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Derivative Instruments (Tables)
 12 Months Ended
Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Foreign Currency Forward Contracts
As at December 31, 2017, the Partnership was committed to the following foreign currency forward contracts:

 
Contract Amount
in Foreign
Currency
(thousands)
 
Fair Value / Carrying
Amount of Asset/(Liability)
(in thousands of U.S. Dollars)
Non-hedge
 
Average
Forward
Rate(1)
 
Expected Maturity
2018
 
2019
(in thousands of U.S. Dollars)
Norwegian Kroner
365,000

 
(455
)
 
8.07

 
38,390


6,849

Euro
11,000

 
98

 
0.83

 
13,271


—

 
 
 
(357
)
 
 
 
51,661

 
6,849

(1)
Average forward rate represents the contracted amount of foreign currency one U.S. Dollar will buy.
Summary of Cross Currency Swaps
As at December 31, 2017, the Partnership was committed to the following cross currency swap:

Principal
Amount
NOK (thousands)
 
Principal
Amount
USD (thousands)
 
Floating Rate Receivable
 
Fixed Rate
Payable
 
Fair Value /
Asset
(Liability)
 
Remaining
Term (years)
Reference
Rate
 
Margin
 
1,000,000


162,200


NIBOR

4.25
%

7.45
%

(44,006
)

1.1
 
 
 
 
 
 
 
 
 
 
 
 
 

The effect of the gain (loss) on cross currency swaps in the consolidated statements of (loss) income for the years ended December 31, 2017, 2016 and 2015 are as follows:

 
Year Ended
December 31,
2017
$
 
Year Ended
December 31,
2016
$
 
Year Ended
December 31,
2015
$
Realized loss
(84,205
)
 
(53,497
)
 
(10,140
)
Unrealized gain (loss)
91,914

 
46,127

 
(61,734
)
Total realized and unrealized gain (loss) on cross currency swaps
7,709

 
(7,370
)
 
(71,874
)
Schedule of Interest Rate Swap Agreements
As at December 31, 2017, the Partnership and its consolidated subsidiaries were committed to the following interest rate swap agreements:

 




Fair Value /




 




Carrying

Weighted-


 




Amount of

Average

Fixed
 
Interest

Notional

Assets

Remaining

Interest
 
Rate

Amount

(Liability)

Term

Rate
 
Index

$

$

(years)

(%) (1)
U.S. Dollar-denominated interest rate swaps (2)(3)
LIBOR
 
700,000

 
(127,985
)
 
7.5
 
4.3
%
U.S. Dollar-denominated interest rate swaps (3)(4)
LIBOR
 
1,002,525

 
(40,262
)
 
4.0
 
2.9
%
 
 
 
1,702,525

 
(168,247
)
 
 
 
 
(1)
Excludes the margin the Partnership pays on its variable-rate debt, which as at December 31, 2017, ranged from 0.90% to 3.75%.
(2)
Notional amount remains constant over the term of the swap.
(3)
During the year ended December 31, 2017 the Partnership and the applicable financial institutions agreed to lower the fixed interest rate on certain of the swaps, extend the termination option of such swaps by two years to 2021, and eliminate the related financial guarantee and security package previously provided by Teekay Corporation in return for a prepayment amount and fees.
(4)
Principal amount reduces quarterly or semi-annually.
Effective Portion of Gains (Losses) on Interest Rate Swap Agreements
The following tables exclude any interest rate swap agreements designated and qualifying as cash flow hedges in the Partnership’s equity accounted joint ventures.

Year Ended December 31, 2017
 
Year Ended December 31, 2016
Effective Portion Recognized in AOCI (1)
 
Effective Portion Reclassified from AOCI (2)
 
Ineffective Portion (3)
 
 
 
Effective Portion Recognized in AOCI (1)
  
Effective Portion Reclassified from AOCI (2)
 
Ineffective Portion (3)
 
(19
)
 
(1,186
)
 
(7
)
 
Interest expense
 
101

  
(64
)
  
681

Interest expense
(19
)
 
(1,186
)
 
(7
)
 
 
 
101

  
(64
)
  
681

 
Year Ended December 31, 2015
 
 
 
 
 
 
 
Effective Portion Recognized in AOCI (1)
 
Effective Portion Reclassified from AOCI (2)
 
Ineffective Portion (3)
 
 
 
 
 
 
 
 
 
(65
)
 
—

 
(1,050
)
 
Interest expense
 
 
 
 
 
 
 
(65
)
 
—

 
(1,050
)
 
 
 
 
 
 
 
 
 
(1)
Effective portion of designated and qualifying cash flow hedges recognized in accumulated other comprehensive income (or AOCI).
(2)
Effective portion of designated and qualifying cash flow hedges recorded in AOCI during the term of the hedging relationship and reclassified to earnings.
(3)
Ineffective portion of designated and qualifying cash flow hedges.
Location and Fair Value Amounts of Derivative Instruments
The following table presents the location and fair value amounts of derivative instruments, segregated by type of contract, on the Partnership’s balance sheets.

 
Other
current
assets
$
 
Other
assets
$
 
Accrued
liabilities
$
 
Current
portion of
derivative
liabilities
$
 
Derivative
liabilities
$
As at December 31, 2017
 
 
 
 
 
 
 
 
 
Foreign currency contracts
347

 
28

 
—

 
(665
)
 
(67
)
Cross currency swaps
—

 
—

 
(916
)
 
(4,412
)
 
(38,678
)
Interest rate swaps
233

 
1,565

 
(3,883
)
 
(37,438
)
 
(128,724
)
 
580

 
1,593

 
(4,799
)
 
(42,515
)
 
(167,469
)
As at December 31, 2016
 
 
 
 
 
 
 
 
 
Foreign currency contracts
119

 
—

 
—

 
(1,634
)
 
(271
)
Cross currency swaps
—

 
—

 
(2,375
)
 
(20,281
)
 
(114,723
)
Interest rate swaps
181

 
2,597

 
(5,653
)
 
(33,087
)
 
(167,144
)
 
300

 
2,597

 
(8,028
)
 
(55,002
)
 
(282,138
)
Effect of (Losses) Gains on Derivatives
The effect of the (loss) gain on these derivatives in the consolidated statements of (loss) income for the years ended December 31, 2017, 2016 and 2015 are as follows:

 
Year Ended
December 31,
2017
$

Year Ended
December 31,
2016
$

Year Ended
December 31,
2015
$
Realized (loss) gain on derivative instruments
 
 
 
 
 
Interest rate swaps
(78,296
)
 
(52,819
)
 
(71,617
)
Foreign currency forward contracts
900

 
(7,153
)
 
(13,799
)
 
(77,396
)
 
(59,972
)
 
(85,416
)
Unrealized gain (loss) on derivative instruments
 
 
 
 
 
Interest rate swaps
33,114

 
29,937

 
11,952

Foreign currency forward contracts
1,429

 
9,722

 
(240
)
 
34,543

 
39,659

 
11,712

Total realized and unrealized (loss) gain on derivative instruments
(42,853
)
 
(20,313
)
 
(73,704
)