Total 77

-- Includes vessels leased by the Partnership from third parties and accounted for as finance leases. -- The Partnerships ownership interests in these vessels range from 20 percent to 100 percent. -- The Partnerships ownership interests in these vessels range from 50 percent to 100 percent.

Liquidity

As of June30, 2020, the Partnership had total liquidity of $306.3 million (comprised of $226.3 million in cash and cash equivalents and $80.0 million in undrawn credit facilities).

Conference Call

The Partnership plans to host a conference call on Thursday, August 13, 2020 at 1:00 p.m. (ET) to discuss the results for the second quarter of 2020. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

-- By dialing 1 (800) 367-2403 or 1 (647) 490-5367, if outside North America, and quoting conference ID code 9339565. -- By accessing the webcast, which will be available on Teekay LNGs website at www.teekay.com (the archive will remain on the website for a period of one year).

An accompanying Second Quarter of 2020 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.

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 and LPG services primarily under long-term, fee-based charter contracts through its interests in 47 LNG carriers, 23 mid-size LPG carriers, and seven multi-gas carriers. The Partnership's ownership interests in these vessels range from 20 to 100 percent. In addition, the Partnership owns a 30 percent interest in an LNG regasification terminal. Teekay LNG Partners is a publicly-traded master limited partnership 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 and preferred units trade on the New York Stock Exchange under the symbols TGP, TGP PR A and TGP PR B, respectively.

For Investor Relationsenquiries contact:

Ryan HamiltonTel: +1 (604) 609-2963Website: www.teekay.com

Definitions and Non-GAAP Financial Measures

This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the SEC. These non-GAAP financial measures which include Adjusted Net Income Attributable to the Partners and Preferred Unitholders, Distributable Cash Flow, Total Adjusted Revenues and Adjusted EBITDA, are intended to provide additional information and should not be considered substitutes for measures of performance prepared in accordance with GAAP. In addition, these measures do not have standardized meanings across companies, and may not be comparable to similar measures presented by other companies. These non-GAAP measures are used by management, and the Partnership believes that these supplementary metrics assist investors and other users of its financial reports in comparing financial and operating performance of the Partnership across reporting periods and with other companies.

Non-GAAP Financial Measures

Total Adjusted Revenues represents the Partnership's voyage revenues from its consolidated vessels, as shown in the Partnership's Consolidated Statements of Income (Loss), and its proportionate ownership percentage of the voyage revenues from its equity-accounted joint ventures, as shown in Appendix E of this release, less the Partnership's proportionate share of voyage revenues earned directly from its equity-accounted joint ventures. Please refer to Appendix C and E of this release for a reconciliation of this non-GAAP financial measure to voyage revenues and equity income, the most directly comparable GAAP measures reflected in the Partnerships consolidated financial statements. The Partnership's equity-accounted joint ventures are generally required to distribute all available cash to their owners. However, the timing and amount of dividends from each of the Partnership's equity-accounted joint ventures may not necessarily coincide with the operating cash flow generated from each respective equity-accounted joint venture. The timing and amount of dividends distributed by the Partnership's equity-accounted joint ventures are affected by the timing and amounts of debt repayments in the joint ventures, capital requirements of the joint ventures, as well as any cash reserves maintained in the joint ventures for operations, capital expenditures and/or as required under financing agreements.

Adjusted EBITDA represents net income (loss) before interest, taxes, and depreciation and amortization and is adjusted to exclude certain items whose timing or amount cannot be reasonably estimated in advance or that are not considered representative of core operating performance. Such adjustments include unrealized credit loss adjustments, unrealized gains or losses on derivative instruments, foreign exchange gains or losses, adjustments for direct financing and sales-type leases to a cash basis, and certain other income or expenses. Adjusted EBITDA also excludes realized gains or losses on interest rate swaps as management, in assessing the Partnership's performance, views these gains or losses as an element of interest expense and realized gains or losses on derivative instruments resulting from amendments or terminations of the underlying instruments. Consolidated Adjusted EBITDA represents Adjusted EBITDA from vessels that are consolidated on the Partnership's financial statements. Adjusted EBITDA from Equity-Accounted Vessels represents the Partnership's proportionate share of Adjusted EBITDA from its equity-accounted vessels. The Partnership does not have the unilateral ability to determine whether the cash generated by its equity-accounted vessels is retained within the entity in which the Partnership holds the equity-accounted investments or distributed to the Partnership and other owners. In addition, the Partnership does not control the timing of any such distributions to the Partnership and other owners. Adjusted EBITDA is a non-GAAP financial measure used by certain investors and management to measure the operational performance of companies. Please refer to Appendices C and E of this release for reconciliations of Adjusted EBITDA to net income and equity income, respectively, which are the most directly comparable GAAP measures reflected in the Partnerships consolidated financial statements.

Adjusted Net Income Attributableto the Partners and Preferred Unitholders excludes items of income or loss from GAAP net income (loss) that are typically excluded by securities analysts in their published estimates of the Partnerships financial results. The Partnership believes that certain investors use this information to evaluate the Partnerships financial performance, as does management. Please refer to Appendix A of this release for a reconciliation of this non-GAAP financial measure to net income, and refer to footnote (3) of the Consolidated Statements of Income (Loss) for a reconciliation of adjusted equity income to equity income, the most directly comparable GAAP measure reflected in the Partnerships consolidated financial statements.

Distributable Cash Flow (DCF) represents GAAP net income (loss) adjusted for depreciation and amortization expense, deferred income tax and other non-cash items, estimated maintenance capital expenditures, unrealized gains and losses from non-designated derivative instruments, unrealized credit loss adjustments, distributions relating to equity financing of newbuilding installments, distributions relating to preferred units, adjustments for direct financing and sales-type leases to a cash basis, unrealized foreign currency exchange gains or losses, and the Partnerships proportionate share of such items in its equity-accounted for investments. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnerships capital assets. DCF is a quantitative standard used in the publicly-traded partnership investment community and by management to assist in evaluating financial performance. Please refer to Appendix B of this release for a reconciliation of this non-GAAP financial measure to net income, the most directly comparable GAAP measure reflected in the Partnerships consolidated financial statements.

Teekay LNG Partners L.P.Consolidated Statements of Income (Loss)(in thousands of U.S. Dollars, except unit and per unit data)

Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)Voyage revenues 148,205 139,887 153,060 288,092 302,804 Voyage expenses (5,329 ) (2,317 ) (6,023 ) (7,646 ) (11,798 )Vessel operating (28,407 ) (26,104 ) (27,457 ) (54,511 ) (53,558 )expensesTime-charter (5,368 ) (5,922 ) (3,080 ) (11,290 ) (8,671 )hire expenseDepreciation and (31,629 ) (32,639 ) (35,338 ) (64,268 ) (69,464 )amortizationGeneral andadministrative (7,883 ) (6,167 ) (5,667 ) (14,050 ) (12,299 )expensesWrite-down of ? (45,000 ) ? (45,000 ) ? vessels^(1)Restructuring ? ? (818 ) ? (2,976 )charges^(2)Income fromvessel 69,589 21,738 74,677 91,327 144,038 operations Equity income^ 32,155 373 1,738 32,528 7,316 (3)Interest expense (35,143 ) (36,704 ) (41,018 ) (71,847 ) (83,235 )Interest income 1,697 2,370 960 4,067 2,038 Realized andunrealized losson (8,516 ) (20,471 ) (7,826 ) (28,987 ) (14,443 )non-designatedderivativeinstruments^(4)Foreign currencyexchange (loss) (11,624 ) 4,739 (7,243 ) (6,885 ) (7,974 )gain^(5)Other expense (679 ) (361 ) (487 ) (1,040 ) (236 )Net income(loss) beforeincome tax 47,479 (28,316 ) 20,801 19,163 47,504 recovery(expense)Income taxrecovery 1,804 (2,512 ) (1,749 ) (708 ) (4,327 )(expense)Net income 49,283 (30,828 ) 19,052 18,455 43,177 (loss) Non-controllinginterest in net 4,349 2,166 2,617 6,515 5,125 incomePreferredunitholders' 6,425 6,425 6,425 12,850 12,850 interest in netincomeGeneralpartner's 713 (789 ) 200 (76 ) 504 interest in netincome (loss)Limitedpartners? 37,796 (38,630 ) 9,810 (834 ) 24,698 interest in netincome (loss)Limitedpartners'interest in net income (loss)per common unit:? Basic 0.46 (0.50 ) 0.12 (0.01 ) 0.31 ? Diluted 0.46 (0.50 ) 0.12 (0.01 ) 0.31 Weighted-averagenumber of common unitsoutstanding:? Basic 82,197,665 77,071,647 78,603,636 79,629,623 78,600,342 ? Diluted 82,262,235 77,071,647 78,685,537 79,629,623 78,682,263 Total number ofcommon units 86,927,558 76,171,639 78,441,316 86,927,558 78,441,316 outstanding atend of period

(1) In the first quarter of 2020, the Partnership wrote-down six wholly-owned multi-gas carriers (the Pan Spirit, Unikum Spirit, Vision Spirit, Camilla Spirit, Sonoma Spirit and Cathinka Spirit) to their estimated fair values. The total impairment charge of $45.0 million related to these six multi-gas carriers is included in write-down of vessels for the three months ended March 31, 2020, and six months ended June 30, 2020.

(2) In January 2019, the Toledo Spirit conventional tanker was sold and as a result of this sale, the Partnership recorded restructuring charges of $0.8 million and $3.0 million for the three and six months ended June 30, 2019, respectively.

(3) The Partnerships proportionate share of items within equity income as identified in Appendix A of this release is detailed in the table below. By excluding these items from equity income, the Partnership believes the resulting adjusted equity income is a normalized amount that can be used to better evaluate the financial performance of the Partnerships equity-accounted investments. Adjusted equity income is a non-GAAP financial measure.

Three Months Ended Six Months Ended June 30, March June June 30, June 30, 31, 30, 2020 2020 2019 2020 2019Equity income 32,155 373 1,738 32,528 7,316 Proportionate share of unrealizedloss on non-designated interest 3,806 22,204 5,102 26,010 9,462 rate swapsProportionate share of unrealized (423 ) 8,980 ? 8,557 ? credit loss provision^(a)Proportionate share of other items 362 (539 ) 1,124 (177 ) 1,469 Equity income adjusted for items in 35,900 31,018 7,964 66,918 18,247 Appendix A

(a) Related to adoption of new accounting standard ASC 326 on January 1, 2020.

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

Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019Realized losses relating to: Interest rate swap agreements (3,662 ) (2,911 ) (2,392 ) (6,573 ) (4,777 )Foreign currency forward ? (241 ) ? (241 ) ? contracts (3,662 ) (3,152 ) (2,392 ) (6,814 ) (4,777 )Unrealized (losses) gains relating to:Interest rate swap agreements (4,854 ) (17,521 ) (5,333 ) (22,375 ) (9,525 )Foreign currency forward ? 202 (101 ) 202 (101 )contractsToledo Spirit time-charter ? ? ? ? (40 )derivative contract (4,854 ) (17,319 ) (5,434 ) (22,173 ) (9,666 )Total realized and unrealizedlosses on non-designated (8,516 ) (20,471 ) (7,826 ) (28,987 ) (14,443 )derivative instruments

(5) For accounting purposes, the Partnership is required to revalue all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rates at the end of each reporting period. This revaluation does not affect the Partnerships 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 (Loss).

Foreign currency exchange (loss) gain includes realized (losses) gains relating to the amounts the Partnership paid to settle the Partnerships non-designated cross currency swaps that were entered into as economic hedges in relation to the Partnerships Norwegian Krone (NOK) denominated unsecured bonds. Foreign currency exchange gain (loss) also includes unrealized gains (losses) relating to the change in fair value of such derivative instruments and unrealized (losses) gain on the revaluation of the NOK bonds as detailed in the table below:

Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019Realized losses on (1,430 ) (1,817 ) (1,087 ) (3,247 ) (2,521 )cross-currency swapsRealized losses on (33,844 ) ? ? (33,844 ) ? cross-currency swaps maturityRealized gains on repayment of 33,844 ? ? 33,844 ? NOK bondsUnrealized gains (losses) on 45,881 (49,540 ) (139 ) (3,659 ) (2,059 )cross currency swapsUnrealized (losses) gains on (53,794 ) 53,973 (3,901 ) 179 (4,480 )revaluation of NOK bonds

Teekay LNG Partners L.P.Consolidated Balance Sheets(in thousands of U.S. Dollars)

As at June As at March As at 30, 31, December 31, 2020 2020 2019 (unaudited) (unaudited) (unaudited)ASSETS Current Cash and cash equivalents 226,328 312,710 160,221 Restricted cash ? current 11,544 37,032 53,689 Accounts receivable 9,694 10,592 13,460 Prepaid expenses 10,891 7,780 6,796 Current portion of derivative assets ? ? 355 Current portion of net investments in 14,014 13,740 273,986 direct financing and sale-type leasesAdvances to affiliates 3,025 5,474 5,143 Other current assets 237 237 238 Total current assets 275,733 387,565 513,888 Restricted cash ? long-term 54,603 76,496 39,381 Vessels and equipment At cost, less accumulated depreciation 1,256,434 1,272,433 1,335,397 Vessels related to finance leases, at cost, 1,675,168 1,686,634 1,691,945 less accumulated depreciationOperating lease right-of-use asset 27,568 30,882 34,157 Total vessels and equipment 2,959,170 2,989,949 3,061,499 Investments in and advances to 1,082,346 1,065,389 1,155,316 equity-accounted joint venturesNet investments in direct financing and 525,812 529,943 544,823 sales-type leasesOther assets 17,633 16,169 14,738 Derivative assets ? ? 1,834 Intangible assets ? net 38,938 41,152 43,366 Goodwill 34,841 34,841 34,841 Total assets 4,989,076 5,141,504 5,409,686 LIABILITIES AND EQUITY Current Accounts payable 4,270 1,633 5,094 Accrued liabilities 79,832 76,796 76,752 Unearned revenue 30,185 25,832 28,759 Current portion of long-term debt 295,282 328,384 393,065 Current obligations related to finance 70,955 70,455 69,982 leasesCurrent portion of operating lease 13,681 13,524 13,407 liabilitiesCurrent portion of derivative liabilities 34,997 66,852 38,458 Advances from affiliates 18,271 8,372 7,003 Total current liabilities 547,473 591,848 632,520 Long-term debt 1,263,202 1,356,766 1,438,331 Long-term obligations related to finance 1,305,056 1,323,069 1,340,922 leasesLong-term operating lease liabilities 13,887 17,357 20,750 Derivative liabilities 88,336 96,453 51,006 Other long-term liabilities 52,635 53,460 49,182 Total liabilities 3,270,589 3,438,953 3,532,711 Equity Limited partners ? common units 1,447,690 1,425,960 1,543,598 Limited partners ? preferred units 285,159 285,159 285,159 General partner 45,868 47,839 50,241 Accumulated other comprehensive loss (116,313 ) (108,457 ) (57,312 )Partners' equity 1,662,404 1,650,501 1,821,686 Non-controlling interest 56,083 52,050 55,289 Total equity 1,718,487 1,702,551 1,876,975 Total liabilities and total equity 4,989,076 5,141,504 5,409,686

Teekay LNG Partners L.P.Consolidated Statements of Cash Flows(in thousands of U.S. Dollars)

Six Months Ended June 30, June 30, 2020 2019 (unaudited) (unaudited)Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES Net income 18,455 43,177 Non-cash and non-operating items: Unrealized loss on non-designated derivative 22,173 9,666 instrumentsDepreciation and amortization 64,268 69,464 Write-down of vessels 45,000 ? Unrealized foreign currency exchange loss including the 3,660 4,727 effect of the settlement of cross currency swapsEquity income, net of dividends received $14,852 (2019 (17,676 ) 9,958 ? $17,274)Amortization of deferred financing issuance costs 3,001 5,170 included in interest expenseOther non-cash items 1,823 3,828 Change in non-cash operating assets and liabilities: Receipts from direct financing and sales-type leases 267,463 6,050 Expenditures for dry docking (1,927 ) (6,335 )Other non-cash operating assets and liabilities 17,621 (28,827 )Net operating cash flow 423,861 116,878 FINANCING ACTIVITIES Proceeds from issuance of long-term debt 446,650 126,263 Scheduled repayments of long-term debt and settlement (194,831 ) (66,310 )of related swapsPrepayments of long-term debt (525,021 ) (168,787 )Financing issuance costs (2,601 ) (989 )Proceeds from financing related to sales and leaseback ? 158,680 of vesselsScheduled repayments of obligations related to finance (34,893 ) (33,855 )leasesRepurchase of common units (15,635 ) (12,056 )Cash distributions paid (47,295 ) (39,315 )Acquisition of non-controlling interest in certain of (2,219 ) ? the Partnership's subsidiariesDividends paid to non-controlling interest ? (55 )Net financing cash flow (375,845 ) (36,424 )INVESTING ACTIVITIES Expenditures for vessels and equipment (8,832 ) (82,575 )Capital contributions and advances to equity-accounted ? (15,555 )joint venturesNet investing cash flow (8,832 ) (98,130 )Increase (decrease) in cash, cash equivalents and 39,184 (17,676 )restricted cashCash, cash equivalents and restricted cash, beginning 253,291 222,864 of the periodCash, cash equivalents and restricted cash, end of the 292,475 205,188 period

Teekay LNG Partners L.P.Appendix A - Reconciliation of Non-GAAP Financial MeasuresAdjusted Net Income(in thousands of U.S. Dollars)

Three Months Ended June 30, 2020 2019 (unaudited) (unaudited)Net income ? GAAP basis 49,283 19,052 Less: Net income attributable to non-controlling (4,349 ) (2,617 )interestsNet income attributable to the partners and preferred 44,934 16,435 unitholdersAdd (subtract) specific items affecting net income: Restructuring charges^(1) ? 818 Foreign currency exchange loss^(2) 10,194 6,068 Unrealized losses on non-designated derivativeinstruments and other items from equity-accounted 3,745 6,226 investees^(3)Unrealized losses on non-designated derivative 4,854 5,434 instruments^(4)Other items (1,619 ) ? Non-controlling interests? share of items above^(5) 535 (546 )Total adjustments 17,709 18,000 Adjusted net income attributable to the partners and 62,643 34,435 preferred unitholders Preferred unitholders' interest in adjusted net 6,425 6,425 incomeGeneral partner's interest in adjusted net income 1,044 560 Limited partners? interest in adjusted net income 55,174 27,450 Limited partners? interest in adjusted net income per 0.67 0.35 common unit, basicWeighted-average number of common units outstanding, 82,197,665 78,603,636 basic

-- See Note 2 to the Consolidated Statements of Income (Loss) included in this release for further details. -- Foreign currency exchange loss primarily relate to the Partnerships 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 losses on the cross currency swaps economically hedging the Partnerships NOK bonds. This amount excludes the realized losses relating to the cross currency swaps for the NOK bonds. See Note 5 to the Consolidated Statements of Income (Loss) included in this release for further details. -- Reflects the proportionate share of unrealized losses due to changes in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes and unrealized credit loss provision in the Partnership's equity-accounted investees. See Note 3 to the Consolidated Statements of Income (Loss) included in this release for further details. -- 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. See Note 4 to the Consolidated Statements of Income (Loss) included in this release for further details. -- Items affecting net income (loss) include items from the Partnerships consolidated non-wholly-owned subsidiaries. The specific items affecting net income (loss) 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 above in the table above is the cumulative amount of the non-controlling interests proportionate share of the other specific items affecting net income listed in the table.

Teekay LNG Partners L.P.Appendix B - Reconciliation of Non-GAAP Financial MeasuresDistributable Cash Flow (DCF)(in thousands of U.S. Dollars, except units outstanding and per unit data)

Three Months Ended June 30, 2020 2019 (unaudited) (unaudited) Net income 49,283 19,052 Add: Partnership?s share of equity-accounted jointventures' DCF net of estimated maintenance capital 42,725 16,056 expenditures^(1)Depreciation and amortization 31,629 35,338 Foreign currency exchange loss 10,194 6,068 Unrealized loss on non-designated derivative 4,854 5,434 instrumentsDirect finance and sale-type lease payments receivedin excess of revenue recognized and other 3,392 4,037 adjustmentsDeferred income tax and other non-cash items 531 116 Distributions relating to equity financing of ? 1,099 newbuildingsLess: Distributions relating to preferred units (6,425 ) (6,425 )Estimated maintenance capital expenditures (14,513 ) (17,397 )Equity income (32,155 ) (1,738 )Distributable Cash Flow before non-controlling 89,515 61,640 interestNon-controlling interests? share of DCF before (6,345 ) (5,310 )estimated maintenance capital expendituresDistributable Cash Flow 83,170 56,330 Amount of cash distributions attributable to the (411 ) (304 )General PartnerLimited partners' Distributable Cash Flow 82,759 56,026 Weighted-average number of common units outstanding, 82,197,665 78,603,636 basicDistributable Cash Flow per limited partner common 1.03 0.71 unit

-- The estimated maintenance capital expenditures relating to the Partnerships share of equity-accounted joint ventures were $15.2 million and $10.8 million for the three months ended June 30, 2020 and 2019, respectively.

Teekay LNG Partners L.P.Appendix C - Reconciliation of Non-GAAP Financial MeasuresTotal Adjusted Revenues and Total Adjusted EBITDA(in thousands of U.S. Dollars)

Three Months Ended June 30, 2020 2019 (unaudited) (unaudited)Voyage revenues 148,205 153,060 Partnership's proportionate share of voyage revenuesfrom its equity-accounted joint ventures (See Appendix 111,365 73,391 E)Less the Partnership?s proportionate share of voyagerevenues earned directly from its equity-accounted (5,569 ) (4,525 )joint venturesTotal adjusted revenues 254,001 221,926

Three Months Ended June 30, 2020 2019 (unaudited) (unaudited)Net income 49,283 19,052 Depreciation and amortization 31,629 35,338 Interest expense, net of interest income 33,446 40,058 Income tax (recovery) expense (1,804 ) 1,749 EBITDA 112,554 96,197 Add (subtract) specific income statement items affecting EBITDA:Foreign currency exchange loss 11,624 7,243 Other expense 679 487 Equity income (32,155 ) (1,738 )Realized and unrealized loss on derivative instruments 8,516 7,826 Direct finance and sale-type lease payments received in 3,392 4,037 excess of revenue recognized and other adjustmentsConsolidated adjusted EBITDA 104,610 114,052 Adjusted EBITDA from equity-accounted vessels (See 87,730 48,017 Appendix E)Total adjusted EBITDA 192,340 162,069

Teekay LNG Partners L.P.Appendix D - Reconciliation of Non-GAAP Financial MeasuresConsolidated Adjusted EBITDA by Segment(in thousands of U.S. Dollars)

Three Months Ended June 30, 2020 (unaudited) Liquefied Liquefied Conventional Natural Petroleum Tanker Total Gas Gas Segment Segment SegmentVoyage revenues 137,822 10,383 ? 148,205 Voyage expenses (806 ) (4,523 ) ? (5,329 )Vessel operating expenses (24,599 ) (3,808 ) ? (28,407 )Time-charter hire expense (5,368 ) ? ? (5,368 )Depreciation and amortization (30,566 ) (1,063 ) ? (31,629 )General and administrative expenses (7,251 ) (632 ) ? (7,883 )Income from vessel operations 69,232 357 ? 69,589 Depreciation and amortization 30,566 1,063 ? 31,629 Direct finance and sales-type leasepayments received in excess of 3,392 ? ? 3,392 revenue recognized and otheradjustmentsConsolidated adjusted EBITDA 103,190 1,420 ? 104,610 Three Months Ended June 30, 2019 (unaudited) Liquefied Liquefied Conventional Natural Petroleum Tanker Total Gas Gas Segment Segment SegmentVoyage revenues 141,833 8,858 2,369 153,060 Voyage (expenses) recoveries (3,484 ) (2,542 ) 3 (6,023 )Vessel operating expenses (23,146 ) (3,630 ) (681 ) (27,457 )Time-charter hire expense (3,080 ) ? ? (3,080 )Depreciation and amortization (33,139 ) (2,030 ) (169 ) (35,338 )General and administrative expenses (5,051 ) (345 ) (271 ) (5,667 )Restructuring charges ? ? (818 ) (818 )Income from vessel operations 73,933 311 433 74,677 Depreciation and amortization 33,139 2,030 169 35,338 Direct finance and sales-type leasepayments received in excess of 4,037 ? ? 4,037 revenue recognized and otheradjustmentsConsolidated adjusted EBITDA 111,109 2,341 602 114,052

Teekay LNG Partners L.P.Appendix E - Reconciliation of Non-GAAP Financial MeasuresAdjusted EBITDA from Equity-Accounted Vessels(in thousands of U.S. Dollars)

Three Months Ended June 30, 2020 June 30, 2019 (unaudited) (unaudited) At Partnership's At Partnership's 100% Portion^(1) 100% Portion^(1)Voyage revenues 258,426 111,365 172,632 73,391 Voyage expenses (1,360 ) (638 ) (4,502 ) (2,196 )Vessel operating expenses,time-charter hire expenses (72,316 ) (31,551 ) (63,879 ) (27,992 )and general andadministrative expensesDepreciation and amortization (25,123 ) (12,530 ) (28,551 ) (13,741 )Income from vessel operations 159,627 66,646 75,700 29,462 of equity-accounted vesselsNet interest expense (73,082 ) (29,351 ) (52,929 ) (21,254 )Income tax recovery (expense) 225 110 (670 ) (246 )Other items includingrealized and unrealizedlosses on derivative (17,786 ) (5,250 ) (18,764 ) (6,224 )instruments and unrealizedcredit loss provision^(2)Net income / equity income of 68,984 32,155 3,337 1,738 equity-accounted vesselsNet income / equity income of 60,105 27,795 6,455 3,377 equity-accounted LNG vesselsNet income (loss) / equityincome (loss) of 8,879 4,360 (3,118 ) (1,639 )equity-accounted LPG vessels Net income / equity income of 68,984 32,155 3,337 1,738 equity-accounted vesselsDepreciation and amortization 25,123 12,530 28,551 13,741 Net interest expense 73,082 29,351 52,929 21,254 Income tax recovery (expense) (225 ) (110 ) 670 246 EBITDA from equity-accounted 166,964 73,926 85,487 36,979 vessels Add (subtract) specificincome statement items affecting EBITDA:Other items includingrealized and unrealizedlosses on derivative 17,786 5,250 18,764 6,224 instruments and unrealizedcredit loss provisionDirect finance and sale-typelease payments received in 26,381 9,499 16,131 5,759 excess of revenue recognizedAmortization of in-process (1,738 ) (945 ) (1,736 ) (945 )contractsAdjusted EBITDA from 209,393 87,730 118,646 48,017 equity-accounted vesselsAdjusted EBITDA from 185,577 75,824 102,799 40,095 equity-accounted LNG vesselsAdjusted EBITDA from 23,816 11,906 15,847 7,922 equity-accounted LPG vessels

-- The Partnership's equity-accounted vessels for the three months ended June30, 2020 and 2019 include: the Partnerships 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnerships 50 percent ownership interest in the Partnerships joint venture with Exmar NV (the Excalibur Joint Venture), which owns one LNG carrier; the Partnerships 33 percent ownership interest in four LNG carriers servicing the Angola LNG project; the Partnerships 52 percent ownership interest in the MALT Joint Venture, which owns six LNG carriers; the Partnerships 50 percent ownership interest in Exmar LPG BVBA, which owns and in-charters 23 LPG carriers as at June30, 2020, compared to 22 owned and in-chartered LPG carriers as at June30, 2019; the Partnerships ownership interest ranging from 20 to 30 percent in four LNG carriers as at June30, 2020 chartered to Shell (the Pan Union Joint Venture); the Partnerships 50 percent ownership interest in six ARC7 LNG carriers in the Yamal LNG Joint Venture as at June30, 2020, compared to three ARC7 LNG carriers and three ARC7 LNG carrier newbuildings as at June30, 2019; and the Partnership's 30 percent ownership interest in the Bahrain LNG Joint Venture, which owns an LNG receiving and regasification terminal in Bahrain. -- Unrealized credit losses relate to the Partnership's adoption of ASC 326 on January 1, 2020.

Teekay LNG Partners L.P.Appendix F - Summarized Financial Information of Equity-Accounted Joint Ventures(in thousands of U.S. Dollars)

As at June 30, 2020 As at December 31, 2019 (unaudited) (unaudited) At Partnership's At Partnership's 100% Portion^(1) 100% Portion^(1)Cash and restricted cash, current and non-current 552,035 230,274 509,065 210,736 Other current assets 85,740 34,986 62,566 27,719 Property, plant and equipment, including ownedvessels, vessels related to finance leases and 2,020,188 1,031,717 3,112,349 1,375,570 operating lease right-of-use assetsNet investments in sales-type and direct 5,464,583 2,107,966 4,589,139 1,856,709 financing leases, current and non-currentOther non-current assets 68,602 45,075 50,967 41,015 Total assets 8,191,148 3,450,018 8,324,086 3,511,749 Current portion of long-term debt and obligations 548,893 250,659 315,247 136,573 related to finance leases and operating leasesCurrent portion of derivative liabilities 65,839 26,967 34,618 13,658 Other current liabilities 143,828 57,774 153,816 66,224 Long-term debt and obligations related to finance 4,661,614 1,865,877 5,026,123 2,041,595 leases and operating leasesShareholders' loans, current and non-current 346,969 128,422 346,969 126,546 Derivative liabilities 327,015 131,459 162,640 66,060 Other long-term liabilities 62,864 31,139 64,196 32,323 Equity 2,034,126 957,721 2,220,477 1,028,770 Total liabilities and equity 8,191,148 3,450,018 8,324,086 3,511,749 Investments in equity-accounted joint ventures 957,721 1,028,770 Advances to equity-accounted joint ventures 128,422 126,546 Credit loss provision^(2) (3,797 ) ? Investments in and advances to equity-accounted 1,082,346 1,155,316 joint ventures

-- The Partnership's equity-accounted vessels as at June30, 2020 and December 31, 2019 include: the Partnerships 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnerships 50 percent ownership interests in the Excalibur Joint Venture, which owns one LNG carrier; the Partnerships 33 percent ownership interest in four LNG carriers servicing the Angola LNG project; the Partnerships 52 percent ownership interest in the MALT Joint Venture, which owns six LNG carriers; the Partnerships 50 percent ownership interest in Exmar LPG BVBA, which owns and in-charters 23 LPG carriers; the Partnerships ownership interest ranging from 20 percent to 30 percent in four LNG carriers as at June30, 2020 chartered to Shell in the Pan Union Joint Venture; the Partnerships 50 percent ownership interest in six ARC7 LNG carriers in the Yamal LNG Joint Venture; and the Partnership's 30 percent ownership interest in the Bahrain LNG Joint Venture, which owns an LNG receiving and regasification terminal in Bahrain. -- Unrealized credit losses relate to the Partnership's adoption of ASC 326 on January 1, 2020.

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 managements current views with respect to certain future events and performance, including statements, among other things, regarding: the impact of COVID-19 and related global events on the Partnership's operations and cash flows; the Partnerships ability to achieve previously disclosed financial guidance for 2020; fixed charter coverage for the Partnership's LNG fleet for the remainder of 2020 and 2021; the Partnership's ability to complete remaining crew changes and anticipated timing thereof; the timing of the new commercial management agreement for the Partnership's seven wholly-owned multi-gas vessels; the Partnership's operational performance and cost competitiveness, including the Partnerships ability to derive benefits from its economies of scale; expected reductions in the Partnerships interest costs as it continues to reduce its debt levels; and the continued performance of the Partnership's and its joint ventures' charter contracts. 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: 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; 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 Partnership's fleet; higher than expected costs and expenses, including as a result of off-hire days or dry-docking requirements; general market conditions and trends, including spot, multi-month and multi-year charter rates; inability of customers of the Partnership or any of its joint ventures to make future payments under contracts; potential further delays to the formal commencement of commercial operations of the Bahrain Regasification Terminal; the inability of the Partnership to renew or replace long-term contracts on existing vessels; potential lack of cash flow to reduce balance sheet leverage or of excess capital available to allocate towards returning capital to unitholders; 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, 2019. 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 Partnerships expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.