Slide 1: Tanker Market Update
Tanker Market Update September 2012
Slide 2: Currently In 4th Year of Tanker Market Downturn
Currently In 4th Year of Tanker Market Downturn Aframax Spot Rates Suezmax Spot Rates 80 Aframax Long Term Average Suezmax Long Term Average 70 60 „000 USD / Day 50 40 30 20 10 0 Source: Clarksons • Spot tanker rates have been below the long-term average since 2009 ○ Aframax 2009-12 average of $14,4
Slide 3: Near Term Headwinds
Near Term Headwinds • Slowing global economy / oil demand ○ Europe in recession; US / Chinese economies slowing down • Reduced imports for stockpiling in the non-OECD • High oil prices – impacting on oil demand, increasing bunker costs • Potential US / IEA stock release • Widening Brent-Dubai oil pr
Slide 4: Tanker Market Outlook For 2H-2012
Tanker Market Outlook For 2H-2012 • Seasonally weak summer market is upon us ○ Q3 traditionally the worst quarter for tanker rates ○ Uncertain global economy impacting oil demand ○ Potential for lower OPEC oil production as demand for stockpiling wanes • Stronger winter market fundamentals expected
Slide 5: Expectations For 2013 Demand Have Weakened
Expectations For 2013 Demand Have Weakened Evolution of the EIA’s 2013 Oil Tanker Demand Growth Tanker Fleet Growth Demand Growth Forecast 8% = Reduced Demand Estimate OECD Non-OECD Total 1.6 7% Demand Range Supply Range 1.4 6% 1.2 % Growth MB / Day 1.0 5% 0.8 4% 0.6 0.4 3% 0.2 2% 0.0 -0.2 1% -0.4 0
Slide 6: Asset Prices – Yet To Reach The Bottom
Asset Prices – Yet To Reach The Bottom • 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 shipyard
Slide 7: Aframax / LR2 Best Placed For Recovery
Aframax / LR2 Best Placed For Recovery 800 Tanker Fleet & Orderbook Profile By Sector 20% Orderbook as % of Fleet 700 Fleet 0-14 years Fleet 15+ years 18% On Order O'book as % of Fleet 16% 600 14% 500 Vessels 12% 400 10% 300 8% 6% 200 4% 100 2% 0 0% MR LR1 Panamax LR2 Aframax Suezmax VLCC Aframax /
Slide 8: Gradual Recovery Starting Late 2013 / 2014
Gradual Recovery Starting Late 2013 / 2014 Fleet Utilization Tanker Demand Growth Tanker Supply Growth 94% 8% 92% 7% 90% 6% 88% 5% 86% 4% 84% 3% 82% 80% 2% 78% 1% 76% 0% • 2012 / 13 projected to be the trough in terms of tanker fleet utilization / rates • Improvement in rates from late 2013 / 2014 d
Slide 9: Long-Term Crude Tanker Demand Drivers
Long-Term Crude Tanker Demand Drivers Plenty of pent-up demand in the non-OECD… …with China the main driver of demand growth 25 Oil Consumption (LHS) 1.6 China Oil Market Fundamentals 1.4 Population (Billions) Population (RHS) 16 BBL / Person / Year 20 Oil Demand 1.2 14 Domestic Oil Production 1.0 1
Slide 10: 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 11: Wild Card – US Tight Oil Production
Wild Card – US Tight Oil Production US Oil Production & Canadian Imports • Development of shale oil reserves is having a significant impact on US oil supply / demand dynamics. • According to some estimates, by 2020 North America could have a hydrocarbon surplus. • Potentially very negative for US So
Slide 12: LNG Market Update
LNG Market Update September 2012
Slide 13: Current Market Snapshot
Current Market Snapshot Short Term Shipping Rates Remain Firm; Depend on Duration, Start Date LNG Shipping Spot Rates 160 140 • Spot / short-term shipping rates with „000 USD / Day 120 100 prompt delivery command a steep 80 premium (>$150,000 / day) 60 40 20 0 • Longer duration / forward starting ch
Slide 14: “Golden Age of Gas”
“Golden Age of Gas” • Natural gas gaining market share from oil and coal due to its low cost, abundance, and cleaner burning properties • Demand driven by the power sector (gas displacing coal) • Non-OECD accounts for ~85% of natural gas demand growth to 2035 Fossil Fuel Demand Growth Outlook (2010-
Slide 15: LNG Demand Primarily Driven By China & India
LNG Demand Primarily Driven By China & India • LNG is a cornerstone of China’s energy mix • Chinese LNG imports expected to double to ~25-30 MT by 2015 • Domestic gas shortfall prompting India to turn to LNG • India planning to double regasification capacity by end-2015 Chinese LNG Purchase Agreemen
Slide 16: Japan and the “Fukushima Effect”
Japan and the “Fukushima Effect” • Nuclear accounted for 30% of Japan’s electricity generation pre-Fukushima • Without nuclear Japan depends on fossil fuel imports (vulnerable to price shocks) • Only 2 of Japan’s 50 nuclear Source: Thomson Reuters reactors are currently online – Japanese LNG Imports
Slide 17: Wave of New LNG Supply From 2015
Wave of New LNG Supply From 2015 • Australia expected to add ~80 MTPA of LNG supply by 2020 • US is a wild card: 100+ MTPA of planned export projects, but how much will come online? • Requirement for additional newbuildings to move new LNG volumes LNG Capacity Additions By Region 500 Others Million
Slide 18: US Exports Competitive at $5-6 Henry Hub or Lower
US Exports Competitive at $5-6 Henry Hub or Lower Henry Hub Price $5.40 / mmbtu • US LNG export model based on cheap domestic natural gas $4.00 / mmbtu prices. $2.60 / mmbtu • At current prices US exports are competitive with Australia despite longer transportation distances. • US LNG exports remain
Slide 19: Changing Nature of LNG Trade
Changing Nature of LNG Trade • Spot and short-term LNG trade currently make up 25% of total trade (up from 5% in 2000) • Trend expected to continue towards short-term / flexible volumes Spot and Short-term LNG Trade 70 35% Spot LNG Trade (MTPA) % of Total Trade Million Tonnes Per Annum 60 30% 50 25%
Slide 20: Orderbook Reflective of Strong Spot Market
Orderbook Reflective of Strong Spot Market • Orderbook of 76 vessels represents 20% of the fleet size ○ 32 LNGCs on order are currently uncommitted to long-term charters • Move towards standardized size of 160-170 kcbm ○ New technologies (MEGI engine, new containment systems) LNG Carrier Fleet and O
Slide 21: LNG Carrier Supply / Demand Balance
LNG Carrier Supply / Demand Balance 2012-2015 • Market likely to remain tight through 2013 on elevated Japanese demand • Risk of a softening in spot / short-term charter rates once the orderbook starts to deliver in 2013 / 14 • Bulk of new LNG liquefaction capacity comes online post-2015 2016-2020 •
Slide 22: Offshore Market Update
Offshore Market Update September 2012
Slide 23: Linking Rig to Refinery
Linking Rig to Refinery Leading indicators for offshore Teekay’s role in the production, storage and offshore value chain transportation demand 23 www.teekay.com
Slide 24: Drilling Activity a Key Leading Indicator
Drilling Activity a Key Leading Indicator • 81 mobile drilling unit (MODU) orders placed in 2011 ○ Highest since 1980 • Growth strongest in the deepwater / ultra-deepwater drilling fleet • Deepwater wells yielding the biggest results ○ Average discovery size in 2010 for wells >1,500m depth was 1,000
Slide 25: North Sea Market – Resurgent Activity
North Sea Market – Resurgent Activity • Resurgence in North Sea Norwegian Exploration Wells Drilled* drilling activity yielding Record high level of exploration results ○ 1.7 - 3.3 billion barrel Johan Sverdrup find was biggest of 2011 • New finds tend to suit an FPSO and shuttle tanker solution *So
Slide 26: Brazil Market – More Growth to Come
Brazil Market – More Growth to Come Brazil Offshore Production Fleet Development 140 120 100 Installed On Order Planned 80 60 40 20 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: IMA • Brazilian offshore production fleet set to double in 2011-18 ○ Growth in offshore
Slide 27: Strong Future Demand For FPSOs
Strong Future Demand For FPSOs FPSOs in the Planning Stage FPSO Forecast (Next 5 Years) 30 28 Source: IMA Source: IMA 24 End-06 68 25 20 20 15 End-08 96 15 10 10 5 Apr-12 141 0 Avg. Avg. Orders Orders Low Low Base Base High High Orders Jan-Apr Case Case Case 0 50 100 150 Orders per year Jan-Apr 2012
Slide 28: Increased Demand for FSO Solutions
Increased Demand for FSO Solutions • Resurgence in offshore activity creating new FSO opportunities ○ Re-emergence of FSO demand in the North Sea ○ New development in S.E. Asia • 22 projects currently considering the use of an FSO ○ 11 in Asia; 4 in North Sea Planned FSO Projects Top Leased FSO Oper