TGP Teekay Lng Partners LP

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UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands of U.S. Dollars, except unit and per unit data)

		Three Months Ended March 31,
		2017			2016
		$			$
Voyage revenues (note 9a)		101,180			95,771
Voyage expenses		(1,437	)		(457	)
Vessel operating expenses (note 9a)		(23,388	)		(21,853	)
Depreciation and amortization		(26,120	)		(23,611	)
General and administrative expenses (notes 9a, 9e and 13)		(4,157	)		(5,428	)
Loss on sale of vessels (note 14a)		—			(27,439	)
Income from vessel operations		46,078			16,983
Equity income		5,887			9,498
Interest expense (notes 7 and 10)		(16,988	)		(13,997	)
Interest income		854			602
Realized and unrealized gain (loss) on non-designated derivative instruments (note 10)		1,187			(38,089	)
Foreign currency exchange loss (notes 7 and 10)		(3,568	)		(10,118	)
Other income		391			419
Net income (loss) before income tax expense		33,841			(34,702	)
Income tax expense (note 8)		(157	)		(261	)
Net income (loss)		33,684			(34,963	)
Non-controlling interest in net income (loss)		4,627			2,175
Preferred unitholders' interest in net income (loss) (note 12)		2,812			—
General Partner’s interest in net income (loss)		525			(743	)
Limited partners’ interest in net income (loss)		25,720			(36,395	)
Limited partners’ interest in net income (loss) per common   unit:  (note 12)
• Basic		0.32			(0.46	)
• Diluted		0.32			(0.46	)
Weighted-average number of common units outstanding:
• Basic		79,590,153			79,557,872
• Diluted		79,690,391			79,557,872
Cash distributions declared per common unit		0.14			0.14
Related party transactions (note 9)
Subsequent events (note 15)

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TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands of U.S. Dollars)

	Three Months Ended March 31,
	2017			2016
	$			$
Net income (loss)	33,684			(34,963	)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassifications
Unrealized loss on qualifying cash flow hedging instruments, net of   tax (note 10)	(796	)		(12,115	)
Amounts reclassified from accumulated other comprehensive income (loss)
To equity income:
Realized loss on qualifying cash flow hedging instruments	697			929
Other comprehensive loss	(99	)		(11,186	)
Comprehensive income  (loss)	33,585			(46,149	)
Non-controlling interest in comprehensive income (loss)	4,617			556
Preferred unitholders' interest in net income (loss)  (note 12)	2,812			—
General and limited partners' interest in comprehensive income (loss)	26,156			(46,705	)

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TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. Dollars)

	As at March 31, 2017			As at December 31, 2016
	$			$
ASSETS
Current
Cash and cash equivalents	181,201			126,146
Restricted cash – current  (notes 7 and 10)	9,155			10,145
Accounts receivable, including non-trade of $15,777 (2016 – $19,325)	24,270			25,224
Prepaid expenses	3,889			3,724
Vessel held for sale (note 14b)	—			20,580
Current portion of derivative assets  (note 10)	1,630			531
Current portion of net investments in direct financing leases  (note 5)	149,291			150,342
Advances to affiliates  (notes 9b and 10)	11,354			9,739
Total current assets	380,790			346,431
Restricted cash – long-term  (notes 7, 10 and 11c)	97,746			106,882
Vessels and equipment
At cost, less accumulated depreciation of $688,923 (2016 – $668,969)	1,363,980			1,374,128
Vessels under capital leases, at cost, less accumulated depreciation of $73,524 (2016 – $69,072)  (note 5)	680,430			484,253
Advances on newbuilding contracts  (note 9d)	361,179			357,602
Total vessels and equipment	2,405,589			2,215,983
Investments in and advances to equity-accounted joint ventures  (notes 6   and 9a)	1,077,355			1,037,726
Net investments in direct financing leases  (note 5)	488,561			492,666
Other assets	4,375			5,529
Derivative assets (note 10)	2,258			4,692
Intangible assets – net	67,720			69,934
Goodwill – liquefied gas segment	35,631			35,631
Total assets	4,560,025			4,315,474
LIABILITIES AND EQUITY
Current
Accounts payable	5,364			5,562
Accrued liabilities  (note 10)	36,504			35,881
Unearned revenue	20,808			16,998
Current portion of long-term debt  (note 7)	187,111			188,511
Current obligations under capital lease  (note 5)	81,780			40,353
Current portion of in-process contracts	10,262			15,833
Current portion of derivative liabilities  (note 10)	57,453			56,800
Advances from affiliates  (notes 9b and 10)	23,690			15,492
Total current liabilities	422,972			375,430
Long-term debt  (note 7)	1,626,968			1,602,715
Long-term obligations under capital lease  (note 5)	518,399			352,486
Long-term unearned revenue	10,007			10,332
Other long-term liabilities  (note 5)	60,646			60,573
In-process contracts	6,521			8,233
Derivative liabilities  (note 10)	118,187			128,293
Total liabilities	2,763,700			2,538,062
Commitments and contingencies  (notes 5, 7, 10, and 11)
Equity
Limited Partners - common units (79.6 million units issued and outstanding at March 31, 2017 and December 31, 2016) ( note 12)	1,578,503			1,563,852
Limited Partners - preferred units (5.0 million units issued and outstanding at March 31, 2017 and December 31, 2016) ( note 12)	123,519			123,426
General Partner	50,952			50,653
Accumulated other comprehensive income	486			575
Partners' equity	1,753,460			1,738,506
Non-controlling interest	42,865			38,906
Total equity	1,796,325			1,777,412
Total liabilities and total equity	4,560,025			4,315,474

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TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. Dollars)

	Three Months Ended March 31,
	2017			2016
	$			$
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net income (loss)	33,684			(34,963	)
Non-cash items:
Unrealized (gain) loss on non-designated derivative instruments  (note 10)	(5,452	)		32,076
Depreciation and amortization	26,120			23,611
Loss on sale of vessels	—			27,439
Unrealized foreign currency exchange loss and other (notes 7 and 10)	727			9,366
Equity income	(5,887	)		(9,498	)
Ineffective portion on qualifying cash flow hedging instruments included in interest expense	—			1,398
Change in operating assets and liabilities	12,496			(11,589	)
Expenditures for dry docking	(5,668	)		(155	)
Net operating cash flow	56,020			37,685
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	61,424			3,364
Debt issuance costs	(585	)		—
Scheduled repayments of long-term debt	(25,290	)		(29,792	)
Prepayments of long-term debt	(18,704	)		(20,000	)
Scheduled repayments of capital lease obligations	(13,485	)		(6,681	)
Decrease in restricted cash	9,384			6,591
Cash distributions paid	(14,086	)		(11,364	)
Dividends paid to non-controlling interest	(658	)		(23	)
Other	(571	)		—
Net financing cash flow	(2,571	)		(57,905	)
INVESTING ACTIVITIES
Capital contributions to equity-accounted joint ventures	(77,786	)		(4,029	)
Return of capital from equity-accounted joint ventures	40,320			—
Receipts from direct financing leases	5,156			7,836
Proceeds from sale of vessel	20,580			—
Proceeds from sale-leaseback of vessels	220,825			179,434
Expenditures for vessels and equipment	(207,489	)		(151,357	)
Net investing cash flow	1,606			31,884
Increase in cash and cash equivalents	55,055			11,664
Cash and cash equivalents, beginning of the period	126,146			102,481
Cash and cash equivalents, end of the period	181,201			114,145

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TEEKAY LNG PARTNERS L.P. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

(in thousands of U.S. Dollars and units)

	TOTAL EQUITY
	Partners’ Equity
	Limited Partners
	Common Units			Common Units			Preferred Units			Preferred Units			General Partner			Accumulated Other Comprehensive Income			Non- controlling Interest			Total
	#			$			#			$			$			$			$			$
Balance as at December 31, 2016	79,572			1,563,852			5,000			123,426			50,653			575			38,906			1,777,412
Net income	—			25,720			—			2,812			525			—			4,627			33,684
Other comprehensive loss	—			—			—			—			—			(89	)		(10	)		(99	)
Cash distributions	—			(11,140	)		—			(2,719	)		(227	)		—			—			(14,086	)
Dividends paid to non-controlling interest	—			—									—			—			(658	)		(658	)
Equity based compensation, net of tax of $0.6 m illion (note 13)	55			71			—			—			1			—			—			72
Other	—			—						—			—			—			—			—
Balance as at March 31, 2017	79,627			1,578,503			5,000			123,519			50,952			486			42,865			1,796,325

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1.	Basis of Presentation

3.	Financial Instruments

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(i)	The advances to equity-accounted joint ventures together with the Partnership’s equity investments in the joint ventures form the net aggregate carrying value of the Partnership’s interests in the joint ventures in these consolidated financial statements. The fair values of the individual components of such aggregate interests are not determinable.

(ii)

As described in Note 3 to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year-ended December 31, 2016 , the estimated fair value of the non-interest bearing receivable from Royal Dutch Shell Plc (or Shell ) is based on the remaining future fixed payments as well as an estimated discount rate. The estimated fair value of this receivable as of March 31, 2017 was $9.0 million ( December 31, 2016 – $10.9 million ) using a discount rate of 8.0% . As there is no market rate for the equivalent of an unsecured non-interest bearing receivable from Shell, the discount rate is based on unsecured debt instruments of similar maturity held, adjusted for a liquidity premium. A higher or lower discount rate would result in a lower or higher fair value asset.

		Three Months Ended March 31,
		2017			2016
		$			$
Fair value at beginning of period		2,134			(6,296	)
Realized and unrealized gains included in earnings		1,135			880
Settlement payments		(1,304	)		3,186
Fair value at end of period		1,965			(2,230	)

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			March 31, 2017		December 31, 2016
Class of Financing Receivable	Credit Indicator	Grade	$		$
Direct financing leases	Payment activity	Performing	637,852		643,008
Other receivables:
Long-term receivable and accrued revenue included in accounts receivable and other assets	Payment activity	Performing	10,316		12,171
Advances to equity-accounted joint ventures (note 6)	Other internal metrics	Performing	303,260		272,514
			951,428		927,693

4.	Segment Reporting

		Three Months Ended March 31,
		2017									2016
		Liquefied  Gas Segment $			Conventional Tanker Segment $			Total $			Liquefied  Gas Segment $			Conventional Tanker Segment $			Total $
Voyage revenues		88,947			12,233			101,180			78,585			17,186			95,771
Voyage expenses		(346	)		(1,091	)		(1,437	)		(117	)		(340	)		(457	)
Vessel operating expenses		(18,665	)		(4,723	)		(23,388	)		(15,232	)		(6,621	)		(21,853	)
Depreciation and amortization		(23,220	)		(2,900	)		(26,120	)		(18,685	)		(4,926	)		(23,611	)
General and administrative expenses (i)		(3,380	)		(777	)		(4,157	)		(4,362	)		(1,066	)		(5,428	)
Loss on sale of vessels		—			—			—			—			(27,439	)		(27,439	)
Income (loss) from vessel operations		43,336			2,742			46,078			40,189			(23,206	)		16,983
Equity income		5,887			—			5,887			9,498			—			9,498

(i)	Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources).

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5.	Vessel Charters

	Remainder of 2017		2018		2019		2020		2021
Vessel Charters (i)	$		$		$		$		$
Charters-in – capital leases (ii)	64,406		110,769		87,013		78,725		71,564
Charters-out – operating leases   (iii)	264,741		368,467		397,100		389,245		349,481
Charters-out – direct financing leases (iv)	182,694		173,701		39,065		39,172		39,065
	447,435		542,168		436,165		428,417		388,546

(i)

The Partnership owns 69% of Teekay BLT Corporation (or Teekay Tangguh Joint Venture ), which is a party to operating leases whereby the Teekay Tangguh Joint Venture is leasing the Tangguh Hiri and Tangguh Sago liquefied natural gas (or LNG ) carriers (or the Tangguh LNG Carriers ) to a third party, which is in turn leasing the vessels back to the joint venture. The table does not include the Partnership’s minimum charter hire payments to be paid and received under these leases, which are described in more detail in Note 5 to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2016 . Under the terms of the leasing arrangement for the Tangguh LNG Carriers, whereby the Teekay Tangguh Joint Venture is the lessee, the lessors claim tax depreciation on its lease of these vessels. As is typical in these types of leasing arrangements, tax and change of law risks are assumed by the lessee. Lease payments under the lease arrangements are based on certain tax and financial assumptions at the commencement of the leases. If an assumption proves to be incorrect, the lessor is entitled to increase the lease payments to maintain its agreed after-tax margin.

(ii)

As at March 31, 2017 , the Partnership was a party, as lessee, to capital leases on two Suezmax tankers, the Teide Spirit and Toledo Spirit . Under these capital leases, the owner has the option to require the Partnership to purchase the two vessels. The charterer, who is also the owner, also has the option to cancel the charter contracts and the cancellation options are first exercisable in October 2017 and July 2018 , respectively. The amounts in the table above assume the owner will not exercise its options to require the Partnership to purchase either of the vessels from the owner, but rather it assumes the owner will cancel the charter contracts when the cancellation right is first exercisable (in October 2017 and July 2018 , respectively) and sell the vessels to a third party, upon which the remaining lease obligations will be extinguished.

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(iii)

Minimum scheduled future operating lease revenues do not include revenue generated from new contracts entered into after March 31, 2017 , revenue from unexercised option periods of contracts that existed on March 31, 2017 , revenues from vessels in the Partnership's equity-accounted investments, or variable or contingent revenues. Therefore, the minimum scheduled future operating lease revenues should not be construed to reflect total charter hire revenues that may be recognized for any of the years.

(iv)	As described in Note 5 to the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2016 , the Tangguh LNG Carriers’ time-charter contracts and the two bareboat charter contracts to Awilco LNG ASA are accounted for as direct financing leases.

7. Long-Term Debt

	March 31, 2017		December 31, 2016
	$		$
U.S. Dollar-denominated Revolving Credit Facilities due from 2017 to 2018	230,241		208,222
U.S. Dollar-denominated Term Loans due from 2018 to 2026	968,363		1,005,199
Norwegian Kroner-denominated Bonds due from 2017 to 2021	408,035		371,329
Euro-denominated Term Loans due from 2018 to 2023	218,720		219,733
Total principal	1,825,359		1,804,483
Unamortized discount and debt issuance costs	(11,280	)	(13,257	)
Total debt	1,814,079		1,791,226
Less current portion	(187,111	)	(188,511	)
Long-term debt	1,626,968		1,602,715

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8.	Income Tax

9.	Related Party Transactions

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10.	Derivative Instruments and Hedging Activities

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Interest Rate Risk

The Partnership enters into interest rate swaps which exchange a receipt of floating interest for a payment of fixed interest to reduce the Partnership’s exposure to interest rate variability on certain of its outstanding floating-rate debt. As at March 31, 2017 , the Partnership was committed to the following interest rate swap agreements:

		Interest Rate Index		Principal Amount $			Fair Value / Carrying Amount of (Liability) $			Weighted- Average Remaining Term (years)		Fixed Interest Rate (%) (i)
LIBOR-Based Debt:
U.S. Dollar-denominated interest rate swaps		LIBOR		90,000			(4,808	)		1.4		4.9
U.S. Dollar-denominated interest rate swaps (ii)		LIBOR		150,000			(24,132	)		11.8		5.2
U.S. Dollar-denominated interest rate swaps (ii)		LIBOR		48,201			(1,079	)		4.3		2.8
U.S. Dollar-denominated interest rate swaps (iii)		LIBOR		320,000			(17,224	)		0.8		3.4
U.S. Dollar-denominated interest rate swaps (iv)		LIBOR		106,167			(367	)		1.8		1.7
U.S. Dollar-denominated interest rate swaps (v)		LIBOR		197,629			557			9.2		2.3
EURIBOR-Based Debt:
Euro-denominated interest rate swaps (vi)		EURIBOR		218,720			(31,924	)		3.7		3.1
							(78,977	)

(i)	Excludes the margins the Partnership pays on its floating-rate term loans, which, at March 31, 2017 , ranged from 0.30% to 2.80% .

(ii)	Principal amount reduces semi-annually.

(iii)	These interest rate swaps are being used to economically hedge expected interest payments on future debt that is planned to be outstanding from 2017 to 2024 . These interest rate swaps are subject to mandatory early termination in 2017 and 2018 whereby the swaps will be settled based on their fair value at that time.

(iv)	Principal amount reduces quarterly.

(v)	Principal amount reduces quarterly commencing December 2017.

(vi)	Principal amount reduces monthly to 70.1 million Euros ( $74.7 million ) by the maturity dates of the swap agreements.

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(i)	Amortizing every three months from $155.0 million in April 2017 to $85.4 million in October 2024.

(ii)	Amortizing every three months from $160.0 million in January 2018 to $82.5 million in January 2026.

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		Three Months Ended March 31,
		2017									2016
		Realized gains (losses)			Unrealized gains (losses)			Total			Realized gains (losses)			Unrealized gains (losses)			Total
		$			$			$			$			$			$
Interest rate swap agreements		(4,675	)		4,302			(373	)		(6,643	)		(20,657	)		(27,300	)
Interest rate swaption agreements		—			30			30			—			(11,669	)		(11,669	)
Interest rate swaption agreements termination		395			—			395			—			—			—
Toledo Spirit time-charter derivative		15			1,120			1,135			630			250			880
		(4,265	)		5,452			1,187			(6,013	)		(32,076	)		(38,089	)

		Three Months Ended March 31,
		2017									2016
		Realized gains (losses)			Unrealized gains (losses)			Total			Realized gains (losses)			Unrealized gains (losses)			Total
		$			$			$			$			$			$
Cross-currency swap agreements		(3,537	)		2,699			(838	)		(2,291	)		21,312			19,021
		(3,537	)		2,699			(838	)		(2,291	)		21,312			19,021

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(i)	Effective portion of designated and qualifying cash flow hedges recognized in other comprehensive income (loss).

(ii)	Effective portion of designated and qualifying cash flow hedges recorded in accumulated other comprehensive loss (or AOCI ) during the term of the hedging relationship and reclassified to earnings.

(iii)	Ineffective portion of designated and qualifying cash flow hedges.

11.	Commitments and Contingencies

(i)

As at March 31, 2017 , the Partnership had eight LNG carrier newbuildings on order which are scheduled for delivery between 2017 and 2019. These commitment amounts are described in more detail in Note 13a of the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year-ended December 31, 2016 . The Partnership has secured $817 million of financing related to the remaining commitments for five LNG carrier newbuildings included in the table above (see Note 5a(ii) and Notes 15c and e).

(ii)

The commitment amounts relating to the Partnership’s share of costs for newbuilding and other construction contracts in the Partnership’s equity-accounted joint ventures are based on the Partnership’s ownership percentage in each respective joint venture as of March 31, 2017 . These commitments are described in more detail in Note 13a of the Partnership’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year-ended December 31, 2016 . Based on the Partnership's ownership percentage in each respective joint venture, the Partnership's equity-accounted joint ventures has secured $441 million of financing related to the remaining commitments included in the table above.

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12.	Total Capital and Net Income (Loss) Per Unit

13.	Unit-Based Compensation

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•	a loss on sale of vessels recorded in 2016 upon the charterer, Centrofin Management Inc. (or Centrofin ), exercising its purchase options on the Bermuda Spirit and Hamilton Spirit in February 2016 and March 2016, respectively; and

•	deliveries to us of the Creole Spirit, Oak Spirit and Torben Spirit in February 2016, July 2016 and February 2017, respectively;

•	a decrease in revenue recognized due to uncertainty of collection of hire relating to our six LPG carriers on charter to Skaugen in the first quarter of 2017; and

•	sales of the Bermuda Spirit, Hamilton Spirit and Asian Spirit in April 2016, May 2016 and March 2017, respectively.

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(in thousands of U.S. Dollars, except revenue days, calendar-ship-days and percentages)	Three Months Ended March 31,				% Change
	2017		2016
Voyage revenues	88,947		78,585		13.2
Voyage expenses	(346	)	(117	)	195.7
Net voyage revenues	88,601		78,468		12.9
Vessel operating expenses	(18,665	)	(15,232	)	22.5
Depreciation and amortization	(23,220	)	(18,685	)	24.3
General and administrative expenses (1)	(3,380	)	(4,362	)	(22.5	)
Income from vessel operations	43,336		40,189		7.8
Operating Data:
Revenue Days (A)	1,885		1,754		7.5
Calendar-Ship-Days (B)	1,919		1,772		8.3
Utilization (A)/(B)	98.2	%	99.0	%

(1)	Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of resources).

•	an increase of $7.4 million for the three months ended March 31, 2017 due to the Oak Spirit charter contract commencing on August 1, 2016;

•	an increase of $5.0 million for the three months ended March 31, 2017 due to the Creole Spirit charter contract commencing on February 29, 2016;

•	an increase of $3.2 million for the three months ended March 31, 2017 due to additional revenue recognized in the first quarter of 2017 relating to the accelerated dry docking of two LNG carriers, the costs of which were reimbursed by the charterer; and

•	an increase of $1.2 million for the three months ended March 31, 2017 due to the Torben Spirit charter contract commencing on March 3, 2017;

•	a decrease of $3.9 million due to uncertainty of collection of hire receipts relating to our six LPG carriers on charter to Skaugen in the first quarter of 2017; and

•	a decrease of $2.2 million due to the Hispania Spirit being off-hire for 31 days in the first quarter of 2017 for a scheduled dry docking.

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(in thousands of U.S. Dollars, except revenue days, calendar-ship-days and percentages)	Three Months Ended March 31,				% Change
	2017		2016
Voyage revenues	12,233		17,186		(28.8	)
Voyage expenses	(1,091	)	(340	)	220.9
Net voyage revenues	11,142		16,846		(33.9	)
Vessel operating expenses	(4,723	)	(6,621	)	(28.7	)
Depreciation and amortization	(2,900	)	(4,926	)	(41.1	)
General and administrative expenses (1)	(777	)	(1,066	)	(27.1	)
Loss on sale of vessels	—		(27,439	)	(100.0	)
Income (loss) from vessel operations	2,742		(23,206	)	111.8
Operating Data:
Revenue Days (A)	495		728		(32.0	)
Calendar-Ship-Days (B)	529		728		(27.3	)
Utilization (A)/(B)	93.6	%	100.0	%

(1)	Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources).

•	a decrease of $5.0 million for the three months ended March 31, 2017 due to the sales of the Bermuda Spirit and Hamilton Spirit ; and

•	a decrease of $1.5 million for the three months ended March 31, 2017 as the fixed-rate charter contract for the Asian Spirit expired in January 2017 and the vessel earned lower spot rates before it was sold in March 2017.

(in thousands of U.S. Dollars)	Three Months Ended
	Angola LNG Carriers		Exmar LNG Carriers		Exmar LPG Carriers		MALT LNG Carriers		RasGas 3 LNG Carriers		Other		Total Equity Income
Three months ended March 31, 2017	4,249		2,275		658		(5,966	)	4,881		(210	)	5,887
Three months ended March 31, 2016	(2,019	)	2,012		6,504		(2,375	)	5,431		(55	)	9,498
Difference	6,268		263		(5,846	)	(3,591	)	(550	)	(155	)	(3,611	)

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•	an increase of $3.9 million for the three months ended March 31, 2017 relating to interest incurred on the capital lease obligations for the Creole Spirit , Oak Spirit and Torben Spirit commencing upon their deliveries in 2016 and 2017; and

•	an increase of $1.7 million as a result of our issuances of NOK bonds in October 2016 and January 2017;

•	a decrease of $1.4 million for the three months ended March 31, 2017 relating to the ineffective portion of unrealized losses recognized in the first quarter of 2016 for hedge-accounted swaps entered in January 2016; and

•	a decrease of $1.2 million due to an increase in capitalized interest as a result of additional advances to the Yamal LNG Joint Venture and Bahrain LNG Joint Venture for newbuilding installments and construction costs.

(in thousands of U.S. Dollars)	Three Months Ended March 31,
	2017						2016
	Realized gains (losses)		Unrealized gains (losses)		Total		Realized gains (losses)		Unrealized gains (losses)		Total
Interest rate swap agreements	(4,675	)	4,302		(373	)	(6,643	)	(20,657	)	(27,300	)
Interest rate swaption agreements	—		30		30		—		(11,669	)	(11,669	)
Interest rate swaption agreements termination	395		—		395		—		—		—
Toledo Spirit time-charter derivative	15		1,120		1,135		630		250		880
	(4,265	)	5,452		1,187		(6,013	)	(32,076	)	(38,089	)

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(in thousands of U.S. Dollars)	Three Months Ended March 31,
	2017		2016
Net cash flow from operating activities	56,020		37,685
Net cash flow used for financing activities	(2,571	)	(57,905	)
Net cash flow from investing activities	1,606		31,884

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Contractual Obligations and Contingencies

The following table summarizes our contractual obligations as at March 31, 2017 :

		Total			Remainder of 2017			2018			2019			2020			2021		Beyond 2021
		(in millions of U.S. Dollars)
U.S. Dollar-Denominated Obligations:
Long-term debt :(1)
Scheduled repayments		442.3			70.1			95.2			53.2			52.7			31.2		139.9
Repayments at maturity		756.4			25.0			409.5			20.4			—			146.2		155.3
Commitments under capital leases (2)		869.3			64.4			110.8			87.0			78.7			71.6		456.8
Commitments under operating leases (3)		286.6			17.9			23.9			23.9			23.9			23.8		173.2
Newbuilding installments/shipbuilding supervision (4)		2,628.9			790.1			1,071.9			569.6			197.3			—		—
Total U.S. Dollar-denominated obligations		4,983.5			967.5			1,711.3			754.1			352.6			272.8		925.2
Euro-Denominated Obligations :(5)
Long-term debt (6)		218.7			12.0			126.4			9.0			9.7			10.4		51.2
Total Euro-denominated obligations		218.7			12.0			126.4			9.0			9.7			10.4		51.2
Norwegian Kroner-Denominated Obligations :(5)
Long-term debt (7)		408.0			47.5			104.7			—			116.3			139.5		—
Total Norwegian Kroner-Denominated obligations		408.0			47.5			104.7			—			116.3			139.5		—
Totals		5,610.2			1,027.0			1,942.4			763.1			478.6			422.7		976.4

(1)

Excludes expected interest payments of $22.7 million (remainder of 2017 ), $22.2 million ( 2018 ), $14.5 million ( 2019 ), $13.3 million ( 2020 ), $10.8 million ( 2021 ) and $31.5 million (beyond 2021 ). Expected interest payments are based on the existing interest rates (fixed-rate loans) and LIBOR at March 31, 2017 , plus margins on debt that has been drawn that range up to 2.80% (variable-rate loans). The expected interest payments do not reflect the effect of related interest rate swaps or swaptions that we have used as an economic hedge for certain of our variable-rate debt. In addition, the above table does not reflect scheduled debt repayments in our equity-accounted joint ventures.

(2)

Includes, in addition to lease payments, amounts we may be or are required to pay to purchase the leased vessels at the end of their respective lease terms. For two of our four capital lease obligations, the lessor has the option to sell two Suezmax tankers under capital lease to us at any time during the remaining lease terms; however, in this table we have assumed the lessor will not exercise its right to sell the two Suezmax tankers to us until after the lease terms expire, which is during the years 2017 to 2018 . The purchase price for any Suezmax tanker we are required to purchase would be based on the unamortized portion of the vessel construction financing costs for the vessels, which are included in the table above. We expect to satisfy any such purchase price by assuming the existing vessel financing, although we may be required to obtain separate debt or equity financing to complete any purchases if the lenders do not consent to our assuming the financing obligations. Please read “Item 1 - Financial Statements: Note 5 - Vessel Charters”.

(3)	We have corresponding leases whereby we are the lessor and expect to receive approximately $255.0 million under these leases from the remainder of 2017 to 2029.

(4)	As of March 31, 2017 , we have agreements for the construction of eight wholly-owned LNG carrier newbuildings, of which the estimated remaining costs totaled $1.3 billion , including estimated interest and construction supervision fees. We have secured $817 million of financing related to the commitments for five of the LNG carrier newbuildings included in the table above.

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(5)	Euro-denominated and NOK-denominated obligations are presented in U.S. Dollars and have been converted using the prevailing exchange rate as of March 31, 2017 .

(6)

Excludes expected interest payments of $1.9 million (remainder of 2017 ), $1.3 million ( 2018 ), $0.2 million ( 2019 ), $0.2 million ( 2020 ), $0.2 million ( 2021 ) and $0.2 million (beyond 2021 ). Expected interest payments are based on EURIBOR at March 31, 2017 , plus margins that range up to 2.25%, as well as the prevailing U.S. Dollar/Euro exchange rate as of March 31, 2017 . The expected interest payments do not reflect the effect of related interest rate swaps that we have used as an economic hedge of certain of our variable-rate debt.

(7)

Excludes expected interest payments of $16.8 million ( 2017 ), $18.1 million ( 2018 ), $15.3 million ( 2019 ), $12.6 million ( 2020 ), and $4.9 million ( 2021 ). Expected interest payments are based on NIBOR at March 31, 2017 , plus margins that range up to 6.00%, as well as the prevailing U.S. Dollar/NOK exchange rate as of March 31, 2017 . The expected interest payments do not reflect the effect of the related cross-currency swaps that we have used as an economic hedge of our foreign exchange and interest rate exposure associated with our NOK-denominated long-term debt.

•	our distribution policy and our ability to make cash distributions on our units or any increases in quarterly distributions and the impact of cash distribution reductions on our financial position;

•	our future financial condition and results of operations and our future revenues, expenses and capital expenditures, and our expected financial flexibility to pursue capital expenditures, acquisitions and other expansion opportunities;

•	our liquidity needs and meeting our going concern requirements, including our anticipated funds and sources of financing for liquidity needs and the sufficiency of cash flows, and our expectation that we will have sufficient liquidity for the remainder of 2017 through 2018;

•	our expected sources of funds for liquidity and working capital needs, our ability to enter into vessel financings, new bank financings and to refinance existing indebtedness;

•	our ability to enter into new or replacement charters for our vessels;

•	growth prospects and future trends of the markets in which we operate;

•	LNG, LPG and tanker market fundamentals, including the balance of supply and demand in the LNG, LPG and tanker markets and spot LNG, LPG and tanker charter rates;

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•	the expected lifespan of our vessels, including our expectations as to any impairment of our vessels;

•	our expectations and estimates regarding future charter business, including with respect to minimum charter hire payments, revenues and our vessels’ ability to perform to specifications and maintain their hire rates in the future;

•	our expectations regarding the ability of Skaugen, YLNG and our other customers to make charter payments to us;

•	our ability to finalize an agreement with Awilco which would extend the bareboat charter agreements, adjust the related purchase obligations and defer a portion of charter hire to December 2019 and our expectations regarding the ability of Awilco to make charter payments and fulfill purchase obligations to us in accordance with the terms of this agreement;

•	our ability to maximize the use of our vessels, including the redeployment or disposition of vessels no longer under long-term charter or whose charter contract are expiring;

•	the future resumption of a LNG plant in Yemen operated by YLNG, the expected repayment of deferred hire amounts on our two 52% owned vessels, the Marib Spirit and Arwa Spirit , on charter to YLNG, and the expected reduction to our equity income in 2017 as a result of the charter payment deferral;

•	our expectation regarding the expected charter contract commencement for one of our 52% owned LNG carrier in the Teekay LNG-Marubeni Joint Venture;

•	expected purchases and deliveries of newbuilding vessels, the newbuildings’ commencement of service under charter contracts, and estimated costs for newbuilding vessels;

•	expected financing for capital expenditures, vessel installments and our joint ventures;

•	our expectations regarding the schedule and performance of the Bahrain LNG Joint Venture;

•	the cost of supervision and crew training in relation to the Pan Union Joint Venture, and our expected recovery of a portion of those costs;

•	our ability to maintain long-term relationships with major LNG and LPG importers and exporters and major crude oil companies;

•	our ability to leverage to our advantage Teekay Corporation’s relationships and reputation in the shipping industry;

•	our continued ability to enter into long-term, fixed-rate time-charters with our LNG and LPG customers;

•	the possible purchase of two of our leased Suezmax tankers, the Teide Spirit and the Toledo Spirit ;

•	our expectations regarding whether the UK taxing authority can successfully challenge the tax benefits available under certain of our former and current leasing arrangements, and the potential financial exposure to us if such a challenge is successful;

•	our hedging activities relating to foreign exchange, interest rate and spot market risks, and the effects of fluctuations in foreign exchange, interest rate and spot market rates on our business and results of operations;

•	the potential impact of new accounting guidance;

•	our expectations regarding the possibility of goodwill impairment;

•	anticipated taxation of our partnership and its subsidiaries; and

•	our business strategy and other plans and objectives for future operations.

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		Expected Maturity Date
		Remainder of 2017										There-after				Fair Value Liability
				2018		2019		2020		2021				Total				Rate (1)
		(in millions of U.S. Dollars, except percentages)
Long-Term Debt:
Variable Rate ($U.S.) (2)		95.1		504.7		73.6		52.7		177.4		295.2		1,198.7		(1,158.2)		2.6%
Variable Rate (Euro) (3)(4)		12.0		126.4		9.0		9.7		10.4		51.2		218.7		(209.2)		1.2%
Variable Rate (NOK) (4)(5)		47.5		104.7		—		116.3		139.5		—		408.0		(413.3)		5.9%
Capital Lease Obligations
Fixed-Rate ($U.S.) (6)		43.4		68.4		39.3		40.1		35.7		373.3		600.2		(600.2)		4.4%
Average Interest Rate (7)		4.5%		5.4%		4.7%		4.7%		4.6%		4.0%		4.4%
Interest Rate Swaps: (8)
Contract Amount ($U.S.) (9)		210.7		232.9		155.8		35.3		35.9		241.4		912.0		(47.1)		3.4%
Average Fixed Pay Rate (2)		3.5%		3.6%		2.7%		3.5%		3.4%		3.4%		3.4%
Contract Amount (Euro) (4)(10)		12.0		126.4		9.0		9.7		10.4		51.2		218.7		(31.9)		3.1%
Average Fixed Pay Rate (3)		3.1%		2.6%		3.7%		3.7%		3.7%		3.9%		3.1%

(1)

Rate refers to the weighted-average effective interest rate for our long-term debt and capital lease obligations, including the margin we pay on our floating-rate debt and the average fixed pay rate for our interest rate swap agreements. The average interest rate for our capital lease obligations is the weighted-average interest rate implicit in our lease obligations at the inception of the leases. The average fixed pay rate for our interest rate swaps excludes the margin we pay on our floating-rate term loans, which as of March 31, 2017 ranged from 0.30% to 2.80%. Please read “Item 1 – Financial Statements: Note 7 – Long-Term Debt”.

(2)	Interest payments on U.S. Dollar-denominated debt and interest rate swaps are based on LIBOR.

(3)	Interest payments on Euro-denominated debt and interest rate swaps are based on EURIBOR.

(4)	Euro-denominated and NOK-denominated amounts have been converted to U.S. Dollars using the prevailing exchange rate as of March 31, 2017 .

(5)

Interest payments on our NOK-denominated debt and on our cross-currency swaps are based on NIBOR. Our NOK-denominated bonds have been economically hedged with cross-currency swaps, to swap all interest and principal payments into U.S. Dollars, with the respective interest payments fixed at rates ranging from 5.92% to 7.70%, and the transfer of principal locked in at $503.4 million upon maturities. Please see below in the foreign currency fluctuation section and read “Item 1 – Financial Statements: Note 10 – Derivative Instruments and Hedging Activities”.

(6)	The amount of capital lease obligations represents the present value of minimum lease payments together with our purchase obligation, as applicable.

(7)	The average interest rate is the weighted-average interest rate implicit in the capital lease obligations at the inception of the leases. Interest rate adjustments on these leases have corresponding adjustments in charter receipts under the terms of the charter contracts to which these leases relate.

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(8)

The table above does not reflect our swaption agreements, whereby we have a one-time option to enter into an interest rate swap at a fixed rate with a third party, and the third party has a one-time option to require us to enter into an interest rate swap at a fixed rate. If we or the third party exercises its option, there will be cash settlements for the fair value of the interest rate swap in lieu of taking delivery of the actual interest rate swap. The net fair value of the interest rate swaption agreements as at March 31, 2017 was a liability of $0.9 million . Please read “Item 1 - Financial Statements: Note 10 - Derivative Instruments and Hedging Activities”.

(9)	The average variable receive rate for our U.S. Dollar-denominated interest rate swaps is set at 3-month or 6-month LIBOR.

(10)	The average variable receive rate for our Euro-denominated interest rate swaps is set at 1-month EURIBOR.

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•	REGISTRATION STATEMENT ON FORM S-8 (NO.333-124647) FILED WITH THE SEC ON MAY 5, 2005

•	REGISTRATION STATEMENT ON FORM F-3 (NO.333-170838) FILED WITH THE SEC ON NOVEMBER 24, 2010

•	REGISTRATION STATEMENT ON FORM F-3 (NO.333-190783) FILED WITH THE SEC ON AUGUST 22, 2013

•	REGISTRATION STATEMENT ON FORM F-3ASR (NO.333-197479) FILED WITH THE SEC ON JULY 17, 2014

•	REGISTRATION STATEMENT ON FORM F-3 (NO.333-197651) FILED WITH THE SEC ON JULY 25, 2014

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SIGNATURES

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

 

				TEEKAY LNG PARTNERS L.P.
				By:	Teekay GP L.L.C., its general partner
Date: May 26, 2017				By:	/s/ Edith Robinson
				Edith Robinson
				Secretary

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