Slide 1: Teekay's Second Quarter 2004 Earnings Presentation
Teekay ’s Teekay’s Second Quarter 2004 Earnings Presentation July 22, 2004 NYSE: TK 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 the Company’s
Slide 3: 2nd Quarter Highlights
2nd Quarter Highlights Highest ever Q2 net income of $98.5 million Record quarter for fixed-rate segments Oil demand growing at highest rate in 25 years Completed acquisition of Naviera F. Tapias Awarded 3 long-term LNG contracts by RasGas II Completed 2-for-1 stock split effective May 1
Slide 4: Strong Growth in Global Oil Demand
Strong Growth in Global Oil Demand 86 2005E 84 2004E Oil Demand (Million Bbls/Day) 2003 82 2002 80 5.2% year-on-year growth in Q2 2004 2001 78 2000 76 74 Q1 Q2 Q3 Q4 Source : IEA Teekay Shipping Corporation 4
Slide 5: World Oil Demand Drives Supply Higher
World Oil Demand Drives Supply Higher World oil demand Global Commercial Stocks World oil supply 86 1800 84 Oil Demand/Supply - (Million Bbls/Day) Usable Comm. Stocks - Million Bbls 1600 82 80 1400 78 76 1200 74 1000 72 70 800 68 66 600 1q99 3q99 1q00 3q00 1q01 3q01 1q02 3q02 1q03 3q03 1q04 3q04E 1q
Slide 6: Tanker Supply - Outlook
Tanker Supply - Outlook Deliveries Deletions On Order Net Change 40 Remaining deliveries of 45 mdwt 30 M illion D eadw eight 20 10 0 -10 Remaining mandatory -20 scrapping of ~25 mdwt -30 2007 + 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: CRS Teekay Shipping Corporation 6
Slide 7: World Fleet Segment Development
World Fleet Segment Development Modest fleet growth relative to expected demand Aframax VLCC Suezmax Aframax (excl. LR II) Fleet Change since 1/1/2003 + 2.6% + 5.6% + 8.6% Expected Fleet Changes through 2005 Scheduled for delivery 11.4% 11.9% 13.6% 11.8% Mandatory scrapping -4.6% -5.9% -10.9% -10.9%
Slide 8: World Tanker Supply / Demand Balance to Remain Tight Through 2006
World Tanker Supply / Demand Balance to Remain Tight Through 2006 2H 2004/2005 2006 (mdwt) (mdwt) Newbuilding Deliveries 45 20 less: Mandatory scrapping * -25 -1 Net fleet growth 20 19 Tanker demand growth ** 20 12 Change in supply / demand balance 0 7 * excludes any voluntary scrapping 2H 2004/2005
Slide 9: OPEC Crude Oil Production vs. Aframax TCE
OPEC Crude Oil Production vs. Aframax TCE 29 70,000 OPEC Production Aframax TCE 60,000 Production (Million Bbls/Day) 28 higher highs TCE (US$ per Day) 50,000 27 40,000 26 30,000 25 20,000 higher lows 24 10,000 23 0 Aug-02 Aug-03 Jun-02 Jun-03 Jun-04 Apr-02 Oct-02 Oct-03 Feb-02 Dec-02 Apr-03 Feb-03 D
Slide 10: Developments in Spot Tanker Segment
Developments in Spot Tanker Segment Q2 average Aframax TCE of $27,600 per calendar ship day Spot fleet increased from 82 ships to 86 ships from Q1 to Q2 11 newbuildings on order in spot tanker fleet Maintaining high in-charter activity 5-6 additional ships projected to join spot fleet in Q
Slide 11: Aframax Price Developments
Aframax Price Developments Aframax Newbuilding Resale (delivery in next 6-12 months) Contract Cost of new Aframax Newbuilding order (current lead time ~36-42 months) 60.0 55.0 50.0 Million $ 45.0 40.0 35.0 30.0 Teekay placed Teekay placed Teekay placed order for NB's order for NB's order for NB's 25
Slide 12: Fixed-rate Segments
Fixed-rate Segments Completed Tapias acquisition; integration proceeding smoothly Additional fixed-rate vessels added in Q2: Two Tapias LNGs Five Tapias Suezmaxes Thailand FSO Brazil shuttle Tanker (50% JV) Awarded 3 long-term LNG contracts by RasGas II Record cash flow from vessel o
Slide 13: RasGas II LNG Transaction
RasGas II LNG Transaction 20-year charters on three LNG newbuildings Ordered three 151,700m3 LNG carriers on a low-risk ‘build-to-suit’ basis Relationship with shipyard and ‘en bloc’ order => preferential pricing Secured export financing at interest rates below generally available levels P
Slide 14: LNG Projects Create Incremental Shareholder Value
LNG Projects Create Incremental Shareholder Value Cost per ship ~ $170m - $175m + ready for sea costs => $190 - $195m Project Economics TCE = $65 - $70k/day OPEX = $11.5 - $12.5k/day Bareboat Rate = $53 - $57k/day Cash Flow ~ $19.5m - $21m p.a. 80% Debt Portion ~$155m 20% Equity Portion ~$38m ~ 6% t
Slide 15: Dramatic Demand for LNG Shipping
Dramatic Demand for LNG Shipping # of ships 300 Projected Projected LNG Production LNG 250 demand by 365 2010 200 Existing LNG carrier 165 MMt / year fleet 150 NBs 100 presently 80 on order Further NBs 50 required to be delivered ~120 0 by 2010 2004 2005 2006 2007 2008 2009 2010 Source : Wood Macken
Slide 16: Summary of Operating Results
Summary of Operating Results Three Months Ended Three Months Ended 30-Jun-04 30-Jun-03 (unaudited) (unaudited) Fixed-Rate Fixed-Rate Fixed-Rate (in thousands of U.S. Spot Tanker Spot Tanker Tanker LNG Total Tanker Total dollars) Segment Segment Segment Segment Segment ** Net voyage revenues 202,965
Slide 17: Summary Income Statement
Summary Income Statement June 30, June 30, 2004 2003 (unaudited) (unaudited) 000s of USD Income from vessel operations 122,123 127,676 OTHER ITEMS Interest expense - net (25,789) (20,413) Income tax expense (6,086) (13,864) Equity income from joint ventures 3,288 1,611 Other items Dividend income -
Slide 18: Selected Balance Sheet Items
Selected Balance Sheet Items Teekay As at June 30, 2004 Teekay Shipping Consolidated 000s of USD Standalone Spain ASSETS Cash and cash equivalents 194,227 21,516 215,743 Restricted cash – current and long-term 2,056 393,403 395,459 Vessels and equipment 2,590,166 594,337 3,184,503 Advances on newbui
Slide 19: Sale of TORM Shares
Sale of TORM Shares Shares Sold 5,812,000 shares $130.2 million June/July 2004 Initial Investment on 5,812,000 shares $37.3 million July 4, 2003 Gain on Sale * $90.2 million Dividend received in ~ $1 per share $5.7 million April, 2004 Total Return ** ~250% *Net of selling costs **including dividends
Slide 20: Quarterly Earnings Per Share
Significant Operating Leverage $3.00 2004: Spot Rate increase $1,000 TCE/day EPS Increase $2.50 above $13,000 / day ~ $0.08 - $0.09 / qtr Quarterly Earnings Per Share $2.00 EPS using Clarkson Q3, $1.50 2004 quarter to date TCE Actual Q2 2004 EPS $1.00 $0.50 $- $10,000 $15,000 $20,000 $25,000 $30,000