TANKERS INVESTOR DAY September 30, 2014 KEVIN MACKAY President - - PowerPoint PPT Presentation

TEEKA Y

TEEK A Y

TEEKAY TANKERS INVESTOR DAY

September 30, 2014

2

KEVIN MACKAY

President & CEO, Teekay Tankers

2

Photo credit: Alexandr Lyakhov Australian Spirit

3

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: the crude oil and refined

product tanker market fundamentals, including the balance of supply and demand in the tanker market, estimated growth in the world tanker fleet during 2014 through 2016, estimated growth in global oil demand and crude oil tanker demand in during 2014 through 2016, estimated crude supply and refining capacity in 2014 to 2019, and tanker fleet utilization and spot tanker rates during 2014 through 2016; the Company’s financial position and ability to take advantage of growth opportunities in an expected future tanker market recovery and its ability to invest in newbuildings; the Company’s plans regarding increased spot market exposure and growth in capacity through in-charters; the Company’s fixed-rate coverage for the next 12 months; the Company’s growth strategy; the effect

• f the Company’s operating leverage on cash available for distribution per share; and the Company’s 2015 expected fleet profile. 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 the production of or demand for oil; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in commercial tanker pools; greater or less than anticipated levels of tanker newbuilding orders and deliveries or greater or less than anticipated rates of tanker scrapping; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; the potential for early termination of short- or medium-term contracts and inability of the Company to renew or replace short- or medium-term contracts; changes in interest rates and the financial markets; increases in the Company's expenses, including any dry docking expenses and associated off-hire days; failure to realize expected benefits of the acquisition of an interest in Teekay Operations; failure of Teekay Tankers Board of Directors and its Conflicts Committee to accept future acquisitions of vessels that may be offered by Teekay Corporation or third parties; and other factors discussed in Teekay Tankers’ filings from time to time with the United States Securities and Exchange Commission, including its Report on Form 20-F for the fiscal year ended December 31,

• 2013. 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.

4

Strong Operating Leverage Leading Market Position Trusted Operating Franchise

One of the world’s largest tanker

• wners and
• perators

Every $5,000 increase in spot rates increases earnings by $0.45 per share Over 40 years of leading commercial and technical management expertise $250 million

• f liquidity and

proven access to capital

INVESTMENT HIGHLIGHTS

Stable Financial Platform

5

Largest Operator 700M barrels

Cargo Lifted in 2013

82 Vessels

Commercially Managed

125+

Global Customers

2000

Seafarers

$7.37 per share

Dividends Paid Since IPO

82 64 58 52 48 30 30

Teekay Tankers Sovcomflot Heidmar AET Navig8 Minerva Thenamaris

Of Mid-Sized Tankers

TEEKAY TANKERS AT A GLANCE

6

BUSINESS OVERVIEW

6

7

40 YEARS OF OPERATIONAL EXCELLENCE

Commitment to high HSEQ standards is key to winning and maintaining business and is the essence of the Teekay brand.

1 2 3 0.5 1 1.5 2011 2012 2013

HSEQ KPIs

(Per Million Man Hours)

TRCF LTIF

TRCF: Total Recordable Case Frequency LTIF: Loss Time Injury Frequency 7

Photo credit: Aaron Lobo Al Marrouna

8

Global and Diverse Customer Network

• Customer relationships spanning 40 years based on our reputation for

reliability and operational excellence

• Provides access to diverse cargo streams and agility to respond to changing

market dynamics

9

World-Class Operating Franchise

Technical management leverages power of One Teekay

• Over 2,000 seafarers managed directly through manning offices in

Glasgow, Manila, and Mumbai

• Procurement economies of scale
• Shipyard access and negotiating power

Broad commercial footprint

• Over 80 vessels under commercial management
• Variety of contracts provide access to global trade volumes
• Commercial tonnage pools consistently outperform peers and indices

10

• Transitioned portfolio and added in-chartered vessels for higher spot

exposure

• Increased liquidity by monetizing investment in term loans ($154m)
• Purchased a 50% interest in Teekay’s conventional tanker franchise
• Co-created Tanker Investments Limited (TIL)

16 15 5 10 15 20 25 30 35 40 Number of Vessels

2012 Fleet Profile

Fixed rate vessels Spot (owned vessels) Spot (in-chartered vessels)

48% Spot Exposure 81% Spot Exposure

7 21 8 5 10 15 20 25 30 35 Number of Vessels

Pro forma 2015 Fleet Profile

Well-Positioned for Tanker Market Recovery

11

Strong Operating Leverage

$- $0.50 $1.00 $1.50 $2.00 $2.50 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000

TNK CAD* Per Share Spot Rate Sensitivity

• For every $5,000 per day increase in spot

rates, TNK’s CAD* increases by $0.45 per share

• Low current CAD break-even rate of

~$10,500 per day

• A 10% increase in vessel values increases

net asset value by ~$0.90 per share

* Cash Available for Distribution represents net income (loss) excluding depreciation and amortization, unrealized (gains) losses from derivatives, any non-cash items or write-offs of

• ther non-recurring items.

Aframax Equivalent TCE

(12 months ended June 30, 2015)

11

12

TANKER MARKET OVERVIEW

12

13

• 1%

0% 1% 2% 3% 4% 5% 6% 7%

• 10

10 20 30 40 50 60 70

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

% GDP Growth $ 000s / day

Source: Clarksons / IMF

Global GDP Growth Aframax Spot Rates Suezmax Spot Rates

2013 2009-13 Avg Long-term Avg* Suezmax $14,000 / day $18,500 / day $38,700 / day Aframax $13,100 / day $13,000 / day $28,500 / day

2009 – 2013: Depressed Tanker Market

Tanker rates during 2009 - 2013 were well below the long-term average

*For the period 2002-2013

14

• 4,000
• 2,000

2,000 4,000 6,000 8,000 MR LR2 Aframax Suezmax VLCC

TCE ($ / day)

2014 Change Over 2013 Earnings (Jan-Sep)

$5,600 $7,900 $7,500 $2,200

• $3,500

Source: 90% of Clarksons Reported Rates

2014 Earnings Indicate Rising Market

Mid-sized crude tankers outpacing recovery in other segments

15

Flows of Crude are Moving West to East

16

West of Suez East of Suez

Crude Supply Increasing West of Suez

Change 2014 - 2019

2.7 1.1 0.3 0.2 0.2 Latin America North America OPEC West Africa FSU OPEC East Asia 0.6

• 0.2

Australia 0.2

Source: IEA

17

West of Suez East of Suez

Crude Supply Increasing West of Suez

+3.8 mb/d +0.6 mb/d

Source: IEA

Change 2014 - 2019

18

Refining Capacity Increasing East of Suez

2.4 2.2 0.7 0.6 0.1 Middle East China India Other Asia FSU OECD Asia

• 0.4

0.8 0.7 0.3 0.2 Latin America North America FSU Africa Europe

• 0.6

West of Suez East of Suez

Source: IEA

Change 2014 - 2019

19

Refining Capacity Increasing East of Suez

+1.4 mb/d +5.5 mb/d

West of Suez East of Suez

Source: IEA

Change 2014 - 2019

20

MEG - Asia +280% WAF- Euro +74% WAF - US

• 70%

Suezmax Benchmark Routes are Changing

WAF - Asia +75%

Source: SSY * Spot routes with greatest tonne-mile in given period

21

Aframaxes Remain the Workhorse

• f the Fleet

Existing Trade Routes Potential New Routes

Source: SSY * Spot routes with greatest tonne-mile in given period

22

Source: IEA

To Asia / Pacific

Refined product surplus Refined product deficit

Changes in Long-Haul Refined Product Trade

23

42 30 11 43 35 15 20 40 60 80 100 120 140 160

Aframax

20+ Years 19 Years 16-18 Years 15 Years 14 Years Orderbook 42 30 11 43 35 15 20 40 60 80 100 120 140 160

Aframax

Mid-Sized Tanker Fleet Age Profile

50 19 4 30 9 18 10 20 30 40 50 60 70 80 90

Suezmax

Note: Uncoated vessels only

Mid-sized tankers aged 15+ years exceed orderbook

Orderbook Existing Fleet >14 Years Orderbook Existing Fleet >14 Years

Source: Clarksons / Internal Estimates

Number of Vessels Number of Vessels

24

• 4%
• 2%

0% 2% 4% 6% 8% 10%

• 20
• 10

10 20 30 40 50 2010 2011 2012 2013 2014E 2015E 2016E Number of Vessels

Suezmax Fleet Growth

Scrapping Forecast Scrapped Delivery Forecast Delivered Net Fleet Growth (% of Fleet)

• 5%
• 3%
• 1%

1% 3% 5%

• 50
• 40
• 30
• 20
• 10

10 20 30 40 50 2010 2011 2012 2013 2014E 2015E 2016E Number of Vessels

Aframax Fleet Growth

Source: Clarksons / Internal Estimates Uncoated vessels only

Shrinking Mid-Sized Fleet

Declining mid-size crude tanker fleet driving a sustained market recovery

25 0% 1% 2% 3% 4% 5% 6% 7% 8% 78% 80% 82% 84% 86% 88% 90% 92% 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E Tanker Demand Growth Tanker Supply Growth Fleet Utilization

Higher Fleet Utilization Beginning in 2014

Driver for increased rates and asset prices

Source: Platou/Internal Estimates

Fleet Utilization Supply/Demamd Growth

26

20 30 40 50 60 70 80 90 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Aframax Asset Values

NB 5y-old Upside to 10y avg. 10% 21%

Source: Clarksons

35 45 55 65 75 85 95 105 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Suezmax Asset Values

NB 5y-old 9% Upside to 10y avg. 30%

Asset Values Remain Below 10-Year Averages

NB 5 yr old 10 yr avg NB 10 yr avg 5 yr old

$ millions $ millions

27

STRATEGIC FOCUS

27

28

• Actively pursue in-charters while

managing out-charter portfolio

• Utilize TNK’s operating platform to

pursue consolidation and investment

• pportunities
• Invest in newbuildings
• Increase fee revenues from

commercial and technical management

Teekay Tankers Strategy for Growth

Invest and operate throughout the tanker cycle using a variety of levers

28

Photo credit: Benhur Villavicencio Mahanadi Spirit

29

• Continue to reduce our fixed-rate cover to increase spot fleet

○ 75% of fleet will trade in spot market over the next 12 months

• Further grow our spot fleet capacity through in-charters

○ Recent in-charters added 2,000 operating days ○ Pursue medium-term contracts to increase in-charter portfolio by an additional

15 ship years

• Increase vessels under management and

fee-based revenues

○ Grow existing commercial pools ○ Develop new operating segments to leverage our

commercial and technical expertise

Positioning TNK for Greater Upside to Tanker Market Recovery

Rebalancing our portfolio mix

30

Since the Financial Crisis:

• Several competitors have restructured or

exited

• Non-traditional financial backers have

entered the market with shorter investment horizons

• Many new entrants do not have a full
• perating platform

The Competitive Landscape Has Changed

Presents TNK with opportunities for consolidation

30

Photo credit: Benhur Villavicencio Mahanadi Spirit

31

TNK: Strong Platform for Consolidation

Operational Financial Technical Commercial

• Deep customer relationships
• Growing commercial

management platform

• Variety of cargo contracts
• Global footprint and

experience

• 40 years of Operational

Excellence

• Size to deliver reliable

and flexible operations

• Ability to maximize

vessel performance and voyage returns

• Industry leading HSEQ
• Leveraging power of One

Teekay

• Technical and engineering

expertise

• Strong liquidity
• Financial expertise and

access to diversified sources of capital

• NYSE listing

32