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Teekay Corporation 23 June 2008

Update Report – 1Q 08 Results

Anticipated rise in spot rates to drive top line growth, going forward

Fundamental research indicates a 19% upside for the NYSE common stock over the coming 6-12
NYSE BUY months. The company reports in US dollars, which is assumed to be its major trading currency. As a
result, the impact of currency movements on the price of the NYSE common stock is assumed to be
Common neutral. We have calculated the target price based on fundamental factors, using a weighted average
Stock1 of target prices obtained using DCF and comparative valuation methodologies. We continue to take a
6-12 month investment horizon for this stock as we believe the oil transportation industry in which the
company operates is highly cyclical and therefore trends can be captured more accurately with a
Ticker: TK shorter investment horizon.
Target price: US$58.02
Current price: US$48.75
We reiterate the NYSE common stock a BUY with a 6-12 month target of US$58.02 per share.

European BUY The European stock is expected to appreciate approximately 25% over the next 6-12 months as the
19% fundamental upside is expected to be further augmented by a 5 percentage points upside
Stock1 attributable to the anticipated appreciation of US dollar against euro and 1 percent point upside
Ticker: TK.F attributable to anticipated reduction in discount on the European stock over the same period.2
Target price: €38.68
Current price: €31.46
We upgrade the European stock from a HOLD to a BUY with a 6-12 month target price of €38.68

Supervisor: Ashish Khetan

Analyst: Nishith Sanghvi
Editor: Matthew Bridle
Global Research Director:
Satish Betadpur, CFA
Next news due:
2Q 08 results, 06 August 2008
Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If
this report is provided to you by your broker under the Global Settlement, you may now also access (free of
charge) the short term trading outlook that we publish from time to time for this issuer, looking at the coming
5-30 days for readers with a shorter trading horizon. These are available on-line only at
www.researchoracle.com.

Report summary
Teekay Corporation’s (Teekay) 1Q 08 Net Voyage Revenues (NVR) were in line with our expectation,
margins fell short of our expectations given higher than expected operating expenses in 1Q 08. Going
forward, we expect spot freight rates to continue to rise given capacity constraints in the industry
following the phase out of single-hull oil tankers by the end of FY 2010 coupled with the conversion of
Very Large Crude Carriers (VLCC) into Very Large Ore Carriers (VLOC). Furthermore, the company has
revealed how capacity constraint problems are exacerbated by increasing steel prices, which are
prompting oil tanker owners to scrap their vessels. Based on current price levels, we believe that the
Teekay common stock offers attractive investment opportunity at current levels. Consequently, we
maintain our BUY rating for the NYSE common stock.

Currency impact on European stocks

The impact by itself of the anticipated currency movements on the European common stock (now
€30.91), without considering changes in the share price, is broadly positive and is expected to be2:

Over 6 months: €29.02

Over 12 months: €32.50

Page 1 Refer page 4 for footnotes