Slide 1: Investor Meeting 2009 Presentation
TEEKAY GROUP Investor Meeting 2009 Presentation June 23, 2009 www.teekay.com
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including statements regarding: tanker marke
Slide 3: Agenda
Agenda f Teekay Corp. 8:30 am - 10:00 am f Break f Teekay LNG Partners 10:15 am - 10:45 am (and LNG Market Update) f Teekay Offshore Partners 10:45 am - 11:15 am (and Offshore Market Update) f Teekay Tankers 11:15 am - 11:45 am (and Tanker Market Update) 3 www.teekay.com
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Slide 5: Spotlight on Teekay Parent
TEEKAY CORPORATION Spotlight on Teekay Parent June 23, 2009 www.teekay.com
Slide 6: Investment Highlights
Investment Highlights f Roughly half of Teekay’s value not yet reflected in current stock price f Management has a clear plan to narrow the value gap by: f Actively managing our asset portfolio f Improving profitability of our existing businesses f Further enhancing our financial strength f Providin
Slide 7: Teekay Corporation
Teekay Corporation f Founded 1973 by the late Torben Karlshoej f Transnational company with 6,800 employees f Transporter of more than 10% of the world’s seaborne oil f World’s largest operator of shuttle tankers and mid-size oil tankers f Third largest independent LNG ship owner f Leader in harsh w
Slide 8: Teekay Creates Value through Active Asset Management
Teekay Creates Value through Active Asset Management f Track record of: f Buying and building valuable franchises f Managing the cycle f Realizing value through well-timed asset sales Acquired Acquired Acquired Navion Tapias Acquired Acquired OMI Kenai Shuttle LNG Carrier Petrojarl FPSO Suezmax LNG
Slide 9: Marine Midstream Concept
Marine Midstream Concept Examples of FSO Customer Value Chain Shuttle Tanker Offshore Platform Storage Tanks Crude Tanker FPSO Refinery Ship to Ship Teekay is in every part Lightering of the value chain Storage Tanks Exports Product Carrier LNG Liquefaction LNG LNG Carrier Regasification 9 www.teeka
Slide 10: From Reservoir to Refinery
From Reservoir to Refinery 5 Floating, Production Storage & Offtake Units (FPSO) 40 Shuttle Tankers 12 Product 25 Gas Tankers 5 Floating Storage 85 Crude Oil Tankers & Offloading Units Tankers* *Excludes commercially managed vessels. 10 www.teekay.com
Slide 11: Growing Stable Cash Flows
Growing Stable Cash Flows f Teekay has diversified its cash flow streams beyond cyclical spot tanker markets Historical Cash Flow $1,200 $1,000 $800 Teekay Corp. Q4 ’08 (annualized): over ($ millions) $560m of fixed-rate $600 CFVO $400 $200 $- 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 F
Slide 12: Unrivaled Forward Coverage
Unrivaled Forward Coverage f Over 75% of Teekay Corporation’s Invested Capital operates under long-term, fixed-rate contracts with high quality counterparties Total Forward Fixed-rate Revenues Exceed $12 Billion Avg. Remaining Forward Fixed-rate Segment # of Vessels Primary Charterers Contract (2) R
Slide 13: Financial Market Profile
Financial Market Profile TEEKAY CORPORATION NYSE: TK f Owner and operator of 64 tankers and 5 FPSOs f $2.6bn of parent company assets, including newbuilding installments + f $1.3bn equity ownership in daughter companies = Total assets of $3.9bn 53.05% Ownership 49.99% Ownership (incl. 2% GP interest
Slide 14: Spotlight on Teekay Parent's Significant Value
Spotlight on Teekay Parent’s Significant Value f Conventional tanker assets Teekay f FPSO assets Parent f Newbuildings Asset f Equity ownership in daughter Portfolio companies Paths to f Actively managing asset portfolio Realizing f Improving profitability Value f De-leveraging at Teekay Parent 14 w
Slide 15: Teekay Parent Asset Portfolio
Teekay Parent Asset Portfolio Spotlight on Teekay Parent’s Significant Value f Conventional tanker assets Teekay f FPSO assets Parent f Newbuildings Asset f Equity ownership in daughter Portfolio companies f Actively managing asset portfolio Paths to Realizing f Improving profitability Value f De-le
Slide 16: Owned Conventional Tanker Assets
Teekay Parent Asset Portfolio Owned Conventional Tanker Assets Estimated Asset Class # Vessels(1) FMV(1)(2) ($ millions) Aframax Tankers 7 $304 Suezmax Tankers 10 $702 LR2 Product Tankers 3 $178 Other Product Tankers 5 $110 Total 25 $1,294 Operating Strategy f Managing spot exposure based on market
Slide 17: FPSO Assets
Teekay Parent Asset Portfolio FPSO Assets Estimated # Units FMV* ($ millions) FPSOs 5 $1,056 Operating Strategy f Fleet purchased with below-market contracts f Focused on securing enhanced contracts for existing fleet f Improving economics of existing contracts f Pursuing new charters for units comi
Slide 18: Newbuildings
Teekay Parent Asset Portfolio Newbuildings Contracted Cost to Paid Installments Asset Class # Vessels* Delivery Teekay (at June 15, 2009) ($ millions) ($ millions) Suezmax Tankers 3 2009/10 $213 $136 Shuttle Tankers 4 2010/11 $463 $58 LNG Carriers (33% of JV) 4 2011/12 $299 $30 Total 11 $975 $224 f
Slide 19: Equity Ownership in Daughter Companies
Teekay Parent Asset Portfolio Equity Ownership in Daughter Companies f Teekay owns a significant stake in each of its daughter companies f Controls TOO and TGP through its GP interests and TNK through super-voting shares f Value of these investments is based on market capitalization f $1/share movem
Slide 20: Teekay Asset Value Summary
Teekay Parent Asset Portfolio Teekay Asset Value Summary ($ millions) (per share) Conventional Tanker Assets $1,294 FPSO Assets $1,056 Newbuildings $224 FMV of Teekay Parent Fleet $2,574 Less: Teekay Parent Net Debt(1) ($980) NAV of Teekay Parent Fleet $1,594 $21.98 Plus: Value of Daughter Current(2
Slide 21: Paths to Realizing Value
Paths to Realizing Value Spotlight on Teekay Parent’s Significant Value f Conventional tanker assets Teekay f FPSO assets Parent f Newbuildings Asset f Equity ownership in daughter Portfolio companies f Actively managing asset portfolio Paths to Realizing f Improving profitability Value f De-leverag
Slide 22: Aframax Fleet
Paths to Realizing Value: Actively Managing Asset Portfolio Teekay Parent Conventional Tankers – Aframax Fleet(1) f In-chartered Aframax fleet, which represents Teekay’s largest spot market exposure, will reduce significantly through 2009 f Additional out-charters provide further cover at rates well
Slide 23: Suezmax Fleet
Paths to Realizing Value: Actively Managing Asset Portfolio Teekay Parent Conventional Tankers – Suezmax Fleet(1) f Due to market characteristics, we have strategically focused our conventional tanker fleet growth on the Suezmax-class f Significant portion of Teekay Parent Suezmax fleet trades under
Slide 24: Product Tanker Fleet
Paths to Realizing Value: Actively Managing Asset Portfolio Teekay Parent Conventional Tankers – Product Tanker Fleet(1) f Reducing small- and medium-size product spot exposure during a time of weak product tanker market f In 2009, on average over two-thirds of product tanker fleet is operating unde
Slide 25: Focused on Improving Profitability
Paths to Realizing Value: Improving Profitability Focused on Improving Profitability f Value enhancement is not dependent on growth f Teekay Parent expects to earn more from existing assets f Renegotiating FPSO contracts at higher rates f Reducing G&A and OPEX f Divesting non-core, less profitable a
Slide 26: FPSO Cash Flows
Paths to Realizing Value: Improving Profitability Recontracting Significantly Enhances FPSO Cash Flows f Assuming current FPSO market conditions, cash flow from our existing FPSOs is projected to more than triple over the next five years $180 $160 FPSO Cash Flows ($ Millions) $140 $120 $100 $80 $60
Slide 27: Profitability Enhanced by Reduction in G&A
Paths to Realizing Value: Improving Profitability Profitability Enhanced by Reduction in G&A f Since peaking in Q2 2008, quarterly G&A run-rate has been reduced by approximately 20%, or $10m f Headcount reductions, office rationalizations and cost saving initiatives Teekay Consolidated 2008 Normaliz
Slide 28: Profitability Further Enhanced by Lower Operating Costs
Paths to Realizing Value: Improving Profitability Profitability Further Enhanced by Lower Operating Costs f Several initiatives currently underway to reduce vessel operating expenses f Key areas of cost reduction focus: Manning f Changing nationality mix f Reviewing manning levels Repairs and f Rene
Slide 29: De-Leveraging is a Top Priority
Paths to Realizing Value: De-leveraging De-Leveraging is a Top Priority f Incremental free cash flow as well as proceeds from dropdown transactions and third-party asset sales will be used to reduce Teekay Parent debt f De-leveraging the Teekay Parent balance sheet will position the Company for futu
Slide 30: De-Leveraging - Dropdown Transactions
Paths to Realizing Value: De-leveraging De-Leveraging - Dropdown Transactions f Approximately $1.7 billion of Teekay Parent assets acquired by daughter companies since December 2007 Company Completed Sale Proceeds Date Dropdowns (USD millions) 2007 TNK f IPO: 46% interest in 9 Aframaxes $208 Dec. 20
Slide 31: De-Leveraging - Third-Party Asset Sales
Paths to Realizing Value: De-leveraging De-Leveraging - Third-Party Asset Sales f Over $570 million raised through asset sales / sale-leasebacks in 2008 and 2009 YTD, generating total gains of $142 million Completed Proceeds Gain/(Loss) Date Asset Sales (USD millions) (USD millions) Handymax (Beas S
Slide 32: Spotlight on Teekay Parent's Significant Value
Spotlight on Teekay Parent’s Significant Value f Conventional tanker ¨ 26 vessels or $1.3bn of value Teekay assets Parent f FPSO assets ¨ 5 units valued at $1.1bn Asset f Newbuildings ¨ $224m of installments paid to date for 11 new vessels Portfolio f Equity ownership in ¨ $1.3bn of publicly valued
Slide 33: Teekay Parent Financial Discussion
TEEKAY PARENT Financial Discussion www.teekay.com
Slide 34: Financial Highlights - Teekay Parent
Financial Highlights - Teekay Parent Well-positioned in the current economic and financial environment: 1. Strong liquidity, including committed financing for remaining newbuilding program 2. Favorable debt to asset profile and no covenant concerns 3. No requirement to access capital markets 4. Comm
Slide 35: Strong Liquidity Position with 100% Funding for CAPEX
Strong Liquidity Position with 100% Funding for CAPEX TEEKAY PARENT TOTAL LIQUIDITY CAPEX & FUNDING As of December 31, 2008 As of December 31, 2008 Cash $ 529m Total CAPEX $ 932m Undrawn Revolving Pre-arranged, committed $ 503m <$ 850m> Facilities newbuild financing To be funded from operating cash
Slide 36: Majority of Consolidated Debt is Non-Recourse to Teekay Parent
Majority of Consolidated Debt is Non-Recourse to Teekay Parent f Of Teekay Consolidated’s $4.3bn net debt at December 31, 2008, $3.4bn is non-recourse to Teekay Parent Teekay Consolidated Teekay Parent Total Debt 5,770 Total Debt 1,675 Cash (805) Cash (529) Restricted Cash (651) Restricted Cash (8)
Slide 37: Teekay Parent Debt Composition
Teekay Parent Debt Composition f Approximately 80% of Teekay Parent gross debt is secured against specific vessel or FPSO assets f All-in average cost of debt = ~6% f Cost on undrawn facilities ($503m) = LIBOR + average spread of +60 bp $2,000 $1,675 $1,500 $345 Unsecured Secured $ Millions $1,000 $
Slide 38: Teekay Parent Refinancing Requirements through 2013
Teekay Parent Refinancing Requirements through 2013 f No significant balloon payments until 2011 $1,500 Balloon Payments $1,032 Undrawn Lines $ Millions $1,000 Cash $503 $500 $529 $430 $235 $150 $0 Total Liquidity 2009 2010 2011 2012 2013 31-Dec-08 Note: Adjusted to reflect extension of $400 million
Slide 39: Covenant-lite Debt Provides Flexibility
Covenant-lite Debt Provides Flexibility f Teekay’s debt has few covenants f No covenant concerns f Most stringent financial covenant for Teekay Parent is based on maintaining a minimum level of cash or liquidity f Minimum liquidity requirement as at December 31, 2008 was ~$150m (vs. $1bn actual liqu
Slide 40: Capital Markets Remain Open to Teekay
Capital Markets Remain Open to Teekay f Teekay has been actively negotiating new debt financing and extensions on existing facilities f Proceeds from daughter company equity issuance used to finance dropdown transactions from Teekay Parent Commercial Debt Public Equity $400m facility (TK) – 2 year e
Slide 41: Teekay's Dividend is Funded by MLP Distributions
Teekay’s Dividend is Funded by MLP Distributions f Cash flows from Teekay Parent’s fleet, Teekay Tankers’ dividend and 49% of OPCO remain at Teekay parent and can be used for de- leveraging (millions, except where noted) TOO TGP Total LP units owned by Teekay 14.5 24.7 Current distribution per unit
Slide 42: Free Cash Flow Scenario Analysis
Free Cash Flow Scenario Analysis f The following analysis illustrates Teekay Parent’s expected cash flow growth under two scenarios: f Base case – flat market in 2H 2009 and moderate recovery in 2010/11 f Low case – relatively weak market through 2011 f Assumes status quo: f Existing fleet with the
Slide 43: Teekay Parent Cash Flow - Base Case Scenario
Teekay Parent Cash Flow – Base Case Scenario f Under the base case scenario, Teekay Parent’s free cash flow will increase considerably with improvements in spot revenue and lower time-charter hire expenses Spot Tanker Rate Assumptions: Estimates Base case scenario Q1 2009 Q2 2009 2H 2009 2010 2011 A
Slide 44: Teekay Parent Financial Forecast - Low Case
Teekay Parent Financial Forecast – Low Case f Even in the low case scenario, Teekay Parent returns to positive free cash flow in 2010 Spot Tanker Rate Assumptions: Estimates Low case scenario Q1 2009 Q2 2009 2H 2009 2010 2011 Aframax rates 25,000 15,000 15,000 18,000 18,000 Suezmax rates 40,000 24,0
Slide 45: Cash Flow Break-Even Declining Rapidly
Cash Flow Break-Even Declining Rapidly f The roll-off of in-chartered vessels and renewal of fixed-rate FPSO contracts at higher rates will lower cash flow breakeven and improve cash flow generation at Teekay Parent f Operating leverage is maintained Aframax Spot Cash Flow Break Even Rate* $16,000 $
Slide 46: Dropdown Benefits - Illustrative Dropdown
Dropdown Benefits - Illustrative Dropdown TEEKAY PARENT BALANCE SHEET TEEKAY PARENT CASH FLOW Pre-dropdown Post-dropdown Pre-dropdown Post-dropdown Asset: Debt: EBITDA: $60m Increased LP and GP Net Debt decreased $300m $300m $200m Dist’ns Dropdown Payment Dropdown Payment TEEKAY ‘Daughter’ BALANCE S
Slide 47: De-Leveraging and Building Liquidity are Top Priorities
De-Leveraging and Building Liquidity are Top Priorities f Even including newbuilding debt, the Target Change in Teekay Parent Net Debt targeted dropdown $2,500 schedule will substantially $2,000 decrease Teekay Net Debt (Millions) $1,500 Parent’s net debt by 2011 $1,000 f Free cash flow and $500 any
Slide 48: Concluding Remarks
TEEKAY CORPORATION Concluding Remarks www.teekay.com
Slide 49: Committed to Realizing Teekay's True Value
Committed to Realizing Teekay’s True Value f Teekay is currently trading at just over half of its fair market value f Management has a clear plan to narrow the value gap by: f Actively managing our asset portfolio f Improving profitability of our existing businesses f Further enhancing our financial
Slide 50: Teekay is Trading at a 47% Discount to its NAV
Teekay is Trading at a 47% Discount to its NAV ($ millions) (per share) Conventional Tanker Assets $1,294 FPSO Assets $1,056 Newbuildings $224 FMV of Teekay Parent Fleet $2,574 Less: Teekay Parent Net Debt(1) ($980) NAV of Teekay Parent Fleet $1,594 $21.98 Plus: Value of Daughter Current(2) $1,309 $