2. 2Forward Looking StatementsThis presentation contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) whichreflect management's current views with respect to certain future events and performance, including statements regarding: future growthopportunities and market conditions; the timing for implementation of the Companys new dividend policy, the amount of the initial dividendincrease from the current level, and expected increases over the three years following the initial dividend increase; the anticipated sale of thePetrojarl Knarr FPSO unit to Teekay Offshore, including the sale price, the anticipated commencement of the Petrojarl Knarr FPSO charter contractin the fourth quarter of 2014, and the timing and certainty of Teekay Parent completing the sale; the dividend contributions of any future projectsawarded to the Companys daughter companies; expected growth of Teekay Offshore and Teekay LNG and its impact on Teekay Parent; the totalcost and timing for the delivery of newbuilding and conversion projects and the commencement of associated time-charter contracts; the timing andcertainty of Teekay Offshores joint venture with Odebrecht finalizing the contract for the Libra FPSO project with Petrobras; the timing, certaintyand purchase price of pending and future Teekay Offshore and Teekay LNG vessel acquisitions; the timing and certainty of the charterer resolvingthe subsea issues relating to the Foinaven field and revenues generated from the Foinaven FPSO; and the estimated results for the Company forthe fourth quarter of 2014. The following factors are among those that could cause actual results to differ materially from the forward-lookingstatements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: changes in production of ordemand for oil, petroleum products, LNG and LPG, either generally or in particular regions; greater or less than anticipated levels of tankernewbuilding orders or greater or less than anticipated rates of tanker scrapping; changes in trading patterns significantly affecting overall vesseltonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; changesin the typical seasonal variations in tanker charter rates; changes in the offshore production of oil or demand for shuttle tankers, FSO and FPSOunits; decreases in oil production by, or increased operating expenses for, FPSO units; fluctuations in global oil prices; trends in prevailing charterrates for shuttle tanker and FPSO contract renewals; the potential for early termination of long-term contracts and inability of the Company torenew or replace long-term contracts or complete existing contract negotiations; delays in commencement of operations of FPSO and FSO units atdesignated fields; changes in the Company's expenses; the Company and its publicly-traded subsidiaries future capital expenditure requirementsand the inability to secure financing for such requirements; the amount of future distributions by the Companys daughter companies to theCompany; the amount of Teekay Parent and daughter subsidiary expenses; failure by Teekay Offshores joint venture with Odebrecht to completefinal contract negotiations with Petrobras for the Libra FPSO project; potential delays in the commencement of operations of the Petrojarl KnarrFPSO unit and potential failure of the FPSO unit to be sold to Teekay Offshore; the inability to successfully complete the operational testing of theHi-Load DP unit and achieve final acceptance of the unit from Petrobras; failure by Teekay Offshore and Teekay LNG to complete its vesselacquisitions; the inability of the Company to complete vessel sale transactions to its public-traded subsidiaries or to third parties, includingobtaining Board of Directors and Conflicts Committee approvals; failure of the respective Board of Directors of the general partners of TeekayOffshore and Teekay LNG to approve future distribution increases; failure by the charterer to resolve the subsea issues relating to the Foinavenfield; conditions in the United States capital markets; and other factors discussed in Teekay's filings from time to time with the SEC, including itsReport on Form 20-F for the fiscal year ended December 31, 2013. The Company expressly disclaims any obligation or undertaking to releasepublicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations withrespect thereto or any change in events, conditions or circumstances on which any such statement is based.
3. 3Recent Highlights Generated $252 million of total CFVO1 in Q3-14, an increase of 29percent from Q3-13 Reported Q3-14 consolidated adjusted net loss2 of $12.6m, or $0.17per share, compared to Q3-13 consolidated adjusted net loss2 of$36.0m, or $0.51 per share Announced new dividend policy Intend to increase dividend to $2.20 - $2.30 (annualized) Upon completion of Knarr FPSO dropdown3 Expect to further grow the dividend by ~20% per annum Offered Knarr FPSO for sale to Teekay Offshore1) Total cash flow from vessel operations (CFVO) is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Includes bothCFVO from vessels that are consolidated and CFVO from vessels that are equity-accounted for on the Companys financial statements. Please see appendices in the Q3-14 earningsrelease for a reconciliation of this non-GAAP measure as used in this presentation to the most directly comparable GAAP financial measure.2) See Appendix A of the Q3-14 earnings release for a reconciliation of this non-GAAP measure to the most directly comparable financial measure under GAAP.3) Expected implementation in Q1-15, subject to successful contract start-up and dropdown of Knarr FPSO to Teekay Offshore.Teekay Corporation (Parent)
4. 4Recent Highlights Declared Q3-14 distributionof $0.6918 per unit $25.3mto Teekay Parent Agreed to acquire andbareboat charter-back oneLPG carrier from I.M.Skaugen for $27 million Exmar LPG JV took deliveryof the third of 12 mid-sizeLPG carrier newbuildings;sold one LPG vessel foran $8 million gain Bidding on several LNG andFSRU projects for start-up in2017 onwardsTeekay LNGPartnersTeekay OffshorePartnersTeekay TankersLtd. Declared Q3-14 distributionof $0.5384 per unit $17.7mto Teekay Parent 50/50 JV with Odebrechtsigned letter of intent for theLibra FPSO project in Brazil TOOs investment ~$0.5billion ALP agreed to acquire 6 on-the-water towing and anchorhandling vessels TOOsinvestment $220 million Salamander FSOcommenced charter in Aug-2014 Bidding on several offshoreprojects with start-up in 2017onwards Declared Q3-14 dividend of$0.03 per share $0.8mto Teekay Parent Generated Q3-14 CAD1 of$0.19 per share Secured two new charter-incontracts Invested $10 million inadditional shares of TankerInvestments Ltd. increasingownership toover 9%1) Cash Available for Distribution (CAD) represents net income (loss), plus depreciation and amortization, unrealized losses from derivatives, non-cash items and any write-offs of othernon-recurring items, less unrealized gains from derivatives. Please see appendices in the Teekay Tankers Q2-14 earnings release for a reconciliation of this non-GAAP measure asused in this presentation to the most directly comparable GAAP financial measure.
5. 5Knarr FPSO StatusUpdate Arrived in Norway in Septemberand currently being towed to field Mooring and riser installationscheduled for November andtargeting first oil in December(weather dependent) Offered the unit for sale to TeekayOffshore for fully built-up cost of~$1.16 billion; currently beingreviewed by Teekay OffshoresConflicts Committee Expected to generate annual DCF*of approximately $70 million* Distributable Cash Flow is a non-GAAP measure used by certain investors tomeasure the financial performance of Teekay Offshore and other master limitedpartnerships5
6. 6Consolidated Adjusted Statements of (Loss) IncomeQ3-14 vs. Q2-14($000s, except per share amounts) Q3-14 Adjusted Q2-14 Adjusted CommentsNet revenues 456,000 418,815 Increase mainly related to Banff FPSO returning tooperations in July, higher revenues from theVoyageur and Foinaven FPSO units, higher spottanker rates and additional in-charters, start-up ofSalamander FSO and $7m increase in reimbursablecosts (with corresponding increase in vessel opex).Vessel operating expenses (205,814) (196,724) Increase primarily due to $7m increase inreimburseable opex and Banff FPSO returning tooperations in July.Time charter hire expense (16,899) (9,714) Additional in-charters in TNK.Depreciation and amortization (106,835) (103,373) Amortization of upgrade costs for Banff FPSOreturning to operations in JulyGeneral and administrative (32,010) (35,619) Lower corporate expensesIncome from vessel operations 94,442 73,385Net interest expense (78,241) (78,311)Equity Income 25,702 27,489 Lower income from Exmar LPG and Itajai JVsIncome tax expense (3,111) (3,193)Other - net (532) (734)Net income 38,260 18,636Less: Net income attributable tonon-controlling interest(50,839) (38,730) Higher adjusted earnings in TNK, TGP & TOONet loss attributable toshareholders of Teekay Corp.(12,579) (20,094)Fully diluted loss per share (0.17) (0.28)
7. 7Q4 2014 Outlook Teekay ConsolidatedIncome StatementItemQ4 2014OutlookNet RevenuesFixed-Rate Fleet (expected changes from Q3-14): $20m - 23m increase from Foinaven FPSO due to Q4 recognition of the annual operational and oil pricetariff revenue for 2014 $9m increase from Knarr FPSO assuming achievement of first oil on December 15th $2m increase from a full quarter of Banff FPSO operations $4m decrease due to conventio