Event Brief of Q3 2004 TEEKAY SHIPPING MARSHALL ISLND Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. Scott Gayton, Teekay Shipping Corp., IR . Bjorn Moller, Teekay Shipping Corp., Director, President & CEO . Peter Evensen, Teekay Shipping Corp., EVP & CFO

OVERVIEW

TK's 3Q04 net income was $245m or $2.77 per share, a record result. For the first nine months, the Co. had net income of $533m or $6.12 per share. Q&A Focus: TCE rates, scrapping, business segments, vessel sales, and leverage ratio.

FINANCIAL DATA

A. Key Data From Call 1. 3Q04 net income = $245m. 2. 3Q04 G&A expense = $29m.

PRESENTATION SUMMARY

S1. 3Q04 Performance (B.M.) 1. 3Q04 Highlights: 1. TK's net income was $245m or $2.77 per share, a record result. 2. For the first nine months, the Co. had net income of $533m or $6.12 per share, which was also a record. 3. The Co.'s results for 3Q04 included $144m in gains on vessels, sales, and sales of shares in Torm.

4. On Sept. 30, the Co. announced a dividend increase for the

second consecutive year. 5. The Co. progressed the schedule with the integration of the Tapias acquisition and TK's third LNG new building delivered during the quarter. 6. Due to the cumulative effect of positive tanker demand fundamentals, TK has seen rates surge in Oct. with Aframax rates now ranging from $60,000-100,000 a day and in some cases higher. 2. Tanker Market Fundamentals: 1. Tanker Demand: 1. In 3Q04, demand grew by 3.5% from 1% a year ago. 2. OECD demand rose by 2%, while non-OECD rose by 6%. 3. In IEA's OCD demand rose by 2% while non-OECD rose by 6%. 4. In IEA's Oct. report, it raised its forecast for 2004 predicting 3.4% growth overall, the highest rate of growth

since 1978. 5. The IEA reduced its 2005 growth forecast slightly to 1.8%. 6. With global inventories stuck below their five-year

averages, oil supply is keeping up with the underlying demand.

7. With oil demand expected to continue to grow, the Co. can

look forward to further increases in tanker demand. 8. IEA 2004 Forecast: 1. At the time of its initial forecast in July 2003, the IEA projected that oil demand would rise by only 1.3% this

year, when the IMF was predicting over 4% GDP growth. 2. While the IMF forecast of GDP growth was subsequently raised to 5%. 1. IT is clear from the upward revisions made by the IEA to its forecast in ten out of the next 15 months that its initial forecast that oil demand growth would lag GDP growth by 2.8% was overly conservative. 2. This gap has gradually been halved to only 1.4% today. 9. Over the past 15 months Middle East supply has been growing three times faster than other supply sources and thereby lengthening the avg. voyage of a tanker. 1. A 1% increase in global oil supply translates into global tanker demand growth depending from where the oil originates. 2. The Middle East oil is a huge driver of tanker demand with an increase in tanker demand of almost 3% for every time the Middle East produces an incremental 1% or 800,000 barrels of world oil supply. 10. Overall, the tanker demand side looks very solid going forward. 2. Tanker Supply: 1. 3Q04 saw an increase in the world tanker fleet of 1.5%. 2. New deliveries remained in line with prior quarters at 6m tons, while scrapping dropped to 1.5m tons due to higher charter rates. 3. The forward order book was unchanged overall from the last quarter. 4. The amount of tonnage that is to be delivered through 2005 dropped to 38m tons and 19m tons is expected to be phased out under the IMO regulations through the end of next year, but as noted very little scrapping is likely to occur during

the rest of 2004 due to the strong market. 5. Therefore, the Co. expects this entire 19m tons to be scrapped in 2005. 3. Tanker Supply and Demand (Next Two Years): 1. The Co. has used the IEA's very conservative demand assumption for 2005 of 1.8% oil demand growth and has used the traditional factor of 1-1.75 when translating this into tanker demand growth. 2. For 2006, the Co. is showing a 3% weakening in the market balance. 3. The figures for both years are based on the unrealistic assumption that there would be zero voluntary scrapping over a period of two years, and the reality is that since 2000, during a period of very high charter rates on avg., annual scraping has averaged 18m tons annually, practically all of it voluntary. 4. The Co.'s projection calculates the total amount of new tonnage that needs to be delivered from the shipyards to maintain the status quo in market balance during that four-year period.

1. Assuming a 2% annual growth in oil demand, it would create a need for an additional 55m tons of tankers by the end of 2010 to meet rising demand. 2. During the same four-year period, an estimated 7-8m tons of tankers would be mandated out of the fleet by IMO regulations and would need to be replaced. 1. This means that the Co. would need a total of 133m tons of new tanker deliveries over this four-year period. 3. With 2007 yards base pretty much sold out, the Co. comfortably projects that 2007 deliveries will not exceed 25m tons. 1. This leaves a requirement of 36m tons of new tanker deliveries each year during 2008, 2009 and 2010.

4. In the modern era of shipbuilding, the highest rate of deliveries in a single year is in fact the 32m tons that the Co. is expecting in 2005. 5. Even if shipyards were to continue to allocate the same share of the capacity as in the past to building oil tankers, they would thus come up short. 6. To gauge the situation beyond 2007 where the order book is …