Teekay Offshore Raises Distribution; Completes FSO Acquisition

October 3, 2007

Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE: TOO) announced that its general partner has increased its quarterly cash distribution by $0.035 per unit, from $0.35 per unit to $0.385 per unit ($1.54 annualized) as a result of the previously announced acquisition of the shuttle tankers Navion Bergen and Navion Gothenburg. The cash distribution will be paid on November 14, 2007, to all unitholders of record on November 7, 2007. In addition, the Partnership announced that is has completed the acquisition of a Floating Storage and Offtake unit (FSO), the Dampier Spirit, for a total cost of approximately $30.3m from Teekay Corporation (Teekay), the parent of its general partner. The FSO unit is currently serving under a 7-year fixed-rate time-charter to Apache Corporation, generating approximately $0.06 per unit in distributable cash flow annually. With the increase in the annual distribution and the expected further increase per unit related to the Dampier Spirit, the Partnership will have grown its distributions by approximately 14% since its initial public offering in December 2006, noted Peter Evensen, Teekay Offshore’s Chief Executive Officer.

Teekay Offshore Raises Distribution; Completes FSO Acquisition

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