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Teekay Corporation 2017 Annual General Meeting Presentation

HAMILTON, BERMUDA -- (Marketwired) -- 06/19/17 -- Teekay Corporation (Teekay) (NYSE: TK) presented at its 2017 Annual General Meeting on Thursday, June 15, 2017, which included details on its three publicly-traded Daughter entities, Teekay LNG Partners L.P. (Teekay LNG) (NYSE: TGP), Teekay Offshore Partners L.P. (Teekay Offshore) (NYSE: TOO), and Teekay Tankers Ltd. (Teekay Tankers) (NYSE: TNK). Below is a detailed speech from Kenneth Hvid, Teekay's President and Chief Executive Officer:

"Good morning, ladies and gentlemen. Thank you for attending our June 2017 Annual General Meeting. It is my pleasure to report to you at this Annual General Meeting as Teekay Corporation's President and Chief Executive Officer. As we have done in the past, I will spend some time today reviewing our key developments since our last Annual General Meeting in June 2016. For further information, I refer you to our website at www.teekay.com where you will be able to download our 20-F filing for the year ended December 31, 2016 with the United States Securities and Exchange Commission. Before I begin, I must include the usual and important disclaimers about forward looking statements that are mandated by U.S. Securities laws1.

Teekay Corporation reported total cash flow from vessel operations2 of $1.3 billion, compared to $1.4 billion in 2015. During the year, our diverse portfolio of long-term charter contracts totaling approximately $20 billion in forward fee-based revenues continued to provide support to Teekay Corporation's cash flows. However, our offshore business results were impacted by the redelivery of the Varg FPSO in July 2016 after operating for almost 18 years on the Varg field and lower cash flows from the Arendal Spirit UMS. Our tanker business results were impacted by lower spot tanker rates in 2016 compared to the highs seen in 2015. On the efficiency front, we have implemented various cost saving initiatives during the past year, resulting in lower run-rate operating and general and administrative expenses.

Overall, we continue to focus on delivering on our existing growth projects, optimizing our asset portfolio across the Teekay Group, and strengthening our balance sheets to better position the Teekay Group to take advantage of future opportunities. For Teekay LNG, this means continuing to execute on its existing growth projects, including its current newbuilding financing plan; for Teekay Tankers this means maintaining fixed cover, continuing to deleverage the balance sheet and keeping operating costs low to position the business for the next upcycle; and for Teekay Offshore this means continuing to make progress towards delivering on its existing growth projects and continue to deleverage the balance sheet and build liquidity. As mentioned on our latest earnings conference call, Teekay Offshore has been working on a number of liquidity initiatives over the past several months. We are nearing completion on these initiatives and expect to update the market during the third quarter of 2017.

Looking at the markets that we operate in, over the course of 2016 and into 2017, oil prices have stabilized in the $45 to $55 per barrel range, which is overall positive to the offshore industry sentiment. Looking longer-term, the fundamentals in the offshore and deepwater energy sector remains positive, which will benefit Teekay Offshore. In addition, the fundamentals in the shuttle tanker market continue to tighten, particularly the North Sea. The long-term fundamentals for LNG shipping remain strong with an expectation that more LNG carriers will be required to service new projects, which will benefit Teekay LNG. Lastly, we anticipate 2017 will present some headwinds to crude tanker rates due to OPEC production cuts and higher fleet growth. However, we believe this near-term dip in the market cycle to be relatively short-term in nature, as limited tanker ordering in the mid-sized tanker segments and an anticipated increase in scrapping due to regulatory changes, as well as a more balanced oil market, is expected to lead to a renewed market upturn in 2018, which will benefit Teekay Tankers.

Each of Teekay Corporation's publicly-traded Daughter entities has continued to execute on their respective business plans and I'll spend a few moments now summarizing some of the highlights at each entity.

In 2016, Teekay LNG generated distributable cash flow3 of $235.0 million and continued executing on its portfolio of growth projects. Over the course of 2016 and into 2017, Teekay LNG took delivery of the world's first MEGI LNG carrier newbuildings, the Creole Spirit, the Oak Spirit and the Torben Spirit, which commenced their respective charter contracts with Cheniere Energy and a major energy company, and, through its joint venture with Belgium-based Exmar NV, took delivery of its sixth, seventh and eighth of its 12 mid-size LPG carrier newbuildings. On the business development side, Teekay LNG secured charter contracts for all its remaining unchartered MEGI LNG carrier newbuildings and now all of our LNG carrier newbuildings have secured charter contracts. On the financing side, in 2016 and into 2017, Teekay LNG has continued to secure long-term financing for its growth projects raising over $1.6 billion for various projects. With a significant portfolio of growth projects delivering through 2020, we believe Teekay LNG is set to experience significant cash flow growth in the future.

In 2016, Teekay Tankers generated significant free cash flow4 of $186.7 million, which, together with the sale of some older tonnage, has allowed Teekay Tankers to further strengthen its balance sheet. On the commercial side, Teekay Tankers continued to focus on increasing its fixed-rate time-charter coverage and growing its lightering and other fee-based businesses, which we believe will help to reduce the effect of tanker market volatility in 2017. Lastly, Teekay Tankers recently announced two acquisitions, including the merger with Tanker Investments Ltd. (TIL)5, which owns 18 mid-size conventional tankers, which will position Teekay Tankers as the largest publicly-listed mid-size tanker company with a stronger financial foundation, a much larger, younger fleet with which to service its customers globally and fully integrated tanker operations. With a stronger financial foundation, strong operating leverage and a lower cash break-even rate, we believe Teekay Tankers is well-positioned to benefit from an expected renewed tanker market upturn in 2018.

In 2016, Teekay Offshore generated distributable cash flow3 of $161.3 million, continued to focus on the execution of its portfolio of growth projects, and implemented various cost saving initiatives. Teekay Offshore took delivery of its first of four state-of-the-art towage newbuildings in September 2016 and recently took delivery of its largest current project, the jointly-owned Libra FPSO, which is currently undergoing field installation and testing on its field in Brazil for its 12-year charter contract with an international consortium, led by Petrobras. Over the course of 2016 and into 2017, Teekay Offshore experienced some delays and additional costs on the Gina Krog FSO and Petrojarl I FPSO projects, which are now scheduled to commence operations in the third quarter of 2017 and early-2018, respectively. Teekay Offshore's East Coast Canada shuttle tanker project, which includes three Suezmax-class shuttle tankers, remains on time and on budget for delivery between the third quarter of 2017 and the first quarter of 2018 for their respective 15-year contracts with a consortium of oil companies. On the commercial side, in late-April 2017, Teekay Offshore was notified by the charterer of the Arendal Spirit UMS of its termination of the charter contract on this unit. Teekay Offshore is disputing the termination and reviewing its legal options, while at the same time actively marketing the unit for alternative employment. On the business development side, in 2016 and into 2017, Teekay Offshore secured five shuttle tanker contract of affreightments in the North Sea at successively higher rates, including the largest North Sea shuttle tanker award in five years, and a five-year FSO extension for the Falcon Spirit FSO, and entered into a customer-funded front-end engineering and design (FEED) study for the Varg FPSO for potential use for the development of the Cheviot field in the U.K. sector of the North Sea. In addition to delivering on its existing growth projects, which are expected to provide significant cash flow growth in the future, Teekay Offshore continues to focus on securing contract extensions for its three FPSOs that are coming up for renewal in 2018 and 2019, which are progressing as expected, and strengthening its balance sheet and liquidity position, which I touched on earlier.

Before I conclude, I would like to highlight that operational excellence has always been among Teekay's key strengths. Our global teams onboard ships and ashore, devote enormous effort towards upholding the Teekay name as a respected symbol of quality and as a protector of the environment. We set ourselves high standards for personnel safety, fleet availability and customer service. However, we recognize that there will always be room to do better and we live by our core value of continuous improvement.

In closing, I would like to thank our customers for the opportunity to serve them; our colleagues for their dedicated efforts; our Board of Directors for their valued guidance; and our fellow shareholders for their continued support. In addition, I would like to thank Sean Day for his 18 years as Chairman of Teekay Corporation's Board of Directors and I am looking forward to working with Bill Utt as Teekay Corporation's new Chairman of the Board."

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements (as defined in Section 21E of the U.S. Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: the timing of delivery and start-up and costs of various newbuildings and conversion/upgrade projects and the commencement of related contracts, including potential delays and additional costs on the Petrojarl I FPSO unit and Gina Krog FSO unit; the timing and certainty of completing Teekay Offshore's liquidity initiatives; the positive fundamentals in the offshore and deepwater energy sector and the benefit of those fundamentals on Teekay Offshore; the expected increase in the number of LNG carriers required to service new projects; the expected impact on crude tanker rates in 2017; the expected duration of the dip in the tanker market and expected upturn in 2018, and the benefit of the upturn on Teekay Tankers; the expected growth in future cash flow for Teekay LNG; the timing and certainty of completing the Teekay Tankers merger with TIL; the expected benefits of the merger, including the expected impact on Teekay Tankers' earnings per share, financial leverage, liquidity position, fleet age and future results; the Arendal Spirit UMS charter contract termination, including the outcome of Teekay Offshore's dispute of the contract termination by the charterer and ability to collect amounts under the contract and the potential for alternative employment of the unit; and the expected growth in future cash flow from Teekay Offshore's existing growth 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: changes in production of, or demand for oil, petroleum products, LNG and LPG, either generally or in particular regions; greater or less than anticipated levels of newbuilding orders or greater or less than anticipated rates of vessel scrapping; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws

and regulations; changes in the typical seasonal variations in tanker charter rates; changes in the offshore production of oil or demand for shuttle tankers, FSOs, FPSOs, UMS, and towage vessels; changes in oil production and the impact on the Company's tankers and offshore units; fluctuations in global oil prices; trends in prevailing charter rates for the Company's vessels and offshore unit contract renewals; the potential for early termination of long-term contracts and inability of the Company to renew or replace long-term contracts; the inability of charterers to make future charter payments; the inability of Teekay Offshore to successfully make a claim against, and collect from, Petrobras for the Arendal Spirit UMS; the inability of Teekay Offshore to negotiate acceptable terms with the lenders of the Arendal Spirit UMS credit facility; the inability of Teekay Offshore to negotiate acceptable terms with the charterers, shipyards and lenders related to the delay of the Petrojarl I FPSO and Gina Krog FSO projects; Teekay LNG's and Teekay LNG's joint ventures' ability to secure financing for its existing newbuildings and projects; the inability of Teekay Offshore to negotiate acceptable lease and operate terms related to the Varg FPSO; the ability to fund Teekay Offshore's remaining capital commitments and debt maturities; the inability of Teekay Tankers to manage market volatility by increasing its fixed-rate time charter coverage and growing its lightering and other fee-based businesses; failure to satisfy the closing conditions of the merger with TIL, including obtaining the required approvals from the Teekay Tankers and TIL shareholders and relevant regulatory authorities; failure to successfully integrate TIL into Teekay Tankers and realize the expected benefits and synergies from the combined company; potential shipyard and project construction delays, newbuilding specification changes or cost overruns; costs relating to projects; delays in commencement of operations of FPSO and FSO units at designated fields; the inability of Teekay LNG to collect the deferred charter payments from Skaugen; delays in CoA project start-ups; changes in the Company's expenses; a delay in, or failure to complete, vessel sales; and other factors discussed in Teekay's filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2016. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

(1) Before I proceed with my report to the shareholders, please allow me to remind you that various remarks that we may make in the course of this presentation about future expectations, plans and prospects for the company and the shipping industry constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements, as a result of various important factors, including those discussed in our annual report on Form 20-F for the year ended December 31, 2016, filed with the U.S. Securities and Exchange Commission on April 12, 2017.

2 Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense, amortization of in-process revenue contracts, vessel write-downs, gains or losses on the sale of vessels and equipment and adjustments for direct financing leases to a cash basis, but includes realized gains or losses on the settlement of foreign currency forward contracts and a derivative charter contract. Please refer to Appendix E in Teekay Corporation's Fourth Quarter and Annual 2016 Earnings Release, which can be found on our website www.teekay.com, for a reconciliation of this non-GAAP financial measure, as referenced above, to the most directly comparable financial measure under United States generally accepted accounting principles (GAAP).

3 Distributable cash flow represents net income adjusted for depreciation and amortization expense, deferred income tax and other non-cash items, estimated maintenance capital expenditures, unrealized gains and losses from non-designated derivative instruments, ineffectiveness for derivative instruments designated as hedges for accounting purposes, distributions relating to equity financing of newbuilding installments, adjustments for direct financing leases to a cash basis and foreign exchange related items, including the Partnership's proportionate share of such items in equity-accounted for investments. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnership's capital assets. Please refer to Appendix B in Teekay LNG's and Teekay Offshore's Fourth Quarter and Annual 2016 Earnings Releases, which can be found on our website www.teekay.com, for a reconciliation of this non-GAAP finance measure, as referenced above, to the most directly comparable financial measure under GAAP.

4 Free cash flow (FCF) represents net income, plus depreciation and amortization, unrealized losses from derivatives, certain non-cash items, FCF from the equity accounted investments, loss on sale of vessel, and any write-offs or other non-recurring items, less unrealized gains from derivatives, equity income from the equity accounted investments, gain on sale of vessel and certain other non-cash items. Please refer to Appendix B in Teekay Tankers' Fourth Quarter and Annual 2016 Earnings Release, which can be found on our website www.teekay.com, for a reconciliation of this non-GAAP finance measure, as referenced above, to the most directly comparable financial measure under GAAP.

5 Teekay Tankers merger with TIL remains subject to customary closing conditions, approval by TIL's shareholders of the merger, and approval by Teekay Tankers' shareholders of an increase in the authorized number of Teekay Tankers' Class A common shares, to permit the issuance of Class A common shares as merger consideration.

Contacts:
For Investor Relations enquiries contact:
Ryan Hamilton
+1 (604) 844-6654
www.teekay.com

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