Teekay Tankers Ltd. · NYSE:TNK
Teekay Tankers — Teekay Group — Investor Day (November 2019)
110 slides from Teekay Tankers's investor day presentation, Nov 14, 2019
Slide 1: Teekay Group Investor Day
TEEKAY GROUP INVESTOR DAY November 14, 2019
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, among other things, re
Slide 3: Today's Agenda
Opening Today’s Agenda Remarks David Schellenberg, Chairman Teekay Corporation (TK) Kenneth Hvid, CEO Vince Lok, CFO Teekay LNG Partners (TGP) Mark Kremin, CEO Scott Gayton, CFO Teekay Tankers (TNK) Kevin Mackay, CEO Stewart Andrade, CFO Q&A 3
Slide 4: Teekay Corporation
Teekay Corporation Kenneth Hvid & Vince Lok
Slide 5: Teekay Corporation Investment Highlights
Teekay Corporation Investment Highlights Growing Cash Flows Strengthening Balance Simplifying and and Improving Sheets Provide Capital Focusing Profitability Allocation Flexibility Focusing on core Gas and Tanker Estimated Total Adjusted Each entity expected to further businesses EBITDA(1) of approx
Slide 6: Quote from J. Torben Karlshoej
“It is quite simple: nothing less than being the best is good enough and then once we have achieved this goal, we shall have to go for the next one – absolute excellence” - J. TORBEN KARLSHOEJ 6
Slide 7: Torben's SPIRIT lives on...
Torben’s SPIRIT lives on...
Slide 8: Teekay Group Senior Leadership Team
Teekay Group Senior Leadership Team Kenneth Hvid Vince Lok William Hung President and CEO EVP and CFO EVP, Strategic Development Mark Kremin Kevin Mackay Art Bensler President and CEO, TGP President and CEO, TNK EVP and General Counsel 8
Slide 9: Teekay at a Glance
TEEKAY AT A GLANCE 46 years of experience (since 1973) 3 NYSE listings sea and shore 5700 employees TK Teekay Corporation TGP Teekay LNG Partners L.P operating offices around 12 the world TNK Teekay Tankers Ltd. Gas Shipping Oil Shipping 3rd largest independent LNG carrier owner / operator $12B tota
Slide 10: Teekay is an Essential Part of the Energy Value Chain
Teekay is an Essential Part of the Energy Value Chain 10
Slide 11: Stable Asset Portfolio With Diverse Customer Base
Stable Asset Portfolio With Diverse Customer Base Invested Capital by Segment(1) Supported by unrivaled contracted revenue with strong counterparties Growing fixed-rate gas cash 1% LNG 6% flows provide stability with significant upside from tanker cash flows $9.8B 71% Forward fee-based revenues(2) 2
Slide 12: Teekay Group Corporate Structure
Teekay Group Corporate Structure • Operator Teekay Corporation (TK) • Project Market Cap: $528 million Developer Fleet: 3 FPSOs • Portfolio Manager Consolidated Economic Interest: 33.9% Economic Interest: 28.8% GP Interest (and IDRs): 100.0% Voting Rights: 54.0% Teekay LNG Partners Teekay Tankers (T
Slide 13: Stable and Growing Gas Cash Flows
Stable and Growing Gas Cash Flows Teekay Group Total Adjusted EBITDA (1) With upside potential as tanker market strengthens 1,400 +113% 1,200 USD Millions 1,000 800 600 +70% 400 200 - (2) (3) (4) 2017 2018 2019E 2020E Gas Cash Flows Tanker and 3 FPSO Cash Flows (1) Total Adjusted EBITDA represents n
Slide 14: Teekay Is At A Turning Point
Teekay Is At A Turning Point FY 2014(1) Current Gas shipping Cash flows expected to Gas shipping Core Businesses Oil shipping continue to grow as projects are Oil shipping Offshore fully reflected in cash flows and the tanker market recovers Total Adjusted EBITDA $1.0B $0.9B(2) ($0.6B excl. TOO) Tot
Slide 15: Teekay's Strategic Focus Over Time
Teekay’s Strategic Focus Over Time 15
Slide 16: Fundamental Drivers For Oil & Gas Shipping Remain Strong
Fundamental Drivers For Oil & Gas Shipping Remain Strong Global Energy Mix World needs more energy 700 • Global population 8.5B by 2030 • Energy demand growth of 10% by 2030 600 • Driven by growth in China and India middle-class 500 Hydrocarbons remain essential Exajoules per year • Affordable, depe
Slide 17: Positive Long-Term Outlook For Energy Shipping
Positive Long-Term Outlook For Energy Shipping Gas Shipping Oil Shipping Rising global energy demand and increasing • Natural gas will be the largest source of energy growth • Remains the world’s largest energy source over the dislocation between areas of over the next 15 years next 15 years supply
Slide 18: Changing Global Shipping Landscape
Changing Global Shipping Landscape SHIFTING GEOPOLITICS GREENING OF SHIPPING TECHNOLOGY DISRUPTION • China-U.S. trade war • Increasing regulations • LNG propulsion • U.S. sanctions on Iran, Venezuela • Future decarbonization of shipping • Automated ships and COSCO Tanker Shipping • Increasing focus
Slide 19: The Landscape: Today's Conundrums
The Landscape: Today’s Conundrums MORAL SOCIAL BUSINESS 19
Slide 20: Teekay's Value Era Framework
Teekay’s Value Era Framework OUR BUSINESS Bringing Energy to the World with Teekay Spirit OUR COMPASS To Be the Most Trusted Shipping Company OUR Employees Customers Shareholders Partners Society STAKEHOLDERS BUSINESS Gas Tankers FPSOs STRATEGIES Operating Model Digital People TEEKAY GROUP INITIATIV
Slide 21: A New Generation of Energy Efficient LNG Carriers
A New Generation of Energy Efficient LNG Carriers Vessel Size vs. Fuel Consumption Consumption Per Cargo Capacity Teekay’s newest LNG carriers carry 20% more cargo 200 250 1.4 compared to earlier generation Average Vessel Size carriers, while also consuming Average Daily Consumption 40% less fuel pe
Slide 22: Sustainability Through Innovation
Sustainability Through Innovation As one of the world’s leading energy shipping companies, Teekay is committed to increasing the sustainability of our operations Picture? Leading the industry in next-generation eco- Exceeding global standards by powering our tanker design and technology vessels with
Slide 23: Promoting Responsible Ship Recycling
Promoting Responsible Ship Recycling Stringent Teekay process developed for ship recycling – above and beyond the Hong Kong Convention 6 Teekay vessels recycled in India since 2017 Prior to selection, recycling facilities are audited to ensure compliance with Teekay standards During recycling proces
Slide 24: Safety and Sustainability at Teekay
Safety and Sustainability at Teekay Recent Acknowledgements 2019 Shipping Company 2018 Tanker Shipping and Trade Entrusted to Lift 2018 Jones F. Delvin Award of the Year Environmental Award From Valdez, Alaska Named “Shipping Company of the Presented by the Chamber of Teekay-developed E-Shuttles wil
Slide 25: Teekay's Value Era Framework
Teekay’s Value Era Framework OUR BUSINESS Bringing Energy to the World with Teekay Spirit OUR COMPASS To Be the Most Trusted Shipping Company OUR Employees Customers Shareholders Partners Society STAKEHOLDERS BUSINESS Gas Tankers FPSOs STRATEGIES Operating Model People Digital People TEEKAY GROUP IN
Slide 26: Focus the Business, Simplify the Structure
Focus the Business, Simplify the Structure Tighter business focus with simplified structures that drive synergies and efficiencies Gas Tankers Benefits of global shared services: • Lower G&A costs Business Development Business Development • Better access and lower cost of Chartering & Commercial Ops
Slide 27: Teekay's Digital Strategy
Teekay’s Digital Strategy OUR DIGITAL Teekay: Powered by Digital VISION OUR DIGITAL Operational Excellence Driven by Digital to Deliver Value MISSION Data as an Digitally Connected to Asset Driven New Value Simplified Customer connecting Organization Generation OUR STRATEGIC Operations Outcomes sens
Slide 28: Operational Leadership Enabled by Digital
Operational Leadership Enabled by Digital 28
Slide 29: Teekay's People and Culture
Teekay’s People and Culture 5700 people across sea & shore guided by our SPIRIT values SAFETY & PASSION INTEGRITY RELIABILITY INNOVATION TEAMWORK SUSTAINABILITY fostering leadership transnational employer of choice flexible workforce at all levels staff spanning the globe across sea and shore resour
Slide 30: Roles of Teekay Corporation
Roles of Teekay Corporation OPERATOR PROJECT DEVELOPER PORTFOLIO MANAGER • Operate Group with • Source, develop, invest • Supportive sponsor “One Teekay” mindset in and execute new and active approach to business opportunities Daughter strategies • Ensure continued operational excellence • Leverage
Slide 31: Generating Value from Teekay Franchise
Generating Value from Teekay Franchise “Software” “Hardware” (Leveraging Teekay’s (Deploying capital) capabilities) • Third party fee-based service • Indirect (Daughter level) business • Direct (Teekay Corp. level) • Incentive fees (IDRs, warrants, etc.) Australia (Government Services) (Bulker Inves
Slide 32: Teekay Group Capital Allocation Framework
Teekay Group Capital Allocation Framework Currently focused on Sources of Capital Capital Allocation Priorities strengthening balance sheets: Primary: Strong Secondary: Value-based • Builds equity value Free Cash Flow balance sheet and liquidity capital allocation • Reduces cost of capital Further D
Slide 33: Teekay Parent FPSOs
• Completed a 3.5 year contract to extend production on the Chestnut field to Hummingbird March 2023 where the unit has operated since 2008 • Customer to begin drilling fourth production well before the end of 2019 Teekay Parent FPSOs All three units returned to production in Q4-19 following • Compl
Slide 34: TGP IDRs
TGP IDRs We acknowledge that monetization of TGP’s Incentive Distribution Rights (IDRs) could further align GP and LP interests and improve TGP’s future cost of capital With projects now nearing completion, TGP will have greater cash flow visibility and clear deleveraging path Any future transaction
Slide 35: Teekay Corporation Potential Value Uplift
Teekay Corporation Potential Value Uplift From Daughter Appreciation Value uplift based on closing TK stock price of $5.24/share on Nov 6/19(1) TGP Unit Price ($14.17/unit on Nov 6/19) 15.00 17.00 19.00 21.00 23.00 25.00 2.00 5% 15% 25% 35% 46% 56% TNK Share Price ($1.95/share on 2.50 12% 22% 33% 43
Slide 36: Financial Overview
Financial Overview
Slide 37: Financial Progress Since 2014
Financial Progress Since 2014 Since 2014, Teekay has $12.6 billion $1.9 billion $2.5 billion overcome significant challenges: Bank financings and New bonds raised New equity raised refinancings and sale- Significant unfinanced leaseback transactions orderbook in LNG (TGP) and Offshore (TOO) business
Slide 38: Teekay Group's Financial Focus
Teekay Group’s Financial Focus 1. De-risked Teekay 2. Building Balance 3. Improving Group Sheet Strength Profitability 38
Slide 39: Financial Focus
Financial Focus 1. De-risked Teekay 2. Building Balance 3. Improving Group Sheet Strength Profitability Project Deliveries Financings 39
Slide 40: Project Deliveries Since 2014
TGP: Yamal Project TGP: MEGI TGP: M-class (Shell) 1. De-risked Teekay Group Eduard Toll (Arc7) Bahrain Spirit (MEGI) - FSU Macoma (MEGI) Georgiy Ushakov (Arc7) Creole Spirit (MEGI) Magdala (MEGI) Project Deliveries since 2014 Nikolay Yevgenov (Arc7) Oak Spirit (MEGI) Megara (MEGI) Nearing completion
Slide 41: Unfunded Capex & Debt Maturities
1. De-risked Teekay 7,000 Group Financings: Unfunded 6,000 Capex & Debt Maturities • Currently no unfunded 5,000 Capex compared to $3.7 billion at the end of 2014 (including TOO) USD millions 4,000 • Brookfield transaction in September 2017 resulted in the 3,000 deconsolidation of TOO 2,000 1,000 -
Slide 42: Financial Focus
Financial Focus 1. De-risked Teekay 2. Building Balance 3. Improving Group Sheet Strength Profitability Project Deliveries Delevering Financings Capital Allocation 42
Slide 43: Building Balance Sheet Strength
2. Building Balance Sheet Strength Teekay Group Capital Sources of Capital Capital Allocation Priorities Allocation Framework Primary: Strong Secondary: Value-based Currently focused on Free Cash Flow balance sheet and liquidity capital allocation strengthening balance sheets: • Builds equity value
Slide 44: Leverage Target Based on Business Risk
2. Building Balance Sheet Strength Leverage Target Based on Business Risk Higher TNK: • Stronger spot market TNK TNK Target Range • Opportunistic asset sales as market further strengthens Current Business Risk • Lower target leverage due to cyclical nature of business TGP: • Natural delevering with
Slide 45: Capital Allocation Focus at Daughter Level
2. Building Balance Sheet Strength Teekay LNG (TGP) Teekay Tankers (TNK) Capital Allocation Focus at Business • Stable and steady business • Cyclical business requires counter- Daughter Level provides ability to apply a balanced cyclical balance sheet strength capital allocation approach • Path towa
Slide 46: Teekay Parent Potential Future Balance Sheet
2. Building Balance Sheet Strength $2,493 $2,500 Delevering Teekay Parent Potential Future Balance Sheet Deleveraging Sources Based on current asset mix, Teekay Parent’s goal is to $2,000 Free cash flow move towards net debt free 1,236 Lower leverage should reduce Sell remaining FPSOs cost of capita
Slide 47: Teekay Group Sources of Capital
2. Building Balance Sheet Strength Teekay Group Sources of Capital(1) Key Lending Relationships (December 31, 2008 – Present) Diversified Access to Capital (in $millions) Group approach provides scale benefits and better capital access $1,224 Over $27 billion of Teekay Group $567 debt and equity fin
Slide 48: Financial Focus
Financial Focus 1. De-risked Teekay 2. Building Balance 3. Improving Group Sheet Strength Profitability Project Deliveries Delevering Profitable growth and stronger Financings Capital Allocation performance from existing fleet Reducing G&A 48
Slide 49: Improving Profitability
3. Improving Profitability Profitable growth and stronger performance from Increasing revenue from core businesses existing fleet ✓ Positioned TNK to benefit from tanker market recovery • Completing TGP newbuilding program • Recontracting Teekay Parent FPSOs Reducing debt service cost ✓ Reduced Teek
Slide 50: Improving Profitability: Reducing G&A
3. Improving Profitability Reducing G&A Teekay Corporation Consolidated & Teekay Parent G&A Simplifying business 150 • Focusing on core gas and oil shipping businesses • Reducing size and complexity 125 of Boards • Reviewing corporate and tax structure 100 Reducing headcount costs USD Millions • Rig
Slide 51: Trending Towards Profitability
3. Improving Profitability Trending Towards Teekay Corporation Consolidated Adjusted Net Income (Loss) Profitability 100 Illustrative Completing newbuild program by end of 2019 For every $1,000 per day change in Reducing leverage 50 spot tanker rates Improving FPSO cash flows changes consolidated ne
Slide 52: Teekay Corporation Investment Highlights
Teekay Corporation Investment Highlights Growing Cash Flows Strengthening Balance Simplifying and and Improving Sheets Provide Capital Focusing Profitability Allocation Flexibility Focusing on core Gas and Tanker Estimated Total Adjusted Each entity expected to further businesses EBITDA(1) of approx
Slide 53: Teekay LNG
Teekay LNG Mark Kremin & Scott Gayton 53
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Slide 55: Teekay LNG Investment Highlights
Teekay LNG Investment Highlights World-leading Portfolio Significant Earnings Joint Ventures of Blue Chip-backed and Cash Flow Growth Represent Hidden Value Contracts 2019 guidance revised higher and Off Balance Sheet JVs alone $10 billion contract backlog, 11 new 2020 EPU guidance up 58% represent
Slide 56: Teekay LNG at a Glance
TEEKAY LNG AT A GLANCE NYSE: TGP IPO in 2005 1099-filer 15 years of LNG experience strong project execution Delivered 19 LNG carriers 79 vessel fleet on-time, or early, since 2014 2500 employees at sea and ashore diverse portfolio of blue- 3rd largest $8.5 B chip customers independent LNG carrier ow
Slide 57: LNG Carriers are Floating Pipelines
LNG Carriers are Floating Pipelines A cost-effective means to transport natural gas overseas Targeted landed cost: $7.00-$8.00 / mmBtu Gas Reserve Export Transport Import Production Gas Liquefaction Facilities LNG Shipping LNG Regasification Terminals 35-40% 35-40% 10-25% 5-10% of landed cost of lan
Slide 58: Teekay LNG is the World's 3rd Largest Independent LNG Owner
Teekay LNG is the World’s 3rd Largest Independent LNG Owner and Operator 90 12 Existing On Order 80 11 70 60 Number of Vessels 50 1 40 81 75 14 7 30 48 48 20 30 29 10 0 MOL NYK TGP K Line Maran Gas GasLog Source: Company Websites 58
Slide 59: Largest and Most Diversified Portfolio of Long-term LNG Contracts
Largest and Most Total Forward Fee-Based Revenues Total Forward Adj. EBITDA (excl. extension options) (1) (excl. extension options) (1) Diversified Portfolio of Long-term LNG 99% Contracts 99% Existing portfolio of long-term, $9.8B $7.3B fixed-rate LNG contracts provides cash flow stability Steam-po
Slide 60: Teekay LNG's Unrivaled Contract Portfolio
Contracted Revenues Contracted Revenues per Vessel Teekay LNG’s (USD millions) (USD millions) Unrivaled Contract $12,000 $400 Portfolio $10,000 $8,000 $300 Largest contracted revenue backlog $6,000 $200 Highest contracted revenue $4,000 per vessel $100 $2,000 Longest average remaining $- $0 contract
Slide 61: Long-Term Contract Coverage With High Quality Customers
Long-Term Contract Coverage With High Current Charter Terms – Consolidated Fleet Average Total Fleet Age in 2020: 9 years(1) Quality Customers Ownership Charterer 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Existing LNG Fleet With recent LNG fixed-rate Wilforce 99% charters, LNG fleet rev
Slide 62: Joint Venture Fleet Has Similar Characteristics
Joint Venture Fleet Has Similar Characteristics to Current Charter Terms – Joint Venture Fleet Average Total Fleet Age in 2020: 9 years Consolidated Fleet Ownership Charterer 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Existing LNG Fleet – Joint Ventures 15 years average remaining Methane
Slide 63: TGP At A Turning Point
TGP At A $ Millions, except where noted Turning Point All figures annual or as at fiscal year ended December 31st 2016A 2017A 2018A 2019E 2020E Recent growth program Newbuild Orderbook nearing completion 24 19 6 - - (# vessels) Capex Commitments $2,877 $1,891 $652 - - +$2B of debt raised to finance
Slide 64: Consolidated Adjusted Net Income
Adjusted Net Income(1) Adjusted EBITDA(1) 2019 Guidance Range 300 900 Increased; 2020 Guidance Introduced 250 800 700 TGP’s results on-track to +47% increase substantially: 200 600 USD millions USD millions 500 • Vessel and project deliveries Total (Prop. Consol.) 150 throughout 2018 and 2019 +94% 4
Slide 65: Revised 2019 Guidance Range Up; 2020 Guidance Introduced
Revised 2019 Guidance Range Up; 2020 Guidance Well- 2019 guidance ranges raised above 2019 Adjusted Net Income* EPU* Consol. adj. EBITDA* Total adj. EBITDA* Previous Revised Previous Revised Previous Revised Previous Revised Range – high $170m $175m $1.80/unit $1.85/unit $440m $445m $690m $695m Rang
Slide 66: Teekay LNG's Joint Ventures Represent Significant Value
Teekay LNG’s Joint Ventures Represent Significant Value TGP’s Proportionate Share Teekay LNG’s joint venture TGP Primary TGP TGP Equity # of Avg. Avg. Forward Debt (Sep 30, To be Normal- Next Joint Customer Ownership Investment vessels / Age of Remaining Revenues Drawn ized Debt investments alone ha
Slide 67: Teekay LNG's Joint Venture Portfolio is More Substantial
Teekay LNG’s Joint Venture Portfolio is D= A + B + C More Substantial than Many Public LNG Q3-2019 Total Elimination Adj. Consolidated Proportionate Share In $ millions Proportionate of Equity-Accounted Peers Consolidation Entries Income Statement Joint Ventures Greater than(1): GLOG,DLNG, Net Voyag
Slide 68: Yamal LNG
Yamal LNG Yamal Project Yamal ARC7 Fleet Yamal Operations • Trains 1, 2 and 3 now exporting at • Purpose-designed, ice-class LNG • TGP’s ARC7s carried out ship-to- capacity (16.5m tonnes per carriers that travel the Northern ship (STS) transfers to several annum) Sea Route to Asia in summer conventi
Slide 69: Bahrain Regasification Project
Bahrain Regasification Project Terminal allows Kingdom of Bahrain to handle potential shortages of domestic gas TGP has a 30% interest in the project, with a 100% interest in the FSU chartered to the project Initial charter length of 20 years Project Update: • Bahrain Spirit FSU now alongside jetty
Slide 70: Expecting Increased EBITDA from Exmar J/V in a Recovering LPG Market
Expecting Increased EBITDA from Exmar J/V in a Recovering LPG Market Exmar Joint Venture LPG rates have recently Adjusted EBITDA vs. Time Charter Rates recovered with further improvements expected for $60 $45,000 2020 $40,000 Strong demand from India and $50 Current rates China resulting in rates $3
Slide 71: LNG Spot Market Review
LNG Spot Market Review 2018: LNG Vessel Spot Rates • U.S. exports increased due 200,000 to start up of new facilities 175,000 • Lack of vessels caused winter spot rate spike 150,000 Recent TGP charters of 2019 125,000 1 – 3 years • Warmer than expected USD / day 100,000 winter in Asia reduced demand
Slide 72: Positive Market Outlook for Remainder of 2019 and 2020
Positive Market Outlook for Remainder of 2019 and 2020 Expected tonne-mile demand LNG Fleet Demand and Supply Growth growth in 2019 due to 14% increasing exports Momentum expected to 12% continue into 2020, with projected annual tonne-mile 10% demand growth of 12% from new export projects 8% 6% 4% 2
Slide 73: Potential Market Weakness in Medium-Term
Potential Market Weakness in Medium-Term During 2021-2023, the LNG Fleet Balance fleet could be over-supplied 60 • Coincides with a heavy delivery schedule of 40 Surplus vessels ordered in 2018 coupled with a lack of new 20 export projects starting-up 0 • Negative impact could be 2019 2020 2021 2022
Slide 74: Robust Long-term LNG Demand Driven by Asia Pacific
Robust Long-term LNG Demand Driven by Asia Pacific China: Government policy is Projected Global LNG Import Growth pushing towards cleaner fuel for heating. “War on smog” policies 600 Asia to benefit urban air quality and Pacific LNG imports. 500 Growth ROW India: Government has significant capex all
Slide 75: New LNG Projects to Meet Global LNG Demand
New LNG Projects to Meet Global LNG Demand Demand forecasted to increase to 450-500 MTPA Additional thus, an additional 75-125 # of Capacity Projects Likely to Take FID MTPA Start MTPA of supply is needed to Needed vessels meet global LNG demand Qatar Expansion 32 2023 40 Rovuma LNG 15 2024 18 In 20
Slide 76: Balanced Capital Allocation Plan
Balanced Capital Allocation Plan Delever Return Capital Disciplined Balance Sheet to Unitholders Growth Target Net Debt / Total Sustainable, Flexible Focused on Core Assets Adj. EBITDA: 4.5x – 5.5x and Value-Focused and Returns Equity value increases with Distribution capacity increases Growth not e
Slide 77: Financial Flexibility to Allocate Capital as Leverage Decreases
Financial Flexibility to 7.5X Allocate Capital as Potential LNG tenders Leverage Decreases 7.0X awarded and newbuild Potential vessel orders placed with minimal delivery and LNG Assuming Status Quo, TGP 6.5X payments upfront project start-up expects to be within targeted leverage range by late-2020
Slide 78: Pro Forma Debt Maturity Schedule for Awilco Sale
Pro Forma Debt Maturity Schedule for Awilco Sale 600 As of Q3-19, $391 million of ∙ $147m NOK Bond ∙ $329m at Q3-19 ∙ $194m Tangguh current debt comprised of: 500 ∙ $100m additional ∙ $130m EXMAR • $157 million Awilco-related from Awilco sale debt ∙ $102m NOK Bond ∙ $115m NOK Bond 400 ∙ $145m Angol
Slide 79: Strong Business and Financial Foundation Reduces Cost of Capital
Strong Business and Financial Foundation Reduces Cost of Capital Focus on delevering and strong contract backlog enhances TGP’s creditworthiness Teekay LNG’s Norwegian Bonds trade tighter than LNG and other gas shipping peers Recently re-financed an LNG carrier loan at an all-in cost of 4.1%, reduce
Slide 80: Significant Capital Returned to Unitholders
Significant Capital Returned to Capital Returned LP Unit Distributions LP Unit Buybacks Unitholders to Investors At $14.17 per unit trading • 2019 raised 36% from $0.56 to • Since December 2018, price, Capital Returned to $0.76 per unit repurchased 2.26 million units, or Unitholders yields 9.7% • In
Slide 81: Teekay LNG's Competitive Advantages
Teekay LNG’s Competitive Advantages Significant Scale Commitment to Diverse Customer Strategic Technology Portfolio Partnerships One of the largest LNG Investments improving Multiple relationships in sector carrier operators => trading efficiency; reducing lead to business opportunities Joint ventur
Slide 82: Teekay LNG Strategic Priorities
Teekay LNG Strategic Priorities 2019 - 2021 2022 - 2024 • LNG fleet 97% fixed through 2020 Chartering • Consider increasing exposure to • Focus on high utilization during period of strengthening spot market potential spot market weakness • Continue to delever with strengthening • Maintain leverage w
Slide 83: Teekay LNG Investment Highlights
Teekay LNG Investment Highlights World-leading Portfolio Significant Earnings Joint Ventures of Blue Chip-backed and Cash Flow Growth Represent Hidden Value Contracts 2019 guidance revised higher and Off Balance Sheet JVs alone $10 billion contract backlog, 11 new 2020 EPU guidance up 58% represent
Slide 84: Appendix
Appendix
Slide 85: TGP Detailed EV/EBITDA Calculations
In $ millions except ratios and per unit data Consolidated EV/EBITDA Calculation Cash 234.5 Sept. 30, 2019 Balance Sheet TGP Detailed Total Debt 3,256.0 Sept. 30, 2019 Balance Sheet Net Debt a 3,021.5 EV/EBITDA 77.5 Calculations Common units outstanding Unit price $ 14.17 as at Nov. 6, 2019 Calculat
Slide 86: Teekay Tankers
Teekay Tankers Kevin Mackay & Stewart Andrade
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Slide 88: Teekay Tankers Investment Highlights
Teekay Tankers Investment Highlights Market Leading Position Positive Market World’s largest publicly-traded Fundamentals mid-sized tanker owner-operator Significantly stronger spot tanker rates at the start of Q4-19 Over 45 years of leading commercial and technical Tanker supply and demand manageme
Slide 89: Teekay Tankers at a Glance
TEEKAY TANKERS AT A GLANCE NYSE:TNK Teekay Tankers Ltd. 46 years of experience 30 Suezmax 32 Aframax / LR2 63 vessel fleet (1) 1 VLCC 2300 employees at sea and ashore world’s largest 30% market share blue chip customers publicly traded mid-sized tanker company in U.S. Gulf full service lightering (2
Slide 90: Why Mid-Sized Tankers?
Why Mid-Sized Tankers? • Aframaxes generally operate on short / medium-haul trades with the ability to triangulate in order to minimize time in ballast • Suezmaxes have developed into a hybrid medium / long- haul trading vessel with the ability to triangulate on a global scale • Laden-to-ballast rat
Slide 91: Benefitting From Growing U.S. Crude Exports
Benefitting From 2014 Current Growing U.S. Crude 100% import lightering 50% import / 50% export lightering Exports U.S. crude oil imports have 0.4 mb/d exports (light) reduced in recent years 3.5 mb/d exports (light) • Not expected to shrink further as U.S. refineries require a baseload of heavy cru
Slide 92: Optimizing Market Exposure
Optimizing Market Exposure $90,000 TNK Time Charter Exposure Relative to the Spot Market 16 Increased in-charters in $80,000 14 anticipation of stronger tanker market $70,000 12 • In 2014 / 2015, increased spot Total Time-Charter Vessels Spot Tanker Rates (USD, day) market exposure by 13 vessels $60
Slide 93: Improving Operational Performance and Cost Efficiency
Improving Operational Customer Vetting Findings Port State Inspection Findings Performance and Cost 5 1.4 1.24 Efficiency 1.2 4 1.0 Industry leading operational Industry Avg ** 2.85 performance is hallmark of the 3 2.66 0.8 0.71 0.66 Teekay brand Industry Avg * 2 1.96 0.6 Vetting observations reduce
Slide 94: IMO 2020 Preparation
TNK Bunkering Locations 2018 IMO 2020 Preparation TNK is not installing • Focus is on securing adequate supply of scrubbers based on: low sulphur bunkers, ensuring quality, and minimizing the changeover risk Teekay supports the use of cleaner burning fuels • Secured LSFO supply contracts from high q
Slide 95: TNK Strategic Priorities
TNK Strategic Priorities Position TNK to maximize value as the tanker market 2017 - 2019 2020 strengthens • Reduced fixed rate out-charter contracts • Maintain significant spot exposure Operating and increased in-charter contracts in • Opportunistically increase fixed rate Leverage anticipation of m
Slide 96: Market Outlook
Market Outlook
Slide 97: Freight and Asset Market Snapshot
Freight and Asset Suezmax Monthly Average Spot Rates Aframax Monthly Average Spot Rates Market Snapshot 100 5-year range 5-year avg. 55 5-year range 5-year avg. 90 2018 2019 50 2018 2019 Spot tanker market at multi- 80 45 year highs; asset and time 70 40 ‘000 USD / day ‘000 USD / day 60 35 charter m
Slide 98: Robust Oil and Tanker Demand Growth
Robust Oil and Tanker Global Refining – Crude Throughput Oil Demand Growth Demand Growth 2.5 87 Global refinery throughput 5-year range 5-year avg. set to reach record highs 86 2019 2020 (f) Crude tanker demand is driven 85 2.0 2.1 Change in Demand (mb/d) more by refinery demand / Million barrels pe
Slide 99: Extended Period Of Low Fleet Growth Ahead
Extended Period Of Low Fleet Growth Suez / Afra Orderbook as % of Fleet Fleet Age Profile (Suez / Afra) Ahead 50% 20 yrs Suez Fleet 40% 19 yrs Small orderbook and aging Suez 18 yrs global fleet expected to keep 30% fleet growth low 17 yrs 20% 16 yrs Mid-size tanker orderbook Afra Fleet 15 yrs 10% cu
Slide 100: Favourable Supply and Demand Outlook
Favourable Supply and Demand Outlook Demand Drivers Supply Drivers Demand / supply balance expected to tighten through + Global refinery throughput projected to be + Relatively small tanker orderbook the winter months and into 1.2 mb/d higher in 2020 compared to 2019 2020, though some wild cards + B
Slide 101: Tanker Fleet Utilization Forecast
Tanker Fleet Tanker Fleet Utilization Forecast Utilization Forecast 12% Demand Supply Fleet Utilization 94% Fleet utilization set to approach 90% in 2020 10% 92% % Supply / Demand Growth % Fleet Utilization 8% 90% 6% 88% 4% 86% 2% 84% 0% 82% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201
Slide 102: Financial Overview
Financial Overview
Slide 103: TNK Positioned to Generate Significant Cash Flow
TNK Positioned to 2020 FCF(1,2) Spot Rate Sensitivity Generate Significant Cash Flow $600 Free Cash Flow (FCF) of approximately $320 million, or $1.19/share, in 2020, based on $500 average analyst forecast rates(3) $400 USD millions $300 2020 Broker / Analyst Estimates(3) $200 (4) $100 $0 10,000 15,
Slide 104: TNK has Significant Upside in a Tanker Market Recovery
TNK has Significant Upside in a Tanker Share Price(1) vs. Illustrative 2020 NAV Projection Market Recovery Illustrative 2020 NAV of $5.00 $4.18/share vs. November 6, 2019 closing share price of $4.18 $1.95/share $4.00 • For every $5,000 change in $1.19 (2) spot rates, 2020 NAV changes by approximate
Slide 105: Focus on Reducing Leverage and Eliminating Expensive Debt
Focus on Reducing Leverage and Illustrative - TNK Projected to Delever Significantly Eliminating Expensive 1,200 Debt Delevering increases 1,000 2020: Reduce cost of capital shareholder returns through: by exercising purchase options on higher cost sale- • Increasing net asset value leaseback debt 8
Slide 106: Improving Debt Repayment Profile
Improving Debt Repayment Profile New debt repayment profile Debt Repayment Profile(1,2) based on signed term sheet 500 • Refinancing 36 vessels for 450 $595 million, 5-year debt facility 400 • Pro-forma September 30, 350 2019 liquidity of $180 USD Millions 300 million 250 $402 200 $71 150 $0 $0 $0 1
Slide 107: Teekay Tankers Investment Highlights
Teekay Tankers Investment Highlights Market Leading Position Positive Market World’s largest publicly-traded Fundamentals mid-sized tanker owner-operator Significantly stronger spot tanker rates at the start of Q4-19 Over 45 years of leading commercial and technical Tanker supply and demand manageme
Slide 108: Appendix
Appendix
Slide 109: TNK Illustrative End of 2019 NAV
No. Type Year Built FMV No. Type Year Built FMV 1 Suezmax 2003 20.0 31 Aframax 2003 14.0 2 Suezmax 2003 20.0 32 Aframax 2004 15.0 3 Suezmax 2003 20.0 33 Aframax 2004 15.0 4 Suezmax 2004 22.0 34 Aframax 2004 15.0 TNK Illustrative End 5 Suezmax 2004 22.0 35 Aframax 2004 15.0 of 2019 NAV 6 7 Suezmax Su
Slide 110: TNK 2020 Tanker Spot Rate Estimates
TNK 2020 Tanker Spot Rate Estimates External Broker / Analyst Spot Tanker Rate Estimates for 2020 Aframax Suezmax Forecast A 30,000 40,000 Forecast B 31,200 41,400 Forecast C 32,500 42,000 Forecast D 27,500 40,000 Forecast E 25,000 32,000 Forecast F 22,000 30,000 AVERAGE 28,033 37,567 110