July 26, 2013
HAMILTON, BERMUDA–(Marketwired – July 26, 2013) – Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP) today announced that during the past week it has exercised two of its three existing options with Daewoo Shipbuilding & Marine Engineering Co., Ltd., (DSME) of South Korea for the construction of two 173,400 cubic meter liquefied natural gas (LNG) carrier newbuildings for delivery in 2016. These two newbuilding LNG carriers are in addition to the two LNG carriers Teekay LNG ordered from DSME in December 2012, which have since secured time-charter employment commencing upon delivery. These newbuildings will also be constructed with the M-type, Electronically Controlled, Gas Injection (MEGI) twin engines, which are expected to be significantly more fuel-efficient and have lower emission levels than other engines currently being utilized in LNG shipping. The Partnership intends to secure long-term contract employment for both vessels prior to their delivery in 2016. In connection with the exercise of these two newbuilding options, the Partnership secured further options from DSME which will enable it to order up to five additional LNG carrier newbuildings in the future.
The contract with DSME includes an installment payment schedule similar to the two LNG carrier newbuildings ordered from DSME in December 2012. The Partnership intends to initially finance the installment payments during construction using a portion of its existing liquidity, and expects to secure long-term debt financing for the two newbuildings prior to their scheduled deliveries.
“The delivery of these two additional vessels is timed to coincide with the next wave of increased demand for LNG carriers which is expected when a large number of new LNG export projects come on-stream commencing from late-2015,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “Our recently announced charter contracts with Cheniere Energy for the first two MEGI LNG carrier newbuildings, ordered in December 2012, are a good example of the contract opportunities available in the LNG shipping market and the attractiveness of these vessels with the new fuel-efficient MEGI engines. Given the strong fundamental outlook in LNG shipping, combined with the optimized design of these vessels, we are confident in our ability to secure fixed-rate charter contracts for these additional two newbuildings, which will provide Teekay LNG with further visible built-in growth. Furthermore, the new options we secured to order up to five additional LNG carrier newbuildings should provide the Partnership with a competitive advantage for the various LNG projects we are pursuing.”
About Teekay LNG Partners L.P.
Teekay LNG Partners L.P. is the world’s third largest independent owner and operator of LNG vessels, providing LNG, liquefied petroleum gas (LPG) and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts with major energy and utility companies through its interests in 31 LNG carriers (including one LNG regasification unit and four newbuildings), 29 LPG/Multigas carriers (including five chartered-in LPG carriers and eight newbuildings) and 11 conventional tankers. The Partnership’s interests in these vessels ranges from 33 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) 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 trade on the New York Stock Exchange under the symbol “TGP”.
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 management’s current views with respect to certain future events and performance, including statements regarding: the timing and certainty of completion of the Partnership’s two additional LNG carrier newbuildings; timing and certainty of entering into long-term charter contracts and long-term financing for the two additional LNG newbuildings; the higher fuel-efficiency and lower emissions levels associated with the MEGI engines; the effect of the newbuildings on the Partnership’s fleet size and cash flows; the potential competitive advantage to the Partnership related to bidding on LNG projects as a result of securing the options to order up to an additional five LNG carrier newbuildings; and the anticipated increase in demand for LNG shipping commencing from late-2015 due to new LNG export projects as well as potentially more exports of LNG from the United States. 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: less than anticipated revenues or higher than anticipated costs or capital requirements related to the newbuildings in which the Partnership has agreed to construct; shipyard construction delays; increased cost to construct the two additional LNG carriers; failure of the MEGI engine to provide the expected efficiency and emission specifications; failure by the Partnership to secure charter contracts and/or financing prior to the delivery for the two additional LNG carrier newbuildings; failure by the Partnership to secure new LNG projects associated with the Partnership’s options to order up to five additional LNG carrier newbuildings; changes in production of LNG, either generally or in particular regions that would impact the expected future growth in the global LNG transportation and regasification markets, and spot LNG shipping rates; changes in trading patterns or timing of the start-up of new LNG liquefaction projects significantly impacting overall LNG shipping requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; 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, 2012. 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 Partnership’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.