The Partnership has elected to be treated as a C-Corporation for tax purposes (our investors receive the standard 1099 form and not a K-1 form).

Distributions we pay to U.S. unitholders will be treated as a dividend for U.S. federal income tax purposes to the extent the distributions come from earnings and profits (“E&P”) and as a nondividend distribution or a return of capital (“ROC”) to the extent the distributions exceed E&P.

Distributions we pay to a non-U.S. unitholder will not be subject to U.S. federal income tax or withholding tax if the non-U.S. unitholder is not engaged in a U.S. trade or business.

For more detailed tax commentary, please refer to the F-1 prospectus for Teekay Offshore Partners L.P. (“TOO”).

The chart below describes the total distribution made by TOO in 2011 and the reporting of such distributions on United States Internal Revenue Service (“IRS”) Form 1099.

Please note that the determination of whether these distributions constitute a dividend from E&P or a ROC is not made for U.S. federal income tax purposes until the end of the fiscal year. If you are a U.S. unitholder and you received an IRS Form 1099 that does not set forth such amounts, you should contact your broker or tax advisor.

Holders are directed to consult their own tax advisors to determine the appropriate tax treatment with respect to the distributions.

Record Date	Total Distribution	Amount Reported as a Qualified Dividend in Item 1 (b) of Form 1099	% Reported as a Qualified Dividend in Item 1 (b) of Form 1099	Amount Reported as a Nondividend distribution in Item 3 of Form 1099	% Reported as a Nondividend Distribution in Item 3 of Form 1099
02/07/11	$27,723,191	$1,527,524	5.51%	$26,195,667	94.49%
05/06/11	$33,612,241	$1,852,005	5.51%	$31,760,236	94.49%
08/05/11	$33,993,998	$1,873,040	5.51%	$32,120,958	94.49%
11/02/11	$33,993,998	$1,873,0409	5.51%	$32,120,958	94.49%

Disclaimer:
This chart and related comments are intended as general information only and do not constitute tax advice. This information was not written or intended to be used, and it cannot be used, by any person as a basis for avoiding federal tax penalties that may be imposed on that person. Unitholders should consult their own tax advisors with respect to the specific tax consequences to them. Teekay Offshore Partners L.P. makes no warranty either expressed or implied regarding any tax issues of its unitholders.