Teekay Corporation 2012 Jefferies Conference Market Presentation

1. Tanker Market
Update
September 2012

2. 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 $14,400 / day vs. $25,700 / day long-term average
○ Suezmax 2009-12 average of $22,400 / day vs. $33,500 / day long-term average
When will the bottom be reached and how long will the recovery take?
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3. 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 price spread
○ Discourages long-haul Atlantic-Pacific oil movements
BUT…
• Short-term events still have the potential to create rate spikes
○ Atlantic hurricane activity, unexpected refinery outages etc.
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4. 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 in Q4-12
○ Heating demand in the northern hemisphere
○ Return of refineries from seasonal maintenance
○ Transit delays due to adverse weather conditions
Additional Factors Which Could Move the Market
Upside Downside
 Atlantic hurricane season  Weakening global economy
 Re-opening of Atlantic refineries  Potential OPEC supply cutbacks
 Unplanned refinery outages –  Non-OPEC supply outages
increased product tanker demand (N. Sea, GoM, Sudan, Syria, Yemen)
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5. 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%
2011 2012E 2013E
Source: Platou / Internal estimates EIA Report Date
• Uncertainties with regards to the 2013 demand outlook have grown
• Base case view is for supply and demand to be balanced in 2013
○ Previous assumption was for demand to outstrip supply by ~1%
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6. 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 shipyards to cut prices
○ Lower steel costs pave the way for lower prices
○ Lack of financing likely to constrain ordering
Suezmax Asset Prices Aframax Asset Prices
110 90
NB 5-yr NB 5-yr
100 80
90 70
80 60
$ millions
$ millions
70 50
60 40
50 30
40 20
Source: Clarksons Source: Clarksons
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7. 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 / LR2 Fleet Growth • Aframax / LR2 fleet shows virtually
Deliveries Removals Net Growth no fleet growth for 2H-2012;
100
80 shrinking fleet in 2013
60
Vessels
•
40
20 Suezmax / VLCC with ~5-7% fleet
0 growth to come in 2013
-20
-40
-60 • New round of orders has re-inflated
2009 2010 2011 2012E 2013E 2014E
the MR tanker orderbook
Favorable supply outlook to support Aframax / LR2 rates in 2013
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8. 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 due to slowing fleet growth
(sub-3% p.a.) coupled with economic recovery, improved oil demand
• Recovery will be gradual; pace of ordering must remain low
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9. 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 12
15 Refinery Capacity
0.8 10
MB/D
Crude Imports
10 8
0.6
6
0.4
5 4
0.2
2 Source: IEA / BP
0 0.0 0
2012E
2013E
2014E
2015E
2016E
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
• Future oil demand growth to come almost entirely from non-OECD
○ Increasing wealth to drive demand for transportation fuels
• China is expected to account for the majority of growth in crude imports
○ Supply sourced from Middle East and, increasingly, Atlantic Basin (long haul)
• Growth in crude trade partially offset by a decline in US seaborne imports
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10. 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 / Internal
Source: Clarksons / Internal estimates
• Global refining capacity set to increase by ~8 mb/d during 2012-2016
○ ~40% of new capacity is from export-oriented facilities in India / MEG
• Older / less efficient refineries in the Atlantic Basin becoming marginalized
○ Displaced in part by long-haul product imports from the East
• Growth in long-haul product tanker trade to benefit LR2s / LR1s the most
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11. 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
Source: Citi
seaborne crude imports (though
could lower global oil prices and
US Net Product Imports / Exports stimulate demand elsewhere)
• US has the potential to become a
major exporter of refined products.
• The US is expected to have a large
surplus of naphtha by 2015 as
NGLs push naphtha out of domestic
petrochemical markets.
Source: Citi
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12. LNG Market
Update
September 2012

13. 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
charters likely to earn closer to long-
term average (~$70-90,000 / day)
Source: Various Broker Estimates
Pace of LNG Vessel Orders Has Slowed
25
LNG Vessel Orders
• 17 new LNG carrier orders in 2012 to
date versus 50 in 2011.
No. Vessels
20
15
10 • Enquiry for new tonnage has fallen in
5 recent weeks on concerns that the
0 orderbook is sufficient to meet near-
term demand (i.e. up to 2015)
Source: Clarksons
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14. “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 (2010-35)
2.5%
IEA EIA BP Exxon Average: 1.9% p.a.
2.0%
Average: 1.0% p.a.
CAGR (%)
1.5%
Average: 0.9% p.a.
1.0%
0.5%
0.0%
Oil Coal Natural Gas
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15. 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 Agreements Indian Regasification Capacity
18
Australia Qatar Indonesia 40
Million Tonnes Per Annum
16
Malaysia PNG Portfolio
35
Million Tonnes
14 30
12
25
10
20
8
15
6
4 10
2 5
0 0
Current Secured by MOU 2012 2013 2014 2015 2016
2016
Source: Thomson Reuters Source: Ambit Capital
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16. 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
no clear timeline for activation 90
of remaining reactors Million Tonnes 80
70
60
• Backwardation in LNG 50
40
charter rates reflect the 30
20
Fukushima effect lasting 10
through end 2013 0
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17. 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 Tonnes Per Annum (MTPA)
450 170 MTPA by 2020 = Middle East
170 incremental LNG carriers Canada
400
Other Asia
350 Africa
USA
300
Russia
250
Australia
200 Existing
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Multiple Sources / Internal Estimates
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18. 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
competitive until the price
exceeds $5-6 / mmbtu.
• New projects on hold until US
government assesses the
impact of LNG exports on
domestic gas prices
Source: Deutsche Bank
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19. 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%
(MTPA)
40 20%
30 15%
20 10%
10 5%
0 0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: GIIGNL
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20. 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 Orderbook
60
Long Term Contract Short Term Contract / Uncommitted
50
Number of Vessels
40
30
20
10
0
Source: Clarksons
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21. 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
• Significant ramp-up in LNG export volumes and therefore transportation
demand
• Estimated 100 LNGs over and above the current orderbook required to satisfy
projected demand by 2020
• Demand for floating regasification set to grow in tandem with increased LNG
export volumes and global infrastructure build-out
21 www.teekay.com

22. Offshore
Market Update
September 2012

23. 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

24. 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+ mboe
MODU Orders Versus Oil Price
100 120
Jack Ups Semi-subs and Drillships Oil Price (USD)
80 100
$ / BBL Oil Price
MODU Orders
80
60
60
40
40
20 20
0 0
Source: Clarksons, Douglas Westwood, BP
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25. 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 *Source: Norwegian Petroleum Directorate
• Enhanced Oil Recovery
Barents Sea
(emerging
leading to renewed shuttle region)
production in mature areas
Norwegian Sea
• Move into Barents Sea (existing shuttle
region)
requires high-specification
shuttle tankers and FPSOs North Sea
(existing shuttle
area)
25 www.teekay.com

26. 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 production drives demand for shuttle tankers and FPSOs
• Petrobras is aggressively increasing its production capability
• Other oil companies also have shuttle requirements in offshore Brazil
26 www.teekay.com

27. 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
Case Case Case
per year 2012
Next 5 Years
(2007 – 2011)
• The number of projects which could require an FPSO has doubled in
the past five years
• Estimate of 20-28 FPSO orders per year over the next five years
depending on the global economy, oil demand and energy prices
• Operational and engineering expertise required to be successful in
the leased FPSO business creates a high barrier to entry
27 www.teekay.com

28. 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 Operators
12 10
11 4 Owners with 2 units
10 19 Owners with 1 unit
8
7
8
6 5
6
4 4
4 4
4 3 3
2
2 1 1 2
0 0
S.E. Asia North MED GoM Brazil Africa Tanker Teekay Modec Trada MISC
Sea Pacific Maritime
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