TEEKAY OFFSHORE PARTNERS INVESTOR DAY September 30, 2014 Photo - - PowerPoint PPT Presentation

TEEKAY OFFSHORE PARTNERS INVESTOR DAY

September 30, 2014

Photo Credit: John Mikal Torgersen

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KENNETH HVID

Chief Strategy Officer

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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 fundamentals in and growth potential of the

• ffshore industry; future growth opportunities for the Partnership and its various segments, including the Partnership’s ability to participate

in new offshore projects or to grow organically; the accretive nature of any acquisitions and any future increases in the Partnership’s distributable cash flows; the amount of the Partnership’s forward fee-rate revenues; estimated future total assets of the Partnership and its segments; estimated capital expenditures for existing growth projects; illustrative annual distribution growth of the Partnership; the cost and timing of delivery of new and converted vessels and commencement of their time-charter contracts; the timing of completion of operational testing on the HiLoad DP vessel; the status, timing, cost and expected distributable cash flow to be generated from the potential acquisition by the Partnership of the Knarr FPSO; the timing and certainty of entering into long-term financing and charter contracts for the FAU newbuildings prior to their deliveries; the timing and certainty of the Partnership’s joint venture with Odebrecht completing negotiations for the Libra FPSO project with Petrobras, and the expected related cost and charter period; expected additional project bidding by the Partnership; the Partnership’s FPSO deal execution capacity; and the potential for Teekay Corporation or third parties to offer additional vessels or projects to the Partnership and the Partnership agreeing to acquire such vessels or 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: vessel operations and oil production volumes; significant changes in oil prices; variations in expected levels of field maintenance; increased operating expenses; levels of oil production in the North Sea and Brazil

• ffshore fields; potential early termination of contracts; shipyard delivery or vessel conversion delays and cost overruns; failure by the

Partnership to secure financing or charter contracts for FAU newbuildings; changes in exploration, production and storage of offshore oil and gas, either generally or in particular regions; delays in the commencement of time-charters; the inability to successfully complete the

• perational testing of the HiLoad DP unit; failure of Teekay Corporation to offer to the Partnership additional vessels or of the Partnership

to acquire the Knarr FPSO unit; failure to complete negotiations with Petrobras for the Libra FPSO project; potential delays in the commencement of operations of the Knarr FPSO unit; the Partnership’s ability to raise adequate financing to purchase additional assets; and other factors discussed in the Partnership’s 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 or undertaking 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.

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Teekay Offshore Partners

• Broadening our offshore service offering and growth potential
• Strong industry fundamentals will continue
• Two main business platforms:

○ Floating production ○ Offshore logistics

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Strong Industry Fundamentals Stable Operating Model

INVESTMENT HIGHLIGHTS

Leading Market Positions Strong, Visible Growth

$7.8 billion

• f forward

fee-based revenues Deepwater

• ffshore oil

production is set to double by 2025 Market leader in harsh weather FPSOs and shuttle tankers $3.2 billion

• f built-in

growth

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$

$3B Market Cap. 6%

Distribution CAGR Since IPO in 2006

2006

Fee-based

Contracts

Blue-Chip

Customers

54 Offshore Units

Teekay Offshore at a glance

• Avg. contract

duration of 5.3 years (excluding options)

TEEKAY OFFSHORE AT A GLANCE

15% per annum

Total Shareholder Return Since IPO

2014

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Core Regions: Brazil & North Sea

North Sea

• 19 shuttle tankers
• 6 FPSOs (2 TOO + 4 TK Corp)
• 2 FSOs

Brazil

• 13 shuttle tankers + 1 Hi-Load
• 3 FPSOs + 1 future FPSO
• 1 future accommodation unit

Falcon Spirit FSO Suksan Salamander FSO Dampier Spirit FSO Pattani Spirit FSO

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80% 7% 13% 56% 37% 3% 4% 30% 49% 6% 2% 9% 4%

Teekay Offshore’s Business Mix Continues to Evolve

• Enhancing service offering to the customer
• With roll-off of conventional tanker contracts, Teekay Offshore is becoming a

true “pure-play” in the build-out of offshore crude oil production

Total Assets 2007 by Segment

Total Assets $2.0B Total Assets $3.9B Total Assets $7.1B*

Conventional Tankers FSOs Shuttle Tankers FPSOs FAUs Towing Total Assets 2013 by Segment Total Assets 2013 PF* by Segment

* December 2013 pro forma to include known growth projects delivering through 2017.

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Stable Portfolio of Fee-Based Contracts With Strong Customer Base

Forward Fee-Based Revenues by Segment* Average Remaining Contract Length by Segment*

FPSO FSO Shuttle Tankers Conventional Tankers FAU

6 years 5 years 4 years 4 years 3 years

$7.8B

Total Forward Fee-Based Revenues

* Excludes extension options and includes the Knarr FPSO which has been offered to Teekay Offshore

56% 31% 9% 3% 1%

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Solidifying our Position in the Value Chain

FPSO (Shipshape) FSO Floating Accommodation HiLoad DP Ocean Towage FPSO (Cylindrical)

Offshore Production

Shuttle Tankers

Offshore Logistics

• 2. Responding to needs of our common customers
• 1. Strong fundamentals
• 3. Leveraging our competitive advantages

Teekay Offshore’s growth driven by:

• 4. Pursuit of higher returns

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Providing Services to Meet Customers’ Offshore Oil Production Needs

TERMINAL REFINERY OFFSHORE UNITS CONVENTIONAL FLOATING ACCOMMODATION HI-LOAD FSO

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OFFSHORE PLATFORM OFFSHORE PLATFORM

TOWAGE & INSTALLATION SHUTTLE FPSO

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Oil Production Moving Offshore

With deepwater taking an increasing share

• The world needs 50 mb/d
• f new oil by 2035 just to
• ffset existing field decline
• Easy-to-find oil is

disappearing; new supply will increasingly come from unconventional plays

• Deepwater offshore oil

production is set to double by 2025

• Teekay’s core customers

are at the forefront of these new developments

ExxonMobil Eni Statoil Noble ExxonMobil Eni Statoil Noble

2 4 6 8 10 12 Million boe/d

Source: IHS

ExxonMobil Eni Statoil

Shell

BP

Total Chevron Petrobras

Others

Deepwater Oil Production by Company

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Deepwater Accounts for 23% of New Production for the Top 26 IOCs

8% 20% 21% 23% 28%

Oil Sands Conventional Onshore Conventional Shallow Deepwater Unconventional

7% 18% 19% 31% 25%

2020 New Production Sources

Top 26 IOCs Top 26 IOCs + Petrobras

Total 16 mb/d Total 18 mb/d

Overall production volume growth of the top IOCs requires a balanced production portfolio, despite an increased focus on unconventional sources by many Independents

Source: IHS

Rising to 31% when Petrobras is Added

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Growth Across Multiple Offshore Segments

Known Growth Capex by Segment

FSO 2014 Dropdown FPSOs (Estimated) 2016 2015 2017 Towage Vessels Shuttle / Hi-Load FAUs

49% 14% 2% 7% 19% 9%

$3.2B

Known Growth Projects

FPSO

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Over 80% of Growth Capex Already Booked to Achieve Illustrative Growth Through 2017

Actively bidding on 2017 / 2018 Offshore projects and on-the-water acquisitions to drive future distribution growth

• 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 2015 2016 2017 2018 Annual Capital Investment ($millions)

TOO Growth CAPEX - Committed vs. Illustrative Target

Cumulative Capital Investments (Known) Cumulative CAPEX Required for Illustrative Distribution Growth TOO Known Annual Asset Deliveries

83% of Capex to achieve illustrative growth already committed

Illustrative Distribution Growth 7.5% 5% 5%

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Well Positioned to Capture Significant Share

• f Offshore Production Market Growth

$80 billion market opportunity in our segments

$56 billion

10 20 30 40 50 60 70 80 90 100 20 40 60 80 100 120 140 160 180 200 Offshore Unit Requirement Capex $ Billions Number of units FPSO FSO Shuttle FAU

Offshore Unit Demand 2015-2020

Source: Internal Estimates

$80B

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Core Regions: Brazil & North Sea

:

Current Core Markets Potential New Markets

Southeast Asia

Increase in development of smaller fields

West Africa

Increasing complexity of

• ffshore services

East Coast Canada

Expanding Shuttle Region

Gulf of Mexico

Growing demand for offshore services

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FLOATING PRODUCTION, STORAGE AND OFFLOADING (FPSO)

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Strong Demand for FPSO Projects

Brazil a key region for new FPSO demand

• The pace of FPSO projects is set to

increase during the next 5 years

• Brazil is at the forefront of new

FPSO demand

• Growing trend towards leased

instead of oil company owned units 40 34 15 15 20

Brazil Africa

• N. Europe

S.E. Asia Others

Historical & Forecast FPSO Contracting Planned FPSO Projects by Region

14 10 9 10 5 4 1 4 3 1 3

2 4 6 8 10 12 14 16

BW Offshore SBM MODEC Teekay / TOO Bumi Armada Bluewater

• No. Vessels

Leased FPSO Operators

Existing On Order 5 10 15 20 25

2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E

Number of Contracts Source: Clarksons / Energy Maritime Associates Forecast Historical

14-16 contract awards per year

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Current FPSO Fleet Contract Status

FPSO Unit Centrica 2021 2020 2015 2016 2017 2018 2019 2022 2023 2024 Petrojarl Banff CNR TK Hummingbird Spirit Options TK Petrojarl Varg Talisman Options TOO Voyageur Spirit E.ON Options TOO Cidade de Rio das Ostras Petrobras Options TOO Cidade de Itajai (50%) Petrobras TOO Piranema Spirit Petrobras Options TOO Libra (Conversion) (50%) Petrobras TOO Petrojarl Knarr (Newbuilding) BG TK Owner Petrojarl I TK Evaluating opportunities for redeployment, or sale Petrojarl Foinaven TK BP Extension

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Status of Dropdown FPSOs at Teekay Parent

Remaining FPSOs targeted for dropdown to TOO by end-2016

FPSO Current Status Dropdown Trigger Petrojarl Knarr

• Preparing for field

installation

• Offer has been received from

Teekay Parent Petrojarl Banff

• Producing on field
• Contract uplift commencing

Q1 2015 Hummingbird Spirit

• Options on current

contract run through March 2017

• Centrica to complete possible field

life extension analysis

• Enter into new long-term contract

based-on enhanced field life Foinaven

• Subsea issues causing

field to produce below

• max. capacity
• Stabilize production and obtain

charterer’s approval to transfer

• wnership to TOO

Petrojarl 1

• In lay-up
• Bidding on new long-term

contract (would require upgrade), or

• Sale to third party
• Signing of suitable contract

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Knarr FPSO Status Update

• Arrived in Norway and preparing

for offshore installation

• Tow to field scheduled for early-

October – will then commence mooring and riser installation (weather dependent)

• Commissioning planned for

October to late-November

• On schedule to commence 10-year

charter to BG in December

• Expected to generate annual DCF*
• f approximately $70 million

* Distributable Cash Flow is a non-GAAP measure used by certain investors to measure the financial performance of Teekay Offshore and other master limited partnerships

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Libra FPSO Status Update

• Expect to sign Letter of Intent

with Petrobras today

• Early Well Test unit
• 12-year contract commencing

early-2017

• 50% owned with our Brazilian

partner, Odebrecht Oil and Gas

• Total Capex: $485 million (50%

basis)

• FPSO conversion at Jurong

Shipyard in Singapore utilizing 1995-built TOO shuttle tanker, Navion Norvegia

Libra field considered to be the largest oil field in Brazil with 8-12B recoverable barrels

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Strengthening FPSO Operational Leadership

Key Focus Areas Action Continue to strengthen the organization Reorganized into stand-alone regional teams in Aberdeen, Trondheim and Brazil and established a permanent, Asia-based FPSO execution team Increase access to engineering and project resources Resource sharing agreements with Sevan and Kanfa Enhance risk mitigation Implemented a more rigorous risk management process for tendering and execution of projects Improve start-up and field commissioning processes Installed and commissioned Banff successfully and transferred the same installation and commissioning team to Knarr Achieve full production capacity on all units Restored full production capacity on Banff, Voyageur and Foinaven

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“Target-Rich” FPSO Market

Focused on core North Sea and Brazil markets

• Expect 55 new FPSO projects in next 5 years
• Human capacity to execute 2 - 3 new projects simultaneously
• Targeting FPSO projects of $500 million to $1 billion each
• High barriers to entry and few competitors in core markets

North Sea Brazil

• Expertise required in a highly-

regulated, harsh weather operational environment

• Leading provider of FPSOs in the

North Sea

• Sevan solution more cost effective as

no turret required

• Local content requirements and project

size and complexity

• First-mover advantage on Libra oil field
• Partnership with Odebrecht

Expect to bid on 3 projects in next 24 months Expect to bid on 4 projects in next 24 months

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INGVILD SAETHER

President, Teekay Shuttle and Offshore Services

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TOO’s Offshore Logistics Business

Hi-Load

Innovative technology

Shuttle Tankers

Core of the franchise

FSOs

High-return conversions Quality and know-how

Long-haul Towage

Sevan technology

FAUs

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Organization Structured for Growth

• Stavanger, Norway-based operations streamlined with an intense

focus on profitability:

○ Operating costs reduced by approximately 20% compared to three years

ago:

− Implemented Filipino manning program, reducing crew costs

○ G&A reduced by approximately 20%

− Eliminated middle management layer

○ Increased average revenues per ship day

• Restructured into a project-oriented organization to grow beyond

shuttle tankers

○ Applying core competencies in DP and offshore operations to FAUs, Long-

haul towage, Hi-Load units

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OFFSHORE LOGISTICS:

DP Offshore Loading

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Brazil Driving Demand for Offloading Solutions

Includes a requirement for both DP shuttle tankers and Hi-Load units

• Brazil to drive the bulk of

new shuttle tanker demand to 2020

• Replacement demand for

vessels 20+ years in the North Sea

• Requirement for new

vessels East Coast Canada

• ~$2-3 billion of shuttle

tanker opportunities anticipated in the next 5 years

34 25 5 2 3 2 3 2 1 5 10 15 20 25 30 35 40 TOO Knutsen Viken AET Lauritzen Tsakos

• No. Vessels

Shuttle Tankers

Existing On Order 5 10 15 20 25 30 35 North Sea CoA* North Sea TC East Coast Canada Brazil** TOTAL Number of Vessels

Source: Internal Estimates

Estimated New Shuttle Tanker Requirement to 2020

*Includes replacement demand **Includes Hi-Load units

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Hi-Load Technology Enhances Our Offshore Loading Offering

• Enables conventional tankers to load

from offshore fields

○ Eliminates need for regional

transshipment

• Operational testing for Hi-Load #1

expected to be completed during Q4-14

○ Completed multiple loadings from an

• ffshore unit to a conventional tanker
• FEED Study with BG for future Brazil
• perations to focus on direct crude

export using Suezmax and VLCC tankers

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Case Study: Scott Spirit Extended Well Tests

• Xcite - Bentley Field (UK – 2012)

○ Receiving up to 1000 m3/day ○ 100 days of operation

• Noble (Equitorial Guinea – 2013)

○ Remote area ○ Challenging logistics ○ 180 days of operation

• West Linapacan Field

(Philippines – 2015)

○ Loading, storing, transportation ○ Signed LOI – final contract pending ○ Expected start up March 2015 for ~200 days

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OFFSHORE LOGISTICS:

Floating Storage and Offtake (FSO)

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FSO Demand Growth Concentrated in Asia and North Sea

• Trend toward higher-valued

FSOs

○ Harsh-weather North Sea units

$300 to $500 million

○ Asia-based units $50 to

$100 million

• Pace of FSO demand expected

to increase in the next 5 years

2 4 6 8 10 12 14 16

S.E. Asia North Sea GoM MED Africa Brazil

Source: Energy Maritime Associates

Existing FSO markets for TOO 6 5 3 3 3 1 2 1 2 3 4 5 6 7 8

TOO Omni MODEC Trada Maritime MISC

• No. Vessels

Leased FSO Operators

Existing On Order / Future Conversion

Planned FSO Projects by Region

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2017 – 2020 Prospects

Floating Storage: Short and Long-term Execution Plan

Gina Krog FSO Conversion

Commence conversion of 1995- built Randgrid shuttle tanker Commence 3-15 year contract with Statoil

Premier Oil – Sea Lion Field

• Start up 2018/2019
• 25+ years field life
• Sevan 1.2M bbls
• Falkland Islands
• Combined package FSO, Shuttle

+ potentially Hi-Load

Xcite – Bentley Field

• Start up 2017/2018
• 30 + years field life
• Sevan 1M bbls
• UK sector
• Start up 2017
• 25+ years of field life
• Sevan 650K bbls
• UK sector

Maersk – Culzean Field

2015 2016/2017

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OFFSHORE LOGISTICS:

Floating Accommodation Units (FAU)

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Growing Need for Floating Accommodation

Strong demand for modern DP units to meet growth and replace older units

8 12 12 11 10 10 11 11 11 12 2 3 4 8 9 9 11 12 4 4 5 5 6 7 10 12 13 14 2 3 3 4 4 10 20 30 40 50 60

2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E

• No. Units

FAU Supply / Demand Balance

Mexico Brazil North Sea RoW Supply Adjusted Supply*

*Adjusted to account for scrapping (30% of units aged 30+ years) & excluding low-spec units on order Source: Platou

24% 4% 12% 60%

Age Profile of FAU Fleet

0-4 years 5-9 years 25-29 years 30+ years 11 3 1 1 4 2 3 2 2 2 4 6 8 10 12 14 16 Prosafe Floatel TOO Cotemar Gran Energia

• No. Vessels

Floating Accommodation

Existing On Order

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Key Benefits of Teekay Offshore FAUs

• Cylindrical Sevan design

provides high stability and uptime

○ Superior to semi-sub units

• Large storage capacity (water,

fuel, etc.)

• High variable deck load

○ +2,000 m2 deck space

• Important performance factors for

the customer:

○ Motion stability ○ Station keeping

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Short Term Response in Irregular Waves

Typical wave periods in normal operating conditions

Teekay Offshore FAU has Superior Motion Characteristics

More Stable Less Stable TOO FAU

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Attractive Returns from FAU Contracts in Key Regions

North Sea and UK Continental Shelf

• Typically shorter contract tenor (9 - 18

months)

• Seasonality opposite of shuttle tankers on

CoAs (higher field maintenance during summer)

• Higher returns (5 - 6x EBITDA)

Mexico

• Historically, long-

term contracts (3 – 10 years)

Brazil

• Medium-term contracts (3 – 5 years)
• Returns similar to other offshore production

assets (6 - 8x EBITDA)

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FAU: Execution Plan

2015 2014 2016 - 2017 Rig #1

Complete construction and commence 3-year contract with Petrobras Non-conditional options for an additional 5 units Will consider exercising options based-on market conditions

Rig #2

Complete construction and tender for new contract

Rig #3

Complete construction and tender for new contract

2016 - 2017

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OFFSHORE LOGISTICS:

Long-Haul Towage

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Expect Strong Demand for DP Towage

• TOO is constructing four, DPII, 300-ton bollard pull, SX-157 Ulstein X-Bow

Design long-distance towing and anchor handling vessels delivering in 2016

○ Capable of operating at full load for 45 days without refuelling ○ Equipped with anchor handling capabilities required for mooring and

installation

• Gap in the market for units capable of both high-end towage and installation /

decommissioning

10 20 30 40 50

2013 2014 2015 2016 2017 2018 2019 2020 Forecast Installation Mobilisation Towage

Source: ABN Amro

Towage vessels required to 2020

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TEEKAY OFFSHORE IS WELL- POSITIONED

• Leading market

positions

• Strong industry

fundamentals

• Stable operating model
• Strong, visible growth

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