Teekay Offshore Agrees to Acquire 50 Percent Interest in the Cidade De Itajai FPSO Unit for Approximately $204 Million

Teekay Offshore Agrees to Acquire 50 Percent Interest in the Cidade De Itajai 
FPSO Unit for Approximately $204 Million 
HAMILTON, BERMUDA -- (Marketwired) -- 05/29/13 -- Teekay Offshore
Partners L.P. (Teekay Offshore or the Partnership) (NYSE:TOO) today
announced that it has agreed to acquire a 50 percent interest in the
Cidade de Itajai (Itajai) floating production, storage and offloading
(FPSO) unit from Teekay Corporation (Teekay) for a purchase price of
approximately $204 million. The acquisition will be financed with
assumed debt and proceeds from the recently completed equity private
placement. The acquisition is expected to be completed on June 1,
2013, subject to customary closing conditions. The Itajai FPSO is
operating on the Bauna and Piracaba (previously named Tiro and Sidon)
fields in the Santos Basin offshore Brazil under a nine-year
fixed-rate time-charter contract (plus extension options) with
Petroleo Brasileiro SA (Petrobras). The remaining 50 percent interest
in the Itajai FPSO is owned by Brazilian-based Odebrecht Oil & Gas
The Partnership's 50 percent interest in the Itajai FPSO unit, which
will be equity accounted for, is expected to generate annual Cash
Flow from Vessel Operations(1) of approximately $25 million, and
annual Distributable Cash Flow(2) of approximately $14 million. 
"We are pleased to be completing another strategic FPSO acquisition,
our second to-date in 2013, which will bring the Partnership's total
FPSO fleet size to five units," commented Peter Evensen, Chief
Executive Officer of Teekay Offshore GP LLC. "The Itajai FPSO will
add to our growing FPSO franchise in Brazil, where we currently own
and operate two other FPSO units, and further builds on our strong
relationship with Petrobras. In addition, the stable fixed-rate cash
flow contributed from the Itajai FPSO will be accretive to the
Partnership's distributable cash flow."  
The Board of Directors of the Partnership's general partner and its
Conflicts Committee have approved the transaction. The Conflicts
Committee retained independent legal and financial advisors to assist
in evaluating the transaction. 

1.  Cash flow from vessel operations from equity accounted vessels
    represents income from vessel operations before depreciation and
    amortization expense, amortization of in-process revenue contracts and
    includes adjustments for direct financing leases to a cash basis. Cash
    flow from vessel operations from equity accounted vessels is included
    because certain investors use cash flow from vessel operations to
    measure a company's financial performance, and to highlight this measure
    for the Partnership's equity-accounted joint ventures. Cash flow from
    vessel operations from equity accounted vessels is not required by
    United States generally accepted accounting principles (GAAP) and should
    not be considered as an alternative to equity income or any other
    indicator of the Partnership's performance required by GAAP.
2.  Distributable cash flow represents net income adjusted for depreciation
    and amortization expense, non-controlling interest, non-cash items,
    distributions relating to equity financing of newbuilding installments,
    vessel acquisition costs, estimated maintenance capital expenditures,
    unrealized gains and losses from derivatives, non-cash income taxes and
    unrealized foreign exchange related items. 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. Distributable cash flow is a
    quantitative standard used in the publicly-traded partnership investment
    community to assist in evaluating a partnership's ability to make
    quarterly cash distributions. Distributable cash flow is not defined by
    GAAP and should not be considered as an alternative to net income or any
    other indicator of the Partnership's performance required by GAAP.

About Teekay Offshore Partners L.P. 
Teekay Offshore Partners L.P. is an international provider of marine
transportation, oil production and storage services to the offshore
oil industry focusing on the fast-growing, deepwater offshore oil
regions of the North Sea and Brazil. Teekay Offshore is structured as
a publicly-traded master limited partnership and owns interests in 35
shuttle tankers (including four chartered-in vessels and three
committed newbuildings), five floating production, storage and
offloading (FPSO) units, seven floating storage and offtake (FSO)
units (including two committed FSO conversions) and five conventional
oil tankers. The majority of Teekay Offshore's fleet is employed on
long-term, stable contracts. In addition, Teekay Offshore has rights
to participate in certain other FPSO and shuttle tanker opportunities
provided by Teekay Corporation (NYSE:TK) and Sevan Marine ASA (Oslo
Teekay Offshore's common units trade on the New York Stock Exchange
under the symbol "TOO". 
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,
certainty and effect of the completion of the acquisition of a 50
percent interest in the Itajai FPSO unit, including the form of
financing the acquisition; and the effect of the potential
acquisition on the Partnership's cash flow from vessel operations and
distributable cash flow. 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:
potential failure of the proposed acquisition to be completed;
potential early termination of the contract between the Partnership
and Petrobras and inability to replace this contract; greater than
expected levels of operating expenses or less than expected oil
production by the FPSO unit; and other factors discussed in Teekay
Offshore's 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 or undertaking 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
Teekay Offshore Partners L.P.
Kent Alekson
Investor Relations Enquiries
+1 (604) 609-6442
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