Teekay Corporation Ltd. · NYSE:TK
Teekay — Wells Fargo Securities Industrial Conference 2010
44 slides from Teekay's conference presentation, Jun 14, 2010
Slide 1: Teekay Corporation – Wells Fargo Securities Industrial Conference
TEEKAY CORPORATION Wells Fargo Securities Industrial Conference June 14, 2010 www.teekay.com
Slide 2: Safe Harbor
Safe Harbor 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 market fundamentals,
Slide 3: Investment Highlights
Investment Highlights f Diversified marine midstream operator with stable operating cash flows: over 80% of total fleet operating days under long-term, fixed- rate contracts to high quality oil and gas companies f Asset manager with incremental growth through new offshore and shipping projects f Mar
Slide 4: Teekay Group Corporate Structure
Teekay Group Corporate Structure TEEKAY PARENT NYSE: TK # of Vessels1 Value f Teekay Parent Fleet 56 $2.1b f Equity Investment in Daughter Companies 2.0b $4.1b Current Yield: 5% 49.2% Ownership CONTROL 35.9% Ownership CONTROL CONTROL 37.1% Economic Ownership / (incl. 2% GP interest) (incl. 2% GP int
Slide 5: Strong Dividend Track Record
Strong Dividend Track Record f Teekay Corp. dividend covered by distributions received from TOO and TGP alone f MLP growth will provide increased incentive distributions to the general partner, Teekay Corp. Teekay Corporation Teekay Tankers $0.40 $1.20 Quarterly Dividend / Share Quarterly Dividend /
Slide 6: Substantial Asset Value at Teekay Parent
Substantial Asset Value at Teekay Parent Teekay Parent Assets ($ millions) Conventional Tankers – Spot 1 $811 Conventional Tankers – Fixed 1 169 FPSOs 2 901 Newbuildings 3 177 FMV of Teekay Parent Fleet $2,058 Teekay Parent Equity Investment in Daughters4 TGP $729 TOO 299 Value of TOO and TGP GPs5 2
Slide 7: Company Overview
TEEKAY CORPORATION Company Overview www.teekay.com
Slide 8: Teekay's Transformation
Teekay’s Transformation f Transformed from a regional tanker company to a diversified global marine midstream operator f Combination of strategic acquisitions and organic growth f Track record of: f Buying valuable franchises and growing them f Managing the cycles f Realizing value through well-time
Slide 9: Substantial Scale & Diversification
Substantial Scale & Diversification f Teekay has increased its fixed-rate revenues and broadened its business mix Net Revenues by Business Segment 2003 2009 Fixed-Rate Tanker Segment Spot Tanker Segment¹ 16% 24% Fixed-Rate Liquefied Gas Conventional & Segment Shuttle Tanker 13% Segment 41% Spot Tank
Slide 10: Significant Forward Coverage
Significant Forward Coverage f Substantial portfolio of long-term, fixed-rate contracts with high quality oil and gas companies f Weighted average remaining contract life of over 10 years Total Forward Fixed-Rate Revenues of $12.0 Billion # of Vessels # of Vessels on Average Contract Forward Fixed-R
Slide 11: Teekay is in Every Part of its Customers' Value Chain
Teekay is in Every Part of its Customers’ Value Chain 6 Floating Storage Units (FSOs) 38 Shuttle Tankers Offshore Platform Storage Tanks 5 Floating Production Units (FPSOs) 70 Crude Tankers1 Refinery Average Vessel Age 2 Ship to Ship 7.5 years Lightering Storage Tanks Exports 9 Product Carriers LNG
Slide 12: Teekay is a Market Leader in Each of its Business Segments
Teekay is a Market Leader in Each of its Business Segments Market Leader in Harsh Weather FPSOs Largest Operator of Shuttle Tankers # of vessels Existing New buildings on Order 39 4 Petrojarl Varg Petrojarl Foinaven Petrojarl Banff North Sea North Sea North Sea 16 35 3 9 13 3 3 7 2 2 3 1 Petrojarl I
Slide 13: Active Management of Spot Market Exposure
Active Management of Spot Market Exposure f Teekay Parent’s flexible platform consists of owned, in-chartered and commercially managed vessels f Enables Teekay Parent to dial its market exposure up or down while maintaining sizeable footprint f Reduced spot market exposure by not renewing expiring i
Slide 14: Profitability Focus Delivering Improved Results
Profitability Focus Delivering Improved Results Teekay Adj. Net Income Per Share (Consolidated) $0.20 $20,000 Average Aframax Spot Rate* Adj. Net Income Per Share $0.00 $16,000 RHS ($0.20) $12,000 ($0.40) $8,000 LHS ($0.60) $4,000 ($0.80) $0 Q2-09 Q3-09 Q4-09 Q1-10 f Improving profitability driven b
Slide 15: Progress in Teekay's Offshore Business
Progress in Teekay’s Offshore Business f Significant recent developments in FPSO business f Amended Foinaven FPSO contract will provide $30 - $40m of incremental cash flow from vessel operations annually and $60m in catch-up payments relating to operations in prior periods f Extended Siri FPSO in Br
Slide 16: Recontracting Significantly Enhances FPSO Cash Flows
Recontracting Significantly Enhances FPSO Cash Flows f Even without the addition of new FPSO units, our FPSO fleet is projected to generate strong cash flow FPSO Cash Flow Petrojarl Varg Remaining FPSO Fleet (ex-Petrojarl Varg) $180 June 2009 Forecast Total (incl. Petrojarl Varg) Foinaven Catch-up P
Slide 17: Financial Overview
TEEKAY CORPORATION Financial Overview www.teekay.com
Slide 18: Significant Debt Reduction Achieved at Teekay Parent
Significant Debt Reduction Achieved at Teekay Parent ~$900m Total Liability Reduction $2,500 $2,000 $ Millions $1,500 $1,000 $500 $0 Dec. 31, 2008 Mar. 31, 2010 Pro Forma Apr. 2010 Dropdowns to TNK Net Debt Pre-financed Newbuild Committments f Focused on moving Teekay Parent towards being net debt f
Slide 19: Teekay Parent Balance Sheet Provides Financial Strength and Flexibility
Teekay Parent Balance Sheet Provides Financial Strength and Flexibility Teekay Parent Net Debt Teekay Parent Liquidity ($000s) As at ($000s) As at Mar 31, 2010 Mar 31, 2010 Bonds $471.9 Cash $389.4 Term Debt 553.9 Undrawn Revolvers 855.0 Revolver Debt 70.0 Current Liquidity 1,244.4 Cash (incl. Restr
Slide 20: Significant Liquidity and Favorable Debt Profile
Significant Liquidity and Favorable Debt Profile f No significant debt balloon payments over next several years Teekay Parent 1,500 $1,244 Balloon Payments Undrawn Lines 1,000 $ Millions Cash $855 500 $389 $26 $48 0 Total Liquidity 2010 2011 2012 2013 2014 31-March-10 20 www.teekay.com
Slide 21: Market Update
TEEKAY CORPORATION Market Update www.teekay.com
Slide 22: LNG Industry Outlook
LNG Industry Outlook Global Natural Gas Demand LNG Commentary billion m3 p .a. f Natural gas is one of the world’s 1.5% fastest growing primary energy sources due to its abundance and 4,313 clean burning characteristics 3,395 3,049 1,517 f Global LNG trade grew by over 1980 Source: IEA. 2007 2015E 2
Slide 23: Strong Offshore Growth Expected In Floating Production Sector
Strong Offshore Growth Expected In Floating Production Sector FPSO Order Outlook 2010-15* *Net of redeployments / speculatively ordered units 117 120 100 92 Number of Units 80 72 60 40 20 0 $50-70 Oil ~$80 Oil $90-100 Oil Source: International Maritime Associates f Incremental demand for ~70-120 add
Slide 24: Brazil is a Significant Growth Opportunity
Brazil is a Significant Growth Opportunity f Almost 90% of Brazilian oil is currently produced offshore f Expected to increase as new discoveries come on-line f Significant demand for FPSOs and shuttle tankers f Driven by the depth and distance from shore of discoveries f ~30 FPSO projects currently
Slide 25: Spot Tanker Rates Have Been Firming
Spot Tanker Rates Have Been Firming 55,000 Suezmax Aframax 50,000 45,000 40,000 35,000 USD / Day 30,000 25,000 20,000 15,000 10,000 5,000 0 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 to date Source : Clarksons 25
Slide 26: 2010E: Strongest Oil Demand Growth Since 2004
2010E: Strongest Oil Demand Growth Since 2004 Non-OECD Driving Oil Demand Growth Oil Market Fundamentals 3.0 OECD China f 2010 expected to be the strongest year for oil 2.5 Other Non-OECD Total Demand Grow th 2.0 demand growth since 2004 led by non-OECD Million Barrels Per Day 1.5 f 16% yr-on-yr inc
Slide 27: Increased Scrapping is Moderating Fleet Growth
Increased Scrapping is Moderating Fleet Growth Tanker Removals on the Rise Tanker Supply Update 8.0 Tanker Removals Scrap Price 500 f Vessel scrap prices have risen steadily since Q2-09, encouraging increased scrapping 7.0 450 f Increasing difficulty trading single-hull tankers Million Deadweight US
Slide 28: Updated 2010 Tanker Fleet Utilization Outlook
Updated 2010 Tanker Fleet Utilization Outlook 94% 94% 2010 2010 Base Case Recovery Case +/- 2% 92% 92% +1% Fleet Utilization Fleet Utilization 90% 90% +1.5% +0.5% 88% +0.5% 88% +0.5% 86% Upside Potential + 6% 86% 86% 84% 84% Source: IMF / IEA / CRS / Platou / Internal estimates 82% 82% 2010 (E) (1)
Slide 29: Focused on Realizing Teekay's True Value
Focused on Realizing Teekay’s True Value e Adding new projects at lu Va higher hurdle rates g it n ea Cr De-leveraging at nd Teekay Parent a ng ki oc l Improving profitability Un of existing assets Actively managing asset portfolio 29 www.teekay.com
Slide 30: Appendix: Supplemental Information
TEEKAY CORPORATION Appendix: Supplemental Information www.teekay.com
Slide 31: Capital Markets Are Open to Teekay
Capital Markets Are Open to Teekay f Teekay has been actively negotiating new debt financing and extensions on existing facilities ~$1.8b in transactions completed in 2009 f Proceeds from Daughter company equity issuance used to and 2010YTD finance dropdown transactions from Teekay Parent Commercial
Slide 32: Daughter Dividend History
Daughter Dividend History $0.65 $0.50 Quarterly Distribution / Unit Quarterly Distribution / Unit 6% $1.20 Quarterly Distribution / Unit 5% $0.60 13% 4% $0.45 4% $0.80 $0.55 15% 4% $0.40 10% $0.50 12% $0.40 $0.35 $0.45 $0.40 $0.30 $0.00 2005 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2007 200
Slide 33: Teekay LNG Partners
TEEKAY LNG PARTNERS NYSE: TGP IPO Date: May 4, 2005 Current Unit Price: $28.94* Current Yield: 8.3%** *As at June 10, 2010 **Based on an annualized dividend of $2.40 per unit www.teekay.com
Slide 34: Teekay LNG's Fleet Under Long-Term Contracts
Teekay LNG’s Fleet Under Long-Term Contracts 2000 2010 2020 2030 LNG Carrier Fleet May 2010 Hispania Spirit Catalunya Spirit Galicia Spirit Madrid Spirit Al Marrouna Al Areesh Al Daayen Al Huwaila Al Kharsaah Al Shamal Al Khuwair Tangguh Hiri Tangguh Sago Arctic Spirit Polar Spirit LPG Carrier Fleet
Slide 35: Multi-Year, Built-in Growth
Multi-Year, Built-in Growth $2.40 ANGOLA % PROJECT (33%)(1) 5.3 (4 LNG carriers) S % SKAUGEN ION 7 .5 (2 LPG) UT CONVENTIONAL TRIB TANKERS G DIS $2.28 (3 Vessels) ASIN SKAUGEN SKAUGEN RE 6% (2 LPGs) (1 LPGs) INC 14. $2.12 TANGGUH (70%) (2 LNG Carriers) 1% 12. KENAI (2 LNGs) $1.85 RASGAS 3 (40%) (4 L
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Slide 37: Teekay Offshore Partners
TEEKAY OFFSHORE PARTNERS NYSE: TOO IPO Date: Dec. 13, 2006 Current Unit Price: $20.24* Current Yield: 9.4%** *As at June 10, 2010 **Based on an annualized dividend of $1.90 per unit www.teekay.com
Slide 38: TOO: Strategic Assets in the Offshore Value Chain
TOO: Strategic Assets in the Offshore Value Chain Exploration / Subsea Storage Terminal Seismic Drilling Development Production Transportation SHUTTLE TANKER (34) FPSO (1) Demand for shuttles FSO (6) increasing FPSOs entering the ‘sweet spot’ New marginal fields utilize FSOs 38 www.teekayoffshore.co
Slide 39: Long-Term Contract Portfolio With Strong Counterparties
Long-Term Contract Portfolio With Strong Counterparties Shuttle FPSO & FSO Conventional Tankers Units Tankers f CoA volumes = 2.3 f 4.7 years – f 5.5 years Average 6 vessels years – 7 vessels (plus 5 one-year Contract f Time / bareboat charter options and 2 Life five-year options) 5.7 years – 28 ves
Slide 40: Original Strategy Still Drives Management
Original Strategy Still Drives Management Core business objective unchanged since 2006 IPO… Increase distributions per unit by executing on the following strategies: f Expand global operations in high growth regions f Focus on Brazil and new, niche fields in the North Sea f Pursue additional opportu
Slide 41: Teekay Tankers
TEEKAY TANKERS NYSE: TNK IPO Date: Dec. 12, 2007 Current Unit Price: $11.28* Current Yield: 13.1%** *As at June 10, 2010 **Based on an annualized Q1-10 dividend of $1.48 per share www.teekay.com
Slide 42: Recent Acquisitions Aligned with TNK's Tactical Fleet Management
Recent Acquisitions Aligned with TNK’s Tactical Fleet Management Name Y/ Built Dwt Fleet Coverage Matterhorn Spirit 2005 114,800 (by Revenue Days) Kaveri Spirit 2005 149,985 Trading in Fixed Spot Teekay Pools Ashkini Spirit 2003 165,200 2010E 60% 40% Kanata Spirit 1999 113,000 2011E 34% 66% Sotra Sp
Slide 43: Spot Traded Fleet Provides Significant Operating Leverage
Spot Traded Fleet Provides Significant Operating Leverage f At Q1-10 average Aframax and Suezmax spot rates of $17,500 and $32,000 per day, respectively, TNK could pay an illustrative 2010 dividend of $1.24 per share f Every $5,000 per day in spot TCE provides an additional $0.22 per share to annual
Slide 44: Q2 2010 Dividend Matrix
Q2 2010 Dividend Matrix f Current tanker rates exceed rates experienced in Q2 to date f Estimated dividend for Q2 positively impacted by acquisitions Q2-2010 Estimated Suezmax Spot Rate Assumption (TCE per day) Dividend Per Share $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $10,000 0.22 0.24 0.27
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