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Teekay LNG Partners Reports Fourth Quarter 2019 and Annual 2019 Results

Highlights

  • GAAP net income attributable to the partners and preferred unitholders of $67.4 million and GAAP net income per common unit of $0.77 in the fourth quarter of 2019; and $152.8 million and $1.59 per common unit, respectively, for fiscal 2019.
  • Adjusted net income(1) attributable to the partners and preferred unitholders of $50.3 million and adjusted net income per common unit of $0.56 in the fourth quarter of 2019 (excluding items listed in Appendix A to this release); and $168.7 million and $1.79 per common unit, respectively, for fiscal 2019.
  • Fiscal 2019 adjusted net income per common unit is up 136 percent from fiscal 2018; fiscal 2020 adjusted net income per common unit is expected to be 45 to 73 percent higher than fiscal 2019.
  • Total adjusted EBITDA(1) of $184.2 million in the fourth quarter of 2019; and $684.7 million for fiscal 2019.
  • Took delivery of the fifth and sixth 50 percent-owned ARC7 LNG carrier newbuildings in late-2019.
  • The Bahrain LNG Joint Venture (in which Teekay LNG owns a 30 percent interest) completed mechanical construction and commissioning of the Bahrain LNG regasification terminal and began receiving terminal use payments.
  • In January 2020, Awilco LNG ASA (Awilco) fulfilled its obligation to repurchase two of Teekay LNG's vessels, resulting in over $260 million of deleveraging and over $100 million increase in liquidity for the Partnership.
  • In November 2019, Teekay LNG announced a 32 percent increase in its cash distributions to $1.00 per common unit per annum, effective with the first quarter of 2020 distribution to be paid in May.  In addition, since November 2019, the Partnership has repurchased over 563,700 common units for a total cost of $7.4 million and an average price of $13.15 per unit.

HAMILTON, Bermuda, Feb. 27, 2020 (GLOBE NEWSWIRE) -- Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (TGP), today reported the Partnership’s results for the quarter and year ended December 31, 2019.

Consolidated Financial Summary

  Three Months Ended Year Ended
  December 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018
(in thousands of U.S. Dollars, except per unit data) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
GAAP FINANCIAL COMPARISON          
Voyage revenues 148,797   149,655   149,805   601,256   510,762  
Income from vessel operations 83,604   71,611   65,164   299,253   147,809  
Equity income 30,207   21,296   949   58,819   53,546  
Net income attributable to the partners and preferred unitholders 67,370   47,368   6,579   152,790   28,369  
Limited partners’ interest in net income per common unit 0.77   0.51   0.00   1.59   0.03  
NON-GAAP FINANCIAL COMPARISON          
Total adjusted revenues(1) 246,414   240,134   225,691   935,474   777,150  
Total adjusted EBITDA(1) 184,168   180,216   150,099   684,667   515,292  
Distributable cash flow (DCF)(1) 71,350   70,925   51,211   252,819   158,882  
Adjusted net income attributable to the partners and preferred unitholders(1) 50,342   50,514   32,636   168,656   87,703  
Limited partners’ interest in adjusted net income per common unit 0.56   0.55   0.32   1.79   0.76  
                     

(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).

Fourth Quarter of 2019 Compared to Fourth Quarter of 2018

GAAP net income and non-GAAP adjusted net income attributable to the partners and preferred unitholders for the three months ended December 31, 2019, compared to the same quarter in the prior year, were positively impacted by: earnings from the seven liquefied natural gas (LNG) carrier newbuildings which delivered into the Partnership’s consolidated fleet and equity-accounted joint ventures between December 2018 and December 2019; higher earnings from the Torben Spirit upon redeployment at a higher charter rate in December 2018; a decrease in off-hire days for certain of the Partnership's vessels; higher earnings from the Partnership’s 52 percent-owned joint venture with Marubeni Corporation (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; higher earnings from the Partnership’s 50 percent-owned joint venture with Exmar NV (the Exmar LPG Joint Venture) from higher charter rates earned; and improved results from the Partnership's seven multi-gas carriers. These increases were partially offset by a reduction in earnings due to the sale of the Partnership's four remaining conventional crude oil tankers between October 2018 and October 2019.

In addition, GAAP net income attributable to the partners and preferred unitholders was positively impacted for the three months ended December 31, 2019, compared to the same quarter of the prior year, by various items, including  unrealized gains on non-designated derivative instruments in the fourth quarter of 2019, compared to unrealized losses on non-designated derivative instruments in the fourth quarter of 2018; and the gain recognized in the fourth quarter of 2019 upon derecognition of vessels and reclassification as sales-type leases for the Partnership's two LNG carriers on charter to Awilco, compared to impairment charges recorded in the fourth quarter of 2018 relating to the Partnership's goodwill attributable to its liquefied petroleum gas (LPG) segment.

CEO Commentary

“For both the fourth quarter and the full year 2019, Teekay LNG recorded strong financial results through successfully completing our newbuilding program in late-2019 and securing attractive time-charters during the year," commented Mark Kremin, President and Chief Executive Officer of Teekay Gas Group Ltd. "By virtue of having our LNG fleet 97 percent fixed through fiscal 2020, we are well-insulated from the current weakness in the spot LNG shipping market and the low price of natural gas in international markets," commented Mr. Kremin. "Looking ahead to 2020, we remain confident that our results will fall within the anticipated guidance ranges for the year presented at our Investor Day event in November 2019, with adjusted net income between $2.60 to $3.10 per unit, which is 45 to 73 percent higher than our actual 2019 adjusted net income per unit of $1.79."

"In the fourth quarter of 2019, we concluded our 6-year, $3.5 billion newbuilding program with the successful delivery of our last two Yamal ice-breaking LNG newbuildings to our Yamal LNG Joint Venture, upon which they immediately commenced fixed-rate time-charter contracts. Notably, these LNG carriers were delivered approximately three months ahead of schedule, resulting in an additional three months of charter hire to our Yamal LNG Joint Venture. In addition, the Bahrain regasification terminal completed mechanical construction and commissioning. With our orderbook now complete and our fully-delivered LNG fleet fixed on period charters, the Partnership is expected to benefit from its long-term contracted cash flows, and to continue allocating capital in a manner that focuses on the delevering and strengthening of its balance sheet while also returning capital to unitholders.”

Summary of Recent Events

Bahrain LNG W.L.L. (BLNG), in which Teekay LNG owns a 30 percent interest, announced that it had completed the mechanical construction and commissioning of the Bahrain Regasification Terminal (Terminal) and that the customer had commenced payments to BLNG under its 20-year terminal use agreement in early-January 2020. BLNG also reported that the customer is looking forward to the commencement of commercial operations of the Terminal. The Bahrain Spirit floating storage unit (FSU) (which is 100 percent-owned by Teekay LNG) continues to be chartered to BLNG. Depending on the seasonal requirements for regasification services by the Terminal, BLNG may trade the Bahrain Spirit FSU in the short-term LNG shipping market. Regardless of the deployment strategy utilized by the customer, BLNG will receive its full contractual payments from the customer of the Terminal, and Teekay LNG will continue to receive its full, fixed-rate charter-hire for the Bahrain Spirit FSU from BLNG.

In January 2020, Awilco fulfilled its obligation to repurchase two of Teekay LNG's LNG carriers, Wilforce and Wilpride, for a total of over $260 million. Teekay LNG received net cash proceeds of over $100 million after the repayment of approximately $157 million of debt secured by these two vessels.

In November and December 2019, the Partnership took delivery of the fifth and sixth 50 percent-owned ARC7 LNG carrier newbuildings, respectively, the Georgiy Ushakov and Yakov Gakkel, which immediately commenced their 26-year charter contracts servicing the Yamal LNG project.

On October 16, 2019, the Partnership sold its last remaining conventional tanker, the Alexander Spirit, for net proceeds of $11.5 million.

In December 2018, the board of directors of Teekay LNG's general partner approved a $100 million common unit repurchase program. Since that time, the Partnership has repurchased a total of 2.825 million common units, or approximately 3.5 percent of the outstanding common units immediately prior to commencement of the program, for a total cost of $36.3 million, representing an average repurchase price of $12.85 per unit.

Operating Results

The following table highlights certain financial information for Teekay LNG’s three segments: the Liquefied Natural Gas Segment, the Liquefied Petroleum Gas Segment and the Conventional Tanker Segment (please refer to the “Teekay LNG’s Fleet” section of this release below and Appendices D and E for further details). The Partnership sold its last conventional tanker in October 2019.

  Three Months Ended
  December 31, 2019 December 31, 2018
(in thousands of U.S. Dollars) (unaudited) (unaudited)
  Liquefied Natural Gas Segment Liquefied Petroleum Gas Segment Conventional Tanker Segment Total Liquefied Natural Gas Segment Liquefied Petroleum Gas Segment Conventional Tanker Segment Total
GAAP FINANCIAL COMPARISON                
Voyage revenues 138,436   10,347   14   148,797   135,777   7,253   6,775   149,805  
Income (loss) from vessel operations 85,522   (1,801 ) (117 ) 83,604   68,924   (5,367 ) 1,607   65,164  
Equity income (loss) 28,468   1,739     30,207   4,252   (3,303 )   949  
NON-GAAP FINANCIAL COMPARISON                
Consolidated adjusted EBITDA(i) 112,547   188   (117 ) 112,618   99,981   (2,781 ) 2,099   99,299  
Adjusted EBITDA from equity-accounted vessels(i) 61,454   10,096     71,550   43,893   6,907     50,800  
Total adjusted EBITDA(i) 174,001   10,284   (117 ) 184,168   143,874   4,126   2,099   150,099  
                                 

(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 December 31, 2019, compared to the same quarter of the prior year, were positively impacted primarily by: the deliveries of two wholly-owned LNG carrier newbuildings (the Sean Spirit and Yamal Spirit) between December 2018 and January 2019; higher earnings from the Torben Spirit upon redeployment in December 2018 at a higher charter rate; and a decrease in off-hire days for certain of the Partnership's vessels. In addition, income from vessel operations for the liquefied natural gas segment was positively impacted by the gain recognized in the fourth quarter of 2019 upon derecognition of vessels and reclassification as sales-type leases for the Partnership's two LNG carriers on charter to Awilco.

Equity income and adjusted EBITDA from equity-accounted vessels(1) for the liquefied natural gas segment for the three months ended December 31, 2019, compared to the same quarter of the prior year, were positively impacted primarily by: the deliveries of four ARC7 LNG carrier newbuildings between June and December 2019 to the Partnership’s 50 percent-owned Yamal LNG Joint Venture; the delivery of an LNG carrier newbuilding in January 2019 to the Partnership's 20 percent-owned joint venture with China LNG Shipping (Holdings) Limited, CETS Investment Management (HK) Co. Limited and BW LNG Investments Pte. Ltd. (the Pan Union Joint Venture); and higher earnings from the Partnership’s 52 percent-owned 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. In addition, GAAP equity income was positively impacted by unrealized gains on non-designated derivative instruments in the Partnership's equity-accounted joint ventures in the fourth quarter of 2019 compared to unrealized losses on designated and non-designated derivative instruments in the fourth quarter of 2018.

Liquefied Petroleum Gas Segment

Loss from vessel operations and Consolidated Adjusted EBITDA(1) for the liquefied petroleum gas segment for the three months ended December 31, 2019, compared to the same quarter of the prior year, were positively impacted by improved results from the Partnership's seven multi-gas carriers, which earned higher spot revenues during the fourth quarter of 2019.

Equity income (loss) and adjusted EBITDA from equity-accounted vessels(1) for the liquefied petroleum gas segment for the three months ended December 31, 2019, compared to the same quarter of the prior year, were positively impacted by higher charter rates earned in the Partnership’s 50 percent-owned Exmar LPG Joint Venture.

Conventional Tanker Segment

(Loss) income from vessel operations and consolidated adjusted EBITDA(1) for the conventional tanker segment for the three months ended December 31, 2019, compared to the same quarter of the prior year, were negatively impacted by the sales of the African Spirit, European Spirit, Toledo Spirit and Alexander Spirit between October 2018 and October 2019.

(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 Partnership’s fleet as of February 1, 2020. The Partnership also owns a 30 percent interest in a regasification terminal in Bahrain which has recently completed construction.

  Number of Vessels
  Owned and In-Chartered Vessels(i)
LNG Carrier Fleet 47(ii)
LPG/Multi-gas Carrier Fleet 30(iii)
Total 77
   
  1. Includes vessels leased by the Partnership from third parties and accounted for as finance leases.
  2. The Partnership’s ownership interests in these vessels range from 20 percent to 100 percent.
  3. The Partnership’s ownership interests in these vessels range from 50 percent to 100 percent.

Liquidity

As of December 31, 2019, the Partnership had total liquidity of $326.4 million (comprised of $160.2 million in cash and cash equivalents and $166.2 million in undrawn credit facilities). Giving proforma effect to Awilco's fulfillment of their repurchase obligations of the WilForce and WilPride from Teekay LNG in early-January 2020, the Partnership's total liquidity as at December 31, 2019 would have been $428.2 million.

Conference Call

The Partnership plans to host a conference call on Thursday, February 27, 2020 at 12:00 p.m. (ET) to discuss the results for the fourth quarter and year ended December 31, 2019. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

  • By dialing (800) 367-2403 or (647) 490-5367, if outside North America, and quoting conference ID code 7620501.
  • By accessing the webcast, which will be available on Teekay LNG’s website at www.teekay.com (the archive will remain on the website for a period of one year).

An accompanying Fourth Quarter and Fiscal Year 2019 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 (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 Relations
enquiries contact:

Ryan Hamilton
Tel: +1 (604) 609-2963
Website: 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.

In 2018 and prior periods, the Partnership reported Cash Flow from Vessel Operations (CFVO), as a non-GAAP measure. In the first quarter of 2019, the Partnership made certain changes to its non-GAAP financial measures to more closely align with internal management reporting, annual reporting with the SEC under Form 20-F and metrics used by certain investors. CFVO from Consolidated Vessels and Total CFVO were replaced with Consolidated Adjusted EBITDA and Total Adjusted EBITDA, respectively, for current and comparative periods.

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, and its proportionate ownership percentage of the voyage revenues from its equity-accounted joint ventures, as shown in Appendix E of this release. 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 Partnership’s 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 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 vessel and goodwill write-downs, gains or losses on sales of vessels and equity-accounted investments, unrealized gains or losses on derivative instruments, foreign exchange gains or losses, amortization of in-process contracts, adjustments for direct financing 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 Partnership’s consolidated financial statements.

Adjusted Net Income Attributable to the Partners and Preferred Unitholders excludes items of income or loss from GAAP net income that are typically excluded by securities analysts in their published estimates of the Partnership’s financial results. The Partnership believes that certain investors use this information to evaluate the Partnership’s 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 for a reconciliation of adjusted equity income to equity income, the most directly comparable GAAP measure reflected in the Partnership’s consolidated financial statements.

Distributable Cash Flow (DCF) represents GAAP net income adjusted for gains or losses on sales of vessels and write-down of goodwill and vessels, 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, realized loss on interest rate swap termination, ineffectiveness for derivative instruments designated as hedges for accounting purposes, 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, adjustments relating to additional tax indemnification payments, and the Partnership’s 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 Partnership’s 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 Partnership’s consolidated financial statements.

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

  Three Months Ended Year Ended
  December 31, September 30, December 31, December 31, December 31,
2019 2019 2018 2019 2018
  (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Voyage revenues 148,797   149,655   149,805   601,256   510,762  
           
Voyage expenses (4,628 ) (4,961 ) (6,529 ) (21,387 ) (28,237 )
Vessel operating expenses (30,706 ) (27,321 ) (30,454 ) (111,585 ) (117,658 )
Time-charter hire expense (5,987 ) (5,336 ) (5,980 ) (19,994 ) (7,670 )
Depreciation and amortization (33,053 ) (34,248 ) (33,079 ) (136,765 ) (124,378 )
General and administrative expenses (4,829 ) (5,393 ) (7,809 ) (22,521 ) (28,512 )
Gain (loss) on sales of vessel and write-down of goodwill and vessels(1) 14,349   (785 ) (790 ) 13,564   (54,653 )
Restructuring charges(2) (339 )     (3,315 ) (1,845 )
Income from vessel operations 83,604   71,611   65,164   299,253   147,809  
           
Equity income(3) 30,207   21,296   949   58,819   53,546  
Interest expense (40,712 ) (40,574 ) (39,551 ) (164,521 ) (128,303 )
Interest income 922   1,025   964   3,985   3,760  
Realized and unrealized gain (loss) on non-designated derivative instruments(4) 4,352   (3,270 ) (11,540 ) (13,361 ) 3,278  
Foreign currency exchange (loss) gain(5) (4,545 ) 2,879   (7,244 ) (9,640 ) 1,371  
Other (expense) income(6) (1,767 ) (1,174 ) 545   (2,454 ) (51,373 )
Net income before income tax expense 72,061   51,793   9,287   172,081   30,088  
Income tax expense (985 ) (1,442 ) (42 ) (7,477 ) (3,213 )
Net income 71,076   50,351   9,245   164,604   26,875  
           
Non-controlling interest in net income 3,706   2,983   2,666   11,814   (1,494 )
Preferred unitholders' interest in net income 6,426   6,426   6,425   25,702   25,701  
General partner's interest in net income 1,218   820   2   2,542   53  
Limited partners’ interest in net income 59,726   40,122   152   124,546   2,615  
Limited partners' interest in net income per common unit:          
• Basic 0.77   0.51   0.00   1.59   0.03  
• Diluted 0.77   0.51   0.00   1.59   0.03  
Weighted-average number of common units outstanding:          
• Basic 77,509,379   78,012,514   79,676,541   78,177,189   79,672,435  
• Diluted 77,615,829   78,106,770   79,843,339   78,268,412   79,842,328  
Total number of common units outstanding at end of period 77,509,411   77,509,411   79,360,719   77,509,411   79,360,719  
                     

(1) In December 2019, the Partnership recognized a gain of $14.3 million for the three months and year ended December 31, 2019 on derecognition of two LNG carriers on charter to Awilco as they were reclassified as sales-type leases upon Awilco obtaining credit approval for a financing facility that would provide the funds necessary for Awilco to fulfill its purchase obligation to the Partnership. In September 2019, the Partnership recorded a write-down of $0.8 million for the three months ended September 30, 2019 and year ended December 31, 2019 on the Alexander Spirit, compared to a write-down of $13.0 million for the same vessel during the year ended December 31, 2018 to its then estimated fair value. In June 2018, the Partnership wrote-down four of its wholly-owned multi-gas carriers (the Napa Spirit, Pan Spirit, Camilla Spirit and Cathinka Spirit) and recorded an impairment charge of $33.0 million for the year ended December 31, 2018. In addition, for the year ended December 31, 2018, the Partnership recorded an aggregate write-down of $7.9 million on the European Spirit and African Spirit conventional tankers.

Included in gain (loss) on sales of vessels and write-down of goodwill and vessels for the three months and year ended December 31, 2018 is an impairment change of $0.8 million relating to the Partnership's goodwill attributable to its LPG segment.

(2) For the three months and year ended December 31, 2019, the Partnership incurred restructuring charges of $0.3 million from subsidiaries of Teekay Corporation attributable to employees that previously supported the Partnership. In January 2019 and February 2018, the Toledo Spirit and Teide Spirit, respectively, were sold and as a result of these sales, the Partnership recorded restructuring charges of $2.9 million and $1.8 million for the years ended December 31, 2019 and 2018, respectively, relating to seafarer severance costs.

(3) The Partnership’s 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 Partnership’s equity-accounted investments. Adjusted equity income is a non-GAAP financial measure.

  Three Months Ended Year Ended
  December 31, September 30, December 31, December 31, December 31,
  2019 2019 2018 2019 2018
Equity income 30,207   21,296   949   58,819   53,546  
Proportionate share of unrealized (gain) loss on non-designated interest rate swaps (6,271 ) 5,150   4,736   8,341   (9,076 )
Proportionate share of ineffective portion of hedge-accounted interest rate swaps     4,831     (342 )
Proportionate share of loss on sale of vessel         257  
Gain on sale of equity-accounted investment         (5,563 )
Proportionate share of other items 1,436   (77 ) 181   2,828   (4 )
Equity income adjusted for items in Appendix A 25,372   26,369   10,697   69,988   38,818  
                     

(4) The realized (losses) gains on non-designated derivative instruments relate to the amounts the Partnership actually paid or received to settle non-designated derivative instruments and the unrealized gains (losses) 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 Year Ended
  December 31, September 30, December 31, December 31, December 31,
  2019 2019 2018 2019 2018
Realized (losses) gains relating to:          
Interest rate swap agreements (2,683 ) (2,621 ) (2,804 ) (10,081 ) (14,654 )
Interest rate swap agreements termination         (13,681 )
Foreign currency forward contracts (147 )     (147 )  
Toledo Spirit time-charter derivative contract     (668 )   1,480  
  (2,830 ) (2,621 ) (3,472 ) (10,228 ) (26,855 )
Unrealized gains (losses) relating to:          
Interest rate swap agreements 6,849   (215 ) (7,637 ) (2,891 ) 31,061  
Interest rate swaption agreements         2  
Foreign currency forward contracts 333   (434 )   (202 )  
Toledo Spirit time-charter derivative contract     (431 ) (40 ) (930 )
  7,182   (649 ) (8,068 ) (3,133 ) 30,133  
Total realized and unrealized gains (losses) on non-designated derivative instruments 4,352   (3,270 ) (11,540 ) (13,361 ) 3,278  
                     

(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 Partnership’s 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.

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

  Three Months Ended Year Ended
  December 31, September 30, December 31, December 31, December 31,
  2019 2019 2018 2019 2018
Realized losses on cross-currency swaps (1,109 ) (1,431 ) (1,607 ) (5,061 ) (6,533 )
Realized losses on cross-currency swaps termination         (42,271 )
Realized gains on repurchase of NOK bonds         42,271  
Unrealized gains (losses) on cross currency swaps 12,579   (23,759 ) (28,494 ) (13,239 ) 21,240  
Unrealized (losses) gains on revaluation of NOK bonds (11,877 ) 22,167   21,066   5,810   (23,118 )
                     

(6) Other (expense) income for the three months ended September 30, 2019 and year ended December 31, 2019 included $1.4 million loss recognized relating to the Torben Spirit sale-leaseback refinancing completed in September 2019. In addition, other (expense) income for the year ended December 31, 2018 included a $53.0 million expense for the recognition of an additional tax indemnification guarantee liability recorded within the consolidated Teekay Nakilat Corporation (the RasGas II Joint Venture), which was settled in 2018.

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

  As at December 31, As at September 30, As at December 31,
  2019 2019 2018
  (unaudited) (unaudited) (unaudited)
ASSETS      
Current      
Cash and cash equivalents 160,221   142,860   149,014  
Restricted cash – current 57,889   58,109   38,329  
Accounts receivable 13,460   14,649   20,795  
Prepaid expenses 6,796   9,383   8,076  
Current portion of derivative assets 355   464   835  
Current portion of net investments in direct financing and sale-type leases 273,986   13,365   12,635  
Current portion of advances to equity-accounted joint ventures 73,933   79,108   79,108  
Advances to affiliates 5,143   17,471   8,229  
Vessel held for sale   11,515    
Other current assets 238   238   2,306  
Total current assets 592,021   347,162   319,327  
       
Restricted cash – long-term 35,181   33,562   35,521  
       
Vessels and equipment      
At cost, less accumulated depreciation 1,335,397   1,604,581   1,657,338  
Vessels related to finance leases, at cost, less accumulated depreciation 1,691,945   1,698,545   1,585,243  
Operating lease right-of-use asset 34,157   37,431    
Advances on newbuilding contracts     86,942  
Total vessels and equipment 3,061,499   3,340,557   3,329,523  
Investments in and advances to equity-accounted joint ventures 1,081,383   1,017,994   1,037,025  
Net investments in direct financing and sales-type leases 544,823   548,072   562,528  
Other assets 13,038   11,960   11,432  
Derivative assets 1,834   301   2,362  
Intangible assets – net 43,366   45,580   52,222  
Goodwill 34,841   34,841   34,841  
Total assets 5,407,986   5,380,029   5,384,781  
       
       
LIABILITIES AND EQUITY      
Current      
Accounts payable 5,094   2,426   3,830  
Accrued liabilities 76,752   78,701   74,753  
Unearned revenue 28,759   25,732   30,108  
Current portion of long-term debt 599,065   390,569   135,901  
Current obligations related to finance leases 69,982   69,661   81,219  
Current portion of operating lease liabilities 13,407   13,252    
Current portion of derivative liabilities 38,458   37,523   11,604  
Advances from affiliates 7,003   8,861   14,731  
Total current liabilities 838,520   626,725   352,146  
Long-term debt 1,232,331   1,437,282   1,833,875  
Long-term obligations related to finance leases 1,340,922   1,358,485   1,217,337  
Long-term operating lease liabilities 20,750   24,179    
Other long-term liabilities 47,482   46,180   43,788  
Derivative liabilities 51,006   72,466   55,038  
Total liabilities 3,531,011   3,565,317   3,502,184  
Equity      
Limited partners – common units 1,543,598   1,497,544   1,496,107  
Limited partners – preferred units 285,159   285,159   285,159  
General partner 50,241   49,303   49,271  
Accumulated other comprehensive (loss) income (57,312 ) (71,757 ) 2,717  
Partners' equity 1,821,686   1,760,249   1,833,254  
Non-controlling interest 55,289   54,463   49,343  
Total equity 1,876,975   1,814,712   1,882,597  
Total liabilities and total equity 5,407,986   5,380,029   5,384,781  
             

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

  Year Ended
  December 31, December 31,
  2019 2018
  (unaudited) (unaudited)
Cash, cash equivalents and restricted cash provided by (used for)    
OPERATING ACTIVITIES    
Net income 164,604   26,875  
Non-cash and non-operating items:    
Unrealized loss (gain) on non-designated derivative instruments 3,133   (30,133 )
Depreciation and amortization 136,765   124,378  
(Gain) loss on sales of vessels and write-down of goodwill and vessels (13,564 ) 54,653  
Unrealized foreign currency exchange loss (gain) including the effect of the termination of cross currency swaps 2,805   (7,525 )
Equity income, net of dividends received of $40,303 (2018 – $14,421) (18,516 ) (39,125 )
Amortization of deferred financing issuance costs included in interest expense 8,135   8,720  
Other non-cash items 7,634   (10,495 )
Change in non-cash operating assets and liabilities 5,899   19,218  
Expenditures for dry docking (12,358 ) (15,368 )
Receipts from direct financing and sales-type leases 17,073    
Net operating cash flow 301,610   131,198  
FINANCING ACTIVITIES    
Proceeds from issuance of long-term debt 186,566   1,135,304  
Scheduled repayments of long-term debt and settlement of related swaps (132,627 ) (506,437 )
Prepayments of long-term debt and settlement of related swaps (188,787 ) (465,122 )
Financing issuance costs (1,149 ) (11,932 )
Proceeds from financing related to sales and leaseback of vessels 317,806   370,050  
Extinguishment of obligations related to finance leases (111,617 )  
Scheduled repayments of obligations related to finance leases (71,726 ) (59,722 )
Repurchase of common units (25,728 ) (3,786 )
Cash distributions paid (82,379 ) (70,345 )
Dividends paid to non-controlling interest (90 ) (2,925 )
Net financing cash flow (109,731 ) 385,085  
INVESTING ACTIVITIES    
Expenditures for vessels and equipment, net of warranty settlement (97,895 ) (686,148 )
Capital contributions and advances to equity-accounted joint ventures (72,391 ) (40,544 )
Proceeds from sales of vessels 11,515   28,518  
Acquisition of non-controlling interest in certain of the Partnership's subsidiaries (2,681 )  
Proceeds from sale of equity-accounted joint venture   54,438  
Receipts from direct financing leases   10,882  
Net investing cash flow (161,452 ) (632,854 )
     
Increase (decrease) in cash, cash equivalents and restricted cash 30,427   (116,571 )
Cash, cash equivalents and restricted cash, beginning of the year 222,864   339,435  
Cash, cash equivalents and restricted cash, end of the year 253,291   222,864  
         

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

  Three Months Ended Year Ended
  December 31, December 31,
  2019 2018 2019 2018
  (unaudited) (unaudited) (unaudited) (unaudited)
Net income – GAAP basis 71,076   9,245   164,604   26,875  
Less: Net (income) loss attributable to non-controlling interests (3,706 ) (2,666 ) (11,814 ) 1,494  
Net income attributable to the partners and preferred unitholders 67,370   6,579   152,790   28,369  
Add (subtract) specific items affecting net income:        
(Gain) loss on sales of vessels and write-down of goodwill and vessels(1) (14,349 ) 790   (13,564 ) 54,653  
Restructuring charges(2) 339     3,315   1,845  
Unrealized foreign currency exchange loss (gains)(3) 3,436   5,604   4,021   (8,717 )
Unrealized (gains) losses on non-designated and designated derivative instruments and other items from equity-accounted investees(4) (4,835 ) 9,748   11,169   (14,728 )
Unrealized (gains) losses on non-designated derivative instruments(5) (7,182 ) 8,068   3,133   (30,133 )
Realized loss on interest rate swap termination       13,681  
Other items(6) 5,046   2,447   8,461   56,431  
Non-controlling interests’ share of items above(7) 517   (600 ) (669 ) (13,698 )
Total adjustments (17,028 ) 26,057   15,866   59,334  
Adjusted net income attributable to the partners and preferred unitholders 50,342   32,636   168,656   87,703  
         
Preferred unitholders' interest in adjusted net income 6,426   6,425   25,702   25,701  
General partner's interest in adjusted net income 878   524   2,859   1,240  
Limited partners’ interest in adjusted net income 43,038   25,687   140,095   60,762  
Limited partners’ interest in adjusted net income per common unit, basic 0.56   0.32   1.79   0.76  
Weighted-average number of common units outstanding, basic 77,509,379   79,676,541   78,177,189   79,672,435  
                 
  1. See Note 1 to the Consolidated Statements of Income included in this release for further details.
  2. See Note 2 to the Consolidated Statements of Income included in this release for further details.
  3. Unrealized foreign currency exchange losses (gains) primarily relate to the Partnership’s 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 (gains) losses on the cross currency swaps economically hedging the Partnership’s 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 included in this release for further details.
  4. Reflects the unrealized losses (gains) due to changes in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes in the Partnership's equity-accounted investees. In addition, for the three months and year ended December 31, 2018, it includes the gain on sale by the Partnership of its 50 percent investment in its joint venture with Exmar NV, which owned the Excelsior LNG carrier (Excelsior Joint Venture); any ineffectiveness for derivative instruments designated as hedges for accounting purposes; and loss on sale of vessel within the Partnership's equity-accounted joint ventures. See Note 3 to the Consolidated Statements of Income included in this release for further details.
  5. Reflects the unrealized (gains) 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 included in this release for further details.
  6. Included in other items for the three months and year ended December 31,2019 are adjustments to reflect the impact of the reclassification of the Partnership's two charter contracts with Awilco from operating leases to sale-type leases. Included in other items for the year ended December 31, 2018 is the additional tax indemnification guarantee liability of $53 million, as described in Note 6 to the Consolidated Statements of Income included in this release.
  7. Items affecting net income include items from the Partnership’s consolidated non-wholly-owned subsidiaries. The specific items affecting net income 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 Measures
Distributable Cash Flow (DCF)
(in thousands of U.S. Dollars, except units outstanding and per unit data)

  Three Months Ended Year Ended
  December 31, December 31,
  2019 2018 2019 2018
  (unaudited) (unaudited) (unaudited) (unaudited)
         
Net income: 71,076   9,245   164,604   26,875  
Add:        
Depreciation and amortization 33,053   33,079   136,765   124,378  
Partnership’s share of equity-accounted joint ventures' DCF net of estimated maintenance capital expenditures(1) 32,514   19,282   101,637   72,546  
Direct finance and sale-type lease payments received in excess of revenue recognized and other adjustments 10,310   2,475   21,636   11,082  
Unrealized foreign currency exchange loss (gain) 3,436   5,604   4,021   (8,717 )
Deferred income tax and other non-cash items 992   363   5,674   2,561  
Distributions relating to equity financing of newbuildings 886   1,962   4,190   9,012  
Realized loss on interest rate swap termination       13,681  
Additional tax indemnification guarantee liability       53,000  
Less:        
Distributions relating to preferred units (6,426 ) (6,425 ) (25,702 ) (25,701 )
Unrealized (gains) losses on non-designated derivative instruments (7,182 ) 8,068   3,133   (30,133 )
(Gain) loss on sales of vessels and write-down of goodwill and vessels (14,349 ) 790   (13,564 ) 54,653  
Estimated maintenance capital expenditures (17,411 ) (16,794 ) (69,404 ) (64,186 )
Equity income (30,207 ) (949 ) (58,819 ) (53,546 )
Ineffective portion on qualifying cash flow hedging instruments included in interest expense       (740 )
Portion of additional tax indemnification guarantee liability previously recognized in DCF       (3,849 )
Distributable Cash Flow before non-controlling interest 76,692   56,700   274,171   180,916  
Non-controlling interests’ share of DCF before estimated maintenance capital expenditures (5,342 ) (5,489 ) (21,352 ) (22,034 )
Distributable Cash Flow 71,350   51,211   252,819   158,882  
Amount of cash distributions attributable to the General Partner (301 ) (227 ) (1,211 ) (911 )
Limited partners' Distributable Cash Flow 71,049   50,984   251,608   157,971  
Weighted-average number of common units outstanding, basic 77,509,379   79,676,541   78,177,189   79,672,435  
Distributable Cash Flow per limited partner common unit 0.92   0.64   3.22   1.98  
                 

(1) The estimated maintenance capital expenditures relating to the Partnership’s share of equity-accounted joint ventures were $13.4 million and $10.3 million for the three months ended December 31, 2019 and 2018, respectively, and $47.0 million and $36.4 million for the years ended December 31, 2019 and 2018, respectively.

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

  Three Months Ended Year Ended
  December 31, December 31,
  2019 2018 2019 2018
  (unaudited) (unaudited) (unaudited) (unaudited)
Voyage revenues 148,797   149,805   601,256   510,762  
Partnership's proportionate share of voyage revenue from its equity-accounted joint ventures (See Appendix E) 97,617   75,886   334,218   266,388  
Total adjusted revenues 246,414   225,691   935,474   777,150  
                 


  Three Months Ended Year Ended
  December 31, December 31,
  2019 2018 2019 2018
  (unaudited) (unaudited) (unaudited) (unaudited)
Net income 71,076   9,245   164,604   26,875  
Depreciation and amortization 33,053   33,079   136,765   124,378  
Interest expense, net of interest income 39,790   38,587   160,536   124,543  
Income tax expense 985   42   7,477   3,213  
EBITDA 144,904   80,953   469,382   279,009  
         
Add (subtract) specific income statement items affecting EBITDA:        
Foreign currency exchange loss (gain) 4,545   7,244   9,640   (1,371 )
Other expense (income) – net 1,767   (545 ) 2,454   51,373  
Equity income (30,207 ) (949 ) (58,819 ) (53,546 )
Realized and unrealized (gain) loss on derivative instruments (4,352 ) 11,540   13,361   (3,278 )
(Gain) loss on sales of vessels and write-down of goodwill and vessels (14,349 ) 790   (13,564 ) 54,653  
Direct finance and sale-type lease payments received in excess of revenue recognized and other adjustments 10,310   2,475   21,636   11,082  
Amortization of in-process contracts included in voyage revenues   (1,541 )   (5,756 )
Realized loss on Toledo Spirit derivative contract   (668 )   1,480  
Consolidated adjusted EBITDA 112,618   99,299   444,090   333,646  
Adjusted EBITDA from equity-accounted vessels (See Appendix E) 71,550   50,800   240,577   181,646  
Total adjusted EBITDA 184,168   150,099   684,667   515,292  
                 

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

  Three Months Ended December 31, 2019 Year Ended December 31, 2019
  (unaudited) (unaudited)
  Liquefied Natural Gas Segment Liquefied Petroleum Gas Segment Conventional Tanker Segment Total Total
Voyage revenues 138,436   10,347   14   148,797   601,256  
Voyage (expenses) recoveries (57 ) (4,573 ) 2   (4,628 ) (21,387 )
Vessel operating expenses (25,363 ) (5,102 ) (241 ) (30,706 ) (111,585 )
Time-charter hire expense (5,987 )     (5,987 ) (19,994 )
Depreciation and amortization (31,064 ) (1,989 )   (33,053 ) (136,765 )
General and administrative (expenses) recoveries (4,392 ) (484 ) 47   (4,829 ) (22,521 )
Gain on sales of vessels and write-down of vessels 14,349       14,349   13,564  
Restructuring (charges) recoveries (400 )   61   (339 ) (3,315 )
Income (loss) from vessel operations 85,522   (1,801 ) (117 ) 83,604   299,253  
Depreciation and amortization 31,064   1,989     33,053   136,765  
Gain on sales of vessels and write-down of vessels (14,349 )     (14,349 ) (13,564 )
Direct finance and sales-type lease payments received in excess of revenue recognized and other adjustments 10,310       10,310   21,636  
Consolidated adjusted EBITDA 112,547   188   (117 ) 112,618   444,090  
           
  Three Months Ended December 31, 2018 Year Ended December 31, 2018
  (unaudited) (unaudited)
  Liquefied Natural Gas Segment Liquefied Petroleum Gas Segment Conventional Tanker Segment Total Total
Voyage revenues 135,777   7,253   6,775   149,805   510,762  
Voyage expenses (1,099 ) (4,574 ) (856 ) (6,529 ) (28,237 )
Vessel operating expenses (22,859 ) (4,863 ) (2,732 ) (30,454 ) (117,658 )
Time-charter hire expense (5,980 )     (5,980 ) (7,670 )
Depreciation and amortization (30,121 ) (1,796 ) (1,162 ) (33,079 ) (124,378 )
General and administrative expenses (6,794 ) (597 ) (418 ) (7,809 ) (28,512 )
Write-down of goodwill and vessels   (790 )   (790 ) (54,653 )
Restructuring charges         (1,845 )
Income (loss) from vessel operations 68,924   (5,367 ) 1,607   65,164   147,809  
Depreciation and amortization 30,121   1,796   1,162   33,079   124,378  
Write-down of goodwill and vessels   790     790   54,653  
Amortization of in-process contracts included in voyage revenues (1,539 )   (2 ) (1,541 ) (5,756 )
Direct finance lease payments received in excess of revenue recognized and other adjustments 2,475       2,475   11,082  
Realized (loss) gain on Toledo Spirit derivative contract     (668 ) (668 ) 1,480  
Consolidated adjusted EBITDA 99,981   (2,781 ) 2,099   99,299   333,646  
                     

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

  Three Months Ended
  December 31, 2019 December 31, 2018
  (unaudited) (unaudited)
  At Partnership's At Partnership's
  100% Portion(1) 100% Portion(1)
Voyage revenues 218,416   97,617   176,177   75,886  
Voyage expenses (1,567 ) (788 ) (3,885 ) (1,962 )
Vessel operating expenses, time-charter hire expense and general and administrative expenses (71,018 ) (31,535 ) (61,634 ) (27,291 )
Depreciation and amortization (28,528 ) (13,852 ) (30,471 ) (14,643 )
Income from vessel operations of equity-accounted vessels 117,303   51,442   80,187   31,990  
Net interest expense (61,932 ) (25,641 ) (50,069 ) (20,589 )
Income tax (expense) recovery (200 ) (107 ) 1,048   377  
Other items including realized and unrealized gains (losses) on derivative instruments 12,743   4,513   (27,773 ) (10,829 )
Net income / equity income of equity-accounted vessels 67,914   30,207   3,393   949  
Net income / equity income of equity-accounted LNG vessels 64,274   28,468   9,837   4,252  
Net income (loss) / equity income (loss) of equity-accounted LPG vessels 3,640   1,739   (6,444 ) (3,303 )
         
Net income / equity income of equity-accounted vessels 67,914   30,207   3,393   949  
Depreciation and amortization 28,528   13,852   30,471   14,643  
Net interest expense 61,932   25,641   50,069   20,589  
Income tax expense (recovery) 200   107   (1,048 ) (377 )
EBITDA from equity-accounted vessels 158,574   69,807   82,885   35,804  
         
Add (subtract) specific income statement items affecting EBITDA:        
Other items including realized and unrealized (gains) losses on derivative instruments (12,743 ) (4,513 ) 27,773   10,829  
Direct finance and sales-type lease payments received in excess of revenue recognized 19,286   7,212   14,525   5,132  
Amortization of in-process contracts (1,758 ) (956 ) (1,804 ) (965 )
Adjusted EBITDA from equity-accounted vessels 163,359   71,550   123,379   50,800  
Adjusted EBITDA from equity-accounted LNG vessels 143,164   61,454   109,564   43,893  
Adjusted EBITDA from equity-accounted LPG vessels 20,195   10,096   13,815   6,907  
                 

(1) The Partnership's equity-accounted vessels for the three months ended December 31, 2019 and 2018 include: the Partnership’s 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnership’s 50 percent ownership interest in the Partnership’s joint venture with Exmar NV (the Excalibur Joint Venture), which owns one LNG carrier; the Partnership’s 33 percent ownership interest in four LNG carriers servicing the Angola LNG project; the Partnership’s 52 percent ownership interest in the MALT Joint Venture, which owns six LNG carriers; the Partnership’s 50 percent ownership interest in Exmar LPG BVBA, which owns and in-charters 23 LPG carriers as at December 31, 2019, compared to 22 owned and in-chartered LPG carriers as at December 31, 2018; the Partnership’s ownership interest ranging from 20 to 30 percent in four LNG carriers as at December 31, 2019 for Shell, compared to three LNG carriers and one LNG carrier newbuilding as at December 31, 2018; the Partnership’s 50 percent ownership interest in six ARC7 LNG carriers in the Yamal LNG Joint Venture as at December 31, 2019, compared to two ARC7 LNG carriers and four ARC7 LNG carrier newbuildings as at December 31, 2018; and the Partnership's 30 percent ownership interest in the Bahrain LNG Joint Venture, which owns an LNG receiving and regasification terminal in Bahrain.

  Year Ended
  December 31, 2019 December 31, 2018
  (unaudited) (unaudited)
  At Partnership's At Partnership's
  100% Portion(1) 100% Portion(1)
Voyage revenues 767,026   334,218   612,857   266,388  
Voyage expenses (10,807 ) (5,359 ) (12,058 ) (6,071 )
Vessel operating expenses, time-charter hire expense and general and administrative expenses (247,070 ) (109,063 ) (208,686 ) (93,277 )
Depreciation and amortization (114,610 ) (55,340 ) (107,116 ) (52,883 )
Loss on sale of vessel     (514 ) (257 )
Income from vessel operations of equity-accounted vessels 394,539   164,456   284,483   113,900  
Net interest expense (224,635 ) (91,394 ) (164,635 ) (69,532 )
Income tax (expense) recovery (3,683 ) (1,420 ) 802   262  
Other items including realized and unrealized (losses) gains on derivative instruments (41,197 ) (12,823 ) 16,603   3,353  
Gain on sale of equity-accounted investment(2)       5,563  
Net income / equity income of equity-accounted vessels 125,024   58,819   137,253   53,546  
Net income / equity income of equity-accounted LNG vessels 125,944   59,600   149,981   60,228  
Net loss / equity loss of equity-accounted LPG vessels (920 ) (781 ) (12,728 ) (6,682 )
         
Net income / equity income of equity-accounted vessels 125,024   58,819   137,253   53,546  
Depreciation and amortization 114,610   55,340   107,116   52,883  
Net interest expense 224,635   91,394   164,635   69,532  
Income tax expense (recovery) 3,683   1,420   (802 ) (262 )
EBITDA from equity-accounted vessels 467,952   206,973   408,202   175,699  
         
Add (subtract) specific income statement items affecting EBITDA:        
Other items including realized and unrealized losses (gains) on derivative instruments 41,197   12,823   (16,603 ) (3,353 )
Loss on sale of vessel     514   257  
Direct finance and sales-type lease payments received in excess of revenue recognized 67,807   24,574   51,329   18,453  
Amortization of in-process contracts (6,974 ) (3,793 ) (7,242 ) (3,847 )
Gain on sale of equity-accounted investment(2)       (5,563 )
Adjusted EBITDA from equity-accounted vessels 569,982   240,577   436,200   181,646  
Adjusted EBITDA from equity-accounted LNG vessels 499,176   205,181   382,514   154,803  
Adjusted EBITDA from equity-accounted LPG vessels 70,806   35,396   53,686   26,843  
                 
  1. The Partnership's equity-accounted vessels for the year ended December 31, 2019 and 2018 include: the Partnership’s 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnership’s 50 percent ownership interest in the Excalibur Joint Venture, which owns one LNG carrier; the Partnership’s 33 percent ownership interest in four LNG carriers servicing the Angola LNG project; the Partnership’s 52 percent ownership interest in the MALT Joint Venture, which owns six LNG carriers; the Partnership’s 50 percent ownership interest in Exmar LPG BVBA, which owns and in-charters 23 LPG carriers as at December 31, 2019, compared to 22 owned and in-chartered LPG carriers as at December 31, 2018; the Partnership’s ownership interest ranging from 20 to 30 percent in four LNG carriers as at December 31, 2019 for Shell, compared to three LNG carriers and one LNG carrier newbuilding as at December 31, 2018; the Partnership’s 50 percent ownership interest in six ARC7 LNG carriers in the Yamal LNG Joint Venture as at December 31, 2019, compared to two ARC7 LNG carriers and four ARC7 LNG carrier newbuildings as at December 31, 2018; and the Partnership's 30 percent ownership interest in the Bahrain LNG Joint Venture, which owns an LNG receiving and regasification terminal in Bahrain.
  2. On January 31, 2018, the Partnership sold its 50 percent ownership interest in the Excelsior Joint Venture, which resulted in gain of $5.6 million for the year ended December 31, 2018.

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

  As at December 31, 2019 As at December 31, 2018
  (unaudited) (unaudited)
  At Partnership's At Partnership's
100% Portion(1) 100% Portion(1)
Cash and restricted cash, current and non-current 509,065   210,736   388,820   164,247  
Other current assets 62,566   27,719   91,264   33,354  
Property, plant and equipment, including owned vessels, vessels related to finance leases and operating lease right-of-use assets, advances on newbuilding contracts and LNG terminal 3,112,349   1,375,570   3,649,255   1,635,850  
Net investments in sales-type and direct financing leases, current and non-current 4,589,139   1,856,709   3,089,375   1,163,980  
Other non-current assets 50,967   41,015   61,285   41,667  
Total assets 8,324,086   3,511,749   7,279,999   3,039,098  
         
Current portion of long-term debt and obligations related to finance leases and operating leases 315,247   136,573   284,150   125,984  
Current portion of derivative liabilities 34,618   13,658   12,695   4,420  
Other current liabilities 153,816   66,224   127,266   53,874  
Long-term debt and obligations related to finance leases and operating leases 5,026,123   2,041,595   4,202,745   1,680,986  
Shareholders' loans, current and non-current 346,969   126,546   367,475   131,386  
Derivative liabilities 162,640   66,060   61,814   23,149  
Other long-term liabilities 64,196   32,323   67,793   34,552  
Equity 2,220,477   1,028,770   2,156,061   984,747  
Total liabilities and equity 8,324,086   3,511,749   7,279,999   3,039,098  
         
Investments in equity-accounted joint ventures   1,028,770     984,747  
Advances to equity-accounted joint ventures   126,546     131,386  
Investments in and advances to equity-accounted joint ventures, current and non-current portions   1,155,316     1,116,133  
             

(1) The Partnership's equity-accounted vessels as at December 31, 2019 and December 31, 2018 include: the Partnership’s 40 percent ownership interest in Teekay Nakilat (III) Corporation, which owns four LNG carriers; the Partnership’s 50 percent ownership interests in the Excalibur Joint Venture, which owns one LNG carrier; the Partnership’s 33 percent ownership interest in four LNG carriers servicing the Angola LNG project; the Partnership’s 52 percent ownership interest in the MALT Joint Venture, which owns six LNG carriers; the Partnership’s 50 percent ownership interest in Exmar LPG BVBA, which owns and in-charters 23 LPG carriers as at December 31, 2019, compared to 22 owned and in-chartered LPG carriers as at December 31, 2018; the Partnership’s ownership interest ranging from 20 percent to 30 percent in four LNG carriers as at December 31, 2019 for Shell, compared to three LNG carriers and one LNG carrier newbuilding as at December 31, 2018; the Partnership’s 50 percent ownership interest in six ARC7 LNG carriers in the Yamal LNG Joint Venture as at December 31, 2019, compared to two ARC7 LNG carriers and four ARC7 LNG carrier newbuildings as at December 31, 2018; and the Partnership's 30 percent ownership interest in the Bahrain LNG Joint Venture, which owns an LNG receiving and regasification terminal in Bahrain.

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, among other things, regarding: the Partnership’s ability to be insulated from the near-term weakness in the spot LNG shipping market or international LNG markets; the Partnership’s expected 2020 financial results and the ability to achieve previously-disclosed guidance figures; expectations on future allocation of capital towards balance sheet deleveraging and returning capital to unitholders; and the ability to pay increased distributions on its common units in 2020 and beyond. 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; 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, 2018. 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.