Teekay Corporation Reports Second Quarter Results

Teekay Corporation (Teekay or the Company) (NYSE:TK) today reported net income of $78.4 million, or $1.04 per share, for the quarter ended June 30, 2007, compared to net income of $20.4 million, or $0.27 per share, for the quarter ended June 30, 2006. The results for the quarters ended June 30, 2007 and 2006 included a number of specific items that had the net effect of increasing net income by $10.8 million, or $0.14 per share, and decreasing net income by $29.4 million, or $0.39 per share, respectively, as detailed in Appendix A to this release. Net voyage revenues(2) for the second quarter of 2007 increased to $442.6 million from $311.2 million for the same period in 2006, and income from vessel operations increased to $117.6 million from $68.9 million. Net income for the six months ended June 30, 2007 was $154.8 million, or $2.07 per share, compared to $122.1 million, or $1.62 per share, for the same period last year. The results for the six months ended June 30, 2007 and 2006 included a number of specific items that had the net effect of increasing net income by $3.4 million, or $0.05 per share, and decreasing net income by $46.8 million, or $0.62 per share, respectively, as detailed in Appendix A to this release. Net voyage revenues(2) for the six months ended June 30, 2007 increased to $902.0 million from $703.6 million for the same period in 2006, and income from vessel operations increased to $243.1 million from $211.6 million. (1) Please read Appendix A to this release for information about specific items affecting net income. (2) Net voyage revenues represents revenues less voyage expenses. Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company’s web site at www.teekay.com for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure. Angola LNG Project Teekay announced today that a consortium, in which it has a 33% interest, has signed a letter of intent to charter four newbuilding 160,400 cubic meter LNG carriers for a period of 20 years to the Angola LNG Project, which is being developed by subsidiaries of Chevron, Sonangol, BP, and Total. Final award of the charter contract is still subject to certain conditions, which are expected to be met by September 30, 2007. The vessels will be chartered at fixed rates, with inflation adjustments, commencing in 2011. Mitsui & Co., Ltd. and NYK Bulkship (Europe) Ltd. have 34% and 33% interests in the consortium, respectively. In accordance with existing agreements, Teekay is required to offer to Teekay LNG its 33% interest in these vessels and related charter contracts no later than 180 days before the scheduled delivery dates of the vessels. Acquisition of OMI Corporation On April 17, 2007, the Company and A/S Dampskibsselskabet TORM (Torm) announced they had entered into a definitive agreement to jointly acquire OMI Corporation (OMI), a major international owner and operator of Suezmax and product tankers. Under the agreement, Teekay and Torm offered $29.25 per share for the outstanding common shares of OMI, representing a total cost of approximately $2.2 billion, including assumed net debt and transaction costs. On June 8, 2007, Teekay and Torm successfully completed the joint acquisition, and most of OMI’s assets are expected to be divided equally between the two companies with effect from the beginning of August 2007. Teekay will acquire seven Suezmax tankers, three Medium Range product tankers and three Handysize product tankers. Teekay will also assume OMI's in-charters of a further six Suezmax tankers and OMI’s third party asset management business, the Gemini pool. Teekay and Torm will continue to hold two Medium Range product tankers jointly in OMI, as well as two Handysize product tanker newbuildings scheduled to deliver in 2009. The parties intend to divide these remaining assets equally in due course. Teekay has accounted for OMI's results using the equity method of accounting for the period of June 1, 2007 to June 30, 2007, and will consolidate the results of OMI's assets from the effective date the assets are divided. Operating Results During the second quarter of 2007, fixed-rate businesses generated approximately 69 percent of the Company’s cash flow from vessel operations compared to 66 percent in the second quarter of 2006. The following table highlights certain financial information for Teekay’s four main segments; the offshore segment, the fixed-rate tanker segment, the liquefied gas segment, and the spot tanker segment (please read the "Teekay Fleet” section of this release below and Appendix B for further details): Three Months Ended June 30, 2007 (unaudited)   (in thousands of U.S. dollars)   Offshore Segment   Fixed-Rate Tanker Segment   Liquefied Gas Segment   Spot Tanker Segment   Total Net revenues 210,169 45,195 38,488 148,721 442,573   Vessel operating expenses 74,427 11,822 7,881 14,721 108,851 Time-charter hire expense 39,549 3,981 - 57,717 101,247 Depreciation & amortization 35,627 8,260 11,571 12,637 68,095   Cash flow from vessel operations(a)   64,398   24,870   25,118   50,777   165,163 Three Months Ended June 30, 2006 (unaudited)   (in thousands of U.S. dollars)   Offshore Segment   Fixed-Rate Tanker Segment   Liquefied Gas Segment   Spot Tanker Segment   Total Net revenues 114,629 43,344 23,376 129,821 311,170   Vessel operating expenses 22,043 10,411 5,386 13,863 51,703 Time-charter hire expense 40,297 4,165 - 50,241 94,703 Depreciation & amortization 20,856 8,162 8,031 13,108 50,157   Cash flow from vessel operations(a)   40,973   24,489   14,333   40,934   120,729 (a) Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense and vessel write-downs/(gain) loss on sale of vessels. Cash flow from vessel operations is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company’s web site at www.teekay.com for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure. Offshore Segment The offshore segment is comprised of the Company’s fleet of shuttle tankers, floating storage and off-take (FSO) units, and floating production storage and offtake (FPSO) units. Cash flow from vessel operations from the Company’s offshore segment increased to $64.4 million in the second quarter of 2007, compared to $41.0 million in the second quarter of 2006, primarily due to the acquisition of Teekay Petrojarl ASA in the fourth quarter of 2006 and the consolidation of five 50 percent-owned shuttle tankers effective December 1, 2006. In July 2007, Teekay exercised options for two additional Aframax shuttle tanker newbuildings, which are scheduled to deliver in the second and third quarters of 2011, respectively, for a total delivered cost of approximately $245 million. These two newbuildings are in addition to the two Aframax shuttle tanker newbuildings ordered in January 2007, which are scheduled to deliver during the third quarter of 2010. It is anticipated that these vessels will be used to service new long-term, fixed-rate contracts, the Company’s existing contracts-of-affreightment in the North Sea, or a combination thereof. In July 2007, Teekay sold its interests in two shuttle tankers to its 59.8 percent owned subsidiary Teekay Offshore Partners L.P. (Teekay Offshore), which commenced service under fixed-rate charters upon their delivery. Teekay has also offered to sell an existing FSO to Teekay Offshore in the third quarter of 2007. In May 2007, Teekay sold a 1987-built shuttle tanker and certain equipment, realizing a gain of $11.6 million. Fixed-Rate Tanker Segment The fixed-rate tanker segment includes Teekay LNG‘s Suezmax fleet and Teekay’s directly operated fixed-rate conventional tankers. Cash flow from vessel operations from the Company’s fixed-rate tanker segment increased slightly to $24.9 million in the second quarter of 2007, compared to $24.5 million in the second quarter of 2006. Liquefied Gas Segment The liquefied gas segment includes Teekay LNG’s fleet of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) carriers. The Company’s cash flow from vessel operations from its existing LNG and LPG carriers during the second quarter of 2007 was $25.1 million compared to $14.3 million in the second quarter of 2006. This increase is primarily due to the delivery of the three RasGas II LNG carriers which commenced 20-year fixed-rate charters in November 2006, January 2007, and February 2007, respectively. The Company has ownership interests ranging from 40 percent to 70 percent in six additional LNG newbuildings scheduled to deliver at various dates between the second quarter of 2008 and early 2009, all of which will commence service upon delivery under 20 or 25-year fixed-rate contracts with major energy companies. Teekay has agreed to sell the following vessels to its 63.7 percent owned subsidiary, Teekay LNG: RasGas 3 - a 40 percent interest in four LNG newbuilding carriers scheduled to deliver during the second quarter of 2008. Tangguh - a 70 percent interest in two LNG newbuilding carriers scheduled to deliver during late 2008 and early 2009. Teekay LNG has also agreed to acquire three LPG carriers currently under construction from IM Skaugen ASA (Skaugen) upon their delivery from the shipyard between early 2008 and mid-2009. Upon delivery, these vessels will commence 15-year fixed-rate charters to Skaugen. Spot Tanker Segment The Company’s spot tanker segment includes its conventional tankers, which are operating on voyage and period out-charters with an initial term of less than three years. Cash flow from vessel operations from the Company’s spot tanker segment increased to $50.8 million for the second quarter of 2007, from $40.9 million for the second quarter of 2006, primarily due to an increase in spot tanker charter rates and an increase in the size of the Company’s spot tanker fleet, partially offset by an increase in time-charter hire expense resulting from the sale lease-back of two of the Company’s Aframax vessels and higher average in-charter rates. On a net basis, fleet changes increased the total number of revenue days in the Company’s spot tanker segment to 5,207 for the second quarter of 2007, compared to 4,969 for the second quarter of 2006. Revenue days represent the total number of vessel calendar days less off-hire associated with major repairs, drydockings, or mandated surveys. During the second and third quarters of 2007, the Company sold and leased-back a total of four Aframax tankers, resulting in a total gain of $59.6 million, which will be amortized over the respective lease-back periods of five and four years. During the second quarter of 2007, crude tanker freight rates experienced a seasonal decline from the previous quarter primarily due to refinery maintenance in key consuming regions (led by Asia), North Sea summer oil field maintenance, and production outages in Nigeria. However, crude oil import volumes into the US and China rose over the previous quarter and continued to lend support to long-haul tanker demand. Rates for medium-sized product tankers in the Atlantic basin strengthened, mainly as a result of an increase in US product imports. The trend of tanker sales for offshore and other conversion purposes continued, moderating overall tanker supply growth. As a result, on a net basis, the world tanker fleet grew by 1.4 percent during the second quarter of 2007. As of July 13, 2007, the International Energy Agency (IEA) forecasted global oil demand growth of 1.5 million barrels per day (mb/d) (or 1.8 percent) for 2007. The majority of the year-on-year growth is expected to occur in the second half of the year which should lead to an increase in demand for long-haul OPEC oil production in the second half of 2007. For 2008, the IEA’s estimate for global oil demand growth is 2.2 mb/d (or 2.5 percent), which would be the highest growth rate since 2004. The following table highlights the operating performance of the Company’s spot tanker segment measured in net revenues per revenue day, or time-charter equivalent (TCE), and includes the effect of forward freight agreements (FFAs) which are entered into as hedges against a portion of the Company’s exposure to spot market rates: Three Months Ended Six Months Ended     June 30, 2007   March 31, 2007   June 30, 2006   June 30, 2007   June 30, 2006 Spot Tanker Segment Suezmax Tanker Fleet Revenue days 337 424 420 761 780 TCE per revenue day (a) $ 30,134 $ 39,403 $ 26,029 $ 35,396 $ 39,006   Aframax Tanker Fleet Revenue days 2,820 2,678 2,926 5,498 5,852 TCE per revenue day $ 31,992 $ 36,904 $ 29,191 $ 34,436 $ 36,754   Large/Medium-Size Product Tanker Fleet Revenue days 1,149 1,120 715 2,269 1,663 TCE per revenue day $ 30,010 $ 25,117 $ 26,173 $ 27,438 $ 30,253   Small Product Tanker Fleet Revenue days 901 896 908 1,797 1,804 TCE per revenue day $ 15,392 $ 15,780 $ 16,259 $ 15,585 $ 16,711 (a) TCE results for the Suezmax tanker fleet include certain FFAs and fixed-rate contracts of affreightment that were entered into as hedges against several of the Company’s vessels. Excluding these amounts, TCEs on a revenue-day basis for the quarters ended June 30, 2007, March 31, 2007, and June 30, 2006 would have been $49,876, $45,765 and $33,864 per day, respectively. Teekay Fleet As at July 31, 2007, Teekay’s fleet consisted of 182 vessels, including chartered-in vessels, newbuildings on order, vessels being converted to offshore units and the OMI vessels acquired by Teekay, but excluding vessels managed for third parties. The following table summarizes the Teekay fleet as at July 31, 2007: Number of Vessels (1)     Owned Vessels   Chartered-in Vessels   Newbuildings /Conversions   Total Offshore Segment Shuttle Tankers (2) 27 13 4 44 Floating Storage & Offtake ("FSO") Units (3) 5 - - 5 Floating Production Storage & Offtake ("FPSO") Units (4)   4   -   1   5 Total Offshore Segment   36   13   5   54   Fixed-Rate Tanker Segment Conventional Tankers (5)   15   2   2   19 Total Fixed-Rate Tanker Segment   15   2   2   19   Liquefied Gas Segment LNG Carriers (6) 7 - 6 13 LPG Carriers   1   -   3   4 Total Liquefied Gas Segment   8   -   9   17   Spot Tanker Segment Suezmaxes 7 10 10 27 Aframaxes (7) 20 14 - 34 Large/Medium Product Tankers 14 6 1 21 Small Product Tankers   -   10   -   10 Total Spot Tanker Segment   41   40   11   92 Total   100   55   27   182   (1) Excludes vessels managed on behalf of third parties.   (2) Includes six shuttle tankers in which the Company's ownership interest is 50%.   (3) Includes one unit in which the Company's ownership interest is 89%. (4) Includes four FPSOs owned by Teekay Petrojarl, and one vessel being converted to an FPSO jointly owned by Teekay and Teekay Petrojarl.   (5) Includes eight Suezmax tankers owned by Teekay LNG.   (6) The seven existing LNG vessels are owned by Teekay LNG. Teekay LNG has agreed to acquire Teekay's 70% interest in two of the LNG newbuildings and Teekay's 40% interest in four LNG newbuildings upon delivery of the vessels. Excludes Angola LNG Project vessels.   (7) Includes nine Aframax tankers owned by Teekay Offshore and chartered to Teekay Capital Expenditures and Liquidity As of June 30, 2007, the Company’s remaining capital commitments relating to its portion of newbuildings (including the two recently announced shuttle tanker newbuildings) and conversions, were as follows:     (in millions)       2007       2008       2009       2010   2011     Total Offshore Segment $ 79 - $ 23 $ 231 $ 163 $ 496 Fixed-Rate Tanker Segment 8 59 - - - 67 Liquefied Gas Segment 117 191 54 - - 362 Spot Tanker Segment     35     366     132     -     -   533 Total   $ 239   $ 616   $ 209   $ 231   $ 163 $ 1,458 Excluding the two Aframax shuttle tankers ordered in July 2007, pre-arranged debt facilities are in place for all of the Company’s remaining capital commitments. Additionally, as of June 30, 2007, the Company had total liquidity of $1.9 billion (excluding debt related to capital commitments), comprised of $292.3 million in cash and cash equivalents and $1.6 billion in undrawn credit facilities. Teekay Tankers As previously announced, the Company’s Board of Directors has approved a plan to create a new publicly-traded entity, Teekay Tankers, that will focus on the conventional tanker business. The Company expects to file publicly with the U.S. Securities and Exchange Commission a registration statement for the initial public offering of the common shares of Teekay Tankers during the second half of 2007. About Teekay Teekay Corporation transports more than 10 percent of the world’s seaborne oil, has expanded into the liquefied natural gas shipping sector through its publicly-listed subsidiary, Teekay LNG Partners L.P. (NYSE: TGP), and is further growing its operations in the offshore production, storage and transportation sector through its publicly-listed subsidiary, Teekay Offshore Partners L.P. (NYSE: TOO). With a fleet of over 180 vessels, offices in 17 countries and 6,300 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world’s leading oil and gas companies, helping them seamlessly link their upstream energy production to their downstream processing operations. Teekay’s reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company. Teekay’s common stock is listed on the New York Stock Exchange where it trades under the symbol "TK”. Earnings Conference Call The Company plans to host a conference call on Thursday, August 2, 2007 at 11:00 a.m. (ET) to discuss the results for the quarter. All shareholders and interested parties are invited to listen to the live conference call and view the Company’s earnings presentation through the Company’s web site at www.teekay.com. The Company plans to make available a recording of the conference call until midnight Thursday, August 9, 2007, by dialing (866) 245-6755 or (416) 915-1035, access code 185994, or via the Company’s web site until September 4, 2007. TEEKAY CORPORATION SUMMARY CONSOLIDATED STATEMENTS OF INCOME (in thousands of U.S. dollars, except share and per share data)   Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30,   2007     2007     2006     2007     2006       (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   REVENUES     577,882       583,016       422,587       1,160,898       948,583     OPERATING EXPENSES Voyage expenses 135,309 123,560 111,417 258,869 245,028 Vessel operating expenses 108,851 97,441 51,703 206,292 104,927 Time-charter hire expense 101,247 98,501 94,703 199,748 199,127 Depreciation and amortization 68,095 79,263 50,157 147,358 100,641 General and administrative 58,358 58,797 41,456 117,155 81,716 Writedown / (gain) on sale of vessels and equipment   (11,613 ) - 1,650 (11,613 ) 1,043 Restructuring charge     -       -       2,579       -       4,466         460,247       457,562       353,665       917,809       736,948   Income from vessel operations     117,635       125,454       68,922       243,089       211,635   OTHER ITEMS Interest expense (64,158 ) (60,383 ) (36,729 ) (124,541 ) (73,487 ) Interest income 23,390 16,168 13,585 39,558 25,686 Income tax (expense) recovery (287 ) 4,082 (7,040 ) 3,795 (10,824 ) Equity (loss) income from joint ventures (2,092 ) (1,595 ) (851 ) (3,687 ) 294 Foreign exchange gain (loss) 1,214 (5,888 ) (21,804 ) (4,674 ) (33,268 ) Minority interest (expense) income (6,341 ) (5,640 ) 3,871 (11,981 ) 2,607 Other – net     9,050       4,177       439       13,227       (546 )       (39,224 )     (49,079 )     (48,529 )     (88,303 )     (89,538 ) Net income     78,411       76,375       20,393       154,786       122,097   Earnings per common share   -- Basic $ 1.06 $ 1.04 $ 0.27 $ 2.11 $ 1.67 -- Diluted   $ $1.04     $ $1.02     $ $0.27     $ $2.07     $ $1.62   Weighted- average number of common shares outstanding   -- Basic 73,843,784 73,129,585 74,253,710 73,488,668 73,209,590 -- Diluted     75,310,567       74,545,165       75,784,914       74,929,991       75,509,284   TEEKAY CORPORATION SUMMARY CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars) As atJune 30, As atDecember 31, 2007 2006 (unaudited) (unaudited) ASSETS Cash and cash equivalents 292,332 343,914 Other current assets 348,157 318,229 Restricted cash – current 119,055 64,243 Restricted cash – long-term 650,738 615,749 Vessels held for sale - 20,754 Vessels and equipment 5,201,179 4,925,409 Advances on newbuilding contracts 429,171 382,659 Other assets 904,672 515,242 Investment in and advance to OMI Corporation 899,894 - Intangible assets 221,296 280,559 Goodwill   344,233   266,718 Total Assets   9,410,727   7,733,476 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued liabilities 277,368 311,088 Current portion of long-term debt 806,931 369,043 Long-term debt 4,313,339 3,350,640 Other long-term liabilities / In process revenue contracts 625,248 720,080 Minority interest 576,604 454,403 Stockholders’ equity   2,811,237   2,528,222 Total Liabilities and Stockholders’ Equity   9,410,727   7,733,476 TEEKAY CORPORATION SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars) Six Months Ended June 30, 2007   2006   (unaudited) (unaudited) Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES         Net operating cash flow   152,702     231,696     FINANCING ACTIVITIES   Net proceeds from long-term debt 1,783,863 569,033 Scheduled repayments of long-term debt (31,816 ) (15,134 ) Prepayments of long-term debt (710,506 ) (259,375 ) Increase in restricted cash (79,230 ) (430,753 ) Repurchase of common stock (3,035 ) (176,903 ) Net proceeds from the public offering of Teekay LNG 84,186 - Other   10,879     (20,122 ) Net financing cash flow   1,054,341     (333,254 )   INVESTING ACTIVITIES Expenditures for vessels and equipment (356,104 ) (156,801 ) Proceeds from sale of vessels and equipment 118,975 312,972 Purchase of marketable securities (28,636 ) - Proceeds from sale of marketable securities 49,059 - Purchase of OMI Corporation (896,841 ) - Loan to joint ventures (144,270 ) - Other   (808 )   (4,369 ) Net investing cash flow   (1,258,625 )   151,802     (Decrease) increase in cash and cash equivalents (51,582 ) 50,244 Cash and cash equivalents, beginning of the period   343,914     236,984   Cash and cash equivalents, end of the period   292,332     287,228   TEEKAY CORPORATION APPENDIX A – SPECIFIC ITEMS AFFECTING NET INCOME (in thousands of U.S. dollars, except per share data)   Set forth below are some of the significant items of income and expense that affected the Company’s net income for the three and six months ended June 30, 2007 and 2006, all of which items are typically excluded by securities analysts in their published estimates of the Company’s financial results:   Three Months Ended Six Months Ended June 30, 2007 June 30, 2007 (unaudited) (unaudited) $ $ Per Share $ $ Per Share       Gain on sale of vessels 11,613 0.16 11,613 0.16 Gain on sale of marketable securities 4,836 0.06 4,836 0.06 Foreign currency exchange gains (losses) (1) 2,466 0.03 (1,921) (0.02) Deferred income tax expense on unrealized foreign exchange gains (2) (3,923) (0.05) (6,905) (0.09) Net effect from non-cash changes in purchase price allocation for acquisition of Teekay Petrojarl ASA (3) (4,240)   (0.06) (4,240)   (0.06) Total 10,752   0.14 3,383   0.05 Three Months Ended Six Months Ended June 30, 2006 June 30, 2006 (unaudited) (unaudited) $ $ Per Share $ $ Per Share       Gain on sale of vessels 500 0.01 1,107 0.01 Foreign currency exchange losses (1) (15,252) (0.20) (24,194) (0.32) Deferred income tax expense on unrealized foreign exchange gains (2) (6,966) (0.09) (10,583) (0.14) Write down of vessels and equipment (2,150) (0.03) (2,150) (0.03) Loss on bond repurchases (8.875% Notes due 2011) - - (375) - Restructuring charge (2,579) (0.04) (4,466) (0.06) Loss on expiry of options to construct LNG carriers (3,000)   (0.04) (6,102)   (0.08) Total (29,447)   (0.39) (46,763)   (0.62) (1) Foreign currency exchange gains and losses (net of minority owners’ share) primarily relate to the Company’s debt denominated in Euros and deferred tax liability denominated in Norwegian Kroner. Nearly all of the Company’s foreign currency exchange gains and losses are unrealized. (2) Portion of deferred income tax related to unrealized foreign exchange gains (net of minority owners’ share). (3) Primarily from changes in amortization of vessels, intangible assets and in-process revenue contracts relating to the period from October 1, 2006, to June 30, 2007, as a result of adjustments to the purchase price allocation for acquisition of Teekay Petrojarl ASA. TEEKAY CORPORATION APPENDIX B - SUPPLEMENTAL INFORMATION (in thousands of U.S. dollars)   Three Months Ended June 30, 2007 (unaudited)       Offshore Segment   Fixed-Rate Tanker Segment   Liquefied Gas Segment   Spot Tanker Segment   Total   Net revenues (1) 210,169 45,195 38,488 148,721 442,573 Vessel operating expenses 74,427 11,822 7,881 14,721 108,851 Time-charter hire expense 39,549 3,981 - 57,717 101,247 Depreciation and amortization 35,627 8,260 11,571 12,637 68,095 General and administrative 24,627 4,522 5,489 23,720 58,358 Gain on sale of vessels and equipment   (11,613 )   -   -   -   (11,613 ) Income from vessel operations   47,552     16,610   13,547   39,926   117,635   Three Months Ended March 31, 2007 (unaudited)       Offshore Segment   Fixed-Rate Tanker Segment   Liquefied Gas Segment   Spot Tanker Segment   Total   Net revenues (1) 220,149 44,029 37,472 157,806 459,456 Vessel operating expenses 62,714 11,690 6,458 16,579 97,441 Time-charter hire expense 41,317 3,837 - 53,347 98,501 Depreciation and amortization 45,722 8,468 10,794 14,279 79,263 General and administrative   25,506   4,476   5,199   23,616   58,797 Income from vessel operations   44,890   15,558   15,021   49,985   125,454 Three Months Ended June 30, 2006 (unaudited)       Offshore Segment   Fixed-Rate Tanker Segment   Liquefied Gas Segment   Spot Tanker Segment   Total   Net revenues (1) 114,629 43,344 23,376 129,821 311,170 Vessel operating expenses 22,043 10,411 5,386 13,863 51,703 Time-charter hire expense 40,297 4,165 - 50,241 94,703 Depreciation and amortization 20,856 8,162 8,031 13,108 50,157 General and administrative 11,316 4,279 3,657 22,204 41,456 Writedown / (gain) on sale of vessels and equipment 1,950 - - (300) 1,650 Restructuring charge   -   -   -   2,579   2,579 Income from vessel operations   18,167   16,327   6,302   28,126   68,922 TEEKAY CORPORATION APPENDIX B - SUPPLEMENTAL INFORMATION (in thousands of U.S. dollars)   Six Months Ended June 30, 2007 (unaudited)       Offshore Segment   Fixed-Rate Tanker Segment   Liquefied Gas Segment   Spot Tanker Segment   Total   Net revenues (1) 430,318 89,224 75,960 306,527 902,029 Vessel operating expenses 137,141 23,512 14,339 31,300 206,292 Time-charter hire expense 80,866 7,818 - 111,064 199,748 Depreciation and amortization 81,349 16,728 22,365 26,916 147,358 General and administrative 50,133 8,998 10,688 47,336 117,155 Gain on sale of vessels and equipment   (11,613 )   -   -   -   (11,613 ) Income from vessel operations   92,442     32,168   28,568   89,911   243,089   Six Months Ended June 30, 2006 (unaudited)       Offshore Segment   Fixed-Rate Tanker Segment   Liquefied Gas Segment   Spot Tanker Segment   Total   Net revenues (1) 241,899 87,357 48,330 325,969 703,555 Vessel operating expenses 45,442 21,355 9,619 28,511 104,927 Time-charter hire expense 86,066 8,317 - 104,744 199,127 Depreciation and amortization 42,040 16,311 15,987 26,303 100,641 General and administrative 21,747 8,133 7,292 44,544 81,716 Writedown / (gain) on sale of vessels and equipment 1,845 - - (802 ) 1,043 Restructuring charge   -   -   -   4,466     4,466 Income from vessel operations   44,759   33,241   15,432   118,203     211,635 (1) Net voyage revenues represents voyage revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, canal tolls and brokerage commissions. Net voyage revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company’s Web site at www.teekay.com for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure. FORWARD-LOOKING STATEMENTS This release 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, including statements regarding: the proposed initial public offering of Teekay Tankers, and the timing of filing a registration statement relating to the offering; the Company’s expectations regarding the timing of the division of OMI’s assets; the Company’s future growth prospects; tanker market fundamentals, including the balance of supply and demand in the tanker market, and spot tanker charter rates; expected demand in the offshore oil production sector and the demand for vessels; the Company’s future capital expenditure commitments and the financing requirements for such commitments; the timing of newbuilding deliveries; the commencement of charter contracts; the Company being awarded LNG vessels and associated long-term contracts to service the Angola LNG Project; and the level of OPEC oil production in the second half of 2007. 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: the potential inability of Teekay to integrate OMI’s operations successfully; conditions in the United States capital markets, changes affecting the conventional tanker market, and the need for the SEC to declare effective a registration statement relating to the offering of Teekay Tankers; changes in production of or demand for oil, petroleum products and LNG, either generally or in particular regions; greater or less than anticipated levels of tanker newbuilding orders or greater or less than anticipated rates of tanker 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 and FPSOs; the potential for early termination of long-term contracts and inability of the Company to renew or replace long-term contracts; the potential that the conditions for the Angola LNG Project are not met; changes affecting the offshore tanker market; shipyard production delays; the Company’s future capital expenditure requirements; the Company’s, Teekay LNG’s and Teekay Offshore’s potential inability to raise financing to purchase additional vessels; 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, 2006. 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.