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<SEC-DOCUMENT>0000911971-02-000011.txt : 20020814
<SEC-HEADER>0000911971-02-000011.hdr.sgml : 20020814
<ACCEPTANCE-DATETIME>20020814132256
ACCESSION NUMBER:		0000911971-02-000011
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20020630
FILED AS OF DATE:		20020814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TEEKAY SHIPPING CORP
		CENTRAL INDEX KEY:			0000911971
		STANDARD INDUSTRIAL CLASSIFICATION:	DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			C5
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-12874
		FILM NUMBER:		02733839

	BUSINESS ADDRESS:	
		STREET 1:		TK HOUSE, BAYSIDE EXECUTIVE PARK
		STREET 2:		WEST BAY ST & BLAKE RD, PO BOX AP-59213
		CITY:			NASSAU BAHAMAS
		STATE:			C5
		ZIP:			00000
		BUSINESS PHONE:		8093228020

	MAIL ADDRESS:	
		STREET 1:		1 BENTALL CENTRE,STE 1400,505 BURRARD ST
		STREET 2:		VANCOUVER, BRITISH COLUMBIA
		CITY:			CANADA V7X 1M5
		STATE:			A6
		ZIP:			00000

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	VIKING STAR SHIPPING INC
		DATE OF NAME CHANGE:	19930914
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>form6k_063002.htm
<DESCRIPTION>FORM 6-K
<TEXT>
<HTML>
<HEAD>
<TITLE>TEEKAY SHIPPING CORPORATION</TITLE>
</HEAD>
<BODY>
<H1 ALIGN=CENTER>
<FONT FACE="Times New Roman, Times, Serif" SIZE=5>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</FONT></H1>

<H1 ALIGN=CENTER>
<FONT FACE="Times New Roman, Times, Serif" SIZE=3><u><B>WASHINGTON, D.C. 20549</B></u>
</FONT>
</H1>

<BR>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4>FORM 6-K</FONT></H1>

<P ALIGN=CENTER>Report of Foreign Private Issuer</P>
<P ALIGN=CENTER>Pursuant to Rule 13a-16 or 15d-16 of<BR>
the Securities Exchange Act of 1934</P>

<hr width=15% size=1 noshade>

                                   <P ALIGN=CENTER>For the quarterly period ended <u>June 30, 2002</u><BR>
<BR>
                                            <FONT SIZE=4><B>TEEKAY SHIPPING CORPORATION</B></FONT><BR>
                              (Exact name of Registrant as specified in its charter)<BR>
<BR>
                                                     TK House<BR>
                                              Bayside Executive Park<BR>
                                           West Bay Street &amp; Blake Road<BR>
                                        P.O. Box AP-59213, Nassau, Bahamas<BR>
                                      (Address of principal executive office)<BR></P>

<hr width=15% size=1 noshade>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.]</P>

<P ALIGN=CENTER>Form 20-F&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Form 40- F&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Indicate by check mark whether the registrant by furnishing the information contained in this Form is
also thereby furnishing the information to the Commission pursuant to Rule
12g3-2(b) under the Securities Exchange Act of 1934.]</P>

<P ALIGN=CENTER>Yes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule
12g3-2(b):82-<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>]</P>
<BR>
<BR>
<BR>
<BR>
<BR>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED June 30, 2002</FONT></H1>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<U>INDEX</U></FONT></H1>

<PRE>
PART I:  FINANCIAL INFORMATION                                                                                <u>PAGE</u>

Item 1.  Financial Statements

                Independent Accountant's Report........................................................         3

                Consolidated Statements of Income
                       for the three months ended June 30, 2002 and 2001..............................          4

                Consolidated Balance Sheets
                       June 30, 2002 and December 31, 2001............................................          5

                Consolidated Statements of Cash Flows
                       for the six months ended June 30, 2002 and 2001................................          6

                Notes to Consolidated Financial Statements.............................................         7

                Schedule A to the Consolidated Financial Statements....................................        11


Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations............................................................        15

Item 3.  Quantitative and Qualitative Disclosures about Market Risk....................................        19

PART II: OTHER INFORMATION.............................................................................        20

SIGNATURES.............................................................................................        21
</PRE>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>
INDEPENDENT ACCOUNTANT&#146;S REVIEW REPORT ON INTERIM<BR>
FINANCIAL STATEMENTS</b></font></p>
<BR><BR>
<p>To the Shareholders and Board of Directors of<BR>
<b>Teekay Shipping Corporation</b></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>We have reviewed the  accompanying  consolidated  balance sheet of Teekay Shipping  Corporation and subsidiaries as
of June 30, 2002,  the related  consolidated  statements of income for the three and  six-month  periods ended June
30, 2002 and 2001,  and the  consolidated  statements of cash flows for the  six-month  periods ended June 30, 2002
and 2001. Our review also included  Schedule A listed in Index Item 1. These financial  statements and schedule are
the responsibility of the Company&#146;s management.</font></P>

<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>We were  furnished  with the report of other  accountants  on their  review of the  interim  information  of Ugland
Nordic  Shipping  ASA, a wholly  owned  subsidiary,  whose  total  assets as of June 30,  2002 and whose net voyage
revenues for the six-month  period ended June 30, 2002  constituted 22 per cent and 18 per cent,  respectively,  of
the consolidated totals.</font></p>

<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>We conducted our reviews in accordance  with standards  established by the American  Institute of Certified  Public
Accountants.  A review of interim financial  information consists principally of applying analytical  procedures to
financial  data,  and making  inquiries  of  persons  responsible  for  financial  and  accounting  matters.  It is
substantially  less in scope than an audit conducted in accordance with auditing  standards  generally  accepted in
the  United  States,  which  will be  performed  for the full year with the  objective  of  expressing  an  opinion
regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.</font></p>

<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Based on our reviews  and the report of other  accountants,  we are not aware of any  material  modifications  that
should be made to the accompanying  consolidated  financial  statements and schedule  referred to above for them to
be in conformity with accounting principles generally accepted in the United States.</font></p>

<p><FONT FACE="Times New Roman, Times, Serif" SIZE=3>We have previously  audited,  in accordance with auditing  standards  generally  accepted in the United States, the
consolidated  balance  sheet of Teekay  Shipping  Corporation  and  subsidiaries  as of December 31, 2001,  and the
related  consolidated  statements  of  income,  changes  in  stockholders&#146;  equity and cash flows for the year then
ended,  not presented  herein,  and in our report dated  February 8, 2002, we expressed an  unqualified  opinion on
those consolidated  financial statements.  We did not audit the financial statements of Ugland Nordic Shipping ASA,
a wholly owned subsidiary,  which statements reflect total assets and net voyage revenues  constituting 21 per cent
and 10 per cent,  respectively of the related  consolidated totals. Those statements were audited by other auditors
whose report has been  furnished to us, and our opinion,  insofar as it relates to the amounts  included for Ugland
Nordic  Shipping ASA, is based solely on the report of other  auditors.  In our opinion,  the information set forth
in the accompanying  consolidated  balance sheet and related schedule as of December 31, 2001, is fairly stated, in
all  material  respects,  in relation to the  consolidated  balance  sheet and  schedule  from which they have been
derived.</font></p>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
        <TD WIDTH=45%>Vancouver, Canada,<BR>
        July 25, 2002</TD>
        <TD WIDTH=55%>/s/ ERNST &amp; YOUNG LLP<BR>
        Chartered Accountants</TD>
</TR>
</TABLE>

<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
CONSOLIDATED STATEMENTS OF INCOME<BR>
(in thousands of U.S. dollars, except per share amounts)<BR>
</b></font></P><BR>
<BR>
<BR>
<PRE>
<b>                                                         Three Months Ended June 30,         Six Months Ended June 30,
                                                           2002               2001             2002              2001
                                                             $                 $                 $                $
                                                   ================== ================= ================ ===============
                                                               (unaudited)                        (unaudited)</b>
<b>NET VOYAGE REVENUES</b>
Voyage revenues                                          186,935            276,048          375,565           583,934
Voyage expenses                                           57,127             62,227          109,598           124,957
- -------------------------------------------------- ------------------ ----------------- ---------------- ---------------

Net voyage revenues                                      129,808            213,821          265,967           458,977
- -------------------------------------------------- ------------------ ----------------- ---------------- ---------------

<b>OPERATING EXPENSES</b>
Vessel operating expenses                                 42,663             39,274           83,050            73,153
Time-charter hire expense                                 13,496             16,346           26,210            33,529
Depreciation and amortization                             36,763             36,100           72,841            63,621
General and administrative                                14,327             11,761           28,494            22,599
- -------------------------------------------------- ------------------ ----------------- ---------------- ---------------
                                                         107,249            103,481          210,595           192,902
- -------------------------------------------------- ------------------ ----------------- ---------------- ---------------

<b>Income from vessel operations</b>                             22,559            110,340           55,372           266,075
- -------------------------------------------------- ------------------ ----------------- ---------------- ---------------

<b>OTHER ITEMS</b>
Interest expense                                         (14,478)           (18,080)         (29,179)          (32,866)
Interest income                                            1,001              2,849            1,793             5,652
Other (loss) income <i>(note 8)</i>                              (5,131)             1,132           (8,344)            2,068
- -------------------------------------------------- ------------------ ----------------- ---------------- ---------------
                                                         (18,608)           (14,099)         (35,730)          (25,146)
- -------------------------------------------------- ------------------ ----------------- ---------------- ---------------

<b>Net income</b>                                                 3,951             96,241           19,642           240,929
================================================== ================== ================= ================ ===============

<b>Earnings per common share</b>
     - Basic                                                0.10               2.42              0.50             6.10
     - Diluted                                              0.10               2.35              0.49             5.95
<b>Weighted average number of common shares</b>
     - Basic                                           39,631,949         39,807,935       39,593,419       39,520,392
     - Diluted                                         40,348,900         40,941,121       40,278,281       40,512,712
================================================== ================== ================= ================ ===============

</PRE><p><font size=2><i>The accompanying notes are an integral part of the consolidated financial statements.</i></font></p>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
CONSOLIDATED BALANCE SHEETS<BR>
(in thousands of U.S. dollars)<BR></b>
</font></P>
<BR>
<PRE>
                                                                                     <b>     As at            As at
                                                                                        June 30,        December 31,
                                                                                          2002              2001
                                                                                            $                $
                                                                                   ================ =================
                                                                                      (unaudited)</b>
     <b>ASSETS</b>
     <b>Current</b>
     Cash and cash equivalents <i>(note 5)</i>                                                   174,115          174,950
     Marketable securities                                                                      -            5,028
     Restricted cash <i>(note 5)</i>                                                              11,123            7,833
     Accounts receivable                                                                   56,046           57,519
     Prepaid expenses and other assets                                                     27,695           22,139
     ----------------------------------------------------------------------------- ---------------- -----------------

     <b>Total current assets</b>                                                                 268,979          267,469
     ----------------------------------------------------------------------------- ---------------- -----------------

     Marketable securities                                                                 13,763           16,026

     <b>Vessels and equipment</b> <i>(note 5)</i>
     At cost, less accumulated depreciation of $867,045
         (December 31, 2001 -  $801,985)                                                1,924,863        1,925,844
     Advances on newbuilding contracts <i>(note 7)</i>                                           141,008          117,254
     ----------------------------------------------------------------------------- ---------------- -----------------

     <b>Total vessels and equipment</b>                                                        2,065,871        2,043,098
     ----------------------------------------------------------------------------- ---------------- -----------------
     Investment in joint ventures                                                          28,306           27,352
     Other assets                                                                          28,433           26,757
     Goodwill <i>(note 4)</i>                                                                     89,189           87,079
     ----------------------------------------------------------------------------- ---------------- -----------------

                                                                                        2,494,541        2,467,781
     ============================================================================= ================ =================


     <b>LIABILITIES AND STOCKHOLDERS' EQUITY</b>
     <b>Current</b>
     Accounts payable                                                                      20,843           24,484
     Accrued liabilities                                                                   71,579           51,011
     Current portion of long-term debt <i>(note 5)</i>                                            52,366           51,830
     ----------------------------------------------------------------------------- ---------------- -----------------

     <b>Total current liabilities</b>                                                            144,788          127,325
     ----------------------------------------------------------------------------- ---------------- -----------------
     Long-term debt <i>(note 5)</i>                                                              876,581          883,872
     Other long-term liabilities                                                           45,725           39,407
     ----------------------------------------------------------------------------- ---------------- -----------------

     <b>Total liabilities</b>                                                                  1,067,094        1,050,604
     ----------------------------------------------------------------------------- ---------------- -----------------

     <b>Minority interest</b>                                                                     19,842           18,977

     <b>Stockholders' equity</b>
     Capital stock <i>(note 6)</i>                                                               470,570          467,341
     Retained earnings                                                                    938,285          935,660
     Accumulated other comprehensive loss                                                  (1,250)          (4,801)
     ----------------------------------------------------------------------------- ---------------- -----------------

     <b>Total stockholders' equity</b>                                                         1,407,605        1,398,200
     ----------------------------------------------------------------------------- ---------------- -----------------

                                                                                        2,494,541        2,467,781
     ============================================================================= ================ =================
</PRE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies <i>(note 7)</i></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>The accompanying notes are an integral part of the consolidated financial statements.</i></font></P>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<b>TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
(in thousands of U.S. dollars)</b></font></P>
<BR>
<BR>
<PRE>
                                                                                     <b>Six Months Ended June 30,
                                                                                    2002                    2001
                                                                                     $                       $
                                                                           ======================= =======================
                                                                                            (unaudited)</b>
Cash and cash equivalents provided by (used for)

<b>OPERATING ACTIVITIES</b>
Net income                                                                          19,642                 240,929
Non-cash items:
     Depreciation and amortization                                                  72,841                  63,621
     Gain on disposition of available-for-sale securities                            1,130                  (1,944)
     Equity income (net of dividends received: June 30, 2002 - $1,748;
        June 30, 2001 - $5,000)                                                       (539)                   (394)
     Future income taxes                                                             6,991                   3,090
     Other - net                                                                       796                     258
Change in non-cash working capital items related to
   operating activities                                                             11,148                 (10,856)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<b>Net cash flow from operating activities</b>                                            112,009                 294,704
- -------------------------------------------------------------------------- ----------------------- -----------------------

<b>FINANCING ACTIVITIES</b>
Proceeds from long-term debt                                                        19,260                 529,733
Scheduled repayments of long-term debt                                             (25,897)                (40,886)
Prepayments of long-term debt                                                            -                (378,735)
Increase in restricted cash                                                         (3,290)                      -
Proceeds from issuance of Common Stock                                               3,225                  20,323
Cash dividends paid                                                                (17,013)                (16,894)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<b>Net cash flow (used in) from financing activities</b>                                  (23,715)                113,541
- -------------------------------------------------------------------------- ----------------------- -----------------------

<b>INVESTING ACTIVITIES</b>
Expenditures for vessels and equipment                                             (80,373)               (114,531)
Expenditures for drydocking                                                        (13,546)                 (8,049)
Expenditure for purchase of Ugland Nordic Shipping ASA (net of cash
    acquired of $26,605)                                                                 -                (176,453)
Acquisition costs related to purchase of Ugland Nordic Shipping ASA                      -                    (888)
Acquisition costs related to purchase of Bona Shipholding Ltd.                           -                     (20)
Proceeds from disposition of available-for-sale securities                           6,675                  14,618
Other                                                                               (1,885)                      -
- -------------------------------------------------------------------------- ----------------------- -----------------------

<b>Net cash flow used in investing activities</b>                                         (89,129)               (285,323)
- -------------------------------------------------------------------------- ----------------------- -----------------------

(Decrease) increase in cash and cash equivalents                                      (835)                122,922
Cash and cash equivalents, beginning of the period                                 174,950                 181,300
- -------------------------------------------------------------------------- ----------------------- -----------------------

<b>Cash and cash equivalents, end of the period</b>                                       174,115                 304,222
========================================================================== ======================= =======================
</PRE>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>The accompanying notes are an integral part of the consolidated financial statements.</i></font></P>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
                                    <b>TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
                    (all tabular amounts stated in thousands of U.S. dollars, except share data)<BR>
                      (Information as at June 30, 2002 and for the Three and Six-Month Periods<BR>
                                     Ended June 30, 2002 and 2001 is unaudited)</b></font></P>
<BR>
<BR>
<P><b>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basis of Presentation</b></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>The accompanying  unaudited  interim  consolidated  financial  statements have been prepared in accordance
         with accounting  principles  generally  accepted in the United States and the rules and regulations of the
         Securities  and  Exchange   Commission.   They  include  the  accounts  of  Teekay  Shipping   Corporation
         (&#147;Teekay&#148;),  which is incorporated under the laws of the Republic of the Marshall Islands,  and its wholly
         owned  or  controlled   subsidiaries  (the  &#147;Company&#148;).   Certain  information  and  footnote  disclosures
         required by generally accepted  accounting  principles for complete annual financial  statements have been
         omitted and,  therefore,  it is suggested that these interim  financial  statements be read in conjunction
         with the Company&#146;s  audited  financial  statements for the year ended December 31, 2001. In the opinion of
         management,  these statements  reflect all adjustments  (consisting  only of normal  recurring  accruals),
         necessary to present fairly, in all material  respects,  the Company&#146;s  consolidated  financial  position,
         results of operations,  and cash flows for the interim  periods  presented.  The results of operations for
         the three and  six-month  periods ended June 30, 2002 are not  necessarily  indicative of those for a full
         fiscal year.
</P>
</TD>
</TR>
</TABLE>
<BR>
<P><b>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of Ugland Nordic Shipping ASA</b></P>

         <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
As of May 28,  2001,  Teekay had  purchased  100% of the issued and  outstanding  shares of Ugland  Nordic
         Shipping  ASA  (&#147;UNS&#148;)  (9% of which was  purchased  in  fiscal  2000 and the  remaining  91% of which was
         purchased  in fiscal  2001),  for  $222.8  million  cash,  including  estimated  transaction  expenses  of
         approximately  $7  million.   UNS  controls  a  modern  fleet  of  18  shuttle  tankers  (including  three
         newbuildings  on order) that engage in the  transportation  of oil from offshore  production  platforms to
         onshore storage and refinery facilities.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The  acquisition  of UNS has been  accounted  for using the  purchase  method of  accounting,  based  upon
         estimates  of  fair  value.  UNS&#146;  operating  results  are  reflected  in  Teekay&#146;s  financial  statements
         commencing March 6, 2001, the date Teekay acquired a majority  interest in UNS.  Teekay&#146;s  interest in UNS
         for the  period  from  January  1,  2001 to March 5,  2001 has been  included  in  equity  income  for the
         corresponding period.</P>
</TD>
</TR>
</TABLE>
<BR>
<P><b>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash Flows</b></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
          Cash  interest  paid during the  six-month  periods  ended June 30, 2002 and 2001  totalled  approximately
         $33.5 million and $35.2 million, respectively.</P>
</TD>
</TR>
</TABLE>
<BR>
<P><b>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill</b></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         In July 2001,  the FASB  issued  Statement  of  Financial  Accounting  Standards  No.  142  (&#147;SFAS  142&#148;),
         &#147;Goodwill and Other Intangible  Assets&#148;,  which  establishes new standards for accounting for goodwill and
         other  intangible  assets.  SFAS 142 requires  that goodwill and  indefinite  lived  intangible  assets no
         longer be  amortized  but  reviewed  for  impairment  during  the first  six  months of 2002 and  annually
         thereafter,  or more frequently if impairment  indicators  arise. This statement is effective for existing
         goodwill  beginning  with fiscal years  starting  after  December 15, 2001.  During the  six-month  period
         ended June 30, 2002, the Company  completed its transitional  impairment  testing required by SFAS 142 and
         has determined that goodwill is not impaired.  Based upon the Company&#145;s  goodwill  balance at December 31,
         2001, the Company  estimates that adoption of SFAS 142 will result in an annual  increase in net income of
         approximately $4.5 million, by no longer amortizing goodwill.</P>
</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
                    (all tabular amounts stated in thousands of U.S. dollars, except share data)<BR>
                      (Information as at June 30, 2002 and for the Three and Six-Month Periods<BR>
                                     Ended June 30, 2002 and 2001 is unaudited)</b></P><BR>
<BR>
<P><b>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-Term Debt</b></P>
<BR>
<PRE>                                                                                  <b>June 30,          December 31,
                                                                                    2002                2001
                                                                                      $                   $
                                                                             -------------------- ------------------</b>
         First Preferred Ship Mortgage Notes (8.32%)
           due through 2008...............................................         167,229              167,229
         Term Loans due through 2010 .....................................         409,601              416,239
         Senior Notes (8.875%) due July 15, 2011 .........................         352,117              352,234
                                                                             -------------------- ------------------
                                                                                   928,947              935,702
         Less current portion.............................................          52,366               51,830
                                                                             -------------------- ------------------
                                                                                   876,581              883,872
                                                                             ==================== ==================
</PRE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The Company has two undrawn long-term Revolving Credit Facilities (the &#147;Revolvers&#148;)  available,  which, as
         at June 30, 2002,  provided for borrowings of up to $479.4 million.  The Revolvers are  collateralized  by
         first  priority  mortgages  granted on 33 of the  Company&#146;s  vessels,  together with certain other related
         collateral, and a guarantee from Teekay for all amounts outstanding under the Revolvers.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The  8.32%  First   Preferred   Ship  Mortgage  Notes  due  February  1,  2008  (the  &#147;8.32%  Notes&#148;)  are
         collateralized  by first  preferred  mortgages on seven of the Company&#146;s  Aframax  tankers,  together with
         certain  other  related  collateral,  and are  guaranteed  by seven  subsidiaries  of Teekay  that own the
         mortgaged  vessels (the &#147;8.32%  Notes  Guarantor  Subsidiaries&#148;)  to a maximum of 95% of the fair value of
         their net assets.  As at June 30, 2002, the fair value of these net assets  approximated  $170.8  million.
         The 8.32% Notes are also subject to a sinking fund,  which will retire $45.0 million  principal  amount of
         the 8.32% Notes on each February 1, commencing 2004.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         Condensed  financial   information  regarding  Teekay,  the  8.32%  Notes  Guarantor   Subsidiaries,   and
         non-guarantor  subsidiaries  of  Teekay  is  set  out  in  Schedule  A  of  these  consolidated  financial
         statements.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The Company has several term loans outstanding,  which, as at June 30, 2002, totalled $409.6 million.  All
         term loans of the Company are  collateralized  by first  preferred  mortgages  on the vessels to which the
         loans relate,  together with certain other collateral.  All term loans, other than UNS term loans totaling
         $307.9 million,  are guaranteed by Teekay.  One term loan required a retention deposit of $11.1 million as
         at June 30, 2002.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         Pursuant to certain long-term debt agreements,  the amount of Restricted  Payments,  as defined,  that the
         Company can make,  including  dividends and purchases of its own capital stock, was limited as of June 30,
         2002,  to  $444.1  million.  Certain  loan  agreements  require  that a  minimum  level  of  free  cash be
         maintained. As at June 30, 2002, this amount was $75.0 million.</P>
</TD>
</TR>
</TABLE>
<BR>
<P><b>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital Stock</b></P>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The authorized  capital stock of Teekay at June 30, 2002 is 25,000,000  shares of Preferred Stock,  with a
         par value of $1 per share, and 725,000,000  shares of Common Stock,  with a par value of $0.001 per share.
         As at June 30,  2002,  Teekay  had  39,695,536  shares of Common  Stock and no shares of  Preferred  Stock
         issued and outstanding.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         As at June 30, 2002,  3,848,842  shares of Common  Stock were  reserved and  available  for issuance  upon
         exercise  of options  granted or to be granted  pursuant  to its 1995 Stock  Option  Plan.  As at June 30,
         2002,  options to purchase a total of  3,573,498  shares of Teekay&#146;s  Common  Stock were  outstanding,  of
         which  1,695,738  options were then  exercisable at prices ranging from $16.875 to $41.190 per share and a
         weighted  average  exercise price of $25.396 per share.  The remaining  outstanding  options have exercise
         prices  ranging from  $16.875 to $41.190 per share and a weighted  average  exercise  price of $31.385 per
         share.  All outstanding  options expire between July 19, 2005 and March 11, 2012, ten years after the date
         of each respective grant.</P>
</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
                    (all tabular amounts stated in thousands of U.S. dollars, except share data)<BR>
                      (Information as at June 30, 2002 and for the Three and Six-Month Periods<BR>
                                     Ended June 30, 2002 and 2001 is unaudited)</b></P>
<BR>
<BR>
<P><b>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and Contingencies</b></P>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         As at June 30, 2002, the Company was committed to the  construction  of three  shuttle,  three Suezmax and
         two Aframax  tankers  scheduled for delivery  between  December 2002 and December 2003, at a total cost of
         approximately  $411.7  million.  As of June  30,  2002,  there  have  been  payments  made  towards  these
         commitments of $132.1 million and long-term  financing  arrangements exist for $42.2 million of the unpaid
         cost of these  vessels.  It is the Company&#146;s  intention to finance the  remaining  unpaid amount of $279.6
         million through either debt borrowing or surplus cash balances,  or a combination  thereof. As of June 30,
         2002, the remaining payments required to be made under these newbuilding  contracts are as follows:  $37.3
         million in 2002 and $242.3  million in 2003.  Upon  delivery,  the  vessels  will be subject to  long-term
         charter contracts, which expire between 2009 and 2015.</P>
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         Teekay and certain  subsidiaries  of Teekay have guaranteed  their share of the outstanding  mortgage debt
         in three  50%-owned  joint venture  companies.  As of June 30, 2002,  Teekay and these  subsidiaries  have
         guaranteed  $85.4 million of such debt, or 50% of the total $170.8  million in  outstanding  mortgage debt
         of the joint venture companies. These joint venture companies own three shuttle tankers.</P>
</TD>
</TR>
</TABLE>
<BR>
<P><b>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other (Loss) Income</b></P>
<BR>
<PRE>                                                                        <b>Three Months Ended         Six Months Ended

                                                                       June 30,     June 30,     June 30,    June 30,
                                                                         2002         2001         2002        2001
                                                                          $             $           $           $
                                                                     ------------- ------------ ----------- -----------</b>
         (Loss) gain on disposition of available-for-sale securities          -          (229)     (1,130)      1,944
         Equity income from joint venture...........................        402         2,601       2,287       5,394
         Future income taxes........................................     (3,810)       (2,419)     (6,991)     (3,090)
         Miscellaneous..............................................     (1,723)        1,179      (2,510)     (2,180)
                                                                     ------------- ------------ ----------- -----------
                                                                         (5,131)        1,132      (8,344)      2,068
                                                                     ============= ============ =========== ============
</PRE>
<BR>

<P><b>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive Income</b></P>
<BR>
<PRE>                                                                        <b>Three Months Ended         Six Months Ended

                                                                       June 30,     June 30,     June 30,    June 30,
                                                                         2002         2001         2002        2001
                                                                          $             $           $           $
                                                                     ------------- ------------ ----------- -----------</b>
         Net income.................................................     3,951        96,241       19,642     240,929
         Other comprehensive income:
            Unrealized loss on available-for-sale securities........    (1,168)       (2,062)        (144)     (3,565)
            Reclassification adjustment for loss (gain) on
              available-for-sale securities included in net income..         -           519          737      (4,427)
            Cumulative effect of accounting change..................         -             -            -       4,155
            Unrealized gain (loss) on derivative instruments........     2,735           597        3,458      (2,717)
            Reclassification adjustment for gain on derivative
               instruments..........................................      (361)         (267)        (500)      (657)
                                                                     ------------- ------------ ----------- -----------
         Comprehensive income.......................................     5,157        95,028       23,193     233,718
                                                                     ============= ============ =========== ============

</PRE>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
                    (all tabular amounts stated in thousands of U.S. dollars, except share data)<BR>
                      (Information as at June 30, 2002 and for the Three and Six-Month Periods<BR>
                                     Ended June 30, 2002 and 2001 is unaudited)</b></P>
<BR>
<BR>
<P><b>10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative Instruments and Hedging Activities</b></P>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3% ALIGN=RIGHT><P> </P></TD>
<TD WIDTH=97%><P>
         The Company uses  derivatives  only for hedging  purposes.  The following  summarizes  the Company&#146;s  risk
         strategies  with respect to market risk from foreign  currency  fluctuations,  changes in interest  rates,
         bunker  fuel  prices  and  tanker  freight  rates and the  effect  of these  strategies  on the  Company&#146;s
         financial statements.<BR>
<BR>
         The  Company  hedges  portions of its  forecasted  expenditures  denominated  in foreign  currencies  with
         forward  contracts and a portion of its bunker fuel  expenditures  with bunker fuel swap contracts.  As at
         June 30,  2002,  the Company was  committed  to foreign  exchange  contracts  for the forward  purchase of
         approximately  Norwegian  Kroner 74.9  million,  Canadian  Dollars  64.4 million and Euros 2.9 million for
         U.S. Dollars,  at an average rate of Norwegian Kroner 8.32 per U.S. Dollar,  Canadian Dollar 1.58 per U.S.
         Dollar and Euros 0.93 per U.S. Dollar,  respectively.  The foreign  exchange  forward  contracts mature as
         follows:  $24.4  million  in 2002,  and $28.1  million  in 2003.  As at June 30,  2002,  the  Company  was
         committed to bunker fuel swap contracts totaling 42,600 metric tonnes,  with a  weighted-average  price of
         $110.17 per tonne. These swap contracts expire between July 2002 and May 2004.<BR>
<BR>
         As at June 30, 2002, the Company was committed to interest rate swap  agreements  whereby $70.0 million of
         the  Company&#146;s  floating  rate debt was  swapped  with fixed rate  obligations  having a weighted  average
         remaining  term of 0.7  years.  These  agreements,  which  expire  between  December  2002  and May  2004,
         effectively  change the Company&#146;s  interest  rate exposure on $70.0 million of debt from a floating  LIBOR
         rate to a weighted  average  fixed rate of 6.48%.  The  Company is exposed to credit  loss in the event of
         non-performance  by the counter parties to the interest rate swap  agreements;  however,  the Company does
         not anticipate non-performance by any of the counter parties.<BR>
<BR>
         The Company hedges certain of its voyage  revenues  through the use of a written  freight call option.  As
         at June 30, 2002, the Company had a written freight call option  outstanding  with a remaining term of six
         months,  which could  require  payments to the  counterparty  if monthly  average  freight  rates exceed a
         specified amount.</P>
</TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<BR>

<P ALIGN=RIGHT><b>SCHEDULE A</b></P><BR>

<P ALIGN=CENTER><b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                 CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS<BR>
                                           (in thousands of U.S. dollars)<BR>
                                                     (unaudited)</b></P><BR>
<BR>
<BR>
<PRE>
<b>                                                                  Three Months Ended June 30, 2002
                                           -------------------------------------------------------------------------------
                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $
                                           -------------------------------------------------------------------------------
</b>
Net voyage revenues                                   -         9,038          155,852       (35,082)         129,808
Operating expenses                                3,220         8,522          130,589       (35,082)         107,249
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations          (3,220)          516           25,263             -           22,559
Net interest expense                            (10,367)            -           (3,110)            -          (13,477)
Equity in net income of subsidiaries             16,784             -                -       (16,784)               -
Other income (loss)                                 754             -           (5,885)            -           (5,131)
                                           -------------------------------------------------------------------------------
<b>Net income</b>                                        3,951           516           16,268       (16,784)           3,951
Retained earnings (deficit), beginning
   of the period                                942,844       (13,524)       1,062,204    (1,048,680)         942,844
Dividends declared                               (8,510)            -                -             -           (8,510)
                                           -------------------------------------------------------------------------------
<b>Retained earnings (deficit), end of the
   the period</b>                                   938,285       (13,008)       1,078,472    (1,065,464)         938,285
                                           ===============================================================================

</PRE><BR>
<BR>

<PRE>
<b>                                                                  Three Months Ended June 30, 2001
                                           -------------------------------------------------------------------------------
                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $
                                           -------------------------------------------------------------------------------</b>

Net voyage revenues                                 -           8,879        243,770          (38,828)        213,821
Operating expenses                              2,695           8,313        131,301          (38,828)        103,481
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations        (2,695)            566        112,469                -         110,340
Net interest expense                           (3,217)              -        (12,014)               -         (15,231)
Equity in net income of subsidiaries          103,130               -              -         (103,130)              -
Other income                                     (977)          1,663            446                -           1,132
                                           -------------------------------------------------------------------------------
<b>Net income</b>                                     96,241           2,229        100,901         (103,130)         96,241
Retained earnings (deficit), beginning
   of the period                              777,618         (18,928)       818,886         (799,958)        777,618
Dividends declared                             (8,481)              -              -                -          (8,481)
                                           -------------------------------------------------------------------------------
<b>Retained earnings (deficit), end of
   the period</b>                                 865,378         (16,699)       919,787         (903,088)        865,378
                                           ===============================================================================
</PRE>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____________<BR>
(See Note 7)</font>
<BR>
<BR>
<BR>
<BR>
<BR>


<P ALIGN=RIGHT><b>SCHEDULE A</b></P>
<BR>

<P ALIGN=CENTER>
<b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                 CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS<BR>
                                           (in thousands of U.S. dollars)<BR>
                                                     (unaudited)</b></P>
<BR>
<BR>
<BR>
<PRE><b>                                                                   Six Months Ended June 30, 2002
                                           -------------------------------------------------------------------------------
                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $
                                           -------------------------------------------------------------------------------</b>

Net voyage revenues                                   -        17,977          317,783       (69,793)         265,967
Operating expenses                                5,834        15,707          258,847       (69,793)         210,595
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations          (5,834)        2,270           58,936             -           55,372
Net interest expense                            (20,818)            -           (6,568)            -          (27,386)
Equity in net income of subsidiaries             44,341             -                -       (44,341)               -
Other income (loss)                               1,953             -          (10,297)            -           (8,344)
                                           -------------------------------------------------------------------------------
<b>Net income</b>                                       19,642         2,270           42,071       (44,341)          19,642
Retained earnings (deficit), beginning
   of the period                                935,660       (15,278)       1,036,401    (1,021,123)         935,660
Dividends declared                              (17,017)            -                -             -          (17,017)
                                           -------------------------------------------------------------------------------
<b>Retained earnings (deficit), end of
   the period</b>                                   938,285       (13,008)       1,078,472    (1,065,464)         938,285
                                           ===============================================================================





<b>                                                                   Six Months Ended June 30, 2001
                                           -------------------------------------------------------------------------------
                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $
                                           -------------------------------------------------------------------------------</b>

Net voyage revenues                                 -          17,660        520,304          (78,987)        458,977
Operating expenses                              5,488          17,053        249,348          (78,987)        192,902
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations        (5,488)            607        270,956                -         266,075
Net interest expense                           (5,963)              -        (21,251)               -         (27,214)
Equity in net income of subsidiaries          250,988               -              -         (250,988)              -
Other income (loss)                             1,392           1,663           (987)               -           2,068
                                           -------------------------------------------------------------------------------
<b>Net income</b>                                    240,929           2,270        248,718         (250,988)        240,929
Retained earnings (deficit), beginning
   of the period                              641,149         (18,969)       671,069         (652,100)        641,149
Adjustment for equity income on step
   acquisition                                    198               -              -                -             198
Dividends declared                            (16,898)              -              -                -         (16,898)
                                           -------------------------------------------------------------------------------
<b>Retained earnings (deficit), end of
   the period </b>                                865,378         (16,699)       919,787         (903,088)        865,378
                                           ===============================================================================

</PRE>

<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____________<BR>
(See Note 7)</font>
<BR>
<BR>
<BR>
<BR>
<BR>

<P ALIGN=RIGHT><b>SCHEDULE A</b></P>
<BR>
<P ALIGN=CENTER>
<b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                               CONDENSED BALANCE SHEETS<BR>
                                            (in thousands of U.S. dollars)<BR>
                                                     (unaudited)</b></p>
<BR>
<BR>
<PRE>
<b>                                                                        As at June 30, 2002
                                          ---------------------------------------------------------------------------------
                                                            8.32% Notes                                        Teekay
                                          Teekay Shipping    Guarantor    Non-Guarantor                    Shipping Corp.
                                               Corp.       Subsidiaries    Subsidiaries    Eliminations    &amp; Subsidiaries
                                                 $               $              $                $               $
                                          ---------------------------------------------------------------------------------</b>
<b>ASSETS</b>
Cash and cash equivalents                            3               -         174,112               -           174,115
Other current assets                               375             790         189,699         (96,000)           94,864
                                          ---------------------------------------------------------------------------------
     Total current assets                          378             790         363,811         (96,000)          268,979
Vessels and equipment (net)                          -         258,499       1,807,372               -         2,065,871
Advances due from subsidiaries                 318,522               -               -        (318,522)                -
Other assets (principally marketable
     securities and investment in
     subsidiaries                            1,631,224               -          42,196      (1,631,224)           42,196
Investment in joint ventures                         -               -          28,306               -            28,306
Goodwill                                             -               -          89,189               -            89,189
                                          ---------------------------------------------------------------------------------
                                             1,950,124         259,289       2,330,874      (2,045,746)        2,494,541
                                          =================================================================================
<b>LIABILITIES &amp; STOCKHOLDERS&#146;
EQUITY</b>
Current liabilities                             21,923           1,932         216,933         (96,000)          144,788
Long-term debt                                 519,346               -         402,960               -           922,306
Due to (from) affiliates                             -         (98,965)        471,208        (372,243)                -
                                          ---------------------------------------------------------------------------------
     Total liabilities                         541,269         (97,033)      1,091,101        (468,243)        1,067,094
                                          ---------------------------------------------------------------------------------
Minority Interest                                    -               -          19,842               -            19,842
Stockholders&#146; Equity
Capital stock                                  470,570              23           5,943          (5,966)          470,570
Contributed capital                                  -         369,307         136,766        (506,073)                -
Retained earnings (deficit)                    938,285         (13,008)      1,078,472      (1,065,464)          938,285
Accumulated other comprehensive loss                 -               -          (1,250)              -            (1,250)
                                          ---------------------------------------------------------------------------------
     Total stockholders&#146; equity              1,408,855         356,322       1,219,931      (1,577,503)        1,407,605
                                          ---------------------------------------------------------------------------------
                                             1,950,124         259,289       2,330,874      (2,045,746)        2,494,541
                                          =================================================================================

<b>                                                                      As at December 31, 2001
                                         ----------------------------------------------------------------------------------
                                                            8.32% Notes                                        Teekay
                                              Teekay         Guarantor    Non-Guarantor                    Shipping Corp.
                                          Shipping Corp.    Subsidiaries   Subsidiaries     Eliminations   &amp; Subsidiaries
                                                 $               $              $                $                $
                                         ------------------ ------------ ----------------- --------------- ----------------</b>
<b>ASSETS</b>                                                -            -           174,950              -           174,950
Cash and cash equivalents
Other current assets             1                  1,101          472           186,946        (96,000)           92,519
                                         ------------------ ------------ ----------------- --------------- ----------------
     Total current assets                          1,101          472           361,896        (96,000)          267,469
Vessels and equipment (net)                            -      264,768         1,778,330              -         2,043,098
Advances due from subsidiaries                   346,430            -                 -       (346,430)                -
Other assets (principally marketable
     securities and investments in
     subsidiaries)                             1,599,746            -            42,783     (1,599,746)           42,783
Investment in joint ventures                           -            -            27,352              -            27,352
Goodwill                                               -            -            87,079              -            87,079
                                         ------------------ ------------ ----------------- --------------- ----------------
                                               1,947,277      265,240         2,297,440     (2,042,176)        2,467,781
                                         ================== ============ ================= =============== ================
<b>LIABILITIES &amp; STOCKHOLDERS&#146;
EQUITY</b>
Current liabilities                               24,813        1,319           197,193        (96,000)          127,325
Long-term debt                                   519,463            -           403,816              -           923,279
Due to (from) affiliates                               -      (90,131)          503,145       (413,014)                -
                                         ------------------ ------------ ----------------- --------------- ----------------
     Total liabilities                           544,276      (88,812)        1,104,154       (509,014)        1,050,604
                                         ------------------ ------------ ----------------- --------------- ----------------
Minority Interest                                      -            -            18,977              -            18,977
Stockholders&#146; Equity
Capital stock                                    467,341           23             5,943         (5,966)          467,341
Contributed capital                                    -      369,307           136,766       (506,073)                -
Retained earnings (deficit)                      935,660      (15,278)        1,036,401     (1,021,123)          935,660
Accumulated other comprehensive loss                   -            -            (4,801)             -            (4,801)
                                         ------------------ ------------ ----------------- --------------- ----------------
     Total stockholders' equity                1,403,001      354,052         1,174,309     (1,533,162)        1,398,200
                                         ------------------ ------------ ----------------- --------------- ----------------
                                               1,947,277      265,240         2,297,440     (2,042,176)        2,467,781
                                         ================== ============ ================= =============== ================</PRE>
<BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____________<BR>
(See Note 7)</font>
<BR>
<BR>
<BR>
<BR>
<BR>

<P ALIGN=RIGHT><b>SCHEDULE A</b></P>

<P ALIGN=CENTER>
<b>                                     TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
<BR>
                                          CONDENSED STATEMENTS OF CASH FLOWS<BR>
                                            (in thousands of U.S. dollars)<BR>
                                                     (unaudited)<BR>
</b></p>
<BR>

<PRE><b>                                                                          Six Months Ended June 30, 2002
                                                     -------------- --------------- ------------- ------------ ---------------
                                                                     8.32% Notes    Non-Guarantor                  Teekay
                                                        Teekay        Guarantor     Subsidiaries               Shipping Corp.
                                                       Shipping      Subsidiaries                 Eliminations &amp; Subsidiaries
                                                         Corp.
                                                           $               $              $             $             $
                                                     -------------- --------------- ------------- ------------ ---------------</b>
Cash and cash equivalents provided by (used for)
<b>OPERATING ACTIVITIES</b>
                                                     -------------- --------------- ------------- ------------ ---------------
     Net cash flow from operating activities            (14,105)        10,564         115,550           -        112,009
                                                     -------------- --------------- ------------- ------------ ---------------
<b>FINANCING ACTIVITIES</b>
Proceeds from long-term debt                                  -              -          19,260           -         19,260
Scheduled repayments of long-term debt                        -              -         (25,897)          -        (25,897)
Other                                                    14,108         (8,833)        (22,353)          -        (17,078)
                                                     -------------- --------------- ------------- ------------ ---------------
     Net cash flow from (used in)  financing
     activities                                          14,108         (8,833)        (28,990)          -        (23,715)
                                                     -------------- --------------- ------------- ------------ ---------------

<b>INVESTING ACTIVITIES</b>
Expenditures for vessels and equipment                        -         (1,731)        (92,188)          -        (93,919)
Other                                                         -              -           4,790           -          4,790
                                                     -------------- --------------- ------------- ------------ ---------------
     Net cash flow used in investing activities               -         (1,731)        (87,398)          -        (89,129)
                                                     -------------- --------------- ------------- ------------ ---------------
<b>Increase (decrease) in cash and cash equivalents</b>              3              -            (838)          -           (835)
Cash and cash equivalents, beginning of the period            -              -         174,950           -        174,950
                                                     -------------- --------------- ------------- ------------ ---------------
<b>Cash and cash equivalents, end of the period</b>                  3              -         174,112           -        174,115
<b>                                                     ============== =============== ============= ============ ===============</b>






<b>                                                                        Six Months Ended June 30, 2001
                                                 ---------------- --------------- -------------- ----------- -----------------
                                                                   8.32% Notes                                    Teekay
                                                     Teekay         Guarantor     Non-Guarantor               Shipping Corp.
                                                 Shipping Corp.    Subsidiaries   Subsidiaries   Eliminations &amp; Subsidiaries
                                                        $               $               $            $              $
                                                 ---------------- --------------- -------------- ----------- -----------------</b>
Cash and cash equivalents provided by (used for)
<b>OPERATING ACTIVITIES</b>
                                                 ---------------- --------------- -------------- ----------- -----------------
     Net cash flow from operating activities          3,296           11,676         279,732         -          294,704
                                                 ---------------- --------------- -------------- ----------- -----------------
<b>FINANCING ACTIVITIES</b>
Net proceeds from long-term debt                    245,233                -         284,500           -        529,733
Scheduled repayments of long-term debt                    -                -         (40,886)          -        (40,886)
Prepayments of long-term debt                       (22,045)               -        (356,690)          -       (378,735)
Other                                              (226,918)         (11,301)        241,648           -          3,429
                                                 ---------------- --------------- -------------- ----------- -----------------
     Net cash flow (used in) from financing
     activities                                      (3,730)         (11,301)        128,572           -        113,541
                                                 ---------------- --------------- -------------- ----------- -----------------

<b>INVESTING ACTIVITIES</b>
Expenditures for vessels and equipment                    -             (376)       (122,204)          -       (122,580)
Expenditure for the purchase of Ugland Nordic
     Shipping ASA                                       198                -        (176,651)          -       (176,453)
Other                                                     -                1          13,709           -         13,710
                                                 ---------------- --------------- -------------- ----------- -----------------
     Net cash flow from (used in) investing             198             (375)       (285,146)          -       (285,323)
     activities
                                                 ---------------- --------------- -------------- ----------- -----------------
<b>Increase (decrease) in cash and cash
     equivalents</b>                                       (236)               -         123,158           -        122,922
Cash and cash equivalents, beginning of
     the period                                         294                -         181,006           -        181,300
                                                 ---------------- --------------- -------------- ----------- -----------------
<b>Cash and cash equivalents, end of the period</b>             58                -         304,164           -        304,222
                                                 ================ =============== ============== =========== =================
</PRE>
<BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____________<BR>
(See Note 7)</font>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><b>                                    TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
                                                   JUNE 30, 2002<BR>
                                          PART I &#150; FINANCIAL INFORMATION<BR></b></P>

<P><b>ITEM 2 &#150;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</b></P>

<P><b>RESULTS OF OPERATIONS</b></P>

<P><b>General</b></P>
<P><BR>
Teekay is a leading  provider of international  crude oil and petroleum  product  transportation  services to major
oil  companies,  major oil traders and government  agencies  worldwide.  As at June 30, 2002,  the Company&#146;s  fleet
consisted of 96 vessels (including eight newbuildings on order, five vessels  time-chartered-in,  and three vessels
owned by joint ventures), for a total cargo-carrying capacity of approximately 9.8 million tonnes.<BR>
<BR>
During the six months ended June 30,  2002,  approximately  46% of the  Company&#146;s  net voyage  revenues was derived
from  spot  voyages.  The  balance  of the  Company&#146;s  revenue  is  generated  by two  other  modes of  employment,
time-charters,  whereby  vessels are  chartered to customers for a fixed  period,  and  contracts of  affreightment
(&#147;COAs&#148;),  whereby the Company  carries an agreed  quantity  of cargo for a customer  over a specified  trade route
within a given  period of time.  In the six months ended June 30, 2002,  approximately  19% of net voyage  revenues
was generated by time-charters  and COAs priced on a spot market basis. In the aggregate,  approximately 65% of the
Company&#146;s  net  voyage  revenues  during  the six  months  ended June 30,  2002 was  derived  from spot  voyages or
time-charters  and COAs priced on a spot  market  basis,  with the  remaining  35% being  derived  from  fixed-rate
time-charters  and COAs.  This dependence on the spot market,  which is within  industry norms,  contributes to the
volatility of the Company&#146;s revenues, cash flow from operations, and net income.<BR>
<BR>
Historically,  the tanker industry has been cyclical,  experiencing  volatility in  profitability  and asset values
resulting  from  changes in the supply of, and demand for,  vessel  capacity.  In  addition,  tanker  markets  have
historically  exhibited seasonal  variations in charter rates.  Tanker markets are typically stronger in the winter
months as a result of increased oil  consumption in the northern  hemisphere  and  unpredictable  weather  patterns
that tend to disrupt vessel scheduling.<BR>
<BR>
<b>Acquisition of Ugland Nordic Shipping ASA</b><BR>
<BR>
As of May 28, 2001, the Company had purchased 100% of the issued and  outstanding  shares of Ugland Nordic Shipping
ASA (&#147;UNS&#148;)  (9% of which was  purchased  in fiscal 2000 and the  remaining  91% of which was  purchased  in fiscal
2001), for $222.8 million in cash.<BR>
<BR>
UNS is the world&#146;s  largest owner of shuttle  tankers,  controlling a modern fleet of 18 vessels  (including  three
newbuildings  on order)  (the &#147;UNS  Fleet&#148;)  that  engage in the  transportation  of oil from  offshore  production
platforms  to onshore  storage  and  refinery  facilities.  The UNS Fleet has an average age of  approximately  9.5
years,  excluding  the three  newbuildings  on order,  and  operates  primarily  in the North Sea under  fixed-rate
long-term  contracts.  In  addition,  as of June 30, 2002,  UNS owned  approximately  10.3% of the publicly  traded
company  Nordic  American  Tankers  Shipping  Ltd.  (AMEX:  NAT) (&#147;NAT&#148;),  the owner of three Suezmax  tankers on a
long-term contract to BP Shipping.<BR>
<BR>
The operating  results of UNS have been  consolidated in the Company&#146;s  financial  statements  commencing  March 6,
2001,  the date that the  Company  acquired  a  majority  interest  in UNS.  Minority  interest  expense,  which is
included as part of other (loss)  income,  has been  recorded to reflect the minority  shareholders&#146; share of UNS&#146;
net income for the period from March 6, 2001 to May 28, 2001,  when the Company  acquired the  remaining  shares in
UNS.<BR>
<BR>
<b>Results of Operations</b><BR>
<BR>
Bulk  shipping  industry  freight  rates  are  commonly  measured  at the net  voyage  revenue  level  in  terms of
&#147;time-charter  equivalent&#148; (&#147;TCE&#148;) rates, defined as voyage revenues less voyage expenses (excluding  commissions),
divided by voyage  ship-days for the round-trip  voyage.  Voyage revenues and voyage expenses are a function of the
type of charter,  either spot charter or time-charter,  and port, canal and fuel costs depending on the trade route
upon which a vessel is sailing,  in addition to being a function of the level of shipping  freight rates.  For this
reason,  shipowners base economic  decisions  regarding the deployment of their vessels upon anticipated TCE rates,
and  industry  analysts  typically  measure  bulk  shipping  freight  rates in terms of TCE rates.  Therefore,  the
discussion of revenue below focuses on net voyage revenues and TCE rates.<BR>
<BR>
TCE rates are primarily  dependent on oil production and consumption  levels,  the number of vessels scrapped,  the
number of  newbuildings  delivered and  charterers&#146;  preference  for modern  tankers.  As a result of the Company&#146;s
dependence on the tanker spot market,  any  fluctuations  in Aframax TCE rates will impact the  Company&#146;s  revenues
and earnings.<BR>
<BR>
The  Company&#146;s  average fleet size  decreased  0.8% and increased  7.1%,  respectively,  in the three and six-month
periods ended June 30, 2002,  compared to the same periods last year.  The increase in the  six-month  period ended
June 30, 2002 was primarily due to the acquisition of UNS in March 2001.<BR>
<BR>
In response to a slowing global  economy,  a series of OPEC oil production  cuts were made during 2001.  These cuts
resulted in a reduction in tanker  demand,  contributing  to a significant  decline in average TCE rates during the
last  three  quarters  of 2001.  Average  TCE rates  continued  to decline in the first six months of 2002 and have
remained  low during  the third  quarter  of 2002 as a result of  decreased  world oil  production.  The  Company&#146;s
average  TCE rate  decreased  37.9% to $18,430  and 44.9% to  $18,908,  respectively,  for the three and  six-month
periods ended June 30, 2002, from $29,658 and $34,290 in the same periods last year.<BR>
<BR>
Net voyage revenues decreased 39.3% to $129.8 million and 42.1% to $266.0 million,  respectively,  in the three and
six-month  periods ended June 30, 2002,  from $213.8  million and $459.0 million in the same periods last year. The
decrease for the  three-month  period ended June 30, 2002 was due primarily to a decrease in the Company&#146;s  average
TCE rate while the decrease for the  six-month  period ended June 30, 2002 was  primarily  due to a decrease in the
Company&#146;s average TCE rate, partially offset by the increase in the Company&#146;s average fleet size.<BR>
<BR>
Vessel  operating  expenses,  which include  crewing,  repairs and  maintenance,  insurance,  stores and lubes, and
communication  expenses,  increased  8.6% to $42.7 million and 13.5% to $83.1 million,  respectively,  in the three
and  six-month  periods  ended June 30, 2002,  from $39.3  million and $73.2 million in the same periods last year.
The  increase  for the  three-month  period  ended June 30, 2002 was  primarily  as a result of higher  repairs and
maintenance  costs while the increase  for the  six-month  period ended June 30, 2002 was  primarily as a result of
the acquisition of UNS and higher repairs and maintenance costs.<BR>
<BR>
Time-charter hire expense decreased 17.4% to $13.5 million and 21.8% to $26.2 million,  respectively,  in the three
and  six-month  periods  ended June 30, 2002,  from $16.3  million and $33.5 million in the same periods last year.
The decrease in both  periods was due  primarily to a decrease in the average TCE rates earned by the 13 vessels in
the  oil/bulk/ore  (&#147;O/B/O&#148;)  pool  managed  by the  Company  and a  decrease  in the  average  number  of  vessels
time-chartered-in by the Company. The minority  participants&#146; share of the O/B/O pool&#146;s net voyage revenues,  which
is reflected as a time-charter  hire expense,  was $5.7 million and $10.2 million,  respectively,  in the three and
six-month  periods  ended June 30, 2002,  compared to $7.0 million and $16.4 million in the same periods last year.
The average number of vessels  time-chartered-in  by the Company,  excluding the O/B/Os, was five in both the three
and six-month periods ended June 30, 2002, compared to six in the same periods last year.<BR>
<BR>
Depreciation and  amortization  expense  increased 1.8% to $36.8 million and 14.5% to $72.8 million,  respectively,
in the three and six-month  periods  ended June 30, 2002,  from $36.1 million and $63.6 million in the same periods
last year.  The  increase in the  three-month  period  ended was mainly due to an increase in drydock  amortization
expense,  partially  offset by the  elimination  of goodwill  amortization  in 2002.  The increase in the six-month
period ended June 30, 2002 was mainly due to the  acquisition  of UNS, which resulted in an increase in the average
size and  average  cost base of the  Company&#146;s  owned  fleet  and an  increase  in  drydock  amortization  expense,
partially  offset by the elimination of goodwill  amortization.  Depreciation  and  amortization  expense  included
amortization  of  drydocking  costs of $5.2  million and $9.9  million,  respectively,  in the three and  six-month
periods ended June 30, 2002, compared to $3.5 million and $6.5 million in the same periods last year.<BR>
<BR>
General and administrative expenses increased 21.8% to $14.3 million and 26.1% to $28.5 million,  respectively,  in
the three and  six-month  periods  ended June 30, 2002,  from $11.8  million and $22.6  million in the same periods
last year.  This  increase in the  three-month  period ended June 30, 2002 was primarily a result of an increase in
the number of shore staff.  The increase in the six-month  period ended June 30, 2002 was primarily a result of the
acquisition of UNS and an increase in the number of shore staff.<BR>
<BR>
Interest  expense  decreased  19.9% to $14.5  million and 11.2% to $29.2  million,  respectively,  in the three and
six-month  periods ended June 30, 2002,  from $18.1  million and $32.9  million in the same periods last year.  The
decrease  in the  three-month  period  ended June 30, 2002  reflects  lower  interest  rates.  The  decrease in the
six-month  period ended June 30, 2002 reflects  lower  interest  rates,  partially  offset by the  additional  debt
assumed as part of the UNS acquisition.<BR>
<BR>
Interest  income  decreased  64.9% to $1.0  million  and  68.3% to $1.8  million,  respectively,  in the  three and
six-month  periods  ended June 30, 2002,  from $2.8  million and $5.7  million in the same  periods last year.  The
decrease in both periods was mainly as a result of lower interest rates.<BR>
<BR>
Other  loss in the  three  and  six-month  periods  ended  June  30,  2002  was  $5.1  million  and  $8.4  million,
respectively,  and was comprised mainly of income taxes, loss on sale of  available-for-sale  securities,  minority
interest  expense,  partially offset by equity income from 50%-owned joint ventures,  dividend income from NAT, and
foreign  exchange gains.  Other income in the three and six-month  periods ended June 30, 2001 was $1.1 million and
$2.1 million,  respectively,  and was comprised  mainly of equity income from 50%-owned  joint  ventures,  dividend
income from NAT, gain on the disposition of  available-for-sale  securities and foreign  exchange gains,  partially
offset by income taxes,  minority interest,  loss on the disposition of  available-for-sale  securities and foreign
exchange losses.<BR>
<BR>
As a result of the foregoing  factors,  net income was $4.0 million and $19.6 million,  respectively,  in the three
and six-month periods ended June 30, 2002,  compared to net income of $96.2 million and $240.9  million in the same
periods last year.<BR>
<BR>
<b>LIQUIDITY AND CAPITAL RESOURCES</b><BR>
<BR>
As at June 30, 2002, the Company&#146;s total cash and cash  equivalents was $174.1 million,  compared to $174.9 million
at December 31, 2001. The Company&#146;s total liquidity,  including cash,  short-term marketable securities and undrawn
long-term  borrowings,  was $653.5  million as at June 30, 2002,  down from $688.2 million as at December 31, 2001.
The  decrease  in  liquidity  was mainly the result of cash used for capital  expenditures,  debt  repayments,  the
payment of dividends,  and an $18.8 million  scheduled  reduction in the  available  borrowing  limit of one of the
Company&#146;s two long-term  revolving  credit  facilities (the  &#147;Revolvers&#148;),  partially  offset by net cash flow from
operating  activities  during the first half of 2002. In the Company&#146;s  opinion,  working capital is sufficient for
the Company&#146;s present requirements.<BR>
<BR>
Net cash flow from operating  activities  decreased to $112.0  million in the six months ended June 30, 2002,  from
$294.7 million in the same period last year, mainly reflecting the significant decrease in TCE rates.<BR>
<BR>
Scheduled debt repayments  were $25.9 million during the six months ended June 30, 2002,  compared to $40.9 million
during the same period last year.  There were no debt  prepayments  during the six months ended June 30, 2002. Debt
prepayments during the six months ended June 30, 2001 totalled $378.7 million.<BR>
<BR>
As at June 30, 2002,  the Company&#146;s  total debt was $928.9  million,  compared to $935.7 million as at December 31,
2001.  The  Company&#146;s  Revolvers  provided for  additional  borrowings of $479.4  million as at June 30, 2002.  The
amount available under the Revolvers  reduces  semi-annually,  with final balloon  reductions in 2006 and 2008. The
Company&#146;s  8.32% First  Preferred  Ship  Mortgage  Notes are due February 1, 2008 and are subject to a sinking fund
which will retire $45.0 million  principal  amount of the 8.32% Notes in February 1 of each year,  commencing 2004.
The Company&#146;s  unsecured 8.875% Senior Notes are due July 15, 2011. The Company&#146;s  outstanding term loans reduce in
quarterly or  semi-annual  payments with varying  maturities  through 2009.  The aggregate  annual  long-term  debt
principal  repayments  required to be made for the remainder of fiscal 2002 and the four following fiscal years are
$26.0 million  (2002),  $63.6 million  (2003),  $84.9 million  (2004),  $111.1  million  (2005) and $130.9  million
(2006).<BR>
<BR>
Among other matters,  the Company&#146;s  long-term debt agreements  generally provide for maintenance of certain vessel
market  value-to-loan ratios and minimum consolidated  financial  covenants,  prepayment  privileges (in some cases
with  penalties),  and  restrictions  against the  incurrence of new  investments  by the  individual  subsidiaries
without prior lender consent. The amount of Restricted Payments,  as defined,  that the Company can make, including
dividends and purchases of its own capital  stock,  was limited to $444.1  million as of June 30, 2002.  Certain of
the loan agreements  require that a minimum level of free cash be maintained.  As at June 30, 2002, this amount was
$75.0 million.<BR>
<BR>
Dividends declared during the six months ended June 30, 2002 were $17.0 million, or 43.0 cents per share.<BR>
<BR>
During the six months ended June 30, 2002, the Company incurred  capital  expenditures for vessels and equipment of
$80.4 million.  These capital  expenditures were primarily for the purchase of a 2001-built  Suezmax tanker and for
shuttle tanker  newbuilding  installment  payments.  Cash expenditures for drydocking were $13.5 million in the six
months ended June 30, 2002, compared to $3.9 million during the same period last year.<BR>
<BR>
As at June 30,  2002,  the Company was  committed  to the  construction  of three  shuttle,  three  Suezmax and two
Aframax  tankers.  See  Item  1  -  Notes  to  Consolidated   Financial  Statements:   Note  7  &#150;  Commitments  and
Contingencies.<BR>
<BR>
The Company and certain  subsidiaries of the Company have guaranteed  their share of the outstanding  mortgage debt
in three  50%-owned joint venture  companies.  See Item 1 - Notes to Consolidated  Financial  Statements:  Note 7 -
Commitments and Contingencies.<BR>
<BR>
As part of its growth  strategy,  the Company will  continue to consider  strategic  opportunities,  including  the
acquisition  of  additional  vessels  and  expansion  into new  markets.  The  Company  may  choose to pursue  such
opportunities  through internal growth, joint ventures,  or business  acquisitions.  The Company intends to finance
any future  acquisitions  through various sources of capital,  including  internally-generated  cash flow, existing
credit lines, additional debt borrowings, and the issuance of additional shares of capital stock.<BR>
<BR>
<b>FORWARD-LOOKING STATEMENTS</b><BR>
<BR>
This Report on Form 6-K for the quarterly  period ended June 30, 2002 contains certain  forward-looking  statements
(as such term is  defined in  Section  27A of the  Securities  Act of 1933,  as  amended,  and  Section  21E of the
Securities  Exchange Act of 1934, as amended)  concerning future events and the Company&#146;s  operations,  performance
and financial  condition,  including,  in particular,  statements  regarding:  Aframax TCE rates; tanker supply and
demand;  supply and demand for oil;  future capital  expenditures;  the Company&#146;s  growth  strategy and measures to
implement such strategy;  and the future success of the Company.  These 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 the control of the Company.  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:  changes in  production of or demand for oil and petroleum
products,  either  generally or in  particular  regions;  changes in the offshore  production  of oil; the cyclical
nature of the tanker  industry  and its  dependence  on oil  markets;  the supply of tankers  available to meet the
demand for transportation of petroleum products;  charterers&#146; preference for modern tankers;  greater or less than
anticipated  levels of tanker  newbuilding  orders or greater or less than anticipated  rates of tanker  scrapping;
changes in trading  patterns  significantly  impacting  overall  tanker  tonnage  requirements;  changes in typical
seasonal variations in tanker charter rates; the Company&#146;s  dependence on spot oil voyages;  competitive factors in
the markets in which the Company operates;  environmental and other regulation,  including without limitation,  the
imposition of freight  taxes and income taxes;  the  Company&#146;s  potential  inability to achieve and manage  growth;
risks  associated with  operations  outside the United States;  the potential  inability of the Company to generate
internal  cash flow and  obtain  additional  debt or equity  financing  to fund  capital  expenditures  or  Company
expansion;  the potential  inability of the Company to renew long-term  contracts;  and other factors detailed from
time to time in the  Company&#146;s  periodic  reports,  including  its Form 20-F for the year ended  December 31, 2001,
filed with the U.S.  Securities  and  Exchange  Commission.  The Company  expressly  disclaims  any  obligation  or
undertaking to release  publicly any updates or revisions to any  forward-looking  statements  contained  herein to
reflect any change in the  Company&#146;s  expectations  with  respect  thereto or any change in events,  conditions  or
circumstances on which any such statement is based.<BR>
</P>
<BR>
<BR>
<BR>
<BR>
<BR>
<P ALIGN=CENTER><b>                                   TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES<BR>
                                                   JUNE 30, 2002<BR>
                                          PART I &#150; FINANCIAL INFORMATION<BR></b></P>

<P><b>ITEM 3 -&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</b></P>

<P>The Company is exposed to market risk from foreign currency  fluctuations,  changes in interest rates,  bunker fuel
prices,  and tanker freight rates.  The Company uses forward  currency  contracts,  interest rate swaps, and bunker
fuel swap contracts to manage  currency,  interest  rate,  and bunker fuel price risks,  but does not use financial
instruments for trading or speculative  purposes.  See Item 1 - Notes to Consolidated  Financial  Statements:  Note
10 - Derivative Instruments and Hedging Activities.<BR>
<BR>
The following  table sets forth the  magnitude of these  foreign  exchange  forward  contracts,  interest rate swap
agreements, bunker fuel swap contracts, and written freight call option:<BR>
</P>
<PRE><b>                                             Contract                Carrying Amount                   Fair
(in USD 000&#146;s)                                Amount             Asset           Liability             Value
- ---------------------------------------- ------------------ ---------------- ------------------ --------------------</b>
<U>June 30, 2002</U>
FX Forward Contracts                         $  52,476           $  2,515         $      -             $    2,515
Interest Rate Swap Agreements                   70,000                -              2,088                 (2,088)
Bunker Fuel Swap Contracts                       4,693              535                  -                    535
Written Freight Call Option                      2,999                -                429                   (429)
Debt                                           928,947                -            928,947               (946,233)

<u>December 31, 2001</u>
FX Forward Contracts                         $  65,500           $    -           $    343              $    (343)
Interest Rate Swap Agreements                   85,000                -              2,429                 (2,429)
Bunker Fuel Swap Contracts                       4,769                -                328                   (328)
Written Freight Call Option                      5,998                -                857                   (857)
Debt                                           935,702                -            935,702               (952,055)
- ---------------------------------------- ------------------ ---------------- ------------------ --------------------

</PRE>
<P>For a more  comprehensive  discussion  related to the  general  characteristics  of  Quantitative  and  Qualitative
Disclosures  about  Market Risk,  refer to Item 11.  Quantitative  and  Qualitative  Disclosures  about Market Risk
contained in the Company&#146;s Annual Report on Form 20-F for the year ended December 31, 2001.</P>
<BR>
<BR>
<BR>
<BR>
<BR>

<P ALIGN=CENTER><b>                                     TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES
                                                   JUNE 30, 2002
                                            PART II &#150; OTHER INFORMATION</b>
</P>
<P><U>Item 1 - Legal Proceedings</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<P><U>Item 2 - Changes in Securities</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<P><U>Item 3 - Defaults Upon Senior Securities</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<P><U>Item 4 - Submission of Matters to a Vote of Security Holders</U></P>

<P>The Company&#146;s 2002 Annual Meeting of Shareholders was held on May 20, 2002. The following persons were elected
directors for a term of three years by the votes set forth opposite their names:</P>

<PRE> <b>                                                     Votes against or       Shares Which            Broker
<u>Terms Expiring in 2005</u>              <u>Votes For</u>             <u>Withheld</u>             <u>Abstained</u>           <u>Non-Votes</u></b>
Thomas Kuo-Yuen Hsu                37,453,366              25,004                 N/A                 N/A
Axel Karlshoej                     37,453,504              24,866                 N/A                 N/A
Bjorn Moller                       37,453,216              25,154                 N/A                 N/A
</PRE>
<P>The terms of Directors  Bruce C. Bell, Dr. Ian D.  Blackburne,  C. Sean Day,  Morris L. Feder,  Leif O. Hoegh,  and
Eileen A. Mercier continued after the meeting.<BR>
<BR>
Shareholders also ratified the selection of Ernst &amp; Young LLP, Chartered Accountants, as independent auditors of
the Company for the fiscal year ending December 31, 2002, as set forth below:
</P>
<PRE><b>                                                      Votes against or       Shares Which            Broker
                                    <u>Votes For</u>             <u>Withheld</u>             <u>Abstained</u>           <u>Non-Votes</u></b>
Ernst &amp; Young LLP                  37,436,672              11,356               30,342                 -
</PRE>
<P><U>Item 5 - Other Information</U></P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<P><u>Item 6 - Exhibits and Reports on Form 6-K</u></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<TD WIDTH=10% ALIGN=CENTER>a.</TD>
<TD WIDTH=90%>Exhibits</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=5%>15.1</TD>
<TD WIDTH=85%>Letter from Ernst &amp; Young LLP, as independent chartered accountants, dated August 14, 2002,
regarding unaudited interim financial information.</TD>
</TR>
</TABLE>

<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=5%>99.1</TD>
<TD WIDTH=85%>Certification of Chief Executive Officer</TD>
</TR>
</TABLE>

<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=5%>99.2</TD>
<TD WIDTH=85%>Certification of Chief Financial Officer</TD>
</TR>
</TABLE>

<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<TD WIDTH=10% ALIGN=CENTER>b.</TD>
<TD WIDTH=90%>Reports on Form 6-K</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=5%>(i)</TD>
<TD WIDTH=85%>On April 2, 2002, the Company filed a report on Form 6-K
with respect to its Proxy Statement.</TD>
</TR>
</TABLE>
<BR>

<P><b>THIS REPORT ON FORM 6-K IS HEREBY  INCORPORATED  BY  REFERENCE  INTO THE  REGISTRATION  STATEMENT OF THE COMPANY ON
FORM F-3 FILED WITH THE COMMISSION ON OCTOBER 4, 1995.</b></P>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>SIGNATURES</FONT></H1>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
</P>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<TD WIDTH=45% VALIGN=MIDDLE>
Date:    August 14, 2002
</TD>
<TD WIDTH=55% VALIGN=TOP>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TEEKAY SHIPPING CORPORATION
<BR>
<BR>
<BR>
<BR>
By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>/s/ Peter S. Antturi&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Peter S. Antturi<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Vice President and Chief Financial Officer<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Principal Financial and Accounting Officer)<BR>
</TD>
</TR>
</TABLE>

<BR>
<BR>
<BR>
<BR>
<BR>


<P ALIGN=RIGHT><B>Exhibit 15.1</B></P>

<P>To the Shareholders and Board of Directors of<BR>
<B>Teekay Shipping Corporation</B></P>

<P>We are aware of the  incorporation by reference in the  Registration  Statement (Form F-3 No. 33-97746 filed with the
Commission on October 4, 1995) and related prospectus of Teekay Shipping  Corporation  (&#147;Teekay&#148;) for the
registration  of 2,000,000  shares of Teekay common stock,  with a par value of $0.001 per share, and to  incorporation
by reference  therein of our report dated July 25, 2002 relating to the unaudited  consolidated  interim financial
statements of Teekay for the quarter ended June 30, 2002 that are included in its Form 6-K.</P>

<P>Pursuant  to Rule  436(c) of the  Securities  Act of 1933 our  report is not a part of the  registration  statement
prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933.</P>

<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
        <TD WIDTH=45%>Vancouver, Canada,<BR>
        August 14, 2002</TD>
        <TD WIDTH=55%>/s/ ERNST &amp; YOUNG LLP<BR>
        Chartered Accountants</TD>
</TR>
</TABLE>

<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>




<P AlIGN=RIGHT><b>Exhibit 99.1</b></P>
<BR>
<P ALIGN=CENTER><b>CERTIFICATION OF CHIEF EXECUTIVE OFFICER</b></P>
<BR>
<BR>
<P>In connection  with the Report of Teekay  Shipping  Corporation  (the  "Company") on Form 6-K for the quarter ended
June 30, 2002 as filed with the  Securities  and Exchange  Commission on the date hereof (the  "Report"),  I, Bjorn
Moller,  Chief Executive Officer of the Company,  certify that:</P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=3%>1.</TD>
<TD WIDTH=92%>
The Report fully complies with the  requirements of section 13(a) or 15(d) of the Securities  Exchange Act
of 1934; and<BR>
</TD>
</TR>
<TR VALIGN=TOP>
<TD></TD>
<TD>2.</TD>
<TD>
The  information  contained  in the Report  fairly  presents,  in all  material  respects,  the  financial
condition and results of operations of the Company.<BR>
</TD>
</TR>
</TABLE>

<P>The Company is a foreign private issuer under the Securities and Exchange Act of 1934.  Accordingly, this certification
is being submitted on a voluntary basis and not for the purpose of complying with Section 906 of the Sarbanes-Oxley Act of 2002.</P>

<BR>
<BR>
<BR>

<P>/s/ Bjorn Moller<BR>
<BR>
Bjorn Moller<BR>
Chief Executive Officer<BR>
August 14, 2002</P>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>


<P ALIGN=RIGHT><b>Exhibit 99.2</b></P><BR>
<BR>
<BR><P ALIGN=CENTER><b>CERTIFICATION OF CHIEF FINANCIAL OFFICER</b></P>
<BR>
<P>In connection  with the Report of Teekay  Shipping  Corporation  (the  "Company") on Form 6-K for the quarter ended
June 30, 2002 as filed with the Securities and Exchange  Commission on the date hereof (the "Report"),  I, Peter S.
Antturi, Chief Financial Officer of the Company,  certify that:</P>

<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5></TD>
<TD WIDTH=3%>1.</TD>
<TD WIDTH=92%>
The Report fully complies with the  requirements of section 13(a) or 15(d) of the Securities  Exchange Act
of 1934; and
</TD>
</TR>
<TR VALIGN=TOP>
<TD></TD>
<TD>2.</TD>
<TD>
The  information  contained  in the Report  fairly  presents,  in all  material  respects,  the  financial
condition and results of operations of the Company.
</TD>
</TR>
</TABLE>

<P>The Company is a foreign private issuer under the Securities and Exchange Act of 1934.  Accordingly, this certification
is being submitted on a voluntary basis and not for the purpose of complying with Section 906 of the Sarbanes-Oxley Act of 2002.</P>

<BR>
<BR>
<BR>

<P>/s/ Peter S. Antturi<BR>
<BR>
Peter S. Antturi<BR>
Chief Financial Officer<BR>
August 14, 2002<BR>
</P>



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