TEEKAY LNG PARTNERS INVESTOR DAY September 30, 2014
DAVID GLENDINNING President, Teekay Gas Services 2 2
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. All statements included in or accompanying this presentation, other than statements of historical fact, are forward-looking statements. Forward-looking statements are not guarantees and actual results could differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements in this presentation include, among others, statements regarding: future growth opportunities and expectations and the effect of any growth on the Partnership’s results of operations; the expected delivery dates for the Partnership’s newbuilding vessels and commencement of related time charter contracts; the Partnership’s agreement to provide, through a new 50/50 joint venture with China LNG, six icebreaker LNG carriers for the Yamal LNG project including the timing of delivery and total cost to construct the vessels; the timing of the start-up of the Yamal LNG project and the expected total LNG production capacity of the project, if completed; the impact of the transactions with Yamal LNG and BG on the Partnership’s future cash flows; the delivery and cost to construct the four LNG carrier newbuildings for BG; the total amount of the Partnership’s forward fee-rate revenues and the average remaining contract length on the Partnership’s LNG fleet; future growth opportunities and expectations relating to our interest in the Exmar LPG JV and its ability to secure newbuildings at competitive prices; LNG/LPG shipping market fundamentals and projects; LNG and LPG market fundamentals and trends; the Partnership’s growth strategy and initiatives, including project bidding and expansion into adjacent markets such as ethane projects; illustrative annual distribution growth; and the estimated amount and timing of capital expenditures relating to existing projects. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: potential shipyard construction delays, newbuilding specification changes or cost overruns; availability of suitable LNG shipping, LPG shipping, floating storage and regasification and other growth project opportunities; changes in production of LNG or LPG, either generally or in particular regions; changes in trading patterns or timing of start- up of new LNG liquefaction and regasification projects significantly affecting overall vessel tonnage requirements; competitive dynamics in bidding for potential LNG, LPG or floating regasification projects; potential failure of the Yamal LNG Project to be completed for any reason, including due to lack of funding as a result of existing or future sanctions against Russian entities and individuals, which may affect partners in the project; potential delays or cancellation of the Yamal LNG project; potential delays in constructing and delivering the four LNG carrier newbuildings for BG; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of long-term contracts of existing vessels in the Teekay LNG fleet; the inability of charterers to make future charter payments; the inability of the Partnership to renew or replace long-term contracts on existing vessels; the Partnership’s ability to raise financing for its existing newbuildings or to purchase additional vessels or to pursue other projects; anticipated benefits of partnering with third parties; expected performance of MEGI newbuildings; and other factors discussed in Teekay LNG Partners’ filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2013. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based. 3
INVESTMENT HIGHLIGHTS Leading Stable Strong Visible Market Operating Industry Growth Position Model Fundamentals One of the $11 billion Gas is the $2.5 billion world’s largest of forward fastest growing of built-in LNG carrier fee-based fossil fuel growth owners and revenues operators 4
6% TEEKAY Distribution CAGR LNG AT A Since IPO in 2005 GLANCE 2014 15% per annum 2005 Total Shareholder $3.3B Market Cap Return Since IPO $11B ZERO 83 Vessels Forward fee-based Pollution events revenues 13 years >99.5% Fleet Availability Avg. contract since 2008 duration 5
Teekay LNG’s Evolution Teekay LNG Partners IPO (NYSE:TGP) 2005 Multiple Exmar Maersk Exmar MEGI Yamal BG Naviera LNG LNG JV LNG LPG JV LNG LNG LNG Tapias Gas contract Expanded into Entry into LNG awards LPG 2012 2004 First LNG contracts with Ras Gas Partnership with Exmar, (Ras Gas JV partner ExxonMobil) LPG industry leader Teekay LNG’s Core Businesses Photo Credit: 6 6 Dmitrijs Jemelins
Teekay LNG’s Global Footprint Global Trade Routes Current LNG Trade routes Future Teekay LNG routes Teekay LNG Office 7
Major Independent LNG Operator One of the world’s largest independent owners of LNG carriers 67 64 3 11 47 44 4 15 64 Existing On Order 26 26 53 20 43 10 18 15 5 4 10 10 29 2 2 16 15 14 11 8 8 NYK MOL K Line Teekay Maran GasLog Golar BW Knutsen Dynagas LNG Gas Maritime 8 Note: Excludes state & oil company fleets . Source: Clarksons and Company websites
$11B of Forward-Fee Based Revenues With Strong Customer Base Forward Fee-Based Revenues Average Remaining Contract Length by Segment by Segment 92% LNG Carriers 14 Years * $11.0B LPG Carriers 7 Years* Total Forward Fee-Based Revenues Conventional * 5% 4 Years 3% Tankers 9 * The average remaining contract life and forward fee-based revenues relate to 13 of our 30 LPG carriers currently on fixed-rate charters.
Reliable Track Record of Operational Excellence • Approaching 1,000 days without an LTI • >99.5% fleet availability since 2008 • Zero pollution events since inception LTIF: Loss Time Injury Frequency 10 10
Innovative MEGI Newbuildings Leading edge of LNG carriers • “Best Mouse Trap” for growing LNG demand o Reduced fuel consumption - savings of over $25,000/day* over DFDE vessels Reduced boil off gas – reliquefaction o prevents LNG loss Optimized vessel size – largest capacity o to fit through new Panama Canal • Evaluating every component to find efficiencies o Propeller, hull form, reliquefaction • Reduced engine complexity lowers operational cost Lower total unit freight cost to customers (e.g. reduces US to China cost by $0.45 per mmbtu* compared to DFDE vessels) 11 * Assumes 19.5 knots, $650 per tonne fuel equivalent
Partnerships Enhance Growth Partnering allows Teekay LNG to expand its business footprint more quickly and at a lower cost Access to new lines of business Access to new markets Risk diversification China LNG Financing 12
Teekay LNG’s Competitive Advantages Significant Scale One of the largest independent owners and operators of LNG carriers Technology Reliable Operations First mover to embrace Excellent HSEQ KPIs innovative fuel-efficient MEGI Large pool of seafarers LNG carriers Access to Capital Strategic Partnerships Since IPO, raised $1.9B of equity and bonds Strong joint venture and Strong relationships with over shipyard relationships 30 banks / ECAs 13
STRONG GAS MARKET FUNDAMENTALS 14 14
LNG Fleet Utilization Improves After 2016 LNG liquefaction export growth mostly driven by U.S. and Australia 3 TGP LNG deliveries (uncommitted) ▼ 40 30 20 No. Vessels 10 0 -10 ▲ ▲ Only 2 TGP LNG carriers roll-off contracts (52% owned) -20 Deliveries Scrap Incremental Demand Cumulative Surplus / Deficit Source: Clarksons and internal estimates 15
U.S. Projects Create Demand for LNG Carriers Over 100 LNG carriers needed for U.S. projects from 2016 U.S. Exports – Cumulative Vessel Demand START VESSEL PROJECT FID UP REQUIREMENTS* 120 Sabine Pass 2016 / 2012 / 20 Trains 1 - 4 2017 2013 100 3 TGP LNG Sabine Pass 2018 2015 5 options (undeclared) Train 5 80 No. Vessels Cameron 2018 2014 14 60 Freeport 2018 2014 14 3 TGP LNG deliveries Corpus 2018 2015 16 40 (uncommitted) Christi Lake Charles 2019 2015 17 20 Golden Pass 2020 2015 17 0 2016 2017 2018 2019 2020 Total 103 TGP’s MEGI LNG newbuildings are ideally suited for U.S. LNG exports 16 Source: Company Websites and Clarksons
Over 100 MTPA Growth Outside U.S. by 2020 Export volume growth in Australia, Russia, Canada and East Africa Canada Russia 25 25 Cumulative MTPA Cumulative MTPA 20 20 15 15 10 10 5 5 0 0 Australia 70 60 Cumulative MTPA 50 Rest of World East Africa 40 25 25 Cumulative MTPA Cumulative MTPA 30 20 20 20 15 15 10 10 10 5 5 0 0 0 17 Source: Internal Estimates
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