UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

Commission file number 1-33198

TEEKAY OFFSHORE PARTNERS L.P.

(Exact name of Registrant as specified in its charter)

4th floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, Bermuda
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F þ     Form 40- F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).

Yes o     No þ

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).

Yes o     No þ

 

 

		TEEKAY OFFSHORE PARTNERS L.P. 4th Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, Bermuda

EARNINGS RELEASE

TEEKAY OFFSHORE PARTNERS
REPORTS THIRD QUARTER RESULTS

Highlights

•

Generated distributable cash flow of $20.8 million in the third quarter of 2010.

•

Declared cash distribution of $0.475 per unit for the third quarter of 2010.

•

In August 2010, signed new shuttle tanker Master Agreement with Statoil ASA.

•

In October 2010, acquired one FPSO unit and one newbuilding shuttle tanker for total cost of $286 million; agreed to acquire two additional newbuilding shuttle tankers for approximately $260 million for delivery in January and July 2011.

Hamilton, Bermuda, November 4, 2010 — Teekay Offshore GP L.L.C., the general partner of Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE: TOO), today reported the Partnership’s results for the quarter ended September 30, 2010. During the third quarter of 2010, the Partnership generated distributable cash flow⁽¹⁾ of $20.8 million, compared to $28.1 million in the quarter ended June 30, 2010, primarily as a result of seasonal factors associated with the scheduled maintenance of North Sea oil fields during the summer months.

On October 25, 2010, the Partnership declared a cash distribution of $0.475 per unit for the quarter ended September 30, 2010. The cash distribution will be paid on November 12, 2010, to all unitholders of record on November 5, 2010.

Acquisition of FPSO and Shuttle Tankers

On October 18, 2010, the Partnership announced that it had completed the acquisition of the Cidade de Rio das Ostras (Rio das Ostras) floating production storage and offloading (FPSO) unit from Teekay Corporation (Teekay), which is on a long-term charter with Petroleo Brasileiro SA (Petrobras), for a purchase price of approximately $158 million. In addition, Teekay Offshore announced that its 51 percent-owned subsidiary, Teekay Offshore Operating L.P. (OPCO), had acquired a newbuilding shuttle tanker, the Amundsen Spirit, from Teekay for approximately $128 million and had agreed to acquire two additional newbuilding shuttle tankers, the Nansen Spirit and the Peary Spirit, from Teekay for a total purchase price of approximately $260 million. The acquisitions of the two newbuilding shuttle tankers are expected to coincide with the commencement of their time-charter contracts under a Master Agreement with Statoil in January 2011 and July 2011, respectively. The Partnership financed the acquisition of the Rio das Ostras FPSO unit and the Amundsen Spirit newbuilding shuttle tanker through the assumption of $187 million of debt secured by these assets, with the remainder of the purchase price financed from available capacity under the Partnership’s revolving credit facilities.

These transactions are expected to increase the Partnership’s cash flow from vessel operations⁽²⁾ by approximately $60 million in 2011, and distributable cash flow⁽¹⁾, which includes only 51 percent of OPCO’s cash flow, by approximately $20 million in 2011.

“As expected, the Partnership’s cash flow declined in the third quarter primarily due to the scheduled seasonal maintenance of the North Sea oil fields, which typically occur during the summer months, and the concurrent planned maintenance shutdown of the Petrojarl Varg FPSO unit” commented Peter Evensen, Chief Executive Officer of Teekay Offshore GP L.L.C. “With the completion of the North Sea field maintenance, our shuttle tanker fleet and our Petrojarl Varg FPSO unit have returned to normal production levels in the fourth quarter. In addition, the recently signed Master Agreement with Statoil, initially for seven shuttle tankers, which replaces volume-dependent contracts of affreightment with fixed-rate, time-charter contracts effective September 1, 2010, should reduce the seasonal variability in the Partnership’s cash flows going forward.”

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Mr. Evensen continued, “Teekay Offshore’s FPSO and shuttle tanker businesses have experienced several exciting developments during the past three months. The accretive acquisition of the Rio das Ostras FPSO unit, located in the opportunity-rich Brazil offshore market, provides us with a second FPSO unit and compliments our fleet of 13 shuttle tankers operating in Brazil. In addition, we acquired the first of three shuttle tanker newbuildings, all of which will operate under the new Master Agreement with Statoil.”

Teekay Offshore’s Fleet

The following table summarizes Teekay Offshore’s fleet as of November 1, 2010, including vessels owned by OPCO, of which the Partnership owns a 51 percent interest:

		Number of Vessels
		Owned				Chartered-in
		Vessels				Vessels				Total
Shuttle Tanker Segment			29	*			6				35
Committed Shuttle Tanker Newbuildings			2				—				2
Conventional Tanker Segment			11				—				11
FSO Segment			6				—				6
FPSO Segment			2				—				2
Total			50				6				56

OPCO’s fleet includes 33 shuttle tankers, including six chartered-in vessels, 4 FSO units, and 11 conventional oil tankers.

Future Growth Opportunities

Pursuant to an omnibus agreement that Teekay Offshore entered into in connection with its initial public offering in December 2006, Teekay is obligated to offer to the Partnership its interest in certain shuttle tankers, FSO units, FPSO units and joint ventures it may acquire in the future, provided the vessels are servicing contracts in excess of three years in length. Teekay Offshore also may acquire additional limited partner interests in OPCO or other vessels that Teekay may offer the Partnership from time to time in the future. Teekay currently owns 49 percent of OPCO and Teekay Offshore owns the remaining 51 percent, including the general partner interest.

Shuttle Tankers

As described above, OPCO recently acquired one Aframax shuttle tanker newbuilding (the Amundsen Spirit) and has committed to acquire two additional Aframax shuttle tanker newbuildings (the Nansen Spirit and the Peary Spirit) that are scheduled to deliver to OPCO in January and July 2011. Teekay is obligated to offer to sell to the Partnership its interest in a fourth shuttle tanker newbuilding within 365 days after its delivery, provided the vessel is servicing a charter contract in excess of three years in length.

FPSO Units

Pursuant to the omnibus agreement and a subsequent agreement, Teekay is obligated to offer to sell the Petrojarl Foinaven FPSO unit, an existing FPSO unit of Teekay operating under a long-term contract in the North Sea, to Teekay Offshore prior to July 9, 2012. The purchase price for the Petrojarl Foinaven FPSO unit would be at its fair market value plus any additional tax or other similar costs to Teekay that would be required to transfer the FPSO unit to the Partnership.

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On October 19, 2010, Teekay announced that it had signed a contract with Petrobras to provide a FPSO unit for the Tiro and Sidon fields located in the Santos Basin offshore Brazil. The contract with Petrobras will be serviced by a new converted FPSO unit, to be named the Petrojarl Cidade de Itajai, which is currently under conversion from an existing Aframax tanker at Sembcorp Marine’s Jurong Shipyard in Singapore for a total estimated cost of approximately $370 million. The new FPSO unit is scheduled to deliver in the second quarter of 2012, when it will commence operations under a nine-year, fixed-rate time-charter contract to Petrobras with six additional one-year extension options. Pursuant to the omnibus agreement, Teekay is obligated to offer to the Partnership its interest in this FPSO project at Teekay’s fully built-up cost, within 365 days after the commencement of the charter to Petrobras.

Financial Summary

The Partnership reported adjusted net income attributable to the partners⁽¹⁾ (as detailed in Appendix A to this release) of $12.9 million for the quarter ended September 30, 2010, compared to $18.9 million for the quarter ended June 30, 2010. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of decreasing net income by $16.8 million and $21.7 million for the quarters ended September 30, 2010 and June 30, 2010, respectively, as detailed in Appendix A. Including these items, the Partnership reported, on a GAAP basis, net loss attributable to the partners of $3.9 million (as detailed in Appendix A to this release) for the third quarter of 2010, compared to net loss of $2.8 million in the previous quarter. Net revenues⁽²⁾ for the third quarter of 2010 were $172.7 million compared to $181.0 million in the previous quarter.

For accounting purposes, the Partnership is required to recognize, through the consolidated statements of (loss) income, changes in the fair value of certain derivative instruments as unrealized gains or losses. This revaluation does not affect the economics of any hedging transactions or have any impact on the Partnership’s actual cash flows or the calculation of its distributable cash flow.

The Partnership has recast its historical financial results to include the results of the Falcon Spirit FSO unit and Petrojarl Varg FPSO unit relating to the periods prior to their acquisition by the Partnership from Teekay, and for which pre-acquisition results are referred to in this release as the Dropdown Predecessor. In accordance with GAAP, business acquisitions of entities under common control that have begun operations are required to be accounted for in a manner whereby the Partnership’s financial statements are retroactively adjusted to include the historical results of the acquired vessels from the date the vessels were originally under the control of Teekay. For these purposes, the Falcon Spirit was under common control by Teekay from December 15, 2009 until April 1, 2010, when it was sold to the Partnership, and the Petrojarl Varg FPSO unit was under common control by Teekay from October 1, 2006 to September 10, 2009, when it was sold to the Partnership.

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Operating Results

The following table highlights certain financial information for Teekay Offshore’s four main segments: the Shuttle Tanker segment, the Conventional Tanker segment, the FSO segment, and the FPSO segment (please refer to the “Teekay Offshore’s Fleet” section of this release above and Appendix C for further details).

		Three Months Ended
		September 30, 2010
		(unaudited)
		Shuttle				Conventional
		Tanker				Tanker				FSO				FPSO
(in thousands of U.S. dollars)		Segment				Segment				Segment				Segment				Total
Net revenues			110,068				22,116				16,777				23,726				172,687
Vessel operating expenses			33,442				6,144				8,296				13,223				61,105
Time-charter hire expense			20,352				—				—				—				20,352
Depreciation and amortization			26,786				7,239				3,479				5,119				42,623
Cash flow from vessel operations(1)			45,636				14,932				8,161				9,162				77,891

		Three Months Ended June 30, 2010
		(unaudited)
		Shuttle				Conventional
		Tanker				Tanker				FSO				FPSO
(in thousands of U.S. dollars)		Segment				Segment				Segment(2)				Segment				Total
Net revenues			114,264				21,589				18,343				26,815				181,011
Vessel operating expenses			32,346				5,657				8,420				10,190				56,613
Time-charter hire expense			23,424				—				—				—				23,424
Depreciation and amortization			29,280				5,921				3,829				5,121				44,151
Cash flow from vessel operations(1)			49,343				14,793				9,404				15,513				89,053

Shuttle Tanker Segment

Cash flow from vessel operations from the Partnership’s shuttle tanker segment decreased to $45.6 million for the third quarter of 2010, compared to $49.3 million for the second quarter of 2010, primarily due to reduced revenues as a result of reduced oil production in the North Sea due to seasonal oil field maintenance.

Conventional Tanker Segment

Cash flow from vessel operations from the Partnership’s conventional tanker segment of $14.9 million in the third quarter of 2010 was consistent with the $14.8 million generated in the second quarter of 2010.

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FSO Segment

Cash flow from vessel operations from the Partnership’s FSO segment decreased to $8.2 million in the third quarter of 2010 from $9.4 million in the second quarter of 2010, primarily due to a contractual reduction in the charter rate on the Navion Saga FSO unit effective May 1, 2010.

FPSO Segment

Cash flow from vessel operations from the Partnership’s FPSO segment decreased to $9.2 million for the third quarter of 2010, compared to $15.5 million for the second quarter of 2010, primarily due to a planned maintenance shutdown of the Petrojarl Varg FPSO unit during the third quarter, resulting in lower production tariff revenue and higher vessel operating expenses.

Liquidity

As of September 30, 2010, the Partnership had total liquidity of $448.0 million, which consisted of $158.5 million in cash and cash equivalents and $289.5 million in undrawn revolving credit facilities. Total liquidity increased from $246.1 million as at June 30, 2010, primarily as a result of the Partnership’s follow-on equity offering completed in August 2010, which provided net proceeds to the Partnership of $130.4 million, cash flow from operations and an increase in the completion of a new $32 million debt facility secured by the Falcon Spirit FSO in September 2010.

About Teekay Offshore Partners L.P.

Teekay Offshore Partners L.P., a publicly-traded master limited partnership formed by Teekay Corporation (NYSE: TK), is an international provider of marine transportation, oil production and storage services to the offshore oil industry. Teekay Offshore owns a 51 percent interest in and controls Teekay Offshore Operating L.P., a Marshall Islands limited partnership with a fleet of thirty-three shuttle tankers, including two newbuildings to be acquired, six chartered-in vessels, four FSO units, and eleven conventional oil tankers. In addition, Teekay Offshore has direct ownership interests in two shuttle tankers, two FSO units, and two FPSO units. Teekay Offshore also has rights to participate in certain other FPSO and shuttle tanker opportunities.

Teekay Offshore’s common units trade on the New York Stock Exchange under the symbol “TOO”.

For Investor Relations enquiries contact:
Kent Alekson
Tel: +1 (604) 609-6442

Web site: www.teekayoffshore.com

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TEEKAY OFFSHORE PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(in thousands of U.S. dollars, except unit data)

		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2010				2010(1)				2009(2)				2010(1)				2009(2)
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
REVENUES			200,379				215,960				204,509				637,769				608,460
OPERATING EXPENSES
Voyage expenses			27,692				34,949				29,363				97,595				76,405
Vessel operating expenses(3)			61,105				56,613				55,837				176,126				174,766
Time-charter hire expense			20,352				23,424				27,772				68,814				89,061
Depreciation and amortization			42,623				44,151				40,981				128,009				121,366
General and administrative(3)			14,450				14,879				12,840				44,138				38,993
Restructuring charge(4)			—				—				371				119				4,053
			166,222				174,016				167,164				514,801				504,644
Income from vessel operations			34,157				41,944				37,345				122,968				103,816
OTHER ITEMS
Interest expense			(7,308	)			(7,318	)			(9,147	)			(22,959	)			(33,532	)
Interest income			235				235				141				633				1,098
Realized and unrealized (loss) gain on derivative instruments (5)			(30,769	)			(56,036	)			(37,302	)			(108,929	)			37,716
Foreign exchange gain (loss) (3)			1,737				(1,200	)			(4,359	)			1,173				(7,988	)
Income tax (expense) recovery			(8,779	)			10,378				(20,234	)			8,686				(26,928	)
Other income — net			1,636				1,590				2,068				5,580				7,055
Net (loss) income			(9,091	)			(10,407	)			(31,488	)			7,152				81,237
Net (loss) income attributable to:
Non-controlling interests			(5,231	)			(7,572	)			(12,560	)			(1,954	)			32,831
Dropdown Predecessor(1)(2)			—				—				(5,551	)			921				11,378
Partners			(3,860	)			(2,835	)			(13,377	)			8,185				37,028
Limited partners’ units outstanding:
Weighted-average number of common units outstanding
- Basic and diluted			45,450,625				42,760,000				25,056,250				42,165,412				21,985,714
Weighted-average number of subordinated units outstanding
- Basic and diluted			—				—				9,800,000				—				9,800,000
Weighted-average number of total units outstanding
- Basic and diluted			45,450,625				42,760,000				34,856,250				42,165,412				31,785,714
Total common units outstanding at end of period			48,797,500				42,760,000				37,700,000				48,797,500				37,700,000

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		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2010				2010				2009				2010				2009
Vessel operating expenses			(428	)			(1,198	)			1,404				(2,750	)			2,871
General and administrative			444				(854	)			1,382				(1,145	)			3,484

		Three Months Ended												Nine Months Ended
		September 30,				June 30,				September 30,				September 30,				September 30,
		2010				2010				2009				2010				2009
Realized losses relating to:
Interest rate swaps			(10,327	)			(10,934	)			(12,743	)			(32,080	)			(34,621	)
Foreign currency forward contract			(150	)			(340	)			(93	)			(645	)			(4,071	)
			(10,477	)			(11,274	)			(12,836	)			(32,725	)			(38,692	)
Unrealized (losses) gains relating to:
Interest rate swaps			(28,275	)			(41,486	)			(24,942	)			(80,327	)			71,538
Foreign currency forward contracts			7,983				(3,276	)			476				4,123				4,870
			(20,292	)			(44,762	)			(24,466	)			(76,204	)			76,408
Total realized and unrealized (losses) gains on non-designated derivative instruments			(30,769	)			(56,036	)			(37,302	)			(108,929	)			37,716

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TEEKAY OFFSHORE PARTNERS L.P.
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)

		As at September 30,				As at June 30,				As at December 31,
		2010				2010				2009 (1)
		(unaudited)				(unaudited)				(unaudited)
ASSETS
Cash and cash equivalents			158,466				101,953				101,747
Other current assets			111,268				146,238				149,659
Vessels and equipment			1,851,239				1,885,335				1,917,248
Other assets			76,932				87,649				94,845
Intangible assets			30,793				32,826				36,885
Goodwill			127,113				127,113				127,113
Total Assets			2,355,811				2,381,114				2,427,497
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities			82,182				75,786				74,514
Other current liabilities			34,717				46,294				40,220
Current portion of long-term debt			152,562				161,228				153,004
Current portion of derivative instruments			32,153				36,268				31,852
Long-term debt			1,339,981				1,461,590				1,627,455
Other long-term liabilities			136,813				114,299				73,247
Redeemable non-controlling interest			43,330				42,676				—
Equity:
Non-controlling interest			156,632				174,691				219,692
Partners’ equity			377,441				268,282				207,513
Total Liabilities and Equity			2,355,811				2,381,114				2,427,497

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TEEKAY OFFSHORE PARTNERS L.P.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)

		Nine Months Ended
		September 30,
		2010(1)				2009(2)
		(unaudited)				(unaudited)
Cash and cash equivalents provided by (used for)
OPERATING ACTIVITIES
Net operating cash flow			225,528				140,606
FINANCING ACTIVITIES
Proceeds from drawdown of long-term debt			119,400				119,575
Scheduled repayments of long-term debt			(53,236	)			(24,124	)
Prepayments of long-term debt			(309,235	)			(241,090	)
Prepayments of long-term debt relating to Dropdown Predecessor Falcon Spirit			(33,634	)			—
Distribution to Teekay Corporation for the acquisition of Falcon Spirit			(10,495	)			—
Prepayments of joint venture partner advances			—				(20,775	)
Joint venture partner advances			—				474
Equity contribution from joint venture partner			233				4,772
Proceeds from equity offerings			237,041				109,227
Expenses from equity offerings			(11,117	)			(4,945	)
Contribution of capital from Teekay Corporation to Dropdown Predecessor relating to Petrojarl Varg			—				110,386
Purchase of Petrojarl Varg from Teekay Corporation			—				(100,000	)
Equity contribution from Teekay Corporation to Dropdown Predecessor relating to Falcon Spirit			805				—
Cash distributions paid by the Partnership			(60,579	)			(42,788	)
Cash distributions paid by subsidiaries to non-controlling interest			(58,969	)			(44,093	)
Other			(1,025	)			(1,114	)
Net financing cash flow			(180,811	)			(134,495	)
INVESTING ACTIVITIES
Expenditures for vessels and equipment			(4,292	)			(11,726	)
Investment in direct financing lease assets			(887	)			—
Direct financing lease payments received			17,181				17,013
Net investing cash flow			12,002				5,287
Increase in cash and cash equivalents			56,719				11,398
Cash and cash equivalents, beginning of the period			101,747				132,348
Cash and cash equivalents, end of the period			158,466				143,746

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TEEKAY OFFSHORE PARTNERS L.P.
APPENDIX A — SPECIFIC ITEMS AFFECTING NET LOSS
(in thousands of U.S. dollars)

Set forth below is a reconciliation of the Partnership’s unaudited adjusted net income attributable to the partners, a non-GAAP financial measure, to net loss attributable to the partners as determined in accordance with GAAP. The Partnership believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Partnership’s financial performance. The items below are also typically excluded by securities analysts in their published estimates of the Partnership’s financial results. Adjusted net income attributable to the partners is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.

		Three Months Ended
		September 30, 2010				June 30, 2010
		(unaudited)				(unaudited)
Net loss — GAAP basis			(9,091	)			(10,407	)
Adjustments:
Net loss attributable to non-controlling interests			5,231				7,572
Net loss attributable to the partners			(3,860	)			(2,835	)
Add (subtract) specific items affecting net income:
Foreign exchange (gains) loss (1)			(1,737	)			1,200
Foreign currency exchange (gains) losses resulting from hedging ineffectiveness (2)			(16	)			2,052
Deferred income tax expense (recovery) relating to unrealized foreign exchange gains and losses (3)			13,174				(10,997	)
Unrealized losses on derivative instruments (4)			20,292				44,762
Other(5)			—				3,634
Non-controlling interests’ share of items above			(14,956	)			(18,924	)
Total adjustments			16,757				21,727
Adjusted net income attributable to the partners			12,897				18,892

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TEEKAY OFFSHORE PARTNERS L.P.
APPENDIX B — RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

(in thousands of U.S. dollars)

Description of Non-GAAP Financial Measure — Distributable Cash Flow (DCF)

Distributable cash flow represents net (loss) income adjusted for depreciation and amortization expense, non-controlling interest, non-cash items, estimated maintenance capital expenditures, gains and losses on vessel sales, unrealized gains and losses from derivatives, non-cash income taxes, 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. The table below reconciles distributable cash flow to net loss for the quarter.

		Three Months Ended
		September 30, 2010
		(unaudited)
Net loss			(9,091	)
Add:
Depreciation and amortization			42,623
Unrealized losses on non-designated derivative instruments			20,292
Deferred income tax expense			8,405
Less:
Estimated maintenance capital expenditures			23,242
Foreign exchange and other, net			345
Distributable Cash Flow before Non-Controlling Interest			38,642
Non-controlling interests’ share of DCF			(17,862	)
Distributable Cash Flow			20,780

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TEEKAY OFFSHORE PARTNERS L.P.
APPENDIX C — SUPPLEMENTAL SEGMENT INFORMATION

(in thousands of U.S. dollars)

		Three Months Ended September 30, 2010
		(unaudited)
		Shuttle				Conventional
		Tanker				Tanker				FSO				FPSO
		Segment				Segment				Segment				Segment				Total
Net revenues (1)			110,068				22,116				16,777				23,726				172,687
Vessel operating expenses			33,442				6,144				8,296				13,223				61,105
Time-charter hire expense			20,352				—				—				—				20,352
Depreciation and amortization			26,786				7,239				3,479				5,119				42,623
General and administrative			11,212				1,040				837				1,361				14,450
Income from vessel operations			18,276				7,693				4,165				4,023				34,157

		Three Months Ended June 30, 2010
		(unaudited)
		Shuttle				Conventional
		Tanker				Tanker				FSO				FPSO
		Segment				Segment				Segment(2)				Segment				Total
Net revenues(1)			114,264				21,589				18,343				26,815				181,011
Vessel operating expenses			32,346				5,657				8,420				10,190				56,613
Time-charter hire expense			23,424				—				—				—				23,424
Depreciation and amortization			29,280				5,921				3,829				5,121				44,151
General and administrative			11,603				1,139				1,009				1,128				14,879
Income from vessel operations			17,611				8,872				5,085				10,376				41,944

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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 Partnership’s future growth prospects, cash flows and distributions to unitholders; the expected reduction in the seasonal variability of the Partnership’s future cash flows resulting from the new Master Agreement with Statoil; shuttle tanker and FPSO unit production in the North Sea during the fourth quarter of 2010; the effect of the acquisition of the Rio das Ostras FPSO unit and three newbuilding shuttle tankers (the Amundsen Spirit, the Nansen Spirit and the Peary Sprit) on the Partnership’s future results and in particular, the estimated increase to the Partnership’s 2011 cash flow from vessel operations and distributable cash flow; the purchase price and the timing of delivery and commencement of time-charter contracts for the Nansen Spirit and the Peary Spirit; the potential for Teekay to offer additional vessels to the Partnership and the Partnership’s acquisition of any such vessels, particularly the Petrojarl Foinaven FPSO unit, the Petrojarl Cidade de Itajai FPSO unit and the fourth newbuilding Aframax shuttle tanker; the potential for Teekay to offer to the Partnership additional limited partner interests in OPCO; and the potential acquisition of other new offshore projects. 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: vessel operations and oil production volumes; different levels of field maintenance than expected; increased operating expenses; variability in shuttle tanker tonnage requirements under the Statoil Master Agreement; different-than-expected levels of oil production in the North Sea offshore fields where the Amundsen Spirit, Nansen Spirit and Peary Spirit operate; potential delays in the commencement of the Nansen Spirit and Peary Spirit time-charters; potential early termination of contracts, including the Rio das Ostras FPSO time-charter contract and the Statoil Master Agreement; potential delays and/or cost over-runs relating to the conversion of the Petrojarl Cidade de Itajai FPSO unit; failure of Teekay to offer to the Partnership additional vessels or ownership interests in OPCO; failure to acquire additional vessels due to Teekay Offshore determining that they are unsuitable or not sufficiently profitable to the Partnership; required approvals by the Conflicts Committee of Teekay Offshore’s general partner to acquire from Teekay vessels or ownership interests in OPCO; the Partnership’s ability to raise financing to purchase additional vessels or interests in OPCO; failure to secure a new contract in excess of three years for Teekay’s fourth Aframax shuttle tanker newbuilding; 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, 2009. 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 based.

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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.