Teekay Offshore Partners Announces Public Offering of 4,400,000 Common Units and Acquisition of FSO

Hamilton, Bermuda, March 16, 2010 – Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE: TOO) announced today that it plans to offer 4,400,000 common units, representing limited partner interests, in a public offering. Teekay Offshore expects to grant the underwriters a 30-day option to purchase an additional 660,000 common units to cover over-allotments, if any. The Partnership expects to use a portion of the net proceeds from the public offering to repay the approximately $60 million of outstanding debt under its unsecured subordinated debt facility with Teekay Corporation, and expects to use the remaining net proceeds, together with cash on hand, to finance the purchase of a floating storage and offtake (FSO) unit, the Falcon Spirit.

Teekay Offshore Partners L.P. is a publicly-traded master limited partnership formed by Teekay Corporation (NYSE: TK), and is an international provider of marine transportation and storage services to the offshore oil industry. Teekay Offshore currently owns a 51% interest in and controls Teekay Offshore Operating L.P., which has a fleet of 33 shuttle tankers (seven of which are chartered-in), four FSO units and eleven conventional crude oil Aframax tankers. The Partnership also has direct ownership interests in two shuttle tankers, one FSO unit and one floating production, storage and offloading (FPSO) unit.

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

The joint book-running managers for this offering are Morgan Stanley and BofA Merrill Lynch.

Teekay Offshore Partners L.P.