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As filed with the Securities and Exchange Commission on November 3, 2014

Registration No. 333-198923


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 1 to

Form F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Exmar Energy Partners LP
(Exact name of Registrant as specified in its charter)

Republic of the Marshall Islands
(
State or other jurisdiction of
incorporation or organization)
  4412
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification No.)

Room 3206, 32nd Floor
Lippo Center, Tower Two
No 89 Queensway
Hong Kong
+852 2861 9668

(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

Watson, Farley & Williams LLP
1133 Avenue of the Americas
New York, New York 10036
(212) 922-2200
(Name, Address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:

Catherine S. Gallagher
Adorys Velazquez
Vinson & Elkins L.L.P.
2200 Pennsylvania Avenue NW, Suite 500W
Washington, DC 20037
Telephone: (202) 639-6500
Facsimile: (202) 639-6604

 

Charles E. Carpenter
William N. Finnegan IV
Latham & Watkins LLP
885 Third Avenue, Suite 1000
New York, New York 10022
Telephone: (212) 906-1200
Facsimile: (212) 751-4864



Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

CALCULATION OF REGISTRATION FEE

       
 
Title of each class of securities to be registered
  Proposed maximum aggregate
offering price (1)(2)

  Amount of
registration fee

 

Common units representing limited partner interests

  $125,000,000   $16,100(3)

 

(1)
Includes common units issuable upon exercise of the underwriters' option to purchase additional common units.

(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).

(3)
Previously paid.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated November 3, 2014

Prospectus

LOGO

               Common units representing limited partner interests

Exmar Energy Partners LP



This is the initial public offering of common units representing limited partner interests of Exmar Energy Partners LP. We are offering                        common units in this offering. Prior to this offering, there has been no public market for our common units. We anticipate that the initial public offering price will be between $              and $              per common unit.

We are a Marshall Islands limited partnership formed to own, operate and acquire floating liquefied natural gas ("LNG") infrastructure assets under long-term charters. Our initial assets, which consist of a 50% interest in each of five joint ventures, will be contributed to us by EXMAR NV (NYSE Euronext Brussels: EXM). Although we are organized as a partnership, we have elected to be treated as a corporation for U.S. federal income tax purposes. Our common units have been approved for listing on the New York Stock Exchange, subject to official notice of issuance, under the symbol "XMLP".



We are an "emerging growth company" as defined under the federal securities laws and, as such, may elect to comply with certain reduced reporting requirements. See "Prospectus Summary—Our Emerging Growth Company Status." Investing in our common units involves a high degree of risk. See "Risk Factors" beginning on page 24. These risks include the following:

We are dependent on Excelerate Energy as the sole charterer for the vessels in our current portfolio.

Our only income-generating assets are our interests in our joint ventures.

We may not have sufficient cash from operations following the establishment of cash reserves and payment of fees and expenses to enable us to pay the minimum quarterly distribution on our common units.

We must make substantial capital expenditures to maintain and replace the operating capacity of the vessels in our joint ventures' fleet, which will reduce cash available for distribution.

We depend on EXMAR NV and its subsidiaries to assist us in operating and expanding our business.

Our growth depends on continued growth in demand in the floating LNG infrastructure market.

Unitholders have limited voting rights, and our partnership agreement restricts the voting rights of the unitholders owning more than 4.9% of our common units.

Our general partner and its other affiliates own a significant interest in us and have conflicts of interest and limited fiduciary and contractual duties, which may permit them to favor their own interests to your detriment.

Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price.

You will experience immediate and substantial dilution of $         per common unit.

U.S. tax authorities could treat us as a "passive foreign investment company," which would have adverse U.S. federal income tax consequences to U.S. unitholders.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

   
 
  Per common unit
  Total
 
   

Initial public offering price

  $     $    

Underwriting discounts and commissions(1)

 
$
 
$
 

Proceeds to Exmar Energy Partners LP, before expenses

 
$
 
$
 
   

(1)     Excludes an aggregate structuring fee of 0.5% of the gross proceeds payable to J.P. Morgan Securities LLC. Please read "Underwriting."

We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to an additional                       common units. Delivery of the common units will be on or about                           , 2014.



J.P. Morgan

BofA Merrill Lynch

Citigroup

RS Platou Markets, Inc.   DNB Markets

Clarkson Capital Markets

 

Pareto Securities AS

KBC Securities USA   Petercam SA   BNP PARIBAS

                           , 2014


GRAPHIC


Table of contents

 
  Page

Prospectus summary

  1

Overview

  1

Our charterer

  3

Our relationship with EXMAR

  3

Business opportunities

  4

Competitive strengths

  5

Business strategies

  7

Risk factors

  7

Formation transactions

  8

Holding company structure

  9

Organizational and ownership structure after this offering

  9

Our management

  11

Principal executive offices and internet address

  11

Summary of conflicts of interest and fiduciary duties

  11

Our emerging growth company status

  12

The offering

  14

Summary historical financial and operating data

  20

Risk factors

  24

Risks inherent in our business

  24

Risks inherent in an investment in us

  49

Tax risks

  59

Forward-looking statements

  64

Use of proceeds

  66

Capitalization

  67

Dilution

  69

Our cash distribution policy and restrictions on distributions

  70

General

  70

Forecasted results of operations for the twelve months ending December 31, 2015

  73

Forecast assumptions and considerations

  75

Forecasted cash available for distribution

  80

How we make cash distributions

  85

Distributions of available cash

  85

Operating surplus and capital surplus

  86

Subordination period

  89

Distributions of available cash from operating surplus during the subordination period

  91

i


 
  Page

Distributions of available cash from operating surplus after the subordination period

  91

General partner interest

  91

Incentive distribution rights

  91

Percentage allocations of available cash from operating surplus

  92

Right to reset incentive distribution levels

  93

Distributions from capital surplus

  96

Adjustment to the minimum quarterly distribution and target distribution levels

  96

Distributions of cash upon liquidation

  97

Selected historical financial and operating data

  98

Management's discussion and analysis of financial condition and results of operations

  102

Overview and background

  103

Factors affecting our results of operations

  107

Customer

  110

Inflation and cost increases

  110

Results of operations

  110

Liquidity and capital resources

  117

Debt restrictions

  133

Capital commitments

  134

Critical accounting policies

  134

Recently adopted accounting standards

  136

Recently issued accounting standards

  137

Quantitative and qualitative disclosures about market risk

  138

Industry

  139

Overview of the natural gas market

  139

Introduction to LNG

  143

LNG supply

  145

LNG demand

  146

Floating LNG infrastructure technology

  147

Charter contracts

  154

LNG safety and security

  154

Business

  155

Overview

  155

Our charterer

  156

Our relationship with EXMAR

  156

Business opportunities

  157

Competitive strengths

  159

Business strategies

  160

ii


 
  Page

Our portfolio

  160

Time charters

  163

Vessel option agreement

  167

Classification, inspection and maintenance

  168

Safety, management of vessel operations and administration

  168

Crewing and staff

  170

Risk of loss, insurance and risk management

  170

Environmental and other regulations

  171

Properties

  183

Legal proceedings

  183

Employees

  183

Taxation of the partnership

  184

Management

  196

Management of Exmar Energy Partners LP

  196

Directors

  198

Executive officers

  198

Reimbursement of expenses

  199

Executive compensation

  199

Compensation of directors

  200

Security ownership of certain beneficial owners

  201

Our joint ventures and joint venture agreements

  202

General

  202

Management of our joint ventures

  202

Designation of service providers

  203

Loans from joint venture partners

  204

Dividends

  204

Restrictions on transfer of equity interests; purchase rights

  204

Duration and termination

  205

Certain relationships and related party transactions

  206

Distributions and payments to our general partner and its affiliates

  206

Agreements governing the transactions

  208

Shareholder loans

  215

Conflicts of interest and fiduciary duties

  218

Conflicts of interest

  218

Fiduciary duties

  222

Description of the common units

  226

The units

  226

iii


 
  Page

Transfer agent and registrar

  226

Transfer of common units

  226

The partnership agreement

  228

Organization and duration

  228

Purpose

  228

Cash distributions

  228

Capital contributions

  228

Voting rights

  229

Applicable law; forum, venue and jurisdiction

  231

Limited liability

  231

Issuance of additional securities

  233

Tax status

  233

Amendment of the partnership agreement

  233

Merger, sale, conversion or other disposition of assets

  236

Termination and dissolution

  236

Liquidation and distribution of proceeds

  237

Withdrawal or removal of our general partner

  237

Transfer of general partner interest

  238

Transfer of ownership interests in general partner

  239

Transfer of incentive distribution rights

  239

Change of management provisions

  239

Limited call right

  239

Board of directors

  240

Meetings; voting

  241

Status as limited partner or assignee

  242

Indemnification

  242

Reimbursement of expenses

  242

Books and reports

  243

Right to inspect our books and records

  243

Registration rights

  243

Units eligible for future sale

  244

Material U.S. federal income tax considerations

  245

Election to be treated as a corporation

  245

U.S. federal income taxation of U.S. holders

  246

U.S. federal income taxation of non-U.S. holders

  250

Backup withholding and information reporting

  251

Non-United States tax considerations

  252

iv


You should rely only on the information contained in this prospectus and in any free writing prospectus made available by us. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted.

This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. Please read "Risk Factors" and "Forward-Looking Statements."

Service of process and enforcement of civil liabilities

We are organized under the laws of the Marshall Islands as a limited partnership. The Marshall Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a significantly lesser extent.

Most of our directors and officers and those of our general partner and our subsidiaries and joint ventures are residents of countries other than the United States. Substantially all of the assets of our subsidiaries and our joint ventures and a substantial portion of the assets of our directors and officers are located outside the United States. As a result, it may be difficult or impossible for United States investors to effect service of process within the United States upon us, our directors or officers, our general partner, our subsidiaries or our joint ventures or to realize against us or them judgments obtained in United States

v


courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. However, we have expressly submitted to the jurisdiction of the U.S. federal and New York state courts sitting in the City of New York for the purpose of any suit, action or proceeding arising under the securities laws of the United States or any state in the United States, and we have appointed Watson, Farley & Williams LLP to accept service of process on our behalf in any such action.

Watson, Farley & Williams LLP, our counsel as to Marshall Islands law, has advised us that there is uncertainty as to whether the courts of the Marshall Islands would (1) recognize or enforce against us, our general partner or our directors or officers judgments of courts of the United States based on civil liability provisions of applicable U.S. federal and state securities laws; or (2) impose liabilities against us, our general partner or our directors and officers in original actions brought in the Marshall Islands, based on these laws.

Trademarks and trade names

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties' trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names.

Certain definitions

As used in this prospectus, unless the context indicates or otherwise requires, references to:

"Exmar Energy Partners LP," "Exmar Energy," "the Partnership," "we," "our," "us" or similar terms (i) when used in a historical context are to our predecessor for accounting purposes (as described in more detail below under "—Presentation of Financial Information") and (ii) when used in the present tense or prospectively are to Exmar Energy Partners LP and its subsidiaries;

"our general partner" are to Exmar General Partner Limited, the general partner of Exmar Energy;

"EXMAR" are to Exmar NV (NYSE Euronext Brussels: EXM) and its subsidiaries, other than Exmar Energy and its subsidiaries, including Exmar Shipmanagement NV ("Exmar Shipmanagement"), Exmar Marine NV ("Exmar Marine") and Exmar Hong Kong Ltd ("Exmar Hong Kong");

our "operating company" are to Exmar Energy Hong Kong Ltd;

"our portfolio," "our vessels" or like terms are to the vessels described below that are owned by our joint ventures; we will own a 50.0% equity interest in each joint venture:

Excelerate, Explorer and Express, which are owned respectively by Excelerate NV, Explorer NV and Express NV, each a Belgian naamloze vennootschap (the "Exmar-Excelerate joint ventures"), 50.0% of the equity interests of which will be indirectly owned by each of us and Excelerate Energy, L.P. ("Excelerate Energy") immediately following the closing of this offering;

vi


    Excelsior, which is owned by Excelsior BVBA, a Belgian besloten vennootschap met beperkte aansprakelijkheid, 50.0% of the equity interests of which will be indirectly owned by each of us and Teekay LNG Partners L.P. (NYSE: TGP) ("Teekay LNG") immediately following the closing of this offering; and

    Excalibur, which is owned by Solaia Shipping L.L.C., a Liberian limited liability company (together with Excelsior BVBA, the "Exmar-Teekay joint ventures"), 50.0% of the equity interests of which will be indirectly owned by each of us and Teekay LNG immediately following the closing of this offering;

"our joint ventures" are to the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures, collectively;

"our charter," "our operations" and like terms refer to the charters and operations of our joint ventures;

"shareholder loans" include any loans made by us or our joint venture partners to our joint ventures and any bonds issued by our joint ventures to us or our joint venture partners. For a description of each such arrangement, please read "Management's Discussion & Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Borrowing Activities—Joint Venture Facilities"; and

"vessels" include floating LNG infrastructure assets, including LNG carriers, floating storage and regasification units, LNG regasification vessels and floating liquefaction and storage units.

A glossary of certain industry and other terms used in this prospectus is included as Appendix B.

Presentation of financial information

Predecessor and Rule 3-09 financial statements

Our predecessor for accounting purposes, Exmar Energy Partners LP Predecessor ("our Predecessor"), accounts for its equity interests in the joint ventures owning the vessels in our portfolio as equity method investments in its combined financial statements. Rule 3-09 of Regulation S-X requires separate financial statements ("Rule 3-09 financial statements") of 50% or less owned persons accounted for under the equity method by a registrant such as us if either the income or the investment test in Rule 1-02(w) of Regulation S-X exceeds 20%. Furthermore, Rule 3-09(c) of Regulation S-X provides for the combination of Rule 3-09 financial statements if the underlying investments exhibit common control or common management. In such scenarios, the significance of investments under Rule 1-02(w) of Regulation S-X are to be measured on a combined basis. We have determined that common management exists among the Exmar-Excelerate joint ventures and among the Exmar-Teekay joint ventures, both of which exceed on a combined basis the 20% significance tests of Rule 3-09. Accordingly, this prospectus includes audited combined financial statements as of and for the years ended December 31, 2013 and 2012 and unaudited combined interim financial statements as of September 30, 2014 and for the nine months ended September 30, 2014 and 2013, for both the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures. Such financial statements, including the applicable notes thereto, have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").

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Prospectus summary

This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the historical financial statements and the notes to those financial statements. You should read "Risk Factors" for more information about important risks that you should consider carefully before buying our common units. The information presented in this prospectus assumes, unless otherwise noted, that (i) the initial public offering price of the common units will be $              per unit (the midpoint of the range set forth on the cover page of the prospectus) and (ii) the underwriters' option to purchase additional common units is not exercised.

All references in this prospectus to "our portfolio," "our vessels" or like terms are to the vessels Excelerate, Explorer, Express, Excelsior and Excalibur, which are owned by our joint ventures. Following the completion of this offering, we will own a 50% equity interest in each of our joint ventures. Unless otherwise indicated, all references to "dollars" and "$" in this prospectus are to, and amounts are presented in, U.S. Dollars. Please read "Certain Definitions" for definitions of certain terms used in, and "Presentation of Financial Information" for information pertaining to the financial information included in, this prospectus.


Exmar Energy Partners LP

Overview

We are a growth-oriented limited partnership formed by EXMAR to own, operate and acquire floating LNG infrastructure assets under long-term charters, which we define as charters of five years or more. Our goal is to be a primary provider of floating LNG liquefaction, transportation, storage and regasification services to the natural gas industry. Following the completion of this offering, EXMAR will own a significant interest in us and we believe EXMAR will be incentivized to help us grow. We intend to leverage EXMAR's expertise, relationships, reputation, focus on project development and ability to work with joint venture partners to pursue strategic and accretive opportunities across the floating LNG infrastructure industry.

EXMAR specializes in marine infrastructure solutions for liquefaction, transportation, storage and regasification of natural gas, the transportation of liquefied petroleum gas ("LPG"), ammonia and petrochemical gases as well as the provision of other offshore services within the global oil and natural gas industry. We believe that EXMAR has pioneered certain technological advances in the LNG sector. For example, in 2002, EXMAR was the first company to order and build an LNG regasification vessel ("LNGRV"), a vessel fitted to discharge high pressure natural gas directly into a shoreside pipeline system, and subsequently developed the commercialization of LNG ship-to-ship transfer technology. Having successfully introduced these innovative technologies, EXMAR is currently developing the world's first floating liquefaction and storage unit ("FLSU"). Historically, EXMAR has grown its portfolio of vessels in part through 50/50 joint ventures with partners with whom they have developed strong and longstanding relationships. In each case, EXMAR is the manager of the vessel.

 

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Table of Contents

Upon the closing of this offering, our initial portfolio will consist of interests in four LNGRVs and one LNG carrier, all of which are in joint ventures (in each of which we will own a 50% equity interest) and operating under long-term time charters with Excelerate Energy:

The following table provides information about our four LNGRVs:

   
LNGRV
  Capacity
(cbm)

  Delivery
date

  Our
joint
venture
interest

  Joint
venture
counterparty

  Charterer
  Charter
expiration

  Charter
extension
option
period(s)

 
   

Excelsior

    138,000     January 2005     50%     Teekay LNG     Excelerate Energy     January 2025     Five years
plus five
years
 

Excelerate(1)

    138,000     October 2006     50%     Excelerate
Energy
    Excelerate
Energy
    October 2026     Five years
plus five
years
 

Explorer(1)

    150,900     April 2008     50%     Excelerate
Energy
    Excelerate
Energy
    April
2033
    Five years  

Express(1)

    150,900     May
2009
    50%     Excelerate
Energy
    Excelerate
Energy
    May 2034     Five years  
                                           

Total capacity

    577,800                                      
   

(1)    The Excelerate, Explorer and Express are subject to a vessel option agreement pursuant to which Excelerate Energy is permitted to offer to sell or grant a purchase option on each such vessel to a customer who charters the vessel for a minimum five-year period. Excelerate Energy can sell or grant a purchase option on the vessels at any time, but no such offer or purchase option may call for a transfer of any vessel prior to January 2024. See "Business—Vessel option agreement."

The following table provides information about our LNG carrier:

   
LNG carrier
  Capacity
(cbm)

  Year of
delivery

  Our
joint
venture
interest

  Joint
venture
counterparty

  Charterer
  Charter
expiration

 
   

Excalibur(1)

    138,000     October
2002
    50%     Teekay
LNG
    Excelerate
Energy
    March
2022
 
   

(1)    Excelerate Energy was granted an option to purchase the Excalibur prior to September 2021. Even if the option is exercised, Excalibur will not be sold to Excelerate Energy until March 2022. See "Business—Time charters—LNG carrier charter—Purchase option."

Pursuant to the omnibus agreement that we will enter into with EXMAR at the closing of this offering, we will have the right to purchase from EXMAR any floating LNG infrastructure asset operating under a charter of five or more years. In addition, we will have the right to purchase the following interests from EXMAR:

all or a portion of EXMAR's 90% to 100% interest in the Caribbean FLNG, a newbuilding FLSU, within 24 months following the commencement of its operations, which is currently scheduled for the second half of 2015. The Caribbean FLNG will operate under a 15-year contract (tolling agreement) with Pacific Rubiales Energy Corp. ("PRE"), an independent oil and gas exploration company in Colombia, and will be located off the Colombian Caribbean coast; and

all of EXMAR's interest (currently a 50% interest) in Excel, an LNG carrier delivered in 2003 that is jointly owned with Mitsui O.S.K. Lines, Ltd., within 24 months following the commencement of a charter for the Excel of five or more years.

We will not be obligated to purchase any such interests from EXMAR. The terms and conditions of any such purchase (including, among other things, whether we purchase all or less than all of EXMAR's interests in

 

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any such vessel) will be negotiated with EXMAR at the time any such offer is made to us, and will be based on the facts and circumstances at the time any such offer is made to us, all in accordance with the provisions of the omnibus agreement. Please read "Certain Relationships and Related Party Transactions—Agreements Governing the Transactions—Omnibus Agreement" for a description of our rights to acquire certain assets of EXMAR.


Our charterer

Each of the vessels in our portfolio is under time charter with Excelerate Energy. Excelerate Energy is a private, U.S. based developer of LNG transportation, storage and regasification infrastructure as well as a trader of LNG. Excelerate Energy is owned by George B. Kaiser, an American entrepreneur and the principal owner of the Kaiser Francis Oil Company, one of the largest private energy producers in the United States, as well as the Bank of Oklahoma. George B. Kaiser was ranked number 40 on the Forbes 400 list of wealthy Americans in 2013.


Our relationship with EXMAR

Upon completion of this offering, EXMAR will own our general partner, as well as         % of our common units and all of our subordinated units, which we believe will provide it with significant incentives to contribute to our success. EXMAR has informed us that it intends to utilize us as its primary growth vehicle to pursue acquisitions of long-term stable cash flow generating assets across the floating LNG infrastructure industry. Please read "Certain Relationships and Related Party Transactions—Agreements Governing the Transactions—Omnibus Agreement" for a description of our rights to acquire certain assets of EXMAR.

We believe one of our principal strengths is our relationship with EXMAR. EXMAR is a fully integrated provider of LNG solutions within the broader LNG value chain, operating a portfolio of 14 LNG vessels (including our vessels) that is comprised of nine LNGRVs and five LNG carriers. We believe EXMAR has pioneered the development of floating LNG import terminals through LNGRVs. In the second half of 2015, EXMAR is scheduled to commence operations of the world's first FLSU, the Caribbean FLNG. In February 2014, EXMAR and Pacific Rubiales announced a 50/50 joint venture for the order of a barge-based regasification unit. Construction began in the second quarter of 2014 and delivery is expected in 2016. The parties have not entered into a charter for the barge. EXMAR's other activities include the provision of offshore services within the global oil and natural gas industry as well as the transportation of LPG, ammonia and petrochemical gases through the operation of 34 LPG carriers, including 9 newbuildings, and three accommodation barges in the offshore sector. Following a public tender process, EXMAR is in preliminary discussions with the Antwerp Port Authority regarding a LNG bunkering project in the port of Antwerp. No binding agreements have been executed and construction has not yet begun on the project. In addition, EXMAR is pursuing several small-scale LNG export projects in the United States and British Columbia. There can be no assurance that any of these projects will be completed or successful or employed under a long-term charter arrangement enabling us to acquire any such project pursuant to the omnibus agreement.

We expect our association with EXMAR will give us access to the relationships that EXMAR has established with major energy companies, shipbuilders and financial institutions as a result of its history and experience in providing LNG solutions. In addition, Exmar Shipmanagement, a wholly-owned subsidiary of EXMAR, will continue to provide our joint ventures with technical and crewing management services. EXMAR Shipmanagement has a strong reputation in the floating LNG infrastructure industry and is a key partner to companies such as Teekay LNG, Excelerate Energy, ENI S.p.A., OLT Offshore LNG Toscana S.p.A.

 

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and Avance Gas Holding Ltd. We can provide no assurance, however, that we will realize any benefits from our relationship with EXMAR, or that EXMAR's relationships with major energy companies, shipbuilders and financial institutions will continue in the future.


Business opportunities

We believe that the following factors create opportunities for us to successfully execute our business plan and grow our operations:

Increased global consumption and changing supply dynamics for natural gas.  According to the World Energy Outlook 2013 of the International Energy Agency ("IEA"), natural gas is the only hydrocarbon projected to expand its share of the global primary energy market, with market share declines expected for oil and coal, a trend that is currently underway in many key regions. Global demand for natural gas increased 37% from 2000 to 2012 as world economies sought cleaner energy sources to reduce pollution and meet incremental power demand and public support for nuclear power declined following the Fukushima Daiichi nuclear incident. According to the IEA, these trends are expected to continue with natural gas demand projected to grow by approximately 50% from 3.3 trillion cubic meters ("Tcm") in 2012 to nearly 5.0 Tcm in 2035. While member countries of the Organisation of Economic Co-operation and Development ("OECD") historically have been the primary driver of incremental demand for natural gas, the IEA forecasts that demand growth will be the greatest in emerging markets, with the largest demand increases expected in China and India. The increase in demand for natural gas has been met with an even greater increase in supply, driven by technological advances, including horizontal and deepwater drilling as well as hydraulic fracturing, which are enabling recovery of significant reserves of unconventional natural gas (i.e. shale gas, tight gas and coal bed methane). According to the IEA, technically recoverable remaining global natural gas reserves totaled 810.0 Tcm at year-end 2012, representing a reserve-to-production ("R/P") ratio of 238 years based on natural gas production for the year ended December 31, 2012.

Growing demand for floating LNG infrastructure solutions.  Rapidly shifting demand and supply dynamics for natural gas have created new regional imbalances and spurred an increasing need for fast-track, floating LNG solutions. A combination of growing environmental and regulatory pressures, new LNG production capacity and competitive pricing is projected to increase LNG demand in the future, which, according to Poten & Partners, Inc. ("Poten"), is forecasted to surpass 350.0 million tons per year ("MMt/y") by 2020 and 450.0 MMt/y by 2030, as compared to 238.0 MMt/y in 2013. According to Poten, LNG demand growth is forecasted to be strong in Asia and in the new markets of Central and South America and the Middle East. We believe that floating LNG infrastructure solutions are timely, cost-effective, flexible and reliable ways of bringing LNG to the marketplace because of their relatively low capital costs and short development time compared to conventional onshore solutions. Floating LNG infrastructure solutions include:

    Floating storage and regasification.    Compared to onshore terminals, floating storage and regasification units offer many advantages, including a relatively shorter construction schedule, lower capital costs, less geographic and political constraints and ease of relocation. We believe that customers, particularly those in developing countries, benefit from floating regasification units because they require less local competency and time to implement relative to onshore facilities. According to Poten, the number of floating regasification units operating around the world is projected to reach 26 units by 2020 from 20 units operating as of October 2014.

 

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      LNG transportation.    The transportation of LNG has helped enable the growth in global trade of natural gas and created efficiency between regional natural gas markets. Driven by the growth in LNG supply and the longer-haul nature of the trades, the number of specialized LNG carriers has grown by more than 260% since 2000 to approximately 404 as of October 2014. Growing inter-regional trades have been fostered by local producer market surpluses located far from demand centers. The IEA forecasts inter-regional natural gas trades will increase by nearly 60% from 685 billion cubic meters per year ("Bcm/y") in 2011 to 1.1 Tcm/y in 2035. The IEA projects that inter-regional trades will be split equally between pipelines and LNG by 2030 as compared to a trade split of 58% and 42% for pipeline and LNG, respectively, in 2010. With an abundance of unconventional natural gas reserves, North America has the potential to become a major LNG exporter, creating new long-haul trading routes. We believe these aforementioned trends suggest a strong future demand for LNG carriers.

      Floating liquefaction.    Floating liquefaction represents the next phase of development in the floating LNG infrastructure industry. We believe that mobile and re-deployable floating liquefaction ("FLNG") units will offer the potential to unlock natural gas reserves without the need to invest in capital-intensive pipeline infrastructure, infield platforms and onshore infrastructure, allowing development in areas where the cost of onshore terminals would be prohibitive. We believe that the relatively lower start-up costs and shorter construction periods for FLNG units as compared to conventional onshore LNG projects will enable the efficient monetization of more challenging, smaller and/or remote natural gas resources. There are four floating liquefaction units currently being built with another 13 announced projects under study.

High barriers to entry.  We believe the capital investment and technical expertise required to build and operate sophisticated floating LNG infrastructure assets creates significant barriers to entry, especially as they relate to floating regasification and liquefaction units. As a result, there are currently a limited number of companies that operate such assets, and only three operators have announced plans to build and operate FLNG units. Given that these assets play a key role in the broader supply chain to provide power generation to specific markets, we believe customers will place a premium on high quality, experienced operators of floating LNG storage, regasification and liquefaction units at the onset of the project to avoid potential costly power plant outages.

We can provide no assurance, however, that any of the projections and forecasts described in the factors above will occur.


Competitive strengths

We believe that our future prospects for success are enhanced by the following aspects of our business:

Long-term time charter agreements provide significant cash flow security and stability.  Our initial vessels operate under long-term time charters with an established counterparty, Excelerate Energy. As of September 30, 2014, these charters had an average remaining term of approximately 13.6 years (excluding extension options), with no exposure to commodity prices. Through our partnership with Excelerate Energy, our vessels ultimately serve the complex needs of global energy providers such as Petróleo Brasileiro S.A. ("Petrobras") and Yacimientos Petrolíferos Fiscales ("YPF"). Additionally, three of our five time charters include provisions that allow us to pass our actual operating costs through to our customer, enhancing the stability of our cash flows.

 

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Modern, technologically advanced and versatile vessels.  We own a strategic portfolio of modern floating LNG infrastructure assets equipped with advanced technologies, which will allow us to expand our presence across the rapidly growing floating LNG infrastructure industry. The average age of our initial vessels was approximately 8.3 years as of September 30, 2014. We believe the reliability, efficiency and technological sophistication of our assets give us a competitive advantage. In addition, our LNGRVs are capable of performing as conventional LNG carriers, sailing at a service speed of 19 knots, which we believe gives us an advantage over peers operating fully docked, immobile floating regasification units. Furthermore, two sets of our vessels are sister ships, which enables us to benefit from economies of scale and operating efficiencies in vessel construction, crew training, crew rotation and shared spare parts.

Opportunities for significant future growth.  We intend to leverage our relationship with EXMAR to make strategic and accretive acquisitions from EXMAR and third parties to enhance our position in the global LNG value chain. Pursuant to our omnibus agreement with EXMAR, we have a right to purchase from EXMAR any floating LNG infrastructure asset operating under a long-term charter of five years or more. In addition, we will have the right to purchase the following interests from EXMAR: (i) all or a portion of EXMAR's 90% to 100% interest in the Caribbean FLNG, a newbuilding FLSU, within 24 months following the commencement of its operations, which is currently scheduled in the second half of 2015, and, (ii) all of EXMAR's interest (currently a 50% interest) in the Excel, an LNG carrier, within 24 months following the commencement of a charter for the Excel of five or more years. We believe these identified acquisition opportunities and future potential acquisition opportunities from EXMAR and third parties provide us significant avenues to diversify our portfolio and increase our cash distributions to unitholders.

EXMAR's expertise and relationships.  EXMAR has over 40 years of experience operating in the offshore oil and gas markets, including a distinguished track record of innovation and established technical, commercial and managerial expertise. We believe our access to EXMAR's technological expertise, strong relationships with customers, financing providers and shipyards and pool of experienced and qualified global seafarers will enable us to successfully grow our business. Our relationship with EXMAR also offers us access to the technical and crewing managerial expertise of Exmar Shipmanagement, a wholly-owned subsidiary of EXMAR with a reputation for providing best-in-class service to its customers.

Experienced senior management team.  Our senior management team, including the executive members of our board of directors, has demonstrated the ability to maintain strong relationships with established joint venture partners, including our joint venture partners, Excelerate Energy and Teekay LNG, and to successfully undertake independent projects as well as make accretive acquisitions. The members of our senior management team and the executive members of our board of directors have an average of over 25 years of experience in the shipping industry and over ten years of experience in the floating LNG infrastructure industry. Members of our senior management team have been operating and growing the assets of EXMAR for over ten years. During that time, EXMAR has grown both through establishing several successful strategic joint venture relationships with established partners and successfully completing several independent strategic acquisitions.

 

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Business strategies

Our primary business objective is to increase quarterly distributions per unit over time by executing the following strategies:

Pursue growth through strategic and accretive acquisitions.  We intend to leverage our relationship with EXMAR to make strategic and accretive acquisitions. Pursuant to our omnibus agreement with EXMAR, we will have opportunities to acquire additional floating LNG infrastructure assets from EXMAR. In addition to diversifying our customer base, an acquisition by us of all of EXMAR's interest in the Caribbean FLNG from EXMAR pursuant to the terms of our omnibus agreement would provide us with significant additional revenues based on its current charter agreement, nearly doubling revenues generated by our joint ventures for the year ended December 31, 2013. In addition to acquisitions from EXMAR, we intend to capitalize on opportunities to grow our portfolio and diversify our customer base through accretive acquisitions from third parties and potential new joint ventures.

Manage our operations to provide a stable and secure base of cash flows.  We intend to manage our portfolio of floating LNG infrastructure assets to provide stable cash flows by continuing to pursue long-term charters with established customers. We believe the projected growth in demand for floating LNG infrastructure solutions coupled with EXMAR's established industry relationships will provide us with attractive opportunities to acquire new vessels. We intend to continue to utilize long-term charters to maintain stability of our cash flows by actively seeking the extension or renewal of existing charters and by entering into new long-term charters with existing and other reputable customers. In addition, we intend to continue to structure our long-term charters with provisions that allow us to mitigate operating cost overruns and inflation, thereby enhancing the stability of our cash flows.

Continue to be a leader in providing floating LNG infrastructure solutions and excellent customer service.  Following the completion of this offering, EXMAR will own a significant interest in us and we believe EXMAR will be incentivized to help us grow. We intend to leverage EXMAR's experience and operating history to maintain our leadership in the floating LNG infrastructure industry. In addition, we intend to provide innovative solutions to maintain our high operating standards and safety record. We believe that EXMAR has developed a reputation for offering high quality service to its customers. We intend to utilize our relationship with EXMAR to continue to focus on providing exceptional performance to our customers.

None of the EXMAR relationships described above are contractual or formal, except to the extent that Exmar and our joint ventures have entered into charters with certain of our and their respective customers. EXMAR has developed informal relationships with major energy companies, shipbuilders and financial institutions in connection with providing marine infrastructure solutions. EXMAR has informal relationships with, among others, Statoil ASA, Royal Dutch Shell plc, Itochu Corporation, Daewoo Shipbuilding & Marine Engineering Co., Ltd, Hyundai Heavy Industries Co., Ltd., Hanjin Shipping Co. Ltd, the International Finance Corporation (World Bank Group), DNB ASA and Nordea Bank AB. We cannot guarantee, however, that EXMAR will maintain these informal relationships in the future.


Risk factors

An investment in our common units involves risks associated with our business, our partnership structure and the tax characteristics of our common units. Please read carefully the risks described under "Risk Factors" beginning on page 24 of this prospectus.

 

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Formation transactions

We were formed as a Marshall Islands limited partnership to own, operate and acquire floating LNG infrastructure assets under long-term charters. In connection with this offering, EXMAR will contribute to us all of its equity interests in each of the entities owning our five initial vessels, and its loans to such entities will be transferred to us or replaced with loans made by us to such entities.

Additionally, each of the following transactions have occurred or will occur in connection with the closing of this offering:

we will issue                           common units and                           subordinated units, representing an aggregate          % limited partner interest in us, to EXMAR;

we will issue all of our incentive distribution rights to our general partner;

we will issue                           common units to the public in this offering, representing a         % limited partner interest in us;

we will apply the net proceeds of the offering as described under "Use of Proceeds";

We will grant the underwriters a 30-day option to purchase up to                           additional common units;

we will enter into a new $20.0 million revolving credit facility with EXMAR;

we will enter into an omnibus agreement with EXMAR, our general partner, our operating company and certain subsidiaries of EXMAR governing, among other things:

    the extent to which we and EXMAR may compete with each other;

    our right to purchase all or a portion of EXMAR's interest in the Caribbean FLNG, within 24 months following the commencement of its operations;

    our right to purchase all of EXMAR's interest (currently a 50% interest) in the Excel, within 24 months following the commencement of a charter for the Excel of five years or more;

    our right to purchase from EXMAR any floating LNG infrastructure assets operating under charters of five or more years as described under "Certain Relationships and Related Party Transactions—Agreements Governing the Transactions—Omnibus Agreement;" and

    EXMAR's provision of certain indemnities to us;

our joint ventures will remain parties to management agreements with Exmar Shipmanagement pursuant to which Exmar Shipmanagement provides our joint ventures with crewing and technical management services;

we, our operating company and our general partner will enter into management and administrative services agreements with Exmar Hong Kong, a wholly owned subsidiary of EXMAR, pursuant to which Exmar Hong Kong will agree to provide certain management and administrative services to us, our operating company and our general partner;

 

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we will amend and restate the credit facility relating to Excelerate and the credit facility relating to Explorer and Express; and

the Exmar-Teekay joint ventures will enter into a new $175.0 million credit facility to refinance into one credit facility the existing indebtedness relating to Excelsior and Excalibur.

The Exmar-Excelerate joint ventures are parties to services agreements with EXMAR and its subsidiaries pursuant to which EXMAR and its subsidiaries provide management and administrative services to the Exmar-Excelerate joint ventures; accounting and corporate administration services are provided by EXMAR and its subsidiaries to the Exmar-Teekay joint ventures pursuant to each applicable joint venture agreement.

The number of common units to be issued to EXMAR includes                           common units that will be issued at the expiration of the underwriters' option to purchase additional common units, assuming that the underwriters do not exercise the option. Any exercise of the underwriters' option to purchase additional common units would reduce the common units shown as issued to EXMAR by the number to be purchased by the underwriters in connection with such exercise. If and to the extent the underwriters exercise their option to purchase additional common units, the number of common units purchased by the underwriters pursuant to any exercise will be sold to the public, and any remaining common units not purchased by the underwriters pursuant to any exercise of the option will be issued to EXMAR at the expiration of the option period for no additional consideration.

For further details on our agreements with EXMAR and its affiliates, please read "Certain Relationships and Related Party Transactions."


Holding company structure

We are a holding entity and conduct our operations and business through subsidiaries and joint ventures. We derive all of our income from our interests in our joint ventures. We own a 50% interest in five joint ventures, each of which owns one vessel in our initial portfolio. Teekay LNG is our partner in the joint ventures that own Excalibur and Excelsior. Excelerate Energy is our partner in the joint ventures that own Excelerate, Express and Explorer. Teekay LNG and Excelerate Energy are leading companies with substantial industry experience. Neither we nor our joint venture partners exercise affirmative control over our joint ventures. We are entitled to appoint one half of the members of the board of directors governing each such joint venture. A majority of votes is required for the board of directors of each joint venture to act and as a result, neither we nor our joint venture partners are able to cause the joint venture to act over the objection of the other joint venture partner. Our joint ventures are further described in "Our Joint Ventures and Joint Venture Agreements."


Organizational and ownership structure after this offering

After giving effect to the transactions described above, assuming no exercise of the underwriters' option to purchase additional common units, our units will be held as follows:

   
 
  Number
of units

  Percentage ownership
 
   

Public common units

                    %  

EXMAR common units

             

EXMAR subordinated units

             
       

Total

          100.0%  
   

 

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The following diagram depicts our simplified organizational and ownership structure after giving effect to the offering and related transactions described above:

GRAPHIC

(1)    The remaining 50% equity interest in the joint ventures owning Excelerate, Explorer and Express are owned by an affiliate of Excelerate Energy.

(2)    We and our joint venture partner are each entitled to appoint one half of the members of the joint venture's board of directors.

(3)    The remaining 50% equity interest in the joint ventures owning Excelsior and Excalibur are owned by an affiliate of Teekay LNG.

If the underwriters exercise any part of their option to purchase additional common units, the number of common units shown to be owned by EXMAR will be reduced by the number of common units purchased in connection with any such exercise and will be sold to the public instead of being issued to EXMAR. Any such common units issued to EXMAR will be issued for no additional consideration. If the underwriters' option is exercised in full, then EXMAR would own         % of the common units, and the public would own         % of the common units.

 

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Our management

Our partnership agreement provides that our general partner will irrevocably delegate to our board of directors the authority to oversee and direct our operations, management and policies on an exclusive basis. We will rely on the executive officers of EXMAR and its subsidiaries who will perform executive officer services for our benefit pursuant to a management and administrative services agreement with Exmar Hong Kong and who will be responsible for our day-to-day management subject to the direction of our board of directors. All references in this prospectus to "our officers" refer to those officers of EXMAR and its subsidiaries who perform executive officer functions for our benefit.

Our joint ventures are parties to management agreements with Exmar Shipmanagement pursuant to which Exmar Shipmanagement provides certain crewing and technical management services. Pursuant to the management agreements, our joint ventures pay Exmar Shipmanagement fees for providing crewing and technical management services.

In addition, we, our general partner and our operating company will enter into management and administrative services agreements with Exmar Hong Kong, pursuant to which Exmar Hong Kong will provide management and administrative services to us, our general partner and our operating company. We will reimburse Exmar Hong Kong for its reasonable costs and expenses incurred in connection with the provision of these services. In addition, Exmar Hong Kong will receive a management fee equal to 5% of the costs and expenses incurred in connection with providing these services. We project that we will pay Exmar Hong Kong approximately $2.2 million in total under the management and administrative services agreements for the twelve months ending December 31, 2015.

The Exmar-Excelerate joint ventures are parties to services agreements with EXMAR and its subsidiaries pursuant to which EXMAR and its subsidiaries provide management and administrative services. Accounting and corporate administration services are provided by EXMAR and its subsidiaries to the Exmar-Teekay joint ventures pursuant to each applicable joint venture agreement. Our joint ventures pay EXMAR and its subsidiaries a monthly fee in connection with the provision of these services.

For a more detailed description of these agreements, please read "Our Joint Ventures and Joint Venture Agreements," "Certain Relationships and Related Party Transactions—Agreements Governing the Transaction—Management and Administrative Services Agreement" and "Certain Relationships and Related Party Transactions—Agreements Governing the Transactions—Joint Venture Services Agreements."


Principal executive offices and internet address

Our registered and principal executive offices are located at Room 3206, 32nd Floor, Lippo Center, Tower Two, No 89 Queensway, Hong Kong and our phone number is +852 2861 9668. We expect to make our periodic reports and other information filed with or furnished to the United States Securities and Exchange Commission (the "SEC") available, free of charge, through our website at www.exmarenergypartners.com, which will be operational after this offering, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Please read "Where You Can Find More Information" for an explanation of our reporting requirements as a foreign private issuer.


Summary of conflicts of interest and fiduciary duties

Our general partner and our directors will have a legal duty to manage us in a manner beneficial to our unitholders, subject to the limitations described under "Conflicts of Interest and Fiduciary Duties." This legal duty is commonly referred to as a "fiduciary duty." Our directors have fiduciary duties to manage us

 

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in a manner beneficial to us, our general partner and our limited partners. As a result of these relationships, conflicts of interest may arise between us and our unaffiliated limited partners on the one hand, and EXMAR and its affiliates, including our general partner, on the other hand. The resolution of these conflicts may not be in the best interest of us or our unitholders. In particular:

our chief executive officer, chief financial officer and all of our current directors also serve as executive officers and/or directors of EXMAR;

EXMAR and its affiliates may compete with us, subject to the restrictions contained in the omnibus agreement, and our ability to compete with EXMAR will be limited because we will be prohibited from owning, operating or chartering LNG infrastructure assets under short-term charters, subject to certain exceptions; and

we have entered into arrangements, and may enter into additional arrangements, with EXMAR and certain of its subsidiaries, relating to our right to purchase additional vessels, the provision of certain services to us by Exmar Shipmanagement, Exmar Marine and Exmar Hong Kong and other matters. In the performance of their obligations under these agreements, EXMAR and its subsidiaries, other than our general partner, are not held to a fiduciary duty standard of care to us, our general partner or our limited partners, but rather to the standard of care specified in these agreements.

For a more detailed description of the conflicts of interest and fiduciary duties of our general partner and its affiliates, please read "Conflicts of Interest and Fiduciary Duties."

Although a majority of our directors will over time be elected by common unitholders, our general partner will likely have substantial influence on decisions made by our board of directors. For a more detailed description of our management structure, please read "Management—Directors," "Management—Executive Officers" and "Certain Relationships and Related Party Transactions."

In addition, our partnership agreement contains provisions that restrict the standards to which our general partner and our directors would otherwise be held under Marshall Islands law. For example, our partnership agreement limits the liability and reduces the fiduciary duties of our general partner and our directors to our unitholders. Our partnership agreement also restricts the remedies available to unitholders. By purchasing a common unit, you are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by our general partner, its affiliates or our directors, all as set forth in the partnership agreement. Please read "Conflicts of Interest and Fiduciary Duties" for a description of the fiduciary duties that would otherwise be imposed on our general partner, its affiliates and our directors under Marshall Islands law, the material modifications of those duties contained in our partnership agreement and certain legal rights and remedies available to our unitholders under Marshall Islands law.


Our emerging growth company status

Our Predecessor had less than $1.0 billion in revenue during its last fiscal year, which means that we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may, for up to five years, take advantage of specified exemptions from reporting and other regulatory requirements that are otherwise applicable generally to public companies. These exemptions include:

the presentation of only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations;

 

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exemption from the auditor attestation requirement on the effectiveness of our system of internal control over financial reporting;

exemption from the adoption of new or revised financial accounting standards until they would apply to private companies; and

exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer.

We may take advantage of these provisions until we are no longer an emerging growth company, which will occur on the earliest of (i) the last day of the fiscal year following the fifth anniversary of this offering, (ii) the last day of the fiscal year in which we have more than $1.0 billion in annual revenue, (iii) the date on which we are deemed to be a "large accelerated filer," as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, which generally requires that more than $700.0 million in market value of our common units be held by non-affiliates as of June 30 of the year such determination is made and (iv) the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period.

We have elected to take advantage of all of the applicable JOBS Act provisions, except that we will elect to opt out of the exemption that allows emerging growth companies to extend the transition period for complying with new or revised financial accounting standards (such election being irrevocable).

 

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The offering

Common units offered to the public                        common units.

 

 

                     common units if the underwriters exercise their option to purchase additional common units in full.

Units outstanding after this offering

 

                     common units and                     subordinated units, representing a         % and         % limited partner interest in us, respectively. If the underwriters do not exercise their option to purchase additional common units, we will issue common units to EXMAR upon the option's expiration for no additional consideration. Accordingly, the exercise of the underwriters' option will not affect the total number of common units outstanding. Our general partner will own a non-economic general partner interest in us.

Use of proceeds

 

We intend to use the net proceeds from this offering (approximately $                 million, after deducting an aggregate of approximately $                 million of underwriting discounts and commissions and structuring fees and estimated offering expenses payable by us) as follows: (i) $44.0 million to make a loan to a subsidiary of EXMAR in exchange for a note bearing interest at a rate of LIBOR plus 4.0% per annum, which is repayable on demand or which we may choose to utilize as part of the purchase consideration in the event we purchase all or a portion of EXMAR's interest in the Caribbean FLNG, (ii) $28.3 million to repay outstanding debt, (iii) $2.3 million to pay refinancing fees and (iv) $25.0 million for general partnership purposes, which may include the funding of any future acquisitions. We do not currently have any commitments to make any future acquisitions following the completion of this offering.

 

 

We intend to use the net proceeds of any exercise of the underwriters' option to purchase additional common units ($               million, if exercised in full, after deducting an aggregate of approximately $               million of underwriting discounts and commissions) to make a cash distribution to EXMAR.


 

 

 

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Cash distributions   We intend to make minimum quarterly distributions of $                     per common unit ($                     per unit on an annualized basis) to the extent we have sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to our general partner. In general, we will pay any cash distributions we make each quarter in the following manner:

 

first, to the holders of common units, until each common unit has received a minimum quarterly distribution of $                     plus any arrearages from prior quarters;

 

second, to the holders of subordinated units, until each subordinated unit has received a minimum quarterly distribution of $                     ; and

 

third, to all unitholders, until each unit has received an aggregate distribution of $                     .


 

 

Within 45 days after the end of each fiscal quarter (beginning with the quarter ending December 31, 2014), we will distribute all of our available cash to unitholders of record on the applicable record date. We will adjust the minimum quarterly distribution for the period from the closing of the offering through December 31, 2014 based on the actual length of the period. Our ability to pay our minimum quarterly distribution is subject to various restrictions and other factors described in more detail under the caption "Our Cash Distribution Policy and Restrictions on Distributions."

 

 

If cash distributions to our unitholders exceed $                     per unit in a quarter, holders of our incentive distribution rights (initially, our general partner) will receive increasing percentages, up to 50.0%, of the cash we distribute in excess of that amount. We refer to these distributions as "incentive distributions." We must distribute all of our cash on hand at the end of each quarter, less reserves established by our board of directors to provide for the proper conduct of our business, to comply with any applicable debt instruments or to provide funds for future distributions. We refer to this cash as "available cash," and we define its meaning in our partnership agreement attached as Appendix A hereto. The amount of available cash may be greater than or less than the aggregate amount of the minimum quarterly distribution to be distributed on all units.

 

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    We believe, based on the estimates contained in and the assumptions listed under "Our Cash Distribution Policy and Restrictions on Distributions—Forecasted Cash Available for Distribution," that we will have sufficient cash available for distribution to enable us to pay the minimum quarterly distribution of $                     on all of our common and subordinated units for the twelve months ending December 31, 2015. However, unanticipated events may occur which could adversely affect the actual results we achieve during the forecast period. Consequently, our actual results of operations, cash flows and financial condition during the forecast period may vary from the forecast, and such variations may be material. Prospective investors are cautioned to not place undue reliance on the forecast and should make their own independent assessment of our future results of operations, cash flows and financial condition.

 

 

Please read "Our Cash Distribution Policy and Restrictions on Distributions—Forecasted Cash Available for Distribution."

Subordinated units

 

EXMAR will initially own all of our subordinated units. The principal difference between our common units and subordinated units is that in any quarter during the subordination period the subordinated units are entitled to receive the minimum quarterly distribution of $                     per unit only after the common units have received the minimum quarterly distribution and arrearages in the payment of the minimum quarterly distribution from prior quarters. Subordinated units will not accrue arrearages. The subordination period generally will end if we have earned and paid at least $                     on each outstanding common and subordinated unit for any three consecutive four-quarter periods ending on or after September 30, 2017. For purposes of determining whether the subordination period will end, the three consecutive four-quarter periods for which the determination is being made may include one or more quarters with respect to which arrearages in the payment of the minimum quarterly distribution on the common units have accrued, provided that all such arrearages have been repaid prior to the end of each such four-quarter period.

 

 

The subordination period also will end upon the removal of our general partner other than for cause if no subordinated units or common units held by the holders of subordinated units or their affiliates are voted in favor of that removal. When the subordination period ends, all subordinated units will convert into common units on a one-for-one basis, and the common units will no longer be entitled to arrearages. Please read "How We Make Cash Distributions—Subordination Period."

 

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Issuance of additional units   We can issue an unlimited number of additional units, including units that are senior to the common units in rights of distribution, liquidation and voting, on the terms and conditions determined by our board of directors, without the consent of our unitholders. Please read "Units Eligible for Future Sale" and "The Partnership Agreement—Issuance of Additional Securities."

Board of directors

 

Our current board of directors consists of three members appointed by our general partner. Prior to our first annual meeting of unitholders in 2015, our general partner expects to appoint additional directors, increasing the size of our board of directors to five. We will hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. Our general partner will have the right to appoint two of the five members of our board of directors who will serve as directors for terms determined by our general partner. At our 2015 annual meeting, the common unitholders will elect three of our directors. The three directors elected by our common unitholders at our 2015 annual meeting will be divided into three classes to be elected by our common unitholders annually on a staggered basis to serve for three-year terms. The majority of our directors will be non-U.S. citizens or residents.

Voting rights

 

Each outstanding common unit is entitled to one vote on matters subject to a vote of common unitholders. However, to preserve our ability to be exempt from U.S. federal income tax under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), if at any time, any person or group owns beneficially more than 4.9% of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes (except for purposes of nominating a person for election to our board), determining the presence of a quorum or for other similar purposes under our partnership agreement, unless otherwise required by law. The voting rights of any such unitholders in excess of 4.9% will effectively be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. Our general partner, its affiliates and persons who acquired common units with the prior approval of our board of directors will not be subject to this 4.9% limitation except with respect to voting their common units in the election of the elected directors.

 

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    You will have no right to elect our general partner on an annual or other continuing basis. Our general partner may not be removed except by a vote of the holders of at least 662/3% of the outstanding common and subordinated units, including any common and subordinated units owned by our general partner and its affiliates, voting together as a single class. Upon consummation of this offering, EXMAR will own         % of our outstanding common and subordinated units (or         % of our outstanding common and subordinated units if the underwriters' option to purchase additional common units is exercised in full). As a result, you will initially be unable to remove our general partner without its consent because EXMAR will own sufficient units upon completion of this offering to be able to prevent the general partner's removal. Please read "The Partnership Agreement—Voting Rights."

Limited call right

 

If at any time our general partner and its affiliates own more than 80% of the outstanding common units, our general partner has the right, but not the obligation, to purchase all, but not less than all, of the remaining common units at a price equal to the greater of (x) the average of the daily closing prices of the common units over the 20 trading days preceding the date three days before the notice of exercise of the call right is first mailed and (y) the highest price per-unit paid by our general partner or any of its affiliates for common units during the 90-day period preceding the date such notice is first mailed.

U.S. federal income tax considerations

 

Although we are organized as a partnership, we have elected to be treated as a corporation for U.S. federal income tax purposes. Consequently, all or a portion of the distributions you receive from us will constitute dividends for such purposes. The remaining portion of such distributions will be treated first as a non-taxable return of capital to the extent of your tax basis in your common units and, thereafter, as capital gain. We estimate that if you hold the common units that you purchase in this offering through the period ending December 31, 2016, the distributions you receive, on a cumulative basis, that will constitute dividends for U.S. federal income tax purposes will be approximately         % of the total cash distributions received during that period. Please read "Material U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of U.S. Holders—Ratio of Dividend Income to Distributions" for the basis for this estimate. For a discussion of other material U.S. federal income tax consequences that may be relevant to prospective unitholders who are individual citizens or residents of the United States, please read "Material U.S. Federal Income Tax Considerations."

 

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Non-U.S. tax considerations   We and our general partner are expected to be centrally managed and controlled in Hong Kong. For a discussion of material Belgium, Marshall Islands and Hong Kong income tax considerations that may be relevant to prospective unitholders, please read "Non-United States Tax Considerations." Please also read "Business—Taxation of the Partnership" and "Risk Factors—Tax Risks."

Exchange listing

 

Our common units have been approved for listing on the New York Stock Exchange (the "NYSE"), subject to official notice of issuance, under the symbol "XMLP".

 

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Summary historical financial and operating data

All of the vessels in our portfolio are owned by our joint ventures, each of which is owned 50% by us. Under applicable accounting rules, we do not consolidate the financial results of our joint ventures into our Predecessor's financial results. Our Predecessor accounts for its equity interest in the joint ventures owning the vessels in our portfolio as equity method investments in its combined financial statements. We derive cash flows from the operations of our joint ventures from several sources. Relative to the Exmar-Teekay joint ventures, our cash flows are generated from dividend payments, which are calculated to pay out all cash flows after debt service obligations. The Exmar-Excelerate joint ventures historically have not paid dividends. Instead, the Exmar-Excelerate joint ventures have been capitalized with shareholder loans in lieu of equity. Substantially all of the operating cash flows of these joint ventures are used to pay interest and principal on these shareholder loans.

You should read the following summary financial and operating data in conjunction with "Presentation of Financial Information," "Selected Historical Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as the historical combined carve-out financial statements of our Predecessor, the historical combined financial statements of the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures and related notes thereto included elsewhere in this prospectus. The financial information included in this prospectus may not be indicative of our future results of operations, financial condition and cash flows.

Set forth below is (i) summary historical financial data of our Predecessor as of and for the years ended December 31, 2013 and 2012, which have been derived from the audited historical combined carve-out financial statements of our Predecessor prepared in accordance with U.S. GAAP included elsewhere in this prospectus, (ii) summary historical financial data of our Predecessor as of September 30, 2014 and for the nine months ended September 30, 2014 and 2013, which have been derived from the unaudited historical combined carve-out interim financial statements of our Predecessor prepared in accordance with U.S. GAAP included elsewhere in this prospectus, (iii) summary historical combined financial data of the Exmar-Excelerate joint ventures and of the Exmar-Teekay joint ventures, each as of and for the years ended December 31, 2013 and 2012, which have been derived from the audited historical combined financial statements thereof prepared in accordance with U.S. GAAP included elsewhere in this prospectus and (iv) summary historical combined financial data of the Exmar-Excelerate joint ventures and of the Exmar-Teekay joint ventures, each as of September 30, 2014 and for the nine months ended September 30, 2014 and 2013, which have been derived from the unaudited historical combined interim financial statements thereof prepared in accordance with U.S. GAAP included elsewhere in this prospectus.

 

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  Predecessor  
 
  Nine months ended
September 30,
  Year ended December 31,  
(in thousands)
  2014
  2013
  2013
  2012
 
   

Statements of income data:

                         

Total operating revenues

  $   $   $   $  

General and administrative expenses

    (1,650 )   (1,590 )   (2,138 )   (2,053 )
       

Operating loss

    (1,650 )   (1,590 )   (2,138 )   (2,053 )

Share of income from equity accounted joint ventures(1)

    10,246     5,954     8,148     3,775  

Interest income

    16,485     17,006     22,640     23,431  

Interest expense

    (3,911 )   (4,366 )   (5,738 )   (6,768 )
       

Net income before income taxes

  $ 21,170   $ 17,004     22,912     18,385  

Income taxes

                 
       

Net income

  $ 21,170   $ 17,004   $ 22,912   $ 18,385  
       

Balance sheet data (at period end):

                         

Cash and cash equivalents

  $ 4,000         $ 7   $ 2  

Restricted cash and short-term investments

    10,888           10,862     10,800  

Advances to equity accounted joint ventures—current

    25,556           20,135     17,042  

Accrued interest income and deferred costs

    4,771           818     757  
       

Total current assets

    45,215           31,822     28,601  

Investments in equity accounted joint ventures

    62,569           48,521     40,932  

Advances to equity accounted joint ventures

    303,794           312,010     325,045  
       

Total assets

    411,578           392,353     394,578  
       

Current portion of long-term debt

    14,137           13,829     13,439  

Trade accounts payable

    2           4     3  

Accrued interest expenses and other liabilities

    5,767           1,229     1,392  
       

Total current liabilities

    19,906           15,062     14,834  
       

Long-term debt

    304,370           312,741     325,270  

Amounts due to equity accounted joint ventures

    43,218           39,416     32,975  
       

Total liabilities

    367,494           367,219     373,079  

Owner's net investment

    44,084           25,134     21,499  
       

Total equity

    44,084           25,134     21,499  
       

Total liabilities and total equity

  $ 411,578         $ 392,353   $ 394,578  
   

 

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  Exmar-Excelerate joint ventures    
  Exmar-Teekay joint ventures  
 
  Nine months ended
September 30,
  Year ended
December 31,
   
  Nine months ended
September 30,
  Year ended
December 31,
 
(in thousands)
  2014
  2013
  2013
  2012
   
  2014
  2013
  2013
  2012
 
   

Combined statements of income data:

                                                     

Time charter revenues

  $ 50,470   $ 60,442   $ 78,782   $ 75,724       $ 37,072   $ 37,001   $ 49,619   $ 49,158  

Vessel operating expenses(2)

    (19,113 )   (24,411 )   (30,568 )   (29,230 )       (10,530 )   (8,551 )   (11,634 )   (14,778 )

Depreciation and amortization

    (15,797 )   (19,052 )   (25,472 )   (25,472 )       (6,976 )   (8,538 )   (11,353 )   (11,825 )

General and administrative

    (91 )   (159 )   (193 )   (127 )       (84 )   (93 )   (115 )   (148 )

Other income

    8,393                                  
       

Operating income

    23,862     16,820     22,549     20,895         19,482     19,819     26,517     22,407  

Interest income

    20     20     25     34         1,825     1,788     2,461     3,243  

Interest expense

    (21,205 )   (22,141 )   (29,409 )   (31,320 )       (3,719 )   (4,306 )   (5,657 )   (7,479 )

Other financial items, net

    23     (13 )   (41 )   (63 )       (26 )   (59 )   (110 )   (167 )
       

Net financial expense

    (21,162 )   (22,134 )   (29,425 )   (31,349 )       (1,920 )   (2,577 )   (3,306 )   (4,403 )

(Loss) income before income tax

    2,700     (5,314 )   (6,876 )   (10,454 )       17,562     17,242     23,211     18,004  

Income taxes

                                     
       

Net (loss) income

  $ 2,700   $ (5,314 )   (6,876 ) $ (10,454 )     $ 17,562   $ 17,242     23,211   $ 18,004  
       

Balance sheet data (at period end):

                                                     

Cash and cash equivalents

  $ 18,312         $ 8,075   $ 7,597       $ 20,459         $ 10,066   $ 5,942  

Restricted cash and short-term investments

                          188,083           24,847     24,199  

Trade accounts receivable

    4,757           4,180     5,466         748           394     637  

Other receivables, prepaid expense and accrued income

    6,990           1,751     3,622         235           439     266  
       

Total current assets

    30,059           14,006     16,685         209,525           35,746     31,044  

Restricted cash, long-term

                                    170,037     166,674  

Vessels, net

    605,125           620,921     646,394         107,672           110,981     116,410  

Vessels under capital lease, net

                          90,246           93,913     99,688  

Total assets

    635,184           634,927     663,079         407,443           410,677     413,816  

Current obligations under capital lease

                          165,523           2,525     2,589  

Current portion of long-term debt

    25,450           24,609     23,289         83,040           90,031     19,568  

Trade accounts payable

    11,576           11,384     9,648         8,030           5,938     6,743  

Other current liabilities

    27,079           15,343     15,066         11,061           11,793     7,132  
       

Total current liabilities

    64,105           51,336     48,003         267,654           110,287     36,032  

Long-term obligations under capital lease

                                    167,512     164,086  

Long-term debt, excluding current portion

    623,992           639,204     663,813         48,175           58,825     148,856  
       

Total liabilities

    688,097           690,540     711,816         315,829           336,624     348,974  

Common stock

    313           313     313         3,192           3,192     3,192  

Preferred stock

                          30,000           30,000     30,000  

Retained earnings

    (53,226 )         (55,926 )   (49,050 )       58,422           40,861     31,650  
       

Total stockholders' equity

    (52,913 )         (55,613 )   (48,737 )       91,614           74,053     64,842  
       

Total liabilities and stockholders' equity

  $ 635,184         $ 634,927   $ 663,079       $ 407,443         $ 410,677   $ 413,816  
       

Cash flow data:

                                                     

Net cash provided by operating activities        

  $ 14,049   $ 19,620   $ 23,766   $ 21,854       $ 25,748   $ 24,139   $ 38,341   $ 27,852  

Net cash used in investing activities

                                     

Net cash used in financing activities

    (3,811 )   (13,567 )   (23,289 )   (19,515 )       (15,354 )   (9,424 )   (34,216 )   (32,172 )

Portfolio data:

                                                     

Number of vessels at period end

    3     3     3     3         2     2     2     2  

Average age of vessels

    6.6     5.6     5.8     4.8         10.8     9.8     10     9.0  

Total calendar days for portfolio

    819     819     1,095     1,098         546     546     730     732  

Total operating days for portfolio(3)

    730     819     1,095     1,098         546     546     730     707  

Other financial data:

                                                     

EBITDA(4)

  $ 39,682   $ 35,859   $ 47,980   $ 46,304       $ 26,432   $ 28,298   $ 37,760   $ 34,065  
   

(1)    Represents our interest in the Exmar—Excelerate joint ventures and the Exmar—Teekay joint ventures. Our Predecessor accounted for its equity interests in the joint ventures as equity method investments in its combined carve-out financial statements

(2)   Vessel operating expenses are the direct costs associated with operating a vessel, including crew wages, vessel supplies, routine repairs, maintenance, insurance, lubricating oils and management fees.

(3)   The operating days for our portfolio is the total number of days in a given period that the vessels were in our possession less the total number of days off-hire. We define days off-hire as days lost to, among other things, operational deficiencies, drydocking for repairs, maintenance or inspection, equipment breakdowns and vessel upgrades, delays due to accidents, crewing strikes, certain vessel

 

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detentions or similar problems, or our failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the required crew, or during periods of commercial waiting time during which we do not earn charter hire.

(4)   Non-GAAP Financial Measure

EBITDA. EBITDA is defined as earnings before interest, taxes, and depreciation and amortization. EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess our financial and operating performance. We believe that EBITDA assists our management and investors by increasing the comparability of our performance from period to period and against the performance of other companies in our industry that provide EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, taxes and depreciation and amortization, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. We believe that including EBITDA as a financial and operating measure benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing financial and operational strength in assessing whether to continue to hold common units.

EBITDA should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with U.S. GAAP. EBITDA excludes some, but not all, items that affect net income, and these measures may vary among other companies. Therefore, EBITDA as presented below may not be comparable to similarly titled measures of other companies. The following table reconciles EBITDA to net income:

   
 
  Exmar-Excelerate joint ventures    
  Exmar-Teekay joint ventures  
 
  Nine months ended
September 30,
  Year ended
December 31,
   
  Nine months ended
September 30,
  Year ended
December 31,
 
(in thousands)
  2014
  2013
  2013
  2012
   
  2014
  2013
  2013
  2012
 
   

Net (loss) income

  $ 2,700   $ (5,314 ) $ (6,876 ) $ (10,454 )     $ 17,562   $ 17,242   $ 23,211   $ 18,004  

Depreciation and amortization

    15,797     19,052     25,472     25,472         6,976     8,538     11,353     11,825  

Interest income

    (20 )   (20 )   (25 )   (34 )       (1,825 )   (1,788 )   (2,461 )   (3,243 )

Interest expense

    21,205     22,141     29,409     31,320         3,719     4,306     5,657     7,479  

Income taxes

                                     
       

EBITDA

  $ 39,682   $ 35,859   $ 47,980   $ 46,304       $ 26,432   $ 28,298   $ 37,760   $ 34,065  
   

 

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Risk factors

Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. You should carefully consider the following risk factors together with all of the other information included in this prospectus in evaluating an investment in our common units.

If any of the following risks were actually to occur, our business, financial condition, results of operations and ability to make cash distributions to our unitholders could be materially adversely affected. In that case, we might not be able to make cash distributions on our common units, the trading price of our common units could decline, and you could lose all or part of your investment.


Risks inherent in our business

We are dependent on Excelerate Energy as the sole charter counterparty for the vessels in our initial portfolio. A deterioration of the financial viability of Excelerate Energy or our relationship with Excelerate Energy, or the loss of Excelerate Energy as a customer, would have a material adverse effect on our business, financial condition, results of operations and ability to make cash distributions to our unitholders.

For the nine months ended September 30, 2014 and the years ended December 31, 2013 and 2012, Excelerate Energy accounted for all of the revenues of our joint ventures from which we derive all of our income, respectively. A deterioration of the financial viability of Excelerate Energy or our relationship with Excelerate Energy or the loss of Excelerate Energy as a customer would have a greater adverse effect on us than for a company with a more diverse customer base.

Our joint ventures could lose Excelerate Energy as a customer or the benefits of a charter as a result of a breach by Excelerate Energy of a charter or other unanticipated developments, such as:

Excelerate Energy failing to make charter payments because of its financial inability, disagreements with us or otherwise;

Excelerate Energy exercising its right to terminate the charter for a vessel under certain circumstances, such as:

    loss of the vessel or damage to it beyond repair;

    defaults of our joint venture's obligations under a charter, including prolonged periods of off-hire;

    in the event of war or hostilities that would significantly disrupt the free trade of the vessel; or

    requisition by any governmental authority;

with respect to Excalibur, Excelerate Energy exercising its right to purchase the vessel in 2022;

with respect to Explorer, Express or Excelerate, third parties exercising any options that may be granted by Excelerate Energy to its customers to purchase the Explorer, Express or Excelerate beginning in 2024; or

with respect to Excelerate, Excelsior, Explorer and Express, a prolonged force majeure event affecting Excelerate Energy or its customers, should Excelerate Energy establish a designated trade under the terms of the applicable charter.

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Please read "Business—Time Charters—LNGRV Charters" and "Business—Time Charters—LNG Carrier Charter." If our joint ventures lose any of their charters with Excelerate Energy, they may be unable to re-deploy the related vessel on terms as favorable as the current charters or at all.

Any event, whether in our industry or otherwise, that adversely affects Excelerate Energy's financial condition, leverage, results of operations, cash flows or demand for our services and has an effect on its payments under our charters may adversely affect our ability to sustain or increase cash distributions to our unitholders. Accordingly, we are indirectly subject to the business risks of Excelerate Energy, some of which are the following:

its level of indebtedness;

economic conditions and government policies in its areas of operation; and

its being controlled by George B. Kaiser, which subjects it to risks as a result of certain actions taken by Mr. Kaiser, including the level of indebtedness of Mr. Kaiser;

Although the obligations of Excelerate Energy are partially secured by a letter of credit in the case of the Excelsior charter, and by a personal guarantee of Mr. Kaiser in the case of the Excelerate charter, and by prepaid hire in the case of the Explorer and Express charters, no security exists for Excelerate Energy's obligations under the Excalibur charter.

The ability of Excelerate Energy to perform its obligations under its charters with our joint ventures depends on its future financial condition and economic performance, which in turn will depend upon prevailing economic conditions and financial, business and other factors, many of which are beyond its control.

The loss by our joint ventures of Excelerate Energy as a charterer, or a decline in payments under any of such charters, could have a material adverse effect on our business, results of operations, financial condition and ability to make cash distributions to our unitholders.

Excelerate Energy is a private company for which limited information is available.

Excelerate Energy is a private company and is not required to provide us with access to or otherwise make publicly available its financial information. As a privately held company, Excelerate Energy is not required to comply with certain corporate governance and financial reporting practices and policies of publicly-traded companies. Little public information exists about Excelerate Energy and we will be required to rely on the ability of our management to obtain adequate information regarding Excelerate Energy.

Our only income-generating assets are our interests in our joint ventures. Neither we nor our joint venture partners exercise affirmative control over our joint ventures. Accordingly, we cannot require our joint ventures to act in our best interests. Furthermore, our joint venture partners, each of which is a competitor of ours, may prevent our joint ventures from taking action that may otherwise be beneficial to us, including making cash distributions to us. A deadlock between us and our joint venture partners could result in a sale of our equity interests in a joint venture to our joint venture partner or in the purchase of our joint venture partner's equity interest in a joint venture.

Our only income generating assets are our interests in our joint ventures. Please read "Our Joint Ventures and Joint Venture Agreements" for a description of our joint venture agreements. We are entitled to appoint one half of the members of the board of directors governing each such joint venture. A majority of votes is required for the board of directors of each joint venture to act and as a result, we are unable to

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cause the joint venture to act in our best interests over the objection of our joint venture partner. Our inability to require our joint ventures to act in our interest may cause us to fail to realize expected benefits from our interests and could adversely affect our business, results of operations, financial condition and ability to make quarterly distributions to our unitholders.

Furthermore, our joint venture partners are subsidiaries of Excelerate Energy and Teekay LNG, each of which is a competitor of ours. As described above, these entities exercise one half of the voting power on the board of directors of each joint venture. While our joint venture partners are required to act in the best interests of the applicable joint venture, our joint venture partners may prevent our joint ventures from acting in a manner that would otherwise be in our best interest.

Our joint venture agreements provide that the consent of the joint venture partners is required for the distribution of cash dividends to the joint venture partners. While we generate cash flow from our three joint ventures with Excelerate Energy through the receipt of principal and interest payments on our shareholder loans to such joint ventures, our cash flow generated from our joint ventures with Teekay LNG have historically related to cash distributions approved by us and Teekay LNG. Should Teekay LNG alter its practice of approving cash distributions to us from our joint ventures, our ability to make cash distributions to our unitholders would be materially impaired.

If the directors nominated by us and our joint venture partners are unable to reach agreement on any decision or action, then the issue will be resolved in accordance with the procedure set forth in our joint venture agreements. After the board of directors has met a second time to consider the decision or action, one or more of our senior executives will attempt to reach agreement with their counterpart from the joint venture partner. Should these efforts be unsuccessful, our joint venture partner may seek to compel us to sell our equity interests or purchase its equity interests in the joint venture pursuant to the procedure set forth in our joint venture agreements. In order to purchase our joint venture partner's equity interest in the joint venture, we may be required to secure additional financing in a short period of time, which may not be available on terms acceptable to us. If we are required to sell our equity interest in a joint venture, we will lose future revenue generated by the vessel owned or leased by the joint venture. In either case, our business, results of operations, financial condition and ability to make quarterly distributions to our unitholders may be adversely affected.

We generate a substantial portion of our cash flow from the receipt of principal and interest payments on our shareholder loans made to our joint ventures with Excelerate Energy.

We generate a substantial portion of our cash flow from the receipt of principal and interest payments from our three joint ventures with Excelerate Energy on shareholder loans to such joint ventures to finance the vessels. All of the vessels owned by our joint ventures are also financed through long-term bank borrowings.

The lenders under the Excelerate Facility (as defined herein) have a first mortgage on the Excelerate and a first priority charge, assignment and pledge of the Excelerate time charter to the lending banks, a share pledge and a general security deed. In addition, there is a right to take a second priority mortgage and a second priority assignment and pledge of the insurances and requisition compensation of the Excelerate to secure repayment of the shareholder bonds held by affiliates of Excelerate Energy, but such right has not been exercised.

The lenders under the Explorer and Express Facilities (as defined herein) are secured by a first priority mortgage on each of the Explorer and the Express, a first priority pledge agreement over EXMAR's shares in such vessels' respective joint venture owner, a guarantee given by each such joint venture owner, a first

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priority charge, assignment and pledge of the charter party of each such vessel, an account security deed and a general security deed with each owner. Such bank facilities are also secured by a charge, assignment and pledge of each Exmar NV loan agreement with each owner and an account security deed with Exmar LNG Holding NV. In addition, repayment of the shareholder loans made by Excelerate Energy to the joint venture that owns and operates the Explorer is secured by a second priority pledge of receivables under the charter and a second priority pledge of the Explorer's earnings, insurances and requisition compensation. Repayment of the prepaid amounts under the Explorer's time charter is secured by a third priority pledge of the Explorer's earnings, insurances and requisition compensation and a second priority pledge of shares in Explorer NV.

If the lenders under the Excelerate Facility or the Explorer and Express Facilities foreclose on their first priority mortgage and sell the vessels, the joint venture that owns and operates the vessel will not have any income generating assets or cash flow to make payments to us on our shareholder loans. Furthermore, any proceeds from such sales will likely be insufficient to make any payments to us on our shareholder loans after amounts due to the lenders under such bank facilities are paid.

If there is any significant reduction in the amount of principal and interest payments made to us by our joint ventures on the shareholder loans and shareholder bonds we hold or if any of our joint ventures ceases to make such payments to us, we would experience a material adverse effect on our business, results of operations, financial condition and ability to make cash distributions to our unitholders.

We may not have sufficient cash from operations following the establishment of cash reserves and payment of fees and expenses to enable us to pay the minimum quarterly distribution on our common units.

We may not have sufficient cash from operations to pay the minimum quarterly distribution of $              per unit on our common units. The amount of cash we can distribute on our units principally depends upon the amount of cash we generate from our operations. We currently generate cash from operations through distributions and debt service payments from our joint ventures, and as such our cash from operations is dependent on the cash distributions, debt service payments and operations of our joint ventures, each of which may fluctuate from quarter to quarter based on the risks described in this section, including, among other things:

the rates they obtain from time charters;

the level of operating costs, such as the cost of crews, maintenance and insurance;

currency exchange rate fluctuations;

interest rate fluctuations; and

the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of our business.

In addition, the actual amount of cash we will have available for distribution will depend on other factors, including:

the amount of cash distributed from our joint ventures;

the level of capital expenditures we and our joint ventures make, including for maintaining or replacing vessels, building new vessels, acquiring existing vessels and complying with regulations;

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the number of unscheduled off-hire days for the vessels in our portfolio and the timing of, and number of days required for, scheduled or unscheduled drydocking of our vessels;

our and our joint ventures' debt service requirements and restrictions on distributions contained in our and our joint ventures' debt instruments;

whether Excelerate Energy exercises its right to purchase Excalibur in 2022 or whether third parties exercise any options that may be granted to purchase the Explorer, Express or Excelerate beginning in 2024;

fluctuations in working capital needs;

changes in tax rates;

our ability to make, and the level of, working capital borrowings; and

the amount of any cash reserves established by our board of directors.

The amount of cash we generate from our operations may differ materially from our profit or loss for the period, which will be affected by non-cash items. As a result of this and the other factors mentioned above, we may make cash distributions during periods when we record losses and may not make cash distributions during periods when we record net income.

The assumptions underlying our forecast of cash available for distribution are inherently uncertain and are subject to risks and uncertainties that could cause actual results to differ materially from those forecasted.

The forecast of cash available for distribution set forth in "Our Cash Distribution Policy and Restrictions on Distributions" is based in part on our forecasts of operating results and cash flows for our joint ventures for the twelve months ending December 31, 2015. The financial forecasts have been prepared by management and we have not received opinions or reports on them from our or any other independent auditor. The assumptions underlying these forecasts and our forecast of cash available for distribution are inherently uncertain and are subject to significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those forecasted. If the forecasted results are not achieved, we may not be able to pay the full minimum quarterly distribution or any amount on our common units or subordinated units, in which event the market price of the common units may decline materially.

Our ability to grow and to meet our financial needs may be adversely affected by our cash distribution policy.

Our cash distribution policy, which is consistent with our partnership agreement, requires us to distribute all of our available cash (as defined in our partnership agreement) each quarter. Accordingly, our growth may not be as fast as businesses that reinvest their available cash to expand ongoing operations.

In determining the amount of cash available for distribution, our board of directors approves the amount of cash reserves to set aside, including reserves for future maintenance and replacement capital expenditures, working capital and other matters. We also rely upon external financing sources, including commercial borrowings, to fund our capital expenditures. Accordingly, to the extent we do not have sufficient cash reserves or are unable to obtain financing, our cash distribution policy may significantly impair our ability to meet our financial needs or to grow.

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We must make substantial capital expenditures to maintain and replace the operating capacity of our portfolio, which will reduce cash available for distribution. In addition, each quarter we are required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted.

We must make substantial capital expenditures to maintain and replace, over the long-term, the operating capacity of our portfolio. We estimate that total maintenance capital expenditures for our joint ventures will average approximately $13.1 million per year in the aggregate. Maintenance capital expenditures could include capital expenditures associated with drydocking a vessel or modifying an existing vessel to the extent these expenditures are incurred to maintain the operating capacity of our portfolio. Replacement capital expenditures include acquiring a new vessel or otherwise replacing current vessels at the end of their useful lives to the extent these expenditures are incurred to replace the operating capacity of our portfolio. These expenditures could vary significantly from quarter to quarter and could increase as a result of changes in:

the cost of labor and materials;

customer requirements;

the size of our portfolio;

the cost of replacement vessels;

length of charters;

governmental regulations and maritime self-regulatory organization standards relating to safety, security or the environment; and

competitive standards.

Our partnership agreement requires our board of directors to deduct estimated maintenance and replacement capital expenditures, instead of actual maintenance and replacement capital expenditures, from operating surplus each quarter in an effort to reduce fluctuations in operating surplus as a result of significant variations in actual maintenance and replacement capital expenditures each quarter. Initially, because all of our drydocking costs are incurred at our joint ventures, our estimated maintenance capital expenditures for drydocking will be zero. The amount of estimated maintenance and replacement capital expenditures deducted from operating surplus is subject to review and change by our conflicts committee at least once a year. In years when estimated maintenance and replacement capital expenditures are higher than actual maintenance and replacement capital expenditures, the amount of cash available for distribution to unitholders will be lower than if actual maintenance and replacement capital expenditures were deducted from operating surplus. If our board of directors underestimates the appropriate level of estimated maintenance and replacement capital expenditures, we may have less cash available for distribution in periods when actual capital expenditures exceed our previous estimates.

If capital expenditures are financed through cash from operations or by issuing debt or equity securities, our ability to make cash distributions may be diminished, our financial leverage could increase or our unitholders may be diluted.

Use of cash from operations to expand our portfolio will reduce cash available for distribution to unitholders. Our ability to obtain bank financing or to access the capital markets may be limited by our

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financial condition at the time of any such financing or offering as well as by adverse market conditions resulting from, among other things, general economic conditions, changes in the LNG industry and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for future capital expenditures could have a material adverse effect on our business, financial condition, results of operations and ability to make cash distributions. Even if we are successful in obtaining necessary funds, the terms of any debt financings could limit our ability to pay cash distributions to unitholders. In addition, incurring additional debt may significantly increase our interest expense and financial leverage, and issuing additional equity securities may result in significant unitholder dilution and would increase the aggregate amount of cash required to pay the minimum quarterly distribution to unitholders, which could have a material adverse effect on our ability to make cash distributions.

The failure to consummate or integrate acquisitions in a timely and cost-effective manner could have an adverse effect on our financial condition and results of operations.

We believe that acquisition opportunities may arise from time to time, and any such acquisition could be significant. Any acquisition could involve the payment by us of a substantial amount of cash, the incurrence of a substantial amount of debt or the issuance of a substantial amount of equity. Certain acquisition and investment opportunities may not result in the consummation of a transaction. In addition, we may not be able to obtain acceptable terms for the required financing for any such acquisition or investment that arises. We cannot predict the effect, if any, that any announcement or consummation of an acquisition would have on the trading price of our common units. If we fail to consummate and integrate our acquisitions in a timely and cost-effective manner, our financial condition, results of operations and cash available for distribution could be adversely affected.

We may be unable to make or realize expected benefits from acquisitions, which could have an adverse effect on our expected plans for growth.

Our growth strategy includes selectively acquiring floating LNG infrastructure assets that are operating under long-term, stable cash flow generating time charters. Any acquisition of a vessel or business may not be profitable to us at or after the time we acquire it and may not generate cash flow sufficient to justify our investment. In addition, our acquisition growth strategy exposes us to risks that may harm our business, financial condition and operating results, including risks that we may:

fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;

be unable to hire, train or retain qualified shore and seafaring personnel to manage and operate our growing business and portfolio;

decrease our liquidity by using a significant portion of our available cash or borrowing capacity to finance acquisitions;

significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;

incur or assume unanticipated liabilities, losses or costs associated with the business or vessels acquired; or

incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

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We have only five vessels in our portfolio. Any limitation in the availability or operation of those vessels could have a material adverse effect on our business, financial condition and results of operations and could significantly reduce our ability to make distributions to our unitholders.

Our portfolio currently consists of four LNGRVs and one LNG carrier. If any of these vessels are unable to generate revenues as a result of off-hire time, our joint ventures, and in turn, our financial condition and results of operations could be materially adversely affected.

The charters relating to our LNGRVs and LNG carrier permit the charterer to terminate the charter in the event that the vessel is off-hire for any extended period. The charters also allow the charterer to terminate the charter upon the occurrence of specified defaults. The termination of any of our charters could have a material adverse effect on our business, financial condition and results of operations and could significantly reduce our ability to make cash distributions to our unitholders. For further details regarding termination of our charters, please read "Business—Time Charters—LNGRV Charters—Termination; Non-Utilization" and "Business—Time Charters—LNG Carrier Charter—Termination."

An increase in operating expenses or drydocking costs could materially and adversely affect our financial performance.

Our operating expenses and drydock capital expenditures at our joint ventures depend on a variety of factors including crew costs, provisions, deck and engine stores and spares, lubricating oil, insurance, maintenance and repairs and shipyard costs, many of which are beyond our control and affect the entire shipping industry. While we do not bear the cost of fuel (bunkers) under our time charters, fuel is a significant expense in our operations when our vessels are, for example, moving to or from drydock or when off-hire. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and natural gas, actions by the Organization of the Petroleum Exporting Countries and other oil and natural gas producers, war and unrest in oil-producing countries and regions, regional production patterns and environmental concerns. These may increase vessel operating and drydocking costs further. If costs continue to rise, they could materially and adversely affect our results of operations.

The drydocking of our vessels also results in loss of revenue if the vessels are drydocked for longer than the allowable period under the time charters. Although each of the LNGRV time charters requires the charterer to pay hire for a specified number of days of scheduled drydocking, any significant increase in the number of days of drydocking beyond the permitted duration could have a material adverse effect on our ability to make cash distributions to our unitholders. In addition, under the Excalibur charter, no hire is due during drydocking and, as a result, any prolonged period of drydocking may significantly reduce the benefits we receive under the charter. Although three of the charters require the charterer to pay drydocking costs, a significant increase in the cost of repairs during drydocking of the remaining two vessels could also adversely affect our cash available for distribution. We may underestimate the time required to drydock any of our vessels or unanticipated problems may arise. If more than one of our vessels is required to be out of service at the same time, if a vessel is drydocked longer than the allowable period or if the cost of repairs during drydocking is greater than budgeted, our cash available for distribution could be adversely affected.

Currently three of our charters allow us to pass operating costs directly to the charterer. Two of our charters do not have the pass through protection and as a result, we are responsible for things such as cost overruns, higher than expected labor costs and exposure to currency exchange rates.

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Fluctuations in overall LNG demand growth could adversely affect our ability to secure future long-term charters.

Our joint ventures' business relies heavily upon the ability to secure the floating LNG infrastructure vessels on long-term charters and thus is highly dependent on underlying global LNG demand. Our ability to secure new vessels or existing vessels upon expiry of their time charters on new long-term charters could be adversely affected to the extent projected LNG demand growth is not realized.

Our growth depends on continued growth in demand in the floating LNG infrastructure market.

Our growth strategy focuses on floating LNG infrastructure assets under long-term charters. While global LNG demand has continued to rise, the rate of its growth has fluctuated due to several reasons, including the global economic crisis and the continued increase in natural gas production from unconventional sources in regions such as North America. Accordingly, our growth depends on continued growth in world and regional demand for LNG, LNGRVs, LNG carriers and other floating LNG infrastructure assets, which could be negatively affected by a number of factors, including:

increases in the cost of natural gas derived from LNG relative to the cost of alternative energy sources generally;

increases in the production levels of low-cost natural gas in domestic natural gas consuming markets, which could further depress prices for natural gas in those markets and make LNG uneconomical;

decreases in the cost, or increases in the demand for, conventional land-based regasification systems, which could occur if providers or users of regasification services seek greater economies of scale than LNGRVs can provide or if the economic, regulatory or political challenges associated with land-based activities improve;

further development of, or decreases in the cost of, alternative technologies for floating LNG regasification;

increases in the production of natural gas in areas linked by pipelines to consuming areas, the extension of existing, or the development of new, pipeline systems in markets we may serve, or the conversion of existing non-natural gas pipelines to natural gas pipelines in those markets;

decreases in the consumption of natural gas due to increases in its price relative to other energy sources or other factors making consumption of natural gas less attractive;

availability of new, alternative energy sources, including compressed natural gas; and

negative global or regional economic or political conditions, particularly in LNG consuming regions, which could reduce energy consumption or its growth.

Reduced demand for LNG, LNGRVs, LNG carriers and other floating LNG infrastructure assets would have a material adverse effect on our future growth and could harm our business, financial condition and results of operations.

The debt levels of us and our joint ventures may limit our and their flexibility in obtaining additional financing, pursuing other business opportunities or our paying distributions to you.

As of September 30, 2014, our Predecessor had $307.6 million of combined net debt (net of restricted cash) and the Exmar-Teekay joint ventures had $108.7 million in combined net debt (net of restricted cash

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but excluding obligations under capital lease and excluding restricted cash for such obligations), $54.3 million of which was attributable to us. For the years ended December 31, 2013 and 2012, our predecessor incurred $5.7 million and $6.8 million, respectively, in interest expense. For the nine months ended September 30, 2014 and 2013, our Predecessor incurred $3.9 million and $4.4 million, respectively, in interest expense.

Upon completion of this offering and the related transactions, we estimate that our combined net debt (net of restricted cash) will be approximately $274.5 million and the combined net debt (net of restricted cash) of the Exmar-Teekay joint ventures will be $161.0 million, approximately $80.5 million of which will be attributable to us. Following this offering, we will continue to have the ability to incur additional debt. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

Our level of debt could have important consequences to us, including the following:

our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be limited or such financing may not be available on favorable terms;

we will be required to refinance our outstanding indebtedness, and we may not be able to do so on favorable terms or at all;

we will need a substantial portion of our cash flow to make principal and interest payments on our debt, reducing the funds that would otherwise be available for operations, future business opportunities and distributions to unitholders;

our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally; and

our debt level may limit our flexibility in responding to changing business and economic conditions.

Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing distributions, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms, or at all.

We are lending a substantial portion of the net proceeds of this offering to a subsidiary of EXMAR pursuant to a demand note and EXMAR is entering into a revolving credit facility to provide us with liquidity, and, as a result of these transactions, we will be exposed to credit risk of EXMAR and other risks that could impact our liquidity.

Upon consummation of this offering, we expect to lend $44.0 million to a subsidiary of EXMAR pursuant to a demand note. At or prior to the closing of this offering, we expect to enter into a four-year, $20 million revolving credit facility with EXMAR as our lender to be used to fund our general partnership purposes, including working capital and distributions. Initially, this revolving credit facility will provide our primary source of liquidity other than our cash from operations distributed to us by our joint ventures and payments made to us under our shareholder loans. EXMAR's ability to make loans under the revolving credit facility and the ability of EXMAR's subsidiary to repay the demand note on demand may be affected

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by events beyond our and their control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our and their ability to comply with the terms of the revolving credit facility and the demand note may be impaired. If we make a demand on the demand note, or if we request a borrowing under the revolving credit facility, EXMAR and its subsidiary may not have, or be able to obtain, sufficient funds to repay the demand note or make loans under the revolving credit facility. In the event that EXMAR is unable to make loans to us pursuant to the revolving credit facility, or a default or other circumstance prohibits us from borrowing loans thereunder, or EXMAR's subsidiary is unable to repay the demand note upon demand, our financial condition, results of operations and ability to make cash distributions to our unitholders could be materially adversely affected.

The financing arrangements of our joint ventures are secured by the vessels in our initial portfolio and contain operating and financial restrictions and other covenants that may restrict our business and financing activities as well as our ability to make cash distributions to our unitholders.

The operating and financial restrictions and covenants in the financing arrangements of our joint ventures, including lease agreements and any future financing agreements, could adversely affect their and our ability to finance future operations or capital needs or to engage, expand or pursue our business activities. For example, our and our joint ventures' financing arrangements limit our ability to incur additional debt, make distributions to our equity holders, make guarantees or provide any other credit support, enter any other lines of business or merge or otherwise reorganize. Additionally, we and our joint ventures are required to maintain compliance with certain financial ratios, including minimum equity values, minimum liquidity, minimum cash flow and minimum security coverage.

The agreements governing our and our joint ventures' other financing arrangements also contain operating and financial restrictions and covenants. For more information, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Borrowing Activities—Long-Term Debt—" and "—Debt Restrictions."

Our and our joint ventures' ability to comply with covenants and restrictions contained in financing arrangements may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our and their ability to comply with these covenants may be impaired. If restrictions, covenants, ratios or tests in debt instruments are breached, a significant portion of the obligations may become immediately due and payable, and the lenders' commitment to make further loans may terminate. We and/or our joint ventures may not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, obligations under our and our joint ventures' financing arrangements are secured by all of the vessels in our initial portfolio and guaranteed by our subsidiaries holding the interests in the vessels in our portfolio, and if we or they, as applicable, are unable to repay debt under our financing arrangements, the lenders or lessors could seek to foreclose on those assets. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

EXMAR's or Teekay LNG's failure to comply with certain obligations under the Excalibur and Excelsior Facility, and certain other events occurring at EXMAR or Teekay LNG, could result in cross-defaults or defaults under such facility, which could have a material adverse effect on us.

EXMAR and Teekay LNG each guarantees the obligations of Solaia Shipping L.L.C. and Excelsior BVBA, the owners of the Excalibur and the Excelsior, under the Excalibur and Excelsior credit facility to be entered into prior to the closing of this offering (the "Excalibur and Excelsior Facility"). Pursuant to the terms of the credit facility, among other things, EXMAR and Teekay LNG must comply with certain financial

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covenants. Failure by EXMAR or Teekay LNG to satisfy any of the covenants applicable to EXMAR or Teekay LNG would result in a default under the Excalibur and Excelsior Facility. Furthermore, among other things, a default by EXMAR or Teekay LNG on certain of its respective indebtedness, the failure of Teekay LNG to maintain its listing on the New York Stock Exchange, EXMAR to maintain its listing on the Euronext Brussels Stock Exchange, insolvency events at EXMAR or Teekay LNG or the occurrence of certain other events at EXMAR or Teekay LNG may cause a default under the Excalibur and Excelsior Facility. Upon satisfaction of certain conditions, including our achieving a minimum book equity, EXMAR may be released as a guarantor under the Excalibur and Excelsior Facility, and the covenants will thereafter no longer apply to EXMAR. While we expect that EXMAR will be released as a guarantor from the Excalibur and Excelsior Facility shortly after this offering is completed, no assurances can be made that we will be able to meet the conditions to such a release. The occurrence of any default would cause us to be unable to make distributions to our unitholders for so long as such default is continuing. Furthermore, any one of these events could result in the acceleration of the maturity of the Excalibur and Excelsior Facility, and the lenders thereunder may call on our guarantee of such credit facility or foreclose upon any collateral securing that debt, including arrest and seizure of the Excalibur and the Excelsior, even if EXMAR or Teekay LNG were to subsequently cure its default. In the event of such acceleration and foreclosure, Solaia Shipping L.L.C. and Excelsior BVBA might not have sufficient funds or other assets to satisfy all of its obligations, which would have a material adverse effect on our business, results of operations and financial condition.

EXMAR's failure to comply with certain obligations under the amended and restated financing agreements related to Excelerate (the "Excelerate Facility") and Explorer and Express (the "Explorer and Express Facility"), and certain other events occurring at EXMAR or Excelerate Energy Limited Partnership, could result in cross-defaults or defaults under such facilities, which could have a material adverse effect on us.

EXMAR is a joint and several co-borrower, together with our operating company, under the Excelerate Facility and the Explorer and Express Facility. Pursuant to the terms of these facilities, among other things, EXMAR must comply with certain financial and other covenants, including current assets exceeding current liabilities, minimum book equity and minimum free liquid assets. Failure by EXMAR to satisfy any of the covenants applicable to EXMAR would result in a default under these facilities. Furthermore, among other things, a default by EXMAR on certain of its indebtedness, a change of control at EXMAR, insolvency events at EXMAR or the occurrence of certain other events at EXMAR could cause a default under these facilities. A material adverse effect (as defined in the facilities) at EXMAR or Excelerate Energy would also cause a default under these facilities. Any one of these events could result in the acceleration of the maturity of the Excelerate Facility and the Explorer and Express Facility, and the lenders thereunder may foreclose upon any collateral securing that debt, including arrest and seizure of Excelerate, Explorer and Express, even if EXMAR or Excelerate Energy were to subsequently cure its default. In the event of such acceleration and foreclosure, our operating company might not have sufficient funds or other assets to satisfy all of its obligations, which would have a material adverse effect on our business, results of operations and financial condition. Upon satisfaction of certain conditions, including our achieving a minimum book equity, EXMAR may be released as a borrower under the Excelerate Facility and the Explorer and Express Facility, and the covenants will thereafter no longer apply to EXMAR. While we expect that EXMAR will be released as a borrower from the Excelerate Facility and the Explorer and Express Facility shortly after this offering is completed, no assurances can be made that we will be able to meet the conditions to such a release.

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Restrictions in our debt agreements may prevent us from paying distributions.

The payment of principal and interest on our debt will reduce our cash available for distribution. In addition, our and our joint ventures' financing arrangements prohibit the payment of distributions upon the occurrence of the following events:

failure to pay any principal, interest, fees, expenses or other amounts when due;

breach or lapse of any insurance with respect to the vessels in our portfolio that secure the facilities;

breach of certain financial covenants;

failure to observe any other agreement, security instrument, obligation or covenant beyond specified cure periods in certain cases;

default under other indebtedness by the applicable borrower or guarantor;

bankruptcy or insolvency events;

failure of any representation or warranty to be correct;

a change of control, or change in the relevant entity's line of business; and

a material adverse event occurs with respect to the applicable entity or the affiliates of the applicable entity.

In connection with this offering, we will amend or replace certain of our existing financing agreements to permit the transactions pursuant to which we will acquire our initial portfolio and enter into a $20.0 million revolving credit facility with EXMAR, which we refer to as the sponsor credit facility. We expect that the amended financing agreements, and the sponsor credit facility, will contain covenants and provisions relating to events of default similar to those contained in our existing financing agreements. Furthermore, we expect that our future financing agreements will contain similar provisions. For more information regarding these financing agreements, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

Growth of the LNG market may be limited by many factors, including infrastructure constraints and community and political group resistance to new LNG infrastructure over concerns about environmental, safety and terrorism.

A complete LNG project includes production, liquefaction, regasification, storage and distribution facilities and LNG carriers. Existing LNG projects and infrastructure are limited, and new or expanded LNG projects are highly complex and capital intensive, with new projects often costing several billion dollars. Many factors could negatively affect continued development of LNG infrastructure and related alternatives, including floating storage and regasification, or disrupt the supply of LNG, including:

the availability of sufficient financing for LNG projects on commercially reasonable terms;

decreases in the price of LNG, which might decrease the expected returns relating to investments in LNG projects;

the inability of project owners or operators to obtain governmental approvals to construct or operate LNG facilities;

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local community resistance to proposed or existing LNG facilities based on safety, environmental or security concerns;

any significant incident, environmental or other, involving an LNG facility or vessel involved in the LNG transportation, storage and regasification industry; and

labor or political unrest affecting existing or proposed areas of LNG production, liquefaction and regasification.

We expect that, as a result of the factors discussed above, some of the proposals to expand existing or develop new LNG liquefaction and regasification facilities may be abandoned or significantly delayed. If the LNG supply chain is disrupted or does not continue to grow, or if a significant incident, environmental or other, occurs involving the LNG liquefaction, transportation, storage and regasification industry, it could have a material adverse effect on our business, financial condition, results of operations and ability to make cash distributions to our unitholders.

Further technological advancements and other innovations affecting floating LNG infrastructure assets could reduce the charter hire rates we are able to obtain when seeking new employment and this could adversely impact the value of our assets.

The charter rates, asset values and operational lives of floating LNG infrastructure assets are determined by a number of factors, including the vessel's efficiency, operational flexibility and physical life. Efficiency includes speed and fuel economy. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. Physical life is related to the original design and construction, the ongoing maintenance and the impact of operational stresses on the asset. If more advanced vessel designs are developed in the future and new vessels are built that are more efficient or more flexible or have longer physical lives than ours, competition from these more technologically advanced vessels could adversely affect the charter hire rates we will be able to secure when we seek to re-charter our vessels upon expiration or termination of our current charter arrangement and could also reduce the resale value of our vessels. This could adversely affect our revenues and cash flows, including cash available for distributions.

Our future cash flow stability depends on our ability to expand relationships with existing customers and obtain new customers, for which we will face substantial competition.

Our future cash flow stability is influenced by our ability to enter into additional long-term time charters for floating LNG infrastructure assets. The process of obtaining long-term charters for LNGRVs and LNG carriers is highly competitive and generally involves an intensive screening process and competitive bids, and often extends for several months. We believe LNGRV and LNG carrier time charters are awarded based upon a variety of factors relating to the vessel operator, including:

LNG shipping and LNGRV experience and quality of operations;

cost effectiveness;

shipping industry relationships and reputation for customer service and safety;

technical ability and reputation for operation of highly specialized vessels, including LNGRVs;

quality and experience of seafaring crew;

safety record;

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the ability to finance floating LNG infrastructure assets at competitive rates and financial stability generally;

relationships with shipyards and the ability to get suitable berths;

construction management experience, including the ability to obtain on-time delivery of new floating LNG infrastructure assets according to customer specifications;

willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and

competitiveness of the bid in terms of overall price.

We expect substantial competition for providing floating storage, regasification and liquefaction services and marine transportation services for potential LNG projects from a number of experienced companies, including state sponsored entities and major energy companies. Many of these competitors have significantly greater financial resources and larger and more versatile portfolios than do we or EXMAR. We anticipate that an increasing number of marine transportation companies—including many with strong reputations and extensive resources and experience—will enter the LNGRV market and LNG transportation market. This increased competition may cause greater price competition for time charters. As a result of these factors, we may be unable to expand our relationships with existing customers or to obtain new customers on a profitable basis, if at all, which would have a material adverse effect on our financial condition, results of operations and ability to make cash distributions to our unitholders.

We may have more difficulty entering into long-term time charters in the future if an active short-term or spot LNG shipping market continues to develop.

Most shipping requirements for new LNG projects continue to be provided on a long-term basis, though the level of spot voyages and short-term time charters of less than 12 months in duration has grown in the past few years. If an active short-term or spot market continues to develop, we may have increased difficulty entering into long-term time charters upon expiration or early termination of our current charters or for any vessels that we acquire in the future, and, as a result, our cash flow may be less stable. In addition, an active short-term or spot LNG market may require us to enter into time charters based on changing market prices, as opposed to time charters based on a fixed rate, which could result in a decrease in our cash flow in periods when the market price for shipping LNG is depressed or insufficient funds are available to cover our financing costs for related vessels.

An increase in the global supply of LNGRVs or LNG carrier capacity, including conversion of existing tonnage, without a commensurate increase in demand may have an adverse effect on hire rates and the values of the vessels in our portfolio, which could have a material adverse effect on our business, financial condition, results of operations and ability to make cash distributions to our unitholders.

The supply of LNGRVs and LNG carriers in the industry is affected by, among other things, assessments of the demand for these vessels by charterers. Any over-estimation of demand for floating LNG infrastructure assets may result in an excess supply. This may, in the long term when existing contracts expire, result in lower hire rates and depress the values of the vessels in our portfolio. In such an event, our business, financial condition, results of operations and ability to make cash distributions to our unitholders may be adversely affected.

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During periods of high utilization and high hire rates, industry participants may increase the supply of LNGRVs and/or LNG carriers by ordering the construction of new vessels. This may result in an over-supply and may cause a subsequent decline in utilization and hire rates when the vessels enter the market. Lower utilization and hire rates could adversely affect revenues and profitability. Prolonged periods of low utilization and hire rates could also result in the recognition of impairment charges on the vessels in our portfolio if future cash flow estimates, based upon information available at the time, indicate that the carrying value of these vessels may not be recoverable. Such impairment charges may cause lenders to accelerate loan payments under our or our joint ventures' financing agreements, which could adversely affect our business, financial condition, results of operations and ability to make cash distributions to our unitholders.

Hire rates for LNGRVs and LNG carriers are not readily available and may fluctuate substantially. If rates are lower when we are seeking a new charter, our earnings and ability to make distributions to our unitholders may decline.

Hire rates for LNGRVs and LNG carriers are not readily available and may fluctuate over time as a result of changes in the supply demand balance relating to current and future LNGRV and LNG carrier capacity. This supply demand relationship largely depends on a number of factors outside our control. The LNG market is closely connected to world natural gas prices and energy markets, which we cannot predict. A substantial or extended decline in natural gas prices could adversely affect our ability to recharter our vessels at acceptable rates or to acquire and profitably operate new LNGRVs or LNG carriers. Our ability from time to time to charter or re-charter any vessel at attractive rates will depend on, among other things, the prevailing economic conditions in the LNG industry. Hire rates for newbuilding LNGRVs and LNG carriers are correlated with the price of LNGRV newbuildings and LNG carrier newbuildings. Hire rates at a time when we may be seeking a new charter may be lower than the hire rates at which our vessels are currently chartered. If rates are lower when we are seeking a new charter, our earnings and ability to make cash distributions to our unitholders may decline.

The value of floating LNG infrastructure assets may fluctuate substantially and, if these values are lower at a time when we are attempting to dispose of vessels, we may incur a loss.

The value of floating LNG infrastructure assets can fluctuate substantially over time due to a number of different factors, including:

prevailing economic conditions in the natural gas and energy markets;

a substantial or extended decline in demand for LNG;

increases in the supply of vessel capacity;

the size and age of a vessel; and

the cost of retrofitting or modifying existing vessels, as a result of technological advances in design or equipment, changes in applicable environmental or other regulations or standards, customer requirements or otherwise.

As the vessels in our portfolio age, the expenses associated with maintaining and operating them are expected to increase, which could have an adverse effect on our business and operations if we do not maintain sufficient cash reserves for maintenance and replacement capital expenditures. Moreover, the cost of a replacement vessel would be significant.

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If a charter terminates, we may be unable to re-deploy the affected vessel at an attractive rate and, rather than continue to incur costs to maintain and finance it, we may seek to dispose of it. Our inability to dispose of a vessel at a reasonable value could result in a loss on its sale and adversely affect our ability to purchase a replacement vessel, financial condition, results of operations and ability to make distributions to unitholders.

We depend on EXMAR and its subsidiaries, including Exmar Shipmanagement, Exmar Marine and Exmar Hong Kong, to assist us in operating and expanding our business.

Our ability to enter into new charters and expand our customer relationships will depend largely on our ability to leverage our relationship with EXMAR and its reputation and relationships in the shipping industry. If EXMAR suffers material damage to its reputation or relationships, it may harm our ability to:

renew existing charters upon their expiration;

obtain new charters;

successfully interact with shipyards;

obtain financing on commercially acceptable terms;

maintain access to capital under the sponsor credit facility; or

maintain satisfactory relationships with suppliers and other third parties.

In addition, our operations and those of our joint ventures are supported by agreements with subsidiaries of EXMAR. Our joint ventures are subject to management agreements pursuant to which certain crewing and technical management services are provided by Exmar Shipmanagement. Furthermore, EXMAR and its subsidiaries provide certain management and administrative services to the Exmar-Excelerate joint ventures pursuant to services agreements. EXMAR and its subsidiaries also provide accounting and corporate administration services to the Exmar-Teekay joint ventures pursuant to the terms of each applicable joint venture agreement. In addition, pursuant to the management and administrative services agreements between Exmar Hong Kong, and each of us, our operating company and our general partner, Exmar Hong Kong will provide significant management, administrative, financial and other support services to us, our operating company and our general partner. Our operational success and ability to execute our growth strategy will depend significantly upon the satisfactory performance of these services. Our business will be harmed if our service providers fail to perform these services satisfactorily, if they cancel their agreements with us or if they stop providing these services to us. Please read "Our Joint Ventures and Joint Venture Agreements" and "Certain Relationships and Related Party Transactions."

The operation of floating LNG infrastructure assets is inherently risky, and an incident involving significant loss of life or property or environmental consequences involving any vessel in our portfolio could harm our reputation and business.

The vessels in our portfolio and their cargoes are at risk of being damaged or lost because of events such as:

marine disasters;

piracy;

environmental accidents;

bad weather;

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mechanical failures;

grounding, fire, explosions and collisions;

human error; and

war and terrorism.

An accident involving any of the vessels in our portfolio could result in any of the following:

death or injury to persons, loss of property or environmental damage;

delays in the delivery of cargo;

loss of revenues from or termination of charter contracts;

governmental fines, penalties or restrictions on conducting business;

higher insurance rates; and

damage to our reputation and customer relationships generally.

Any of these results could have a material adverse effect on our business, financial condition and results of operations.

If the vessels in our portfolio suffer damage, they may need to be repaired. The costs of vessel repairs are unpredictable and can be substantial. We may have to pay repair costs that our insurance policies do not cover. The loss of earnings while these vessels are being repaired, as well as the actual cost of these repairs, would decrease our results of operations and negatively affect our ability to make cash distributions to unitholders. Furthermore, if one of our vessels suffers damage resulting in a total loss, we would lose the future cash flows generated by such vessel. If any vessel in our portfolio is involved in an accident with the potential risk of environmental consequences, the resulting media coverage could have a material adverse effect on our business, our results of operations and cash flows, weaken our financial condition and negatively affect our ability to make cash distributions to our unitholders.

Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.

The operation of LNGRVs and LNG carriers is inherently risky. Although we carry protection and indemnity and hull and machinery insurance consistent with industry standards, all risks may not be adequately insured against, and any particular claim may not be paid. Any claims covered by insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. Certain of our insurance coverage is maintained through mutual protection and indemnity associations, and as a member of such associations we may be required to make additional payments over and above budgeted premiums if member claims exceed association reserves.

We may be unable to procure adequate insurance coverage at commercially reasonable rates in the future. For example, more stringent environmental regulations have led in the past to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. A marine disaster could exceed our insurance coverage, which could harm our business, financial condition and results of operations. Any uninsured or underinsured loss could harm our business and financial condition. In addition, our insurance may be voidable by the insurers as a result of certain of our

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actions, such as the vessels in our portfolio failing to maintain certification with applicable maritime self-regulatory organizations.

Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain. In addition, upon renewal or expiration of our current policies, the insurance that may be available to us may be significantly more expensive than our existing coverage.

If the vessels in our portfolio fail to meet the performance standards set forth in the time charters, Excelerate Energy may withhold a portion of the hire due to us under the time charter, which could adversely affect our cash available for distribution.

Under the time charters, our joint ventures undertake that each vessel should meet certain performance standards (e.g., guaranteed speed). However, the vessels in our portfolio are complex and their operation technically challenging. Design, construction or operational problems may cause the vessels in our portfolio to fail to meet the performance standards set forth in the time charters. If any such performance standards are not met, Excelerate Energy may withhold a portion of the hire due to our joint ventures. The resulting loss of revenue could harm our business, financial condition, results of operations and ability to make cash distributions to our unitholders.

An increased shortage of qualified officers and crew could have an adverse effect on our business and financial condition.

Floating LNG infrastructure assets require technically skilled officers with specialized training. As the number of floating LNG infrastructure assets operating worldwide continues to grow, the demand for technically skilled officers and crew will increase, which may lead to a shortfall of such personnel. Each key officer crewing an LNGRV must receive specialized training related to the operation and maintenance of the regasification equipment. If Exmar Shipmanagement is unable to employ technically skilled staff and crew, they will not be able to adequately staff the vessels in our portfolio. A material decrease in the supply of technically skilled officers or an inability of Exmar Shipmanagement to attract and retain such qualified officers could impair our joint ventures' ability to operate or increase the cost of crewing the vessels in our portfolio, which would materially adversely affect our business, financial condition and results of operations and significantly reduce our ability to make distributions to our unitholders.

We may be unable to attract and retain key management personnel in the floating LNG infrastructure industry, which may negatively impact our growth, the effectiveness of our management and our results of operation.

Our success depends to a significant extent upon the abilities and the efforts of our senior executives. While we believe that we have an experienced management team, the loss or unavailability of one or more of our senior executives for any extended period of time could have an adverse effect on our growth, business and results of operations.

Terrorist attacks, increased hostilities, piracy or war could lead to further economic instability, increased costs and disruption of business.

Terrorist attacks may adversely affect our business, financial condition, results of operations, ability to raise capital and future growth. From time to time, our vessels may operate in, or transit through, the Middle East. Continuing hostilities in the Middle East may lead to additional armed conflicts or to further acts of terrorism and civil disturbance in the United States or elsewhere, which may contribute further to economic instability and disruption of production and distribution of LNG, which could result in reduced demand for our services.

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Terrorist attacks on vessels, such as the October 2002 attack on the m.v. Limburg and the July 2010 attack allegedly by Al-Qaeda on the m. Star, both very large crude carriers, may in the future adversely affect our business, financial condition and results of operations. In addition, LNG facilities, shipyards, vessels, pipelines and natural gas fields could be targets of future terrorist attacks. Any such attacks could lead to, among other things, bodily injury or loss of life, damage to the vessels in our portfolio or other property damage, increased operational costs, including insurance costs, and the inability to transport LNG to or from certain locations.

Acts of piracy have historically affected oceangoing vessels trading in regions of the world such as the South China Sea and the Gulf of Aden off the coast of Somalia. From time to time, our vessels may operate in, or transit through, these regions. If such piracy attacks result in regions in which the vessels in our portfolio are deployed being named on the Joint War Committee Listed Areas, war-risk insurance premiums payable for such insurance coverage could increase significantly and such insurance coverage might become more difficult to obtain. In addition, crew costs, including costs that may be incurred to the extent we employ onboard security guards, could increase in such circumstances.

Terrorist attacks, piracy, war or other events beyond our control that adversely affect the distribution, production or transportation of LNG to be shipped by us could entitle customers to terminate our charters, which would harm our cash flow and business. In addition, the loss of a vessel in our portfolio as a result of terrorism or piracy would have a material adverse effect on our business, financial condition and results of operations. We may not be adequately insured to cover losses from these incidents. In addition, hijacking as a result of an act of piracy against the vessels in our portfolio, or an increase in cost or unavailability of insurance for the vessels in our portfolio, could have a material adverse impact on our business, financial condition and results of operations.

We could be exposed to political, governmental and economic instability that could harm our operations.

Economic, political and governmental conditions in the countries where we are engaged in business or where the vessels in our portfolio are registered could affect our operations. Any disruption caused by these factors could harm our business. Political conflicts in the areas in which we operate could include attacks on ships, mining of waterways and other efforts to disrupt shipping. In addition to acts of terrorism, vessels could also be subject, in limited instances, to piracy. Future hostilities or other political instability where we operate or may operate could have a material adverse effect on the growth of our business, financial condition, results of operations and our ability to make cash distributions to our unitholders. In addition, tariffs, trade embargoes and other economic sanctions by Brazil, the United States or other countries against countries in the Middle East, Southeast Asia or elsewhere as a result of terrorist attacks, hostilities or otherwise may limit trading activities with those countries, which could also harm our business and ability to make cash distributions to our unitholders.

If our business activities involve countries, entities and individuals that are subject to restrictions imposed by the U.S. or other governments, we could be subject to enforcement action and our reputation and the market for our common units could be adversely affected.

The tightening of U.S. sanctions in recent years has affected non U.S. companies, such as us. In particular, sanctions against Iran have been significantly expanded. In 2012 the U.S. signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012 ("TRA"), which placed further restrictions on the ability of non U.S. companies to do business or trade with Iran and Syria. A major provision in TRA is that issuers of securities must disclose to the SEC in their annual and quarterly reports filed after February 6, 2013 if the issuer or "any affiliate" has "knowingly" engaged in certain activities involving Iran during the timeframe covered by the report. This disclosure obligation is broad in scope in that it requires the reporting of

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activity that would not be considered a violation of U.S. sanctions as well as violative conduct, and is not subject to a materiality threshold. The SEC publishes these disclosures on its website and the President must initiate an investigation in response to all disclosures. Exmar NV set up two subsidiaries in Iran in 2004 and 2005 that have been dormant since approximately 2007. On June 22, 2014, Exmar NV ceased to be the legal or beneficial owner of the two subsidiaries as a result of a transfer of its shares. We understand that the subsidiaries did not engage in any conduct that would be sanctionable under U.S. law during the time that Exmar NV maintained its ownership interest. Additionally, the transfer of shares in the subsidiaries by Exmar NV, a non-U.S. entity, did not violate U.S. sanctions laws. Furthermore, during 2011 and 2012, our parent, Exmar, carried certain products of Iran on its LPG vessels (which are not in our fleet), as described further below. In 2011, Exmar transported 200,000 metric tons of ammonia and 110,000 metric tons of liquefied petroleum gas (LPG) from Iran. These carriages of Iranian-origin product represented 5% of the total cargo volume transported by Exmar's midsize—and very large LPG carriers for that year. In February 2012, an Exmar chartered vessel transported 12,996 metric tons of ammonia from Iran, representing no more than 0.2% of cargoes carried by Exmar's midsize—and very large LPG carriers in 2012. These shipments did not violate U.S., EU or UN sanctions at the time they were made. On March 24, 2012, European Union sanctions with respect to certain petroleum products of Iran came into effect that prohibit, among other things, the carriage of certain petrochemical products of Iran. Since that date, no Exmar vessel has carried any products of Iran and Exmar has procedures in place to ensure that no shipments that would violate applicable sanctions can occur.

In addition to the sanctions against Iran, the U.S. also has sanctions that target other countries, entities and individuals. These sanctions have certain extraterritorial effects that need to be considered by non U.S. companies. It should also be noted that other governments have implemented versions of U.S. sanctions. We believe that we are in compliance with all applicable sanctions and embargo laws and regulations imposed by the U.S., the United Nations or EU countries and intend to maintain such compliance. However, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines or other penalties and could result in some investors deciding, or being required, to divest their interest, or not to invest, in our common units. Additionally, some investors may decide to divest their interest, or not to invest, in our common units simply because we may do business with companies that do business in sanctioned countries. Investor perception of the value of our common units may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.

Failure to comply with the U.S. Foreign Corrupt Practices Act, the UK Bribery Act or other anti-corruption laws could result in fines, criminal penalties, contract terminations and an adverse effect on our business.

Our vessels currently operate in a number of countries throughout the world, including some with developing economies. Also, the existence of state or government-owned enterprises puts us in contact with persons who may be considered "foreign officials" or "foreign public officials" under the U.S. Foreign Corrupt Practices Act of 1977 (or the FCPA) and the Bribery Act 2010 of the Parliament of the United Kingdom (or the UK Bribery Act), respectively. We are committed to doing business in accordance with all applicable anti-corruption laws and have adopted a code of business conduct and ethics that requires employees to comply with laws prohibiting bribery and corruption. In December 2013, we adopted a comprehensive policy and procedures designed to promote compliance with applicable anti-fraud, anti-bribery and other anti-corruption laws and regulations in all jurisdictions in which we conduct our business. We are subject, however, to the risk that we, our affiliated entities, our joint venture partners or our or their respective officers, directors, employees and agents may take actions determined to be in

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violation of such anti-corruption laws, including the FCPA and the UK Bribery Act. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of our operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business.

The LNG liquefaction, transportation, storage, and regasification industry is subject to substantial environmental and other safety regulations, which may significantly limit our operations or increase our expenses.

Our operations are materially affected by extensive and changing international, national and local environmental protection laws, regulations, treaties, conventions and standards in force in international waters, the jurisdictional waters of the countries in which the vessels in our portfolio operate, as well as the countries in which the vessels in our portfolio are registered, including those relating to equipping and operating floating LNG infrastructure assets, providing security and minimizing the potential for impacts to the environment from their operations. We have incurred, and expect to continue to incur, substantial expenses in complying with these laws and regulations, including expenses for vessel modifications and changes in operating procedures. Additional laws and regulations may be adopted that could limit our ability to do business or further increase costs, which could harm our business. In addition, failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of operations. We may become subject to additional laws and regulations if we enter new markets or trades.

These requirements can affect the resale value or useful lives of the vessels in our portfolio, require a reduction in cargo capacity, vessel modifications or operational changes or restrictions, lead to decreased availability of insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in certain ports.

The design, construction and operation of LNGRVs and interconnecting pipelines and the transportation of LNG are subject to governmental approvals and permits in the jurisdictions in which our vessels operate. The length of time it takes to receive regulatory approval for offshore LNG operations is one factor that has affected our industry, including through increased expenses.

The vessels in our portfolio operating in international waters, now or in the future, will be subject to various international, federal, state and local laws and regulations relating to protection of the environment, which may significantly increase our expenses.

The vessels in our portfolio traveling in international waters are subject to various existing regulations published by the International Maritime Organization (the "IMO") as well as marine pollution and prevention requirements imposed by the IMO International Convention for the Prevention of Pollution from Ships of 1973, as from time to time amended (or MARPOL), the International Convention on Civil Liability for Oil Pollution Damage of 1969, as from time to time amended (or the CLC), the IMO International Convention for the Safety of Life at Sea of 1974, as from time to time amended and generally referred to as SOLAS, the IMO International Convention on Load Lines of 1966, as from time to time amended, and the International Management Code for the Safe Operation of Ships and for Pollution Prevention (or the ISM Code). In addition, the vessels in our portfolio may become subject to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, as amended by the April 2010 Protocol to the HNS Convention (the "2010 HNS Convention"), if it is entered into force. If the 2010 HNS Protocol were to enter into force, we cannot estimate with any certainty at this time the costs that may be needed to comply with any such requirements that may be adopted.

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Our vessels operating in U.S. waters now or, in the future, will be subject to various federal, state and local laws and regulations relating to protection of the environment, including the Oil Pollution Act of 1990 ("OPA 90"), the U.S. Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the Clean Water Act (the "CWA"), and the Clean Air Act (the "CAA"). In some cases, these laws and regulations require us to obtain governmental permits and authorizations before we may conduct certain activities. These environmental laws and regulations may impose substantial penalties for noncompliance and substantial liabilities for pollution. Failure to comply with these laws and regulations may result in substantial civil and criminal fines and penalties. As with the industry generally, our operations will entail risks in these areas, and compliance with these laws and regulations, which may be subject to frequent revisions and reinterpretation, may increase our overall cost of business.

Many of these requirements are designed to reduce the risk of oil spills and other pollution. In addition, we believe that the heightened environmental, quality and security concerns of insurance underwriters, regulators and charterers will lead to additional regulatory requirements, including enhanced risk assessment and security requirements and greater inspection and safety requirements on vessels. We expect to incur substantial expenses in complying with these laws and regulation, including expenses for unit modifications and changes in operating procedures.

These requirements can affect the resale value or useful lives of the units in our portfolio, unit modifications or operational changes or restrictions, lead to decreased availability of insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in, certain ports. Under local, national and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including cleanup obligations, in the event that there is a release of hazardous substances from any unit in our portfolio or otherwise in connection with our operations. We could also become subject to personal injury or property damage claims relating to the release of or exposure to hazardous materials associated with our operations. In addition, failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations, including, in certain instances, seizure or detention of the units in our portfolio.

Please read "Business—Environmental and Other Regulations—United States Environmental Regulation of LNG Vessels" below for a more detailed discussion on these topics.

Further changes to existing environmental legislation that is applicable to international and national maritime trade may have an adverse effect on our business.

We believe that the heightened environmental, quality and security concerns of insurance underwriters, regulators and charterers will generally lead to additional regulatory requirements, including enhanced risk assessment and security requirements and greater inspection and safety requirements on all LNG carriers in the marine transportation markets and offshore LNG terminals. These requirements are likely to add incremental costs to our operations and the failure to comply with these requirements may affect the ability of the vessels in our portfolio to obtain and, possibly, collect on insurance or to obtain the required certificates for entry into the different ports where we operate.

Further legislation, or amendments to existing legislation, applicable to international and national maritime trade are expected over the coming years in areas such as ship recycling, sewage systems, emission control (including emissions of greenhouse gases), and ballast treatment and handling. The United States has recently enacted legislation and regulations that require more stringent controls of air and water emissions from oceangoing vessels. Such legislation or regulations may require additional capital

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expenditures or operating expenses (such as increased costs for low-sulfur fuel) in order for us to maintain compliance with international and/or national regulations.

Climate change and greenhouse gas restrictions may adversely impact our operations and markets.

Due to concern over the risk of climate change, a number of countries and the IMO have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emission from vessel emissions. These regulatory measures may include, among others, adoption of cap and trade regimes, carbon taxes, increased efficiency standards, and incentives or mandates for renewable energy. Emissions of greenhouse gases from international shipping currently are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (the "Kyoto Protocol"). A new treaty may be adopted in the future that includes additional restrictions on shipping emissions to those already adopted under MARPOL. The IMO has amended MARPOL to include two new sets of mandatory requirements designed to address greenhouse gases from ships: the Energy Efficiency Design Index and the Ship Energy Efficiency Management plan, discussed in detail in "Business—Environmental and Other Regulations—Regulation of Greenhouse Gas Emissions." In addition, some countries have made voluntary pledges to control the emissions of greenhouse gasses. Compliance with changes in laws and regulations relating to climate change could increase our costs of operating and maintaining the vessels in our portfolio and could require us to make significant financial expenditures that we cannot predict with certainty at this time.

Adverse effects upon the oil and natural gas industry relating to climate change, including growing public concern about the environmental impact of climate change, may also have an effect on demand for our services. For example, increased regulation of greenhouse gases or other concerns relating to climate change may reduce the demand for oil and natural gas in the future or create greater incentives for use of alternative energy sources. Any long-term material adverse effect on the oil and natural gas industry could have a significant financial and operational adverse impact on our business that we cannot predict with certainty at this time.

Maritime claimants could arrest the vessels in our portfolio, which could interrupt our cash flow.

Crew members, suppliers of goods and services to the vessels in our portfolio, owners of cargo, or other parties may be entitled to a maritime lien against one or more of the vessels in our portfolio for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. In a few jurisdictions, claimants could try to assert "sister ship" liability against one vessel in our portfolio for claims relating to another vessel in our portfolio. The arrest or attachment of one or more of vessels in our portfolio could interrupt our cash flow and require us to pay to have the arrest lifted. Under some of our present charters, if the vessel is arrested or detained for as few as 10 days as a result of a claim against us or our joint ventures, we may be in default of our charter and the charterer may terminate the charter. This would negatively impact our revenues and reduce our cash available for distribution to unitholders.

Governments could requisition our vessels during a period of war or emergency, resulting in loss of earnings.

The government of a jurisdiction where one or more of our vessels are registered could requisition for title or seize our vessels. Requisition for title occurs when a government takes control of a ship and becomes its owner. Also, a government could requisition our vessels for hire. Requisition for hire occurs when a government takes control of a ship and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency, although governments may elect to requisition ships in other circumstances. Although we would expect to be entitled to government compensation in the event of a requisition of one or more of our vessels, the amount and timing of

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payments, if any, would be uncertain. A government requisition of one or more of our vessels would result in off-hire days under our time charters and may cause us to breach covenants in certain of our financing agreements, and could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distribution to our unitholders.

Compliance with safety and other vessel requirements imposed by classification societies may be very costly and may adversely affect our business.

The hull and machinery of every large, oceangoing commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention. All of our vessels are certified by Bureau Veritas. Each vessel in our portfolio has been awarded ISM certification and is currently "in class".

As part of the certification process, a vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Each of the vessels in our portfolio is on a planned maintenance system approval, and as such the classification society attends onboard once every year to verify that the maintenance of the equipment onboard is done correctly. Each of the vessels in our portfolio is required to be qualified within its respective classification society for drydocking once every five years subject to an intermediate underwater survey done using an approved diving company in the presence of a surveyor from the classification society.

If any vessel in our portfolio does not maintain its class or fails any annual survey, intermediate survey or special survey, the vessel will be unable to trade between ports and will be unemployable. We would lose revenue while the vessel was off-hire and incur costs of compliance. This would negatively impact our revenues and reduce our cash available for distribution to unitholders.

Many seafaring employees are covered by collective bargaining agreements and the failure to renew those agreements or any future labor agreements may disrupt operations and adversely affect our business, financial condition, results of operations and ability to make cash distributions to our unitholders.

Substantially all of the seafarers that crew certain of our vessels are employed under collective bargaining agreements. We and our joint ventures may become subject to additional labor agreements in the future. We and our joint ventures may suffer labor disruptions if relationships deteriorate with the seafarers or the unions that represent them. The collective bargaining agreements may not prevent labor disruptions, particularly when the agreements are being renegotiated. Salaries are typically renegotiated from time to time for seafarers and higher compensation levels will increase our costs of operations. Although these negotiations have not caused labor disruptions in the past, any future labor disruptions could harm the operations of our joint ventures and could have a material adverse effect on our business, financial condition, results of operations and ability to make cash distributions to our unitholders.

Excelerate Energy has the right to purchase the Excalibur in March 2022. In addition, no earlier than January 2024, Excelerate Energy has the right to sell, or grant an option to purchase, the Express, the Explorer and/or the Excelerate to any customer who sub-charters the vessel for a minimum five-year period. If any of these rights are exercised, it could have a material adverse effect on our operating cash flow and our ability to make distributions to our unitholders.

Excelerate Energy has the right to purchase the Excalibur in March 2022, at a price specified in the purchase option agreement. In addition, Excelerate Energy has the right to sell, or grant an option to

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purchase, the Express, the Explorer and/or the Excelerate to any customer who sub-charters the vessel for a minimum five-year period at a price determined in accordance with the vessel option agreement and at a date no earlier than January 2024.

If any of these rights are exercised, it would significantly reduce the size of our portfolio, and we may be unable to identify or acquire a suitable replacement vessel with the proceeds of the option exercise. Furthermore, any replacement newbuilding would not generate revenues during its construction. Even if we find or build a suitable replacement vessel, the hire rate of such vessel may be significantly lower than the hire rate under the current Excelerate Energy charter. Our inability to find or build a suitable replacement vessel or the chartering of a replacement vessel at a lower hire rate would have a material adverse effect on our results of operations, cash flows and ability to make distributions to our unitholders. Please read "Business—Time Charters—LNG Carrier Charter—Purchase Option" and "Business—Vessel Option Agreement."


Risks inherent in an investment in us

EXMAR and its affiliates may compete with us, and our ability to compete with EXMAR may be limited.

Pursuant to the omnibus agreement that we and EXMAR will enter into in connection with the closing of this offering, EXMAR and its controlled affiliates (other than us, our general partner and our subsidiaries) generally will agree not to acquire, own, operate or charter certain floating LNG infrastructure assets operating under charters of five years or more. The omnibus agreement, however, contains exceptions that may allow EXMAR or any of its controlled affiliates to compete with us, which could harm our business. Pursuant to the omnibus agreement, we will agree and will cause our subsidiaries to agree, not to acquire, own, operate or charter LNG infrastructure assets operating under charters of fewer than five years, which will limit our ability to compete with EXMAR. Please read "Certain Relationships and Related Party Transactions—Agreements Governing the Transactions—Omnibus Agreement—Noncompetition."

Unitholders have limited voting rights, and our partnership agreement restricts the voting rights of the unitholders owning more than 4.9% of our common units.

Unlike the holders of common stock in a corporation, holders of common units have only limited voting rights on matters affecting our business. We will hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. Common unitholders will be entitled to elect only three of the five members of our board of directors. The elected directors will be elected on a staggered basis and will serve for three year terms. Our general partner in its sole discretion will appoint the remaining two directors and set the terms for which those directors will serve. The partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting the unitholders' ability to influence the manner or direction of management. Unitholders will have no right to elect our general partner, and our general partner may not be removed except by a vote of the holders of at least 662/3% of the outstanding common and subordinated units, including any units owned by our general partner and its affiliates, voting together as a single class.

Our partnership agreement further restricts unitholders' voting rights by providing that if any person or group owns beneficially more than 4.9% of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes (except for purposes of nominating a person for election to our board of directors), determining the presence of a quorum or for other similar purposes, unless required by law. The voting rights of any such unitholders in excess of 4.9% will effectively be redistributed pro rata among the other common unitholders holding less

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than 4.9% of the voting power of all classes of units entitled to vote. Our general partner, its affiliates and persons who acquired common units with the prior approval of our board of directors will not be subject to this 4.9% limitation except with respect to voting their common units in the election of the elected directors.

Our general partner and its other affiliates own a significant interest in us and have conflicts of interest and limited fiduciary and contractual duties, which may permit them to favor their own interests to your detriment.

Following this offering, EXMAR will own a         % limited partner interest in us, assuming no exercise of the underwriters' option to purchase additional common units, and will own and control our general partner. All of our officers and certain of our directors are directors and/or officers of EXMAR and its affiliates and, as such, they have fiduciary duties to EXMAR that may cause them to pursue business strategies that disproportionately benefit EXMAR or which otherwise are not in the best interests of us or our unitholders. Conflicts of interest may arise between EXMAR and its affiliates (including our general partner) on the one hand, and us and our unitholders, on the other hand. As a result of these conflicts, our general partner and its affiliates may favor their own interests over the interests of our unitholders. Please read "—Risks Inherent in an Investment in Us—Our partnership agreement limits our general partner's and our directors' fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner or our directors." These conflicts include, among others, the following situations:

neither our partnership agreement nor any other agreement requires our general partner or EXMAR or its affiliates to pursue a business strategy that favors us or utilizes our assets, and EXMAR's officers and directors have a fiduciary duty to make decisions in the best interests of the shareholders of EXMAR, which may be contrary to our interests;

our partnership agreement permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. Specifically, our general partner will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights or registration rights, consents or withholds consent to any merger or consolidation of the partnership, appoints any directors or votes for the election of any director, votes or refrains from voting on amendments to our partnership agreement that require a vote of the outstanding units, voluntarily withdraws from the partnership, transfers (to the extent permitted under our partnership agreement) or refrains from transferring its units or general partner interest or votes upon the dissolution of the partnership;

our general partner and our directors have restricted their liabilities and their fiduciary duties under the laws of the Marshall Islands, while also restricting the remedies available to our unitholders, and, as a result of purchasing common units, unitholders are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by our general partner and our directors, all as set forth in the partnership agreement;

our general partner is entitled to reimbursement of all reasonable costs incurred by it and its affiliates for our benefit;

our partnership agreement does not restrict us from paying our general partner or its affiliates for any services rendered to us on terms that are determined in good faith or entering into additional contractual arrangements with any of these entities on our behalf;

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our general partner may exercise its right to call and purchase our common units if it and its affiliates own more than 80% of our common units; and

our general partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon the exercise of its limited call right.

Although a majority of our directors will over time be elected by common unitholders, our general partner will likely have substantial influence on decisions made by our board of directors. Please read "Certain Relationships and Related Party Transactions," "Conflicts of Interest and Fiduciary Duties" and "The Partnership Agreement."

Our officers face conflicts in the allocation of their time to our business.

Our officers will perform executive officer functions for us pursuant to a management and administrative services agreement with Exmar Hong Kong. Such officers are not required to work full-time on our affairs and also perform services for EXMAR. For example, Miguel de Potter, who functions as our Chief Executive Officer, also serves as the chief financial officer for EXMAR. Similarly, Didier Ryelandt, our Chief Financial Officer, is Executive Vice President of EXMAR Offshore Company. Initially, we estimate that Mr. de Potter will devote approximately one-eighth of his time and Mr. Ryelandt will devote approximately one half of his time to the management of our business. However, the amount of time our officers will allocate between our business and the business of EXMAR will vary from time to time depending on various circumstances and the needs of the businesses, such as the level of strategic activities of the businesses. The affiliates of our general partner, including EXMAR, conduct substantial businesses and activities of their own in which we have no economic interest. As a result, there could be material competition for the time and effort of our officers who also provide services to our general partner's affiliates, which could have a material adverse effect on our business, financial condition and results of operations. Please read "Management."

Our partnership agreement restricts our general partner's and our directors' fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner or our directors.

Our partnership agreement provides that our general partner will irrevocably delegate to our board of directors the authority to oversee and direct our operations, management and policies on an exclusive basis, and such delegation will be binding on any successor general partner of the partnership. Our partnership agreement also contains provisions that restrict the standards to which our general partner and directors would otherwise be held by Marshall Islands law. For example, our partnership agreement:

permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. Where our partnership agreement permits, our general partner may consider only the interests and factors that it desires, and in such cases it has no fiduciary duty or obligation to give any consideration to any interest of, or factors affecting us, our affiliates or our unitholders. Decisions made by our general partner in its individual capacity will be made by its sole owner, EXMAR. Specifically, pursuant to our partnership agreement, our general partner will be considered to be acting in its individual capacity if it exercises its right to make a determination to receive common units in exchange for resetting the target distribution levels related to the incentive distribution rights, call right, pre-emptive rights or registration rights, consents or withholds consent to any merger or consolidation of the partnership, appoints any directors or votes for the election of any director, votes or refrains from voting on amendments to our partnership agreement that require a vote of the outstanding units, voluntarily withdraws from the partnership, transfers (to the extent permitted

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    under our partnership agreement) or refrains from transferring its units or general partner interest or votes upon the dissolution of the partnership;

provides that our general partner and our directors are entitled to make other decisions in "good faith" if they believe that the decision is in our best interests;

provides that affiliated transactions and resolutions of conflicts of interest that are approved by the conflicts committee of our board of directors or by a vote of a majority of the outstanding common units (excluding common units owned by our general partner and its affiliates) shall be deemed approved by all partners and shall not constitute a breach of our partnership agreement; and

provides that neither our general partner nor our officers or our directors will be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or directors or its officers or directors or those other persons engaged in actual fraud or willful misconduct.

In order to become a limited partner of our partnership, a common unitholder is required to agree to be bound by the provisions in the partnership agreement, including the provisions discussed above. Please read "Conflicts of Interest and Fiduciary Duties—Fiduciary Duties."

Fees and cost reimbursements, which EXMAR will determine for services provided to us and our joint ventures, will be substantial, will be payable regardless of our profitability and will reduce our cash available for distribution to you.

Our joint ventures are parties to management agreements with Exmar Shipmanagement pursuant to which Exmar Shipmanagement provides certain crewing and technical management services. Pursuant to the management agreements, our joint ventures pay Exmar Shipmanagement fees for providing these services. We project the amount of these fees to be approximately $3.0 million for the twelve months ending December 31, 2015.

The Exmar-Excelerate joint ventures are parties to services agreements with EXMAR and its subsidiaries, pursuant to which EXMAR and its subsidiaries provide management and administrative services. Accounting and corporate administration services are provided by EXMAR and its subsidiaries to the Exmar-Teekay joint ventures pursuant to each applicable joint venture agreement. Our joint ventures pay EXMAR and its subsidiaries a monthly fee in connection with the provision of these services. We project that our joint ventures will pay EXMAR and its subsidiaries approximately $0.1 million in total for these services agreement during the twelve months ending December 31, 2015.

Pursuant to our management and administrative services agreements with Exmar Hong Kong, we will reimburse Exmar Hong Kong for its reasonable costs and expenses incurred in connection with providing management, administrative, financial and other support services to us. In addition, we will pay Exmar Hong Kong a management fee equal to 5% of the costs and expenses incurred in connection with the provision of these services. We project that we will pay Exmar Hong Kong approximately $2.2 million for such expenses and fees for the twelve months ending December 31, 2015.

For a description of these arrangements, please read "Our Joint Ventures and Joint Venture Agreements" and "Certain Relationships and Related Party Transactions." The fees and expenses payable pursuant to those agreements will be payable without regard to our financial condition or results of operations. The payment of fees to and the reimbursement of expenses of EXMAR and its subsidiaries could adversely affect our ability to pay cash distributions to you.

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Our partnership agreement contains provisions that may have the effect of discouraging a person or group from attempting to remove our current management or our general partner, and even if public unitholders are dissatisfied, they will be unable to remove our general partner without EXMAR's consent, unless EXMAR's ownership interest in us is decreased, all of which could diminish the trading price of our common units.

Our partnership agreement contains provisions that may have the effect of discouraging a person or group from attempting to remove our current management or our general partner.

The unitholders will be unable initially to remove our general partner without its consent because our general partner and its affiliates will own sufficient units upon completion of this offering to be able to prevent its removal. The vote of the holders of at least 662/3% of all outstanding common and subordinated units voting together as a single class is required to remove the general partner. Following the closing of this offering, EXMAR will own         % of the outstanding common and subordinated units, assuming no exercise of the underwriters' option to purchase additional common units.

If our general partner is removed without "cause" during the subordination period and no units held by the holders of our subordinated units or their affiliates are voted in favor of that removal, all remaining subordinated units will automatically convert into common units, any existing arrearages on the common units will be extinguished, and our general partner will have the right to convert its incentive distribution rights, into common units or to receive cash in exchange for those interests based on the fair market value of those interests at the time. A removal of our general partner under these circumstances would adversely affect the common units by prematurely eliminating their distribution and liquidation preference over the subordinated units, which would otherwise have continued until we had met certain distribution and performance tests. Any conversion of the incentive distribution rights would be dilutive to existing unitholders. Furthermore, any cash payment in lieu of such conversion could be prohibitively expensive. "Cause" is narrowly defined to mean that a court of competent jurisdiction has entered a final, non-appealable judgment finding our general partner liable for actual fraud or willful or wanton misconduct in its capacity as our general partner. Cause does not include most cases of charges of poor business decisions, such as charges of poor management of our business by the directors appointed by our general partner, so the removal of our general partner because of the unitholders' dissatisfaction with the general partner's decisions in this regard would most likely result in the termination of the subordination period.

Common unitholders will be entitled to elect only three of the five members of our board of directors. Our general partner in its sole discretion will appoint the remaining two directors.

Election of the three directors elected by unitholders is staggered, meaning that the members of only one of three classes of our elected directors will be selected each year. In addition, the directors appointed by our general partner will serve for terms determined by our general partner.

Our partnership agreement contains provisions limiting the ability of unitholders to call meetings of unitholders, to nominate directors and to acquire information about our operations as well as other provisions limiting the unitholders' ability to influence the manner or direction of management.

Unitholders' voting rights are further restricted by the partnership agreement provision providing that if any person or group owns beneficially more than 4.9% of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes (except for purposes of nominating a person for election to our board of directors), determining

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    the presence of a quorum or for other similar purposes, unless required by law. The voting rights of any such unitholders in excess of 4.9% will effectively be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. Our general partner, its affiliates (including EXMAR) and persons who acquired common units with the prior approval of our board of directors will not be subject to this 4.9% limitation except with respect to voting their common units in the election of the elected directors.

There are no restrictions in our partnership agreement on our ability to issue equity securities.

The effect of these provisions may be to diminish the price at which the common units will trade.

The control of our general partner may be transferred to a third party without unitholder consent.

Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially all of its assets without the consent of the unitholders. In addition, our partnership agreement does not restrict the ability of the members of our general partner from transferring their respective membership interests in our general partner to a third party.

Substantial future sales of our common units in the public market could cause the price of our common units to fall.

We have granted registration rights to EXMAR and certain of its affiliates. These unitholders have the right, subject to some conditions, to require us to file registration statements covering any of our common, subordinated or other equity securities owned by them or to include those securities in registration statements that we may file for ourselves or other unitholders. Upon the closing of this offering and assuming no exercise of the underwriters' option to purchase additional common units, EXMAR will own                           common units and                           subordinated units. Following their registration and sale under the applicable registration statement, those securities will become freely tradable. By exercising their registration rights and selling a large number of common units or other securities, these unitholders could cause the price of our common units to decline.

We are subject to Marshall Islands law, which lacks a bankruptcy statute or general statutory mechanism for insolvency proceedings.

We are a Marshall Islands limited partnership, and we have limited operations in the United States and maintain limited assets in the United States. Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving us, bankruptcy laws other than those of the United States could apply. The Republic of the Marshall Islands does not have a bankruptcy statute or general statutory mechanism for insolvency proceedings. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, including property situated in other countries. There can be no assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcy court would be entitled to, or accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S. bankruptcy court's jurisdiction, if any other bankruptcy court would determine it had jurisdiction. These factors may delay or prevent us from entering bankruptcy in the United States and may affect the ability of our unitholders to receive any recovery following our bankruptcy.

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You will experience immediate and substantial dilution of $               per common unit.

The assumed initial public offering price of $              per common unit exceeds pro forma net tangible book value of $              per common unit. Based on the assumed initial public offering price, you will incur immediate and substantial dilution of $              per common unit. This dilution results primarily because the assets contributed by our general partner and its affiliates are recorded at their historical cost, and not their fair value, in accordance with U.S. GAAP. Please read "Dilution."

Our general partner, as the initial holder of the incentive distribution rights, may elect to cause us to issue additional common units to it in connection with a resetting of the target distribution levels related to our general partner's incentive distribution rights without the approval of the conflicts committee of our board of directors or holders of our common units and subordinated units. This may result in lower distributions to holders of our common units in certain situations.

Our general partner, as the initial holder of the incentive distribution rights, has the right, at a time when there are no subordinated units outstanding and our general partner has received incentive distributions at the highest level to which it is entitled (50.0%) for each of the prior four consecutive fiscal quarters, to reset the initial cash target distribution levels at higher levels based on the distribution at the time of the exercise of the reset election. Following a reset election, the minimum quarterly distribution amount will be reset to an amount equal to the average cash distribution amount per common unit for the fiscal quarter immediately preceding the reset election (such amount is referred to as the "reset minimum quarterly distribution"), and the target distribution levels will be reset to correspondingly higher levels based on the same percentage increases above the reset minimum quarterly distribution amount.

In connection with resetting these target distribution levels, our general partner will be entitled to receive a number of common units equal to that number of common units whose aggregate quarterly cash distributions equaled the average of the distributions to our general partner on the incentive distribution rights in the prior fiscal quarter. We anticipate that our general partner would exercise this reset right in order to facilitate acquisitions or internal growth projects that would not be sufficiently accretive to cash distributions per common unit without such conversion; however, it is possible that our general partner could exercise this reset election at a time when it is experiencing, or may be expected to experience, declines in the cash distributions it receives related to its incentive distribution rights and may therefore desire to be issued our common units, rather than retain the right to receive incentive distributions based on the initial target distribution levels. As a result, a reset election may cause our common unitholders to experience dilution in the amount of cash distributions that they would have otherwise received had we not issued additional common units to our general partner in connection with resetting the target distribution levels related to its incentive distribution rights. Please read "How We Make Cash Distributions—Incentive Distribution Rights" and "How We Make Cash Distributions—Right to Reset Incentive Distribution Levels."

We may issue additional equity securities, including securities senior to the common units, without your approval, which would dilute your ownership interests.

We may, without the approval of our unitholders, issue an unlimited number of additional units or other equity securities. In addition, we may issue an unlimited number of units that are senior to the common units in right of distribution, liquidation and voting. The issuance by us of additional common units or other equity securities of equal or senior rank will have the following effects:

our unitholders' proportionate ownership interest in us will decrease;

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the amount of cash available for distribution on each unit may decrease;

because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholders will increase;

the relative voting strength of each previously outstanding unit may be diminished; and

the market price of the common units may decline.

Upon the expiration of the subordination period, the subordinated units will convert into common units and will then participate pro rata with other common units in distributions of available cash.

During the subordination period, which we define elsewhere in this prospectus, the common units will have the right to receive distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $              per unit, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. Distribution arrearages do not accrue on the subordinated units. The purpose of the subordinated units is to increase the likelihood that during the subordination period there will be available cash from operating surplus to be distributed on the common units. Upon the expiration of the subordination period, the subordinated units will convert into common units and will then participate pro rata with other common units in distributions of available cash. See "How We Make Cash Distributions—Subordination Period," "How We Make Cash Distributions—Distributions of Available Cash From Operating Surplus During the Subordination Period" and "How We Make Cash Distributions—Distributions of Available Cash From Operating Surplus After the Subordination Period."

In establishing cash reserves, our board of directors may reduce the amount of cash available for distribution to you.

Our partnership agreement requires our general partner to deduct from operating surplus cash reserves that it determines are necessary to fund our future operating expenditures. These reserves also will affect the amount of cash available for distribution to our unitholders. Our board of directors may establish reserves for distributions on the subordinated units, but only if those reserves will not prevent us from distributing the full minimum quarterly distribution, plus any arrearages, on the common units for the following four quarters. As described above in "—Risks Inherent in Our Business—We must make substantial capital expenditures to maintain and replace the operating capacity of our portfolio, which will reduce cash available for distribution. In addition, each quarter we are required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted," our partnership agreement requires our board of directors each quarter to deduct from operating surplus estimated maintenance and replacement capital expenditures, as opposed to actual maintenance and replacement capital expenditures, which could reduce the amount of available cash for distribution. The amount of estimated maintenance and replacement capital expenditures deducted from operating surplus is subject to review and change by our board of directors at least once a year, provided that any change must be approved by the conflicts committee of our board of directors.

Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price.

If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right, which it may assign to any of its affiliates or to us, but not the obligation, to

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acquire all, but not less than all, of the common units held by unaffiliated persons at a price not less than the then-current market price of our common units. Our general partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon the exercise of this limited call right. As a result, you may be required to sell your common units at an undesirable time or price and may not receive any return on your investment. You may also incur a tax liability upon a sale of your units. For additional information about the limited call right, please read "The Partnership Agreement—Limited Call Right."

At the completion of this offering and assuming no exercise of the underwriters' option to purchase additional common units, EXMAR, which owns and controls of our general partner, will own          % of our common units. At the end of the subordination period, assuming no additional issuances of common units, no exercise of the underwriters' option to purchase additional common units and the conversion of our subordinated units into common units, EXMAR will own         % of our common units.

You may not have limited liability if a court finds that unitholder action constitutes control of our business.

As a limited partner in a partnership organized under the laws of the Marshall Islands, you could be held liable for our obligations to the same extent as a general partner if you participate in the "control" of our business. Our general partner generally has unlimited liability for the obligations of the partnership, such as its debts and environmental liabilities, except for those contractual obligations of the partnership that are expressly made without recourse to our general partner. In addition, the limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some jurisdictions in which we do business. Please read "The Partnership Agreement—Limited Liability" for a discussion of the implications of the limitations on liability of a unitholder.

We can borrow money to pay distributions, which would reduce the amount of credit available to operate our business.

Our partnership agreement allows us to make working capital borrowings to make cash distributions. Accordingly, if we have available borrowing capacity, we can make cash distributions on all our units even though cash generated by our operations may not be sufficient to pay such distributions. Any working capital borrowings by us to make cash distributions will reduce the amount of working capital borrowings we can make for operating our business. For more information, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

Increases in interest rates may cause the market price of our common units to decline.

An increase in interest rates may cause a corresponding decline in demand for equity investments in general, and in particular for yield based equity investments such as our common units. Any such increase in interest rates or reduction in demand for our common units resulting from other relatively more attractive investment opportunities may cause the trading price of our common units to decline.

There is no existing market for our common units, and a trading market that will provide you with adequate liquidity may not develop. The price of our common units may fluctuate significantly, and you could lose all or part of your investment.

Prior to this offering, there has been no public market for the common units. After this offering, there will be only                           publicly traded common units, assuming no exercise of the underwriters' option to purchase additional common units. We do not know the extent to which investor interest will lead to the development of a trading market or how liquid that market might be. You may not be able to

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resell your common units at or above the initial public offering price. Additionally, the lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of the common units and limit the number of investors who are able to buy the common units.

Unitholders may have liability to repay distributions.

Under some circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under the Marshall Islands Limited Partnership Act (the "Marshall Islands Act"), we may not make a distribution to you to the extent that at the time of the distribution, after giving effect to the distribution, all of our liabilities, other than liabilities to our partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specified property of ours, exceed the fair value of our assets, except that the fair value of property that is subject to a liability for which the recourse of creditors is limited shall be included in our assets only to the extent that the fair value of that property exceeds that liability. Marshall Islands law provides that for a period of three years from the date of the impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Marshall Islands law will be liable to the limited partnership for the distribution amount. Assignees who become substituted limited partners are liable for the obligations of the assignor to make contributions to the partnership that are known to the assignee at the time it became a limited partner and for unknown obligations if the liabilities could be determined from the partnership agreement.

We have no history operating as a separate publicly traded entity and will incur increased costs as a result of being a publicly traded limited partnership.

We have no history operating as a separate publicly traded entity. As a publicly traded limited partnership, we will be required to comply with the SEC's reporting requirements and with corporate governance and related requirements of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the SEC and the securities exchange on which our common units will be listed. We will incur significant legal, accounting and other expenses in complying with these and other applicable regulations. We anticipate that our incremental general and administrative expenses as a publicly traded limited partnership will be approximately $1.0 million annually and will include costs associated with annual reports to unitholders, tax return preparation, investor relations, registrar and transfer agent's fees, incremental director and officer liability insurance costs and officer and director compensation.

We are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common units less attractive to investors.

We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" as described under "Prospectus Summary—Our Emerging Growth Company Status." We cannot predict if investors will find our common units less attractive because we may rely on these exemptions. If some investors find our common units less attractive as a result, there may be a less active trading market for our common units and our unit price may be more volatile.

In addition, under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act for so long as we are an emerging growth company. For as long as we take advantage of the reduced reporting obligations, the information that we provide unitholders may be different than information provided by other public companies.

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We have been organized as a limited partnership under the laws of the Republic of the Marshall Islands, which does not have a well-developed body of partnership law.

Our partnership affairs are governed by our partnership agreement and by the Marshall Islands Act. The provisions of the Marshall Islands Act resemble provisions of the limited partnership laws of a number of states in the United States, most notably Delaware. The Marshall Islands Act also provides that it is to be applied and construed to make it uniform with the laws of the state of Delaware and, so long as it does not conflict with the Marshall Islands Act or decisions of the Marshall Islands courts, the non-statutory law (or case law) of the State of Delaware is adopted as the law of the Marshall Islands. There have been, however, few, if any, court cases in the Marshall Islands interpreting the Marshall Islands Act, in contrast to Delaware, which has a fairly well-developed body of case law interpreting its limited partnership statute. Accordingly, we cannot predict whether Marshall Islands courts would reach the same conclusions as the courts in Delaware. For example, the rights of our unitholders and the fiduciary responsibilities of our general partner under Marshall Islands law are not as clearly established as under judicial precedent in existence in Delaware. As a result, unitholders may have more difficulty in protecting their interests in the face of actions by our general partner and its officers and directors than would unitholders of a similarly organized limited partnership in the United States.

Because we are organized under the laws of the Marshall Islands, it may be difficult to serve us with legal process or enforce judgments against us, our directors or our management.

We are organized under the laws of the Marshall Islands, and substantially all of our assets are located outside of the United States. In addition, our general partner is a limited company organized under the laws of Hong Kong and our directors and officers generally are or will be non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing a judgment against our assets or the assets of our general partner or our directors or officers. For more information regarding the relevant laws of the Marshall Islands, please read "Service of Process and Enforcement of Civil Liabilities."


Tax risks

In addition to the following risk factors, you should read "Business—Taxation of the Partnership," "Material U.S. Federal Income Tax Considerations" and "Non-United States Tax Considerations" for a more complete discussion of the expected material U.S. federal and non-U.S. income tax considerations relating to us and the ownership and disposition of our common units.

We will be subject to taxes, which will reduce our cash available for distribution to you.

We and our subsidiaries may be subject to tax in the jurisdictions in which we are organized or operate, reducing the amount of cash available for distribution. In computing our tax obligation in these jurisdictions, we are required to take various tax accounting and reporting positions on matters that are not entirely free from doubt and for which we have not received rulings from the governing authorities. We cannot assure you that upon review of these positions the applicable authorities will agree with our positions. A successful challenge by a tax authority could result in additional tax imposed on us, our subsidiaries or our joint ventures, further reducing the cash available for distribution. In addition, changes in our operations or ownership could result in additional tax being imposed on us, our subsidiaries or our

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joint ventures in jurisdictions in which operations are conducted. Please read "Business—Taxation of the Partnership."

We may lose the benefit of the Belgian tonnage tax regime, which may expose certain of our joint ventures to additional tax liability, reducing the amount of cash available for distribution.

Under Belgian tax law, income earned by a Belgian company from vessels operating in international transportation may be eligible to be taxed under a favorable "tonnage tax" regime in lieu of paying the ordinary Belgian corporate income tax. Under the tonnage tax regime, tax liability is determined on a lump sum basis, based on the net tonnage of vessels engaged in international maritime transportation rather than the income earned by those vessels. Two of our vessel-owning joint ventures, Excelsior BVBA and Excelerate NV, are currently taxed under the tonnage tax regime. In addition, Explorer NV and Express NV have been granted approval for entry into the tonnage tax regime effective January 1, 2015. The tonnage tax does not apply, however, to income earned by LNGRVs from stationary regasification activities, which is subject to Belgian net income tax at a 33.99% rate.

U.S. tax authorities could treat us as a "passive foreign investment company," which would have adverse U.S. federal income tax consequences to U.S. unitholders.

A non-U.S. entity treated as a corporation for U.S. federal income tax purposes will be treated as a "passive foreign investment company" ("PFIC") for U.S. federal income tax purposes if at least 75.0% of its gross income for any taxable year consists of "passive income" or at least 50.0% of the average value of its assets produce, or are held for the production of, "passive income." For purposes of these tests, "passive income" includes dividends, interest, gains from the sale or exchange of investment property, and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute "passive income." U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC, and the gain, if any, they derive from the sale or other disposition of their interests in the PFIC.

Based on our current and projected method of operation, and on an opinion of our U.S. counsel, Vinson & Elkins L.L.P., we believe that we will not be a PFIC for our initial taxable year, and we expect that we will not be treated as a PFIC for any future taxable year. We have received an opinion of our U.S. counsel in support of this position that concludes that the income our subsidiaries earn from our present chartering activities should not constitute passive income for purposes of determining whether we are a PFIC. In addition, we have represented to our U.S. counsel that we expect that more than 25.0% of our gross income for our current taxable year and each future year will arise from such time-chartering activities or other income our U.S. counsel has opined does not constitute passive income, and more than 50.0% of the average value of our assets for each such year will be held for the production of such nonpassive income. Assuming the composition of our income and assets is consistent with these expectations, and assuming the accuracy of the other representations we have made to our U.S. counsel for purposes of their opinion, our U.S. counsel is of the opinion that we should not be a PFIC for our current taxable year or any future year. This opinion is based and its accuracy is conditioned on representations, valuations and projections provided by us regarding our assets, income and charters to our U.S. counsel. While we believe these representations, valuations and projections to be accurate, the shipping market is volatile and no assurance can be given that they will continue to be accurate at any time in the future.

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Moreover, there are legal uncertainties involved in determining whether the income derived from time-chartering activities constitutes rental income or income derived from the performance of services. In Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), the Fifth Circuit held that income derived from certain time-chartering activities should be treated as rental income rather than services income for purposes of a provision of the Code relating to foreign sales corporations. In that case, the Fifth Circuit did not address the definition of passive income or the PFIC rules; however, the reasoning of the case could have implications as to how the income from a time charter would be classified under such rules. If the reasoning of this case were extended to the PFIC context, the gross income we derive or are deemed to derive from our time-chartering activities may be treated as rental income, and we would likely be treated as a PFIC. In published guidance, the Internal Revenue Service, or IRS, stated that it disagreed with the holding in Tidewater, and specified that time charters similar to those at issue in the case should be treated as service contracts. We have not sought, and we do not expect to seek, an IRS ruling on the treatment of income generated from our time-chartering activities, and the opinion of our counsel is not binding on the IRS or any court. As a result, the IRS or a court could disagree with our position. No assurance can be given that this result will not occur.

In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future and that we will not become a PFIC in the future. If the IRS were to find that we are or have been a PFIC for any taxable year (and regardless of whether we remain a PFIC for subsequent taxable years), our U.S. unitholders would face adverse U.S. federal income tax consequences. Please read "Material U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of U.S. Holders—PFIC Status and Significant Tax Consequences" for a more detailed discussion of the U.S. federal income tax consequences to U.S. unitholders if we are treated as a PFIC.

We may have to pay tax on U.S. source income, which would reduce our cash flow.

Under the Code, U.S. source gross transportation income generally is subject to a 4.0% U.S. federal income tax without allowance for deduction of expenses unless an exemption from tax applies under Section 883 of the Code and the Treasury Regulations promulgated thereunder. U.S. source gross transportation consists of 50.0% of the gross shipping income of a vessel-owning or -chartering corporation, such as ourselves, that is attributable to transportation that either begins or ends, but that does not both begin and end, in the United States.

We expect that U.S. source gross transportation income earned by our vessel-owning joint ventures, as well as any vessel-owning joint venture or subsidiary we acquire in the future, would generally be subject to a 4% U.S. federal income tax unless the exemption under Section 883 of the Code applies. We believe that we and the Exmar-Teekay joint ventures will initially qualify for this statutory tax exemption, and we expect to take this position for U.S. federal income tax return reporting purposes. Please read "Business—Taxation of the Partnership." However, there are factual circumstances, including some that may be beyond our control, that could cause us to lose the benefit of this tax exemption after this offering. In addition, our position that we qualify for this exemption is based upon legal authorities that do not expressly contemplate an organizational structure such as ours; specifically, although we have elected to be treated as a corporation for U.S. federal income tax purposes, we are organized as a limited partnership under Marshall Islands law. Therefore, we can give no assurance that the IRS will not take a different position regarding our qualification, or the qualification of the Exmar-Teekay joint ventures, for this tax exemption.

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If we or the Exmar-Teekay joint ventures are not entitled to this exemption under Section 883, we or such joint venture or subsidiary generally would be subject to a 4.0% U.S. federal gross income tax on our U.S. source shipping income for such year. Our failure to qualify for the exemption under Section 883 could have a negative effect on our business and would result in decreased earnings available for distribution to our unitholders.

Our vessels do not currently engage, and we do not expect that they will in the future engage, in transportation that begins and ends in the United States, and they are not engaged in providing regasification or storage of LNG within the territorial seas of the United States. If, notwithstanding this expectation, our joint ventures earn income in the future from transportation that begins and ends in the United States or if we earn income in the future from liquefaction, regasification or storage of LNG within the territorial seas of the United States, that income would not be exempt from U.S. federal income tax under Section 883 of the Code and would be subject to a 35% net income tax in the United States.

You may be subject to income tax in one or more non-U.S. jurisdictions, including Belgium and Hong Kong, as a result of owning our common units if, under the laws of any such jurisdiction, we are considered to be carrying on business there. Such laws may require you to file a tax return with, and pay taxes to, those jurisdictions.

We intend to conduct our affairs and cause or influence each of our joint ventures and subsidiaries to operate its business in a manner that minimizes income taxes imposed upon us and our joint ventures and subsidiaries and that may be imposed upon you as a result of owning our common units. However, because we are organized as a partnership, there is a risk in some jurisdictions, including Belgium and Hong Kong, that our activities or the activities of our joint ventures and subsidiaries may be attributed to our unitholders for tax purposes if, under the laws of such jurisdiction, we are considered to be carrying on business there. If you are subject to tax in any such jurisdiction, you may be required to file a tax return with, and to pay tax in, that jurisdiction based on your allocable share of our income. We may be required to reduce distributions to you on account of any tax withholding obligations imposed upon us by that jurisdiction in respect of such allocation to you. The United States may not allow a tax credit for any foreign income taxes that you directly or indirectly incur by virtue of an investment in us.

We believe we can conduct our affairs in a manner that does not result in our unitholders being considered to be carrying on business in Belgium and Hong Kong solely as a consequence of the acquisition, ownership, disposition or redemption of our common units. However, the question of whether either we or any of our joint ventures or subsidiaries will be treated as carrying on business in any jurisdiction, including Belgium and Hong Kong, will be largely a question of fact to be determined through an analysis of contractual arrangements, including the management agreements that our joint ventures and subsidiaries have entered into with Exmar Shipmanagement, certain other subsidiaries of EXMAR and certain third party shipmanagers and the management and administrative service agreement we will enter into with Exmar Hong Kong in connection with the closing of this offering, as well as through an analysis of the manner in which we conduct business or operations, all of which may change over time. Furthermore, the laws of Belgium, Hong Kong or any other jurisdiction may also change, which could cause that jurisdiction's taxing authorities to determine that we are carrying on business in such jurisdiction and that we or our unitholders are subject to its taxation laws. In addition to the potential for taxation of our unitholders, any additional taxes imposed on us or any of our subsidiaries will reduce our cash available for distribution.

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The ratio of dividend income to distributions on our common units is subject to business, economic and other uncertainties as well as tax reporting positions with which the IRS may disagree, which could result in a higher ratio of dividend income to distributions and adversely affect the value of our common units.

We estimate that approximately         % of the total cash distributions made to a purchaser of common units in this offering who owns those units from the date of this offering through December 31, 2016 will constitute dividend income for U.S. tax purposes. The remaining portion of the distributions will be treated first as a nontaxable return of capital to the extent of the purchaser's tax basis in its common units and thereafter as capital gain. These estimates are based on certain assumptions that are subject to business, economic, regulatory, competitive and political uncertainties beyond our control. In addition, these estimates are based on current U.S. federal income tax law and tax reporting positions that we will adopt and with which the IRS could disagree. As a result of these uncertainties, these estimates may be incorrect and the actual percentage of total cash distributions that will constitute dividend income could be higher, and any difference could adversely affect the value of the common units. Please read "Material U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of U.S. Holders—Ratio of Dividend Income to Distributions."

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Forward-looking statements

Statements included in this prospectus which are not historical facts (including our financial forecast and any other statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto) are forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such statements include, in particular, statements about our plans, strategies, business prospects, changes and trends in our business, and the markets in which we operate as described in this prospectus. In some cases, you can identify the forward-looking statements by the use of words such as "may," "could," "should," "would," "expect," "plan," "anticipate," "intend," "forecast," "believe," "estimate," "predict," "propose," "potential," "continue" or the negative of these terms or other comparable terminology.

Forward-looking statements appear in a number of places and include statements with respect to, among other things:

LNGRV and LNG carrier market trends, including charter rates, factors affecting supply and demand, and opportunities for the profitable operations of LNGRVs and LNG carriers;

our anticipated growth strategies;

our anticipated receipt of dividends and repayments of indebtedness from our joint ventures;

the effect of the worldwide economic environment;

turmoil in the global financial markets;

fluctuations in currencies and interest rates;

general market conditions, including fluctuations in charter hire rates and values of floating LNG infrastructure assets;

changes in our operating expenses, including drydocking and insurance costs and bunker prices;

forecasts of our ability to make cash distributions on our common units and the amount of any borrowings that may be necessary to make such distributions;

our future financial condition or results of operations and our future revenues and expenses;

the future financial condition of our existing or future charterers;

the repayment of debt;

our ability to make additional borrowings and to access debt and equity markets;

planned capital expenditures and availability of capital resources to fund capital expenditures;

the exercise of purchase options by our charterers;

our ability to maintain long-term relationships with our customers;

our ability to leverage EXMAR's relationships and reputation in the shipping industry;

our ability to purchase LNG infrastructure assets from EXMAR in the future;

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our continued ability to enter into long-term time charters, including charters for floating storage and regasification and liquefaction projects;

our ability to develop new projects and investments;

our ability to maximize the use of the vessels in our portfolio, including the re-deployment or disposition of vessels no longer under long-term time charter;

timely purchases and deliveries of newbuildings;

future purchase prices of newbuildings and secondhand vessels;

our ability to compete successfully for future chartering and newbuilding opportunities;

acceptance of a vessel by its charterer;

termination dates and extensions of charters;

the expected cost of, and our ability to comply with, governmental regulations, maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business;

availability of skilled labor, crews and management;

our anticipated incremental general and administrative expenses as a publicly traded limited partnership and our fees and expenses payable under the management and administrative services agreement;

the anticipated taxation of our partnership and our joint ventures, and distributions to our unitholders;

estimated future maintenance and replacement capital expenditures;

our ability to retain key employees;

customers' increasing emphasis on environmental and safety concerns;

potential liability from any pending or future litigation;

potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists;

future sales of our common units in the public market; and

our business strategy and other plans and objectives for future operations.

These and other forward-looking statements are made based upon management's current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and therefore involve a number of risks and uncertainties, including those risks discussed in "Risk Factors." The risks, uncertainties and assumptions involve known and unknown risks and are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

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Use of proceeds

We intend to use the net proceeds from this offering (approximately $               million, after deducting an aggregate of approximately $               million of underwriting discounts and commissions and structuring fees and estimated offering expenses payable by us) as follows: (i)  $44.0 million to make a loan to a subsidiary of EXMAR in exchange for a note bearing interest at a rate of LIBOR plus 4.0% per annum, which is repayable on demand or which we may choose to utilize as part of the purchase consideration in the event we purchase all or a portion of EXMAR's interests in the Caribbean FLNG, (ii) $28.3 million to repay outstanding debt, (iii) $2.3 million to pay refinancing fees and (iv) $25.0 million for general partnership purposes, which may include the funding of any future acquisitions. We do not currently have any commitments to make any future acquisitions following the completion of this offering.

Proceeds from this offering will be used to repay approximately $28.3 million of outstanding debt under the Excelerate KEXIM Facility. The KEXIM Facility bears interest at a fixed rate of 5.515% and matures in October 2018. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Borrowing Activities" for a description of our credit facilities.

We have granted the underwriters a 30-day option to purchase up to                           additional common units. If the underwriters exercise their option to purchase additional common units, we will use the net proceeds (approximately $               million, if exercised in full, after deducting an aggregate of approximately $               million of underwriting discounts and commissions) to make a cash distribution to EXMAR. If the underwriters do not exercise their option to purchase any additional common units, we will issue                           common units to EXMAR at the expiration of the option period. If and to the extent the underwriters exercise their option to purchase additional common units, the number of units purchased by the underwriters pursuant to such exercise will be issued to the public and the remainder, if any, will be issued to EXMAR. Accordingly, the exercise of the underwriters' option will not affect the total number of units outstanding or the amount of cash needed to pay the minimum quarterly distribution on all units. Please read "Underwriting."

A $1.00 increase or decrease in the assumed initial public offering price of $              per common unit would cause the net proceeds from this offering, after deducting the estimated underwriting discounts, commissions and structuring fees and estimated offering expenses payable by us, to increase or decrease, respectively, by approximately $               million. In addition, we may also increase or decrease the number of common units we are offering. Each increase of 1.0 million common units offered by us, together with a concomitant $1.00 increase in the assumed initial public offering price to $              per common unit, would increase net proceeds to us from this offering by approximately $               million. Similarly, each decrease of 1.0 million common units offered by us, together with a concomitant $1.00 decrease in the assumed initial public offering price to $              per common unit, would decrease the net proceeds to us from this offering by approximately $               million. We expect that any such increase or decrease will correspondingly increase or decrease the $44.0 million loan to be made to Exmar Netherlands BV from the net proceeds of this offering.

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Capitalization

The following table shows:

our historical cash and capitalization as of September 30, 2014; and

our as adjusted cash and capitalization as of September 30, 2014, which reflects the offering and the other transactions described in the unaudited pro forma combined balance sheet included in this prospectus, including the application of the net proceeds of the offering as described in "Use of proceeds."

This table is derived from and should be read together with the historical combined financial statements and the pro forma combined balance sheet and the accompanying notes contained elsewhere in this prospectus. We account for our equity interests in our joint ventures as equity method investments in our combined financial statements. You should read this table in conjunction with "Management's discussion and analysis of financial condition and results of operations."

   
 
  As of September 30, 2014  
(in thousands)
  Actual
  As adjusted
 
   

Cash and cash equivalents

  $ 4,000   $    

Restricted cash and short-term investments(1)

    10,888        

Note receivable from Exmar Netherlands BV(2)

           
       

Total cash, cash equivalents, restricted cash and short-term investments and note receivable

  $ 14,888   $    

Debt:(3)

   
 
   
 
 

Current portion of long-term debt

  $ 14,137   $    

Borrowings under sponsor credit facility(4)

           

Long-term debt(5)(6)

    304,370        
       

Total debt

  $ 318,507   $    
       

Equity:

             

Total equity

  $ 44,084   $  

Held by public:

             

Common units(7)

           

Held by general partner and its affiliates:

             

Common units(7)

           

Subordinated units(7)

           

Equity attributable to Exmar Energy Partners LP

           
       

Total capitalization

  $ 362,591   $    
   

(1)    As of September 30, 2014, restricted cash includes balances of $5.4 million and $5.4 million relating to the Explorer and Express debt agreements, respectively, representing interest and principal payments for approximately one year and usually in the form of three-month deposits.

(2)    See "Certain Relationships and Related Party Transactions—Intercompany Note."

(3)    Except for the borrowings under the sponsor credit facility, all of our outstanding debt is secured by mortgages covering the vessels in our portfolio.

(4)   At or prior to the closing of this offering, we will enter into the sponsor credit facility with EXMAR.

(5)    Because we account for our joint ventures under the equity method, the table does not reflect our 50% portion of the indebtedness at the Teekay Joint Ventures. As of September 30, 2014, the Teekay Joint Ventures had $131.2 million in long-term debt (excluding obligations under

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capital lease), $65.6 million of which was attributable to us. Prior to the closing of this offering, the Exmar-Teekay joint ventures will enter into a new credit agreement relating to Excelsior and Excalibur, under which they will incur, in the aggregate, an additional $41.5 million in debt (net of financing fees) of which $20.7 million will be attributable to us.

(6)   As adjusted reflects the application of approximately $28.3 million of the net proceeds of this offering to repay a portion of our outstanding indebtedness and approximately $2.3 million to pay refinancing fees.

(7)    Allocation of pro forma equity held by the public and held by our general partner and its affiliates was made in accordance with percentage ownership interests after this offering as set forth under "Prospectus summary—Organizational and ownership structure after this offering."

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Dilution

Dilution is the amount by which the offering price will exceed the net tangible book value per common unit after this offering. Based on the initial public offering price of $              per common unit, on a pro forma basis as of September 30, 2014, after giving effect to this offering of common units, the application of the net proceeds in the manner described under "Use of Proceeds" and the formation transactions related to this offering, our pro forma net tangible book value was $              , or $              per common unit. Purchasers of common units in this offering will experience substantial and immediate dilution in net tangible book value per common unit for financial accounting purposes, as illustrated in the following table.

   

Assumed initial public offering price per common unit

  $                             

Pro forma net tangible book value(1) per common unit before this offering(2)

  $                             

Increase in net tangible book value(1) per common unit attributable to purchasers in this offering

       
       

Less: Pro forma net tangible book value per common unit after this offering(3)

       
       

Immediate dilution in net tangible book value per common unit to purchasers in this offering(4)

  $                             
   

(1)    Pro forma net tangible book value is defined as pro forma total assets minus goodwill and pro forma total liabilities.

(2)    Determined by dividing the total number of units (              common units and                           subordinated units to be issued to our general partner and its affiliates for their contribution of assets and liabilities to us) into the net tangible book value of the contributed assets and liabilities.

(3)    Determined by dividing the total number of units (              common units and                           subordinated units to be outstanding after this offering) into our pro forma net tangible book value, after giving effect to the application of the net proceeds of this offering.

(4)   Because the total number of units outstanding following this offering will not be impacted by any exercise of the underwriters' option to purchase additional common units and any net proceeds from such exercise will not be retained by us, there will be no change to the dilution in net tangible book value per common unit to purchasers in the offering due to any exercise of the option.

The following table sets forth the number of units that we will issue and the total consideration contributed to us by our general partner and its affiliates and by the purchasers of common units in this offering upon consummation of the transactions contemplated by this prospectus.

   
 
  Units acquired   Total consideration  
 
  Number
  Percent
  Amount
  Percent
 
   

EXMAR and its affiliates(1)(2)

                    %   $                                          %  

New investors

                         
       

Total

             100%   $                                   100%  
   

(1)    Upon consummation of the transactions contemplated by this prospectus, our general partner and its affiliates will own an aggregate of                           common units and                            subordinated units.

(2)    The assets contributed by our general partner and its affiliates were recorded at historical book value, rather than fair value, in accordance with U.S. GAAP. Book value of the consideration provided by our general partner and its affiliates, as of September 30, 2014, was $               million.

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Our cash distribution policy and restrictions on distributions

You should read the following discussion of our cash distribution policy and restrictions on distributions in conjunction with specific assumptions included in this section. In addition, you should read "Forward-Looking Statements" and "Risk Factors" for information regarding statements that do not relate strictly to historical or current facts and certain risks inherent in our business.


General

Rationale for our cash distribution policy

Our cash distribution policy reflects a judgment that our unitholders will be better served by our distributing our cash available (after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves) rather than retaining it. Because we believe we will generally finance any expansion capital expenditures from external financing sources, we believe that our investors are best served by our distributing all of our available cash. Our cash distribution policy is consistent with the terms of our partnership agreement, which requires that we distribute all of our available cash quarterly (after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves).

Limitations on cash distributions and our ability to change our cash distribution policy

There is no guarantee that unitholders will receive quarterly distributions from us. Our distribution policy may be changed at any time and is subject to certain restrictions, including:

Our unitholders have no contractual or other legal right to receive distributions other than the obligation under our partnership agreement to distribute available cash on a quarterly basis, which is subject to the broad discretion of our board of directors to establish reserves and other limitations.

We will be subject to restrictions on distributions under our financing arrangements. Our financing arrangements contain material financial tests and covenants that must be satisfied in order to pay distributions. If we are unable to satisfy the restrictions included in any of our financing arrangements or are otherwise in default under any of those agreements, it could have a material adverse effect on our ability to make cash distributions to you, notwithstanding our stated cash distribution policy. These financial tests and covenants are described in this prospectus in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Debt Restrictions."

Our joint ventures will be subject to restrictions on distributions under Belgian law. Under Belgian law, cash distributions are prohibited if net assets on the last day of the most recently completed fiscal year were, or would have been as a result of such distribution, less than the amount of paid up capital together with any reserves that cannot be distributed. For Excelerate NV, Explorer NV and Express NV, profits during an ongoing fiscal year may only be distributed after the first six months of the fiscal year have been completed, the annual accounts of the most recently completed fiscal year have been approved and interim financial statements have been audited by the statutory auditor. In addition to the other applicable provisions of Belgian law, at least three months must elapse between distributions. In the event that the aggregate amount of any advances on the distribution exceeds total profits for such year, any such excess would be required to be reimbursed to the joint venture. Excelsior BVBA is subject to additional restrictions on distributions under Belgian law. The shareholders of Excelsior BVBA may authorize a distribution of profits earned during the preceding fiscal year at an annual meeting of shareholders of Excelsior BVBA. A practice has developed whereby, under certain circumstances, a

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    distribution of profits earned during prior years may be made in one or more installments prior to the completion of the fiscal year if such distribution of profits is approved by the shareholders at an extraordinary meeting of shareholders of Excelsior BVBA.

Our operating company will be subject to restrictions on distributions under Hong Kong law. Under Hong Kong law, the board of directors may only declare a cash dividend when the accumulated realized profits of the company exceed its accumulated realized losses.

Our business is conducted primarily through our joint ventures. Under our joint venture agreements, our joint ventures are prohibited from making distributions under certain circumstances, including when they have outstanding indebtedness. In addition, we are unable to cause our joint ventures to make distributions without the agreement of our joint venture partners. If our joint ventures are unable to make distributions to us, it could have a material adverse effect on our ability to pay cash distributions to you in accordance with our stated cash distribution policy. The restrictions on distributions by our joint ventures are described in this prospectus in "Our Joint Ventures and Joint Venture Agreements."

We are required to make substantial capital expenditures to maintain and replace the vessels in our portfolio. These expenditures may fluctuate significantly over time, particularly as the vessels in our portfolio near the end of their useful lives. In order to minimize these fluctuations, our partnership agreement requires us to deduct estimated, as opposed to actual, maintenance and replacement capital expenditures from the amount of cash that we would otherwise have available for distribution to our unitholders. In years when estimated maintenance and replacement capital expenditures are higher than actual maintenance and replacement capital expenditures, the amount of cash available for distribution to unitholders will be lower than if actual maintenance and replacement capital expenditures were deducted.

Although our partnership agreement requires us to distribute all of our available cash, our partnership agreement, including provisions contained therein requiring us to make cash distributions, may be amended. During the subordination period, with certain exceptions, our partnership agreement may not be amended without the approval of non-affiliated common unitholders. After the subordination period has ended, our partnership agreement can be amended with the approval of a majority of the outstanding common units. At the closing of this offering, EXMAR will own approximately         % of our common units and all of our subordinated units outstanding immediately after the closing of this offering. Please read "The Partnership Agreement—Amendment of the Partnership Agreement."

Even if our cash distribution policy is not modified or revoked, the amount of distributions we pay under our cash distribution policy and the decision to make any distribution is determined by our board of directors, taking into consideration the terms of our partnership agreement.

Under Section 51 of the Marshall Islands Act, we may not make a distribution to you to the extent that at the time of the distribution, after giving effect to the distribution, all of our liabilities, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specified property of ours, exceed the fair value of our assets, except that the fair value of property that is subject to a liability for which the recourse of creditors is limited shall be included in our assets only to the extent that the fair value of that property exceeds that liability.

We may lack sufficient cash to pay distributions to our unitholders due to decreases in total operating revenues, decreases in hire rates, the loss of a vessel in our portfolio (including, without limitation, through a customer's exercise of its purchase option) or increases in operating or general and administrative expenses, principal and interest payments on outstanding debt, taxes, working capital

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    requirements, maintenance and replacement capital expenditures or anticipated cash needs. Please read "Risk Factors" for a discussion of these factors.

Our ability to grow depends on our ability to access external expansion capital

Because we distribute all of our available cash, we may not grow as quickly as businesses that reinvest their available cash to expand ongoing operations. We expect that we will rely upon external financing sources, including bank borrowings and the issuance of debt and equity securities, to fund acquisitions and expansion and investment capital expenditures. As a result, to the extent we are unable to finance growth externally, our cash distribution policy will significantly impair our ability to grow. To the extent we issue additional units in connection with any acquisitions or other capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level, which in turn may affect the available cash that we have to distribute on each unit. There are no limitations in our partnership agreement on our ability to issue additional units, including units ranking senior to the common units. The incurrence of additional borrowings or other debt by us to finance our growth would result in increased interest expense, which in turn may affect the available cash that we have to distribute to our unitholders.

Initial distribution rate

Upon completion of this offering, our board of directors will adopt a policy pursuant to which we will declare an initial quarterly distribution of $              per unit for each complete quarter, or $              per unit on an annualized basis, to be paid no later than 45 days after the end of each fiscal quarter (beginning with the quarter ending December 31, 2014). This equates to an aggregate cash distribution of $               million per quarter, or $               million per year, in each case based on the number of common units and subordinated units outstanding immediately after the completion of this offering. Our ability to make cash distributions at the initial distribution rate pursuant to this policy will be subject to the factors described above under "—General—Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy."

The table below sets forth the number of outstanding common units and subordinated units upon the closing of this offering and the aggregate distribution amounts payable on such units during the year following the closing of this offering at our initial distribution rate of $              per unit per quarter ($              per unit on an annualized basis).

   
 
   
  Distributions  
 
  Number of units
  One quarter
  Four quarters
 
   

Common units

                      $                   $                  

Subordinated units

                                                             
       

Total

                      $                 (1) $                  
   

(1)  Actual payments of distributions on the common units and subordinated units are expected to be approximately $                million for the period between the estimated closing date of this offering (                           , 2014) and December 31, 2014.

During the subordination period, before we make any quarterly distributions to subordinated unitholders, our common unitholders are entitled to receive payment of the full minimum quarterly distribution plus any arrearages in distributions from prior quarters. Please read "How We Make Cash Distributions—Subordination Period." We cannot guarantee, however, that we will pay the minimum quarterly distribution or any amount on the common units in any quarter.

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In the following sections, we present in detail the basis for our belief that we will be able to pay our minimum quarterly distribution on all of our outstanding units for the twelve months ending December 31, 2015. We present two tables, consisting of:

Forecasted Results of Operations for the Twelve Months Ending December 31, 2015; and

Forecasted Cash Available for Distribution for the Twelve Months Ending December 31, 2015,

as well as the significant assumptions upon which the forecast is based.


Forecasted results of operations for the twelve months ending December 31, 2015

We present below forecasts of the expected results of operations for the twelve months ending December 31, 2015 for each of us, the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures. Please read "Presentation of Financial Information." Our forecasts present, to the best of our knowledge and belief, the expected results of operations for each of us, the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures for the forecast period.

Pursuant to the omnibus agreement that we will enter into with EXMAR at the closing of this offering, we will have the right to purchase from EXMAR any floating LNG infrastructure asset operating under a charter of five or more years. In addition, we will have the option to purchase the following interests from EXMAR:

all or a portion of EXMAR's 90% to 100% interest in the Caribbean FLNG, a newbuilding FLSU, within 24 months following the commencement of its operations, which is currently scheduled for the second half of 2015. The Caribbean FLNG will operate under a 15-year contract (tolling agreement) with PRE, an independent oil and gas exploration company in Colombia, and will be located off the Colombian Caribbean coast. EXMAR has granted PRE an option, which expires upon delivery of the vessel in Colombia, to purchase up to a 10% interest in the entity that owns the Caribbean FLNG; and

all of EXMAR's interest (currently a 50% interest) in Excel, an LNG carrier delivered in 2003 that is jointly owned with Mitsui O.S.K. Lines, Ltd., within 24 months following the commencement of a charter of five or more years.

Although we anticipate that we will seek to purchase EXMAR's interest in each of the Caribbean FLNG and the Excel, the timing of such purchases are uncertain and are subject to reaching agreement with EXMAR on the terms of such purchases and, in the case of the Excel, its securing a long-term charter. As a result, our forecast does not reflect the expected results of operations or related financings of such vessels.

Our forecasts reflect management's judgment, as of the date of this prospectus, of conditions we expect to exist and the course of action we expect we and our joint ventures will take during the twelve months ending December 31, 2015. The assumptions and estimates used in the forecasts are inherently uncertain and represent those that we believe are significant to our financial forecasts. We believe that we have a reasonable objective basis for those assumptions. We believe the actual results of operations of us and our joint ventures will approximate those reflected in our forecasts, but we can give no assurance that such forecasted results will be achieved. There will likely be differences between our forecasts and the actual results, and those differences could be material. The operations of our joint ventures are subject to numerous risks that are beyond our control. If either or both of the forecasts are not achieved, we may not be able to pay cash distributions on our units at the initial distribution rate stated in our cash distribution policy or at all.

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Our forecasts of results of operations are forward-looking statements and should be read together with our Predecessor's combined historical financial statements, the historical combined financial statements of the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures and the accompanying notes included elsewhere in this prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations." We do not, as a matter of course, make public projections as to future revenues, earnings or other results. The forecasts have been prepared by and are the responsibility of our management. However, our management has prepared the financial forecasts set forth below in support of our belief that we will have sufficient cash available to allow us to pay the minimum quarterly distribution on all of our outstanding units during the forecast period. In the view of our management, the accompanying financial forecasts were prepared on reasonable bases, reflect the best currently available estimates and judgments, and present, to the best of our knowledge and belief, the expected course of action and the expected future financial performance of our joint ventures. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this prospectus are cautioned not to place undue reliance on the financial forecasts.

When considering our financial forecasts, you should keep in mind the risk factors and other cautionary statements included under the heading "Risk Factors" elsewhere in this prospectus. Any of the risks discussed in this prospectus could cause actual results of operations to vary significantly from the financial forecasts.

We are providing the financial forecasts to supplement our Predecessor's combined historical financial statements and those of the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures in support of our belief that we will have sufficient cash available to allow us to pay our minimum quarterly distribution on all of our units for the twelve months ending December 31, 2015. Please read "—Forecast Assumptions and Considerations—Summary of Significant Forecast Assumptions" for further information as to the assumptions we have made for the financial forecasts.

Unanticipated events may occur which could adversely affect the actual results achieved during the forecast period. Consequently, the actual results of operations, cash flows and financial condition of us, the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures during the forecast period may vary from the forecasts and such variations may be material. Prospective investors are cautioned to not place undue reliance on the forecasts and should make their own independent assessment of such future results of operations, cash flows and financial condition.

We do not undertake any obligation to release publicly the results of any future revisions we may make to the financial forecasts or to update the financial forecasts to reflect events or circumstances after the date of this prospectus, even in the event that any or all of the underlying assumptions are shown to be in error. Therefore, we caution you not to place undue reliance on this information.

Neither our or our joint ventures' independent registered public accounting firm, nor any other independent registered public accounting firm have compiled, examined or performed any procedures with respect to the forecasted financial information contained herein, nor have they expressed any opinion or given any other form of assurance on such information or its achievability, and they assume no responsibility for such forecasted financial information. Our or our joint ventures' independent registered accounting firm's report included in this prospectus relate to historical financial information of our Pedecessor, the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures. Those reports do not extend to the tables and the related forecasted financial information contained in this section and should not be read to do so.

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Forecasted results of operations

The following table presents the unaudited forecasted results of operations for each of us, the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures for the twelve months ending December 31, 2015.

   
 
  Twelve months ending
December 31, 2015
 
(in thousands)
  Exmar-Excelerate
joint ventures

   
  Exmar-Teekay
joint ventures

 
   

Time charter revenues

  $ 73,189       $ 48,232  

Vessel operating expenses

    (20,747 )       (11,739 )

General and administrative expenses

    (254 )       (134 )

Depreciation and amortization

    (21,832 )       (12,079 )
       

Total operating expenses

    (42,833 )       (23,952 )
       

Operating income

    30,356         24,281  

Interest income

             

Interest expense

    (27,674 )       (5,405 )

Other financial expenses

    (44 )       (65 )
       

Income before income taxes

    2,638         18,811  

Income taxes

             
       

Net income

  $ 2,638       $ 18,811  
   

 

   
 
  Twelve months ending
December 31, 2015
 
(in thousands)
  Exmar Energy
Partners LP

 
   

Total operating revenues

  $  

General and administrative expense

    (3,242 )
       

Operating loss

    (3,242 )

Income from equity accounted joint ventures

    10,724  

Interest income

    23,651  

Interest expense

    (6,389 )
       

Net income

    24,744  
       

Net income per:

       

Common unit (basic and diluted)

  $    

Subordinated unit (basic and diluted)

  $    
   


Forecast assumptions and considerations

Basis of presentation

The accompanying financial forecast and related notes present our forecast of the results of operations of each of us, the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures for the twelve months

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ending December 31, 2015, based on the assumption that the following transactions occurred as of the commencement of the forecast period:

we will issue                           common units and                           subordinated units, representing an aggregate          % limited partner interest in us, to EXMAR;

we will issue all of our incentive distribution rights to our general partner;

we will issue                           common units to the public in this offering, representing a         % limited partner interest in us;

we will apply the net proceeds of the offering as follows: (i) $44.0 million to make a loan to a subsidiary of EXMAR in exchange for a note bearing interest at a rate of LIBOR plus 4.0% per annum, which is repayable on demand or which we may choose to utilize as part of the purchase consideration in the event we purchase all or a portion of EXMAR's interests in the Caribbean FLNG, (ii) $28.3 million to repay outstanding debt, (iii) $2.3 million to pay refinancing fees, and (iv) $25.0 million for general partnership purposes;

$322.4 million of loans made by EXMAR to the joint ventures will be transferred to us or replaced with loans made by us to the joint ventures; and

we will enter into a new $20.0 million revolving credit facility with EXMAR.

Summary of significant accounting policies used in the forecast

Organization.    We are a Marshall Islands limited partnership formed to own, operate and acquire floating LNG infrastructure assets under long-term charters.

Principles of combination.    Our Predecessor for accounting purposes accounts for its equity interests in the joint ventures owning the vessels in our portfolio as equity method investments in its combined financial statements. Rule 3-09 of Regulation S-X requires separate financial statements of 50% or less owned persons accounted for under the equity method by a registrant such as us if either the income or the investment test in Rule 1-02(w) of Regulation S-X exceeds 20%. Furthermore, Rule 3-09(c) of Regulation S-X provides for the combination of Rule 3-09 financial statements if the underlying investments exhibit common control or common management. In such scenarios, the significance of investments under Rule 1-02(w) of Regulation S-X are to be measured on a combined basis. We have determined that common management exists among the Exmar-Excelerate joint ventures and among the Exmar-Teekay joint ventures, both of which exceed on a combined basis the 20% significance tests of Rule 3-09.

Use of estimates.    The preparation of the forecasted financial information in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts. Actual results could differ from those estimates.

Foreign currency.    The forecasted financial information is stated in U.S. Dollars, which is the functional currency of each of us and our joint ventures and which is the typical currency used in international shipping markets in which we operate. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. Euro-based vessel operating expenses have been converted at an assumed exchange rate of $1.30 per €1.00. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the U.S. Dollar are translated to reflect the year-end exchange rates.

Revenue and vessel operating expense recognition.    Our revenues include minimum lease payments under time charters as well as the reimbursement of vessel operating and drydocking costs for certain vessels.

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We record revenues generated from time charters, which we classify as operating leases, over the term of the charter as service is provided.

Vessel operating expenses, which we recognize when they are incurred, include crewing, repairs and maintenance, insurance, stores, lube oils, communication expenses and third party management fees. For arrangements where operating costs are borne by the charterer on a pass through basis, the pass through of operating costs, including drydocking costs, is reflected in revenue and expenses as incurred. For vessels for which the drydocking costs are reimbursed as part of the operating cost component, drydocking expenses are capitalized and amortized over their estimated useful lives, generally between three and five years.

Vessels.    Vessels are stated at cost less accumulated depreciation. The cost of the vessels includes all directly attributable expenses, including borrowing cost, incurred during the construction of the vessel, less the estimated residual value. Vessels are depreciated on a straight line basis over an estimated useful life of the vessels of 35 years.

Cash and cash equivalents.    All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents unless there is a restriction imposed by a third party on the availability of the funds.

Restricted cash.    Restricted cash consists of bank deposits, which may only be used to settle certain pre-arranged debt payments.

Derivative instruments.    We may, from time to time, enter into interest rate swap transactions to hedge a portion of our exposure to floating interest rates. These transactions involve the conversion of floating rates into fixed rates over the life of the transactions without an exchange of underlying principal. In addition, from time to time we enter into foreign currency swap contracts to reduce risk from foreign currency fluctuations.

Income taxes.    We do not anticipate that we or any of our joint ventures that are not currently taxed under the tonnage tax regime will incur any income taxes payable during the forecast period, due to the combination of tax losses and the availability of prudent and feasible tax strategies notwithstanding the availability of tonnage tax regime election. A valuation allowance has been recognized for the full amount of the deferred tax asset related to net operating losses and tax credits carried forward.

Net income per unit.    The calculation of the forecasted basic and diluted earnings for the twelve months ending December 31, 2015 is set forth below:

   
 
  Common
unitholders

   
  Subordinated
unitholders

 
   

Limited partners' interest in forecasted net income (in thousands)

  $         $    

Forecasted weighted average number of units outstanding

                 

Forecasted net income per unit

  $         $    
   

Summary of significant forecast assumptions

Exmar Energy Partners LP

Our assets.    The forecast assumes that we will retain our 50.0% interests in each of the joint ventures in our initial portfolio.

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General and administrative expenses.    Our forecasted general and administrative expenses for the twelve months ending December 31, 2015 of $3.2 million are based on the assumption that we will incur approximately $1.0 million annually in additional general and administrative expenses as a publicly traded limited partnership that our Predecessor has not previously incurred, including costs associated with annual reports to unitholders, investor relations, registrar and transfer agent fees, audit fees, incremental director and officer liability insurance costs and officers' and directors' compensation. Included in our general and administrative expenses are expenses we expect to incur under the management and administrative services agreements we and our operating company will enter into with Exmar Hong Kong. We do not expect our joint ventures will incur any additional general and administrative expenses as a result of our becoming a publicly traded partnership.

Interest income.    In addition to interest income derived from payments made by the Exmar-Excelerate joint ventures on our shareholder loans, the forecast assumes that we will receive interest income of $1.9 million with respect to the $44.0 million note bearing interest at a rate of LIBOR plus 4.0% per annum that Exmar Netherlands BV will issue to us concurrently with the closing of this offering.

Interest expense.    Our forecasted interest expense for the twelve months ending December 31, 2015 assumes we will have an average outstanding loan balance of approximately $280.5 million with an estimated weighted average interest rate of approximately 2.3% per annum. This weighted average interest rate reflects the assumption that the interest rate on the amended Excelerate Facility and a portion of the Explorer and Express Facility is fixed at the five-year swap rate.

Our joint ventures

Operational Days.    The forecasts reflect or assume for revenue purposes that the vessels Explorer, Express, Excelerate and Excelsior in our portfolio have 362 days of operation and no days of off-hire. The above operating days reflects a portfolio utilization of 99.2%, which is consistent with these vessels' utilization rate of approximately 100% for the year ended December 31, 2013. The utilization rate for the nine months ended September 30, 2014 was 93.5% and was adversely impacted by an unexpected fire in the engine room of the Explorer. The Explorer returned to operations in mid-September. Scheduled drydocks for Excalibur, Excelsior and Excelerate will occur in April 2015, January 2015 and April 2015, respectively. There are no other scheduled drydocks for the vessels in our portfolio for the twelve months ending December 31, 2015. Except for Excalibur, all vessels remain on-hire during normally scheduled drydocks. For Excalibur, the forecast for revenue purposes reflects the planned number of days the vessel is assumed to be off-hire during scheduled drydocks. The forecast assumes that the vessels in our portfolio will perform in accordance with the performance standards set forth in our time charters.

Time charter revenues.    Our forecasts of time charter revenues are based on the contractual expected daily hire rates due under the respective time charter agreements. The financial cost component hire rates payable under our current charters are generally fixed. However, two of our charters (Explorer and Express) contain a variable cost component intended to adjust the financial cost component included in the hire rate for interest rate changes. The forecast assumes a floating interest rate of 3-month LIBOR (0.40% during the twelve months ending December 31, 2015) plus a margin. In addition, time charter revenues include the estimated vessel operating expenses that are charged on a pass through basis for Explorer, Express and Excelerate. For Excelsior and Excalibur, time charter revenues include an operating cost component which is adjusted for inflation. For more information on the components of the hire rate payable under our charters, please read "Business—Time Charters—LNG Carrier Charter—Hire Rate" and "Business—Time Charters—LNGRV Charters—Hire Rate."

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Vessel operating expenses.    Our forecasts of vessel operating expenses assume that all of the vessels in our portfolio are operational during the twelve months ending December 31, 2015. The forecasts also take into account increases in operating expenses driven predominantly by an increase in demand for qualified and experienced officers and crew.

General and administrative expenses.    Forecasted general and administrative expenses for the twelve months ending December 31, 2015 primarily consist of incurred service fees such as accounting and audit fees. Costs and fees for the provision of management and administrative services are incurred by the Exmar-Excelerate joint ventures pursuant to services agreements with EXMAR and its subsidiaries, and by the Exmar-Teekay joint ventures pursuant to each applicable joint venture agreement. Please read "Our Joint Ventures and Joint Venture Agreements" and "Certain Relationships and Related Party Transactions—Agreements Governing the Transactions—Joint Venture Services Agreements."

Depreciation and amortization.    Forecasted amounts of depreciation and amortization expense assume that no vessel in our portfolio is purchased or sold during the twelve months ending December 31, 2015. The vessels in our portfolio and equipment are stated at cost less accumulated depreciation. The cost of the vessels in our portfolio and equipment less the estimated residual value is depreciated on a straight-line basis over the vessels' useful life. Vessels are projected to be depreciated on a straight line basis over an estimated useful life of the vessels of 35 years.

Interest rates.    We have assumed that interest rates are floating throughout the forecast period. The three-month LIBOR we have assumed for floating rate debt is 0.40% during the twelve months ending December 31, 2015.

Interest expense.    Our forecasted interest expense for the twelve months ending December 31, 2015 assumes that the Exmar-Teekay joint ventures debt has been refinanced as of December 31, 2014. We project that the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures will have average outstanding loan balances of approximately $627.5 million and $171.7 million, respectively, during the twelve months ending December 31, 2015.

General

Income taxes.    We have not forecasted income tax expense for the twelve months ending December 31, 2015 as we believe that neither we nor our joint ventures will be in a taxable position during the period.

Regulatory, industry and economic factors.    Our forecasts for the twelve months ending December 31, 2015 are based on the following assumptions related to regulatory, industry and economic factors:

no material nonperformance or credit related defaults by suppliers, customers or vendors;

no new regulation or any interpretation of existing regulations that, in either case, would be materially adverse to our business;

no material accidents, releases, weather related incidents, unscheduled downtime or similar unanticipated events;

no major adverse change in the markets in which we operate resulting from production disruptions, reduced demand for natural gas or LNG or significant changes in the market prices of natural gas or LNG;

no material changes to market, regulatory and overall economic conditions; and

no material changes to time charters.

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Forecasted cash available for distribution

The table below sets forth our unaudited calculation of forecasted cash available for distribution to our unitholders and general partner based on the Forecasted Results of Operations set forth above. Based on the financial forecasts and related assumptions, we forecast that our cash available for distribution generated during the twelve months ending December 31, 2015 will be approximately $               million. This amount would be sufficient to pay 100% of the minimum quarterly distribution of $         per unit on all of our common units and subordinated units for the twelve months ending December 31, 2015.

Actual payments of distributions on the common units and subordinated units are expected to be approximately $               million for the period between the estimated closing date of this offering (                           , 2014) and December 31, 2014. We will not make distributions for the period that begins on October 1, 2014 and ends on the day prior to the closing date of this offering. We will adjust the distribution for the period commencing on the closing date of this offering through December 31, 2014 based on the actual length of the period.

You should read "—Forecast Assumptions and Considerations—Summary of Significant Forecast Assumptions" included as part of the financial forecasts for a discussion of the material assumptions underlying our forecasts of EBITDA for the Exmar-Excelerate joint ventures and the Exmar-Teekay joint ventures that are included in the table below. Our forecasts are based on those material assumptions and reflect our judgment of conditions we expect to exist and the course of action we expect our joint ventures to take. The assumptions disclosed in our financial forecasts are those that we believe are significant to generate the forecasted EBITDA. If our estimates are not achieved, we may not be able to pay distributions on the common units at the initial distribution rate of $              per unit per quarter ($              per unit on an annualized basis). Our financial forecasts and the forecast of cash available for distribution set forth below have been prepared by our management. This calculation represents available cash from operating surplus expected to be generated during the period and excludes any cash from working capital borrowings, capital expenditures and cash on hand on the closing date.

EBITDA should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance calculated in accordance with U.S. GAAP.

When considering our forecast of cash available for distribution for the twelve months ending December 31, 2015, you should keep in mind the risk factors and other cautionary statements under the heading "Forward-Looking Statements" and "Risk Factors" and elsewhere in this prospectus. Any of these factors or the other risks discussed in this prospectus could cause the financial results of operations of us or of our joint ventures to vary significantly from those set forth in the financial forecasts and the forecast of cash available for distribution set forth below.

Neither our independent registered public accounting firm, nor any other independent registered public accounting firm have compiled, examined or performed any procedures with respect to the forecasted financial information contained herein, nor have they expressed any opinion or given any other form of assurance on such information or its achievability, and they assume no responsibility for such forecasted financial information.

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Exmar Energy Partners LP
Forecasted cash available for distribution

   
 
  Twelve months ending
December 31, 2015
 
(in thousands)
  Exmar-Excelerate
joint ventures(1)

   
  Exmar-Teekay
joint ventures(1)

 
   

Net income

  $ 2,638       $ 18,811  

Depreciation and amortization

    21,832         12,079  

Interest income

               

Interest expense:

                 

Bank facilities

            5,405  

Shareholder loans to us

    21,407          

Shareholder loans to our joint venture partner

    6,266          

Other financial items, net

    44         65  

Income taxes

             

EBITDA(2)

    52,187         36,360  

Adjustments for cash items:

                 

Cash interest expense:

                 

Bank facilities

            (5,405 )

Shareholder loans to us

    (21,407 )        

Shareholder loans to our joint venture partner

    (6,266 )        

Cash interest income

             

Principal payments:

                 

Bank facilities

            (8,750 )

Shareholder loans to us

    (13,815 )        

Shareholder loans to our joint venture partner

    (12,164 )        

Maintenance capital expenditures and reserves(3)

            (3,500 )

Cash available for distribution to joint venture partners(4)

    (1,465 )       18,705  

Cash available for distribution to us

  $ (733 )     $ 9,353  
   

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  Twelve months ending
December 31, 2015
 
(in thousands, except per unit amounts)
  Exmar Energy
Partners LP

 
   

Amounts received from joint ventures:

       

Interest payments on shareholder loans from Exmar-Excelerate joint ventures

  $ 21,407  

Principal repayments on shareholder loans from Exmar-Excelerate joint ventures

    13,815  

Deficit related to Exmar-Excelerate joint ventures

    (733 )

Dividends from Exmar-Teekay joint ventures

    9,353  
       

Total

  $ 43,842  

General and administrative expenses(5)

    (3,242 )

Net cash interest expense(6)

    (4,145 )

Net estimated replacement capital expenditures(7)

    (8,681 )
       

Cash available for distribution to our unitholders(8)

  $ 27,774  
       

Expected distributions:

       

Distributions per unit

  $    

Distributions to our public common unitholders(9)

       

Distributions to EXMAR common units(9)

       

Distributions to EXMAR subordinated units

       
       

Total distributions(10)

  $    
       

Excess

  $    

Annualized minimum quarterly distribution per unit

  $    

Aggregate distributions based on annualized minimum quarterly distribution

       

Percent of minimum quarterly distributions payable to common unitholders

    100 %

Percent of minimum quarterly distributions payable to subordinated unitholder

    100 %
   

(1)    The forecasts are based on the assumptions set forth in "—Forecast Assumptions and Considerations—Summary of Significant Forecast Assumptions."

(2)    EBITDA is a non-GAAP financial measure. EBITDA means earnings before interest, other financial items, taxes, non-controlling interest and depreciation and amortization and is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess our financial and operating performance. EBITDA assists our management and investors by increasing the comparability of our performance from period to period and against the performance of other companies in our industry that provide EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, other financial items, taxes, depreciation and amortization, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. We believe that including EBITDA as a financial and operating measure benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing financial and operational strength in assessing whether to continue to hold common units. EBITDA should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with U.S. GAAP. EBITDA excludes some, but not all, items that affect net income, and these measures may vary among other companies. Therefore, EBITDA as presented below may not be comparable to similarly titled measures of other companies.

(3)    Amounts represent the projected expenditures and reserves made by the Exmar-Teekay joint ventures to fund future scheduled drydockings. With respect to the Exmar-Excelerate joint ventures, drydocking costs incurred by the joint ventures are recovered as time charter revenues pursuant to the terms of the time charter. Accordingly, no maintenance capital expenditures are projected for the Exmar-Excelerate joint ventures. However, for the Exmar-Teekay joint ventures, the costs of drydocking are incurred by the joint ventures and not reimbursed. The Exmar-Teekay joint ventures have historically retained cash from operations to fund drydockings. We estimate that the Exmar-Teekay joint ventures would be required to reserve approximately $3.5 million per year in order to fund capital expenditures associated with their scheduled drydockings.

(4)   Does not reflect working capital on hand at the beginning of the period or changes during the period other than those arising directly from operations during the period. The deficit of $0.7 million from the Exmar-Excelerate joint ventures will be funded from cash on hand at those joint ventures. As of September 30, 2014 and December 31, 2013, the Exmar-Excelerate joint ventures had an unrestricted cash and cash equivalents balance of $18.3 million and $8.1 million, respectively. There are no unrestricted cash reserves at the Exmar-Teekay joint ventures other than those retained to fund future maintenance capital expenditures.

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(5)    Includes approximately $1.0 million of additional general and administrative expenses we expect to incur as a publicly traded limited partnership that our Predecessor has not previously incurred, including costs associated with annual reports to unitholders, investor relations, registrar and transfer agent fees, audit fees, incremental director and officer liability insurance costs and directors' compensation.

(6)   Gives effect to (i) cash interest income of $1.9 million with respect to the $44.0 million note bearing interest at a rate of LIBOR plus 4.0% per annum that Exmar Netherlands BV will issue to us concurrently with the closing of this offering and (ii) cash interest expense on our bank facilities.

(7)    Bank debt incurred to finance the construction or purchase of vessels is usually structured by the banks to provide for regular amortization rather than full payment at maturity. One reason banks provide for regular amortization is that vessels have a finite life and as a result generally decline in value as they age. The debt amortization is generally scheduled to decrease the amount of debt outstanding at a rate significantly faster than the value of a vessel declines with age to protect the bank security position. To the degree the repayment exceeds the decline in vessel value, the owner of the vessel builds equity value in the vessel. Therefore, we believe that in calculating distributable cash flow it is appropriate to net debt repayments against amounts being retained as a replacement capital reserve in calculating distributable cash flow. This is consistent with the way "operating surplus" is calculated in the limited partnership agreement. For a discussion of the terms of this indebtedness of the joint ventures and our Predecessor, including amortization requirements, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." Net estimated replacement capital expenditures represent the amounts by which the estimated replacement capital expenditures of the applicable joint ventures exceeds, or is less than, the amount of principal repayment made on debt issued by us or such joint ventures on indebtedness incurred to finance the purchase or construction of the underlying vessels. A calculation of net estimated replacement capital expenditures is presented below:

   
(in thousands)
  Exmar-Excelerate
joint ventures

   
  Exmar-Teekay
joint ventures

   
  Total
 
   

Estimated replacement capital expenditures(a)

  $ 7,548       $ 5,508       $ 13,056  

Allocated payment of principal on joint venture bank facilities(b)

            (4,375 )       (4,375 )
       

Net estimated replacement capital expenditures

  $ 7,548       $ 1,133       $ 8,681  
   

(a)    Represents the estimated replacement capital expenditures associated with our 50% interest in the joint ventures.

(b)   Represents our 50% portion of the principal payments made on the bank facilities of the Exmar-Teekay joint ventures.

(8)   We believe that our estimated cash available for distribution to our unitholders is substantially equivalent to what our estimated "operating surplus" generated during the twelve months ending December 31, 2015 would be. Please read "How We Make Cash Distributions—Operating Surplus and Capital Surplus." In calculating operating surplus, we will proportionately consolidate our vessel-owning joint ventures where they have no plans to grow or replace the vessels then owned by such joint venture (other than in the event of a casualty loss).

(9)   Assumes the underwriters' option to purchase additional common units is not exercised.

(10)  Represents the amount required to fund distributions to our unitholders for four quarters based upon our minimum quarterly distribution rate of $              per unit.

Forecast of maintenance and replacement expenditures

Our partnership agreement requires our board of directors to deduct from operating surplus each quarter estimated maintenance and replacement capital expenditures, as opposed to actual maintenance and replacement capital expenditures, in order to reduce disparities in operating surplus caused by fluctuating maintenance and replacement capital expenditures, such as drydocking and vessel replacement. The actual cost of replacing the vessels in our portfolio will depend on a number of factors, including prevailing market conditions, charter hire rates and the availability and cost of financing at the time of replacement. Our board of directors, with the approval of the conflicts committee, may determine that one or more of our assumptions should be revised, which could cause our board of directors to increase the amount of estimated maintenance and replacement capital expenditures. We may elect to finance some or all of our maintenance and replacement capital expenditures through the issuance of additional common units which could be dilutive to our existing unitholders. Estimated maintenance capital expenditures will not include maintenance capital expenditures to the extent the charterers bear such expenses. In those cases the amounts received by us from the charterers for such maintenance capital expenditures will not be included in operating surplus. Please read "Risk Factors—Risks Inherent in Our Business—We must make substantial capital expenditures to maintain and replace the operating capacity of our portfolio, which will reduce cash available for distribution. In addition, each quarter we are required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted."

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Maintenance capital expenditures.    With respect to the Exmar-Excelerate joint ventures, maintenance capital expenditures incurred by the joint ventures are recovered as time charter revenues pursuant to the terms of the time charter. However, for the Exmar-Teekay joint ventures, the costs of drydocking are incurred by the joint ventures and not reimbursed.

Replacement capital expenditures.    Our initial annual estimated replacement capital expenditures for purposes of calculating operating surplus will be $13.1 million per year, including financing costs, for replacing our LNGRVs and LNG carrier at the end of their useful lives. The $13.1 million for future replacement of the vessels in our portfolio is based on assumptions regarding the remaining useful lives of the vessels in our portfolio, a long-term net investment rate equivalent to our expected long-term borrowing costs, vessel replacement values based on current market conditions and residual value of the vessels at the end of their useful lives based on current steel prices. Net estimated replacement capital expenditures will be $8.7 million, representing the amounts by which the estimated replacement capital expenditures of the applicable joint ventures exceeds (or is less than) the amount of principal repayment made on debt issued by us or such joint ventures on indebtedness incurred to finance the purchase or construction of the underlying vessels.

Forecast of compliance with debt covenants

Our ability to make distributions could be affected if we or our joint ventures do not remain in compliance with the covenants of our respective financing agreements. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Borrowing Activities." We have assumed we will be in compliance with all of these covenants.

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How we make cash distributions

Distributions of available cash

General

Within 45 days after the end of each quarter, beginning with the quarter ending December 31, 2014, we will distribute all of our available cash (defined below) to unitholders of record on the applicable record date. We will adjust the minimum quarterly distribution for the period from the closing of this offering through December 31, 2014, based on the actual length of the period.

In determining "available cash" and "operating surplus," we will proportionately consolidate our less than wholly-owned subsidiaries, which for this purpose includes joint ventures, provided that such entities were formed for the purpose of owning and operating specified assets, and with respect to which we have at the time of determination at least a 20% beneficial interest and are either consolidated by us for accounting purposes or accounted for by us on the equity method. Available cash and operating surplus shall not include cash on hand at our joint ventures at the time of our initial public offering.

Definition of available cash

Available cash generally means, for each fiscal quarter, all cash on hand at the end of the quarter (including our proportionate share of cash on hand of our subsidiaries):

less, the amount of cash reserves (including our proportionate share of cash reserves of our subsidiaries) established by our board of directors to:

    provide for the proper conduct of our business (including reserves for future capital expenditures and for our anticipated credit needs);

    comply with applicable law, any of our debt instruments, or other agreements; or

    provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters;

plus, all cash on hand (including our proportionate share of cash on hand of our subsidiaries) on the date of determination of available cash for the quarter resulting from (1) working capital borrowings made after the end of the quarter and (2) cash distributions received after the end of the quarter from any our equity interest in any person (other than a subsidiary of us), which distributions are paid by such person in respect of operations conducted by such person during such quarter. Working capital borrowings are generally borrowings that are made under a revolving credit facility and in all cases are used solely for working capital purposes or to pay distributions to partners.

Intent to distribute the minimum quarterly distribution

We intend to distribute to the holders of common units and subordinated units on a quarterly basis at least the minimum quarterly distribution of $              per unit, or $              per unit per year, to the extent we have sufficient cash on hand to pay the distribution after we establish cash reserves and pay fees and expenses. The amount of available cash from operating surplus needed to pay the minimum quarterly distribution for one quarter on all units outstanding immediately after this offering is approximately $               million.

There is no guarantee that we will pay the minimum quarterly distribution on the common units and subordinated units in any quarter. Even if our cash distribution policy is not modified or revoked, the amount of distributions paid under our policy and the decision to make any distribution is determined by

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our board of directors, taking into consideration the terms of our partnership agreement. We will be prohibited from making any distributions to unitholders if it would cause an event of default, or an event of default is then existing, under our financing arrangements. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" for a discussion of the restrictions contained in our financing arrangements that may restrict our ability to make distributions.


Operating surplus and capital surplus

General

All cash distributed to unitholders will be characterized as either "operating surplus" or "capital surplus." We treat distributions of available cash from operating surplus differently than distributions of available cash from capital surplus.

Definition of operating surplus

Operating surplus for any period generally means:

$               million; plus

all of our cash receipts (including our proportionate share of cash receipts of our subsidiaries) after the closing of this offering (provided, that cash receipts from the termination of an interest rate, currency or commodity hedge contract prior to its specified termination date will be included in operating surplus in equal quarterly installments over the remaining scheduled life of such hedge contract), excluding cash from (1) borrowings, other than working capital borrowings, (2) sales of equity and debt securities, (3) sales or other dispositions of assets outside the ordinary course of business, (4) capital contributions or (5) corporate reorganizations or restructurings; plus

working capital borrowings (including our proportionate share of working capital borrowings for our subsidiaries) made after the end of a quarter but before the date of determination of operating surplus for the quarter; plus

interest paid on debt incurred (including periodic net payments under related hedge contracts) and cash distributions paid on equity securities issued (including the amount of any incremental distributions made to the holders of our incentive distribution rights and our proportionate share of such interest and cash distributions paid by our subsidiaries), in each case, to finance all or any portion of the construction, replacement or improvement of a capital asset (such as an LNGRV or LNG carrier) in respect of the period from such financing until the earlier to occur of the date the capital asset is put into service or the date that it is abandoned or disposed of; plus

interest paid on debt incurred (including periodic net payments under related hedge contracts) and cash distributions paid on equity securities issued (including the amount of any incremental distributions made to the holders of our incentive distribution rights and our proportionate share of such interest and cash distributions paid by our subsidiaries), in each case, to pay the construction period interest on debt incurred (including periodic net payments under related interest rate swap agreements), or to pay construction period distributions on equity issued, to finance the construction projects described in the immediately preceding bullet; less

all of our "operating expenditures" (which includes estimated maintenance and replacement capital expenditures and is further described below) of us and our subsidiaries (including our proportionate share of operating expenditures by our subsidiaries) immediately after the closing of this offering; less

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the amount of cash reserves (including our proportionate share of cash reserves for our subsidiaries) established by our board of directors to provide funds for future operating expenditures; less

any cash loss realized on dispositions of assets acquired using investment capital expenditures; less

all working capital borrowings (including our proportionate share of working capital borrowings by our subsidiaries) not repaid within twelve months after having been incurred.

If a working capital borrowing, which increases operating surplus, is not repaid during the 12-month period following the borrowing, it will be deemed repaid at the end of such period, thus decreasing operating surplus at such time. When such working capital borrowing is in fact repaid, it will not be treated as a reduction in operating surplus because operating surplus will have been previously reduced by the deemed repayment.

As described above, operating surplus includes a provision that will enable us, if we choose, to distribute as operating surplus up to $               million of cash we receive in the future from non-operating sources, such as asset sales, issuances of securities and long-term borrowings, that would otherwise be distributed as capital surplus. In addition, the effect of including, as described above, certain cash distributions on equity securities or interest payments on debt in operating surplus would be to increase operating surplus by the amount of any such cash distributions or interest payments. As a result, we may also distribute as operating surplus up to the amount of any such cash distributions or interest payments of cash we receive from non-operating sources.

Operating expenditures generally means all of our cash expenditures, including, but not limited to taxes, employee and director compensation, reimbursement of expenses to our general partner, repayment of working capital borrowings, debt service payments and payments made under any interest rate, currency or commodity hedge contracts (provided that payments made in connection with the termination of any hedge contract prior to the expiration of its stipulated settlement or termination date shall be included in operating expenditures in equal quarterly installments over the remaining scheduled life of such hedge contract), provided that operating expenditures will not include:

deemed repayments of working capital borrowings deducted from operating surplus pursuant to the last bullet point of the definition of operating surplus above when such repayment actually occurs;

payments (including prepayments and payment penalties) of principal of and premium on indebtedness, other than working capital borrowings;

expansion capital expenditures, investment capital expenditures or actual maintenance and replacement capital expenditures (which are discussed in further detail under "—Capital Expenditures" below);

payment of transaction expenses (including taxes) relating to interim capital transactions; or

distributions to partners.

Capital expenditures

For purposes of determining operating surplus, maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long-term the operating capacity of or the revenue generated by our capital assets, and expansion capital expenditures are those capital expenditures that increase the operating capacity of or the revenue generated by our capital assets. In our partnership agreement, we refer to these maintenance and replacement capital expenditures as "maintenance capital expenditures." To the extent, however, that capital expenditures associated with acquiring a new floating

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LNG infrastructure asset or improving an existing one increase the revenues or the operating capacity of our portfolio, those capital expenditures would be classified as expansion capital expenditures.

Investment capital expenditures are those capital expenditures that are neither maintenance and replacement capital expenditures nor expansion capital expenditures. Investment capital expenditures largely will consist of capital expenditures made for investment purposes. Examples of investment capital expenditures include traditional capital expenditures for investment purposes, such as purchases of equity securities, as well as other capital expenditures that might be made in lieu of such traditional investment capital expenditures, such as the acquisition of a capital asset for investment purposes.

Examples of maintenance and replacement capital expenditures include capital expenditures associated with drydocking, modifying an existing vessel or acquiring a new vessel to the extent such expenditures are incurred to maintain the operating capacity of or the revenue generated by the vessels in our portfolio. Maintenance and replacement capital expenditures will also include interest (and related fees) on debt incurred and distributions on equity issued (including the amount of any incremental distributions made to the holders of our incentive distribution rights) to finance the construction of a replacement vessel and paid in respect of the construction period, which we define as the period beginning on the date that we enter into a binding construction contract and ending on the earlier of the date that the replacement vessel commences commercial service or the date that the replacement vessel is abandoned or disposed of. Debt incurred to pay or equity issued to fund construction period interest payments, and distributions on such equity (including the amount of any incremental distributions made to the holders of our incentive distribution rights), will also be considered maintenance and replacement capital expenditures.

Because our maintenance and replacement capital expenditures can be very large and vary significantly in timing, the amount of our actual maintenance and replacement capital expenditures may differ substantially from period to period, which could cause similar fluctuations in the amounts of operating surplus, adjusted operating surplus, and available cash for distribution to our unitholders if we subtracted actual maintenance and replacement capital expenditures from operating surplus each quarter. Accordingly, to eliminate the effect on operating surplus of these fluctuations, our partnership agreement will require that an amount equal to an estimate of the average quarterly maintenance and replacement capital expenditures necessary to maintain the operating capacity of or the revenue generated by our capital assets over the long-term be subtracted from operating surplus each quarter, as opposed to the actual amounts spent. In our partnership agreement, we refer to these estimated maintenance and replacement capital expenditures to be subtracted from operating surplus as "estimated maintenance capital expenditures." The amount of estimated maintenance and replacement capital expenditures deducted from operating surplus is subject to review and change by our board of directors at least once a year, provided that any change must be approved by our conflicts committee. The estimate will be made at least annually and whenever an event occurs that is likely to result in a material adjustment to the amount of our maintenance and replacement capital expenditures, such as a major acquisition or the introduction of new governmental regulations that will affect our portfolio. For purposes of calculating operating surplus, any adjustment to this estimate will be prospective only. For a discussion of the amounts we have allocated toward estimated maintenance and replacement capital expenditures, please read "Our Cash Distribution Policy and Restrictions on Distributions."

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The use of estimated maintenance and replacement capital expenditures in calculating operating surplus will have the following effects:

it will reduce the risk that actual maintenance and replacement capital expenditures in any one quarter will be large enough to make operating surplus less than the minimum quarterly distribution to be paid on all the units for that quarter and subsequent quarters;

it may reduce the need for us to borrow to pay distributions;

it will be more difficult for us to raise our distribution above the minimum quarterly distribution and pay incentive distributions to our general partner; and

it will reduce the likelihood that a large maintenance and replacement capital expenditure in a period will prevent EXMAR from being able to convert some or all of its subordinated units into common units since the effect of an estimate is to spread the expected expense over several periods, mitigating the effect of the actual payment of the expenditure on any single period.

Definition of capital surplus

Capital surplus generally will be generated only by:

borrowings other than working capital borrowings;

sales of debt and equity securities; and

sales or other dispositions of assets for cash, other than inventory, accounts receivable and other current assets sold in the ordinary course of business or non-current assets sold as part of normal retirements or replacements of assets.

Characterization of cash distributions

We will treat all available cash distributed as coming from operating surplus until the sum of all available cash distributed since we began operations equals the operating surplus as of the most recent date of determination of available cash. We will treat any amount distributed in excess of operating surplus, regardless of its source, as capital surplus. As described above, operating surplus does not reflect actual cash on hand that is available for distribution to our unitholders. For example, it includes a provision that will enable us, if we choose, to distribute as operating surplus up to $               million of cash we receive in the future from non-operating sources, such as asset sales, issuances of securities and long-term borrowings, that would otherwise be distributed as capital surplus. We do not anticipate that we will make any distributions from capital surplus.


Subordination period

General

During the subordination period, which we define below, the common units will have the right to receive distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $              per unit, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. Distribution arrearages do not accrue on the subordinated units. The purpose of the subordinated units is to increase the likelihood that during the subordination period there will be available cash from operating surplus to be distributed on the common units.

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Definition of subordination period

The subordination period will extend until the second business day following the distribution of available cash from operating surplus in respect of any quarter, ending on or after September 30, 2017, that each of the following tests are met:

distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;

the "adjusted operating surplus" (as defined below) generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted weighted average basis during those periods; and

there are no outstanding arrearages in payment of the minimum quarterly distribution on the common units.

If the unitholders remove our general partner without cause, the subordination period may end before September 30, 2017.

For purposes of determining whether the subordination period will end, the three consecutive four-quarter periods for which the determination is being made may include one or more quarters with respect to which arrearages in the payment of the minimum quarterly distribution on the common units have accrued, provided that all such arrearages have been repaid prior to the end of each such four-quarter period.

When the subordination period ends, all subordinated units will convert into common units on a one-for-one basis, and the common units will no longer be entitled to arrearages.

Definition of adjusted operating surplus

Adjusted operating surplus for any period generally means:

operating surplus generated with respect to that period (excluding any amounts attributable to the item described in the first bullet point under "—Operating Surplus and Capital Surplus—Definition of Operating Surplus" above); less

the amount of any net increase in working capital borrowings (including our proportionate share of any changes in working capital borrowings of our subsidiaries) with respect to that period; less

the amount of any net reduction in cash reserves for operating expenditures (including our proportionate share of cash reserves of our subsidiaries) over that period not relating to an operating expenditure made during that period; plus

the amount of any net decrease in working capital borrowings (including our proportionate share of any changes in working capital borrowings of our subsidiaries) with respect to that period; plus

the amount of any net increase in cash reserves for operating expenditures (including our proportionate share of cash reserves of our subsidiaries) over that period required by any debt instrument for the repayment of principal, interest or premium; plus

the amount of any net decrease made in subsequent periods to cash reserves for operating expenditures initially established with respect to such period to the extent such decrease results in a reduction in adjusted operating surplus in subsequent periods.

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Adjusted operating surplus is intended to reflect the cash generated from operations during a particular period and therefore excludes net increases in working capital borrowings and net drawdowns of reserves of cash generated in prior periods.

Effect of removal of our general partner on the subordination period

If the unitholders remove our general partner other than for cause and units held by our general partner and its affiliates are not voted in favor of such removal:

the subordination period will end and each subordinated unit will immediately convert into one common unit and will then participate pro rata with the other common units in distributions of available cash;

any existing arrearages in payment of the minimum quarterly distribution on the common units will be extinguished; and

our general partner's non-economic general partner interest and the incentive distribution rights (initially owned by our general partner) will either be sold for cash or converted into common units.


Distributions of available cash from operating surplus during the subordination period

We will make distributions of available cash from operating surplus for any quarter during the subordination period in the following manner:

first, to the common unitholders, pro rata, until we distribute for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter and any arrearages in payment of the minimum quarterly distribution on the common units for any prior quarters during the subordination period;

second, to the subordinated unitholders, pro rata, until we distribute for each subordinated unit an amount equal to the minimum quarterly distribution for that quarter; and

thereafter, in the manner described in "—Incentive Distribution Rights" below.


Distributions of available cash from operating surplus after the subordination period

We will make distributions of available cash from operating surplus for any quarter after the subordination period in the following manner:

first, to all unitholders, pro rata, until we distribute for each outstanding unit an amount equal to the minimum quarterly distribution for that quarter; and

thereafter, in the manner described in "—Incentive Distribution Rights" below.


General partner interest

Our general partner owns a non-economic general partner interest in us, which does not entitle it to receive cash distributions. However, our general partner may in the future own common units or other equity securities in us and will be entitled to receive distributions on any such interests.


Incentive distribution rights

Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Our general partner will hold the incentive distribution rights

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following completion of this offering. Except for transfers of incentive distribution rights to an affiliate or another entity as part of a merger or consolidation with or into, or sale of substantially all of the assets to, such entity, the approval of a majority of our common units (excluding common units held by our general partner and its affiliates), voting separately as a class, generally is required for a transfer of the incentive distribution rights to a third party prior to September 30, 2019. Please read "The Partnership Agreement—Transfer of Incentive Distribution Rights." Any transfer by our general partner of the incentive distribution rights would not change the percentage allocations of quarterly distributions with respect to such rights.

If for any quarter:

we have distributed available cash from operating surplus to the common and subordinated unitholders in an amount equal to the minimum quarterly distribution; and

we have distributed available cash from operating surplus on outstanding common units in an amount necessary to eliminate any cumulative arrearages in payment of the minimum quarterly distribution;

then, we will distribute any additional available cash from operating surplus for that quarter among the unitholders and our general partner in the following manner:

first, to all unitholders, pro rata, until each unitholder receives a total of $              per unit for that quarter (the "first target distribution");

second, 85.0% to all unitholders, pro rata, and 15.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives a total of $              per unit for that quarter (the "second target distribution");

third, 75.0% to all unitholders, pro rata, and 25.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives a total of $              per unit for that quarter (the "third target distribution"); and

thereafter, 50.0% to all unitholders, pro rata, and 50.0% to the holders of the incentive distribution rights, pro rata.

In each case, the amount of the target distribution set forth above is exclusive of any distributions to common unitholders to eliminate any cumulative arrearages in payment of the minimum quarterly distribution.


Percentage allocations of available cash from operating surplus

The following table illustrates the percentage allocations of the additional available cash from operating surplus between the unitholders and the holders of the incentive distribution rights up to the various target distribution levels. The amounts set forth under "Marginal Percentage Interest in Distributions" are the percentage interests of the unitholders and the holders of the incentive distribution rights in any available cash from operating surplus we distribute up to and including the corresponding amount in the column "Total Quarterly Distribution Target Amount," until available cash from operating surplus we distribute reaches the next target distribution level, if any. The percentage interests shown for the

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unitholders and the holders of the incentive distribution rights for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution.

   
 
   
  Marginal percentage interest
in distributions
 
 
  Total quarterly
distribution target
amount

 
 
  Unitholders
  Holders of
IDRs

 
   

Minimum Quarterly Distribution

  $            100.0%     0%  

First Target Distribution

  up to $            100.0%     0%  

Second Target Distribution

  above $       up to $            85.0%     15.0%  

Third Target Distribution

  above $       up to $            75.0%     25.0%  

Thereafter

  above $            50.0%     50.0%  
   


Right to reset incentive distribution levels

Our general partner, as the initial holder of all of our incentive distribution rights, has the right under our partnership agreement to elect to relinquish the right of the holders of our incentive distribution rights to receive incentive distribution payments based on the initial cash target distribution levels and to reset, at higher levels, the minimum quarterly distribution amount and cash target distribution levels upon which the incentive distribution payments to our general partner would be set. Our general partner's right to reset the minimum quarterly distribution amount and the target distribution levels upon which the incentive distributions payable to it are based may be exercised, without approval of our unitholders or the conflicts committee of our board of directors, at any time when there are no subordinated units outstanding and we have made cash distributions to the holders of the incentive distribution rights at the highest level of incentive distribution for each of the prior four consecutive fiscal quarters. If at the time of any election to reset the minimum quarterly distribution amount and the target distribution levels our general partner and its affiliates are not the holders of a majority of the incentive distribution rights, then any such election to reset shall be subject to the prior written concurrence of our general partner that the conditions described in the immediately preceding sentence have been satisfied. The reset minimum quarterly distribution amount and target distribution levels will be higher than the minimum quarterly distribution amount and the target distribution levels prior to the reset such that there will be no incentive distributions paid under the reset target distribution levels until cash distributions per unit following this event increase as described below. We anticipate that our general partner would exercise this reset right in order to facilitate acquisitions or internal growth projects that would otherwise not be sufficiently accretive to cash distributions per common unit, taking into account the existing levels of incentive distribution payments being made to it.

In connection with the resetting of the minimum quarterly distribution amount and the target distribution levels and the corresponding relinquishment by our general partner of incentive distribution payments based on the target cash distributions prior to the reset, our general partner will be entitled to receive a number of newly issued common units based on a predetermined formula described below that takes into account the "cash parity" value of the cash distribution related to the incentive distribution rights received by our general partner for the quarter prior to the reset event as compared to the cash distribution per common unit during this period.

The number of common units that our general partner would be entitled to receive from us in connection with a resetting of the minimum quarterly distribution amount and the target distribution levels then in effect would be equal to (x) the cash distribution received by our general partner in respect of its incentive

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distribution rights during the fiscal quarter ended immediately prior to the date of such reset election divided by (y) the amount of cash distributed per common unit during such quarter. The issuance of the additional common units will be conditioned upon approval of the listing or admission for trading of such common units by the national securities exchange on which the common units are then listed or admitted for trading.

Following a reset election, the minimum quarterly distribution amount will be reset to an amount equal to the average cash distribution amount per unit for the fiscal quarter immediately preceding the reset election (such amount is referred to as the "reset minimum quarterly distribution") and the target distribution levels will be reset to be correspondingly higher such that we would distribute all of our available cash from operating surplus for each quarter thereafter as follows:

first, to all unitholders, pro rata, until each unitholder receives an amount equal to 115.0% of the reset minimum quarterly distribution for that quarter;

second, 85.0% to all unitholders, pro rata, and 15.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives an amount per unit equal to 125.0% of the reset minimum quarterly distribution for the quarter;

third, 75.0% to all unitholders, pro rata, and 25.0% to the holders of the incentive distribution rights, pro rata, until each unitholder receives an amount per unit equal to 150.0% of the reset minimum quarterly distribution for the quarter; and

thereafter, 50.0% to all unitholders, pro rata, and 50.0% to the holders of the incentive distribution rights, pro rata.

The following table illustrates the percentage allocation of available cash from operating surplus between the unitholders, our general partner and the holders of the incentive distribution rights at various levels of cash distribution levels pursuant to the cash distribution provision of our partnership agreement in effect at the closing of this offering as well as following a hypothetical reset of the minimum quarterly distribution and target distribution levels based on the assumption that the quarterly cash distribution amount per common unit during the fiscal quarter immediately preceding the reset election was $              .

 
 
   
  Marginal percentage
interest in
distribution
   
 
  Quarterly distribution
per unit prior to
reset

  Quarterly distribution per
unit following hypothetical
reset

 
  Unitholders
  Holders of
IDRs

 

Minimum Quarterly Distribution

  $            100.0%     0%   $       

First Target Distribution

  above $       up to $            100.0%     0%   up to $       (1)

Second Target Distribution

  above $       up to $            85.0%     15.0%   above $       up to $       (2)

Third Target Distribution

  above $       up to $            75.0%     25.0%   above $       up to $       (3)

Thereafter

  above $            50.0%     50.0%   above $       (3)
 

(1)    This amount is 115% of the hypothetical reset minimum quarterly distribution.

(2)    This amount is 125% of the hypothetical reset minimum quarterly distribution.

(3)    This amount is 150% of the hypothetical reset minimum quarterly distribution.

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The following table illustrates the total amount of available cash from operating surplus that would be distributed to the unitholders and the holders of the incentive distribution rights based on the amounts distributed for the quarter immediately prior to the reset. The table assumes that there are                           common units outstanding and that the distribution to each common unit is $              for the quarter prior to the reset. The assumed number of outstanding units assumes the conversion of all subordinated units into common units and no additional unit issuances.