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CEO Commentary

"This was a successful quarter for Teekay Offshore as we commenced a new charter and completed previously announced acquisitions, which helped the Partnership generate strong cash flow again this quarter and resulted in a coverage ratio of 1.06," stated Peter Evensen, Chief Executive Officer of Teekay Offshore GP LLC. "On July 1 ^st , we also completed the purchase of the Knarr FPSO, the Partnership's largest acquisition to date, which along with our other recent growth initiatives, are expected to drive further distributable cash flow increases in future quarters. This includes our first UMS, which commenced its three-year charter with Petrobras in Brazil in early-June, and our recently acquired towage vessels, which are off to a strong start with high utilization during the second quarter. As a result of these growth initiatives, we intend to recommend to the Partnership's Board of Directors that Teekay Offshore increase its cash distribution by four percent, commencing in the third quarter of 2015."

"I am also pleased to report that during the past quarter the Partnership secured new business in our offshore logistics segment, which expands our franchise into a promising new offshore oil production market," Mr. Evensen continued. "In June, we secured strategic long-term contracts with a group of strong counterparties to be the sole provider of shuttle tanker services in the growing Eastern Canada offshore market, which enhances our expected distributable cash flow growth profile beyond 2017".

Mr. Evensen added, "Teekay Offshore's cash flows are stable and growing, supported by a large and diversified portfolio of long-term, fee-based contracts of $8.4 billion in forward revenues with an average remaining contract duration of over five years and no direct commodity price exposure. Despite the current volatility in the energy markets, the long-term fundamentals of the offshore oil production market remain attractive. With a strong pipeline of contracted growth projects and access to competitive bank financing and multiple capital markets, we believe the Partnership is well-positioned for further distributable cash flow growth."

Summary of Recent Events

Completed Acquisition of Knarr FPSO

In June 2011, Teekay Corporation entered into a contract with BG Norge Limited ( BG ) to provide a harsh weather FPSO unit to operate in the North Sea. The contract is being serviced by a newbuilding FPSO unit, the Petrojarl Knarr ( Knarr ), which commenced its charter contract with BG in March 2015 on partial charter rate. In June 2015, the Knarr completed its operational testing and commenced its full charter rate and on July 1, 2015, the Partnership completed the acquisition of the Knarr from Teekay Corporation. The purchase price for the Knarr , which is based on a fully built-up cost of approximately $1.26 billion, was fully financed through the assumption of an existing $745 million long-term debt facility, $300 million of common equity units issued to Teekay Corporation, and $250 million of convertible preferred units issued in a private placement.

Delivery of Arendal Spirit UMS and Deferred Delivery of UMS Newbuildings

In August 2014, the Partnership acquired Logitel Offshore Holding AS ( Logitel ), a Norway-based company focused on the high-end floating accommodation market and providing units for maintenance and safety. Prior to being acquired by the Partnership, Logitel secured a three-year fixed-rate time-charter contract, plus extension options, with Petrobras in Brazil for the first UMS, the Arendal Spirit , which commenced its three-year charter contract on June 7, 2015.

During the second quarter of 2015, the Partnership exercised its options to defer delivery of its second UMS newbuilding by up to one year, and the delivery and all related construction work by 120 days for its third UMS. The Partnership expects to secure charter contracts for these newbuildings prior to their respective current scheduled deliveries in the third quarter of 2016 and the second quarter of 2017.

Awarded Strategic East Coast Canada Shuttle Tanker Contract

In early-June 2015, the Partnership entered into new long-term contracts with a group of companies that includes Chevron Canada, Exxon Mobil, Husky Energy, Mosbacher Operating Ltd., Murphy Oil, Nalcor Energy, Statoil and Suncor Energy, to provide shuttle tanker services in the East Coast of Canada. These 15-year contracts, plus extension options, are initially being serviced by three third-party owned shuttle tankers currently operating in the East Coast of Canada, which are in-chartered by the Partnership. One of these vessels is expected to be replaced by one of the Partnership's existing shuttle tankers, the Navion Hispania, during the third quarter of 2015. In connection with the contract award, the Partnership has entered into shipbuilding contracts to construct three, Suezmax-size, dynamic positioning 2 (DP2) shuttle tanker newbuildings with a South Korean shipyard for a fully built-up cost of approximately $370 million, with an option to order one additional vessel should a fourth vessel be required. The three ordered vessels are expected to be delivered in the fourth quarter of 2017 through the first half of 2018.

Petrojarl Varg FPSO Contract Extension

In June 2015, the charterer of the Petrojarl Varg FPSO unit, Talisman Energy Norge AS, exercised an option to extend the contract period of the unit for an additional three years through June 30, 2019. The charterer has one remaining option to extend the contract period for a further three years.

Delivery of Towage Vessels

In late-October 2014, the Partnership, through its wholly-owned subsidiary, ALP Maritime Services B.V. ( ALP ), agreed to acquire six, modern on-the-water, long-distance towing and offshore installation vessels for approximately $220 million. Five vessels were delivered during the first half of 2015 and the sixth vessel delivered in early-July 2015. The vessels were built between 2006 and 2010 and are all equipped with DP capabilities, allowing them to be used for towage, station-keeping, installation and decommissioning of large floating objects such as FPSO units and floating drilling rigs.

Financial Summary

The Partnership reported adjusted net income attributable to the partners ⁽¹⁾ of $39.5 million for the quarter ended June 30, 2015, compared to $23.8 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of increasing net income by $64.8 million and decreasing net income by $29.2 million for the quarters ended June 30, 2015 and 2014, respectively, primarily relating to unrealized gains and losses on derivative instruments, as detailed in Appendix A to this release. Including these items, the Partnership reported, on a GAAP basis, net income attributable to the partners of $104.2 million for the second quarter of 2015, compared to net loss attributable to the partners of $5.5 million in the same period of the prior year. Net revenues ⁽²⁾ increased to $235.0 million for the second quarter of 2015, compared to $215.1 million in the same period of the prior year.

Adjusted net income attributable to the partners for the three months ended June 30, 2015 increased from the same period in the prior year mainly due to: the acquisition of five long-distance towing and offshore installation vessels during the first half of 2015; the Arendal Spirit UMS starting its charter contract in early-June 2015; the Suksan Salamander FSO commencing its charter contract in August 2014; an increase in revenues from the FPSO fleet due to higher production and charter rates; and a reduction in operating expenses. These increases were partially offset by the sale of the Navion Norvegia in October 2014 and the sale of the Navion Svenita in March 2015.

For accounting purposes, the Partnership is required to recognize, through the consolidated statements of income (loss), changes in the fair value of derivative instruments as unrealized gains or losses. This revaluation does not affect the economics of any hedging transactions nor does it have any impact on the Partnership's actual cash flows or the calculation of its distributable cash flow.

Operating Results

The following table highlights certain financial information for Teekay Offshore's six segments: the Shuttle Tanker segment, the FPSO segment, the FSO segment, the Conventional Tanker segment, and two new segments, the Towage segment and the UMS segment (please refer to the "Teekay Offshore's Fleet" section of this release above and Appendices C through F for further details).

Shuttle Tanker Segment

Cash flow from vessel operations from the Partnership's Shuttle Tanker segment increased to $63.9 million for the second quarter of 2015 compared to $61.7 million for the same period of the prior year, primarily due to higher charter rates and more days trading in the conventional tanker spot market, and lower operating expenses due to the strengthening of the U.S. Dollar associated with foreign-denominated expenditures, the timing of maintenance programs and lower crewing expenses following a change in crew composition. These increases were partially offset by the sale of the Navion Norvegia in October 2014 to a 50 percent-owned joint venture company of the Partnership (which vessel is currently being converted into an FPSO unit) and the sale of the Navion Svenita in March 2015.

FPSO Segment

Cash flow from vessel operations from the Partnership's FPSO segment (which also includes the results from one equity-accounted FPSO unit), increased to $49.8 million for the second quarter of 2015 compared to $40.7 million for the same period of the prior year, primarily due to lower operating expenses as a result of the strengthening of the U.S. Dollar associated with foreign-denominated expenditures, an increase in revenues from the Voyageur Spirit FPSO due to higher production during the first half of 2015 and higher revenue from the Cidade de Rio das Ostras FPSO unit due to an increase in charter rates commencing in the fourth quarter of 2014.

FSO Segment

Cash flow from vessel operations from the Partnership's FSO segment increased to $7.9 million in the second quarter of 2015 compared to $4.0 million for the same period of the prior year, primarily due to the Suksan Salamander FSO, which commenced its charter contract in August 2014.

Conventional Tanker Segment

Cash flow from vessel operations from the Partnership's Conventional Tanker segment of $5.6 million for the second quarter of 2015 was consistent with the same period of the prior year.

Towage Segment

Cash flow from vessel operations from the Partnership's Towage segment of $5.0 million for the second quarter of 2015 relates to the five long-distance towing and offshore installation vessels acquired during the first half of 2015. Cash flow used for vessel operations of $2.1 million for the second quarter of 2014 primarily related to fees paid to Teekay Corporation in connection with the acquisition of ALP.

UMS Segment

Cash flow from vessel operations from the Partnership's UMS segment of $1.9 million for the second quarter of 2015 relates to the Arendal Spirit UMS, which commenced its charter contract with Petrobras on June 7, 2015.

Teekay Offshore's Fleet

The following table summarizes Teekay Offshore's fleet as of August 1, 2015.

Liquidity and Continuous Offering Program Update

In 2013, the Partnership implemented a continuous offering program ( COP ) under which the Partnership may issue new common units at market prices up to a maximum aggregate amount of $100 million. As at June 30, 2015, the Partnership had sold approximately 300,000 common units under the COP, generating proceeds of approximately $10.0 million (including the Partnership's general partner's two percent proportionate capital contribution and net of offering costs). The Partnership did not sell any common units under the COP during the second quarter of 2015.

In April 2015, the Partnership completed a $125 million 8.5 percent perpetual preferred unit public offering, raising net proceeds of approximately $120.8 million. The net proceeds from the public offering were used for general partnership purposes, including the funding of newbuilding installments, capital conversion projects and vessel acquisitions.

In July 2015, the Partnership completed a $250 million, 8.6 percent convertible preferred unit private placement. The proceeds from the private placement were used to partially finance the acquisition of the Knarr FPSO from Teekay Corporation.

As of August 1, 2015, the Partnership had total liquidity of approximately $328 million.

Conference Call

The Partnership plans to host a conference call on Thursday, August 6, 2015 at noon (ET) to discuss the results for the second quarter of 2015. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

• By dialing 1-800-505-9568 or 416-204-9271, if outside North America, and quoting conference ID code 1569103.

• By accessing the webcast, which will be available on Teekay Offshore's website at www.teekay.com (the archive will remain on the website for a period of 30 days).

A supporting Second Quarter 2015 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.

The conference call will be recorded and available until Thursday, August 20, 2015. This recording can be accessed following the live call by dialing 1-888-203-1112 or 647-436-0148, if outside North America, and entering access code 1569103.

About Teekay Offshore Partners L.P.

Teekay Offshore Partners L.P. is an international provider of marine transportation, oil production, storage, long-distance towing and offshore installation and maintenance and safety services to the offshore oil industry, primarily focusing on the growing deepwater offshore oil regions of the North Sea and Brazil. Teekay Offshore is structured as a publicly-traded master limited partnership ( MLP ) with consolidated assets of approximately $4.4 billion, comprised of 69 offshore assets, including shuttle tankers, floating production, storage and offloading ( FPSO ) units, floating storage and offtake ( FSO ) units, units for maintenance and safety ( UMS ), long-distance towing and offshore installation vessels and conventional tankers. The majority of Teekay Offshore's fleet is employed on medium-term, stable contracts.

Teekay Offshore's common units trade on the New York Stock Exchange under the symbol "TOO".

ments (855 ) 53,106 Equity income (13,811 ) (6,091 ) Depreciation and amortization 107,468 96,962 Write-down and (gain) on sale of vessels 14,353 - Deferred income tax expense (recovery) 571 (223 ) Amortization of in-process revenue contracts (6,320 ) (6,320 ) Foreign currency exchange (gain) loss and other (39,269 ) 371 Change in non-cash working capital items related to operating activities 15,192 (96,617 ) Expenditures for dry docking (5,145 ) (9,468 ) Net operating cash flow 166,820 36,942 FINANCING ACTIVITIES Proceeds from long-term debt 410,374 720,443 Scheduled repayments of long-term debt (150,949 ) (241,223 ) Prepayments of long-term debt (13,606 ) (302,413 ) Debt issuance costs (4,554 ) (10,094 ) Decrease in restricted cash 15,140 - Proceeds from issuance of common units - 7,784 Proceeds from issuance of preferred units 125,000 - Expenses relating to equity offerings (4,187 ) (153 ) Cash distributions paid by the Partnership (115,460 ) (107,197 ) Settlement of contingent consideration liability (3,303 ) - Cash distributions paid by subsidiaries to non-controlling interests (5,720 ) (5,718 ) Equity contribution from joint venture partner 5,500 22,017 Indemnification on Voyageur Spirit FPSO from Teekay Corporation - 3,474 Other 579 397 Net financing cash flow 258,814 87,317 INVESTING ACTIVITIES Expenditures for vessels and equipment, including advances on newbuilding contracts and conversion costs (404,033 ) (92,084 ) Increase in restricted cash⁽¹⁾ (42,080 ) - Proceeds from sale of vessels and equipment 8,918 - Repayment from joint ventures 5,225 - Direct financing lease payments received 2,358 2,582 Investment in equity accounted joint ventures (5,396 ) - Acquisition of ALP Maritime Services B.V. (net of cash acquired of $0.3 million) - (2,322 ) Net investing cash flow (435,008 ) (91,824 ) (Decrease) increase in cash and cash equivalents (9,374 ) 32,435 Cash and cash equivalents, beginning of the period 252,138 219,126 Cash and cash equivalents, end of the period 242,764 251,561

TEEKAY OFFSHORE PARTNERS L.P.

APPENDIX A - SPECIFIC ITEMS AFFECTING NET (LOSS) INCOME

(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 income (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.

TEEKAY OFFSHORE PARTNERS L.P.

APPENDIX B - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

DISTRIBUTABLE CASH FLOW

(in thousands of U.S. dollars)

Distributable cash flow represents net income (loss) adjusted for depreciation and amortization expense, non-controlling interests, non-cash items, distributions relating to equity financing of newbuilding installments, distributions on our preferred units, vessel and business acquisition costs, pre-operational costs, estimated maintenance capital expenditures, gain on sale and write-down of vessels, 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 (loss) or any other indicator of the Partnership's performance required by GAAP. The table below reconciles distributable cash flow to net income (loss) for the quarters ended June 30, 2015 and June 30, 2014, respectively.

TEEKAY OFFSHORE PARTNERS L.P.

APPENDIX C - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

NET REVENUES

(in thousands of U.S. dollars)

Net revenues represents revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies, however, it is not required by GAAP and should not be considered as an alternative to revenues or any other indicator of the Partnership's performance required by GAAP.

TEEKAY OFFSHORE PARTNERS L.P.

APPENDIX D - SUPPLEMENTAL SEGMENT INFORMATION

(in thousands of U.S. dollars)

TEEKAY OFFSHORE PARTNERS L.P.

APPENDIX E - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

CASH FLOW FROM VESSEL OPERATIONS FROM CONSOLIDATED VESSELS

(in thousands of U.S. dollars)

Cash flow from vessel operations from consolidated vessels represents income from vessel operations before depreciation and amortization expense, write-down of vessels and amortization of deferred gains, and includes the realized gains and losses on the settlement of foreign exchange forward contracts and adjustments for direct financing leases to a cash basis. Cash flow from vessel operations is included because certain investors use this data to measure a company's financial performance. Cash flow from vessel operations is not required by GAAP and should not be considered as an alternative to net income (loss) or any other indicator of the Partnership's performance required by GAAP.

TEEKAY OFFSHORE PARTNERS L.P.

APPENDIX F - RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

CASH FLOW FROM VESSEL OPERATIONS FROM EQUITY ACCOUNTED VESSELS

(in thousands of U.S. dollars)

Cash flow from vessel operations from equity accounted vessel represents income from vessel operations before depreciation and amortization expense. Cash flow from equity accounted vessel represents the Partnership's proportionate share of cash flow from vessel operations from its equity-accounted vessel, the Cidade de Itajai FPSO unit. Cash flow from vessel operations from equity accounted vessel 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 vessel is not required by GAAP and should not be considered as an alternative to equity income or any other indicator of the Partnership's performance required by GAAP.

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: a potential cash distribution increase in the third quarter of 2015; the impact of the Knarr FPSO, the Partnership's first UMS and the acquired towage vessels on the Partnership's distributable cash flow; the accretive nature of the Knarr FPSO acquisition; the offshore market growth potential in the East Coast of Canada; the impact of the East Coast Canada shuttle tanker project on the Partnership's distributable cash flow; the Partnership's expected future revenues and remaining average contract duration; fundamentals in the offshore industry; the timing of newbuilding, conversion and upgrade vessel or offshore unit deliveries and commencement of their respective charter contracts; the estimated cost of building vessels; the Partnership's access to competitive bank financing and multiple capital markets; and the impact of growth projects on the Partnership's 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: vessel operations and oil production volumes; significant changes in oil prices; variations in expected levels of field maintenance; increased operating expenses; different-than-expected levels of oil production in the North Sea, Brazil and East Coast of Canada offshore fields; potential early termination of contracts; shipyard delivery or vessel conversion and upgrade delays and cost overruns; changes in exploration, production and storage of offshore oil and gas, either generally or in particular regions that would impact expected future growth; delays in the commencement of time-charters; failure by the Partnership's Board of Directors to approve future distribution increases; failure to obtain required approvals by the Conflicts Committee of Teekay Offshore's general partner to approve the acquisition of vessels offered from Teekay Corporation, or third parties; the Partnership's ability to raise adequate financing to purchase additional assets and complete organic growth projects; 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, 2014. 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.