Stable Asset Portfolio With Diverse Customer Base Invested Capital by Segment (1) Supported by unrivaled contracted revenue with strong counterparties LNG 1% Growing fixed-rate gas cash 6% $9.8B flows provide stability with significant upside from tanker cash flows Forward fee-based revenues (2) 71% 21% 10.8 years Average remaining contract duration (2) LNG Conventional Tanker LPG FPSO Based on consolidated book values as of September 30, 2019 and includes proportionate share of equity-accounted joint ventures and remaining newbuild capex. (1) 11 As of October 1, 2019. Based on existing contracts but excludes extension options; includes proportionate share of equity-accounted joint ventures. (2)
Teekay Group Teekay Corporation (TK) Corporate Structure • Operator Market Cap: $528 million • Project Fleet: 3 FPSOs Developer • Portfolio Manager Consolidated Economic Interest: 33.9% Economic Interest: 28.8% GP Interest (and IDRs): 100.0% Voting Rights: 54.0% Teekay LNG Partners Teekay Tankers (TGP) (TNK) Market Cap: $1,098 million Market Cap: $525 million Asset Fleet: 79 vessels + Bahrain Fleet: 68 vessels (2) Owners regasification project Leading mid-sized tanker $9.8 billion contracted forward company with integrated fee-based revenue (1) lightering business 10.8 years weighted avg. remaining contract duration (1) Note: Ownership and market capitalization figures as of November 6, 2019 12 As of October 1, 2019. Based on existing contracts but excludes extension options; includes proportionate share of equity-accounted joint ventures. (1) Includes five ship-to-ship transfer support vessels. (2)
Stable and Growing Gas Cash Flows Teekay Group Total Adjusted EBITDA (1) With upside potential as tanker market strengthens 1,400 +113% 1,200 1,000 USD Millions 800 +70% 600 400 200 - (2) (3) (4) 2017 2018 2019E 2020E Gas Cash Flows Tanker and 3 FPSO Cash Flows (1) Total Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, foreign exchange gain (loss), items included in other (loss) income, write-down and (loss) gain on sale of vessels, equipment and other operating assets, amortization of in-process revenue contracts, adjustments for direct financing leases to a cash basis, unrealized gains (losses) on derivative instruments, realized losses on interest rate swaps, realized losses on interest rate swap amendments and terminations, loss on deconsolidation of Teekay Offshore, write-downs related to equity- accounted investments, and our share of the above items in non-consolidated joint ventures which are accounted for using the equity method of accounting. Total Adjusted EBITDA is a non-GAAP financial measure used by certain investors and management to measure the operational performance of companies. Please refer to the Company’s earnings releases for reconciliations of Adjusted EBITDA to net income (loss) and eq uity (loss) income, respectively, which are the most directly comparable GAAP measures reflected in the Company’s consolidate d financial statements. 13 Excludes Adjusted EBITDA from Teekay Offshore when it was consolidated on Teekay Corporation’s financial statements. Teekay O ffshore was deconsolidated in September 2017 upon closing of the transaction with Brookfield. (2) (3) Gas Cash Flows based on the midpoint of 2019 guidance and Tanker and 3 FPSO Cash Flows based on management FPSO expectations and Q4-19 to-date tanker spot rate levels for the rest of 2019. (4) Gas Cash Flows based on the midpoint of 2020 guidance and Tanker and 3 FPSO Cash Flows based on management FPSO expectations and tanker spot rates based on the average of 6 broker / analyst reports (see TNK appendix for details).
Teekay Is At A Turning Point FY 2014 (1) Current Gas shipping Cash flows expected to Gas shipping Oil shipping continue to grow as projects are Core Businesses Oil shipping Offshore fully reflected in cash flows and the tanker market recovers Total Adjusted EBITDA $1.0B $0.9B (2) ($0.6B excl. TOO) Total Unfunded Capex $3.7B - Projects Under 36 2 Construction Remaining projects to deliver by end of 2019 TKC – 5 TKC – 3 TGP – 55 TGP – 78 TNK – 28 On-The-Water Fleet (3) TNK – 68 TOO – 53 Total – 149 Total – 141 Includes Teekay Offshore (TOO) on a consolidated basis. (1) Based on the midpoint of 2019 TGP guidance, management FPSO expectations and Q4-19 to-date tanker spot rate levels for the rest of 2019. (2) 14 Includes on-the-water owned and chartered-in vessels (i.e., excludes newbuilds). (3)
Teekay’s Strategic Focus Over Time 15
Fundamental Drivers For Oil & Gas Shipping Remain Strong Global Energy Mix World needs more energy 700 • Global population 8.5B by 2030 • Energy demand growth of 10% by 2030 600 • Driven by growth in China and India middle-class 500 Hydrocarbons remain essential Exajoules per year • 400 Affordable, dependable, plentiful • Oil and gas > 50% of demand 300 Gas is the fastest growing hydrocarbon 200 • Lower carbon emissions • 20% growth to 2030 100 • LNG imports are set to grow by 70% in the same period 0 Oil remains a key part of energy mix • Driven by petrochemicals and transportation Coal Oil Natural Gas Nuclear Fuels Geothermal • Demand growth slowing due to Biomass Hydropower Solar Thermal Solar PV Wind increased efficiencies Source: DNV GL “Energy Transition Outlook” 2019 16
Positive Long-Term Outlook For Energy Shipping Gas Shipping Oil Shipping Rising global energy demand and increasing • • Remains the world’s largest energy source over the Natural gas will be the largest source of energy growth dislocation between areas of over the next 15 years next 15 years supply and demand to drive • • Global LNG trade expected to increase by Demand driven by transportation and petrochemicals gas and oil shipping approximately 70% by 2030 • Increasing surplus of crude oil in the Atlantic basin and • Increase in seaborne LNG exports from North America, an increasing deficit in Asia to drive crude tanker the Middle East, Africa and Russia to Asia and Europe tonne-mile demand Projected Change in LNG Exports / Imports Projected Change in Crude Tanker Trade Flows (2019 – 2030) (2019 – 2024) Change 2019-2024 Change 2019-2024 (West of Suez) (East of Suez) N. America 8.0 8.0 Europe +107 MT +47 MT 6.0 6.0 MB/D MB/D 4.0 4.0 2.0 2.0 Asia +135 MT 0.0 0.0 Mid East Oil Supply Refining Oil Supply Refining +27 MT Growth Capacity Growth Capacity Growth Growth Africa Australia LNG Export Growth +16 MT +24 MT Increasing Crude Flows From West to East LNG Import Growth MT = Million Tonnes MB/D = Million Barrels per Day Source: BP Energy Outlook, 2019 Source: IEA 17
Changing Global Shipping Landscape SHIFTING GEOPOLITICS TECHNOLOGY DISRUPTION GREENING OF SHIPPING • China-U.S. trade war • • Increasing regulations LNG propulsion • U.S. sanctions on Iran, Venezuela • • Future decarbonization of shipping Automated ships and COSCO Tanker Shipping • • Increasing focus by banks and Digitization of shipping • Rising nationalism / isolationism investors (e.g. Poseidon Principles) • Middle East unrest 18
The Landscape: Today’s Conundrums MORAL SOCIAL BUSINESS 19
Teekay’s Value Era Framework OUR BUSINESS Bringing Energy to the World with Teekay Spirit OUR COMPASS To Be the Most Trusted Shipping Company OUR Employees Customers Shareholders Partners Society STAKEHOLDERS BUSINESS Gas Tankers FPSOs STRATEGIES Digital Operating Model People TEEKAY GROUP INITIATIVES Finance 20
A New Generation of Energy Efficient LNG Carriers Consumption Per Cargo Capacity Vessel Size vs. Fuel Consumption Teekay’s newest LNG carriers carry 20% more cargo 200 250 1.4 compared to earlier generation Average Vessel Size carriers, while also consuming Average Daily Consumption 40% less fuel per day while 1.2 sailing 200 MT / day per Thousand CBM >50% 150 As a result, daily fuel 1.0 reduction consumption per cargo capacity has decreased >50% Thousand CBM 150 MT / Day 0.8 Teekay continues to invest in efficiency improvements 100 0.6 • High performance paints to 100 reduce hull friction • Automated systems for 0.4 continuous monitoring of vessel 50 performance from shore 50 • 0.2 Integration with weather service to optimize voyage 0 0 0.0 Steam DFDE / TFDE MEGI Steam DFDE / TFDE MEGI Note: Excludes Arctic Spirit, Polar Spirit, and Yamal ARC7 LNG vessels. Daily fuel consumption of vessels with reliquefaction systems may be lower than indicated. 21 CBM = Cubic meter.
Sustainability Through Innovation As one of the world’s leading energy shipping companies, Teekay is committed to increasing the sustainability of our operations Picture? Leading the industry in next-generation eco- Exceeding global standards by powering our tanker design and technology vessels with cleaner fuels • • First company to order MEGI powered LNG carriers, Shipping industry must continue to transition to cleaner which set a new standard in fuel efficiency fuels • • Teekay’s LNG fleet currently operates on LNG fuel, and Developed E-Shuttle, the most environmentally friendly shuttle tankers ever built therefore fleet-wide fuel sulphur content is already relatively low • Agreement in principle with the Government of Canada • to develop next-generation LNG-fueled low noise Do not believe scrubbing high sulphur fuel onboard Aframax tankers ships is a long-term solution for the industry 22
Promoting Responsible Ship Recycling Stringent Teekay process developed for ship recycling – above and beyond the Hong Kong Convention 6 Teekay vessels recycled in India since 2017 Prior to selection, recycling facilities are audited to ensure compliance with Teekay standards During recycling process, Teekay staff continually monitor HSE performance, conduct frequent site visits and provide training Teekay continues to push for increased transparency and elevated standards throughout the industry Teekay is a member of the Ship Recycling Transparency Initiative (SRTI) 23
Safety and Sustainability at Teekay Recent Acknowledgements 2019 Shipping Company 2018 Tanker Shipping and Trade Entrusted to Lift 2018 Jones F. Delvin Award of the Year Environmental Award From Valdez, Alaska Named “Shipping Company of the Teekay-developed E-Shuttles will Presented by the Chamber of Until recently, Teekay has been operate on both liquefied natural Year” as voted by seafarers at the Shipping of America (CSA) in the only international-flagged gas (LNG) as the primary fuel, 2019 International Seafarers’ recognition of 108 vessels tanker owner to lift from Valdez, and a mixture of LNG and Welfare awards operating a total of 701 years lost- Alaska recovered volatile organic time-injury free compounds (VOCs) as secondary fuel 24
Teekay’s Value Era Framework OUR BUSINESS Bringing Energy to the World with Teekay Spirit OUR COMPASS To Be the Most Trusted Shipping Company OUR Employees Customers Shareholders Partners Society STAKEHOLDERS BUSINESS Gas Tankers FPSOs STRATEGIES People Operating Model Digital People TEEKAY GROUP INITIATIVES Finance 25
Focus the Business, Simplify the Structure Tighter business focus with simplified structures that drive synergies and efficiencies Gas Tankers Benefits of global shared services: • Business Development Business Development Lower G&A costs • Chartering & Commercial Ops Chartering & Commercial Ops Better access and lower cost of capital Ship Management Ship Management • Bank and investor relationships • Greater purchasing power Asset Management • Shipyards Procurement Teekay • Suppliers Parent Marine Human Resources • Breadth of expertise and provides technical knowledge shared Human Resources Shore services to • Broader access to seafarers Finance & Accounting the Teekay Group Information Technology Legal, Tax, Insurance 26
Teekay’s Digital Strategy OUR DIGITAL Teekay: Powered by Digital VISION OUR DIGITAL Operational Excellence Driven by Digital to Deliver Value MISSION Data as an Digitally Connected to Asset Driven New Value Simplified Customer connecting Organization Generation OUR STRATEGIC Operations Outcomes sensor data to and Culture through using machine to gain INTENTS drive real-time through cloud- strategic learning competitive voyage based partnerships advantage management collaboration 27
Operational Leadership Enabled by Digital 28
Teekay’s People and Culture 5700 people across sea & shore guided by our SPIRIT values SAFETY & PASSION INTEGRITY RELIABILITY INNOVATION TEAMWORK SUSTAINABILITY fostering leadership transnational employer of choice flexible workforce at all levels staff spanning the globe across sea and shore resourcing model 29
Roles of Teekay Corporation OPERATOR PROJECT DEVELOPER PORTFOLIO MANAGER • • Source, develop, invest • Operate Group with Supportive sponsor in and execute new “One Teekay ” mindset and active approach to business opportunities Daughter strategies • Ensure continued • Leverage operational • operational excellence Optimize portfolio for brand to position value creation Teekay Group for new • Maximize economies of business scale • Channel group horsepower 30
Generating Value from Teekay Franchise “Software” “Hardware” (Leveraging Teekay’s (Deploying capital) capabilities) • • Third party fee-based service Indirect (Daughter level) • business Direct (Teekay Corp. level) • Incentive fees (IDRs, warrants, etc.) Australia (Government Services) (Bulker Investment) 31
Teekay Group Capital Allocation Framework Sources of Capital Capital Allocation Priorities Currently focused on strengthening balance sheets: Primary: Strong Secondary: Value-based • Builds equity value Free Cash Flow balance sheet and liquidity capital allocation • Reduces cost of capital Further Debt • Closes valuation gap Cash on Hand and Undrawn Paydown Lines • Over time, enables return of capital to shareholders and/or counter-cyclical Dividends investments Asset Sales Debt Paydown Capital Allocation guided by key financial metrics – Share Buybacks leverage, liquidity and risk- Debt adjusted returns Framework will apply to each Disciplined entity based on its specific Growth circumstances Equity Key Objective: Sustainable Total Shareholder Returns 32
• Completed a 3.5 year contract to extend production on the Chestnut field to Hummingbird March 2023 where the unit has operated since 2008 • Customer to begin drilling fourth production well before the end of 2019 Teekay Parent FPSOs All three units returned to production in Q4-19 following • Completed a 1-year contract extension extending production to August Q3-19 scheduled shutdowns: 2020, the 5 th extension since the unit started producing in 1998 Banff • Hummingbird – contracted • Completed planned maintenance in Q3-19 to March 2023 • Banff – contracted • Unit has been producing since 1997 and charterer has indicated field could to August 2020 continue producing until 2025 Foinaven • Foinaven – “evergreen” • Currently in discussions to address the negative EBITDA from the unit contract • Completed planned maintenance in early October 2019 Ultimately looking to divest these non-core assets FPSO Adjusted EBITDA 1H-2019 results were negatively impacted by • Q3-19 impairment mainly All 3 Units returned to production In Q3-19 all 3 units had unplanned shutdowns and adoption of new lease in Q4-19; includes annual due to increased likelihood shutdowns for planned accounting standards (revenue deferred to future incentive revenues for Foinaven maintenance of sale quarters) 15 10 $80/bbl $ Millions $60/bbl 5 0 -5 -10 -15 Q1-19A Q2-19A Q3-19A Q4-19E 33
TGP IDRs We acknowledge that monetization of TGP’s Incentive Distribution Rights ( IDRs ) could further align GP and LP interests and improve TGP’s future cost of capital With projects now nearing completion, TGP will have greater cash flow visibility and clear deleveraging path Any future transaction would be on terms acceptable to both parties and subject to Teekay and TGP board approvals and approval from TGP’s independent Conflicts Committee 34
Teekay Corporation Potential Value Uplift From Daughter Appreciation Value uplift based on closing TK stock price of $5.24/share on Nov 6/19 (1) TGP Unit Price ($14.17/unit on Nov 6/19) 15.00 17.00 19.00 21.00 23.00 25.00 2.00 5% 15% 25% 35% 46% 56% TNK Share Price ($1.95/share on 2.50 12% 22% 33% 43% 53% 63% Nov 6/19) 20% 30% 40% 50% 60% 70% 3.00 3.50 27% 37% 47% 57% 67% 78% 4.00 34% 44% 55% 65% 75% 85% 42% 52% 62% 72% 82% 92% 4.50 5.00 49% 59% 69% 79% 89% 100% 35 Based on current ownership of 25.2 million TGP common units, the TGP General partner (excluding IDRs) and 40.3 million and 37.0 million Class A and Class B TNK common shares, respectively. (1)
Financial Overview
Financial Progress Since 2014 Since 2014, Teekay has $12.6 billion $1.9 billion $2.5 billion overcome significant Bank financings and New bonds raised New equity raised challenges: refinancings and sale- Significant unfinanced leaseback transactions orderbook in LNG (TGP) and Offshore (TOO) businesses Cost overruns in Offshore $3.5 billion $3.5 billion $0.4 billion (TOO) projects Offshore projects delivered Gas projects delivered Asset sales Significant near-term debt maturities Energy market downturn and a cyclically low point in the tanker market 37
Teekay Group’s Financial Focus 1. 2. 3. De-risked Teekay Building Balance Improving Group Sheet Strength Profitability 38
Financial Focus 1. 2. 3. De-risked Teekay Building Balance Improving Group Sheet Strength Profitability Project Deliveries Financings 39
TGP: Yamal Project TGP: MEGI TGP: M-class (Shell) 1. De-risked Teekay Group Eduard Toll (Arc7) Bahrain Spirit (MEGI) - FSU Macoma (MEGI) Georgiy Ushakov (Arc7) Creole Spirit (MEGI) Magdala (MEGI) Project Deliveries since 2014 Nikolay Yevgenov (Arc7) Oak Spirit (MEGI) Megara (MEGI) Nearing completion of Rudolf Samoylovich(Arc7) Sean Spirit (MEGI) Murex (MEGI) $7 billion growth program Vladimir Voronin (Arc7) Torben Spirit (MEGI) Myrina (MEGI) Yamal Spirit (MEGI) Remaining two LNG projects fully-financed Exmar LPG TGP: Pan-class TOO: Shuttle Kallo (LPG) Pan Africa (TFDE) Beothuk Spirit (ECC Shuttle) Kapellen (LPG) Pan Americas (TFDE) Dorset Spirit (ECC Shuttle) Kaprijke (LPG) Pan Asia (TFDE) Norse Spirit (ECC Shuttle) Knokke (LPG) Pan Europe (TFDE) Koksijde (LPG) TOO: FPSO/FSO TOO: Towage Kontich (LPG) Kortrijk (LPG) Kruibeke (LPG) Arendal Spirit (UMS) ALP Defender (Towage) Waasmuntster (LPG) Gina Krog (FSO) ALP Keeper (Towage) Waregem (LPG) Libra (FPSO) ALP Striker (Towage) Warinsart (LPG) Petrojarl I (FPSO) ALP Sweeper (Towage) Warisoulx (LPG) Petrojarl Knarr (FPSO) Wepion (LPG) 40
1. De-risked Teekay 7,000 Group Financings: Unfunded 6,000 Capex & Debt Maturities • Currently no unfunded 5,000 Capex compared to $3.7 billion at the end of 2014 (including TOO) USD millions 4,000 • Brookfield transaction in September 2017 resulted in the 3,000 deconsolidation of TOO 2,000 1,000 - 2014 2015 2016 2017 2018 Sep 30/19 Bank Debt Maturities - Next 3 Years Bond Maturities - Next 3 Years Total Unfunded Capex TOO Total 41
Financial Focus 1. 2. 3. De-risked Teekay De-risked Teekay Building Balance Improving Group Group Sheet Strength Profitability Project Deliveries Delevering Financings Capital Allocation 42
2. Building Balance Sheet Strength Sources of Capital Capital Allocation Priorities Teekay Group Capital Allocation Framework Primary: Strong Secondary: Value-based Currently focused on Free Cash Flow balance sheet and liquidity capital allocation strengthening balance sheets: • Builds equity value Further Debt Cash on Hand and Undrawn Paydown • Reduces cost of capital Lines • Closes valuation gap Dividends • Over time, enables return Asset Sales of capital to shareholders Debt Paydown and/or counter-cyclical investments Share Buybacks Capital Allocation guided by Debt key financial metrics – leverage, liquidity and risk- Disciplined adjusted returns Growth Equity Framework will apply to each entity based on its specific circumstances Key Objective: Sustainable Total Shareholder Returns 43
2. Building Balance Sheet Strength Leverage Target Based on Business Risk Higher TNK: • Stronger spot market TNK TNK Target Range • Opportunistic asset sales as Current market further strengthens Business Risk • Lower target leverage due to cyclical nature of business TGP: • Natural delevering with deliveries TGP • Further delevering through TGP Target Range potential asset sales Current • More moderate target Lower leverage due to relatively low business risk from diversified modern fleet with significant fixed EBITDA backlog Low Leverage Moderate Leverage High Leverage 44
2. Building Balance Sheet Strength Teekay LNG (TGP) Teekay Tankers (TNK) • • Business Stable and steady business Cyclical business requires counter- Capital Allocation Focus at provides ability to apply a balanced cyclical balance sheet strength Daughter Level • capital allocation approach Path towards target leverage Teekay Corporation, as the • Clear path towards target leverage dependent on tanker market largest shareholder of TGP • • and TNK, is aligned with Debt Paydown Required debt amortization of Required debt amortization of Daughter shareholders $300M/yr $110M/yr • Unwinding of higher cost sale- leasebacks • Further delevering from Free Cash Flow and opportunistic asset sales • 2019 – 36% increase to annual • Distributions / Focus on delevering and building Dividends distribution of $0.76/unit net asset value. As a result, • 2020 – intend to increase annual eliminating current formulaic distribution by 32% to $1.00/unit dividend policy • No dividends expected in 2020 • • Share Buybacks Since beginning of December Opportunistic as balance sheet 2018, repurchased 2.26 million delevers units for $28.9M at an average price of $12.78/unit • • Disciplined Growth Selective projects that start in 2023 No growth in current cycle 45
2. Building Balance Sheet Strength $2,493 $2,500 Delevering Teekay Parent Potential Future Balance Sheet Deleveraging Sources Based on current asset mix, Teekay Parent’s goal is to $2,000 Free cash flow move towards net debt free 1,236 Sell remaining FPSOs Lower leverage should reduce cost of capital $1,527 Monetize IDRs $1,500 After delevering and lowering USD Millions 279 cost of capital, Teekay Parent $1,260 Eliminate Daughter debt would have financial flexibility 154 guarantees to allocate capital to secondary 393 $929 $1,000 priorities in our Teekay Group 593 83 $800 capital allocation framework 593 123 $562 37 593 509 $500 125 741 655 250 514 125 253 166 150 $0 2014 2015 2016 2017 2018 Q3-19 Daughter Debt Guarantees 2015 NOK Bond 2022 Bond 2023 Convertible Bond 2020 Bond Secured Loans 46
2. Building Balance Sheet Strength Teekay Group Sources of Capital (1) Key Lending Relationships (December 31, 2008 – Present) Diversified Access to Capital (in $millions) Group approach provides scale benefits and better capital access $1,224 Over $27 billion of Teekay Group $567 debt and equity financings / refinancings completed since 2008 Active lending relationships with $15,501 $27.3B over 30 financial institutions $5,574 • Commercial banks • Lessors • Export Credit Agencies $2,025 Diversified capital markets providing $1,626 alternative and complementary sources of capital $306 $517 • U.S. bonds Commercial Bank and ECA Debt ECA Debt • Norwegian Kroner bonds Sale-leaseback Equity • Joint venture partner equity US Corporate bonds Norwegian Kroner Bonds • Project Bonds JV Partner Equity Public / private equity 47 Includes Teekay Offshore. (1)
Financial Focus 1. 2. 3. De-risked Teekay Building Balance Improving Group Sheet Strength Profitability Project Deliveries Delevering Profitable growth and stronger Financings Capital Allocation performance from existing fleet Reducing G&A 48
3. Improving Profitability Profitable growth and Increasing revenue from core businesses stronger performance from existing fleet ✓ Positioned TNK to benefit from tanker market recovery • Completing TGP newbuilding program • Recontracting Teekay Parent FPSOs Reducing debt service cost ✓ Reduced Teekay Parent bond size • Further deleveraging of Teekay Group balance sheets Divesting/monetizing assets ✓ Sevan ✓ TOO • Three Teekay Parent FPSOs • Opportunistic asset sales in TGP and TNK • TGP IDRs 49
3. Improving Profitability Teekay Corporation Consolidated & Teekay Parent G&A Reducing G&A 150 Simplifying business • Focusing on core gas and oil shipping businesses 125 • Reducing size and complexity of Boards • Reviewing corporate and tax structure 100 USD Millions Reducing headcount costs • Right-sizing shared services 75 with TOO carve-out • Streamlining core business processes to achieve further economies of scale 50 • Automating / digitizing transactional processes across the organization 25 Reducing office location costs • 12 operating office locations currently vs. 25 in 2014 0 • Consolidating and reducing 2014 2015 2016 2017 2018 2019E floor space TK Consolidated Teekay Parent 50
3. Improving Profitability Teekay Corporation Consolidated Adjusted Net Income (Loss) Trending Towards Profitability 100 Illustrative Completing newbuild program by end of 2019 For every $1,000 per day change in Reducing leverage 50 spot tanker rates changes Improving FPSO cash flows consolidated net Strengthening tanker rates income by $5.5 0 USD Millions million per year Further G&A savings (50) (100) (150) (1) (2) 2017 2018 2019E 2020E (1) Based on the midpoint of 2019 TGP guidance, management FPSO expectations and Q4-19 to-date tanker spot rate levels for the rest of 2019. 51 (2) Based on the midpoint of 2020 TGP guidance, management FPSO expectations and tanker spot rates based on the average of 6 broker / analyst reports (see TNK appendix for details).
Teekay Corporation Investment Highlights Simplifying and Growing Cash Flows Strengthening Balance Sheets Provide Capital Focusing and Improving Allocation Flexibility Profitability Focusing on core Gas and Tanker businesses Estimated Total Adjusted Each entity expected to further EBITDA (1) of approximately $1.2 delever, which builds equity value Driving efficiencies across the billion in 2020 (2) , an increase of and reduces cost of capital Teekay Group 30% from 2019 (3) No unfinanced Capex Strong Industry Value of Asset Portfolio Fundamentals Not Fully Reflected in Share Prices Global LNG trade expected to increase by approximately 70% by TK share price does not fully reflect 2030 intrinsic value of asset portfolio Significantly stronger spot tanker Daughter entities trading at rates at the start of Q4-19 and discounts and intrinsic values strong fundamentals expected expected to further increase through 2020 Changing landscape plays to Teekay’s strengths (1) Total Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, foreign exchange gain (loss), items included in other (loss) income, write-down and (loss) gain on sale of vessels, equipment and other operating assets, amortization of in-process revenue contracts, adjustments for direct financing leases to a cash basis, unrealized gains (losses) on derivative instruments, realized losses on interest rate swaps, realized losses on interest rate swap amendments and terminations, loss on deconsolidation of Teekay Offshore, write-downs related to equity-accounted investments, and our share of the above items in non-consolidated joint ventures which are accounted for using the 52 equity method of accounting. Total Adjusted EBITDA is a non-GAAP financial measure used by certain investors and management to measure the operational performance of companies. (2) Based on the midpoint of 2020 TGP guidance, management FPSO expectations and tanker spot rates based on the average of 6 broker / analyst estimates (see TNK appendix for details). (3) Based on the midpoint of 2019 TGP guidance, management FPSO expectations and Q4-19 to-date tanker spot rate levels for the rest of 2019.
Teekay LNG Mark Kremin & Scott Gayton 53
54
Teekay LNG Investment Highlights Joint Ventures World-leading Portfolio Significant Earnings and Cash Flow Growth Represent Hidden Value of Blue Chip-backed Contracts 2019 guidance revised higher and Off Balance Sheet JVs alone new 2020 EPU guidance up 58% represent ~$14.15 / TGP unit of $10 billion contract backlog, 11 over 2019 (1) book value compared with TGP unit years average remaining tenor price of $14.17 Trading (2) at compelling 2020 Strong customer creditworthiness valuation of 5.0x EPU (1) and 8.2x and diversification Total Adjusted EBITDA (1) Balanced Approach to Strong Gas Fundamentals Capital Allocation Global LNG trade expected to increase by approximately 70% by Intend to increase annual distribution by 32% to $1.00 per 2030 unit, commencing Q1-2020 150 LNG carriers required to meet increase in LNG production over Repurchased 2.8% of outstanding next 5 years units since December 2018 Strong demand leading to Leverage projected to reduce from resurgence of mid-size LPG rates 7x to 5x in next three years, which will provide further flexibility to allocate capital (1) Based on Guidance midpoints 55 (2) Based on Nov. 6, 2019 unit price of $14.17
TEEKAY LNG 15 years of LNG experience NYSE: TGP 1099-filer IPO in 2005 AT A GLANCE strong project execution Delivered 19 LNG carriers 79 2500 on-time, or early, since employees at sea vessel 2014 and ashore fleet diverse portfolio of blue- 3 rd largest $8.5 B chip customers total Assets (1) independent LNG carrier owner / operator 8% 11 years of the world’s seaborne gas moved average contract duration (2) Includes Teekay LNG’s proportionate share of total assets from equity investments and Teekay LNG’s portion of committed capex. (1) 56 (2) As of October 1, 2019. Based on existing contracts but excludes extension options; includes proportionate share of equity-accounted joint ventures.
LNG Carriers are Floating Pipelines A cost-effective means to transport natural gas overseas Targeted landed cost: $7.00-$8.00 / mmBtu Gas Reserve Export Transport Import Production Gas Liquefaction Facilities LNG Shipping LNG Regasification Terminals 35-40% 35-40% 10-25% 5-10% of landed cost of landed cost of landed cost of landed cost 57
Teekay LNG is the World’s 3 rd Largest Independent LNG Owner and Operator 90 12 Existing On Order 11 80 70 60 Number of Vessels 50 1 40 81 75 14 7 30 48 48 20 30 29 10 0 MOL NYK TGP K Line Maran Gas GasLog Source: Company Websites 58
Total Forward Fee-Based Revenues Total Forward Adj. EBITDA Largest and Most (excl. extension options) (1) (excl. extension options) (1) Diversified Portfolio of Long-term LNG Contracts 99% 99% $7.3B Existing portfolio of long-term, $9.8B fixed-rate LNG contracts provides cash flow stability Steam-powered LNG carriers 1% 1% only comprise ~10% of fleet LNG Average Remaining Contract Invested Capital Breakdown LPG Length by Segment (1) by Segment (2) 92% $6.7B - 5 10 15 8% Years As of October 1, 2019. Based on existing contracts but excludes extension options; includes proportionate share of equity-accounted joint ventures. (1) 59 Based on book values as of October 1, 2019 and includes proportionate share of equity-accounted joint ventures and remaining CAPEX. (2)
Contracted Revenues Contracted Revenues per Vessel Teekay LNG’s (USD millions) (USD millions) Unrivaled Contract $12,000 $400 Portfolio $10,000 $300 $8,000 Largest contracted revenue backlog $6,000 $200 $4,000 Highest contracted revenue $100 per vessel $2,000 Longest average remaining $- $0 contract term TGP Average TGP Average Greater customer Avg. Remaining Contract Term Customer Concentration diversification (years) (%) 12 100% Largest Customer 10 80% Top Three Customers 8 60% 6 40% 4 20% 2 - 0% TGP Average TGP Average Average includes: GLOG, GMLP, GLOP, HMLP, HLNG, DLNG. FLEX excluded given 100% spot focused fleet and GLNG excluded given focus on power. 60
Long-Term Contract Coverage With High Current Charter Terms – Consolidated Fleet Average Total Fleet Age in 2020: 9 years (1) Quality Customers Ownership Charterer 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Existing LNG Fleet With recent LNG fixed-rate Wilforce 99% charters, LNG fleet revenues Vessels subject to charterer Purchase Obligations which were extended to end-Feb 2020 Wilpride 99% are now 100%, 97% and 92% Creole Spirit 100% fixed for remainder of 2019, for Oak Spirit 100% 2020 and 2021, respectively Torben Spirit 100% Polar Spirit 99% Arctic Spirit 99% Hispania Spirit 100% Catalunya Spirit 100% Macoma 99% Murex 99% Myrina 99% Madrid Spirit 100% Magdala 99% Megara 99% Sean Spirit 100% Al Marrouna 70% Al Areesh 70% Al Daayen 70% 69% Tangguh Hiri Firm period end date in 2029 Tangguh Sago 69% Firm period end date in 2029 Galicia Spirit 100% Firm period end date in 2029 Yamal Spirit 100% Firm period end date in 2033 Bahrain Spirit Firm period end date in 2038 100% Firm Period Option Periods Available (1) Average fleet age on January 1, 2020 on a fully delivered basis, including existing on-the-water vessels and newbuild deliveries within the LNG & LPG fleet. 61
Joint Venture Fleet Has Similar Current Charter Terms – Joint Venture Fleet Characteristics to Average Total Fleet Age in 2020: 9 years Consolidated Fleet Ownership Charterer 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Existing LNG Fleet – Joint Ventures 15 years average remaining Methane Spirit 52% contract duration across the Marib Spirit (1) 52% joint venture LNG fleet Arwa Spirit (1) 52% Financing completed for all Excalibur 49% deliveries Magellan Spirit 52% (in-charter) Woodside Donaldson 52% 5 th Yamal ARC7 delivered Firm period end date in 2045 Meridian Spirit 52% Firm period end date in 2030 Firm period end date in 2038 November 6, 2019; 6 th Soyo 33% Firm period end date in 2031 newbuild to deliver in late- Malanje 33% Firm period end date in 2031 November 2019 Lobito 33% Firm period end date in 2031 Firm period end date in 2038 Cubal 33% Firm period end date in 2032 Bahrain LNG Regas terminal Al Huwaila 40% Firm period end date in 2033 expected to start-up by year- Al Kharsaah 40% Firm period end date in 2033 Firm period end date in 2038 end Al Shamal 40% Firm period end date in 2033 Firm period end date in 2045 Al Khuwair 40% Firm period end date in 2033 Pan Asia 30% Firm period end date in 2037 Pan Americas 30% Firm period end date in 2038 Pan Europe 20% Firm period end date in 2038 Pan Africa 20% Firm period end date in 2039 Eduard Toll 50% Firm period end date in 2045 Rudolf Samoylovich 50% Firm period end date in 2045 Nikolay Yevgenov Firm period end date in 2045 50% Firm period end date in 2045 Vladimir Voronin 50% Firm period end date in 2045 Firm Period Georgiy Ushakov 50% Newbuild LNG Fleet and Project – Joint Ventures Firm period end date in 2045 Option Periods Regas Terminal 30% Firm period end date in 2039 Yakov Gakkel 50% Firm period end date in 2045 Available 62 (1) Trading in short- term market as a result of the temporary closing of YLNG’s LNG plant in Yemen in 2015 due to the conflict s ituation. 3-year suspension agreement signed in May 2019.
TGP At A $ Millions, except where noted Turning Point All figures annual or as at fiscal year ended December 31 st 2016A 2017A 2018A 2019E 2020E Recent growth program Newbuild Orderbook 24 19 6 - - nearing completion (# vessels) Capex Commitments $2,877 $1,891 $652 - - +$2B of debt raised to finance newbuild program Unfunded Capex $1,612 $113 $16 - - Proportionally Consol. 5.3x 6.5x 7.8x 9.1x 7.2x Elevated leverage rapidly Leverage reducing through secured debt amortization and Net debt to Cap 52% 56% 62% 62% 53% growing cash flows Common LP Units 77.5 (1) 77.5 (1) 79.6 79.6 79.4 Outstanding (millions) Adjusted $149 $94 $88 $170 (2) $250 (3) Earnings projected to Net Income increase by over 3.5x EPU 2018 through 2020 $1.80 (2) $2.85 (3) $1.80 $0.98 $0.76 ($ / unit) “Project Execution” phase transitioning to “Earnings and Cash Flow Growth” phase, creating financial flexibility for Teekay LNG (1) As of September 30, 2019. 63 (2) Midpoint of revised 2019 Guidance range provided. (3) Midpoint of 2020 Guidance range provided.
Adjusted Net Income (1) Adjusted EBITDA (1) 2019 Guidance Range 300 Increased; 2020 900 Guidance Introduced 800 250 700 TGP’s results on -track to +47% increase substantially: 200 600 USD millions USD millions 500 • Vessel and project deliveries Total (Prop. Consol.) 150 throughout 2018 and 2019 400 +94% 100 300 Consolidated • Contracts rolling at higher levels 200 50 • Early delivery of vessels in 100 2019 0 0 2018A 2019E 2020E 2018A 2019E 2020E 2019 guidance increased Current Trading Current Trading 2020 guidance significantly Multiple Multiple higher than 2019 5.0x 2020 8.2x 2020 EPU (1)(2) Total Adjusted EBITDA (1)(2) Should TGP trade to the average current trading multiple of LNG peers (3) (9.7x 2020 EPU), it would result in a unit price of: $25 - $30 / unit ( 4) Assumes midpoint of guidance range. These are non-GAAP financial measures. Please see Teekay LNG’s Q3 -19 earnings release for definitions and reconciliations to the comparable GAAP measures. Guidance ranges (1) have been normalized to exclude $30.5 million of Awilco deferred revenue. Based on unit price of $14.17 per unit as of Nov. 6, 2019 and midpoint of 2020 guidance range. (2) 64 Includes GLOG, GMLP, GLOP, HMLP, GLNG, DLNG, FLNG from Bloomberg (3) (4) Using low and high 2020 EPU Guidance range of $2.60 and $3.10 per unit, respectively
Revised 2019 Guidance Range Up; 2020 Guidance Well- 2019 guidance ranges raised above 2019 Adjusted Net Income* EPU* Consol. adj. EBITDA* Total adj. EBITDA* Previous Revised Previous Revised Previous Revised Previous Revised Range – high $170m $175m $1.80/unit $1.85/unit $440m $445m $690m $695m Range – low $140m $165m $1.45/unit $1.75/unit $420m $435m $665m $685m Midpoint $155m $170m $1.625 $1.80 $430m $440m $677.5 $690m % increase (1) 10% 11% 2% 2% 2020 results expected to increase further as earnings from newbuild deliveries and strong period charters are recognized Adjusted Net EPU* (2) Consol. adj. EBITDA* Total adj. EBITDA* Income* Range – high $270m $3.10/unit $430m $780m Range – low $230m $2.60/unit $410m $750m Midpoint $250m $2.85/unit $420m $765m % change from 2019 (1) 47% 58% (5%) 11% * Excludes $30.5 million deferred revenue expected to be received from Awilco in 2019, or possibly 2020 65 Assuming midpoints. (1) Assumes 77.5 million LP units remain outstanding throughout the year and excludes the impact of any potential future unit repurchases. (2)
Teekay LNG’s Joint Ventures Represent Significant Value TGP’s Proportionate Share Teekay LNG’s joint venture TGP Primary TGP TGP Equity # of Avg. Avg. Forward Debt To be Normal- Next Joint Customer Ownership Investment vessels / Age of Remaining Revenues (Sep 30, Drawn ized Debt investments alone have a 2019) Venture % $ millions on-order Vessels Contract ($ millions) ( $ millions) Amort. Maturity book value of $14.15 per (Sep 30, 2019) Length ($ millions) unit, compared with TGP’s MALT unit price of $14.17 (1) 52% $352 6 / 0 10 years 7 years $355 $271 - $25 2H-2023 2030 / Proportionate EBITDA of Yamal 50% $219 5 / 1 (2) <1 year 27 years $2,766 $697 (2) $81 (2) $34 32 $345 million from joint ventures expected in 2020 Exmar LNG / Various 50% $182 23 / 0 9 years 3 years $201 $280 - $35 Q2-2021 Joint ventures expected to LPG have $100 million per year RG3 40% $124 4 / 0 11 years 14 years $660 $265 - $10 2026 of dividend capacity to TGP • 9% yield based on the book MINT 33% $85 4 / 0 7 years 13 years $499 $195 - $11 2H-2023 Angola value of TGP’s investment in its joint ventures Bahrain 4Q-19 30% $57 0 / 1 21 years $868 $202 $22 $9 2036 Terminal start-up Pan 2029 / 25% (avg.) $78 4 / 0 <1 year 19 years $587 $180 - $6 Union 31 Total $1,097 43 / 5 ~15 years $5,936 $2,090 $103 $130 Closing unit price as of Nov 6, 2019. (1) 66 Pro forma for delivery of 5 th vessel in early-November. (2)
Teekay LNG’s Joint Venture Portfolio is D = + + A B C More Substantial than Many Public LNG Total Proportionate Share Q3-2019 Elimination Adj. Consolidated Proportionate of Equity-Accounted In $ millions Peers Entries Income Statement Greater than (1) : Consolidation Joint Ventures GLOG,DLNG, Net Voyage Recreated TGP’s Q3 -2019 228,744 (5,501) 144,694 89,551 HMLP, HLNG Revenues financial results in a simplified format OPEX, G&A, T/C (57,632) 5,501 (38,050) (25,083) Expenses Highlights the relative size Depreciation (48,210) (34,248) (13,962) - and profitability of TGP’s Joint Venture investments Income from 122,902 72,396 50,506 - Vessel Ops. Due to GAAP disclosure, Greater than: Equity Income - 26,369 - (26,369) Joint ventures are included GLOG, DLNG, as only one line on TGP’s Net Interest GLNG, GMLP, (67,119) (43,898) (23,221) - financial statements Expense HLNG, HMLP Other (2,115) (1,199) (916) - Joint venture results expected to increase in 2020 Adj. Net Income 53,668 53,668 26,369 (26,369) due to multiple deliveries in 2019 Adj. EBITDA 180,216 110,715 69,501 - Greater than: GLOG, GLOP, DLNG, GMLP, Q3-2019 Total Proportionate Share GAAP Balance Elimination Proportionate of Equity-Accounted In $ millions HLNG, HMLP Entries Sheet Consolidation Joint Ventures Total Assets 7,613 5,380 3,330 (1.097) 67 (1) DLNG, HLNG, HMLP, GLNG and GMLP are as of June 30, 2019. GLOP and GLOG are as of Sept. 30, 2019
Yamal LNG Yamal Project Yamal ARC7 Fleet Yamal Operations • • • TGP’s ARC7s carried out ship -to- Trains 1, 2 and 3 now exporting at Purpose-designed, ice-class LNG capacity (16.5m tonnes per carriers that travel the Northern ship (STS) transfers to several conventional LNGC’s (including annum) Sea Route to Asia in summer TGP’s Yamal Spirit) in Norway • Reduces 30-day Suez Canal • Larger than each of Gorgon throughout winter 2018. voyage to 15 days Trains 1-3, Freeport Trains 1-3, • • and Corpus Christi Trains 1-3 Ships can transit through ice Primarily crewed through existing Teekay seafarers – 50% Russian up to 2.1 meters (7ft) thick • All LNG production sold to and 50% Eastern European • Vessels operate in -52C/-62F customers in Europe and Asia • Heavily sought-after project under 15- to 20-year contracts • All 6 TGP ARC7s built at DSME • • Train 3 commenced operations First sunrise of the winter viewed • 4 of TGP’s 50% -owned ARC7 ice- one-year ahead of schedule late-January 2019 breaking LNG carriers requested Recently shipped 100 th LNG cargo • 3-5 months early • 2-3 loadings per week 68
Bahrain Regasification Project Terminal allows Kingdom of Bahrain to handle potential shortages of domestic gas TGP has a 30% interest in the project, with a 100% interest in the FSU chartered to the project Initial charter length of 20 years Project Update: • Bahrain Spirit FSU now alongside jetty • Commissioning with LNG commenced early-October • Commercial start-up planned before end of year 69
Expecting Increased EBITDA from Exmar J/V in a Recovering LPG Market Exmar Joint Venture LPG rates have recently Adjusted EBITDA vs. Time Charter Rates recovered with further $60 improvements expected for $45,000 2020 $40,000 Current rates Strong demand from India and $50 China resulting in rates $35,000 reaching a 2-year high for mid- sized LPG carriers (MGC) $40 $30,000 USD Millions USD / day • 38K CBM MGC 1-year time $25,000 charter (TC) rates recently $30 $20,000 reached $26,000/day $20 Outlook remains positive as $15,000 demand is expected to outpace supply $10,000 $10 • New Chinese propane $5,000 (PDH) plants expected to $0 add to LPG demand growth $0 (1) 2014 2015 2016 2017 2018 2019E • Increased export capacity Proportionally Adj. EBITDA MGC 1-Year TC Rate (35K CBM) MGC 1-Year TC Rate (38K CBM F/R) from North America Source: Clarksons 70 (1) First 9 months of 2019, annualized.
LNG Spot Market Review LNG Vessel Spot Rates 2018: • U.S. exports increased due 200,000 to start up of new facilities 175,000 • Lack of vessels caused Recent TGP winter spot rate spike 150,000 charters of 2019 1 – 3 years 125,000 • Warmer than expected USD / day 100,000 winter in Asia reduced demand and resulted in 75,000 minimal LNG price arbitrage in Q1-2019 50,000 • Increase in European 25,000 imports reduced voyage distances 0 • Fleet supply outpaced demand in 1H-2019 • Further start up of new 160K CBM 174K CBM export facilities soaking-up Source: Clarksons tonnage, increasing rates for 2H-2019 71
Positive Market Outlook for Remainder of 2019 and 2020 LNG Fleet Demand and Supply Growth Expected tonne-mile demand growth in 2019 due to 14% increasing exports Momentum expected to 12% continue into 2020, with projected annual tonne-mile 10% demand growth of 12% from new export projects 8% 6% 4% 2% 0% 2015 2016 2017 2018 2019 2020 Tonne-mile Demand Growth Fleet Supply Growth Source: Clarksons 72
Potential Market Weakness in Medium-Term Fleet Balance During 2021-2023, the LNG fleet could be over-supplied 60 • Coincides with a heavy 40 delivery schedule of Surplus vessels ordered in 2018 coupled with a lack of new 20 export projects starting-up 0 • Negative impact could be 2019 2020 2021 2022 2023 2024 2025 dampened if low gas price -20 environment triggers further coal-to-gas switching in EU -40 Deficit Recovery could be as early as -60 late-2022 and into 2023, depending on the sanctioning -80 of future projects, construction timelines, and newbuild orders -100 Source: Internal estimates based on current orderbook and assumed slot reservations for upcoming projects 73
Robust Long-term LNG Demand Driven by Asia Pacific China : Government policy is Projected Global LNG Import Growth pushing towards cleaner fuel for heating. “War on smog” policies 600 Asia to benefit urban air quality and Pacific LNG imports. 500 Growth ROW India : Government has 400 significant capex allotted to gas Other Asia Pacific import and distribution MTPA infrastructure. US$8.5B spend India 300 on infrastructure projects over China the next 3-5 years. 200 Southeast Asia: Focusing on Japan and Korea natural gas as a source of 100 power generation. Government Europe policies implemented to switch 0 coal-to-gas to combat air 2017 2030 pollution. Source: BP Energy Outlook 74
New LNG Projects to Meet Global LNG Demand Demand forecasted to increase to 450-500 MTPA Additional # of thus, an additional 75-125 Capacity Projects Likely to Take FID MTPA Start vessels MTPA of supply is needed to Needed Qatar Expansion 32 2023 40 meet global LNG demand Rovuma LNG 15 2024 18 12 2024 14 Port Arthur LNG In 2019, 5 projects have Total 59 72 announced FID (totaling 61.5 MTPA) and 3 projects are # of Projects Taken FID in 2019 MTPA Start “likely” to reach FID in the next vessels 12 months, combining for an Calcasieu Pass LNG 10 2022 15 additional 120.5 MPTA Mozambique LNG 12 2023 16 4.7 2023 4 Sabine Pass Train 6 Estimate 150 vessels will be Arctic LNG 2 19.8 2023 15 needed to match the increase Golden Pass 15 2024 27 in LNG supply in the next 5 Total 61.5 77 years Source: Clarksons Platou 75
Balanced Capital Allocation Plan Delever Return Capital Disciplined Balance Sheet to Unitholders Growth Target Net Debt / Total Sustainable, Flexible Focused on Core Assets Adj. EBITDA: 4.5x – 5.5x and Value-Focused and Returns Growth not expected until Equity value increases with Distribution capacity increases further delevering and relative debt repayments as balance sheet delevers returns improve Leverage range reflects Preserve flexibility to pursue Will be selective and targeting stability of cash flows opportunistic buybacks higher hurdle rates 76
Financial Flexibility to 7.5X Allocate Capital as Potential LNG tenders awarded and newbuild Potential vessel Leverage Decreases 7.0X orders placed with minimal delivery and LNG payments upfront project start-up 6.5X Assuming Status Quo, TGP expects to be within targeted leverage range by late-2020 / 6.0X early-2021 5.5X Provides financial flexibility to: 4.5X to 5.5X Net Debt / 5.0X EBITDA Target Range • Increase distributions 4.5X • Continue unit repurchases 4.0X • Pursue disciplined growth 2019 2020 2021 2022 2023 Net Debt to EBITDA - Consolidated Net Debt to EBITDA - Proportionately Consolidated Key parameters to be considered before undertaking disciplined growth: • Build-to-suit; vessels ordered against contracts • Utilize partnering strategy which limits capital commitment while meeting customers’ desire for fewer suppliers • Limit amount of unfunded CAPEX • Stagger contract maturities 77
Pro Forma Debt Maturity Schedule for Awilco Sale 600 ∙ $147m NOK Bond As of Q3-19, $391 million of ∙ $194m Tangguh ∙ $329m at Q3-19 current debt comprised of: 500 ∙ $130m EXMAR ∙ $100m additional • from Awilco sale $157 million Awilco-related ∙ $102m NOK Bond debt ∙ $115m NOK Bond ∙ $145m Angola 400 ∙ $225m Revolver ∙ $102m MALT • $115 million ($134 million USD Millions notional) NOK Bond (May 2020) 300 • $119 million scheduled consolidated debt 200 amortization ∙ $88m Galicia Spirit Revolver 100 ∙ $28m Yamal LNG ∙ $8m Bahrain LNG - 2019-Q3 liquidity 2019 2020 2021 2022 2023 Bond Maturities (net of collateral) Bank Debt Balloon Maturity Revolver amortization at maturity Unfinanced capex 2019-Q3 liquidity Awilco liquidity 78 Notes: Excludes balloon amount related to en bloc sale of 7X LPG vessels assumed to occur end-2020 and repayment of Awilco debt Any debt maturities relating to joint ventures are adjusted for TGP’s proportional share.
Strong Business and Financial Foundation Reduces Cost of Capital Focus on delevering and strong contract backlog enhances TGP’s creditworthiness Teekay LNG’s Norwegian Bonds trade tighter than LNG and other gas shipping peers Recently re-financed an LNG carrier loan at an all-in cost of 4.1%, reduced by approximately 100 bps 79
Significant Capital Returned to Capital Returned LP Unit Distributions LP Unit Buybacks Unitholders to Investors • • 2019 raised 36% from $0.56 to Since December 2018, At $14.17 per unit trading $0.76 per unit repurchased 2.26 million units, or price, Capital Returned to • 2.8% of outstanding units at an Unitholders yields 9.7% Intend to increase annual average price of $12.78/unit, or (including distributions and distribution by 32% to $1.00/unit $28.9 million (including, since buybacks) based on significant increase in early-August, repurchased 816,700 earnings expected units at w.a. of $14.33/unit, or $11.7 Q2-18 to Q2-19 Ticker Coverage ratio (1) million) TGP 3.8x 150 TGP US Equity Peer Group Average* GLOP 1.17x 140 GMLP 1.08x 130 Indexed Return HMLP 1.44x 120 110 100 90 80 70 60 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 *Peer group average includes: GLOG, GLNG, GMLP, GLOP, HMLP, HLNG, DLNG, FLNG 80 (1) Provided by Stifel
Teekay LNG’s Competitive Advantages Commitment to Diverse Customer Strategic Significant Scale Technology Portfolio Partnerships One of the largest LNG Investments improving Multiple relationships in sector carrier operators => trading efficiency; reducing lead to business opportunities Joint venture partnerships relevant to customers, cost emissions provide strategic benefits and advantages risk diversification Customers preferring fewer Technologically advanced suppliers fleet Global footprint ‘In - House’ Technical Newbuild +15-year Operating Access to Capital Expertise History Operations Access to multiple sources of Delivered 19, or over $3B, of capital at attractive rates High quality operations with newbuild vessels over last 5 years Proven brand and operational and industry leading HSEQ on-budget, on-time, or early track record KPIs Customers choose us to manage their newbuildings, which can lead to exclusive investment opportunities. 81
Teekay LNG Strategic Priorities 2019 - 2021 2022 - 2024 • LNG fleet 97% fixed through 2020 • Consider increasing exposure to Chartering • Focus on high utilization during period of strengthening spot market potential spot market weakness • Maintain leverage within target • Continue to delever with strengthening Leverage range (4.5x – 5.5x) cash flows • Selectively participate in new tenders • Conclude existing newbuilding program Growth • If pursued, take delivery of newbuild • Selectively participate in new tenders vessels / commence new contracts • Distribution increases as newbuilding • Continue returning capital to Return of Capital deliveries commence charters unitholders • Opportunistic unit repurchases • Converted from K1 to 1099-filer Structure • Consider IDR monetization • Consider conversion to C-Corp. 82
Teekay LNG Investment Highlights Joint Ventures World-leading Portfolio Significant Earnings and Cash Flow Growth Represent Hidden Value of Blue Chip-backed Contracts 2019 guidance revised higher and Off Balance Sheet JVs alone new 2020 EPU guidance up 58% represent ~$14.15 / TGP unit of $10 billion contract backlog, 11 over 2019 (1) book value compared with TGP unit years average remaining tenor price of $14.17 Trading (2) at compelling 2020 Strong customer creditworthiness valuation of 5.0x EPU (1) and 8.2x and diversification Total Adjusted EBITDA (1) Balanced Approach to Strong Gas Fundamentals Capital Allocation Global LNG trade expected to increase by approximately 70% by Intend to increase annual distribution by 32% to $1.00 per 2030 unit, commencing Q1-2020 150 LNG carriers required to meet increase in LNG production over Repurchased 2.8% of outstanding next 5 years units since December 2018 Strong demand leading to Leverage projected to reduce from resurgence of mid-size LPG rates 7x to 5x in next three years, which will provide further flexibility to allocate capital (1) Based on Guidance midpoints 83 (2) Based on Nov. 6, 2019 unit price of $14.17
Appendix
In $ millions except ratios and per unit data Consolidated EV/EBITDA Calculation Cash 234.5 Sept. 30, 2019 Balance Sheet TGP Detailed Total Debt 3,256.0 Sept. 30, 2019 Balance Sheet Net Debt a 3,021.5 EV/EBITDA 77.5 Calculations Common units outstanding Unit price $ 14.17 as at Nov. 6, 2019 Calculating EV/EBITDA on Total Common Market Cap 1,098.2 GAAP figures overstates cash Preferreds A & B 295.0 Sept. 30, 2019 Balance Sheet flow multiple while missing a Total Equity value b 1,393.2 significant part of TGP’s Tangguh and RG2 NCI c 54.46 Sept. 30, 2019 Balance Sheet business Enterprise Value d=a+b+c 4,469.1 Assuming 10.6x 2020 Total 2020 EBITDA Guidance (midpoint) e 420As provided adjusted EBITDA Guidance of Consol. EV/Consol. EBITDA =d/e 10.6 x $765 million = $38.00 unit price Proporitionately Consolidated EV/EBITDA Calculation Consolidated Cash 234.5 Sept. 30, 2019 Balance Sheet Proportionate share of J/V cash 211.0 Sept. 30, 2019 Appendix F of Earnings Release Total Proportionate Consolidated Cash 445.5 Consolidated Debt 3,256.0 Sept. 30, 2019 Balance Sheet Proportionate share of J/V Debt 2,035.4 Sept. 30, 2019 Appendix F of Earnings Release Total Proportionate Consolidated Net Debt a 4,845.8 Common Units outstanding 77.5 Unit price $ 14.17 as at Nov. 6, 2019 Total Common Market Cap $ 1,098.2 Preferreds A & B 295.0 Sept. 30, 2019 Balance Sheet Total Equity value (common + Prefs) b 1,393.2 Tangguh and RG2 NCI c 54.46 Sept. 30, 2019 Balance Sheet Enterprise Value d=a+b+c 6,293.5 2020 EBITDA Guidance (midpoint) e 765 As provided Total EV/Total EBITDA =d/e 8.2 x 85
Teekay Tankers Kevin Mackay & Stewart Andrade
87
Teekay Tankers Investment Highlights Positive Market Market Leading Position Fundamentals World’s largest publicly -traded mid-sized tanker owner-operator Significantly stronger spot tanker rates at the start of Q4-19 Over 45 years of leading commercial and technical Tanker supply and demand management expertise fundamentals imply continued strength through 2020 Attractive Operating Improved Financial Position Leverage and Undervalued Equity Significant cash flow and vessel Completed financing initiatives value upside from anticipated during 2017 & 2018 strengthening tanker market Shares currently trading at 67% (1) of illustrative 2019 net asset value Fleet currently 90% spot exposed (NAV) (2) and 47% (1) of illustrative 2020 NAV (2) Every $5,000 increase in daily charter rates equates to approximately $95 million of additional annual free cash flow Based on TNK ‘s November 6, 2019 closing price of $1.95 / share (1) 88 (2) Refer to slides in Financial Overview and appendix for details on illustrative 2019 and 2020 NAV.
TEEKAY TANKERS 46 NYSE:TNK Teekay Tankers Ltd. years of experience AT A GLANCE 30 Suezmax 32 Aframax / LR2 2300 63 employees at sea vessel 1 VLCC and ashore fleet (1) world’s largest 30% market share blue chip customers in U.S. Gulf full service lightering (2) publicly traded mid-sized tanker company 5% 82 vessels of the world’s seaborne crude oil moved under commercial management Includes owned and chartered-in vessels (1) 89 Based on management estimates. (2)
Why Mid-Sized Tankers? • Aframaxes generally operate on short / medium-haul trades with the ability to triangulate in order to minimize time in ballast • Suezmaxes have developed into a hybrid medium / long- haul trading vessel with the ability to triangulate on a global scale • Laden-to-ballast ratio of 75/25 on Aframaxes and 60/40 on Suezmaxes vs. round trip on a VLCC • Allows for development of related service businesses • LR2 fleet allows flexibility to move between clean and Representative Aframax Trade Representative Suezmax Trade dirty trades 90
2014 Current Benefitting From Growing U.S. Crude 100% import lightering 50% import / 50% export lightering Exports U.S. crude oil imports have 0.4 mb/d exports (light) reduced in recent years 3.5 mb/d exports (light) • Not expected to shrink further as U.S. refineries require a baseload of heavy crude 4.4 mb/d imports (heavy) 3.2 mb/d imports (heavy) Growing U.S. crude exports have benefitted both mid-size tanker trade and U.S. Gulf lightering demand TNK has 6 vessels dedicated to TNK Lightering vs. Aframax Rates lightering in the U.S. Gulf 40,000 80-100 U.S. Gulf lightering USD / day 30,000 operations per month, of which TNK has a ~30% market share 20,000 10,000 From Q4-15 through Q3-19 lightering premium increased 0 earnings by total of $26 million TNK Aframax TNK Lightering 91
Optimizing Market TNK Time Charter Exposure Relative to the Spot Market Exposure $90,000 16 $80,000 Increased in-charters in 14 anticipation of stronger tanker market $70,000 12 • In 2014 / 2015, increased spot Spot Tanker Rates (USD, day) Total Time-Charter Vessels $60,000 market exposure by 13 vessels 10 Increased out-charters in $50,000 anticipation of weaker spot 8 market $40,000 • In 2017 / 2018, reduced spot 6 market exposure by 14 vessels $30,000 • Full service lightering fleet 4 provides additional coverage $20,000 during periods of spot market weakness 2 $10,000 2014 through Q3-19, total increase in earnings from time $0 0 charter activity of approximately $105 million (1) Avg mid-size spot tanker rate In-chartered vessels Out-chartered vessels (1) Includes all in-charters and out-charters entered into by TNK after January 1, 2014. 92
Improving Operational Customer Vetting Findings Port State Inspection Findings Performance and Cost 5 1.4 1.24 Efficiency 1.2 4 1.0 Industry leading operational Industry Avg ** 2.85 3 2.66 performance is hallmark of the 0.71 0.8 0.66 Teekay brand Industry Avg * 1.96 0.6 2 1.33 Vetting observations reduced 1.21 0.31 0.4 from 2.85 per inspection to 1.33 1 0.13 0.2 between 2015 and 2018 0 0.0 Port State Control (PSC) 2015 2016 2017 2018 2015 2016 2017 2018 observations reduced from 0.71 per inspection to 0.13 between *Source OCIMF 2018 **Source Paris MOU 2015 and 2018 OPEX Cost Per Day Quality recognized: First independent tanker operator 8,500 trusted to load crude oil from 8,000 Valdez, Alaska Industry Avg *** 7,500 Operating expenses decreased from ~$8,650 per day 7,000 to ~$7,900 per day between 2014 and 2018 6,500 6,000 2014 2015 2016 2017 2018 *** Source BDO OpCost 93
TNK Bunkering Locations 2018 IMO 2020 Preparation TNK is not installing • Focus is on securing adequate supply of scrubbers based on: low sulphur bunkers, ensuring quality, and minimizing the changeover risk Teekay supports the use of cleaner burning fuels • Secured LSFO supply contracts from high quality suppliers covering 75% of TNK's Concerns over availability of annual bunker requirement high sulphur fuel • 0.5% fuel trials carried out and rigorous • TNK bunkered in 74 different Delivered 0.5% LSFO Premium to 3.5% HSFO (1) pre-testing program developed ports globally in 2018 200 • Introduction of additives to bunker tanks Fuel price spread between 150 high sulphur (HSFO) and low commenced in 2016; minimal bunker tank 100 sulphur fuel (LSFO / MGO) is cleaning as a result $ / tonne uncertain 50 • Bunker tank modifications undertaken to 0 Payback period of scrubber improve bunker segregation capability in technology is much longer on order to avoid co-mingling fuels -50 mid-sized tankers vs. larger -100 tankers • Phased purchasing approach commencing in early Q4 2019 Source: Platts. 94 (1) Basis Singapore pricing.
TNK Strategic Priorities Position TNK to maximize 2017 - 2019 2020 value as the tanker market strengthens • Maintain significant spot exposure • Reduced fixed rate out-charter contracts Operating and increased in-charter contracts in • Opportunistically increase fixed rate Leverage anticipation of market recovery out-charter contracts • Completed financing activities to increase • Focus on delevering, building net asset financial flexibility value and reducing cost of capital Financial • Eliminated current formulaic dividend • No dividends expected in 2020 policy • Consider selling vessels on an • Acquired Tanker Investments Ltd. opportunistic basis Assets increasing the fleet by 18 vessels at • No vessel investments cyclically low prices • Decision not to install scrubbers • Smooth transition to low sulphur • Focused on securing high quality IMO 2020 fuels compliant fuel 95
Market Outlook
Freight and Asset Suezmax Monthly Average Spot Rates Aframax Monthly Average Spot Rates Market Snapshot 5-year range 5-year avg. 100 5-year range 5-year avg. 55 90 50 2018 2019 2018 2019 Spot tanker market at multi- 45 80 40 year highs; asset and time 70 ‘000 USD / day ‘000 USD / day 35 60 charter markets signal 30 50 strength 25 40 20 High refinery throughput, U.S. 30 15 crude export growth, IMO 20 10 10 2020, and tighter fleet supply 5 0 0 driving rates higher Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Clarksons Source: Clarksons U.S. sanctions on COSCO Dalian creating significant Tanker Asset Values (5yr Price) Tanker Time Charter Rates (1yr) near-term volatility 80 45 Both asset values and time Suezmax Aframax Suezmax Aframax 40 70 charter rates are currently the USD Million ‘000 USD / day highest in over three years 35 60 30 Secondhand asset values up 50 25 35% since the bottom in 2017 40 20 Firming asset values and time 30 15 charter rates indicates positive 10 20 forward sentiment towards the tanker market Source: Clarksons Source: Clarksons 97
Robust Oil and Tanker Global Refining – Crude Throughput Oil Demand Growth Demand Growth 2.5 87 Global refinery throughput 5-year range 5-year avg. set to reach record highs 86 2019 2020 (f) Crude tanker demand is driven 2.1 2.0 85 more by refinery demand / Change in Demand (mb/d) Million barrels per day throughput than end-user 84 demand 1.7 83 1.5 Refinery throughput dampened 82 in mid-2019 by heavy 1.3 1.3 1.3 maintenance ahead of IMO 1.2 81 1.1 2020 1.0 0.9 80 Refinery runs set to increase significantly in Q4-2019 and to 79 hit record highs in 2020 0.5 78 Global oil demand growth expected to recover to 1.2-1.3 77 0.0 mb/d in 2020 and 2021 2014 2015 2016 2017 2018 2019 2020 2021 76 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average of IEA, EIA, and OPEC Source: IEA 98
Extended Period Of Low Fleet Growth Suez / Afra Orderbook as % of Fleet Fleet Age Profile (Suez / Afra) Ahead 50% 20 yrs Suez Fleet 40% 19 yrs Small orderbook and aging Suez 18 yrs global fleet expected to keep 30% fleet growth low 17 yrs 20% 16 yrs Afra Fleet Mid-size tanker orderbook 15 yrs 10% currently just 9% of the existing Orderbook Afra fleet size 0% • Aframax fleet: 1,015 vessels 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 0 50 100 150 200 250 300 Number of Ships • Suezmax fleet: 545 vessels Source: Clarksons Source: Clarksons Large pool of 15+ year ships, Suezmax Fleet Growth Aframax Fleet Growth which are expected to face scrapping over the next five years Scrapping Deliveries Delivery Forecast Scrapping Forecast Net Fleet Growth • 107 Suezmaxes 80 8% 60 8% 50 60 6% • 204 Aframaxes 6% No. Ships 40 No. Ships 40 4% 30 4% 20 2% 20 Mid-size fleet projected to grow by 2% 10 0 0% only 1-2% per annum over the 0 0% -20 -2% next two years -10 -2% -40 -4% -20 • Long-term average fleet growth -30 -4% -60 -6% of approx. 4.5% per annum Source: Clarksons / Internal Estimates Source: Clarksons / Internal Estimates Note: Aframax data includes both coated and uncoated vessels. 99
Favourable Supply and Demand Outlook Demand Drivers Supply Drivers Demand / supply balance + Global refinery throughput projected to be + Relatively small tanker orderbook expected to tighten through 1.2 mb/d higher in 2020 compared to 2019 the winter months and into + Below-average fleet growth of 1-2% per 2020, though some wild cards + U.S. crude oil exports projected to exceed 4 exist annum over the next two years mb/d in 2020 + Major shipyards currently booked through + Supply growth from other non-OPEC (e.g. 2H-2021 Brazil, Norway) positive for mid-size tankers + Increase in vessel off-hire time as vessels + IMO 2020 could lead to new trade patterns / are taken out of service to retrofit scrubbers arbitrage movements, floating storage, and + U.S. sanctions on shipping companies increased port congestion + 20+ older VLCCs being used for fuel oil OPEC supply cuts through to March 2020 ▬ storage in S.E. Asia Venezuela sanctions negative for regional ▬ mid-size tanker markets ? Large pool of scrap candidates, but potential for delayed scrapping in a strong ? Middle East tensions / disruptions freight rate environment ? Global economy / U.S.-China trade war 100
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