Welcome to Teekay Corporation’s Second Quarter 2012 Earnings Results Conference Call. During the call, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded. Now, for opening remarks and introductions, I would like to turn the call over to Mr. Peter Evensen, Teekay’s President and Chief Executive Officer. Please go ahead, sir.

Before Mr. Evensen begins, I would like to direct all participants to our website at www.teekay.com, where you will find a copy of the second quarter 2012 earnings presentation. Mr. Evensen and Mr. Lok will review this presentation during today’s conference call. Please allow me to remind you that our discussion today contains forward-looking statements and actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the second quarter 2012 earnings release and earnings presentation available on our website. I will now turn the call over to Mr. Evensen to begin.

Thank you, Kent. Good morning, everyone, and thank you for joining us today for Teekay Corporation’s second quarter 2012 earnings call. I’m joined this morning by our CFO, Vince Lok, and for the Q&A session, we also have our Chief Strategy Officer, Kenneth Hvid. During our call today, I’ll be walking through the second quarter of 2012 earnings presentation, which can be found on our website. Beginning on Slide 3 of the presentation, I will briefly review some recent highlights for Teekay Corporation and our three publicly traded daughter companies. For the second quarter of 2012, Teekay Corporation generated total consolidated cash flow from vessel operations or CFVO of $208.4 million, an increase of approximately 26% from the second quarter of 2011. As a reminder, last quarter we changed the format of our operating results table to include our share of the CFVO generated from our equity accounted investments given their increasing significance, in addition to the CFVO generated by our fully consolidated businesses. Teekay Corporation reported a consolidated adjusted net loss of $17 million or $0.25 per share for the second quarter of 2012, just under half of the consolidated adjusted net loss of $0.51 per share that we reported in the second quarter of 2011. The reduction in our adjusted net loss for the quarter reflects the contributions from the strategic acquisitions and new building deliveries over the past year, in addition to the progress we’ve made on our profitability enhancement initiatives for our existing assets. In late June, we completed the previously announced sale of 13 of our 17 conventional Teekay Tankers, two Teekay Tankers for $454.2 million. As a result of the transaction, which closed late in the second quarter, we will not see the full quarter effect until next quarter. With completion of this transaction,…

Thanks, Peter, and good morning, everyone. Starting with Slide 8, I will review our consolidated results for the quarter. In order to present the results on a comparative basis, as we do each quarter, we have shown an adjusted income statement for the current quarter against an adjusted income statement for the previous quarter. Later on, I will also provide our outlook for the remainder of the year. As expected, net revenues decrease by $14 million mainly due to lower average realized TCE rates for our Conventional Tanker Fleet in Q2 compared to Q1, more scheduled dry dockings in Q2 and the impact of vessel re-deliveries. Vessel operating expenses increased by $6 million due to the increased repairs and maintenance work on our FPSO Fleet, partially offset by lower costs in our Conventional, Gas and Shuttle Fleets. Time charter hire expense decreased by $12 million due to the re-deliveries of in-chartered vessels in both Q2 and Q1 and less spot in-chartering in our Shuttle Fleet. Depreciation and amortization was $115 million consistent with the prior quarter. G&A expenses decreased to $50 million in Q2. For the first half of 2012, we are in line with our normalized run rate and we expect further savings during the second half of the year as a result of our restructuring activities. Net interest expense was in line with the prior quarter. Equity income increased by $6 million due to the full quarter impact of the Maersk LNG acquisition completed at the end of February, including a charter rate increase in April for one of the vessels within the joint venture. Noncontrolling interest expense decreased to $35 million as a result of lower adjusted earnings in Teekay Offshore and Teekay Tankers, partially offset by higher adjusted earnings in Teekay LNG. Looking at the bottom…

Thank you, Vince. Turning to Slide 11, as we presented at our recent Investor Day in New York, Teekay’s overarching objective is to grow our net asset value per share. While I won’t walk through our latest sum-of-the-parts calculation, which can be found in the appendix for this earnings presentation, we remain focused in our initiatives to enhance our underlying asset value, both on an absolute and per share basis by being an effective asset manager, project developer, and operational leader. As an asset manager, we continue to drop down assets to our daughter companies, which are set up to be asset owners. Accordingly, we recently offered to sell the Voyageur Spirit to Teekay Offshore, which when completed will delever the Teekay Parent balance sheet further and enhance our GP and LP cash flows. We’re also actively reviewing new project tenders and asset acquisition opportunities in each of our core businesses to ensure continued cash flow growth beyond our recent acquisitions and project investments. As a project developer, we’re focused on executing on our strong project portfolio and ensuring our projects are delivered on schedule and able to achieve targeted return hurdles. And as Vince mentioned, this also involves efficiently executing on project financing objectives. Finally, as an operational leader, we’ve been focused on the integration of the recently acquired Maersk LNG carriers in addition to our ongoing efforts to enhance the profitability of our existing assets. Thank you. And operator, we’re now ready to take questions.

Thank you. (Operator Instructions) The first question comes from Justin Yagerman of Deutsche Bank. Please go ahead. Josh Katzeff – Deutsche Bank: Hi. Good morning. It’s Josh on for Justin.

Good morning. Josh Katzeff – Deutsche Bank: I guess just starting off in the LNG sector, congratulations on the Magellan charter. But can you maybe talk about some of the opportunities you’re seeing out there? I guess the types of tenders you’re seeing, is this more for conventional LNG or is this for Regasification? And if you can provide any sort of guidance on where you’re seeing yields on these projects and for competition?

Sure. They’re really sort of two different markets. What we’re seeing is that there’s a lot of tendering activity coming out and you really have to look at where the market is. The market up until 2015, we think is dominated by what’s happening in Japan with what we call the Fukushima effect, which has caused charter rates to be higher. But if you look in the longer-term, charter market right now, you can see a big backwardation in rates. And we saw for example that Japan, it isn’t as hot in Japan this summer as it was last summer. And so, you have gas being priced at below $14, whereas it was up at about $18, and that has caused less gas to move out to Asia. And so, you’ve seen charter rates – I guess I would say, the boil has come off. So we’ve seen short-term charter rates come down, but on the long-term charter rates, we’ve seen them be under $100,000. And what we’re really focused on in our new building tendering activity is when a lot of liquefaction plants come on in a post-2015 timeframe. And that’s where we’re seeing most of the tendering activity. So the new buildings that we’re talking with yards about are for projects that come on post-2015-2016. And that’s when I think things will really get exciting in the LNG shipping space, because there’ll be a lot of new projects coming on. We of course, have to adjust for project delays or expected delays, but we’re quite excited about post-2015, 2016 and that’s also been reflected in the FSRU market. We’ve bid on several projects, but we haven’t won any, and I think that has to do more with our return hurdles. But I’ve been pleased about that, because what’s happened is that the market has changed. It was dominated by conversion projects, whereby people were converting existing ships that were anywhere from 125,000 to 145,000 cubic. Now what we’re seeing is people want FSRUs at 160,000 all the way up to as high as 300,000 cubic. So, these are more purpose-built FSRUs. And that makes sense, because the size of LNGs has moved up to 155,000 to 173,000. So when people come in with a full load of LNG, they want to be able to efficiently discharge it into the FSRU rather than have to spend more time, because the size of the FSRU wasn’t big enough. So that’s why we’re concentrating more on the new building market, both as it relates to LNG conventional carriers as well as FSRUs. Josh Katzeff – Deutsche Bank: Got it. Maybe I guess switching topics over to the Tanker side, you guys presented your new Tanker design at the Investor Day. Can you provide any more thoughts on orders or order timing?

Sure. We’re out talking with yards as well as customers. I think a lot of people are talking about what they’re calling eco-friendly designs. But let’s talk about what it really is, which is that you save a lot on bunker consumption. And because as much as $0.75 of every dollar that we get goes toward bunkers, if we can save 15% to 25% on our bunker consumption under various load capabilities, that’s a lot of money. But we’re testing it out. We’re talking with a number of shipyards. We’re talking with customers. And that’s how we’re developing that project, which we would hope sometime later this year we might be able to see some orders for. Josh Katzeff – Deutsche Bank: Interesting. I guess on the – maybe the secondhand or resale market, there was some press out recently that Teekay was in talks with another owner. Is there any intent on purchasing VLCCs or VLCC resales?

We look at a lot, but we don’t buy that much. And so that’s as much as I’ll say. Josh Katzeff – Deutsche Bank: All right, fair enough. And I guess one more before I turn it over. Is there any sort of update on potentials for the Foinaven drop-down?

No, there are not. We’re continuing to work with the charter of that unit, BP, on getting permission to drop it down. Josh Katzeff – Deutsche Bank: Okay, great. Appreciate the time.

Thank you.

Thank you. The next question comes from Michael Webber of Wells Fargo. Please go ahead. Michael Webber – Wells Fargo: Hey. Good morning, guys. How are you?

Good. Thanks. How are you? Michael Webber – Wells Fargo: Good. I wanted just to jump in and talk about the Voyageur. I think, and correct me if I’m wrong, with that $540 million valuation is new, it looks like a pretty, relatively healthy multiple. I think you guys had bought it at 5.9, and this looks like about 7.2 times EBITDA. Can you talk a little bit about how you kind of, a, came to that valuation? And then, I guess what’s factored in to kind of that ramp in multiples there? I mean, you’ve got some competitors that are valuing FSRUs at 9 times. So it doesn’t look like it’s egregious by any stretch, just it’s a little bit elevated from where you purchased it. Just a little bit of color on how you guys got to that $540 million?

Well, we did as any seller would do. We looked at what we thought the net asset value was compared to what it would be on a – to any buyer, and that’s really valuing up the contract. And so, we will sell it for more than we bought it for, but that’s because Teekay added a lot of value in the upgrading of it, as well as the financing of it. And then, Teekay Offshore, which will have its call tomorrow, will provide more color on how they look upon the transaction. And I think it’s more interesting to see how Teekay Offshore looks at the transaction. But you’re right, that’s the first time we’ve put out the number, $540 million. Michael Webber – Wells Fargo: Right. That makes sense. Within that $540 million, I know you guys mentioned in the release, Peter, that you guys were – the Voyageur is getting close to sailing now. Are those upgrades coming in on budget? Is there any sort of bleed-through there, or are they on budget?

Nope. They’re on budget. Michael Webber – Wells Fargo: Okay.

A little under budget. Michael Webber – Wells Fargo: Okay. That’s helpful. And then in terms of delivering in Q4, do you have any more specific timing on that? Is it going to be towards the earlier end of the quarter?

No. We’re waiting for E.ON to tell us when the field development is going to be ready to accept the unit. Michael Webber – Wells Fargo: All right. That’s helpful. Peter, I just wanted to stick with the Offshore stuff for a second. You mentioned in the release within the commentary what read kind of like a desire to clear out your current pipeline before taking on any more construction risk. That can be read kind of in a couple of different ways. Was that statement specifically (inaudible) about not starting any new construction before you deliver your current project? Is that just a reflection of the timing in terms of if you were to do something new on the FPSO side, you wouldn’t start building it until after the Knarr? Or was that more of a reflection of you guys wanting to kind of preserve some liquidity and address some other issues as you kind of go through the next year or two in terms of buybacks and dividends and things like that?

Well, it’s a combination of things. First of all, you have to look at what your human resources are capable of. I think the first thing we looked at is, I said, let’s make sure we efficiently execute on our projects, and Peter Lytzen, who heads up our FPSO unit, he got handed a lot last year with both the Sevan transaction and you have to integrate and then, we had the Banff, which we have to bring back on station. So what we said was, let’s not look at any more near-term opportunities, let’s look at some longer-term opportunities. And what’s very important in any project mentality is to see what’s the timing of projects and how it fits into your human resources. It isn’t really a question of financing resources. We didn’t want to stretch our people, and so we’re really looking at projects that have a startup from 2015 to 2016. And we’re also looking at – concentrating on the rollover of some of our existing projects. Michael Webber – Wells Fargo: Sure. All right. That’s helpful and makes sense. You kind of touched on this a bit in the deck, but with regard to the Anglo-Eastern tie-ups and then, the cost savings there, you guys are expecting to see some incremental benefit in the fourth quarter. Is that still kind of the pace you guys are looking at in terms of the guidance? I think you guys were talking to $10 million to $20 million in terms of annual cost savings once that’s up and running. Has there been any change to that since the Investor Day?

Yeah, the guidance we gave in Investor Day, Mike, was annual savings of about $10 million. And so, the fourth quarter, we’re expecting about $2 million, $2.5 million for the quarter. So that hasn’t changed. Michael Webber – Wells Fargo: Okay. Great. That’s helpful. And also you mentioned you guys are taking over technical management of the Maersk LNG assets pretty soon. Should we expect any sort of lumpy cost impact there in terms of the actual changeover there? Or is that going to be relatively smooth?

That’ll be smooth. First of all, we’re paying Maersk LNG. We’re paying them since the acquisition. We’ve actually already taken over five of six vessels and so, you won’t see that in the financials.

Yeah. Actually the joint venture, that’s where the costs are and the joint venture is paying Teekay for those services. Michael Webber – Wells Fargo: Got you. Okay. That’s helpful. One more and I’ll turn it over. It looks like you guys had the charter termination with TOO with an add-back of, I think, about $14 million. How should we think about that going forward? There are obviously some other charters there between Teekay and TOO with some vessels essentially being sold. Should we expect a couple of more of those as we move into the next couple of quarters? Or just how should we think about this and those kinds of charters?

I think we’re looking at – obviously, we’re losing money. So, what you’re talking about is the owned assets down at Teekay Offshore, which are chartered to Teekay Parent. Michael Webber – Wells Fargo: Yeah.

So those are at higher rates as we’ve said, about $27,000 and we have one expiring at the end of the year, the Torben Spirit. And if TOO chooses to sell it earlier, then they’ll get a termination. But it really comes off of Teekay Offshore partners deciding what they’re going to do with that vessel. Are they going to continue to trade it? Do they want to sell it? Or do they want to try to make it into a floating storage unit? Michael Webber – Wells Fargo: Got you. Okay. That’s helpful. Thank you guys for the time.

Thank you.

Thank you. The next question comes from Greg Lewis of Credit Suisse. Please go ahead. Mr. Lewis, please go ahead.

I’m sure Greg will get back into queue.

Okay, great. So, the next question comes from Brandon Oglenski of Barclays. Please go ahead. Brandon Oglenski – Barclays: Hey. Good morning, everyone.

Hi. Brandon Oglenski – Barclays: With the recent decline that we’ve seen in the Tanker market, does that in any way back you off of where you thought you’d be run rate profitable at the parent level next year?

No, it doesn’t. The Tanker market for Teekay consolidated is probably about 15%. And so, it’s far more important that we deliver in on our projects that we have in the Offshore and LNG towards getting back to profitability than whether the Tanker market moves up or down. As Vince said, $1,000 moves it up $2 million on a quarter, but when we’re putting in these big assets, it generates good cash flow, that’s far more important. Brandon Oglenski – Barclays: Well, thinking about that with the projects you have coming online later this year and potentially early next year, are there going to be any acceptance periods where you might be running higher costs than anticipated and maybe less revenue as the projects are delivered to the customers?

I’m not sure I understand that. We generally capitalize up the costs until it comes online with the customer. Brandon Oglenski – Barclays: Okay. So, there’s not an early period cost that can be ramped higher than anticipated?

No, no. Brandon Oglenski – Barclays: Okay. And then, looking forward, and I think the question has been asked another way, but what is going to be the priority at the Parent level? I know you said on the Offshore side, you want to wait until you get some of these projects on the water. But is it going to be more on the Tanker side that you’re looking at? Or should we be thinking more on the Gas side, which I think you’ve alluded to looking longer-term. What’s going to be the next project that Teekay Parent is looking for as easy lever?

Well, Teekay is developing projects for all four companies that we’re looking at. And at Investor Day we gave – what we said was that we don’t see Teekay Parent owning gas assets, offshore assets, tanker assets, but it will definitely develop assets for that. So, we’re looking at a few new things, but they have to have higher hurdle rates. For example, we talked about wind farm installation vessels. But for me, it all starts with getting of good contracts for that, so we’re not going to be in the, I would say, speculative tanker market going forward. We can make more money developing projects, both for Teekay Parent as well as for its daughters. Brandon Oglenski – Barclays: Thank you.

Thank you.

Thank you. (Operator Instructions) The next question comes from Fotis Giannakoulis of Morgan Stanley. Please go ahead. Fotis Giannakoulis – Morgan Stanley: Yes, thank you and good morning. I would like to ask you about your evaluation right now. I see your estimate about $44 to $45. The stock is clearly trading at a very steep discount to your intrinsic value. Are there any plans for continuing your share buyback program or paying more dividend or you think that you’re going to keep using your balance sheet in order to finance future growth?

Hi, Fotis. So as we said, our focus is on the net asset – on growing that $44 or the net asset value per share. As you see, the biggest thing we can do is to generate higher LP – and limited-partner and general-partner cash flows from our MLPs going forward. We are in a de-leveraging mode and at that point that we switched back, then I think you’ll see Teekay look more aggressively on what it’ll do with its surplus capital. But at this point, we don’t have surplus capital going forward. But when we do, then we’ll start to look at what’s the most efficient way to employ that, whether that’s new projects or returning it to our shareholders. Fotis Giannakoulis – Morgan Stanley: May I ask about the banking situation and we’ve seen in other sectors, mainly in dry bulk and container ships, banks trying to approach strong owners to take control over assets where they are over-levered. Have you seen any of these opportunities where you can take control of assets without investing any capital?

We have seen those opportunities and so, those are what I guess you could call stressed or distressed opportunities. We have seen them, but we haven’t actually – but the first thing we look at isn’t whether we can do a good financial transaction, it’s our outlook for the market. And I have to say and Bruce will talk about it more in about an hour, our outlook for the tanker market has been that it’ll be weaker until late 2013, 2014. So, there really hasn’t been any reason to take over assets and you haven’t seen the asset valuations improve. So, from our point of view, we’ve looked at opportunistic in-charters, but we really haven’t seen anything. Where we did act, of course, was the Sevan transaction where you had a company that unfortunately had too much leverage, but it was intrinsically a very good company. It had good people and we thought that would be the right kind of deal that we could do. So, we acted very quickly there. So, as I said earlier, we look at a lot and people come to us, but we aren’t buying very much at this point given our market outlook. Fotis Giannakoulis – Morgan Stanley: And my last question is in regards to your LNG operations. You have one of the largest fleets in the world, but we haven’t seen you in any of the FSRU bidding processes. Is this an expertise that you’re planning to develop, or could we see you in the future tendering for any of the FSRU contracts?

Well, first of all, we have been tendering for FSRU projects. What we haven’t done is win them. And so, we’ve probably, I guess you could say, been more cautious, but we think that’s the right way to go. We have one FSRU that we jointly own with Exmar, so I would say we have the expertise in house. But as I said earlier, I think that’s actually has been a benefit, because a lot of these early stage FSRUs were smaller, $125,000, $145,000. So you have to look at how the market is changing and the market has changed toward new building FSRUs. So you may very well find that we go ahead and order some FSRUs, but our general – as part of what we see as the market opportunity. But in general, we’ve been quite successful at Teekay LNG without having to take excessive risk. And FSRUs, it isn’t a commoditized market, and we’ve been really pleased at how the technology has been coming along. So we think the technology has gotten to a matured state, so when we look at the FSRUs, you have to decide, are you going to have a dedicated, more barge type of FSRU? Or are you going to have one that trades? And if you can save by not putting an engine room in or a certain kind of engine, you can save easily $50 million on the CapEx. So we’re concerned about the long-term value when we order a unit. Fotis Giannakoulis – Morgan Stanley: Shall we assume that if you decide to place an order for an LNG carrier or an FSRU, that will have a contract attached? Or you can go ahead seeding a speculative order at the beginning until you find an attractive contract?

Well, we don’t get consider it speculative. As I said earlier, we see a wall of projects and opportunities coming in late 2015 into 2016 projects. You can take your pick from Australia, to the U.S., and so, if we were to order, it would be with the idea that we would get a charter later on for it, because we can see that those units are going to be needed. But again, we see that the LNG market is preferring more Atlantic MACs, $160,000 to $170,000. We’re seeing lower boil-offs of 0.1 rather than the 0.15. And so, I think if we ordered now, we would order a better spec at a lower price than some of the people who have already ordered. Fotis Giannakoulis – Morgan Stanley: Okay. Thank you very much for your time.

Thank you.

Thank you. The next question comes from Michael Webber of Wells Fargo. Please go ahead. Michael Webber – Wells Fargo: Hey, guys. I just wanted to hop in with a follow-up question. Peter, at the Investor Day, wind farm installation assets kind of went from kind of an opaque side project to something that seemed like you guys were going to be allocating capital towards over the near and immediate term. If memory serves me, you guys quoted a year – where you guys could be deploying capital there within the year. Any new developments there? And then, just maybe a little bit of commentary around how that process works. And then, whether or not you guys are working more than just the one partner you guys had about a year and a half ago?

Sure. I’m not sure we committed to employing it, but I was quite careful about saying is, you need to have a customer. Michael Webber – Wells Fargo: Sure.

We’re a little different from other shipping companies, but this order with this idea that they’ll go get a customer. When you have more specialized units, you have to have a base load capacity in terms of a customer willing to give you a charter for a certain amount. That goes for the FSRUs as well as for wind farm instillation vessels. So, we have the ships, but we’ve been working on perfecting the design and working with customers to make sure that what we order works for one customer as well as for follow-on projects. So, as soon as we can put all those things together, then we have a project that we’ll announce. If we can’t put those things together, then we move on. Michael Webber – Wells Fargo: Got you. Okay, fair enough. Thanks guys.

Thank you.

Thank you. The next question is from Greg Lewis of Credit Suisse. Please go ahead. Mr. Lewis, is your line on mute? Greg Lewis – Credit Suisse: Hi. Thank you. Good morning. Sorry for falling off the call earlier. I just had a quick question on the Foinaven. I guess, we’re seven months into the year, do you have any guidance? Or how should we think about the performance of that through the first seven months in terms of potentially what that payout in the fourth quarter could be? Is it sort of in line with the performance of last year and year-to-date? Is it behind? Is it above? If you could just provide any color in terms of the performance of that FPSO? And maybe sort of give us maybe some insights into what that potential payout in the fourth quarter could be?

Yeah. Of course, the performance is based on production as well as the average Brent oil price as well as a few other operational measures. So, it will of course, vary depending on what those drivers are for the rest of the year. We do have in the third quarter, I think I mentioned in my remarks, that we have a planned shutdown for life extension work on the Foinaven in the third quarter. So that would reduce the average production for the year. And I think based on where Brent oil prices are currently, the average oil price for the year might be a little bit lower than 2011, so that could lower that amount. So, I think last year’s fourth quarter we had the fourth quarter additional payment was about $35 million or so. I would expect the 2012 amount would be a little bit lower than that, sort of in the range of $25 million to $30 million I would say. Greg Lewis – Credit Suisse: Okay, perfect. Okay guys, thanks for the time.

Thank you, Greg.

Thank you. There are no further questions at this time. I’ll turn the call back to Mr. Evensen.

All right. Thank you very much and we look forward to reporting to you next quarter. Thank you.