Teekay Tankers Ltd. · NYSE:TNK
Teekay Tankers — Investor Day (June 2012)
19 slides from Teekay Tankers's investor day presentation, Jun 18, 2012
Slide 1: Teekay Tankers Investor Day Presentation
Teekay Tankers Investor Day Presentation June 18, 2012
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’
Slide 3: Teekay Tanker's Highlights
Teekay Tanker’s Highlights • One of the world’s largest owners of mid-size conventional tankers • Portfolio of fixed-rate contracts enables the payment of dividends during the current weak spot tanker market • Strong balance sheet and liquidity enables us to: ○ Endure the current tanker cycle trough
Slide 4: Business Strategy – Yielding Results
Business Strategy – Yielding Results • Pay out all cash available for distribution after reserving for debt principal payments and drydock expenses • Maximize cash available for distribution by: ○ Tactically managing our mix of fixed-rate contracts and spot trading ○ Operating spot traded vessels in
Slide 5: Strategic 13-Vessel Acquisition
Strategic 13-Vessel Acquisition Teekay Tankers has acquired 13 conventional tankers from Teekay Corporation for a total purchase price of approximately $455 million Strategic Benefits • Modern vessels acquired at a cyclical low purchase price • Increases near-term fixed-rate coverage from 29% to 43%
Slide 6: Transaction is Accretive to CAD and Dividend Per Share
Transaction is Accretive to CAD and Dividend Per Share $2.50 $2.50 Illustrative Annualized CAD1 Per Share Illustrative Annualized Dividend Per Share 12 months Ending June 30, 2013 12 months Ending June 30, 2013 $2.00 $2.00 $1.50 $1.50 $1.00 $1.00 $0.50 $0.50 Pro Forma Pro Forma Pre-transaction Pre-t
Slide 7: Acquisition Provides TNK with Significant Scale
Acquisition Provides TNK with Significant Scale • Post-transaction, TNK will become one of the world’s largest owners of mid-size conventional tanker tonnage Comparable Fleet Size* (MDWT of Owned Tonnage) 8 7 6 MDwt 5 4 3 2 1 0 Sovcomflot AET Teekay Fredriksen Dynacom NAT Minerva Tsakos Marmaras Gen
Slide 8: Teekay Tankers Fleet
Teekay Tankers Fleet Name Class Y/Built Erik Spirit Aframax 2005 Fixed-Rate Coverage (estimated) Kareela Spirit Aframax 1999 Nassau Spirit Aframax 1998 Pre- Post- Ashkini Spirit Suezmax 2003 Transaction Transaction Iskmati Spirit Suezmax 2003 Kaveri Spirit Suezmax 2004 Trading in 12 months Commencin
Slide 9: Proven Pool Performance
Proven Pool Performance Average last Aframax Segment 4 quarters 2011 TCE Aframax RSA 12,073 12,995 AFRAMAX RSA BITR Aframax Avg 7,299 7,944 Clarksons (90%) 10,128 9,546 Average last LRII Segment 4 quarters 2011 TCE Taurus Pool 11,539 12,690 BITR LR2 TC1 7,767 9,623 Clarksons (90%) 8,547 9,662 Averag
Slide 10: Specialized Assets Enhance Dividend
Specialized Assets Enhance Dividend • VLCC Mortgage Loans • 50% VLCC Ownership ○ Fixed-rate return of 10% until mid- ○ VLCC newbuilding scheduled to 2013 deliver in mid-2013 with fixed five- year time-charter with profit share ○ Loans secured with first-priority mortgages on two modern VLCCs ○ CAPEX
Slide 11: 2H-2012 Tanker Market Outlook
2H-2012 Tanker Market Outlook • Seasonally weak summer market expected ○ Q3 traditionally the worst quarter for tanker demand ○ Uncertain global economy impacting oil demand ○ Potential for lower OPEC oil production due to declining oil prices • Stronger winter market fundamentals expected in Q4-12
Slide 12: 2013 Tanker Market Improvement
2013 Tanker Market Improvement Tanker Demand Growth Tanker Fleet Growth 8% 7% Demand Range Supply Range 6% % Growth 5% 4% 3% 2% 1% 0% 2009 2010 2011 2012E 2013E Source: Platou / Internal estimates Global Floating Slowdown in Moving towards Improved fleet recession; storage demand; balance by end uti
Slide 13: Improvement Factor #1: Low Fleet Growth
Improvement Factor #1: Low Fleet Growth • Base Case: 3.4% tanker fleet growth in 2013 • Upside Case: 2.5% fleet growth if scrapping remains at 2012 levels • Downside Case: 4.5% fleet growth if construction delays / cancellations moderate from 5-year average of ~30% Projected Tanker Fleet Growth To 2
Slide 14: Improvement Factor #2: Demand Growth
Improvement Factor #2: Demand Growth • Base Case: 1.3 mb/d (1.5%) oil demand growth driven by China, which translates into approximately 4.5% tanker demand growth • Upside Case: additional strategic stockbuilding during 2013 • Downside Case: global economic downturn starting 2H-2012, extending into
Slide 15: 2013 Stimulus – Changing Trade Patterns
2013 Stimulus – Changing Trade Patterns • Lengthening of voyage distances due to an increase in long-haul Atlantic-Pacific crude oil movements • Ramp-up of Russian exports from Ust-Luga (Baltic) and Kozmino (Pacific) positive for Aframax trade Ust-Luga Kozmino End of Baltic End of East Siberia Pipel
Slide 16: Long-Term Crude Tanker Demand Drivers
Long-Term Crude Tanker Demand Drivers Increasing reliance on long-haul OPEC barrels… …with China the main driver of demand growth Global Oil Production Outlook China Oil Market Fundamentals Middle East Other OPEC Share of Total 16 60 60% Oil Demand 14 Source: IEA Domestic Oil Production 50 50% 12 Re
Slide 17: Long-Term Product Tanker Demand Drivers
Long-Term Product Tanker Demand Drivers Product tanker tonne-miles set to grow… …as fleet growth slows to a 10-year low Fleet Growth* (mdwt) Fleet Growth (%) 10 14% Million Deadweight 9 % Fleet Growth 12% 8 7 10% 6 8% 5 4 6% 3 4% 2 1 2% 0 0% 2011 2005 2006 2007 2008 2009 2010 2012E 2013E Source: IEA
Slide 18: Asset Prices – Nearing The Bottom
Asset Prices – Nearing The Bottom • Approximately 20-25% decline in asset prices in 2011; further 10% in 2012-to-date • Asset prices for older (>15 years) vessels under significant pressure • Newbuilding prices likely to see further downward pressure in 2H-12 ○ Lack of new orders putting pressure on
Slide 19: TNK – A Safe Play on Tanker Market Recovery
TNK – A Safe Play on Tanker Market Recovery Simple and Sustainable Business Model • Teekay Tankers has strong fixed cover to support its dividend in a weak near-term tanker market • Expected tanker market recovery in the medium-term will benefit our modern fleet • Strong balance sheet provides flexi