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Teekay LNG Release

Teekay GP LLC, the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (TGP), has approved a plan to reduce its quarterly cash distributions to $0.14 per common unit, down from $0.70 per common unit in the third quarter of 2015, commencing with the fourth quarter of 2015 distribution payable in February 2016. The Partnership expects to use a significant portion of its internally generated cash flow to fund equity capital requirements on its future profitable growth projects and reduce debt levels, eliminating the need to access the equity capital markets for the foreseeable future.

“Despite significant weakness in the global energy and capital markets, Teekay LNG’s businesses remain strong,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “The Partnership’s cash flows remain stable and growing, supported by a large and well-diversified portfolio of fee-based contracts with high quality counterparties,” Mr. Evensen continued. “However, as a growing MLP, Teekay LNG does require capital and there is currently a dislocation in the capital markets relative to the stability of our businesses such that the Partnership’s cost of equity has increased to the point where it is currently not an economically attractive source of capital. Based on the upcoming capital requirements for our committed growth projects, coupled with the uncertainty regarding how long it will take for the energy and capital markets to normalize, management and the Partnership’s Board of Directors believe that it is in the best interest of the Partnership’s unitholders to conserve our internally generated cash flows to fund future growth projects and reduce our debt levels.”

Mr. Evensen added “This decision by management and the Partnership’s Board of Directors was not taken lightly. Numerous options were considered, including selling existing assets and future growth projects, and evaluating potential alternative sources of capital, which could have resulted in permanent dilution to existing unitholders. Rather than take this course, we determined that temporarily reducing our cash distributions is the most reliable way to fund our future profitable growth projects with the lowest cost of capital. We believe this prudent approach will strengthen the Partnership’s financial position, preserve our long-term growth potential, and will result in higher distributable cash flow per unit.”

Teekay Corporation and the Partnership plan to host a joint conference call on Thursday, December 17, 2015 at 8:45 a.m. (ET) to discuss this announcement. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

  • By dialing 1-800-524-8950 or 1-416-260-0113, if outside North America, and quoting conference ID code 4020024.
  • By accessing the webcast, which will be available on Teekay LNG’s websitewww.teekaylng.com (the archive will remain on the website for a period of 30 days).

About Teekay LNG

Teekay LNG Partners is one of the world’s largest independent owners and operators of LNG carriers, providing LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts through its interests in 50 LNG carriers (including one LNG regasification unit and 21 newbuildings), 30 LPG/Multigas carriers (including three in-chartered LPG carriers and seven newbuildings) and eight conventional tankers. The Partnership’s interests in these vessels range from 20 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.

Teekay Offshore Release

Teekay Offshore GP LLC, the general partner of Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (TOO), has approved a plan to reduce its quarterly cash distributions to $0.11 per common unit, down from $0.56 per common unit in the third quarter of 2015, commencing with the fourth quarter of 2015 distribution payable in February 2016. The Partnership expects to use a significant portion of its internally generated cash flow to fund equity capital requirements on its future profitable growth projects and reduce debt levels, eliminating the need to access the equity capital markets for the foreseeable future.

“Despite significant weakness in the global energy and capital markets, Teekay Offshore’s businesses remain strong,” commented Peter Evensen, Chief Executive Officer of Teekay Offshore GP LLC. “The Partnership’s cash flows remain stable and growing, supported by a large and well-diversified portfolio of fee-based contracts with high quality counterparties,” Mr. Evensen continued. “However, as a growing MLP, Teekay Offshore does require capital and there is currently a dislocation in the capital markets relative to the stability of our businesses such that the Partnership’s cost of equity has increased to the point where it is currently not an economically attractive source of capital. Based on the upcoming capital requirements for our committed growth projects and bond maturities, coupled with the uncertainty regarding how long it will take for the energy and capital markets to normalize, management and the Partnership’s Board of Directors believe that it is in the best interest of the Partnership’s unitholders to conserve our internally generated cash flows to fund future growth projects and reduce our debt levels.”

Mr. Evensen added “This decision by management and the Partnership’s Board of Directors was not taken lightly. Numerous options were considered, including selling existing assets and future growth projects, and evaluating potential alternative sources of capital, which could have resulted in permanent dilution to existing unitholders. Rather than take this course, we determined that temporarily reducing our cash distributions is the most reliable way to fund our future profitable growth projects with the lowest cost of capital. We believe this prudent approach will strengthen the Partnership’s financial position, preserve our long-term growth potential, and will result in higher distributable cash flow per unit.”

The Partnership’s Series A, B and C preferred unitholders are not directly affected by this change and we expect to continue paying regular quarterly cash distributions to the preferred unitholders.

Teekay Corporation and the Partnership plan to host a joint conference call on Thursday, December 17, 2015 at 8:45 a.m. (ET) to discuss this announcement. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

  • By dialing 1-800-524-8950 or 1-416-260-0113, if outside North America, and quoting conference ID code 4020024.
  • By accessing the webcast, which will be available on Teekay Offshore’s websitewww.teekayoffshore.com (the archive will remain on the website for a period of 30 days).

About Teekay Offshore

Teekay Offshore Partners L.P. is an international provider of marine transportation, oil production, storage, long-distance towing and offshore installation and maintenance and safety services to the offshore oil industry, primarily focusing on the growing deepwater offshore oil regions of the North Sea and Brazil. Teekay Offshore is structured as a publicly-traded master limited partnership (MLP) with consolidated assets of approximately $5.9 billion, comprised of 68 offshore assets, including shuttle tankers, floating production, storage and offloading (FPSO) units, floating storage and offtake (FSO) units, units for maintenance and safety (UMS), long-distance towing and offshore installation vessels and conventional tankers. The majority of Teekay Offshore’s fleet is employed on medium-term, stable contracts.