SEAL-PA

Business Context and Reporting Period

Company: Teekay LNG Partners L.P. (NYSE: TGP)

Filing Type: Form 6-K (Report of Foreign Private Issuer)

Reporting Period: Third Quarter ended September 30, 2015

Date of Report: November 5, 2015

Teekay LNG Partners L.P. is a master limited partnership and one of the world's largest independent owners and operators of LNG carriers. The company operates a diversified fleet of LNG, LPG/Multigas, and conventional tankers, primarily under long-term, fixed-rate charter contracts.

Key Financial Metrics

Segment Performance (Cash Flow from Vessel Operations - CFVO):

• Liquefied Gas Segment: $103.9 million (Consolidated: $58.8M; Equity Accounted: $45.1M)
• Conventional Tanker Segment: $10.3 million

Material Changes vs. Prior Period

Decreases in DCF and Adjusted Net Income: The decline from the prior year was primarily driven by:

• The termination of the charter contract for the Magellan Spirit LNG carrier (52% owned) in March 2015, which is currently being disputed with the joint venture partner, Marubeni Corporation.
• The scheduled expiration of the charter contract for the Methane Spirit LNG carrier (52% owned) in March 2015.
• The sale of a conventional tanker in August 2014.
• Depreciation of the Euro against the U.S. Dollar.

Offsetting Factors: Decreases were partially mitigated by:

• Lower interest expense following the refinancing of three LNG carriers in December 2014.
• Increased charter rates for two Suezmax tankers.
• Higher LPG spot rates and the addition of newbuildings in the Exmar LPG joint venture.
• Acquisition of the LPG carrier Norgas Napa in November 2014.

GAAP Volatility: GAAP Net Income dropped significantly ($90.6M to $7.5M) largely due to unrealized losses on derivative instruments ($26.8M) and foreign exchange losses ($8.2M), which do not impact cash flow.

Guidance, Outlook, and Management Commentary

Management Commentary: CEO Peter Evensen noted that distribution coverage was stronger than expected, driven by higher-than-anticipated revenues from the Exmar LPG joint venture. The company maintains a portfolio of fixed forward revenues totaling approximately $11.3 billion, with no direct link to commodity prices.

Outlook and Growth:

• MEGI LNG Newbuildings: The first two of the world's first MEGI LNG carrier newbuildings are expected to deliver in early 2016. These vessels will operate under fee-based charters with Cheniere Energy.
• Financing: The Partnership secured a new $150 million unsecured revolving credit facility to fund future capital commitments. A new ~$360 million long-term lease facility is expected to finance the MEGI newbuildings upon delivery.
• Exmar LPG: The fifth of 12 LPG carrier newbuildings was delivered in September 2015 and commenced a 10-year charter with Potash Corporation.

Risks and Contingencies:

• Dispute: Ongoing dispute regarding the termination of the Magellan Spirit charter contract.
• Construction: Risks related to shipyard delays, specification changes, or cost overruns on newbuildings.
• Market: Potential changes in LNG/LPG production, trading patterns, or early termination of long-term contracts.

Investor Verification Checklist

• Dispute Resolution: Monitor the status of the legal dispute regarding the Magellan Spirit charter termination and potential financial recovery.
• Newbuilding Delivery: Verify the on-time delivery of the MEGI LNG carriers in early 2016 and the commencement of the Cheniere Energy charter.
• Financing Completion: Confirm the finalization of the $150 million revolving credit facility and the $360 million lease facility for newbuildings.
• Derivative Exposure: Review the reconciliation of GAAP Net Income to Adjusted Net Income to understand the magnitude of unrealized derivative and FX losses impacting reported earnings.
• Liquidity Position: Track the utilization of the new credit facility against capital commitments for the remaining newbuilding portfolio.