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☐			REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒			ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐			TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐			SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                     

For the transition period from                      to                     

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, par value of $0.001 per share			TK			New York Stock Exchange

Large Accelerated Filer  ¨                 Accelerated Filer  ý                 Non-Accelerated Filer  ¨ Emerging growth company  ☐

U.S. GAAP

x

International Financial Reporting Standards as issued by the International Accounting Standards Board

¨

Other

¨

Auditor Name:    KPMG LLP    Auditor Location:    Vancouver BC, Canada    Auditor Firm ID:    85

PART I															PAGE
Item 1.			Identity of Directors, Senior Management and Advisors												6
Item 2.			Offer Statistics and Expected Timetable												6
Item 3.			Key Information												6
						Risk Factors									6
						Tax Risks									20
Item 4.			Information on the Company												21
						A.			Overview, History and Development						21
						B.			Operations						22
									Our Consolidated Fleet under Management						24
									Safety, Management of Ship Operations and Administration						24
									Risk of Loss and Insurance						25
									Operations Outside of the United States						26
									Customers						26
									Flag, Classification, Audits and Inspections						26
									Regulations						27
						C.			Organizational Structure						34
						D.			Property, Plant and Equipment						35
						E.			Taxation of the Company						35
									1.			United States Taxation			35
									2.			Marshall Islands Taxation			37
									3.			Other Taxation			37
Item 4A.			Unresolved Staff Comments												37
Item 5.			Operating and Financial Review and Prospects												37
						Overview									37
						Important Financial and Operational Terms and Concepts									38
						Items You Should Consider When Evaluating Our Results									39
						Summary Financial Data									40
						Recent Developments and Results of Operations									41
						Liquidity and Capital Resources									58
						Critical Accounting Estimates									62
						Non-GAAP Financial Measures									66
Item 6.			Directors, Senior Management and Employees												67
						Directors and Senior Management.									68
						Compensation of Directors and Senior Management									69
						Options to Purchase Securities from Registrant or Subsidiaries									70
						Board Practices									70
						The Board's Role in Oversight of Environmental, Social and Corporate Governance									71
						Crewing and Staff									71
						Share Ownership									71
Item 7.			Major Shareholders and Certain Relationships and Related Party Transactions												72
						Major Shareholders									72
						Relationships with Our Major Shareholder									72
						Our Directors and Executive Officers									72
						Relationship and Management Agreement with Teekay Tankers									73
Item 8.			Financial Information												73
Item 9.			The Offer and Listing												74
Item 10.			Additional Information												74
						Memorandum and Articles of Association									74
						Material Contracts									74

Exchange Controls and Other Limitations Affecting Security Holders

74

Taxation

74

Material United States Federal Income Tax Considerations

74

Non-United States Tax Considerations

78

Documents on Display

79

Item 11.

Quantitative and Qualitative Disclosures About Market Risk

79

Item 12.

Description of Securities Other than Equity Securities

80

PART II.

80

Item 13.

Defaults, Dividend Arrearages and Delinquencies

80

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

80

Item 15.

Controls and Procedures

81

Management’s Report on Internal Control over Financial Reporting

81

Item 16A.

Audit Committee Financial Expert

81

Item 16B.

Code of Ethics

81

Item 16C.

Principal Accountant Fees and Services

82

Item 16D.

Exemptions from the Listing Standards for Audit Committees

82

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

82

Item 16F.

Change in Registrant’s Certifying Accountant

82

Item 16G.

Corporate Governance

82

Item 16H.

Mine Safety Disclosure

82

PART III.

82

Item 17.

Financial Statements

82

Item 18.

Financial Statements

83

Item 19.

Exhibits

83

Signature

86

PART I

•our future financial condition and results of operations and our future revenues, expenses and capital expenditures, and our expected financial flexibility and sources of liquidity to pursue capital expenditures, acquisitions and other expansion opportunities, including vessel acquisitions;

•our dividend policy and our ability to pay cash dividends on our shares of common stock or any increases in quarterly distributions, and the distribution and dividend policies of our publicly-listed subsidiary, Teekay Tankers, including any increases in distribution or dividend levels of Teekay Tankers;

•our liquidity needs and meeting our going concern requirements, including our working capital deficit, anticipated funds and sources of financing for liquidity needs and the sufficiency of cash flows, and our estimation that we will have sufficient liquidity for at least the next 12 months;

•our ability and plans to obtain financing for new projects and commitments, refinance existing debt obligations and fulfill our debt obligations;

•our plans for Teekay Parent, which excludes our interests in Teekay Tankers and includes Teekay Corporation and its remaining subsidiaries, to reduce or eliminate operational risk in any floating production, storage and offloading (or FPSO) units and to increase its intrinsic value per share;

•the expected scope, duration and effects of the novel coronavirus pandemic and the unfolding geopolitical crisis between Ukraine and Russia, including its impact on global supply and demand for crude oil and petroleum products and fleet utilization, and the consequences of any future epidemic or pandemic crises or geopolitical tensions;

•conditions and fundamentals of the markets in which we operate, including the balance of supply and demand in these markets and charter and spot rates, estimated growth in world fleets and vessel scrapping, and oil production, refinery capacity and competition for providing services;

•our expectations regarding tax liabilities, including whether applicable tax authorities may agree with our tax positions, including whether or not we qualify as a passive foreign investment company;

•our expectations regarding the effect of economic substance regulations in the Marshall Islands and Bermuda and their future status under those regulations;

•our expectations as to the useful lives of our vessels;

•our future growth prospects and competitive position;

•the impact of future changes in the demand for and price of oil;

•expected costs, capabilities, acquisitions and conversions, and the commencement of any related charters or other contracts;

•our ability to maximize the use of our vessels, including the re-deployment or disposition of vessels no longer under long-term time charter or on short-term charter contracts;

•our expectations regarding customer payments, including the ability of our customers to make charter payments to us;

•the status and outcome of any pending legal claims, actions or disputes;

•Teekay Tankers’ expected recovery of fuel price increases from the charterers of its vessels through higher rates for voyage charters;

•the future valuation or impairment of our assets, including goodwill;

•our expectations and estimates regarding future charter business, with respect to minimum charter hire payments, revenues and our vessels' ability to perform to specifications and maintain their hire rates in the future;

•our compliance with financing agreements and the expected effect of restrictive covenants in such agreements;

•operating expenses, availability of crew and crewing costs, number of off-hire days, drydocking requirements and durations and the adequacy and cost of insurance, and expectations as to cost-saving initiatives;

•the effectiveness of our risk management policies and procedures and the ability of the counterparties to our derivative and other contracts to fulfill their contractual obligations;

•the impact on us and the shipping industry of environmental liabilities and developments, including climate change;

•the impact of any sanctions on our operations and our ongoing compliance with such sanctions;

•the impact of the invasion of Ukraine by Russia on the economy, our industry and our business, including as the result of sanctions on Russian companies and individuals;

•the expected impact of the cessation of the London Inter-Bank Offered Rate (or LIBOR) or the adoption of the “Poseidon Principles” by financial institutions;

•the impact and expected cost of, and our ability to comply with, new and existing governmental regulations and maritime self-regulatory organization standards applicable to our business, including, among others, the expected cost to install ballast water treatment systems (or BWTS) on our vessels;

•the impact of increasing scrutiny and changing expectations from investors, lenders, customers and other stakeholders with respect to environmental, social and governance (or ESG) policies and practices, and the Company’s ability to meet its corporate ESG goals;

•our ability to obtain all permits, licenses and certificates with respect to the conduct of our operations;

•the expectations as to the chartering of unchartered vessels;

•our entering into joint ventures or partnerships with companies;

•our hedging activities relating to foreign exchange, interest rate and spot market risks, and the effects of fluctuations in foreign currency exchange, interest rate and spot market rates on our business and results of operations;

•the potential impact of new accounting guidance or the adoption of new accounting standards;

•our potential need to renew portions of our tanker fleet; and

•our business strategy and other plans and objectives for future operations, including, among others, our pursuit of investment opportunities in the shipping sector and potentially in new and adjacent markets.

Forward-looking statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to, those factors discussed below in “Item 3 – Key Information – Risk Factors” and other factors detailed from time to time in other reports we file with the U.S. Securities and Exchange Commission (or the SEC).

Item 1.Identity of Directors, Senior Management and Advisors

Item 2.Offer Statistics and Expected Timetable

Item 3.Key Information

Risk Factors

Risk Factor Summary

Risks Related to Our Industry

•Changes in the oil markets could result in decreased demand for our vessels and services.

•The cyclical nature of the tanker industry may lead to volatile changes in charter rates and significant fluctuations in the utilization of our vessels.

•High oil prices could negatively impact tanker freight rates.

•A decline in oil prices may adversely affect our growth prospects and results of operations.

•Marine transportation is inherently risky, and an incident involving loss or damage to a vessel, significant loss of product or environmental contamination by any of our vessels could harm our reputation and business.

•The novel coronavirus (or COVID-19) pandemic is dynamic. The continuation of this pandemic, and the emergence of other epidemic or pandemic crises, could have material adverse effects on our business, results of operations, or financial condition.

•Terrorist attacks, increased hostilities, political change, or war, including the unfolding war and geopolitical crisis between Ukraine and Russia, could lead to further economic instability, increased costs and business disruption.

•Acts of piracy on ocean-going vessels continue to be a risk, which could adversely affect our business.

Risks Related to Our Business

•Economic downturns, including disruptions in the global credit markets, could adversely affect our ability to grow.

•Economic downturns may affect our customers’ ability to charter our vessels and pay for our services and may adversely affect our business and results of operations.

•The intense competition in our markets may lead to reduced profitability or reduced expansion opportunities.

•The loss of any key customer or its inability to pay for our services could result in a significant loss of revenue in a given period.

•Our ability to repay or refinance debt obligations and to fund capital expenditures will depend on certain financial, business and other factors, many of which are beyond our control. We will need to obtain additional financing, which financing may limit our ability to make cash dividends and distributions, increase our financial leverage and result in dilution to our equityholders.

•Charter rates for conventional oil and product tankers may fluctuate substantially over time and may be lower when we are attempting to re-charter these vessels.

•Changes in market conditions may limit our access to capital and our growth.

•Declining market values of our vessels could adversely affect our liquidity and result in breaches of our financing agreements.

•Over time, the value of our vessels may decline, which could result in both write-downs and an adverse effect on our operating results.

•We have recognized asset impairments in the past and we may recognize additional impairments in the future.

•Teekay Tankers anticipates that it may need to accelerate its fleet renewal in coming years, the success of any such program will depend on newbuilding and second-hand vessel availability and prices, market conditions and available financing, and which it anticipates will require significant expenditures.

•Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.

•We are green-recycling one FPSO unit and plan to decommission and/or green-recycle our remaining FPSO units, which are scheduled to generate limited additional revenue and for which we may be required to incur significant costs.

•Teekay Tankers has substantial debt levels and may incur additional debt.

•Exposure to interest rate fluctuations will result in fluctuations in our cash flows and operating results.

•Use of LIBOR is currently scheduled to cease, and interest rates on our LIBOR-based obligations may increase in the future.

•Financing agreements containing operating and financial restrictions may restrict our business and financing activities.

•Our and many of our customers’ substantial operations outside the United States expose us and them to political, governmental and economic instability.

•Maritime claimants could arrest, or port authorities could detain, our vessels, which could interrupt our cash flow.

•Many of our seafaring employees are covered by collective bargaining agreements and the failure to renew those agreements or any future labor agreements may disrupt operations and adversely affect our cash flows.

•We may be unable to attract and retain qualified, skilled employees or crew to operate our business.

•Exposure to currency exchange rate fluctuations results in fluctuations in our cash flows and operating results.

•Our operating results are subject to seasonal fluctuations.

•We may be unable to realize benefits from acquisitions and growth through acquisitions may harm our financial condition and performance.

•Teekay Tankers may expend substantial sums during the construction of future potential newbuildings or upgrades to their existing vessels, without earning revenue and without assurance that they will be completed.

•Teekay Tankers’ U.S. Gulf lightering business competes with alternative methods of delivering crude oil to ports, which may limit its earnings in this area of its operations.

•Teekay Tankers’ full service lightering operations are subject to specific risks that could lead to accidents, oil spills or property damage.

Legal and Regulatory Risks

•We are bound to adhere to sanctions from many jurisdictions, including the United States, United Kingdom, European Union and Canada, due to our domicile and location of offices.

•Past port calls by our vessels or third-party vessels participating in Revenue Sharing Agreements (or RSAs) to countries that are subject to sanctions imposed by the United States, European Union and the United Kingdom could harm our business.

•Failure to comply with the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, the UK Criminal Finances Act and similar laws in other jurisdictions could result in fines, criminal penalties, contract terminations and an adverse effect on our business.

•The shipping industry is subject to substantial environmental and other regulations, which may significantly limit operations and increase expenses.

•Climate change and greenhouse gas restrictions may adversely impact our operations and markets.

•Increasing scrutiny and changing expectations from investors, lenders, customers and other market participants with respect to ESG policies and practices may impose additional costs on us or expose us to additional risks.

•Regulations relating to ballast water discharge may adversely affect our operational results and financial condition.

•Our operations may be subject to economic substance requirements in the Marshall Islands and other offshore jurisdictions.

Information and Technology Risks

•A cyber-attack could materially disrupt our business.

•Our failure to comply with data privacy laws could damage our customer relationships and expose us to litigation risks and potential fines.

Risks Related to an Investment in Our Securities

•Because we are organized under the laws of the Marshall Islands, it may be difficult to serve us with legal process or enforce judgments against us, our directors or our management.

Tax Risks

•U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. shareholders.

•We are subject to taxes. The imposition of taxes, including as a result of a change in tax law or accounting requirements, may reduce our cash available for distribution to shareholders.

Risks Related to Our Industry

•demand for oil and oil products;

•supply of oil and oil products;

•regional availability of refining capacity;

•global and regional economic and political conditions;

•the distance oil and oil products are to be moved by sea;

•demand for floating storage of oil; and

•changes in seaborne and other transportation patterns.

•the number of newbuilding deliveries;

•the scrapping rate of older vessels;

•conversion of tankers to other uses;

•the number of vessels that are out of service; and

•environmental concerns and regulations.

•the termination of production of oil at the fields we service;

•lower demand for vessels of the types we own and operate, which may reduce available charter rates and revenue to us upon redeployment of our vessels following expiration or termination of existing contracts or upon the initial chartering of vessels, or which may result in extended periods of our vessels being idle between contracts;

•customers potentially seeking to renegotiate or terminate existing vessel contracts, failing to extend or renew contracts upon expiration, or seeking to negotiate cancelable contracts;

•the inability or refusal of customers to make charter payments to us due to financial constraints or otherwise; or

•declines in vessel values, which may result in losses to us upon vessel sales or impairment charges against our earnings.

•marine disasters;

•bad weather or natural disasters;

•mechanical or electrical failures;

•grounding, capsizing, fire, explosions and collisions;

•piracy (hijacking and kidnapping);

•cyber-attack;

•acute-onset illness in connection with global or regional pandemics or similar public health crises;

•mental health of crew members;

•human error; and

•war and terrorism.

•significant litigation with our customers or other third parties;

•death or injury to persons, loss of property or damage to the environment and natural resources;

•delays in the delivery of cargo;

•liabilities or costs to recover any spilled oil and to restore the environment affected by the spill;

•loss of revenues from charters;

•governmental fines, penalties or restrictions on conducting business;

•higher insurance rates; and

•damage to our reputation and customer relationships generally.

•disruptions to our operations as a result of the potential health impact on our employees and crew, and on the workforces of our customers and business partners;

•disruptions to our business from, or additional costs related to, new regulations, directives or practices implemented in response to the pandemic, such as travel restrictions (including for any of our onshore personnel or any of our crew members to timely embark or disembark from our vessels), increased inspection regimes, hygiene measures (such as quarantining and physical distancing) or increased implementation of remote working arrangements;

•supply chain and other business disruptions from, or additional costs related to, a limited supply of labor, parts or goods;

•potential delays in the loading and discharging of cargo on or from our vessels, and any related off hire due to quarantine, worker health, or regulations, which in turn could disrupt our operations and result in a reduction of revenue;

•potential shortages or a lack of access to required spare parts for our vessels, or potential delays in any repairs to, scheduled or unscheduled maintenance or modifications, or dry docking of, our vessels (including the currently scheduled dry docks for 10 of Teekay Tankers' vessels in 2022), as a result of a lack of berths available by shipyards from a shortage in labor or due to other business disruptions;

•potential delays in vessel inspections and related certifications by class societies, customers or government agencies;

•potential reduced cash flows and financial condition, including potential liquidity constraints;

•reduced access to capital, including the ability to refinance any existing obligations, as a result of any credit tightening generally or due to declines in global financial markets, including to the prices of publicly-traded equity securities of us, our peers and of listed companies generally;

•a reduced ability to opportunistically sell any of our vessels on the second-hand market, either as a result of a lack of buyers or a general decline in the value of second-hand vessels;

•a decline in the market value of our vessels, which may cause us to (a) incur additional impairment charges or (b) breach certain covenants under our financing agreements (including our secured credit facility agreements and financial leases) relating to vessel-to-loan covenants; and

•potential deterioration in the financial condition and prospects of our customers or the third-party owners whose ships we commercially manage, or attempts by charterers, suppliers or receivers to invoke force majeure contractual clauses as a result of delays or other disruptions.

•the customer fails to make payments because of its financial inability, disagreements with us or otherwise;

•we agree to reduce the payments due to us under a contract because of the customer’s inability to continue making the original payments;

•upon our breach of the relevant contract, the customer exercises certain rights to terminate the contract;

•the customer terminates the contract because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire, or we default under the contract;

•under some of our contracts, the customer terminates the contract because of the termination of the customer's sales agreement or a prolonged force majeure affecting the customer, including damage to or destruction of relevant facilities, war or political unrest preventing us from performing services for that customer; or

•the customer becomes subject to applicable sanctions laws which prohibit our ability to lawfully charter our vessel to such customer.

•prevailing economic conditions in oil and energy markets;

•a substantial or extended decline in demand for oil;

•increases in the supply of vessel capacity;

•the age of the vessel relative to other alternative vessels that are available in the market;

•competition from more technologically advanced vessels; and

•the cost of retrofitting or modifying existing vessels, as a result of technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, or otherwise.

Further, if we determine at any time that a vessel’s future useful life and earnings require us to impair its value on our financial statements, we may need to recognize a significant impairment charge against our earnings. Such a determination involves numerous assumptions and estimates, some of which require more discretion and are less predictable. We recognized asset impairment charges of $92.4 million, $149.2 million and $183.9 million in 2021, 2020, and 2019, respectively, in relation to continuing operations. The 2021 charge included impairments of $66.9 million, $18.4 million, and $6.4 million for four Suezmax tankers, three LR2 tankers and four Aframax tankers, respectively, of Teekay Tankers' vessels. The 2020 charge included impairments of $70.7 million for two of our FPSO units, the Petrojarl Banff and Sevan Hummingbird, and impairments of $67.0 million for nine of Teekay Tankers' Aframax tankers, and the 2019 charge included impairments of $178.3 million for three of our FPSO units, the Petrojarl Banff, Sevan Hummingbird and Petrojarl Foinaven.

In February 2022, Spirit Energy, the charterer of the Sevan Hummingbird FPSO unit, provided a formal notice of termination of the FPSO charter contract, indicating an expected cessation of production on March 31, 2022 and a charter termination date of approximately May 16, 2022. In conjunction with Spirit Energy, Teekay is currently planning for the decommissioning of the unit from the Chestnut Field. Our estimates of decommissioning costs may change and differ from actual costs required to decommission and recycle the unit.

In April 2021, BP plc announced its decision to suspend production from the Foinaven oil fields and permanently remove the Petrojarl Foinaven FPSO unit from the site. In February 2022, BP plc provided formal redelivery notice to us, indicating an expected redelivery date of August 3, 2022, after which Teekay intends to recycle the unit in accordance with EU ship recycling regulations. Upon redelivery of the FPSO unit, we will receive a fixed lump sum payment of $11.6 million from BP, which we expect will cover the majority of the cost of green-recycling the FPSO unit.

In the first quarter of 2020, CNR International (U.K.) Limited (or CNRI) provided formal notice to us of its intention to decommission the Banff field and remove the Petrojarl Banff FPSO unit and the Apollo Spirit FSO from the field in June 2020. The oil production under the existing contract for the Petrojarl Banff FPSO unit ceased in June 2020, and Teekay commenced decommissioning activities during the second quarter of 2020 and into 2021. In May 2021, as a result of the Decommissioning Services Agreement (or DSA) with CNRI, Teekay was deemed to have fulfilled its prior decommissioning obligations associated with the Banff field. In May 2021, Teekay sold the Petrojarl Banff FPSO unit to an EU-approved shipyard for recycling and the unit is currently in the latter stages of green-recycling.

•our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes, and our ability to refinance our credit facilities may be impaired or such financing may not be available on favorable terms, if at all;

•we will need to use a substantial portion of our cash flow to make principal and interest payments on our debt, reducing the funds that would otherwise be available for operations, future business opportunities, repurchases of equity securities and dividends to shareholders;

•our debt level may make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our industry or the economy generally; and

•our debt level may limit our flexibility in obtaining additional financing, pursuing other business opportunities and responding to changing business and economic conditions.

We are exposed to the impact of interest rate changes primarily through certain of our borrowings that require us to make interest payments based on LIBOR or Secured Overnight Finance Rate (or SOFR). Significant increases in interest rates could adversely affect our profit margins, results of operations and our ability to service our debt. In accordance with our risk management policy, we use interest rate swaps on certain of our debt to reduce our exposure to market risk from changes in interest rates. The principal objective of these contracts is to minimize the risks and costs associated with our floating rate debt. However, any hedging activities entered into by us may not be effective in fully mitigating our interest rate risk from our variable rate indebtedness.

•incur additional indebtedness and guarantee indebtedness;

•pay dividends or make other distributions or repurchase or redeem our capital stock;

•prepay, redeem or repurchase certain debt;

•issue certain preferred shares or similar equity securities;

•make loans and investments;

•enter into a new line of business;

•incur or permit certain liens to exist;

•enter into transactions with affiliates;

•create unrestricted subsidiaries;

•transfer, sell, convey or otherwise dispose of assets;

•make certain acquisitions and investments;

•enter into agreements restricting our subsidiaries’ ability to pay dividends; and

Our and many of our customers' substantial operations outside the United States expose us and them to political, governmental, and economic instability, which could harm our operations.

•interruption of, or loss of momentum in, the activities of one or more of an acquired company’s businesses and our businesses;

•additional demands on members of our senior management while integrating acquired businesses, which would decrease the time they have to manage our existing business, service existing customers and attract new customers;

•difficulties identifying suitable acquisition candidates;

•difficulties integrating the operations, personnel and business culture of acquired companies;

•difficulties coordinating and managing geographically separate organizations;

•adverse effects on relationships with our existing suppliers and customers, and those of the companies acquired;

•difficulties entering geographic markets or new market segments in which we have no or limited experience; and

•loss of key officers and employees of acquired companies.

Legal and Regulatory Risks

Past port calls by our vessels or third-party vessels participating in RSAs to countries that are subject to sanctions imposed by the United States, European Union and the United Kingdom could harm our business.

Failure to comply with the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, the UK Criminal Finances Act and similar laws in other jurisdictions could result in fines, criminal penalties, contract terminations and an adverse effect on our business.

We operate our vessels worldwide, which may require our vessels to trade in countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977 (the FCPA), the Bribery Act 2010 of the United Kingdom (or the UK Bribery Act) and the Criminal Finances Act 2017 of the United Kingdom (the CFA). We are subject, however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption and anti-money laundering laws, including the FCPA, the UK Bribery Act and the CFA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, or curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.

The shipping industry is subject to substantial environmental and other regulations, which may significantly limit operations and increase expenses.

Our operations are affected by extensive and changing international, national and local environmental protection laws, regulations, treaties and conventions which are in force in international waters, the jurisdictional waters of the countries in which our vessels operate, as well as the countries of our vessels’ registration, including those governing oil spills, discharges to air and water, and the handling and disposal of hazardous substances and wastes. Many of these requirements are designed to reduce the risk of oil spills and other pollution. In addition, we believe that the heightened environmental, quality and security concerns of insurance underwriters, regulators and charterers will lead to additional regulatory requirements, including enhanced risk assessment and security requirements and greater inspection and safety requirements on vessels. For example, new or amended legislation relating to ship recycling, sewage systems, emission control (including emissions of greenhouse gases and other pollutants) as well as ballast water treatment and ballast water handling may be adopted. The International Maritime Organization (the IMO), the United Nations agency for maritime safety and the prevention of pollution by vessels, has also established progressive standards limiting emissions from ships starting from 2023 towards 2030 and 2050 goals. These and other laws or regulations may require significant additional capital expenditures or operating expenses in order for us to comply with the laws and regulations and maintain our vessels in compliance with international and national regulations.

In addition to the requirements under the IMO, the United States Coast Guard (the USCG) has imposed mandatory ballast water management practices for all vessels equipped with ballast water tanks and entering U.S. waters. These USCG regulations may have the effect of restricting our vessels from entering U.S. waters, unless we equip our vessels with pre-approved BWTS management systems or receive authorization by a duly-issued permit or exemption.

Information and Technology Risks

Our failure to comply with data privacy laws could damage our customer relationships and expose us to litigation risks and potential fines.

Data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions and countries in which we provide services and continue to develop in ways which we cannot predict, including with respect to evolving technologies such as cloud computing. The EU has adopted the General Data Privacy Regulation (or GDPR), a comprehensive legal framework to govern data collection, use and sharing and related consumer privacy rights, which took effect in May 2018. The GDPR includes significant penalties for non-compliance. Our failure to adhere to or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability or impairment to our reputation in the marketplace, which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to an Investment in Our Securities

Tax Risks

A non-U.S. entity treated as a corporation for U.S. federal income tax purposes will be treated as a PFIC for such purposes in any taxable year in which, after taking into account the income and assets of the corporation and, pursuant to a “look-through” rule, any other corporation or partnership in which the corporation directly or indirectly owns at least 25% of the stock or equity interests (by value) and any partnership in which the corporation directly or indirectly owns less than 25% of the equity interests (by value) to the extent the corporation satisfies an "active partner" test and does not elect out of "look through" treatment, either (i) at least 75% of its gross income consists of “passive income” (or the PFIC income test) or (ii) at least 50% of the average value of the entity’s assets is attributable to assets that produce or are held for the production of “passive income” (or the PFIC asset test). For purposes of these tests, “passive income” includes dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business. By contrast, income derived from the performance of services does not constitute “passive income.”

Additionally, with respect to the PFIC income test, there are legal uncertainties involved in determining whether the income derived from our and our look-through subsidiaries' time-chartering activities constitutes rental income or income derived from the performance of services, including the decision in Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), which held that income derived from certain time-chartering activities should be treated as rental income rather than services income for purposes of a foreign sales corporation provision of the Internal Revenue Code of 1986, as amended (or the Code). However, the Internal Revenue Service (or the IRS) stated in an Action on Decision (AOD 2010-01) that it disagrees with, and will not acquiesce to, the way that the rental versus services framework was applied to the facts in the Tidewater decision, and in its discussion stated that the time charters at issue in Tidewater would be treated as producing services income for PFIC purposes. The IRS’s statement with respect to Tidewater cannot be relied upon or otherwise cited as precedent by taxpayers. Consequently, in the absence of any binding legal authority specifically relating to the statutory provisions governing PFICs, there can be no assurance that the IRS or a court would not follow the Tidewater decision in interpreting the PFIC provisions of the Code. Nevertheless, based on our and our look-through subsidiaries’ current assets and operations, we intend to take the position that we are not now and have never been a PFIC by reason of the PFIC income test. No assurance can be given, however, that this position would be sustained by a court if contested by the IRS or that we would not constitute a PFIC by reason of the PFIC income test (or, alternatively, as described above, the PFIC asset test) for the 2022 taxable year or any future taxable year if there were to be changes in our and our look-through subsidiaries' assets, income or operations.

We are subject to taxes, which reduces our cash available for distribution to shareholders.

Item 4.Information on the Company

A.Overview, History and Development

Overview

Teekay Corporation is a leading provider of international crude oil and other marine transportation services. Teekay currently provides these services directly and through its controlling ownership interest in Teekay Tankers Ltd. (NYSE: TNK) (or Teekay Tankers), one of the world’s largest owners and operators of mid-sized crude tankers.

•Generating attractive risk-adjusted returns, utilizing our strong operating franchise and capabilities, global footprint and operational excellence;

•Offering a wide breadth of marine solutions to meet our customers’ needs;

•Providing superior customer service by maintaining high reliability, safety, environmental and quality standards; and

•Leveraging Teekay Parent’s deep expertise and experience in our industry to pursue suitable investment opportunities in both the broader shipping sector and, potentially, in new and adjacent markets, which we expect to be dynamic as the world pushes towards greater energy diversification.

Our organizational structure can be divided into (a) our controlling interest in Teekay Tankers and (b) Teekay and its remaining subsidiaries (or Teekay Parent).

In addition to Teekay Tankers, we also formed and developed industry-leading public companies Teekay LNG Partners L.P. (now Seapeak) and Teekay Offshore Partners L.P. (now Altera) related to our expansion into the liquefied gas shipping sector and offshore production, storage and transportation sector, respectively. We sold our entire interests in Seapeak and related assets to affiliates of Stonepeak pursuant to the sale of the Teekay Gas Business in January 2022; we sold a significant portion of our interests in Teekay Offshore Partners L.P. to affiliates of Brookfield Business Partners L.P. in a strategic transaction in 2017, and our remaining interests to Brookfield in May 2019 (or the 2019 Brookfield Transaction). Please read “Item 5 – Operating and Financial Review and Prospects – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview” for more information about the sale of the Teekay Gas Business.

Seasonality of our operations

B.Operations

Subsequent to the sale of the Teekay Gas Business, we currently have three primary lines of business: conventional tankers, operational and maintenance marine services, and offshore production (FPSO units). We manage these businesses for the benefit of all stakeholders. We allocate capital and assess performance from the separate perspectives Teekay Tankers and Teekay Parent, as well as from the perspective of the lines of business (the Line of Business approach). The primary focus of our organizational structure, internal reporting and allocation of resources by the chief operating decision maker, is on Teekay Tankers and Teekay Parent (the Legal Entity approach). However, we continue to incorporate the Line of Business approach as in certain cases there is more than one line of business in each of Teekay Tankers and Teekay Parent, and we believe this information allows a better understanding of our performance and prospects for future net cash flows.

Teekay Tankers

Most of Teekay Tankers’ conventional tankers operate pursuant to revenue sharing agreements (or RSAs). The RSAs, which are managed by Teekay Tankers, are designed to spread the costs and risks associated with operation of vessels and to share the net revenues (revenues less voyage expenses and other applicable expenses) earned by all of the vessels in the RSA, based on the actual earning days each vessel is available and the relative performance capabilities, including speed and bunker consumption of each vessel. The performance capabilities of each vessel are adjusted on standard intervals based on current data. In addition, Teekay Tankers' share of the net revenues includes additional amounts, consisting of a per vessel per day fee and a percentage of the gross revenues related to the vessels of third-party vessel owners, based on their responsibilities in employing the vessels subject to the RSAs on voyage charters or time-charters. As of December 31, 2021, a total of 45 of Teekay Tankers' owned and leased vessels and three of Teekay Tankers' time-chartered in vessels operated in the spot market through employment on spot voyage charters. As of December 31, 2021, a total of 26 of Teekay Tankers' Suezmax tankers, seven of the Aframax tankers and nine of the LR2 product tankers in its fleet, as well as 13 vessels owned by third parties, were subject to RSAs. The vessels subject to the RSAs are employed and operated in the spot market or pursuant to time charters of less than one year.

Teekay Tankers’ competition in the Aframax (85,000 to 124,999 dwt) market is also affected by the availability of other size vessels that compete in that market. Suezmax (125,000 to 199,999 dwt) vessels and Panamax (55,000 to 84,999 dwt) vessels can compete for many of the same charters for which our Aframax tankers compete; Aframax size vessels and VLCCs (200,000 to 319,999 dwt) can compete for many of the same charters for which our Suezmax tankers may compete. Because of their large size, Very Large Crude Carriers (or VLCCs) and Ultra Large Crude Carriers (or ULCCs) (320,000+ dwt) rarely compete directly with Aframax tankers, and ULCCs rarely compete with Suezmax tankers for specific charters. However, because VLCCs and ULCCs comprise a substantial portion of the total capacity of the market, movements by such vessels into Suezmax trades and of Suezmax vessels into Aframax trades would heighten the already intense competition.

Teekay Tankers also competes in the Long Range 2 (or LR2) (85,000 to 109,999 dwt) product tanker market. Competition in the LR2 product tanker market is affected by the availability of other size vessels that compete in the market. Long Range 1 (or LR1) (55,000-84,999 dwt) size vessels can compete for many of the same charters for which Teekay Tankers' LR2 tankers compete.

Teekay Tankers acquired a ship-to-ship transfer business (now known as Teekay Marine Solutions or TMS) in July 2015 from a company jointly owned by Teekay and I.M. Skaugen SE. TMS provided a full suite of ship-to-ship transfer services in the oil, gas and dry bulk industries. In addition to full service lightering and lightering support, it also provided consultancy, terminal management and project development services. In April 2020, Teekay Tankers sold off its non-U.S. portion of the TMS business, as well as its liquefied natural gas (or LNG) terminal management business.

Teekay Parent

FPSO Units

Our Sevan Hummingbird FPSO unit is on a charter contract with Spirit Energy Ltd. (or Spirit Energy) in the North Sea. The contract is based on a fixed charter rate and is subject to early termination options. In February 2022, Spirit Energy provided to us a formal notice of termination of the FPSO charter contract, indicating an expected cessation of production on March 31, 2022 and a charter termination date of approximately May 16, 2022. In conjunction with Spirit Energy, Teekay is currently planning for the decommissioning of the unit from the Chestnut Field.

In March 2020, Teekay Parent entered into a new bareboat charter contract with the existing charterer of the Petrojarl Foinaven FPSO unit. Under the terms of the new contract, Teekay Parent received a cash payment of $67 million in April 2020 and will receive a nominal per day rate over the life of the contract and a lump sum payment at the end of the contract period. In February 2022, BP plc provided to us formal redelivery notice, indicating an expected redelivery date of August 3, 2022, after which Teekay intends to recycle the unit in accordance with EU ship recycling regulations. Upon redelivery of the FPSO unit, we will receive a fixed lump sum payment of $11.6 million from BP which we expect will cover the majority of the cost of green-recycling the FPSO unit.

In the first quarter of 2020, CNR International (U.K.) Limited (or CNRI) provided formal notice to Teekay of its intention to decommission the Banff field and remove the Petrojarl Banff FPSO unit and the related Apollo Spirit floating storage and offtake (or FSO) unit from the field in June 2020. The oil production under the existing contract for the Petrojarl Banff FPSO unit ceased in June 2020, and Teekay commenced decommissioning activities during the second quarter of 2020 and into 2021. In May 2021, Teekay was deemed to have fulfilled its prior decommissioning obligations associated with the Banff field. In May 2021, Teekay sold the Petrojarl Banff FPSO unit to an EU-approved shipyard for recycling and the unit is currently in the latter stages of green-recycling.

Our Consolidated Fleet under Management

						Owned and Leased Vessels						Chartered-in  Vessels						Total
Teekay Tankers
Conventional Tankers
Aframax Tankers						13						2						15
Suezmax Tankers						25						—						25
VLCC Tanker						1			(1)			—						1
Product Tankers						9						1						10
STS Support Vessels						—						2						2
						48						5						53
Teekay Parent
FPSO Units						2						—						2
						2						—						2
Total						50						5						55

(1)VLCC is 50%-owned by Teekay Tankers.

Safety, Management of Ship Operations and Administration

We, through certain of our subsidiaries, assist our operating subsidiaries in managing their ship operations. All vessels are operated under our comprehensive and integrated Safety Management System that complies with the International Safety Management Code (or ISM Code), the International Standards Organization’s (or ISO) 9001 for Quality Assurance, ISO 14001 for Environment Management Systems, ISO 45001 for Occupational Health and Safety Management System and the Maritime Labour Convention 2006 (MLC 2006) that became effective in 2013. The management system is certified by Det Norske Veritas (or DNV), the Norwegian classification society. It has also been separately approved by the Australian and Spanish flag administrations. Although certification is valid for five years, compliance with the above-mentioned standards is confirmed on a yearly basis by a rigorous auditing procedure that includes both internal audits as well as external verification audits by DNV and certain flag states.

•vessel maintenance (including repairs and dry docking) and certification;

•crewing by competent seafarers;

•procurement of stores, bunkers and spare parts;

•management of emergencies and incidents;

•supervision of shipyard and projects during new-building, conversions, lay up and recycling;

•terminal support;

•insurance; and

•financial management services.

Risk of Loss and Insurance

Operations Outside of the United States

Customers

Flag, Classification, Audits and Inspections

Our vessels are registered with reputable flag states, and the hull and machinery of all of our vessels have been “Classed” by one of the major classification societies and members of International Association of Classification Societies ltd (or IACS): Bureau Veritas (or BV), Lloyd’s Register of Shipping, the American Bureau of Shipping or DNV.

•our vessels and operations adhere to our operating standards;

•the structural integrity of the vessel is being maintained;

•machinery and equipment are being maintained to give reliable service;

•we are optimizing performance in terms of speed and fuel consumption; and

•our vessels’ appearance supports our brand and meets customer expectations.

Regulations

General

Our business and the operation of our vessels are significantly affected by international conventions and national, state and local laws and regulations in the jurisdictions in which our vessels operate, as well as in the country or countries of their registration. Because these conventions, laws and regulations change frequently, we cannot predict the ultimate cost of compliance or their impact on the resale price or useful life of our vessels. Additional conventions, laws, and regulations may be adopted that could limit our ability to do business or increase the cost of our doing business, and that may materially affect our operations. We are required by various governmental and quasi-governmental agencies to obtain permits, licenses, and certificates with respect to our operations. Subject to the discussion below and to the fact that the kinds of permits, licenses and certificates required for the operations of the vessels we own will depend on a number of factors, we believe that we will be able to continue to obtain all permits, licenses and certificates material to the conduct of our operations.

International Maritime Organization

The IMO is the United Nations’ agency for maritime safety and prevention of pollution. IMO regulations relating to pollution prevention for oil tankers have been adopted by many of the jurisdictions in which our tanker fleet operates. Under IMO regulations and subject to limited exceptions, a tanker must be of double-hull construction in accordance with the requirements set out in these regulations or be of another approved design ensuring the same level of protection against oil pollution. All of our tankers are double-hulled.

Many countries, but not the United States, have ratified and follow the liability regime adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended (or CLC). Under this convention, a vessel’s registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil (e.g., crude oil, fuel oil, heavy diesel oil or lubricating oil), subject to certain defenses. The right to limit liability to specified amounts that are periodically revised is forfeited under the CLC when the spill is caused by the owner’s actual fault or when the spill is caused by the owner’s intentional or reckless conduct. Vessels trading to contracting states must provide evidence of insurance covering the limited liability of the owner. In jurisdictions where the CLC has not been adopted, various legislative regimes or common law governs, and liability is imposed either on the basis of fault or in a manner similar to the CLC.

IMO regulations also include the International Convention for Safety of Life at Sea (or SOLAS), including amendments to SOLAS implementing the International Ship and Port Facility Security Code (or ISPS), the ISM Code and the International Convention on Load Lines of 1966. SOLAS provides rules for the construction of and the equipment required for commercial vessels and includes regulations for their safe operation. Flag states which have ratified the convention and the treaty generally employ the classification societies, which have incorporated SOLAS requirements into their class rules, to undertake surveys to confirm compliance.

SOLAS and other IMO regulations concerning safety, including those relating to treaties on the training of shipboard personnel, lifesaving appliances, navigation, radio equipment and the global maritime distress and safety system, are applicable to our operations. Non-compliance with IMO regulations, including SOLAS, the ISM Code and ISPS Code may subject us to increased liability or penalties, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to or detention in some ports. For example, the United States Coast Guard (or USCG) and European Union authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in the United States and European Union ports. The ISM Code requires vessel operators to obtain a safety management certification for each vessel they manage, evidencing the shipowner’s development and maintenance of an extensive safety management system. Each of the existing vessels in our fleet is currently ISM Code-certified, and we obtain, a safety management certificate for each newbuilding on delivery.

Annex VI to the IMO’s International Convention for the Prevention of Pollution from Ships (or MARPOL) (or Annex VI) sets limits on sulfur oxide (or SOx) and nitrogen oxide (or NOx) emissions from ship exhausts and prohibits emissions of ozone depleting substances, emissions of volatile compounds from cargo tanks and the incineration of specific substances. Annex VI also includes a world-wide cap on the sulfur content of fuel oil and allows for special “emission control areas” (or ECAs) to be established with more stringent controls on sulfur emissions. Annex VI provides for a three-tier reduction in NOx emissions from marine diesel engines, with the final tier (or Tier III) to apply to engines installed on vessels constructed on or after January 1, 2016, and which operate in the North American ECA or the U.S. Caribbean Sea ECA as well as ECAs designated in the future by the IMO. Tier III limits are 80% below Tier I and these cannot be achieved without additional means such as Selective Catalytic Reduction (or SCR). In October 2016, the IMO’s Marine Environment Protection Committee (or MEPC) approved the designation of the North Sea (including the English Channel) and the Baltic Sea as ECAs for NOx emissions; these ECAs and the related amendments to Annex VI of MARPOL (with some exceptions) entered into effect on January 1, 2019. This requirement will be applicable for new ships constructed on or after January 1, 2021 if they visit the Baltic or North Sea (including the English Channel) and requires the future trading area of a ship to be assessed at the contract stage. There are exemption provisions to allow ships with only Tier II engines, to navigate in a NOx Tier III ECA if the ship is departing from a shipyard where the ship is newly built or visiting a shipyard for conversion/repair/maintenance without loading/unloading cargoes.

Effective January 1, 2020, Annex VI imposes a global limit for sulfur in fuel oil used on board ships of 0.50% m/m (mass by mass), regardless of whether a ship is operating outside a designated ECA. The ECA limit of 0.10% will still apply, as will any applicable local regulations. Effective March 1, 2020, the carriage of non-compliant fuel is prohibited. To comply with the 2020 global sulfur limit for fuel, ships must utilize different fuels containing low or very low sulfur (e.g., low sulfur fuel oil (or LSFO), very low sulfur fuel oil (or VLSFO), low sulfur marine gas oil (or LSMGO), biofuels or other compliant fuels such as LNG), or utilize exhaust gas cleaning systems, known as “scrubbers”. Amendments to the information to be included in bunker delivery notes relating to the supply of marine fuel oil to ships fitted with alternative mechanisms to address sulfur emission requirements (e.g., scrubbers) became effective January 1, 2019.

As of March 1, 2018, amendments to Annex VI impose requirements for ships of 5,000 gross tonnage and above to collect fuel oil consumption data for ships, as well as certain other data including proxies for transport work. Amendments to MARPOL Annex VI that make the data collection system for fuel oil consumption of ships mandatory were adopted at the 70th session of the MEPC held in October 2016 and entered into force on March 1, 2018. The amendments require operators to update the vessels' Ship Energy Efficiency Management Plan (or SEEMP) to include a part II describing the ship-specific methodology that will be used for collecting and measuring data for fuel oil consumption, distance travelled, hours underway, ensuring data quality is maintained and the processes that will be used to report the data to the Flag State Administration. This has been verified as compliant on all ships for calendar year 2019 and 2020. A confirmation of Compliance has been provided by the Ship's Flag State Administration / Recognized Organization on behalf of Flag State and is kept on board. Data collection for 2021 has been completed, and the verification of the data is ongoing by DNV who are the authorized verifiers. The process is expected to be completed by end of April 2022.

IMO regulations required that as of January 1, 2015, all vessels operating within ECAs worldwide recognized under MARPOL Annex VI must comply with 0.1% sulfur requirements. Certain modifications were necessary in order to optimize operation on LSMGO of equipment originally designed to operate on Heavy Fuel Oil (or HFO), and to ensure our compliance with the EU Directive. In addition, LSMGO is more expensive than HFO, and this impacts the costs of operations. We are primarily exposed to increased fuel costs through in our spot trading vessels, although our competitors bear a similar cost increase as this is a regulatory item applicable to all vessels. All required vessels in our fleet trading to and within regulated low sulfur areas are able to comply with fuel requirements.

The IMO has issued guidance regarding protecting against acts of piracy off the coast of Somalia. We comply with these guidelines.

IMO Guidance for countering acts of piracy and armed robbery is published by the IMO’s Maritime Safety Committee (or MSC). MSC.1/Circ.1339 (Piracy and armed robbery against ships in waters off the coast of Somalia) outlines Best Management Practices for protection against Somalia based Piracy. Specifically, MSC.1/Circ.1339 provides guidance to shipowners and ship operators, shipmasters, and crews on preventing and suppressing acts of piracy and armed robbery and was adopted by the IMO through Resolution MSC.324(89). The Best Management Practices (or BMP) is a joint industry publication by BIMCO, ICS, IGP&I Clubs, INTERTANKO and OCIMF VIQ Version 7 as the latest. Our fleet follows the guidance within BMP 5 when transiting in other regions with recognized threat levels for piracy and armed robbery, including West Africa.

The IMO's Ballast Water Management Convention entered into force on September 8, 2017. The convention stipulates two standards for discharged ballast water. The D-1 standard covers ballast water exchange while the D-2 standard covers ballast water treatment. The convention requires the implementation of either the D-1 or D-2 standard. There will be a transitional period from the entry into force to the International Oil Pollution Prevention (or IOPP) renewal survey in which ballast water exchange (reg. D-1) can be employed. The IMO’s MEPC agreed to a compromise on the implementation dates for the D-2 discharge standard: ships constructed on or after September 8, 2017 must comply with the D-2 standard upon delivery. Existing ships should be D-2 compliant on the first IOPP renewal following entry into force if the survey is completed on or after September 8, 2019, or a renewal IOPP survey was completed on or after September 8, 2014 but prior to September 8, 2017. Ships should be D-2 compliant on the second IOPP renewal survey after September 8, 2017 if the first renewal survey after that date was completed prior to September 8, 2019 and if the previous two conditions are not met. Vessels will be required to meet the discharge standard D-2 by installing an approved BWTS.

Besides the IMO convention, ships sailing in U.S. waters are required to deploy a type approved BWTS which is compliant with USCG regulations. The USCG has approved a number of BWTSs both nationally and internationally, out of which Alfa Laval (Sweden), Ocean Saver (Norway), Techcross, and De Nora are under Teekay’s approved list for retrofit. We estimate that the installation of approved BWTS will cost approximately $1.5 million per vessel between the years 2022 and 2023.

MARPOL Annex I also state that oil residue may be discharged directly from the sludge tank to the shore reception facility through standard discharge connections. They may also be discharged to the incinerator or to an auxiliary boiler suitable for burning the oil by means of a dedicated discharge pump. Amendments to Annex I expand on the requirements for discharge connections and piping to ensure residues are properly disposed of. Annex I is applicable for existing vessels with a first renewal survey beginning on or after January 1, 2017.

Amendments to MARPOL Annex V were adopted at the 70th session of the MEPC held in October 2016 and entered into force on March 1, 2018. The changes include criteria for determining whether cargo residues are harmful to the marine environment and a new Garbage Record Book (or GRB) format with a new garbage category for e-waste. Solid bulk cargo as per regulation VI/1-1.2 of SOLAS, other than grain, shall now be classified as per the criteria in the new Appendix I of MARPOL Annex V, and the shipper shall then declare whether or not the cargo is harmful to the marine environment. A new form of the GRB has been included in Appendix II to MAROL Annex V. The GRB is now divided into two parts: Part I - for all garbage other than cargo residues, applicable to all ships. PART II - for cargo residues only applicable to ships carrying solid bulk cargo. These changes are reflected in the vessels latest revised GRB.

The IMO has also adopted an International Code for Ships Operating in Polar Waters (or Polar Code) which deals with matters regarding the design, construction, equipment, operation, search and rescue and environmental protection in relation to ships operating in waters surrounding the two poles. The Polar Code includes both safety and environmental provisions. The Polar Code and related amendments entered into force in January 2017. The Polar Code is mandatory for new vessels built after January 1, 2017. For existing ships, this code will be applicable from the first intermediate or renewal survey, whichever occurs first, beginning on or after January 1, 2018. All of our vessels trading in this area are fully compliant with the Polar Code.

MSC 91 adopted amendments to SOLAS Regulation II-2/10 to clarify that a minimum of two-way portable radiotelephone apparatus for each fire party for firefighters' communication shall be carried on board. These radio devices shall be of explosion proof type or intrinsically safe type. All existing ships built before July 1, 2014 should comply with this requirement by the first safety equipment survey after July 1, 2018. All new vessels constructed (keel laid) on or after July 1, 2014 must comply with this requirement at the time of delivery. Amendments to SOLAS Regulation II-1/3/-12 on protection against noise, Regulation II-2/1 and II 2/10 on firefighting came into force on July 1, 2014. Existing ships built before July 1, 2014 were required to comply by July 1, 2019.

As per MSC. 338(91), requirements have been highlighted for audio and visual indicators for breathing apparatus which will alert the user before the volume of the air in the cylinder has been reduced to no less than 200 liters. This applies to ships constructed on or after July 1, 2014. Ships constructed before July 1, 2014 were required to comply no later than July 1, 2019. As of December 31, 2021, all of our vessels are in compliance with these requirements.

Cyber-related risks are operational risks that are appropriately assessed and managed in accordance with the safety management requirements of the ISM Code. Cyber risks are required to be appropriately addressed in our safety management system no later than the first annual verification of our Document of Compliance after January 1, 2021. As of July 2021, verification audits of our Document of Compliance have been completed.

The Maritime Labour Convention (MLC) 2006 was adopted by the International Labour Conference at its 94th (Maritime) Session (2006), establishing minimum working and living conditions for seafarers. The convention entered into force August 20, 2013, with further amendments approved by the International Labour Conference at its 103rd Session (2014). The MLC establishes a single, coherent instrument embodying all up-to-date standards of existing international maritime labour conventions and recommendations, as well as the fundamental principles to be found in other international labour conventions. All of our maritime labour contracts comply with the MLC.

Two regulations that are part of the implementation of the Port State Control Directive, came into force on January 1, 2011 and introduced a ranking system (published on a public website and updated daily) displaying shipping companies operating in the EU with the worst safety records. The ranking is judged upon the results of the technical inspections carried out on the vessels owned by a particular shipping company. Those shipping companies that have the most positive safety records are rewarded by subjecting them to fewer inspections, while those with the most safety shortcomings or technical failings recorded upon inspection will in turn be subject to a greater frequency of official inspections to their vessels.

The EU has, by way of Directive 2005/35/EC, as amended by Directive 2009/123/EC, created a legal framework for imposing criminal penalties in the event of discharges of oil and other noxious substances from ships sailing in its waters, irrespective of their flag. This relates to discharges of oil or other noxious substances from vessels. Minor discharges shall not automatically be considered as offenses, except where repetition leads to deterioration in the quality of the water. The persons responsible may be subject to criminal penalties if they have acted with intent, recklessly or with serious negligence and the act of inciting, aiding and abetting a person to discharge a polluting substance may also lead to criminal penalties.

The EU adopted a Directive requiring the use of low sulfur fuel. Since January 1, 2015, vessels have been required to burn fuel with sulfur content not exceeding 0.1% while within EU member states’ territorial seas, exclusive economic zones and pollution control zones that are included in SOX Emission Control Areas. Other jurisdictions have also adopted similar regulations.

All ships above 5,000 gross tonnage calling EU waters are required to comply with EU-MRV regulations. These regulations came into force on July 1, 2015 and aim to reduce greenhouse gas (or GHG) emissions within the EU. It requires ships carrying out maritime transport activities to or from European Economic Area (or EEA) ports to monitor and report information including verified data on their CO2 emissions from January 1, 2018 onwards. Data collection takes place on a per voyage basis and started from January 1, 2018. The reported CO2 emissions, together with additional data (e.g., cargo, energy efficiency parameters), are to be verified by independent verifiers and sent to a central database, managed by the European Maritime Safety Agency (or EMSA). We entered into an agreement with DNV for monitoring, verification and reporting as required by this regulation. The reporting period for the 2021 calendar year has been completed and emission reports for the vessels which have carried out EU voyages have been submitted in the THETIS Database. Based on emission reports submitted in THETIS, a document of compliance has been issued and is placed on board.

The EU Ship Recycling Regulation generally entered into force on December 31, 2018, with certain provisions applicable from December 31, 2020. Compliance timelines are as follows: EU-flagged newbuildings were required to have onboard a verified Inventory of Hazardous Materials (or IHM) with a Statement of Compliance by December 31, 2018, existing EU-flagged vessels are required to have onboard a verified IHM with a Statement of Compliance by December 31, 2020, and non-EU-flagged vessels calling at EU ports are also required to have onboard a verified IHM with a Statement of Compliance latest by December 31, 2020. Teekay Tankers contracted with a class-approved HazMat expert company to assist in the preparation of Inventory of Hazardous Materials and obtaining Statements of Compliance for its vessels. The EU Commission also adopted a European List of approved ship recycling facilities, as well as four further decisions dealing with certification and other administrative requirements set out in the EU Ship Recycling Regulation. In 2014, the Council Decision 2014/241/EU authorized EU countries having ships flying their flag or registered under their flag to ratify or to accede to the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships. The Hong Kong Convention is not yet ratified.

There is no international regime in force which deals with compensation for oil pollution from offshore craft such as FPSOs. Whether the CLC and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971, as amended by the 1992 Protocol (or the Fund Convention), which deal with liability and compensation for oil pollution and the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the 1996 Protocol (or the 1976 Limitation of Liability Convention), which deals with limitation of liability for maritime claims, apply to FPSOs is neither straightforward nor certain. This is due to the definition of “ship” under these conventions and the requirement that oil is “carried” onboard the relevant vessel. Nevertheless, the wording of the 1992 Protocol to the CLC leaves room for arguing that FPSOs and oil pollution caused by them can come under the ambit of these conventions for the purposes of liability and compensation. However, the application of these conventions also depends on their implementation by the relevant domestic laws of the countries which are parties to them.

The UK’s Merchant Shipping Act 1995, as amended (or MSA), implements the CLC but uses a wider definition of a “ship” than the one used in the CLC and in its 1992 Protocol but still refers to the criteria used by the CLC. It is therefore doubtful that FPSOs fall within its wording. However, the MSA also includes separate provisions for liability for oil pollution. These apply to vessels which fall within a much wider definition and include non-seagoing vessels. It is arguable that the wording of these MSA provisions is wide enough to cover oil pollution caused by offshore crafts such as FPSOs. The liability regime under these MSA provisions is similar to that imposed under the CLC but limitation of liability is subject to the 1976 Limitation of Liability Convention regime (as implemented in the MSA).

With regard to FPSOs, Chapter 7 of Annex I of MARPOL (which contains regulations for the prevention of oil pollution) sets out special requirements for fixed and floating platforms, including, amongst others, FPSOs and floating storage units (or FSU). The IMO’s MEPC has issued guidelines for the application of MARPOL Annex I requirements to FPSOs and FSUs.

The EU’s Directive 2004/35/CE on environmental liability with regard to the prevention and remedying of environmental damage (or the Environmental Liability Directive) deals with liability for environmental damage on the basis of the “polluter pays” principle. Environmental damage includes damage to protected species and natural habitats and damage to water and land. Under this Directive, operators whose activities caused environmental damage or the imminent threat of such damage are to be held liable for the damage (subject to certain exceptions). With regard to environmental damage caused by specific activities listed in the Directive, operators are strictly liable. This is without prejudice to their right to limit their liability in accordance with national legislation implementing the 1976 Limitation of Liability Convention. The Directive applies both to damage which has already occurred and where there is an imminent threat of damage. It also requires the relevant operator to take preventive action, to report an imminent threat and any environmental damage to the regulators and to perform remedial measures, such as clean-up. The Environmental Liability Directive is implemented in the UK by the Environmental Damage (Prevention and Remediation) Regulations 2015.

In June 2013, the EU adopted Directive 2013/30/EU on safety of offshore oil and gas operations and amending Directive 2004/35/EC (or the Offshore Safety Directive). This Directive lays down minimum requirements for member states and the European Maritime Safety Agency for the purposes of reducing the occurrence of major accidents related to offshore oil and gas operations, thus increasing protection of the marine environment and coastal economies against pollution, establishing minimum conditions for safe offshore exploration and exploitation of oil and gas, and limiting disruptions to the EU’s energy production and improving responses to accidents. The Offshore Safety Directive sets out extensive requirements, such as preparation of a major hazard report with risk assessment, emergency response plan and safety and environmental management system applicable to the relevant oil and gas installation before the planned commencement of the operations, independent verification of safety and environmental critical elements identified in the risk assessment for the relevant oil and gas installation, and ensuring that factors such as the applicant’s safety and environmental performance and its financial capabilities or security to meet potential liabilities arising from the oil and gas operations are taken into account when considering granting a license.

The United States has enacted an extensive regulatory and liability regime for the protection and clean-up of the environment from oil spills, including discharges of oil cargoes, bunker fuels or lubricants, primarily through the Oil Pollution Act of 1990 (or OPA 90) and the Comprehensive Environmental Response, Compensation and Liability Act (or CERCLA). OPA 90 affects all owners, bareboat charterers, and operators whose vessels trade to the United States or its territories or possessions or whose vessels operate in United States waters, which include the U.S. territorial sea and 200-mile exclusive economic zone around the United States. CERCLA applies to the discharge of “hazardous substances” rather than “oil” and imposes strict joint and several liability upon the owners, operators or bareboat charterers of vessels for clean-up costs and damages arising from discharges of hazardous substances. We believe that petroleum products should not be considered hazardous substances under CERCLA, but additives to oil or lubricants used on other vessels might fall within its scope.

Under OPA 90, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly, severally, and strictly liable (unless the oil spill results solely from the act or omission of a third party, an act of God or an act of war and the responsible party reports the incident and reasonably cooperates with the appropriate authorities) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels. These other damages are defined broadly to include: natural resources damages and the related assessment costs; real and personal property damages; net loss of taxes, royalties, rents, fees and other lost revenues; lost profits or impairment of earning capacity due to property or natural resources damage; net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; and loss of subsistence use of natural resources.

OPA 90 limits the liability of responsible parties in an amount it periodically updates. The liability limits do not apply if the incident was proximately caused by violation of applicable U.S. federal safety, construction or operating regulations, including IMO conventions to which the United States is a signatory, or by the responsible party’s gross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the oil removal activities. Liability under CERCLA is also subject to limits unless the incident is caused by gross negligence, willful misconduct, or a violation of certain regulations. We currently maintain for each of our vessels pollution liability coverage in the maximum coverage amount of $1 billion per incident. A catastrophic spill could exceed the coverage available, which could harm our business, financial condition, and results of operations.

Under OPA 90, with limited exceptions, all newly built or converted tankers delivered after January 1, 1994 and operating in U.S. waters must be double-hulled. All our tankers are double-hulled.

OPA 90 also requires owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility in an amount at least equal to the relevant limitation amount for such vessels under the statute. The USCG has implemented regulations requiring that an owner or operator of a fleet of vessels must demonstrate evidence of financial responsibility in an amount sufficient to cover the vessel in the fleet having the greatest maximum limited liability under OPA 90 and CERCLA. Evidence of financial responsibility may be demonstrated by insurance, surety bond, self-insurance, guaranty or an alternate method subject to approval by the USCG. Under the self-insurance provisions, the ship owners or operators must have a net worth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. We have complied with the USCG regulations by using self-insurance for certain vessels and obtaining financial guaranties from a third party for the remaining vessels. If other vessels in our fleet trade into the United States in the future, we expect to obtain guaranties from third-party insurers.

OPA 90 and CERCLA permit individual U.S. states to impose their own liability regimes with regard to oil or hazardous substance pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited strict liability for spills. Several coastal states, such as California, Washington and Alaska require state-specific evidence of financial responsibility and vessel response plans. We comply with all applicable state regulations in the ports where our vessels call.

Owners or operators of vessels, including tankers operating in U.S. waters, are required to file vessel response plans with the USCG, and their tankers are required to operate in compliance with USCG approved plans. Such response plans must, among other things: address a “worst case” scenario and identify and ensure, through contract or other approved means, the availability of necessary private response resources to respond to a “worst case discharge”; describe crew training and drills; and identify a qualified individual with full authority to implement removal actions.

All our vessels have USCG approved vessel response plans. In addition, we conduct regular oil spill response drills in accordance with the guidelines set out in OPA 90. The USCG has announced it intends to propose similar regulations requiring certain vessels to prepare response plans for the release of hazardous substances. Similarly, we also have California Vessel Contingency Plans on board vessels which are likely to call ports in State of California.

OPA 90 and CERCLA do not preclude claimants from seeking damages resulting from the discharge of oil and hazardous substances under other applicable law, including maritime tort law. The application of this doctrine varies by jurisdiction.

The U.S. Clean Water Act (or the Clean Water Act) also prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liability in the form of penalties for unauthorized discharges. The Clean Water Act imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA 90 and CERCLA discussed above.

Our vessels that discharge certain effluents, including ballast water, in U.S. waters must obtain a Clean Water Act permit from the Environmental Protection Agency (or EPA) titled the “Vessel General Permit” (or VGP) and comply with a range of effluent limitations, best management practices, reporting, inspections and other requirements. The Vessel General Permit incorporated USCG requirements for ballast water exchange and includes specific technology-based requirements for vessels, as well as an implementation schedule to require vessels to meet the ballast water effluent limitations by the first dry docking after January 1, 2016, depending on the vessel size. The Vessel Incidental Discharge Act (or VIDA) was signed into law on December 4, 2018 and establishes a new framework for the regulation of vessel incidental discharges under the CWA. VIDA requires the EPA to develop performance standards for approximately 30 discharges by December 2020 (similar to the discharges in the EPA 2013 VGP). In most cases, the future standards will be at least as stringent as the existing EPA 2013 VGP requirements and will be technology-based. Two years thereafter, the USCG is required to develop corresponding implementation, compliance, and enforcement regulations. These may include requirements governing the design, construction, testing, approval, installation and use of devices to achieve the EPA national standards of performance (or NSPs). Under VIDA, all provisions of the VGP remain in force and effect as currently written until the USCG regulations are finalized. Vessels that are constructed after December 1, 2013 are subject to the ballast water numeric effluent limitations. Several U.S. states have added specific requirements to the Vessel General Permit and, in some cases, may require vessels to install ballast water treatment technology to meet biological performance standards. Every five years the Vessel General Permit gets reissued, however the provisions of the 2013 VGP, as currently written, will apply beyond 2018, until the EPA publishes new NSPs and the USCG develops implementing regulations for those NSPs which could take up to four years.

China previously established ECAs in the Pearl River Delta, Yangtze River Delta and Bohai Sea, which took effect on January 1, 2016. The Hainan ECA took effect on January 1, 2019. From January 1, 2019, all the ECAs have merged, and the scope of Domestic Emission Controls Areas (or DECAs) were extended to 12 nautical miles from the coastline, covering the Chinese mainland territorial coastal areas as well as the Hainan Island territorial coastal waters. From January 1, 2019, all vessels navigating within the Chinese mainland territorial coastal DECAs and at berths are required to use marine fuel with sulfur content of maximum 0.50% m/m. As per the new regulation, ships can also use alternative methods such as an Exhaust Gas Scrubber, LNG or other clean fuel that reduces the SOx to the same level or lower than the maximum required limits of sulfur when using fossil fuel in the DECA areas or when at berth. All the vessels without an exhaust gas cleaning system entering the emission control area are only permitted to carry and use the compliant fuel oil specified by the new regulation.

From July 1, 2019, vessels engaged on international voyages (except tankers) that are equipped to connect to shore power must use shore power if they berth for more than three hours (or for more than two hours for inland river control area) in berths with shore supply capacity in the coastal control areas.

From January 1, 2020, all vessels navigating within the Chinese mainland territorial coastal DECAs should use marine fuel with a maximum 0.5% m/m sulfur cap. All the vessels entering China inland waterway emission control area are to use the fuel oil with sulfur content not exceeding 0.1% m/m. Any vessel using or carrying non-compliant fuel oil due to the non-availability of compliant fuel oil is to submit a fuel oil non-availability report to the China Maritime Safety Administration (or CMSA) of the next arrival port before entering waters under the jurisdiction of China.

From March 1, 2020, all vessels entering waters under the jurisdiction of the People’s Republic of China are prohibited to carry fuel oil of sulfur content exceeding 0.50% m/m on board ships. Any vessel carrying non-compliant fuel oil in the waters under the jurisdiction of China is to:

•discharge the non-compliant fuel oil; or

•as permitted by the CMSA of calling port, to retain the non-compliant fuel oil on board with a commitment letter stating it will not be used in waters under the jurisdiction of China.

New Zealand's Craft Risk Management Standard (or CRMS) requirements are based on the IMO's guidelines for the control and management of ships' biofouling to minimize the transfer of invasive aquatic species.

Marine pests and diseases brought in on vessel hulls (or biofouling) are a threat to New Zealand's marine resources. From May 15, 2018, all vessels arriving in New Zealand will need to have a clean hull. Vessels staying up to 20 days and only visiting designated ports (places of first arrival) will be allowed a slight amount of biofouling. Vessels staying longer and visiting other places will only be allowed a slime layer and goose barnacles.

The Korean Ministry of Oceans and Fisheries announced an air quality control program that defines selected South Korean ports and areas as ECAs. The ECAs cover Korea’s five major port areas: Incheon, Pyeongtaek & Dangjin, Yeosu & Gwangyang, Busan and Ulsan. From September 1, 2020, ships at berth or at anchor in the new Korean ECAs must burn fuel with a maximum sulfur content of 0.10%. Ships must switch to compliant fuel within one hour of mooring/anchoring and burn compliant fuel until not more than one hour before departure. From January 1, 2022, the requirements have been expanded, and the 0.10% sulfur limit will apply at all times while operating within the ECAs.

A Vessel Speed Reduction Program has also been introduced as a part of an air quality control program on a voluntary compliance basis to certain types of ships (Crude, Chemical and LNG carriers) calling at ports Busan, Ulsan, Yeosu, Gwangyang and Incheon.

On October 2, 2019, the Government of India urged its citizens and government agencies to take steps towards phasing out single-use plastics (or SUP). As a result, all shipping participants operating in Indian waters are required to contribute to the Indian government’s goal of phasing out SUPs.

The Directorate General of Shipping, India (or DGS) has mandated certain policies as a result, and in order to comply with these required policies, all cargo vessels are required as of January 31, 2020 to prepare a vessel-specific Ship Execution Plan (or SEP) detailing the inventory of all SUP used on board the vessel and which has not been exempted by DGS. This SEP will be reviewed to determine the prohibition of SUP on the subject vessel.

Vessels will be allowed to use an additional 10% of SUP items in the SEP that have not been prohibited. Amendments to the finalized SEP are discouraged save for material corrections.

Foreign vessels visiting Indian ports are not allowed to use prohibited items while at a place or port in India. However, these items are allowed to be on board provided they are stored at identified locations. SEPs are also required to detail the prevention steps that will be implemented during a vessel’s call at an Indian port to prevent unsanctioned usage of SUPs. This includes the preparation and use of a deck and official log entry identifying all SUP items on board the vessel.

Greenhouse Gas Regulation

In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change (or the Kyoto Protocol) took effect. Pursuant to the Kyoto Protocol, adopting countries are required to implement national programs to reduce emissions of greenhouse gases. In December 2009, more than 27 nations, including the United States, entered into the Copenhagen Accord. The Copenhagen Accord is non-binding but is intended to pave the way for a comprehensive, international treaty on climate change. In December 2015, the Paris Agreement was adopted by a large number of countries at the 21st Session of the Conference of Parties (commonly known as COP 21, a conference of the countries which are parties to the United Nations Framework Convention on Climate Change; the COP is the highest decision-making authority of this organization). The Paris Agreement, which entered into force on November 4, 2016, deals with greenhouse gas emission reduction measures and targets from 2020 in order to limit the global temperature increases to well below 2˚ Celsius above pre-industrial levels. Although shipping was ultimately not included in the Paris Agreement, it is expected that the adoption of the Paris Agreement may lead to regulatory changes in relation to curbing greenhouse gas emissions from shipping.

In July 2011, the IMO adopted regulations imposing technical and operational measures for the reduction of greenhouse gas emissions. These new regulations formed a new chapter in MARPOL Annex VI and became effective on January 1, 2013. The new technical and operational measures include the “Energy Efficiency Design Index” (or the EEDI), which is mandatory for newbuilding vessels, and the “Ship Energy Efficiency Management Plan,” which is mandatory for all vessels. In October 2016, the IMO’s Marine Environment Protection Committee (or MEPC) adopted updated guidelines for the calculation of the EEDI. In October 2014, the IMO’s MEPC agreed in principle to develop a system of data collection regarding fuel consumption of ships. In October 2016, the IMO adopted a mandatory data collection system under which vessels of 5,000 gross tonnages and above are to collect fuel consumption and other data and to report the aggregated data so collected to their flag state at the end of each calendar year. The new requirements entered into force on March 1, 2018.

All vessels are required to submit fuel consumption data to their respective administration/registered organizations for onward submission to the IMO for analysis and to help with decision making on future measures. The amendments require operators to update the vessel's SEEMP to include descriptions of the ship-specific methodology that will be used for collecting and measuring data for fuel oil consumption, distance travelled, hours underway and processes that will be used to report the data to the Flag State Administration, in order to ensure data quality is maintained.

All of our vessels were verified as being compliant before December 31, 2018, with the first data collection period being for the 2019 calendar year. A Confirmation of Compliance was issued by the administration/registered organization, which must be kept on board the ship. The IMO also approved a roadmap for the development of a comprehensive IMO strategy on the reduction of greenhouse gas emissions from ships with an initial strategy adopted on April 13, 2018 and a revised strategy to be adopted in 2023. Further, the MEPC adopted two other sets of amendments to MARPOL Annex VI related to carbon intensity regulations. The MEPC agreed on combining the technical and operational measures with an entry into force date on January 1, 2023. The Energy Efficiency Existing Ships Index (or EEXI) will be implemented for existing ships as a technical measure to reduce CO2 emissions. The Carbon Intensity Index (or CII) will be implemented as an operational carbon intensity measure to benchmark and improve efficiency. Regulations and frameworks are expected to be fully defined at the next MEPC meeting in June 2022. For Teekay vessels, we have calculated the EEXI and Engine Power Limiter (or EPL) values for our vessels. Further, we are looking at different ways to optimize the emissions either through the use of low friction paints during docking or installing energy saving devices on board our vessels, such as Mewis ducts.

The EU has also proposed an expansion of an existing EU emissions trading regime to include emissions of greenhouse gases from vessels, and individual countries in the EU may impose additional requirements. The EU has adopted Regulation (EU) 2015/757 on the monitoring, reporting and verification (or MRV) of CO2 emissions from vessels (or the MRV Regulation), which entered into force on July 1, 2015. The MRV Regulation aims to quantify and reduce CO2 emissions from shipping. It lists the requirements on the MRV of carbon dioxide emissions and requires ship owners and operators to annually monitor, report and verify CO2 emissions for vessels larger than 5,000 gross tonnage calling at any EU and EFTA (Norway and Iceland) port (with a few exceptions, such as fish-catching or fish-processing vessels). Data collection takes place on a per voyage basis and started on January 1, 2018. The reported CO2 emissions, together with additional data, such as cargo and energy efficiency parameters, are to be verified by independent verifiers and sent to a central inspection database hosted by the European Maritime Safety Agency to collate all the data applicable to the EU region. Companies responsible for the operation of large ships using EU ports are required to report their CO2 emissions. While the EU was considering a proposal for the inclusion of shipping in the EU Emissions Trading System as from 2022 (in the absence of a comparable system operating under the IMO), it appears that the decision to include shipping may be deferred until 2023.

In the United States, the EPA issued an “endangerment finding” regarding greenhouse gases under the Clean Air Act. While this finding in itself does not impose any requirements on our industry, it authorizes the EPA to regulate GHG emissions directly through a rule-making process. In addition, climate change initiatives are being considered in the United States Congress and by individual states. Any passage of new climate control legislation or other regulatory initiatives by the IMO, EU, the United States or other countries or states where we operate that restrict emissions of greenhouse gases could have a significant financial and operational impact on our business that we cannot predict with certainty at this time.

Many financial institutions that lend to the maritime industry have adopted the Poseidon Principles, which establish a framework for assessing and disclosing the climate alignment of ship finance portfolios. The Poseidon Principles set a benchmark for the banks who fund for the maritime sector, which is based on the IMO GHG strategy. The IMO approved an initial GHG strategy in April 2018 to reduce GHG emissions generated from shipping activity, which represents a significant shift in climate ambition for a sector that currently accounts for 2%-3% of global carbon dioxide emissions. As a result, the Poseidon Principles are expected to enable financial institutions to align their ship finance portfolios with responsible environmental behavior and incentivize international shipping's decarbonization.

Vessel Security

The ISPS was adopted by the IMO in December 2002 in the wake of heightened concern over worldwide terrorism and became effective on July 1, 2004. The objective of ISPS is to enhance maritime security by detecting security threats to ships and ports and by requiring the development of security plans and other measures designed to prevent such threats. Each of the existing vessels in our fleet currently complies with the requirements of ISPS and Maritime Transportation Security Act of 2002 (U.S. specific requirements). Procedures are in place to inform the relevant reporting regimes such as Maritime Security Council Horn of Africa, the Maritime Domain Awareness for Trade - Gulf of Guinea, the Information Fusion Center whenever our vessels are calling in the Indian Ocean Region, or West Coast of Africa or Southeast Asia high-risk areas respectively. In order to mitigate the security risk, security arrangements are required for vessels which travel through these high-risk areas.

C.Organizational Structure

(1)Teekay Tankers has two classes of shares: Class A common stock and Class B common stock. Teekay Corporation indirectly owns 100% of the Class B shares which have up to five votes each but aggregate voting power capped at 49%. As a result of Teekay Corporation’s ownership of Class A and Class B shares, it holds aggregate voting power of 55.6% as of March 1, 2022.

(2)Teekay Corporation owns 31.3% of Class A and Class B common stock through Teekay Holdings Limited (Bermuda)'s ownership of 28.6% and Teekay Corporation's direct ownership of 2.7%.

In December 2007, we added Teekay Tankers to our structure. Teekay Tankers is a Marshall Islands corporation formed by us to own our conventional tanker business. As of December 31, 2021, Teekay Tankers’ fleet included 15 double-hull Aframax tankers (including two chartered-in vessels), 26 double-hull Suezmax tankers, 10 product tankers (including one chartered-in vessel), and one VLCC, all of which trade either in the spot tanker market or under short- or medium-term, fixed-rate time-charter contracts. Teekay Tankers owns 100% of its fleet, other than a 50% interest in the VLCC and the in-chartered vessels. Prior to October 1, 2018, we provided Teekay Tankers with certain commercial, technical, administrative, and strategic services under a long-term management agreement through a wholly-owned subsidiary. As of October 1, 2018, Teekay Tankers elected to receive commercial and technical management services directly from its wholly-owned subsidiaries, who receive various services from us and our affiliates.

D.Property, Plant and Equipment

E.Taxation of the Company

United States Taxation

The following is a discussion of material U.S. federal income tax considerations applicable to us. This discussion is based upon provisions of the Code, legislative history, applicable U.S. Treasury Regulations (or Treasury Regulations), judicial authority and administrative interpretations, all as in effect on the date of this Annual Report, and which are subject to change, possibly with retroactive effect, or are subject to different interpretations. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below.

Taxation of Operating Income. A significant portion of our gross income will be attributable to the transportation of crude oil and related products. For this purpose, gross income attributable to transportation (or Transportation Income) includes income derived from, or in connection with, the use (or hiring or leasing for use) of a vessel to transport cargo, or the performance of services directly related to the use of any vessel to transport cargo, and thus includes income from time charters, contracts of affreightment, bareboat charters, and voyage charters.

Fifty percent (50%) of Transportation Income that either begins or ends, but that does not both begin and end, in the United States (or U.S. Source International Transportation Gross Income) is considered to be derived from sources within the United States. Transportation Income that both begins and ends in the United States (or U.S. Source Domestic Transportation Gross Income) is considered to be 100% derived from sources within the United States. Transportation Income exclusively between non-U.S. destinations is considered to be 100% derived from sources outside the United States. Transportation Income derived from sources outside the United States generally is not subject to U.S. federal income tax.

Based on our current operations, and the operations of our subsidiaries, a substantial portion of our Transportation Income is from sources outside the United States and not subject to U.S. federal income tax. Unless the exemption from U.S. taxation under Section 883 of the Code (or the Section 883 Exemption) applies, our U.S. Source International Transportation Gross Income generally is subject to U.S. federal income taxation under either the net basis and branch profits taxes or the 4% gross basis tax, each of which is discussed below. Furthermore, certain of our subsidiaries engaged in activities which could give rise to U.S. Source International Transportation Gross Income rely on our ability to claim the Section 883 Exemption.

The Section 883 Exemption. In general, the Section 883 Exemption provides that if a non-U.S. corporation satisfies the requirements of Section 883 of the Code and the Treasury Regulations thereunder (or the Section 883 Regulations), it will not be subject to the net basis and branch profits taxes or the 4% gross basis tax described below on its U.S. Source International Transportation Gross Income. As discussed below, we believe the Section 883 Exemption will apply and we will not be taxed on our U.S. Source International Transportation Gross Income. The Section 883 Exemption does not apply to U.S. Source Domestic Transportation Gross Income.

A non-U.S. corporation will qualify for the Section 883 Exemption if, among other things, it (i) is organized in a jurisdiction outside the United States that grants an exemption from tax to U.S. corporations on international Transportation Gross Income (or an Equivalent Exemption), (ii) meets one of three ownership tests (or Ownership Tests) described in the Section 883 Regulations, and (iii) meets certain substantiation, reporting and other requirements (or the Substantiation Requirements).

Net Basis Tax and Branch Profits Tax. If the Section 883 Exemption does not apply, our U.S. Source International Transportation Gross Income may be treated as effectively connected with the conduct of a trade or business in the United States (or Effectively Connected Income) if we have a fixed place of business in the United States and substantially all of our U.S. Source International Transportation Gross Income is attributable to regularly scheduled transportation or, in the case of income derived from bareboat charters, is attributable to a fixed place of business in the United States. Based on our current operations, none of our potential U.S. Source International Transportation Gross Income is attributable to regularly scheduled transportation or is derived from bareboat charters attributable to a fixed place of business in the United States. As a result, we do not anticipate that any of our U.S. Source International Transportation Gross Income will be treated as Effectively Connected Income. However, there is no assurance that we will not earn income pursuant to regularly scheduled transportation or bareboat charters attributable to a fixed place of business in the United States in the future, which will result in such income being treated as Effectively Connected Income. U.S. Source Domestic Transportation Gross Income generally will be treated as Effectively Connected Income.

Marshall Islands Taxation

Other Taxation

We and our subsidiaries are subject to taxation in certain non-U.S. jurisdictions because we or our subsidiaries are either organized, or conduct business or operations in such jurisdictions. In other non-U.S. jurisdictions, we and our subsidiaries rely on statutory exemptions from tax. However, we cannot assure that any statutory exemptions from tax on which we or our subsidiaries rely will continue to be available as tax laws in those jurisdictions may change or we or our subsidiaries may enter into new business transactions relating to such jurisdictions, which could affect our and our subsidiaries' tax liability. Please read “Item 18 – Financial Statements: Note 21 – Income Tax Recovery (Expense)".

Item 4A.Unresolved Staff Comments

Item 5.Operating and Financial Review and Prospects

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

On October 4, 2021, Teekay LNG Partners L.P. (or Teekay LNG Partners) (now known as Seapeak LLC (or Seapeak)), Teekay LNG Partners' general partner, Teekay GP L.L.C. (or Teekay GP), an investment vehicle (or Acquiror) managed by Stonepeak Partners L.P., and a wholly-owned subsidiary of Acquiror (or Merger Sub) entered into an agreement and plan of merger (or the Merger Agreement). On January 13, 2022, Teekay announced the closing of the merger (or the Merger) pursuant to the Merger Agreement and related transactions. As part of the Merger and other transactions, Teekay sold all of its ownership interest in Teekay LNG Partners, including approximately 36.0 million Teekay LNG Partners common units, and Teekay GP (equivalent to approximately 1.6 million Teekay LNG Partners common units), for $17.00 per common unit or common unit equivalent in cash. As consideration, Teekay received total gross cash proceeds of approximately $641 million. Furthermore, on January 13, 2022, Teekay transferred certain management services companies to Teekay LNG Partners that provide, through existing services agreements, comprehensive managerial, operational and administrative services to Teekay LNG Partners, its subsidiaries and certain of its joint ventures. Due to negative working capital in these subsidiaries on the date of purchase, Teekay paid Teekay LNG Partners $4.9 million to assume ownership of them. Concurrent with closing of the transaction, Teekay and Teekay LNG Partners entered into a transition services agreement whereby each party will provide certain services, consisting primarily of corporate services that were previously shared by the entire Teekay organization, to the other party for a period of months following closing to allow for the orderly separation of these functions into two standalone operations.

Following completion of these transactions, Teekay Parent repaid nearly all of its debt and is now net debt free with our remaining balance sheet consisting of our controlling interest in publicly-listed Teekay Tankers Ltd. (or Teekay Tankers), our direct ownership in two floating production storage and offloading (or FPSO) units, our marine services business in Australia, and a net cash position of over $300 million. Teekay and its current subsidiaries, other than Teekay Tankers, are referred to herein as "Teekay Parent".

IMPORTANT FINANCIAL AND OPERATIONAL TERMS AND CONCEPTS

Revenues. Revenues primarily include revenues from voyage charters, time charters accounted for under operating and sales-type leases, and FPSO contracts. Revenues are affected by hire rates and the number of days a vessel operates. Revenues are also affected by the mix of business between time charters and voyage charters and to a lesser extent whether our vessels are subject to an RSA. Hire rates for voyage charters are more volatile, as they are typically tied to prevailing market rates at the time of a voyage.

Voyage Expenses. Voyage expenses are all expenses unique to a particular voyage, including any fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Voyage expenses are typically paid by the customer under time charters and FPSO contracts and by us under voyage charters.

Net Revenues. Net revenues represents (loss) income from vessel operations before vessel operating expenses, time-charter hire expenses, depreciation and amortization, general and administrative expenses, write-down and gain (loss) on sale of assets and restructuring charges. This is a non-GAAP financial measure; for more information about this measure, please read "Item 5 - Operating and Financial Review and Prospects - Non-GAAP Financial Measures".

Vessel Operating Expenses. Under all types of charters and contracts for our vessels, except for bareboat charters, we are responsible for vessel operating expenses, which include crewing, repairs and maintenance, insurance, stores, lube oils and communication expenses. The two largest components of our vessel operating expenses are crew costs and repairs and maintenance. We expect these expenses to increase as our fleet matures and to the extent that it expands. We are taking steps to maintain these expenses at a stable level but expect an increase in line with inflation in respect of crew, material, and maintenance costs. The strengthening or weakening of the U.S. Dollar relative to foreign currencies may result in significant decreases or increases, respectively, in our vessel operating expenses, depending on the currencies in which such expenses are incurred.

(Loss) Income from Vessel Operations. To assist us in evaluating our operations by segment, we analyze our loss or income from vessel operations for each segment, which represents the loss or income we receive from the segment after deducting operating expenses, but prior to the deduction of interest expense, realized and unrealized gains (losses) on non-designated derivative instruments, income taxes, foreign currency and other income and losses.

Dry docking. We must periodically dry dock each of our vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. Generally, we dry dock each of our vessels every two and a half to five years, depending upon the type of vessel and its age. We capitalize a substantial portion of the costs incurred during dry docking and amortize those costs on a straight-line basis from the completion of a dry docking over the estimated useful life of the dry dock. We expense as incurred costs for routine repairs and maintenance performed during dry dockings that do not improve or extend the useful lives of the assets. and annual class survey costs for our FPSO units. The number of dry dockings undertaken in a given period and the nature of the work performed determine the level of dry-docking expenditures.

Depreciation and Amortization. Our depreciation and amortization expense typically consists of:

•charges related to the depreciation and amortization of the historical cost of our fleet (less an estimated residual value) over the estimated useful lives of our vessels;

•charges related to the amortization of dry-docking expenditures over the useful life of the dry dock; and

•charges related to the amortization of intangible assets, including the fair value of time charters and customer relationships where amounts have been attributed to those items in acquisitions; these amounts are amortized over the period in which the asset is expected to contribute to our future cash flows.

Time-Charter Equivalent (TCE) Rates. Bulk shipping industry freight rates are commonly measured in the shipping industry in terms of “time-charter equivalent” (or TCE) rates, which represent net revenues divided by revenue days.

Revenue Days. Revenue days are the total number of calendar days our vessels were in our possession during a period, less the total number of off-hire days during the period associated with major repairs, dry dockings or special or intermediate surveys. Consequently, revenue days represent the total number of days available for the vessel to earn revenue. Idle days, which are days when the vessel is available for the vessel to earn revenue, yet is not employed, are included in revenue days. We use revenue days to explain changes in our revenues between periods.

Calendar-Ship-Days. Calendar-ship-days are equal to the total number of calendar days that our vessels were in our possession during a period. As a result, we use calendar-ship-days primarily in explaining changes in vessel operating expenses, time-charter hire expenses and depreciation and amortization expense.

ITEMS YOU SHOULD CONSIDER WHEN EVALUATING OUR RESULTS

•Our voyage revenues are affected by cyclicality in the tanker markets. The cyclical nature of the tanker industry causes significant increases or decreases in the revenue we earn from our vessels, particularly those we trade in the spot market. Following the sale of the Teekay Gas Business, which operated primarily under long-term, fixed-rate time-charter contracts, our revenues will be more volatile.

•Tanker rates also fluctuate based on seasonal variations in demand. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a result of lower oil consumption in the northern hemisphere and increased refinery maintenance. In addition, unpredictable weather patterns during the winter months tend to disrupt vessel scheduling, which historically has increased oil price volatility and oil trading activities in the winter months. As a result, revenues generated by our vessels have historically been weaker during the quarters ended June 30 and September 30, and stronger in the quarters ended December 31 and March 31.

•We have retroactively adjusted the presentation of our results of the Teekay Gas Business. On October 4, 2021, we entered into agreements to sell our general partner interest in Teekay LNG Partners (now known as Seapeak LLC), all of our common units in Teekay LNG Partners, and certain subsidiaries which collectively contain the shore-based management operations of the Teekay Gas Business - see "Overview" section above. These transactions closed on January 13, 2022. All revenues and expenses of the Teekay Gas Business prior to the sale and for the periods covered by the consolidated statements of (loss) income in these consolidated financial statements have been aggregated and presented separately from the continuing operations of Teekay. As such, the following sections consisting of Operating Results – Teekay Tankers, Operating Results – Teekay Parent and Other Consolidated Operating Results exclude the results of the Teekay Gas Business.

•The COVID-19 pandemic is dynamic and could have material adverse effects on our business, results of operations or financial conditions.

•Vessel operating and other costs are facing industry-wide cost pressures. We continue to maintain our operating expense increases at near inflationary levels; however, regulatory compliance has increased cost pressures on operators in recent years which may lead to increased operational expenses in the future. In 2021, COVID-19 contributed to some logistical challenges, causing us to defer the scheduled maintenance for certain of our vessels from 2021 to 2022. Additionally, due to increased length of stay for seafarers on board the vessels, we have had an increase in crewing costs.

•The amount and timing of dry dockings and major modifications of our vessels can affect our revenues between periods. Our vessels are off-hire at various times due to scheduled and unscheduled maintenance. During 2021 and 2020, on a consolidated basis, excluding amounts related to the Teekay Gas Business and excluding the vessel in our equity-accounted joint venture, we incurred 611 and 520 off-hire days relating to dry docking and ballast water treatment systems (or BWTS) installations, respectively. The financial impact from these periods of off-hire, if material, is explained in further detail below in "– Results of Operations”. During 2022, 10 of our owned and leased vessels are scheduled for dry docking (excluding the vessel in our equity-accounted joint venture and three owned and leased vessels that are scheduled for BWTS installation without drydocking), compared to 10 vessels which dry docked during 2021 (excluding four vessels that were off hire while installing BWTS).

•Our financial results are affected by fluctuations in currency exchange rates. Under GAAP, all foreign currency-denominated monetary assets and liabilities (including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, advances from affiliates, and long-term debt) are revalued and reported based on the prevailing exchange rate at the end of the period. These foreign currency translations fluctuate based on the strength of the U.S. Dollar relative mainly to the Euro and GBP are included in our results of operations. The translation of all foreign currency-denominated monetary assets and liabilities at each reporting date results in unrealized foreign currency exchange gains or losses but do not currently impact our cash flows.

•The charterer of the Sevan Hummingbird FPSO unit exercised its option for early termination of the FPSO contract with a scheduled termination date in May 2022. We need to seek to redeploy, sell or recycle the unit. Teekay is currently planning for the decommissioning of the Sevan Hummingbird FPSO unit from the Chestnut Field. Our estimates of decommissioning costs may change and differ from actual costs required to decommission and recycle the unit.

•We do not control access to cash flow generated by our investment in our equity-accounted joint venture. We do not have control over the operations of, nor do we have any legal claim to the revenue and expenses of our investment in, our equity-accounted joint venture. Consequently, the cash flow generated by our investment in equity-accounted joint venture may not be available for use by us in the period that such cash flows are generated.

•Russia’s invasion of Ukraine could have material adverse effects on our business, results of operations, or financial condition. Russia’s invasion of Ukraine, in addition to sanctions announced in February and March 2022 by President Biden and several European and world leaders and nations against Russia and any further sanctions, may adversely impact our business given Russia’s role as a major global exporter of crude oil and natural gas. Our business could be harmed by trade tariffs, trade embargoes or other economic sanctions by the United States or other countries against Russia, Russian companies or the Russian energy sector and harmed by any retaliatory measures by Russia in response. While much uncertainty remains regarding the global impact of Russia’s invasion of Ukraine, it is possible that the hostilities could adversely affect our business, financial condition, results of operation and cash flows. Furthermore, it is possible that third parties with whom we have charter contracts or business arrangements may be impacted by events in Russia and Ukraine, which could adversely affect our operations and financial condition.

(in thousands of U.S. Dollars, except per share data)						Years Ended December 31,
						2021						2020						2019
GAAP Financial Comparison:
Income Statement Data:
Revenues						$	682,508					$	1,146,255					$	1,275,045
(Loss) income from vessel operations, continuing operations						(185,353)						70,197						(109,177)
Loss from continuing operations						(277,463)						(24,304)						(324,707)
Income from discontinued operations						274,095						115,286						175,721
Net (loss) income						(3,368)						90,982						(148,986)
Per common share data:
Basic and diluted loss from continuing operations attributable to shareholders of Teekay Corporation						(1.01)						(1.28)						(3.70)
Basic and diluted income from discontinued operations attributable to shareholders of Teekay Corporation						1.08						0.46						0.62
Basic and diluted income (loss)						0.08						(0.82)						(3.08)
Balance Sheet Data (at end of year):
Cash and cash equivalents (1)						210,167						348,785						353,241
Vessels and equipment (1)(2)						4,182,785						4,483,430						5,033,130
Total assets (1)						6,531,982						6,945,912						8,072,864
Total debt (1)(3)						3,639,593						3,766,072						4,702,844
Total equity (1)						2,432,483						2,471,291						2,571,593
Other Financial Data:
EBITDA (4)(5)						$	420,178					$	578,406					$	438,423
Adjusted EBITDA (4)(5)						721,260						1,086,126						951,913
Total debt to total capitalization (1)(6)						59.9		%				60.4		%				64.6		%
Net debt to total net capitalization (1)(7)						58.1		%				57.6		%				62.3		%

(1)    Includes balances from both discontinued operations and continuing operations on the consolidated balance sheets.

(2)    Vessels and equipment consist of (a) our vessels, at cost less accumulated depreciation, (b) vessels related to finance leases, at cost less accumulated depreciation, (c) operating lease right-of-use assets and (d) advances on newbuilding contracts.

(3)     Total debt represents short-term debt, the current portion of long-term debt and long-term debt, and the current and long-term portion of obligations related to finance leases.

(4)     Includes balances from both (loss) from continuing operations and income from discontinued operations on the consolidated statements of (loss) income.

(5)     EBITDA and Adjusted EBITDA are non-GAAP financial measures. An explanation of the usefulness and purpose of each measure as well as a reconciliation to the most directly comparable financial measure calculated and presented in accordance with GAAP are contained with the section “Non-GAAP Financial Measures” at the end of this Item 5 - Operating and Financial Review and Prospects.

(6)     Total capitalization represents total debt and total equity.

(7)     Net debt is a non-GAAP financial measure. Net debt represents total debt less cash, cash equivalents and restricted cash. Total net capitalization represents net debt and total equity.

RECENT DEVELOPMENTS AND RESULTS OF OPERATIONS

						Revenues (1)												(Loss) income from vessel operations (1)
(in thousands of U.S. dollars)						2021						2020						2021						2020
Teekay Tankers						542,367						886,434						(194,095)						141,572
Teekay Parent						140,141						259,821						8,742						(71,375)
Teekay Corporation Consolidated						682,508						1,146,255						(185,353)						70,197

(1) Excluding results pertaining to the Teekay Gas Business. See "Item 18 – Financial Statements: Note 23 – Discontinued Operations" for further details.

•a net decrease of $213.3 million as a result of lower overall average realized spot TCE rates earned by Teekay Tankers' Suezmax tankers, Aframax tankers and LR2 product tankers, as well as lower earnings from its full service lightering (or FSL) dedicated vessels;

•a net decrease of $91.0 million due to various Teekay Tankers' vessels on time-charter out contracts earning lower fixed rates during the first half of 2021 compared to the spot rates realized during the first half of 2020 and various vessels returning from time-charter out contracts earning lower spot rates during 2021 compared to previous fixed rates;

•a decrease of $44.9 million due to a gain recognized on the commencement of the Petrojarl Foinaven FPSO unit's sales-type lease in the first quarter of 2020; and

•a decrease of $7.3 million due to more off-hire days and off-hire bunker expenses related to increased dry dockings, BWTS installations and vessel repairs, as well as higher overall bunker costs in 2021 compared to 2020;

partially offset by:

•a net increase of $60.7 million due to fewer write-downs in 2021, which included the write-downs of two tankers that were held for sale, two tankers that were sold, and the impairment of seven tankers and one right-of-use asset in 2021 compared to the write-downs of nine tankers, five right-of-use assets and two FPSO units in 2020, partially offset by a decrease due to the sale of three Suezmax tankers in the first quarter of 2020 and four Aframax tankers during 2021;

•an increase of $33.0 million due to a gain from the derecognition of the ARO obligation relating to the Petrojarl Banff FPSO unit in the second quarter of 2021; and

•an increase of $14.9 million due to lower decommissioning costs incurred in 2021 compared to 2020 relating to the Petrojarl Banff FPSO unit, as well as depreciation and restructuring charges incurred in 2020, which did not occur in 2021, in relation to the same unit, and the Petrojarl Foinaven FPSO unit's operational losses in the first quarter of 2020 associated with its previous charter agreement.

Details of the changes to our results of operations for the year ended December 31, 2021, compared to the year ended December 31, 2020 are provided in the following section.

Year Ended December 31, 2021 versus Year Ended December 31, 2020

Teekay Tankers

As at December 31, 2021, Teekay Tankers owned and leased 48 double-hulled conventional oil and product tankers, time chartered-in two Aframax and one Long Range 2 (or LR2) product tankers, and owned a 50% interest in one Very Large Crude Carrier (or VLCC).

Recent Developments in Teekay Tankers

						Year Ended December 31,
(in thousands of U.S. dollars, except calendar-ship-days)						2021						2020
Revenues						542,367						886,434
Voyage expenses						(315,121)						(297,225)
Net revenues						227,246						589,209
Vessel operating expenses						(165,375)						(184,233)
Time-charter hire expenses						(13,799)						(36,341)
Depreciation and amortization						(106,084)						(117,213)
General and administrative expenses						(43,715)						(39,006)
(Write-down) and gain (loss) on sale of assets						(92,368)						(69,446)
Restructuring charges						—						(1,398)
(Loss) income from vessel operations						(194,095)						141,572
Equity (loss) income						(14,107)						5,100
Calendar-Ship-Days (1)
Conventional Tankers						18,829						20,673

(1)Calendar-ship-days presented relate to owned and in-chartered consolidated vessels only.

Tanker Market

Spot tanker rates fell to multi-decade lows in 2021 as the COVID-19 global pandemic and ongoing OPEC+ production cuts had a negative impact on tanker demand. As per the International Energy Agency (or IEA), global oil demand grew by 5.5 million barrels per day (or mb/d) to 96.4 mb/d in 2021. Although this was a significant rebound compared to demand of 90.9 mb/d in 2020, it still left global oil demand approximately 3 mb/d below pre-COVID-19 levels. The emergence of new COVID-19 variants dampened both mobility and oil demand at times during the year as countries periodically implemented new restrictions in order to stop the spread. This was most evident during the second and third quarters of 2021, with the emergence of the Delta variant and at the end of the year with the emergence of the Omicron variant.

Tanker fleet supply fundamentals continue to look very positive due to a lack of newbuild ordering, a diminishing tanker orderbook, and higher scrapping. As of January 2022, the tanker orderbook stood at 7.3 percent of the existing fleet size, which is the lowest since 1996 and well below the long-term average of around 20 percent. The level of newbuild orders remains very low, with just 3.4 million deadweight tons (or mdwt) placed in the second half of 2021, the lowest level of new orders placed in a six-month period since the first half of 2009. Teekay Tankers expects that the level of new tanker orders will remain low in the near-term due to rising newbuild prices, which are currently at a 12-year high, and ongoing uncertainty over vessel technology. Tanker scrapping has picked up in recent months with 9.5 mdwt removed in the second half of 2021, the highest level since the first half of 2018. For 2021 as a whole, around 15 mdwt of tankers were scrapped versus only 3.5 mdwt in 2020. Teekay Tankers expects the level of tanker scrapping to remain elevated in 2022 due to the combination of an aging world tanker fleet, weak freight rates in recent quarters, and high tanker scrap prices. Teekay Tankers is currently forecasting around 2 percent tanker fleet growth in 2022 followed by less than 1 percent in 2023 and potentially negative fleet growth in 2024 when ship removals are expected to outweigh new deliveries into the fleet.

Net Revenues. Net revenues were $227.2 million for the year ended December 31, 2021, compared to $589.2 million for the year ended December 31, 2020. The decrease was primarily due to:

•a net decrease of $198.1 million due to lower overall average realized spot rates earned by Teekay Tankers' Suezmax tankers, Aframax tankers and LR2 product tankers in 2021 compared to 2020;

•a decrease of $91.0 million primarily due to various vessels on time-charter out contracts earning lower fixed rates during the first half of 2021 compared to the spot rates realized during the first half of 2020 and various vessels returning from time-charter out contracts earning lower spot rates during 2021 compared to previous fixed rates;

•a net decrease of $40.5 million primarily due to the sale of three Suezmax tankers during the first quarter of 2020 and the sale of four Aframax tankers during 2021, as well as the redeliveries of three Aframax and two LR2 in-chartered tankers to their owners during the first quarter of 2020, the fourth quarter of 2020 and the first quarter of 2021, partially offset by the addition of one Aframax in-chartered tanker and one LR2 in-chartered tanker that were delivered to Teekay Tankers during the second half of 2021;

•a decrease of $14.0 million primarily due to lower net results from Teekay Tankers' FSL activities resulting from lower overall average FSL spot rates in 2021 compared to 2020;

•a decrease of $7.3 million primarily due to more off-hire days and off-hire bunker expenses related to increased dry dockings, BWTS installations, and vessel repairs, as well as higher overall bunker costs in 2021 compared to 2020;

•a decrease of $7.0 million due to the sale of the non-US portion of Teekay Tankers' ship-to-ship (or STS) support services business and its LNG terminal management business during the second quarter of 2020;

•a decrease of $2.1 million due to lower revenue earned from Teekay Tankers' responsibilities in employing the vessels subject to the RSAs in 2021 compared to 2020; and

•a decrease of $2.1 million due to one fewer calendar day in 2021 compared to 2020.

Vessel Operating Expenses. Vessel operating expenses were $165.4 million for the year ended December 31, 2021, compared to $184.2 million for the year ended December 31, 2020. The decrease was primarily due to a reduction of $8.2 million due to the sale of seven tankers during 2020 and 2021, a decrease of $5.9 million due to the sale of the non-US portion of Teekay Tankers' STS support services business and its LNG terminal management business during the second quarter of 2020, a net reduction of $4.7 million mainly due to the scope of repair and planned maintenance activities in 2021 compared to 2020, as well as lower expenditures for ship management costs in 2021.

Time-charter Hire Expenses. Time-charter hire expenses were $13.8 million for the year ended December 31, 2021, compared to $36.3 million for the year ended December 31, 2020. The decrease was primarily due to a reduction of $21.3 million related to the redeliveries of eight chartered-in vessels during 2020 and 2021, including five tankers and three lightering support vessels, partially offset by the delivery of four chartered-in vessels during the second half of 2020 and 2021, including two tankers and two lightering support vessels, a decrease of $0.8 million due to the impairments of certain operating lease right-of-use assets related to chartered-in vessels, as well as a decrease of $0.5 million due to a lower daily charter rate for one chartered-in vessel as part of its new contract, which was entered into during the third quarter of 2021.

Depreciation and Amortization. Depreciation and amortization was $106.1 million for the year ended December 31, 2021, compared to $117.2 million for the year ended December 31, 2020. The decrease was primarily due to a reduction of $7.6 million related to the impairments of 14 tankers during the second half of 2020 and first half of 2021, a decrease of $5.6 million related to the sale of four Aframax tankers during 2021 and a decrease of $0.5 million due to the sale of the non-US portion of Teekay Tankers' STS support services business and its LNG terminal management business during the second quarter of 2020, partially offset by an increase of $2.6 million primarily due to depreciation related to capitalized expenditures for vessels which dry docked during 2020 and 2021.

General and Administrative Expenses. General and administrative expenses were $43.7 million for the year ended December 31, 2021, compared to $39.0 million for the year ended December 31, 2020. The increase was primarily due to higher information technology-related costs, as well as higher administrative, strategic management, and other fees incurred under Teekay Tankers' management agreement with Teekay primarily resulting from increased time spent providing these services during the year ended December 31, 2021, and unfavorable foreign currency exchange rate fluctuations.

(Write-down) and Gain (Loss) on Sale of Assets. The (write-down) and gain (loss) on sale of assets of $92.4 million for the year ended December 31, 2021, was due to:

•the impairments recorded on three Suezmax tankers, three LR2 tankers and one Aframax tanker primarily due to a weaker near-term tanker market outlook and a reduction in certain charter rates, resulting from the economic climate to which the COVID-19 global pandemic is a contributing factor, which resulted in a write-down of $85.0 million during the year ended December 31, 2021;

•the write-downs of one Aframax tanker and one Suezmax tanker by $4.6 million to their estimated and agreed sales prices, respectively;

•the sale of two Aframax tankers during the second half of 2021, which resulted in an aggregate net loss of $2.1 million; and

•the impairment recorded on one of Teekay Tankers' operating lease right-of-use assets resulting from a decline in short-term time charter rates, which resulted in a write-down of $0.7 million during the year ended December 31, 2021.

•the impairments recorded on nine of Teekay Tankers' Aframax tankers primarily due to a decline in spot tanker rates, short-term time charter rates, and vessel values resulting from the economic climate to which the COVID-19 global pandemic was a contributing factor, which resulted in a write-down of $65.4 million;

•the gain on the sale of assets of $3.1 million due to the sale of the non-US portion of Teekay Tankers' STS support services business and its LNG terminal management business during the second quarter of 2020;

•the impairments recorded on Teekay Tankers' operating lease right-of-use assets primarily due to a reduction in short-term time charter rates, which resulted in a write-down of $2.9 million;

•the sale of three Suezmax tankers in the first quarter of 2020, which resulted in an aggregate net loss of $2.6 million; and

•the write-down of two Aframax tankers by $1.6 million to their estimated sales prices.

Restructuring Charges. Restructuring charges of $1.4 million for the year ended December 31, 2020, were related to estimated severance costs resulting from organizational changes to Teekay Tankers' tanker services and operations, partially related to the sale of the non-US portion of Teekay Tankers' ship-to-ship support services business in April 2020.

Equity (Loss) Income. Equity loss was $14.1 million in 2021 compared to equity income of $5.1 million in 2020. The decrease for the year ended December 31, 2021 was primarily due to a write-down of Teekay Tankers' investment in the High-Q joint venture, in which Teekay Tankers has a 50% ownership interest, mainly resulting from a decline in value of the VLCC as a result of the current tanker market to which the COVID-19 global pandemic has been a contributing factor, as well as lower spot rates realized by the VLCC, which has been trading in a third-party managed VLCC pooling arrangement.

Teekay Parent

As at December 31, 2021, Teekay Parent had direct interests in two 100%-owned FPSO units, the Sevan Hummingbird and the Petrojarl Foinaven, which are included in Teekay Parent’s Offshore Production business. Teekay Parent delivered the Petrojarl Banff FPSO unit to a yard for recycling in May 2021. Included in Teekay Parent’s Other and Corporate G&A segment was one FSO unit in-chartered from Altera Infrastructure L.P. (or Altera) until March 1, 2021, when it was redelivered. Teekay Parent also redelivered one FSO unit to Altera in August 2020, one bunker barge to a third party in May 2020, and two shuttle tankers to Altera in March 2020. The remaining portion of the Other and Corporate G&A segment primarily relates to Teekay Parent's marine services business in Australia as well as marine and corporate services provided to Altera. Teekay Parent’s business of providing marine and corporate services to Seapeak's equity-accounted joint ventures is not included in the following table and has been presented as part of the section “Operating Results – Teekay Gas Business”.

Recent Developments in Teekay Parent

As described above in the “Overview” section, Teekay agreed to sell all of its interest in Teekay LNG Partners (now known as Seapeak LLC) in connection with the acquisition of Teekay LNG Partners by an affiliate of Stonepeak, and the sale closed on January 13, 2022.

In February 2022, Spirit Energy, the charterer of the Sevan Hummingbird FPSO unit, provided a formal notice of termination of the FPSO charter contract, indicating an expected cessation of production on March 31, 2022 and a charter termination date of approximately May 16, 2022. In conjunction with Spirit Energy, Teekay is currently planning for the decommissioning of the unit from the Chestnut Field.

In April 2021, Teekay Parent and CNRI, on behalf of the Banff joint venture, entered into a Decommissioning Services Agreement (or DSA) whereby Teekay Parent engaged CNRI to assume full responsibility for Teekay’s remaining Phase 2 asset retirement obligation (or ARO), to decommission our remaining subsea infrastructure located within the CNRI-operated Banff field. The DSA was subject to certain conditions precedent that needed to be satisfied by June 1, 2021 (or any agreed extension thereto) failing which the DSA could have been terminated by either party. On May 27, 2021, all conditions precedent of the DSA that needed to be satisfied by June 1, 2021, were met. As such, Teekay was deemed to have fulfilled its prior decommissioning obligations associated with the Banff field and we derecognized the ARO and its associated receivable, resulting in a $33.0 million gain. As at December 31, 2021, as a result of the extinguishment, the ARO and associated receivable were $nil. In May 2021, Teekay sold the Petrojarl Banff FPSO unit to an EU-approved shipyard for recycling and the unit is currently in the latter stages of green-recycling.

In April 2021, BP plc announced its decision to suspend production from the Foinaven oil fields and permanently remove the Petrojarl Foinaven FPSO unit from the site. In February 2022, BP plc provided formal redelivery notice to us, indicating an expected redelivery date of August 3, 2022, after which Teekay intends to green-recycle the unit. During the year ended December 31, 2021, we increased the present value of the estimated ARO liability relating to the FPSO unit by $2.7 million as a result of the earlier than expected redelivery of the FPSO unit and we increased our cost estimate to recycle the Petrojarl Foinaven FPSO unit by $3.9 million.

Operating Results – Teekay Parent

						Offshore Production												Other and Corporate G&A												Teekay Parent Total
(in thousands of U.S. dollars, except calendar-ship-days)						2021						2020						2021						2020						2021						2020
Revenues						47,895						108,952						92,246						150,869						140,141						259,821
Voyage expenses						—						(24)						8						10						8						(14)
Vessel operating expenses						(42,879)						(94,945)						(87,345)						(132,375)						(130,224)						(227,320)
Time-charter hire expenses						—						(7,972)						(1,641)						(12,406)						(1,641)						(20,378)
Depreciation and amortization						—						(14,166)						—						—						—						(14,166)
General and administrative expenses (1)						(1,113)						(1,872)						(29,559)						(23,276)						(30,672)						(25,148)
Write-down of assets						—						(70,692)						—						(9,100)						—						(79,792)
Asset retirement obligation extinguishment gain						32,950						—						—						—						32,950						—
Gain on commencement of sales-type lease						—						44,943						—						—						—						44,943
Restructuring charges						(1,307)						(2,278)						(513)						(7,043)						(1,820)						(9,321)
Income (loss) from vessel operations						35,546						(38,054)						(26,804)						(33,321)						8,742						(71,375)
Calendar-Ship-Days (2)
FPSO Units						877						1,098						—						—						877						1,098
FSO Units						—						244						59						366						59						610

(1)Includes direct general and administrative expenses and indirect general and administrative expenses allocated to offshore production, and other and corporate G&A based on estimated use of corporate resources.

(2)Apart from three FPSO units (one of which was delivered for recycling in May 2021), all remaining calendar-ship-days presented relate to in-chartered vessels.

Teekay Parent - Offshore Production

Income from vessel operations for Teekay Parent’s Offshore Production business was $35.5 million for 2021, compared to loss from vessel operations of $38.1 million for 2020. The changes are primarily a result of

•an increase of $103.7 million for 2021, due to a gain of $33.0 million from the derecognition of the ARO obligation relating to the Petrojarl Banff FPSO unit in the second quarter of 2021, compared to write-downs of $70.7 million relating to Teekay Parent's FPSO units in 2020; and

•an increase of $6.3 million related to the Petrojarl Banff FPSO unit, primarily due to lower decommissioning costs incurred in 2021 compared to 2020, and depreciation and restructuring charges incurred in 2020, which did not occur in 2021;

•a decrease of $35.7 million for 2021, related to the Petrojarl Foinaven FPSO unit, primarily from the $44.9 million gain recognized on commencement of its sales-type lease in the first quarter of 2020, partially offset by the unit's operational losses in the first quarter of 2020 associated with its previous charter agreement.

Teekay Parent - Other and Corporate G&A

Loss from vessel operations for Teekay Parent’s Other and Corporate G&A segment was $26.8 million for 2021, compared to loss from vessel operations of $33.3 million for 2020. The decrease in loss was primarily due to the $9.1 million write-down of the Suksan Salamander FSO unit in 2020, and lower restructuring charges in 2021, partially offset by increases in corporate expenses in 2021.

Other Consolidated Operating Results

						Year Ended December 31,
(in thousands of U.S. dollars, except percentages)						2021						2020
Interest expense						(68,412)						(89,075)
Interest income						169						1,439
Realized and unrealized gains (losses) on non-designated derivative instruments						467						(2,523)
Foreign exchange loss						(2,414)						(2,345)
Other loss						(12,776)						(1,538)
Income tax recovery (expense)						4,963						(5,559)

Interest expense. Interest expense decreased to $68.4 million in 2021, compared to $89.1 million in 2020, primarily due to:

•a decrease of $16.5 million relating to Teekay Tankers primarily due to lower principal balances and interest rates associated with its finance lease obligations and loan facilities in 2021 compared to 2020, mainly resulting from the completion of new sale-leaseback transactions for eight vessels, which were repurchased under their previous sale-leaseback agreements during 2021, the sale of two Aframax vessels, previously under sale-leaseback arrangements, during the first quarter of 2021, as well as debt refinancings completed during 2020. In addition, overall lower average LIBOR rates and the write-off of previously capitalized loan costs associated with the debt refinancings in the prior period also contributed to the decrease; and

•a decrease of $4.0 million relating to Teekay Parent primarily due to lower accretion expense incurred on Teekay's Convertible Notes as a result of the adoption of ASU 2020-06 on January 1, 2021 (see "Item 18 - Financial Statements Note 1: Recent Accounting Pronouncements" for further details), and lower debt balances mainly due to the repurchase of some of Teekay's 2022 Notes and Convertible Notes during 2020.

Realized and unrealized gains (losses) on non-designated derivative instruments. Realized and unrealized gains (losses) related to derivative instruments that are not designated as hedges for accounting purposes are included as a separate line item in the consolidated statements of (loss) income. Net realized and unrealized gains (losses) on non-designated derivatives were $0.5 million for 2021, compared to ($2.5) million for 2020, as detailed in the table below:

			Year Ended December 31, 2021 $						Year Ended December 31, 2020 $
Realized (losses) gains relating to:
Interest rate swap agreements			(1,275)						(857)
Foreign currency forward contracts			(31)						379
Forward freight agreements			(572)						(1,242)
			(1,878)						(1,720)
Unrealized gains (losses) relating to:
Interest rate swap agreements			2,407						(889)
Foreign currency forward contracts			(58)						—
Forward freight agreements			(4)						86
			2,345						(803)
Total realized and unrealized gains (losses) on derivative instruments			467						(2,523)

Other loss. Other loss increased to $12.8 million in 2021 compared to $1.5 million in 2020. The increase in other loss was primarily due an increase in the ARO liability related to the Petrojarl Foinaven FPSO unit during 2021 as a result of the earlier than expected redelivery of the FPSO unit and costs estimated to recycle the unit (see "Item 18 - Financial Statements: Note 6 - Accrued Liabilities and Other and Other Long-Term Liabilities" of this Annual Report), premiums paid during 2021 in relation to Teekay Tankers' repurchase of the eight vessels, previously under sale-leaseback arrangements, an increase in unrealized credit loss provision relating to the Petrojarl Foinaven FPSO unit lease and Teekay Tankers' amortization of a previously deferred gain during the prior period.

Income Tax Recovery (Expense). Income tax recovery was $5.0 million in 2021 compared to income tax expense of ($5.6) million in 2020. The change was primarily due to lower freight taxes recognized in a certain jurisdiction in 2021, higher recoveries related to the expiry of the statute of limitations in certain jurisdictions during 2021, as well as tax refunds related to group relief and overpayment of prior period taxes; partially offset by a reversal $15.2 million of freight tax liabilities in 2020 as a result of an agreement with a tax authority, which was based in part on an initiative of the tax authority in response to the COVID-19 global pandemic and included the waiver of interest and penalties on unpaid taxes. For additional information, please read "Item 18 - Financial Statements: Note 21 - Income Tax Recovery (Expense)" of this Annual Report.

Operating Results - Teekay Gas Business

The Teekay Gas Business consists of our general partner interest in Teekay LNG Partners (now known as Seapeak LLC), all of our common units in Teekay LNG Partners, and certain subsidiaries which collectively contain our shore-based management operations of Teekay LNG Partners and certain of its joint ventures. On October 4, 2021, Teekay LNG Partners, Teekay GP, the Acquiror and the Merger Sub entered the Merger Agreement, pursuant to which the Merger closed on January 13, 2022. As part of the Merger and related transactions, Teekay sold all of its ownership interest in Teekay LNG Partners, including approximately 36 million Teekay LNG Partners common units, and Teekay GP (equivalent to approximately 1.6 million Teekay LNG Partners common units), for cash in the amount of $17.00 per common unit. As consideration, Teekay received total gross cash proceeds of approximately $641 million. Furthermore, on January 13, 2022, Teekay transferred certain management services companies to Teekay LNG Partners that provide, through existing services agreements, comprehensive managerial, operational and administrative services to Teekay LNG Partners, its subsidiaries and certain of its joint ventures. Due to negative working capital in these subsidiaries on the date of purchase, Teekay paid Teekay LNG Partners $4.9 million to assume ownership of them.

As at December 31, 2021, Teekay LNG Partners (now known as Seapeak LLC) had a fleet of 47 LNG carriers and 28 LPG/multi-gas carriers. Seapeak's ownership interests in these vessels range from 20% to 100%. In addition to Seapeak's fleet, it has a 30% ownership interest in an LNG receiving and regasification terminal in Bahrain.

Operating Results – Teekay Gas Business

						Year Ended December 31,
(in thousands of U.S. dollars, except calendar-ship-days)						2021						2020
Revenues						680,589						669,417
Voyage expenses						(28,190)						(17,394)
Vessel operating expenses						(200,917)						(188,251)
Time-charter hire expenses						(23,487)						(23,564)
Depreciation and amortization						(130,810)						(129,752)
General and administrative expenses (1)						(24,196)						(15,075)
Write-down of vessels						—						(51,000)
Restructuring charges						(3,223)						—
Income from vessel operations						269,766						244,381
Interest expense						(122,561)						(136,572)
Interest income						5,945						6,903
Realized and unrealized gains (losses) on non-designated derivative instruments						8,524						(33,334)
Equity income						115,399						72,233
Foreign exchange gain (loss)						7,344						(18,373)
Other loss						(3,566)						(16,523)
Income from discontinued operations before income taxes						280,851						118,715
Income tax expense						(6,756)						(3,429)
Income from discontinued operations						274,095						115,286
Calendar-Ship-Days (1)
Liquefied Gas Carriers						10,950						10,990

(1)General and administrative costs for the Teekay Gas Business discontinued operations do not include allocations of costs from shared corporate units. As a result, the general and administrative expenses of the Teekay Gas Business discontinued operations do not represent a fully-built-up cost, but rather only the direct costs incurred by Seapeak and the costs associated with functions that are fully-dedicated to providing services to Seapeak and certain of its joint ventures. As such, Seapeak’s share of the costs incurred by the corporate units in Teekay is not included in the discontinued operations results.

(2)Calendar-ship-days presented relate to consolidated vessels only.

•an increase of $51.0 million due to the write-down of Seapeak's seven multi-gas carriers in 2020 partly as a result of the economic environment at that time (including the economic impact of the COVID-19 global pandemic);

•an increase of $15.7 million due to lower operational claims on certain of Seapeak's LNG carriers in 2021 compared to 2020; and

•a net increase of $1.8 million primarily due to higher charter rates earned in 2021, partially offset by unscheduled off-hire days due to repairs on Seapeak's multi-gas carriers in 2021;

partially offset by:

•a decrease of $13.0 million due to 182 additional off-hire days and fuel costs related to the scheduled drydockings and upgrade of certain of Seapeak's LNG carriers in 2021 compared to 2020;

•a decrease of $12.4 million due to higher general and administrative expenses and restructuring charges primarily incurred in connection with the sale of the Teekay Gas Business, including costs allocated from certain restructured subsidiaries of Teekay prior to the closing of the sale;

•a decrease of $7.0 million primarily due to an increase in repairs and maintenance expenditures incurred in 2021 compared to 2020;

•a decrease of $6.8 million due to 47 additional off-hire days for unscheduled repairs on certain of Seapeak's LNG carriers in 2021 compared to 2020; and

•a decrease of $6.0 million due to the redeliveries of the Creole Spirit and the Oak Spirit LNG carriers and these vessels earning lower charter rates upon redeployment in March 2021 and August 2021, respectively.

Interest Expense. Interest expense decreased to $122.6 million for 2021, from $136.6 million for 2020. Interest expense primarily reflects interest incurred on Seapeak's long-term debt and obligations related to finance leases. The decrease was primarily due to a lower debt balance as a result of debt repayments and a decrease in LIBOR.

Realized and Unrealized Gain (Loss) on Non-designated Derivative Instruments. Net realized and unrealized gains (losses) on non-designated derivative instruments were $8.5 million and ($33.3) million for 2021 and 2020, respectively.

Seapeak enters into interest rate swaps which exchange a receipt of floating interest for a payment of fixed interest to reduce exposure to interest rate variability on certain of its outstanding U.S. Dollar-denominated and Euro-denominated floating rate debt. As at December 31, 2021 and 2020, Seapeak had interest rate swap agreements, excluding swap agreements held by Seapeak's equity-accounted joint ventures, with aggregate average net outstanding notional amounts of approximately $911 million and $806 million, respectively, and with average fixed rates of 2.7% and 3.1%, respectively. Seapeak recognized realized losses of $34.1 million under the interest rate swap agreements in 2021, compared to realized losses of $16.6 million in 2020. The increase in realized losses for the 2021 is primarily due to the termination of the interest rate swap agreement associated with the debt refinancing in Seapeak's 70%-owned consolidated joint venture TK BLT Corporation (or the Tangguh Joint Venture) during the first quarter of 2021.

Equity Income. Equity income related to Seapeak’s liquefied gas carriers increased to $115.4 million in 2021 compared to $72.2 million in 2020. The changes were primarily a result of:

•an increase of $42.0 million due to unrealized gains on non-designated interest rate swaps due to an increase in long-term forward LIBOR benchmark interest rates, compared to unrealized losses in 2020 due to a decrease in long-term forward LIBOR benchmark interest rates;

•an increase of $17.0 million due to impairment charges recorded on four LPG carriers in the Exmar LPG Joint Venture in 2020;

•an increase of $15.3 million related to lower unrealized credit loss provisions primarily due to the initial unrealized credit loss provision recognized upon commencement of the sales-type lease for the Bahrain regasification terminal and associated floating storage unit in January 2020 in Seapeak's 30%-owned joint venture in Bahrain (or the Bahrain LNG Joint Venture) and lower unrealized credit loss provisions recorded in certain of Seapeak's equity-accounted joint ventures primarily due to declines in estimated charter-free vessel fair values for vessels which are servicing time-charter contracts accounted for as direct financing leases during 2020; and

•an increase of $9.9 million due to a decrease in interest expense resulting from lower debt balances and lower LIBOR during 2021;

•a decrease of $30.0 million due to an impairment charge recorded on Seapeak's investment in an LNG related joint venture with Exmar (or the Excalibur Joint Venture) in 2021 as a result of a change in expectation as to the possible sale of the Excalibur Joint Venture's only vessel;

•a decrease of $6.7 million primarily due to unscheduled off-hire for repairs during 2021 on certain of Seapeak's equity-accounted LNG carriers in its 50%-owned joint venture with China LNG Shipping (Holdings) Limited (or the Yamal LNG Joint Venture), off-hire for scheduled drydockings and unscheduled repairs during 2021 for certain of Seapeak's equity-accounted LNG carriers in its 33%-owned joint venture with Angola (or the Angola LNG Carriers) and off-hire for scheduled drydockings during 2021 for certain of Seapeak's equity-accounted LPG carriers in its 50/50 LPG-related joint venture with Exmar NV (or the Exmar LPG Joint Venture); and

•a decrease of $6.5 million primarily due to lower charter rates earned upon redeployment of the Marib Spirit, Arwa Spirit and Methane Spirit between May 2020 and April 2021 in Seapeak's MALT Joint Venture.

Foreign Currency Exchange Gain (Loss). Foreign currency exchange gains (losses) were $7.3 million and ($18.4) million for 2021 and 2020, respectively. These foreign currency exchange gains (losses) were primarily due to the relevant period-end revaluation of Seapeak's NOK-denominated debt and Seapeak's Euro-denominated term loans for financial reporting purposes into U.S. Dollars, net of the realized and unrealized gains and losses on Seapeak's cross currency swaps. Gains on NOK-denominated and Euro-denominated monetary liabilities reflect a stronger U.S. Dollar against the NOK and Euro on the date of revaluation or settlement compared to the rate in effect at the beginning of the period. Losses on NOK-denominated and Euro-denominated monetary liabilities reflect a weaker U.S. Dollar against the NOK and Euro on the date of revaluation or settlement compared to the rate in effect at the beginning of the period.

Other Loss. Other loss decreased to $3.6 million for 2021, from $16.5 million for 2020. The change in other loss was primarily due to higher unrealized credit loss provisions recognized in 2020 as a result of larger declines of estimated charter-free valuations of certain of Seapeak's LNG vessels in 2020 compared to 2021, which are servicing time-charter contracts accounted for as direct financing leases, and the impact of such declines on Seapeak's expectation of the value of such vessels upon completion of their existing charter contracts.

Income Tax Expense. Income tax expense increased to $6.8 million for 2021, from $3.4 million for 2020, primarily due to changes in deferred tax amounts related to the timing of deductions in the Tangguh Joint Venture.

Year Ended December 31, 2020 versus Year Ended December 31, 2019

Teekay Tankers

As at December 31, 2020, Teekay Tankers owned and leased 52 double-hulled conventional oil and product tankers, time chartered-in two Aframax and one LR2 product tankers, and owned a 50% interest in one VLCC.

Operating Results – Teekay Tankers

						Year Ended December 31,
(in thousands of U.S. dollars, except calendar-ship-days)						2020						2019
Revenues						886,434						941,938
Voyage expenses						(297,225)						(400,315)
Net revenues						589,209						541,623
Vessel operating expenses						(184,233)						(208,601)
Time-charter hire expenses						(36,341)						(43,189)
Depreciation and amortization						(117,213)						(124,002)
General and administrative expenses						(39,006)						(36,404)
(Write-down) and gain (loss) on sale of assets						(69,446)						(5,544)
Restructuring charges						(1,398)						—
Income from vessel operations						141,572						123,883
Equity income						5,100						2,345
Calendar-Ship-Days (1)
Conventional Tankers						20,673						22,350

(1)Calendar-ship-days presented relate to owned and in-chartered consolidated vessels only.

Net Revenues. Net revenues were $589.2 million for the year ended December 31, 2020 compared to $541.6 million for the year ended December 31, 2019. The increase was primarily due to:

•a net increase of $73.2 million due to higher overall average realized spot rates earned by the Suezmax tankers and LR2 product tankers, partially offset by lower overall average realized spot rates earned by the Aframax tankers in 2020 compared to 2019; and

•an increase of $39.7 million primarily due to a higher number of vessels on time-charter out contracts earning higher rates compared to spot rates for 2019;

partially offset by:

•a net decrease of $37.2 million due to the sale of four Suezmax tankers during the fourth quarter of 2019 and first quarter of 2020 and the redeliveries of two Aframax in-chartered tankers to their owners in the first quarter of 2020, partially offset by the addition of one Aframax in-chartered tanker that was delivered to Teekay Tankers in the third quarter of 2019;

•a decrease of $23.1 million due to the sale of the non-US portion of the ship-to-ship support services business and LNG terminal management business during the second quarter of 2020, as well as the completion of an LNG terminal management project and an LNG STS contract in 2019;

•a decrease of $3.8 million primarily due to lower net results from the FSL dedicated tankers resulting from lower overall spot rates; and

•a decrease of $2.3 million due to an accrual for taxes recoverable from one of the customers in the fourth quarter of 2019 and a reduction of this accrual in the first quarter of 2020 (offset by a corresponding decrease in income tax expense).

Vessel Operating Expenses. Vessel operating expenses were $184.2 million for the year ended December 31, 2020 compared to $208.6 million for the year ended December 31, 2019. The decrease was primarily due a reduction of $18.3 million resulting from the sale of the non-US portion of the ship-to-ship support services business and LNG terminal management business during the second quarter of 2020, as well as the completion of an LNG terminal management project and an LNG STS contract in 2019, a reduction of $9.2 million primarily due to the sale of four Suezmax tankers during the fourth quarter of 2019 and first quarter of 2020 and a decrease of $1.9 million due to a lower volume of support service activities, partially offset by a net increase of $5.2 million primarily due to crewing-related costs that have been impacted by disruptions resulting from the COVID-19 global pandemic.

Time-charter Hire Expenses. Time-charter hire expenses were $36.3 million for the year ended December 31, 2020 compared to $43.2 million for the year ended December 31, 2019. The decrease was primarily due to a reduction of $10.9 million due to the redelivery of two chartered-in vessels in early 2020 and a decrease of $1.4 million due to the impairments of four operating lease right-of-use assets related to chartered-in vessels during 2020, partially offset by an increase of $5.5 million due to the deliveries of a chartered-in tanker in the third quarter of 2019 and a chartered-in lightering support vessel in the third quarter of 2020.

Depreciation and Amortization. Depreciation and amortization was $117.2 million for the year ended December 31, 2020 compared to $124.0 million for the year ended December 31, 2019. The decrease was primarily due to a reduction of $9.6 million due to four vessels sold in the fourth quarter of 2019 and first quarter of 2020, a reduction of $2.4 million primarily resulting from the sale of the non-US portion of the ship-to-ship support services business and LNG terminal management business during the second quarter of 2020 and a decrease of $1.1 million due to the impairments of five Aframax tankers in the third quarter of 2020, partially offset by an increase of $6.3 million primarily due to depreciation related to capitalized expenditures for vessels which dry docked during 2019 and 2020.

General and Administrative Expenses. General and administrative expenses were $39.0 million for the year ended December 31, 2020, compared to $36.4 million for the year ended December 31, 2019. The increase was primarily due to higher general corporate expenditures during 2020.

(Write-down) and Gain (Loss) on Sale of Assets. The (write-down) and gain (loss) on sale of assets of $69.4 million for the year ended December 31, 2020, was due to:

•the impairments recorded on nine of the Aframax tankers primarily due to a decline in spot tanker rates, short-term time charter rates, and vessel values resulting from the current economic climate to which the COVID-19 global pandemic was a contributing factor, which resulted in a write-down of $65.4 million;

•the gain on the sale of assets of $3.1 million due to the sale of the non-US portion of the support services business and LNG terminal management business during the second quarter of 2020;

•the impairments recorded on the operating lease right-of-use assets primarily due to a reduction in short-term time charter rates, which resulted in a write-down of $2.9 million;

•the sale of three Suezmax tankers in the first quarter of 2020, which resulted in an aggregate net loss of $2.6 million; and

•the write-down of two Aframax tankers by $1.6 million to their estimated sales prices.

•the sale of one Suezmax tanker in the fourth quarter of 2019, which resulted in a loss of $2.4 million.

Restructuring Charges. Restructuring charges of $1.4 million for the year ended December 31, 2020, were related to estimated severance costs resulting from organizational changes to the tanker services and operations, partially related to the sale of the non-US portion of the ship-to-ship support services business in April 2020.

Equity Income. Equity income was $5.1 million for the year ended December 31, 2020 compared to $2.3 million for the year ended December 31, 2019, primarily due to higher spot rates realized by the 50% ownership interest in a VLCC, which has been trading in a third-party managed VLCC pooling arrangement.

Teekay Parent

As at December 31, 2020, Teekay Parent had direct interests in three 100%-owned FPSO units, which are included in Teekay Parent’s Offshore Production business. In addition, included in Teekay Parent’s Other and Corporate G&A segment was one FSO unit in-chartered from Altera until March 2021. Teekay Parent also redelivered one FSO unit to Altera in August 2020, one bunker barge to a third party in May 2020, two shuttle tankers to Altera in March 2020, and one FSO unit to Altera in April 2019. The remaining portion of the Other and Corporate G&A segment primarily relates to Teekay Parent's marine services business in Australia as well as marine and corporate services provided to Altera.

						Offshore Production												Other and Corporate G&A												Teekay Parent Total
(in thousands of U.S. dollars, except calendar-ship-days)						2020						2019						2020						2019						2020						2019
Revenues						108,952						210,816						150,869						122,291						259,821						333,107
Voyage expenses						(24)						(36)						10						(7)						(14)						(43)
Vessel operating expenses						(94,945)						(159,822)						(132,375)						(100,813)						(227,320)						(260,635)
Time-charter hire expenses						(7,972)						(41,813)						(12,406)						(13,764)						(20,378)						(55,577)
Depreciation and amortization						(14,166)						(29,710)						—						(195)						(14,166)						(29,905)
General and administrative expenses (1)						(1,872)						(9,272)						(23,276)						(24,055)						(25,148)						(33,327)
Write-down and loss on sales of vessels						(70,692)						(178,330)						(9,100)						—						(79,792)						(178,330)
Gain on commencement of sales-type lease						44,943						—						—						—						44,943						—
Restructuring charges						(2,278)						—						(7,043)						(8,350)						(9,321)						(8,350)
Loss from vessel operations						(38,054)						(208,167)						(33,321)						(24,893)						(71,375)						(233,060)
Calendar-Ship-Days (2)
FPSO Units						1,098						1,095						—						—						1,098						1,095
FSO Units						244						365						366						477						610						842
Shuttle Tankers						113						642						—						—						113						642