Teekay Corporation Ltd. · NYSE:TK
Teekay — Investor Day (April 2007)
108 slides from Teekay's investor day presentation, Apr 4, 2007
Slide 1: Investor Day
TEEKAY CORPORATION Investor Day April 4, 2007 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’
Slide 3: Today's Teekay Team
Today’s Teekay Team f C. Sean Day – Chairman of the Board f Bjorn Moller – Chief Executive Officer f Peter Evensen – Chief Strategy Officer f Vince Lok – Chief Financial Officer f Scott Gayton – Manager, Investor Relations f Dave Drummond – Investor Relations, Analyst 3 www.teekay.com
Slide 4: Table of Contents
Table of Contents 1. Introduction Bjorn Moller 2. Board Discussion Sean Day 3. Teekay Corporation: Introduction Bjorn Moller 4. Teekay Parent: The Asset Manager 5. Overview of MLPs Peter 6. Teekay Offshore Partners Evensen 7. Teekay LNG Partners 8. Overview of GPs Vince Lok 9. Financial Discussion 1
Slide 5: Teekay in 1998 – A Tanker Company
Teekay in 1998 – A Tanker Company CUSTOMER CUSTOMER LOGISTICS LOGISTICS ASSET MIX AFRAMAX (HARDWARE) INDO-PACIFIC CENTRALIZED PEOPLE PEOPLE & & TECHNICAL SYSTEMS SYSTEMS AND (SOFTWARE) (SOFTWARE) COMMERCIAL OPERATIONS SCALE 45 SHIPS 8 OFFICES TOTAL SCALE SCALE 200 SHORE ASSETS 1800 SEA BASED $1.4 BI
Slide 6: Teekay in 2007 – Much More than a Tanker Company
Teekay in 2007 – Much More than a Tanker Company We have created a unique platform through the Teekay Marine Midstream concept NCS CONOCO OFFSHORE BHPB CALTEX CEPSA EMISSIONS EMBEDDED PHILLIPS SPT OFFSHORE CUSTOMER LOADING MARINE AUSTRALIA STRATEGIC STRATEGIC CONTROL CHARTERING STRATEGIC LIGHTERING
Slide 7: Serving Customers from Reservoir to Refinery
Serving Customers from Reservoir to Refinery A leader in high- A leader in harsh end FSO market weather FPSOs World’s largest Shuttle tanker operator Growing force in product tanker market 50% owner of world’s leading lightering World’s largest operator of business mid-size crude oil tankers World’s
Slide 8: The Teekay Marine Midstream Platform
The Teekay Marine Midstream Platform 5 Floating, Production Storage & Offtake Units (FPSO) 42 Shuttle Tankers 25 Product 5 Floating 72 Crude Oil 17 Gas Tankers Storage Units Tankers Tankers CUSTOMER PEOPLE FINANCE OPERATIONS *Includes 6 commercially managed vessels 8 www.teekay.com
Slide 9: Teekay Corporation In Profile
Teekay Corporation In Profile f An asset management company creating value in the Marine Midstream space through: f Proactive freight and vessel trading f An integrated marine operations franchise f Global project management f Innovative corporate structure f Transnational company with 21 offices an
Slide 10: Value Creation Approach – Four Components
Value Creation Approach – Four Components f Proactive freight and vessel trading f Disciplined timing of asset investment f Market knowledge enhances returns f An integrated marine operations franchise f Teekay’s brand is built on the in-house management of all critical functions f Global project ma
Slide 11: Proactively Managing the Cycle
Proactively Managing the Cycle f Understanding trends f Patience f Market intelligence f Strong Balance Sheet $60,000 Sold S/H Ships $55,000 Spot Fleet Changes $50,000 $45,000 Realized Aframax TCE Sold S/H Ships $40,000 Ordered $35,000 Newbuildings $30,000 Acquired Bona Ordered $25,000 Newbuildings
Slide 12: Global Freight Trading Network
Global Freight Trading Network Stavanger Copenhagen London Vancouver Tokyo Houston Singapore f24 hour coverage through commercial offices in all major shipping markets fAvailable to customers in real-time fPaper and physical freight trading 12 www.teekay.com
Slide 13: Integrated Marine Operations Franchise
Integrated Marine Operations Franchise f Regional customer service f Reputation for health, safety, quality and environmental stewardship f Cost effectiveness f Experienced and well trained staff Teekay Brand Opens Doors to New Business 13 www.teekay.com
Slide 14: Global Project Management
Global Project Management f Teekay has developed powerful internal project management expertise which allows us to work on numerous projects simultaneously Specialized Operational/ Engineering & Customer Financial Project Relationships + Commercial Expertise + Expertise + Technical Expertise = Manag
Slide 15: Global Project Management cont'd
Global Project Management cont’d f Built core competencies in securing strategic outsourcings as well as acquiring and integrating new businesses f Subsequently used each deal as a base for further expansion $60,000 Spot Fleet Sold S/H Ships $55,000 Changes Awarded FPSO Acquired L/T Project $50,000
Slide 16: The Teekay Business Development Funnel
The Teekay Business Development Funnel Opportunity Targeted Unlevered IRRs Prospect FPSOs: 12% - 15% Shuttle Tankers: 10% - 12% Approval & LNG Carriers: 8% - 10% Bids Conventional Tankers: >9% Contract Negotiation Project GPs Further Enhance Execution Teekay’s IRRs 16 www.teekay.com
Slide 17: Innovative Corporate Structure
Innovative Corporate Structure Teekay Parent G.P. of G.P. of Teekay LNG TGP TOO Teekay Offshore Partners L.P. Partners L.P. NYSE: TGP NYSE: TOO Conventional Teekay Tankers Petrojarl Shuttle Tankers LNG Carriers FSOs LPG Carriers Future FPSOs 17 www.teekay.com
Slide 18: Corporate Structure Facilitates Growth
Corporate Structure Facilitates Growth ~70%* of Teekay’s assets are MLP eligible Strategic rationale for carving out fixed-rate businesses into MLPs: f Illuminates higher value of fixed-rate cash flows to Teekay investors f Cost of equity advantage accelerates more profitable growth f General Partne
Slide 19: Teekay is Trading at 75% of Sum of Parts Value
Teekay is Trading at 75% of Sum of Parts Value $54.11 $72.02 Sum of Parts Value Per Current Teekay share Teekay share Price* Teekay Offshore Teekay LNG Teekay Parent Partners Partners NYSE: TOO NYSE: TGP NYSE: TK & OPCO $27.42 Per Teekay share $12.44 $32.16 Per Teekay share Per Teekay share *As at M
Slide 20: Today's Teekay
Today’s Teekay f Teekay is a leading asset management company focused on the Marine Midstream space f To create value, Teekay will utilize four key components: f Spot trading f Operating Expertise f Project Management f Corporate Structure f Our asset management platform reduces risk and enhances sh
Slide 21: Teekay – More than a Shipping Company
Teekay – More than a Shipping Company What’s in a name……? Teekay Shipping Corporation Teekay Corporation Name change to be voted on by shareholders at 2007 AGM 21 www.teekay.com
Slide 22: Overview of Teekay Parent
Overview of Teekay Parent f Crude and Product Tankers f Teekay Petrojarl f GP and LP Interest in two MLPs www.teekay.com
Slide 23: World Leader in Conventional Tanker Business
World Leader in Conventional Tanker Business 80 f Largest operator of 70 Exist NB's medium size crude oil 60 Aframax/Suezmax 50 tankers 40 f Growing Suezmax / 30 product tanker business 20 10 f 1 billion barrels of oil 0 Teekay Novo. + MISC Alliance Aframax Intl Dynacom shipped in 2006 Sovcomflot Ch
Slide 24: Customer Benefits from Teekay Scale & Breadth
Customer Benefits from Teekay Scale & Breadth f Global Reach - the only truly global tanker company able to meet the worldwide need of our customers f Customer Service - interchangeability of ships increases on time performance f Teekay’s tanker franchise has the ability to undertake large-scale COA
Slide 25: Growth Areas – Suezmax and Product Tankers
Growth Areas – Suezmax and Product Tankers f World’s largest orderbook of Suezmaxes – 10 on-order f Strong oil production growth from West Africa & FSU supports Suezmax demand Suezmax f Changing nature of trades supports Suezmaxes Tankers f Gives Teekay the flexibility to offer contracts for both Af
Slide 26: 2007 Outlook: Continued Tight Tanker Market
2007 Outlook: Continued Tight Tanker Market Platou tanker utilization estimate for 2006: 89% 2007 Tanker Supply (Mdwt) 2007 Tanker Demand 2007 Tanker deliveries* 34 IEA oil demand growth 1.8% 10% average slippage in deliveries (3.4) Conversion factor 2.5x Expected deliveries 30.6 => Tanker demand Gr
Slide 27: Strong Freight Markets
Strong Freight Markets 2005 2006 2007 80,000 60,000 US $ / TCE Aframax Day 40,000 20,000 0 Q1 Q2 Q3 Q4 Source : CRS (Aframax average) Teekay has Significant Operating Leverage 27 www.teekay.com
Slide 28: Acquisition of Petrojarl ASA
Acquisition of Petrojarl ASA f Acquired 64.5% of Petrojarl ASA in late 2006 f Strategic Rationale f Natural extension of Teekay’s offshore franchise f Petrojarl owns and operates 4 FPSO units in the North Sea and is considered a leader in harsh weather FPSOs f Makes Teekay a one-stop marine solution
Slide 29: Petrojarl's Existing FPSO Units
Petrojarl’s Existing FPSO Units Converted: Converted: 2001 2001 Built: Built: 1999 1999 Built: Built: 1996 1996 Built: Built: 1998 1998 29 www.teekay.com
Slide 30: Petrojarl Value Potential – Part I
Petrojarl Value Potential – Part I Winning New Projects f In-house engineering capability f Strong reputation for project execution and reliable operations f Competitive cost of capital through Teekay Offshore f New projects are very valuable fE.g. Siri project: $160m investment => $30m annual CFVO
Slide 31: Petrojarl Value Potential – Part II
Petrojarl Value Potential – Part II Renegotiation/Redeployment of Existing FPSO Units f Petrojarl FPSO contracts entered into during lower rate environment => today, significantly out-of-the-money Petrojarl Varg f We currently estimate the existing contracts to be out-of-the-money by $600m f In 2006
Slide 32: Assets Under Management
Assets Under Management 2000 2004 2007 In-charter - Spot - $1,171.6m $1,643.7m Fleet - Fixed-rate - 536.6m 962.9 Commercially Managed Fleet - - 218.5 MLPs - - 657.1 (minority interest portion) General Partnership Interests - - 37.9 Total - $1,708.2m $3,520.2 Teekay has a unique position in the indus
Slide 33: Benefits of an Asset Management Platform
Benefits of an Asset Management Platform f Leverages existing operational expertise to enhance returns through fee income f Provides capital to pursue large scale transactions f Reduces risk f Participation in value creation through G.P. Incentive Distribution Rights (IDRs) Enhances Shareholder Retu
Slide 34: Teekay's Business is Evolving
Teekay’s Business is Evolving Investment Returns Low High Pure Fee Business Low Teekay in 2007 Capital Intensity High Teekay in 100% 1998 Ownership 34 www.teekay.com
Slide 35: Changing the Risk/Reward Ratio in our Favor
Changing the Risk/Reward Ratio in our Favor Investment Returns Low High MLP GP Pure Fee Ownership Business Low 3rd Party Mngm’t In-chartering Trading spot ships Capital Intensity Fixed-rate shipping in MLPs Historical Fixed-rate Shipping during High shipping shipping “Super-cycle” 100% Ownership 35
Slide 36: Overview of Master Limited Partnerships (MLPs)
Overview of Master Limited Partnerships (MLPs) www.teekay.com
Slide 37: What is an MLP?
What is an MLP? A Master Limited Partnership (MLP) is a legal form, similar to a C-Corp. but with important tax advantages f Based on the U.S. tax laws How did the MLP structure arise? f Allows publicly traded partnerships for “natural resource” businesses f Expect stable cash distributions with mod
Slide 38: Why Carve-out Assets into MLPs
Why Carve-out Assets into MLPs Capitalize on growing fixed-rate investment opportunities f Provides currency for project or acquisition opportunities in LNG, Offshore (shuttle, FSO and now FPSO) that could not be completed under Teekay’s original structure Lower cost of capital f Yield-oriented inve
Slide 39: Teekay's Shareholders Benefit When our MLPs Grow
Teekay’s Shareholders Benefit When our MLPs Grow Growing businesses within the MLP structure benefits Teekay shareholders f Value of L.P. units increases with every accretive transaction f Value of G.P. grows with every project “dropped down” to MLPs from Teekay f “Virtuous cycle” benefits Teekay sh
Slide 40: Valuation of MLPs – Lower Yield
Valuation of MLPs – Lower Yield MLPs tend to trade at lower yields than their shipping C-Corp peers 10.0% 8.6% 8.1% 8.0% Dividend Yield 5.8% 6.0% 5.0% 4.7% 4.0% 2.0% 0.0% Yield-oriented Other Shipping MLPs Pipeline MLPs Teekay LNG Teekay Offshore Shipping C-Corps (USS, KSP) Partners Partners (SFL, D
Slide 41: Valuation of MLPs – Higher Multiples of Cash Flow
Valuation of MLPs – Higher Multiples of Cash Flow MLPs tend to trade at higher valuations than their shipping C-Corp peers 16.0 14.2 11.7 12.4 12.0 11.0 10.3 EV/EBITDA EV/EBITDA 8.0 4.0 0.0 Yield-oriented Other Shipping Pipeline MLPs Teekay LNG Teekay Offshore Shipping C-Corps MLPs (USS, KSP) Partne
Slide 42: NYSE: TOO
NYSE: TOO IPO Date: Dec. 13, 2006 Current Price/unit: $29.67* Current Dist’n/unit: $1.40 *As of March 29, 2007 www.teekay.com
Slide 43: Teekay Offshore Partners – Ownership Structure
Teekay Offshore Partners – Ownership Structure Teekay Shipping Public Corp. GP Unitholders NYSE: TK 58% 2% 40% Teekay Offshore Partners L.P. 74% NYSE: TOO 26% (Includes 100% of GP interest) Teekay Offshore Operating L.P. (OPCO) 36 4 9 Shuttle Tankers FSO Units Conventional Tankers 43 www.teekay.com
Slide 44: Significant Deepwater Offshore Growth
Significant Deepwater Offshore Growth f Deepwater offshore oil Increasing Trend Towards production is one of the Deepwater Oil Production fastest growing areas in 27 10 the energy industry Shallow water f Only significant 26 8 opportunity to add reserves outside of Russia and Middle East 25 6 MB / D
Slide 45: Offshore Oil Transportation, Storage and Production
Offshore Oil Transportation, Storage and Production Shuttle Tanker FSO FPSO Specially designed to Provides on-site Oil production and transport oil from storage for oil fields storage vessel offshore installations to refineries Majority of contracts Contracts are Contracts are are ‘life of field’ ge
Slide 46: Growing Investment in Offshore Oil and Gas Sector
Growing Investment in Offshore Oil and Gas Sector Run-rate of $247 billion annually by 2010 $163 billion in 2005 expenditures Exploration / Subsea Storage Terminal Seismic Drilling Development Production Transportation SHUTTLE TANKER FPSO FSO Source: Douglas Westwood. 46 www.teekay.com
Slide 47: Teekay Offshore Offers One-Stop Service
Teekay Offshore Offers One-Stop Service FSO Shuttle Tanker FPSO ©Teekay Shipping Ltd. Bundling of Offshore Services Adds Value 47 www.teekay.com
Slide 48: Dominant Position in an Expanding Shuttle Tanker Market
Dominant Position in an Expanding Shuttle Tanker Market World’s Largest Owner and Operator f OPCO operates 62% of the world’s shuttle tankers Geographic Presence in Growing Markets f Only foreign flag operator in Brazil (8 vessels) Low Threat of Substitution f Integral part of offshore oil productio
Slide 49: Developments in Teekay's Offshore Segment
Developments in Teekay’s Offshore Segment fSigned life-of-field shuttle tanker contract of affreightment with Statoil covering Norwegian Continental Shelf f Some fields expected to run beyond 2030 fOrdered two high specification Aframax size DP2 shuttle tanker newbuildings from Korea f Vessels will
Slide 50: Increasing Demand for FSOs
Increasing Demand for FSOs Projected FSO Fleet Growth Opportunity to Add Incremental FSOs 31 - 41 6-8 Additional per Vessels Expected year 5 Newbuilds 76 76 Existing Fleet Existing Fleet March 2007 Next 5 Years Source: International Maritime Associates (IMA). 50 www.teekay.com
Slide 51: Increasing Demand for FPSOs
Increasing Demand for FPSOs Projected FPSO Fleet Growth f Current operating fleet expected to nearly double over next 5 years 17 - 20 87 – 98 Additional per f FPSO usage year Vessels increasingly 46 Newbuilds Expected popular in offshore sector 118 118 Existing Existing f Growing trend to Fleet Flee
Slide 52: Significant Growth Opportunities
Significant Growth Opportunities f Teekay Shipping’s 50% JV FPSO with Teekay Petrojarl is Opportunity actively bidding on new projects S ON (Petrojarl) f Teekay Petrojarl currently owns 4 FPSO units TI BU RI ST May Acquire DI Additional f Teekay may sell 74% NG interest in OPCO over time SI Interest
Slide 53: Our Growth Markets
Our Growth Markets North Sea Caribbean Brazil Developed market Africa Growing market Australia Emerging market Since 2001, We Have Operated In 5 Continents 53 www.teekay.com
Slide 54: Long-term, Diverse Contract Portfolio
Long-term, Diverse Contract Portfolio Conventional Shuttle Tankers FSO Units Tankers f Majority of CoA volumes Average f 5 years f 8 years are life of field (16 year Contract average field life) – 21 (plus 5 one-year Life options) vessels f Time / bareboat charter 6 years – 15 vessels High Quality C
Slide 55: Teekay Offshore Partners Tax Arrangement
Teekay Offshore Partners Tax Arrangement A legal partnership that is electing to be taxed as a corporation in the U.S. Structure f However, the partnership pays no U.S. income tax since its business is considered “offshore” for tax purposes Investors receive standard Form 1099s Benefits No K-1s ~70%
Slide 56: Summary Financial Information – OPCO
Summary Financial Information – OPCO Forecast Twelve Months Ending December 31, 2007 (Dollars in millions) MLP Also Has Option Voyage Revenues to Purchase Directly $749.3 from Sponsor Voyage Expenses 146.7 Time-Charter Hire Expense 146.4 Vessel Operating Expense 124.0 f 2 shuttle tankers on Deprecia
Slide 57: NYSE: TGP
NYSE: TGP IPO Date: May 5, 2005 Current Price/unit: $37.58* Current Dist’n /unit: $1.85 2007 Dist’n Guidance: $2.12** *As of March 29, 2007 **Run-rate commencing in Q2, 2007 www.teekay.com
Slide 58: Teekay LNG Partners LP – Ownership Structure
Teekay LNG Partners LP – Ownership Structure 100% Teekay Shipping Corporation Public Teekay GP L.L.C. 65.8% (General Partner) Unitholders 2% Teekay LNG 32.2% Partners L.P. Current Current LNG/LPG Carriers LNG/LPG Fleet Oil Tanker Fleet on Order 8 Vessels 9 Vessels 8 Vessels 8 Vessels 9 Vessels 58 ww
Slide 59: Teekay's Gas Business
Teekay’s Gas Business Long Term Growth Strategy: f Expand our LNG and LPG fleets on a build-to- suit basis f Grow through newbuildings, joint ventures and acquisitions f Leverage customer and supplier relationships f Provide superior vessel operations f Deliver competitive rates by leveraging our fi
Slide 60: LNG Shipments: 7% Expected Annual Growth
LNG Shipments: 7% Expected Annual Growth f Global demand for natural gas is expected to continue to grow significantly f Growing shortfall of natural gas in key consuming countries f LNG shipments are the obvious solution to address this shortfall f Creates increased demand for LNG Carriers and a $2
Slide 61: LPG Shipments: 7% Expected Annual Growth
LPG Shipments: 7% Expected Annual Growth f As a by-product of natural gas production and liquefaction, LPG supply will increase with new LNG projects f Over half of the supply growth will originate from the Middle East f Longer haul trades will develop as demand and supply increases, increasing the
Slide 62: Sea NG Marine Transportation Solutions
Sea NG Marine Transportation Solutions f Teekay, Sea NG, Marubeni MOU signed Jan 9,2007 f ABS approved the world’s first CNG vessel which will be built and operated by Teekay. f Low cost, first to market opportunity f Potential projects in Asia, the Caribbean & Mediterranean 62 www.teekay.com
Slide 63: Stable Long-Term Cash Flows
Stable Long-Term Cash Flows f Attractive fixed-rate contracts “locking in” cash flows: f 20 - 25 years initial length for LNG carriers f High credit quality customers f Cost escalation provisions f Long remaining contract life for all vessels: f LNGs: 20 years f Tankers: 14 years f Liabilities are m
Slide 64: Multi-year, Built-in Growth
Multi-year, Built-in Growth TANGGUH (70%) (2 LNG Carriers) RASGAS 3 (40%) (4 LNG Carriers) Skaugen (2 LPG) Skaugen (1 LPG) Dania Sp. LPG RASGAS II (70%) (3 LNG Carriers) SUEZMAX ACQUISITION (3 Vessels) INITIAL FLEET (4 LNG Carriers) (5 Suezmax Vessels) 2005 2006 2007 2008 2009 This portfolio of proj
Slide 65: Overview of General Partner Interests (GPs)
Overview of General Partner Interests (GPs) www.teekay.com
Slide 66: G.P. Interests
G.P. Interests f MLPs have two cash flow streams: f Cash flow to LP Unit holders f Cash flow to GP Unit holder f Initial split: 98% to LP units, 2% to GP units f Incentive Distributions Rights (IDRs) allow GP to increase its percentage take of distributions by raising distributions to LP unit holder
Slide 67: Teekay Illustration
Teekay Illustration Assumptions TGP TOO Current Quarterly Distribution per Unit $0.53* $0.35 Annual Distribution Growth Rate 10% 15% LP Unit Issuance per Annum 10% 10% LP Units O/S @ Jan. 1, 2007 34,975,000 19,600,000 *As per guidance commencing 2q07 Note: Teekay is assumed to not increase its LP un
Slide 68: TGP and TOO G.P. Cash Flow Growth - Illustrative
TGP and TOO G.P. Cash Flow Growth - Illustrative $100 $90 $80 $70 9 2% (millions) (millions) $60 = $50 A GR C $40 $30 $20 $10 $ 2007 2008 2009 2010 2011 2012 TGP G.P. Distribution TOO G.P. Distribution FOR ILLUSTRATION PURPOSES ONLY: Based on assumptions detailed on slide 64 and do not reflect manag
Slide 69: Publicly Traded GP Valuations
Publicly Traded GP Valuations Public G.P. Comps Price Current DCF P/DCF GP Ticker (3/15/07) Distribution 2007E 2008E Yield 2007E 2008E Valero GP Holdings, LLC VEH $27.43 $1.28 $1.37 $1.57 4.7% 20.0x 17.5x Atlas Pipeline Holings, L.P. AHD $23.98 $1.00 $1.20 $1.44 4.2% 20.0x 16.7x Alliance Holdings GP
Slide 70: TGP and TOO G.P. Value - Illustrative
TGP and TOO G.P. Value - Illustrative Rapid Escalation of Value of G.P.s $26.73 per $2,000 Teekay share $1,600 (millions) (millions) (Millions) $1,200 $1.02 per Teekay $800 share $400 $ 2007 2008 2009 2010 2011 2012 Value of TGP GP Interest Value of TOO GP Interest Values based on a comparative mult
Slide 71: Financial Discussion
Financial Discussion www.teekay.com
Slide 72: Financing Strategy
Financing Strategy f Maintain financial flexibility to fund future growth: f Teekay Parent total liquidity: $1.15bn* f Teekay LNG total liquidity: $445m* f Teekay Offshore total liquidity: $429m* f Teekay Petrojarl total liquidity: $140m* f Access to capital: f MLP equity markets provide consistent
Slide 73: Financial Summary – Teekay and Subsidiaries
Financial Summary – Teekay and Subsidiaries ~90% 67.8% 100% OPCO Teekay Teekay LNG Partners Teekay Parent Offshore L.P. NYSE: TGP Partners 26% NYSE: TOO Includes 100% of Petrojarl Price: $54/share Yield: 1.8% Price: $37/unit Yield: 5% E 2007 CFVO at $30,000 / Price: $30/unit Yield: 4.7% $275m E 2007
Slide 74: Cash Flow Structure
Cash Flow Structure Public G.P. Units G.P. Units New Public $24.4m $3.0m Investors $0.6m $11.3m L.P. Units 100% L.P. Units $49.7m $92.1m $16.1m Teekay LNG Partners Teekay Parent OPCO Teekay L.P. Offshore Partners Daily Aframax rates & Distribution per unit: associated CFVO: Total $2.12 per unit $25,
Slide 75: Summary of Fixed-rate Contract Portfolio
Summary of Fixed-rate Contract Portfolio Segment # of Avg. remaining Forward Fixed-rate Vessels contract Revenues Shuttle tankers 39 7.3 years $2.5 billion (excl. exercise of options) LNG carriers 13 21.7 years $4.6 billion FSO vessels 5 5.6 years $0.2 billion Conventional 19 12.1 years $1.6 billion
Slide 76: Financial Strategy for Cash Generated
Financial Strategy for Cash Generated 1. Fund Profitable Growth 2. Delever the Balance Sheet f Acquisitions and organic f Maintain sufficient liquidity growth and balance sheet capacity to take advantage of growth f Newbuild and ‘warehousing’ opportunities commitments 3. Return Cash to Shareholders
Slide 77: Each Successful Project Creates Value for Teekay Shareholders
Each Successful Project Creates Value for Teekay Shareholders New 8-10x Projects Repurchase Teekay Fixed-rate Stock or Increase e es EBITDA F le Dividend e c ta b n a ibu m r str ) f o r Di low Equity Capital (Cash) e P of F P . h MLPs G. -50% Cas (2 Issue equity (units) at 11-14x EBITDA Public MLP
Slide 78: Teekay Sum-of-Parts Valuation
Teekay Sum-of-Parts Valuation* Teekay Offshore Partners Teekay LNG Teekay Parent Assets L.P. and OPCO Partners L.P. TOO market TGP market Owned Fleet capitalization @ $593m capitalization @ $1,314m FMV ‘on-the-water’ $29.67/unit $37.58 /unit $1,550m vessels Petrojarl EV $1,124m Teekay’s L.P. 57.75%
Slide 79: Teekay Sum of Parts Valuation
Teekay Sum of Parts Valuation f Excludes f Expected MLP uplift from: f RasGas 3 f Tangguh f Brazil shuttle tankers and FSO to be offered to Teekay Offshore f Future value of G.P.s and L.P.s f Siri project f Petrojarl upside on contract rollovers 79 www.teekay.com
Slide 80: TK: Up 26% YTD; Significant Upside Remains
TK: Up 26% YTD; Significant Upside Remains $72.02 SoP Value / Teekay share $17.91 or 33% $55 NYSE: TK $50 $45 $40 3-Jan-07 20-Jan-07 6-Feb-07 23-Feb-07 12-Mar-07 29-Mar-07 80 www.teekay.com
Slide 81: Closing Comments
Closing Comments www.teekay.com
Slide 82: Teekay – Key Investment Highlights
Teekay – Key Investment Highlights f Global asset management company focused on the marine midstream space f Track record of profitable growth f Widest footprint in our industry f Each of our businesses are in hot sectors f Significant operating leverage f Trading at a significant discount to sum of
Slide 83: Questions & Answers
Teekay - The Marine Midstream Company Questions & Answers 83 www.teekay.com
Slide 84: Appendix
Appendix www.teekay.com . «€
Slide 85: Quarterly Earnings Per Share
EPS Rule of Thumb $1.75 $1.50 Q1 2007: Spot Rate increase $1,000 TCE/day above EPS Increase $16,000 / day ~ $0.06 / qtr $1.25 Quarterly Earnings Per Share $1.00 $0.75 $0.50 $0.25 $- $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 Aframax Rates ($ per day) 85 www.teekay.com
Slide 86: Summary of Share Repurchase Transactions
Summary of Share Repurchase Transactions Repurchased during period Then Remaining Time period $ value # of shares $ value Nov. 2004 to Dec. $555 million 13 million $229 million 6, 2005 Dec. 6, 2005 to $165 million 4.2 million $64 million Policy Feb. 21, 2006 opportunistically Feb. 21, 2006 to $27.5
Slide 87: Teekay's Progressive Dividend Policy
Teekay’s Progressive Dividend Policy = 22% $0.95 $1.00 R CAG Annualized Dividend $0.83 $0.80 $0.60 $0.50 $0.55 $0.43 $0.40 $0.20 $- 2002 2003 2004 2005 2006 Teekay’s dividend has doubled since 2002 87 www.teekay.com
Slide 88: Sum of the Parts Support
Sum of the Parts Support Teekay Offshore Operating Partners (OPCO) Teekay LNG Partners Teekay Standalone 2007 OPCO EBITDA* = $278.4 Actual OPCO Net Debt** = $1,189.4 in (millions) OPCO FMV of owned 'on-the-water' fleet 1,550.0 (per Clarkson's) TOO EBITDA Multiple 12.5x Petrojarl EV 1,123.9 Implied O
Slide 89: Sum of the Parts Support con't
Sum of the Parts Support con’t All figures from 4Q06 F/S All figures from 4Q06 F/S OPCO Net Debt Calculation Teekay LNG Net Debt Calculation Cash 114.0 Cash 28.9 Restricted Cash - current Restricted Cash - current 55.0 Restricted Cash - long-term Restricted Cash - long-term 615.7 Total cash (a) 114.
Slide 90: Sum of Parts Support - Petrojarl
Sum of Parts Support - Petrojarl Petrojarl Market Cap – $858.6m 75m shares at 70 NOK/share @ 6.1 NOK/USD Net Debt (as of Dec. 31, 2006) 265.3m Enterprise Value 1,123.9m Minority Interest (34.5% 304.8m of market cap) 90 www.teekay.com
Slide 91: Newbuilding/Conversion Deliveries
Newbuilding/Conversion Deliveries 1Q07 2Q07 3Q07 4Q07 2007 Offshore Segment 1 1 2 Fixed-Rate Tanker Segment Liquefied Gas Segment 2* 2 Spot Segment 2* 1 3 Total 5 2 7 1Q08 2Q08 3Q08 4Q08 2008 Offshore Segment 1 1 Fixed-Rate Tanker Segment 1 1 2 Liquefied Gas Segment 1 4 2 7 Spot Segment 1 1 2 4 Tota
Slide 92: Capex
Capex Capex by Segment* (in millions) 2007 2008 2009 2010 Total Offshore Segment $297 - $23 $184 $504 Fixed-Rate Tanker Segment 17 59 - - 76 Liquefied Gas Segment 357 191 54 - 602 Spot Segment 156 261 226 - 643 Total $827 $511 $303 $184 $1,825 *As at Jan. 1, 2007 92 www.teekay.com
Slide 93: Teekay Parent Fleet Valuation
Teekay Parent Fleet Valuation Year Spot - In-chartered Spot - owned Built Year Year Aframax Built Built Everest Spirit 2004 Suezmax Large Product Tankers Esther Spirit 2004 Hellespont Trooper 1996 Stavanger Prince 2002 Axel Spirit 2004 SCF Khibiny 2002 Horizon 2004 Erik Spirit 2005 Astra 2002 Stavan
Slide 94: Reconciliation of TOO CFVO to Net Operating Cash Flow
Reconciliation of TOO CFVO to Net Operating Cash Flow (Dollars in millions) Forecast EBITDA for Twelve Months Ending December 31, 2007 Net Operating Cash Flow $188.1 Add: Interest Expense, Net 68.7 Foreign Currency Exchange Gain and Other, Net 1.0 Expenditures for Drydocking 20.6 CFVO* (before non-c
Slide 95: Reconciliation of TGP Non-GAAP Financial Measures
Reconciliation of TGP Non-GAAP Financial Measures (millions) EBITDA $181m Depreciation and Amortization (66m) Interest expense, net (69m) Minority Interest (4m) Net Income $42m 95 www.teekay.com
Slide 96: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Teekay ‘Standalone’ Daily Aframax rates & associated EBITDA: $25,000 => $134m $30,000 => $205m $35,000 => $277m Every $5k thereafter:=> $72m (millions) EBITDA $133.8 $205.4 $277.0 Depreciation & Amortization $48.5 $48.5 $48.5 Income from Vessel Operation
Slide 97: MLP Distribution Schedules
MLP Distribution Schedules TGP Marginal Percentage Interest in Distributions Total Quarterly Distribution Target Amount Unitholders General Partner Minimum Quarterly Distribution $0.4125 98% 2% First Target Distribution up to $0.4625 98% 2% Second Target Distribution above $0.4625 up to $ 0.5375 85%
Slide 98: Fleet Lists
Fleet Lists www.teekay.com . «€
Slide 99: Teekay Offshore Partners' Fleet
Teekay Offshore Partners’ Fleet Fixed-Rate Shuttle Tankers - owned Percent Ownership DWT Year Built Nordic Spirit 100% 151,294 2001 Stena Spirit** 50% 151,293 2001 Nordic Rio** 50% 151,294 2004 Nordic Brasilia 100% 151,294 2004 Navion Stavanger 100% 148,729 2003 Navion Norvegia 100% 130,596 1995 Nav
Slide 100: Teekay Offshore Partners' Fleet cont'd
Teekay Offshore Partners’ Fleet cont’d Fixed-Rate Shuttle Tankers - in-chartered Percent Ownership DWT Year Built Sallie Knutsen * 153,617 1999 Karen Knutsen * 153,617 1999 Grena * 148,553 2003 Gerd Knutsen * 146,273 1996 Elisabeth Knutsen * 124,768 1997 Randgrid * 124,502 1995 Tordis Knutsen * 123,
Slide 101: Teekay Offshore Partners' Fleet cont'd
Teekay Offshore Partners’ Fleet cont’d Teekay Offshore Partners' Fleet List Number of Vessels Chartered-in Owned Vessels Vessels Newbuildings on Order Total Shuttle Tanker segment 24 12 - 36 Conventional Tanker Segment 9 - - 9 Floating Storage & Offtake ("FSO") Vessels 4 - - 4 Total 37 12 - 49 101 w
Slide 102: Teekay LNG Partners' Fleet
Teekay LNG Partners’ Fleet Fixed Rate LNG Carriers Percent Ownership DWT Year Built Hispania Spirit 100% 79,363 2002 Catalunya Spirit 100% 79,363 2003 Galicia Spirit 100% 79,364 2004 Madrid Spirit 100% 79,363 2004 Al Marrouna 70% 78,520 2006 Al Areesh 70% 78,520 2007 Al Daayen 70% 78,520 2007 7 Fixe
Slide 103: Teekay LNG Partners' Fleet cont'd
Teekay LNG Partners’ Fleet cont’d Fixed-rate Conventional Tankers - owned Percent Ownership DWT Year Built Teide Spirit 100% 149,999 2004 Huelva Spirit 100% 149,999 2001 Algeciras Spirit 100% 149,999 2000 Tenerife Spirit 100% 149,999 2000 Asian Spirit 100% 151,693 2004 African Spirit 100% 151,736 20
Slide 104: Teekay Parent Fleet
Teekay Parent Fleet Suezmax Tanker Newbuildings Percent Ownership DWT Year Built BH 508-4 Suezmax 100% 159,000 2008 BH 508-5 - Suezmax 100% 159,000 2008 BH 508-6 Suezmax 100% 159,000 2009 BH 508-7 - Suezmax 100% 159,000 2009 SH 1680 -Suezmax 100% 159,000 2008 SH 1681 -Suezmax 100% 159,000 2008 SH 17
Slide 105: Teekay Parent Fleet cont'd
Teekay Parent Fleet cont’d Large Product Tankers - owned Percent Ownership DWT Year Built Rainier Spirit 100% 114,880 2005 Donegal Spirit 100% 105,200 2006 Kanata Spirit 100% 113,022 1999 Mayon Spirit 100% 98,507 1992 Shetland Spirit 100% 106,236 1994 Galway Spirit 100% 105,200 2007 Limerick Spirit
Slide 106: Teekay Parent Fleet cont'd
Teekay Parent Fleet cont’d Aframax - in-chartered Percent Ownership DWT Year Built Kiowa Spirit * 113,395 1999 Bahamas Spirit * 107,261 1998 Stavanger Viking * 105,400 2004 Mare Salernum * 110,673 2003 Black Sea * 104,943 1999 Forward Bridge * 105,162 1998 Petrodvorets * 105,692 1999 Mare Tirennum *
Slide 107: Teekay Parent Fleet List cont'd
Teekay Parent Fleet List cont’d Fixed-rate Conventional Tankers - owned Percent Ownership DWT Year Built Barrington 100% 33,239 1989 Palmerston 100% 42,956 1990 Samar Spirit 100% 98,640 1992 Australian Spirit 100% 111,905 2004 Americas Spirit 100% 111,920 2003 Kyeema Spirit 100% 113,357 1999 Helga S
Slide 108: Teekay Parent Fleet cont'd
Teekay Parent Fleet cont’d Offshore Units - Under Conversion Percent Ownership DWT Year Built Bergitta (Navion Bergen) 100% 105,641 2000 Roviken (Navion Gothenburg) 100% 152,244 2006 Che Guevara (Siri FPSO) 100% 45,576 1981 Subtotal 3 Teekay Parent Number of Vessels Chartered-in Newbuildings / Owned