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<SEC-DOCUMENT>0000911971-03-000073.txt : 20031117
<SEC-HEADER>0000911971-03-000073.hdr.sgml : 20031117
<ACCEPTANCE-DATETIME>20031114184444
ACCESSION NUMBER:		0000911971-03-000073
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20030930
FILED AS OF DATE:		20031117

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:			1T
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-12874
		FILM NUMBER:		031006386

	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:		SUITE 2000,  BENTALL 5
		STREET 2:		550 BURRARD STREET
		CITY:			VANCOUVER
		STATE:			A1
		ZIP:			V6C 2K2

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	VIKING STAR SHIPPING INC
		DATE OF NAME CHANGE:	19930914
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>form6k_093003.htm
<DESCRIPTION>FORM 6K FOR PERIOD ENDED SEPTEMBER 30, 2003
<TEXT>
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     <!-- Control Number: A0037                                                            -->
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     <!-- Client Name:    Teekay Shipping Corporation                                      -->
     <!-- Project Name:   6-K for the period ended September 30, 2003                      -->
     <!-- Firm Name:      Teekay Shipping Corporation                                      -->
     <TITLE>Form 6K for the period ended September 30, 2003</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>September 30, 2003</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-59212, Nassau, Bahamas<BR>
                                      (Address of principal executive office)<BR></P>

<hr width=15% size=1 noshade>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1):<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>]</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7):<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>]</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;&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;&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>
<BR>
<BR>
<BR>
<BR>
<BR>


<PAGE>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>REPORT ON FORM 6-K FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>INDEX </U></FONT></H1>

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<TABLE WIDTH=700 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=10% ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>PART I:</FONT></TD>
<TD WIDTH=79% ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
FINANCIAL INFORMATION </FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>PAGE</U></FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>

<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Item 1.</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financial Statements</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="700">
<TR VALIGN=Bottom>
     <TD WIDTH="20%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="72%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Independent Accountant's Review Report on Interim Financial Statements</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>3</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Consolidated Statements of Income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the three and nine months ended September 30, 2003 and 2002</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>4</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Consolidated Balance Sheets</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;as at September 30, 2003 and December 31, 2002</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>5</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Consolidated Statements of Cash Flows</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the nine months ended September 30, 2003 and 2002</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>6</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Notes to the Consolidated Financial Statements</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>7</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Schedule A to the Consolidated Financial Statements</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>16</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>

</TABLE>

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<TABLE WIDTH=700 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=7% ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Item 2.</FONT></TD>
<TD WIDTH=80% ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Management's Discussion and Analysis of Financial Condition<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and Results of Operations </FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3><BR>20&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>

<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Item 3.</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Quantitative
and Qualitative Disclosures about Market Risk</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>28&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>

<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>PART II:</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>OTHER INFORMATION</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>29&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>


<TR VALIGN=TOP>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>SIGNATURES</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>30&nbsp;&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR><TD>&nbsp;</TD></TR>
</TABLE>

<PAGE>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>ITEM 1 -&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
FINANCIAL STATEMENTS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>INDEPENDENT
ACCOUNTANT&#146;S REVIEW REPORT ON INTERIM <BR>
FINANCIAL STATEMENTS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>To the Shareholders and Board of
Directors of <BR>
<B>Teekay Shipping Corporation </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<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 September
30, 2003, the related consolidated statements of income for the three and nine-month
periods ended September 30, 2003 and 2002, and the consolidated statements of cash flows
for the nine-month periods ended September 30, 2003 and 2002. Our review also included
Schedule A listed in Index Item 1. These consolidated financial statements and schedule
are the responsibility of the Company&#146;s management. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<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>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Based on our reviews, 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>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<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, 2002, 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 13, 2003 (except for Note 15(b) which is as of February 19, 2003.), we
expressed an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance sheet and
related schedule as of December 31, 2002, 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%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Vancouver, Canada,<BR>
        October 23, 2003</FONT></TD>
        <TD WIDTH=55% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>/s/ ERNST &amp; YOUNG LLP<BR>
        Chartered Accountants&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
CONSOLIDATED STATEMENTS OF INCOME<BR>
(in thousands of U.S. dollars, except share and per share amounts) </FONT></H1>

<PRE>
                                                    <B>Three Months Ended September 30,     Nine Months Ended September 30,
                                                         2003                2002            2003               2002
                                                           $                  $                $                  $</B>
                                                   ------------------------------------ -----------------------------------
                                                               <B>(unaudited)                         (unaudited)</B>
<B>NET VOYAGE REVENUES</B>
Voyage revenues                                          380,544            184,927         1,125,047         560,492
Voyage expenses                                          105,686             62,166           284,207         171,764
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

Net voyage revenues                                      274,858            122,761           840,840         388,728
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

<B>OPERATING EXPENSES</B>
Vessel operating expenses                                 55,281             44,365           153,457         127,415
Time-charter hire expense                                 95,955             11,430           202,349          37,640
Depreciation and amortization                             49,885             37,295           138,790         110,136
General and administrative                                24,118             14,330            60,754          42,824
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------
                                                         225,239            107,420           555,350         318,015
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

<B>Income from vessel operations</B>                             49,619             15,341           285,490          70,713
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

<B>OTHER ITEMS</B>
Interest expense                                         (21,827)           (14,675)          (57,913)        (43,854)
Interest income                                              799                898             2,932           2,691
Write-downs and loss on sale of vessels (note 13)         (5,843)                 -           (36,341)              -
Other loss (note 10)                                      (2,421)              (921)          (23,386)         (9,265)
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

                                                         (29,292)           (14,698)         (114,708)        (50,428)
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

<B>Net income</B>                                                20,327                643           170,782          20,285
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------

<B>Earnings per common share</B>
     - Basic                                                0.51               0.02              4.28            0.51
     - Diluted                                              0.50               0.02              4.21            0.50
<B>Weighted average number of common shares</B>
     - Basic                                          40,042,702          39,667,088        39,870,740     39,618,246
     - Diluted                                        40,942,172          40,229,966        40,560,103     40,259,815
- -------------------------------------------------- ------------------ ----------------- ---------------- ------------------
</PRE>
<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=1><I>The accompanying notes are an
integral part of the consolidated financial statements.</I> </FONT></P>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
CONSOLIDATED BALANCE SHEETS <BR>
(in thousands of U.S. dollars) </FONT></H1>

<PRE>
<B>                                                                                           As at            As at
                                                                                       September 30,     December 31,
                                                                                           2003              2002
                                                                                             $                $</B>
                                                                                     ---------------- -----------------
                                                                                        <B>(unaudited)</B>
     <B>ASSETS</B>
     <B>Current</B>
     Cash and cash equivalents <I>(note 7)</I>                                                   335,951          284,625
     Restricted cash                                                                          773            4,180
     Accounts receivable                                                                  114,519           70,906
     Prepaid expenses and other assets                                                     53,061           27,847
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Total current assets</B>                                                                 504,304          387,558
     ----------------------------------------------------------------------------- ---------------- -----------------
                                                                                           71,285           13,630
     Marketable securities <I>(note 4)</I>

     <B>Vessels and equipment</B> <I>(notes 7 and 13)</I>
     At cost, less accumulated depreciation of $986,986
         (December 31, 2002 -  $940,082)                                                2,502,791        1,928,488
     Vessels under capital leases, at cost, less accumulated
         depreciation of $81 (December 31, 2002 - nil)                                     37,061                -
     Advances on newbuilding contracts <I>(note 9)</I>                                           106,703          138,169
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Total vessels and equipment</B>                                                        2,646,555        2,066,657
     ----------------------------------------------------------------------------- ---------------- -----------------
     Restricted cash <I>(note 7)</I>                                                                   -            4,605
     Deposit for purchase of Navion AS <I>(note 2)</I>                                                 -           76,000
     Net investment in direct financing leases <I>(note 2)</I>                                    46,280                -
     Investment in joint ventures                                                          55,082           56,354
     Other assets                                                                          53,378           29,513
     Intangible assets - net <I>(note 5)</I>                                                     116,511                -
     Goodwill <I>(note 5)</I>                                                                    130,291           89,189
     ----------------------------------------------------------------------------- ---------------- -----------------
                                                                                        3,623,686        2,723,506
     ============================================================================= ================ =================


     <B>LIABILITIES AND STOCKHOLDERS' EQUITY</B>
     <B>Current</B>
     Accounts payable                                                                      43,399           22,307
     Accrued liabilities                                                                   92,456           83,643
     Current portion of long-term debt <I>(note 7)</I>                                           144,074           83,605
     Current obligation under capital lease <I>(note 9)</I>                                        1,135                -
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Total current liabilities</B>                                                            281,064          189,555
     ----------------------------------------------------------------------------- ---------------- -----------------
     Long-term debt <I>(note 7)</I>                                                            1,605,331        1,047,217
     Obligation under capital lease <I>(note 9)</I>                                               35,797                -
     Other long-term liabilities                                                           83,188           44,512
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Total liabilities</B>                                                                  2,005,380        1,281,284
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Minority interest</B>                                                                     19,232           20,324

     <B>Stockholders' equity</B>
     Capital stock <I>(note 8)</I>                                                               477,945          470,988
     Retained earnings                                                                  1,099,106          954,005
     Accumulated other comprehensive income (loss)                                         22,023           (3,095)
     ----------------------------------------------------------------------------- ---------------- -----------------

     <B>Total stockholders' equity</B>                                                         1,599,074        1,421,898
     ----------------------------------------------------------------------------- ---------------- -----------------

                                                                                        3,623,686        2,723,506
     ============================================================================= ================ =================
</PRE>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments
and contingencies (<I>note 9</I>) </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>
The accompanying notes are an integral part of the consolidated financial statements.</I> </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
(in thousands of U.S. dollars) </FONT></H1>

<PRE>
                                                                           <B>       Nine Months Ended September 30,
                                                                                    2003                    2002
                                                                                     $                       $</B>
                                                                           ----------------------- -----------------------
                                                                                            <B>(unaudited)</B>
Cash and cash equivalents provided by (used for)

<B>OPERATING ACTIVITIES</B>
Net income                                                                         170,782                 20,285
Non-cash items:
     Depreciation and amortization                                                 138,790                110,136
     Loss on disposition of assets                                                   1,467                  1,130
     Loss on write-down of vessels and marketable securities                        39,642                      -
     Equity income (net of dividends received: September 30, 2003 -$5,657 ;
        September 30, 2002 - $1,748)                                                 1,904                 (1,304)
     Income tax expense                                                             23,186                  9,701
     Other - net                                                                    (7,421)                 1,229
Change in non-cash working capital items related to
   operating activities                                                            (14,532)                (4,010)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Net cash flow from operating activities</B>                                            353,818                137,167
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>FINANCING ACTIVITIES</B>
Net proceeds from long-term debt                                                 1,679,297                 78,890
Scheduled repayments of long-term debt                                             (49,182)               (34,676)
Prepayments of long-term debt                                                   (1,023,000)                (8,000)
Decrease in restricted cash                                                          8,012                     87
Proceeds from issuance of Common Stock                                              11,757                  3,532
Repurchase of Common Stock                                                               -                 (1,546)
Cash dividends paid                                                                (25,678)               (25,547)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Net cash flow from financing activities</B>                                            601,206                 12,740
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>INVESTING ACTIVITIES</B>
Expenditures for vessels and equipment                                            (227,070)               (93,115)
Expenditures for drydocking                                                        (23,191)               (23,027)
Proceeds from disposition of vessels and equipment                                  91,080                      -
Purchase of Navion AS                                                             (704,734)                     -
Purchase of available-for-sale securities                                          (37,291)                     -
Proceeds from disposition of available-for-sale securities                           2,954                  6,675
Proceeds from joint venture                                                         25,500                      -
Investment in joint venture and advance to joint venture partner                   (25,000)               (52,000)
Other                                                                               (5,946)                (1,885)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Net cash flow from investing activities</B>                                           (903,698)              (163,352)
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Increase (decrease) in cash and cash equivalents</B>                                    51,326                (13,445)
Cash and cash equivalents, beginning of the period                                 284,625                174,950
- -------------------------------------------------------------------------- ----------------------- -----------------------

<B>Cash and cash equivalents, end of the period</B>                                       335,951                161,505
- -------------------------------------------------------------------------- ----------------------- -----------------------
</PRE>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The
accompanying notes are an integral part of the consolidated financial statements.</I> </FONT></P>
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<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>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS <BR>
(all tabular amounts stated in thousands of U.S. dollars, except share and per share data)<BR>
(Information as at September 30, 2003 and for the Three and Nine-Month Periods<BR>
Ended September 30, 2003 and 2002 is unaudited) </FONT></H1>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>1.</B>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>Basis
of Presentation</B> </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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
(collectively, 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, 2002. 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 nine-month periods ended September 30, 2003 are not
necessarily indicative of those for a full fiscal year. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>2.</B>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>Acquisition of Navion AS</B> </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
In
April 2003, Teekay completed its acquisition of 100% of the issued and outstanding shares
of Navion AS for approximately $774.2 million in cash, including transaction costs of
approximately $7 million. The Company made a deposit of $76.0 million towards the purchase
price on December 16, 2002. The remaining portion of the purchase price was paid on
closing. The Company funded its acquisition of Navion by borrowing under a $500 million
364-day facility (subsequently replaced by a $550 million revolving credit facility),
together with available cash and borrowings under other existing revolving credit
facilities. Navion&#146;s results of operation have been consolidated with Teekay&#146;s
results commencing April 1, 2003. </FONT></TD>
</TR>
</TABLE>
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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Navion, based in Stavanger, Norway, operates primarily in the shuttle
tanker and the conventional crude oil and product tanker markets. Its modern shuttle
tanker fleet, which as of September 30, 2003, consisted of eight owned and 12 chartered-in
vessels (excluding five vessels chartered-in from the Company&#146;s shuttle tanker
subsidiary Ugland Nordic Shipping AS (&#147;UNS&#148;)), provides logistical services to
the Norwegian state-owned oil company, Statoil ASA, and other oil companies in the North
Sea under fixed-rate, long-term contracts of affreightment. Navion&#146;s modern,
chartered-in, conventional tanker fleet, which as of September 30, 2003, consisted of 12
crude oil tankers and 10 product tankers, operates primarily in the Atlantic region,
providing services to Statoil and other oil companies. In addition, Navion owns two
floating storage and off-take (&#147;FSO&#148;) vessels currently trading as conventional
crude oil tankers in the Atlantic region, three chartered-in methanol carriers and one
liquid petroleum gas (&#147;LPG&#148;) carrier on long-term charter to Statoil. Through
Navion Chartering AS, an entity owned jointly with Statoil, Navion has a first right of
refusal on Statoil&#146;s oil transportation requirements at the prevailing market rate
until December 31, 2007. In addition to tanker operations, Navion also constructs,
installs, operates and leases equipment (&#147;VOC Equipment&#148;) that reduces volatile
organic compound emissions during loading, transportation and storage of oil and oil
products. </FONT></TD>
</TR>
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<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>NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS<BR>
(all tabular amounts stated in thousands of U.S. dollars, except share and per share data)<BR>
(Information as at September 30, 2003 and for the Three and Nine-Month Periods<BR>
Ended September 30, 2003 and 2002 is unaudited) </FONT></H1>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
following table summarizes the estimated fair value of the assets acquired and liabilities
assumed by the Company at the date of the Navion acquisition. The Company is in the
process of finalizing certain elements of the purchase price allocation and, therefore,
the allocation is subject to further refinement. </FONT></TD>
</TR>
</TABLE>
<BR>

<pre>
                                                                                                     <B>    As at
                                                                                                        April 1,
                                                                                                          2003
                                                                                                      (unaudited)
                                                                                                           $</B>
                                                                                                    -----------------
         <B>ASSETS</B>
         Current assets                                                                                     64,457
         Vessels and equipment                                                                             543,003
         Net investment in direct financing leases                                                          45,558
         Other assets &#150; long-term                                                                            3,835
         Intangible assets subject to amortization:
            Contracts of affreightment (15-year sum-of-years declining balance)                            117,000
         Goodwill (fixed-rate segment)                                                                      40,033
         ------------------------------------------------------------------------- ---------------- -----------------

         <B>Total assets acquired</B>                                                                             813,886
         ------------------------------------------------------------------------- ---------------- -----------------
         <B>LIABILITIES</B>
         Current liabilities                                                                                36,270
         Other long-term liabilities                                                                         3,463
         ------------------------------------------------------------------------- ---------------- -----------------

         <B>Total liabilities assumed</B>                                                                          39,733
         ------------------------------------------------------------------------- ---------------- -----------------

         <B>Net assets acquired (cash consideration)</B>                                                          774,153
         ------------------------------------------------------------------------- ---------------- -----------------
</pre>
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<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
following table shows comparative summarized consolidated pro forma financial information
for the Company for the nine-month period ended September 30, 2003 and 2002, giving effect
to the acquisition of 100% of the outstanding shares in Navion as if the acquisition had
taken place on January 1 on each of the periods presented: </FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
                                                                         <B>                Pro Forma
                                                                               Nine Months Ended September 30,
                                                                                2003                    2002
                                                                             (unaudited)             (unaudited)
                                                                                  $                       $</B>
                                                                       ----------------------- ----------------------
          Net voyage revenues......................................          1,023,351                 754,063
          Net income...............................................            216,821                  26,784
          Net income per common share
          - basic .................................................               5.44                    0.68
          - diluted................................................               5.35                    0.67
</PRE>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>3.</B>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>
Acquisition of 50 % of Petrotrans Holdings Ltd.</B></FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
On
September 30, 2003, Teekay acquired 50% of the issued and outstanding shares of Petrotrans
Holdings Ltd., the parent company of Skaugen Petrotrans Inc. (SPT). The acquisition was
completed for approximately $25 million in cash, and an &#147;earn-out element&#148; to be
calculated based on the financial performance of SPT over the next five years. The Company
funded this acquisition with available cash. </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
SPT
is a leading lightering company operating out of Houston, Texas. Lightering is the process
of ship-to-ship transfer of oil cargo, which is required when vessels transporting oil are
too large to enter ports that are not deep enough or have narrow entrances, or small
berths. The lightering process consists of maneuvering a smaller tanker (service vessel)
alongside the larger tanker, typically with both vessels underway. The service vessel
transports the oil cargo to the port. SPT lighters approximately 1.1 million barrels of
crude per day, or approximately 15% of all seaborne crude oil into US ports. </FONT></TD>
</TR>
</TABLE>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS<BR>
(all tabular amounts stated in thousands of U.S. dollars, except share and per share data)<BR>
(Information as at September 30, 2003 and for the Three and Nine-Month Periods<BR>
Ended September 30, 2003 and 2002 is unaudited) </FONT></H1>

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<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
acquisition of the 50% interest in Petrotrans Holdings Ltd. will be accounted for using
the equity method, whereby the investment is carried at the Company&#146;s original cost
plus its proportionate share of undistributed earnings. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>4.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Investments in Marketable Securities</B> </FONT></TD>
</TR>
</TABLE>

<PRE>
<B>                                                                         Gross           Gross         Approximate
                                                                       Unrealized     Unrealized        Market and
                                                          Cost           Gains          Losses       Carrying Values
                                                            $              $               $                $</B>
                                                      -------------- --------------- -------------- -------------------
         September 30, 2003
         Available-for-sale equity securities..........    48,495         22,863           (73)           71,285

         December 31, 2002
         Available-for-sale equity securities..........    21,416              -        (7,786)           13,630
</PRE>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
         Available-for-sale  equity securities  represent  2,906,000 shares (2002 - Nil) in A/S  Dampskibsselskabet
         Torm ("Torm") and 801,221 shares (2002 - 1,001,221) in Nordic American Tanker Shipping Ltd.
</FONT></TD></TR></TABLE>
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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>5.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Goodwill and Intangible Assets </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
changes in the carrying amount of goodwill for the nine-month period ended September 30,
2003 for the Company&#146;s spot tanker segment and the fixed-rate segment (as described
in Note 14), are as follows: </FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
<B>                                                          Spot Tanker      Fixed-Rate
                                                            Segment         Segment          Other         Total
                                                               $               $               $             $</B>
                                                        ---------------- --------------- -------------- -------------
          Balance as of January 1, 2003................        -             87,079          2,110         89,189
          Goodwill acquired............................        -             40,033          1,069         41,102
                                                        ---------------- --------------- -------------- -------------
          Balance as of September 30, 2003.............        -            127,112          3,179        130,291
                                                        ================ =============== ============== =============
</PRE>
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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
goodwill allocated to the fixed-rate segment is tested for impairment each year. Based on
the test conducted on the goodwill in the fixed-rate segment in June 2003, the Company
determined that goodwill was not impaired at such time. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
         The following table presents amortization details of intangible assets acquired by the Company:</FONT></TD>
</TR>
</TABLE>
<BR>

<pre>
<B>                                                          Gross Carrying      Accumulated      Net Carrying
                                                              Amount         Amortization         Amount
                                                                  $                 $                 $</B>
                                                        ------------------- ------------------ -----------------

          Contracts of affreightment ("COAs")..........        117,000            7,548            109,452
          Intellectual property........................          7,701              642              7,059
                                                        ------------------- ------------------ -----------------
                                                               124,701            8,190            116,511
                                                        =================== ================== =================

          Aggregate amortization expense of intangible assets:
             Three months ended September 30, 2003                                                   4,049
             Nine months ended September 30, 2003                                                    8,190
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>6.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Cash Flows</B></FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Cash  interest  paid by the  Company  during the  nine-month  period  ended  September  30,  2003 and 2002
         approximated $67.2 million and $59.6 million, respectively.</FONT></TD>
</TR>
</TABLE>
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<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS<BR>
(all tabular amounts stated in thousands of U.S. dollars, except share and per share data)<BR>
(Information as at September 30, 2003 and for the Three and Nine-Month Periods<BR>
Ended September 30, 2003 and 2002 is unaudited) </FONT></H1>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>7.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Long-Term Debt</B></FONT></TD>
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<pre>
                                                                                    <B>September 30,      December 31,
                                                                                        2003              2002
                                                                                         $                  $</B>
                                                                                  ----------------- ------------------
         Revolving Credit Facilities............................................        570,000           210,000
         Premium Equity Participating Security Units (7.25%) due May 18, 2006 ..        143,750                 -
         First Preferred Ship Mortgage Notes (8.32%) due through 2008...........        167,229           167,229
         Term Loans due through 2010 ...........................................        516,602           401,593
         Senior Notes (8.875%) due July 15, 2011 ...............................        351,824           352,000
                                                                                  ----------------- ------------------
                                                                                      1,749,405         1,130,822
         Less current portion...................................................        144,074            83,605
                                                                                  ----------------- ------------------
                                                                                      1,605,331         1,047,217
                                                                                  ================= ==================
</PRE>
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As
of September 30, 2003, the Company had three long-term Revolving Credit Facilities (the
&#147;Revolvers&#148;) available, which, as at such date, provided for borrowings of up to
$931.3 million, of which $361.3 million was undrawn. The amount available under the
Revolvers reduces semi-annually by a combined $59.3 million, with final balloon reductions
scheduled for one Revolver in 2006 and for the other two Revolvers in 2008. Two of the
Revolvers are collateralized by first priority mortgages granted on 30 of the
Company&#146;s vessels, together with other related collateral, and all the revolvers
include a guarantee from Teekay for all amounts outstanding under the Revolvers. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
7.25% Premium Equity Participating Security Units due May 18, 2006 (the &#147;Equity
Units&#148;) are unsecured and subordinated to all of the Company&#146;s senior debt. The
Equity Units are not guaranteed by any of the Company&#146;s subsidiaries and effectively
rank behind all existing and future secured debt. Each Equity Unit includes (a) a forward
contract that requires the holder to purchase for $25 a specified fraction of a share of
the Company&#146;s Common Stock on February 16, 2006 and (b) a $25 principal amount,
subordinated note due May 18, 2006. The forward contracts provide for contract adjustment
payments of 1.25% annually and the notes bear interest at 6.0% annually. Upon settlement
on February 16, 2006 of the 5.75 million forward contracts included in the Equity Units,
the Company will issue between 3,267,150 and 3,991,075 shares of its Common Stock
(depending on the average closing price of the Common Stock for the 20-trading day period
ending on the third trading day prior to February 16, 2006). </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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 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 September 30, 2003, the fair value of these net assets approximated $172.5 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. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
Company has several term loans outstanding, which, as at September 30, 2003, totaled
$516.6 million. The term loans of the Company are collateralized by first preferred
mortgages on the vessels to which the loans relate, together with other collateral. All
term loans, other than UNS term loans totaling $348.6 million, are guaranteed by Teekay. </FONT></TD>
</TR>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Pursuant
to 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 September 30, 2003, to $506.7 million. Certain loan agreements require that a
minimum level of free cash be maintained. As at September 30, 2003, this amount was $131.2
million. </FONT></TD>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

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<A NAME=A057></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS <BR>
(all tabular amounts stated in thousands of U.S. dollars, except share and per share data)<BR>
(Information as at September 30, 2003 and for the Three and Nine-Month Periods<BR>
Ended September 30, 2003 and 2002 is unaudited) </FONT></H1>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>8.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Capital Stock</B></FONT></TD>
</TR>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
authorized capital stock of Teekay at September 30, 2003 was 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 September 30, 2003, Teekay had 40,153,527
shares of Common Stock and no shares of Preferred Stock issued and outstanding. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
As
at September 30, 2003, the Company had reserved 5,342,069 shares of Common Stock for
issuance upon exercise of options granted or to be granted pursuant to its 1995 Stock
Option Plan. As at September 30, 2003, options to purchase a total of 4,062,366 shares of
Teekay&#146;s Common Stock were outstanding, of which 2,079,771 options were then
exercisable at prices ranging from $16.875 to $41.19 per share, with a weighted-average
exercise price of $29.01 per share. All outstanding options have exercise prices ranging
from $16.875 to $41.19 per share and a weighted-average exercise price of $34.094 per
share. All outstanding options expire between July 19, 2005 and March 10, 2013, ten years
after the date of each respective grant. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Under
Statement of Financial Accounting Standards No. 123 (&#147;SFAS 123&#148;),
&#147;Accounting for Stock-Based Compensation,&#148; and as amended by Statement of
Financial Accounting Standards No. 148 (&#147;SFAS 148&#148;), &#147;Accounting for
Stock-Based Compensation-Transition and Disclosure,&#148; disclosures of stock-based
compensation arrangements with employees are required and companies are encouraged (but
not required) to record compensation costs associated with employee stock option awards,
based on estimated fair values at the grant dates. The Company has chosen to continue to
account for stock-based compensation using the intrinsic value method prescribed in APB
Opinion No. 25 (&#147;APB 25&#148;) &#147;Accounting for Stock Issued to Employees.&#148;
As the exercise price of the Company&#146;s employee stock options equals the market price
of underlying stock on the date of grant, no compensation expense has been recognized
under APB 25. The following table illustrates the effect on net income and earnings per
share had the Company applied the fair value recognition provisions of SFAS 123 to
stock-based employee compensation. </FONT></TD>
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<PRE>
                                                           <B>        Three Months Ended          Nine Months Ended
                                                                     September 30,                September 30,
                                                                2003             2002           2003          2002
                                                                  $                $              $             $</B>
                                                          ----------------- ------------- -------------- -------------
         Net income - as reported.......................       20,327              643        170,782       20,285
         Less: Total stock-based compensation expense...        2,060            1,919          6,185        5,737
                                                          ----------------- ------------- -------------- -------------
         Net income (loss) - pro forma..................       18,267           (1,276)       164,597       14,548
                                                          ================= ============= ============== =============

         Basic earnings (loss) per common share:
         As reported....................................         0.51             0.02           4.28         0.51
         Pro forma......................................         0.46            (0.03)          4.13         0.37

         Diluted earnings (loss) per common share:
         As reported....................................         0.50             0.02           4.21         0.50
         Pro forma......................................         0.45            (0.03)          4.06         0.36
</PRE>
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For
the purpose of the above pro forma calculation, the fair value of each option granted was
estimated on the date of the grant using the Black-Scholes option pricing model. The
following assumptions were used in computing the fair value of the options granted:
expected volatility of 30%, expected life of five years, dividend yield of 3.0%, and
weighted-average risk-free interest rate of 2.5% in 2003 and 4.7% in 2002. </FONT></TD>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS<BR>
(all tabular amounts stated in thousands of U.S. dollars, except share and per share data) <BR>
(Information as at September 30, 2003 and for the Three and Nine-Month Periods<BR>
Ended September 30, 2003 and 2002 is unaudited) </FONT></H1>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>9.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Commitments and Contingencies</B></FONT></TD>
</TR>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
As
of September 30, 2003, the Company was committed to the construction of four Suezmax
tankers (including two scheduled for conversion to shuttle tankers upon delivery)
and nine Aframax tankers scheduled for delivery between November 2003 and January
2006, at a total cost of approximately $579.3 million, excluding capitalized interest. As
of September 30, 2003, payments made towards these commitments totaled $99.1 million and
long-term financing arrangements existed for $342.4 million of the cost of these vessels.
It is the Company&#146;s intention to finance the remaining $137.8 million through either
debt borrowing, surplus cash balances, or a combination thereof. As of September 30, 2003,
the remaining payments required to be made under these newbuilding and conversion
contracts were: $37.4 million in 2003, $324.9 million in 2004, and $117.9 million in 2005.
Two of the Suezmax tanker newbuildings as well as one of the Aframax tanker newbuildings will be subject to
long-term charter contracts upon delivery. These charter contracts expire between 2009 and
2017. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
Company is also committed to a 15-year capital lease on an Aframax tanker that was
delivered in September 2003. The lease will require minimum payments of $66.6 million
(including a purchase obligation payment) over the remaining term of the lease. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
During
September 2003, the Company was awarded a contract by a consortium of major oil companies
(&#147;Industry Co-op&#148;) to construct and install VOC Equipment, which reduces emissions
during cargo operations, on a number of shuttle tankers. The construction and installation
of these plants are expected to be completed by the end of 2004 at a total cost to Teekay of
approximately $42 million. Under an existing frame agreement, the Industry Co-op has the
option to order additional plants, which the Company expects would cost between $40
million and $50 million. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Teekay
and certain of its subsidiaries have guaranteed their share of the outstanding mortgage
debt in four 50%-owned joint venture companies. As of September 30, 2003, Teekay and these
subsidiaries had guaranteed $104.0 million, or 50% of the total $208.0 million, in
outstanding mortgage debt of the joint venture companies. These joint venture companies
own an aggregate of four shuttle tankers. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The Company enters into indemnification agreements with certain officers and directors. In
addition, the Company enters into other indemnification agreements in the ordinary course
of business. The maximum potential amount of future payments required under these
indemnification agreements is unlimited. However, the Company maintains appropriate
liability insurance that limits the exposure and enables the Company to recover any future
amounts paid, less any deductible amounts pursuant to the terms of the respective
policies, the amounts of which are not considered material. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>10.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Other Loss</B></FONT></TD>
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<PRE>
                                                                      <B>   Three Months Ended         Nine Months Ended
                                                                       September     September    September    September
                                                                          30,           30,          30,          30,
                                                                         2003          2002         2003         2002
                                                                           $             $            $            $</B>
                                                                     -------------- ------------ ------------ ------------
         Gain/(Loss) on disposition of available-for-sale
         securities..............................................         (28)              -         142        (1,130)
         Write-down of marketable securities.....................            -              -      (4,910)           -
         Equity income...........................................        1,357            765       3,753         3,052
         Income tax expense......................................       (6,000)        (2,710)    (23,186)       (9,701)
         Miscellaneous...........................................        2,250          1,024         815        (1,486)
                                                                     -------------- ------------ ------------ ------------
                                                                        (2,421)          (921)    (23,386)       (9,265)
                                                                     ============== ============ ============ ============
</PRE>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS<BR>
(all tabular amounts stated in thousands of U.S. dollars, except share and per share data)<BR>
(Information as at September 30, 2003 and for the Three and Nine-Month Periods<BR>
Ended September 30, 2003 and 2002 is unaudited) </FONT></H1>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>11.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Comprehensive Income</B></FONT></TD>
</TR>
</TABLE>
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<PRE>
                                                                      <B>  Three Months Ended         Nine Months Ended
                                                                      September     September    September    September
                                                                         30,           30,          30,          30,
                                                                         2003         2002         2003         2002
                                                                          $             $            $            $</B>
                                                                     ------------- ------------ ------------- ------------
         Net income                                                     20,327           643      170,782       20,285
         Other comprehensive income:
            Unrealized gain/(loss) on available-for-sale securities     22,577        (2,184)      23,007       (2,328)
            Reclassification adjustment for loss on available-for-
              sale securities included in net income                        31             -        4,971          737
            Unrealized gain/(loss) on derivative instruments             6,644          (896)      (4,938)       2,562
            Reclassification adjustment for gain/(loss) on
              derivative instruments                                     2,441        (1,146)       2,078       (1,646)
                                                                     ------------- ------------ ------------ ------------
         Comprehensive income/(loss)                                    52,020        (3,583)     195,900       19,610
                                                                     ============= ============ ============ ============
</PRE>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>12.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Derivative Instruments and Hedging Activities</B></FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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 and bunker fuel prices and the effect of these
strategies on the Company&#146;s financial statements. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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 September 30, 2003, the Company was committed to foreign exchange
contracts for the forward purchase of approximately Norwegian Kroner 909.0 million,
Canadian Dollars 52.5 million, Euros 0.5 million, Australian Dollars 1.2 million, and
Singapore Dollars 15.2 million for U.S. Dollars at an average rate of Norwegian Kroner
7.64 per U.S. Dollar, Canadian Dollar 1.59 per U.S. Dollar, Euros 1.07 per U.S. Dollar,
Australian Dollar 0.67 per U.S. Dollar, and Singapore Dollar 1.72 per U.S. Dollar,
respectively. The foreign exchange forward contracts mature as follows: $31.1 million in
2003, $106.1 million in 2004, $20.0 million in 2005, and $5.0 million in 2006. As at
September 30, 2003, the Company was committed to bunker fuel swap contracts totaling
10,860 metric tonnes, with a weighted-average price of $116.00 per tonne. The fuel swap
contracts expire between October 2003 and May 2004. </FONT></TD>
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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
As
at September 30, 2003, the Company was committed to interest rate swap agreements whereby
$710.0 million of the Company&#146;s floating-rate debt was swapped with fixed-rate
obligations having a weighted-average remaining term of 1.8 years. These agreements, which
expire between January 2004 and January 2006, effectively change the Company&#146;s
interest rate exposure on $710.0 million of debt from a floating LIBOR rate to a
weighted-average fixed-rate of 2.73%. 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. </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>13.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Write-Downs and Loss on Sale of Vessels</B></FONT></TD>
</TR>
</TABLE>
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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
During
the first two quarters of 2003, the Company sold six-1980s-built Aframax tankers and
one 1980s-built Panamax oil/bulk/ore carriers (&#147;O/B/Os&#148;). During the third quarter of 2003, the Company sold
three 1980s-built Panamax O/B/Os as well as two 1980s-built Aframax tankers.
Subsequent to September 30, 2003, the Company sold four additional 1980s-built
Panamax O/B/Os and one 1980s-built Aframax tanker. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
results for the three and nine-month periods ended September 30, 2003 include write-downs
and loss on sale from these vessels totaling $5.8 million and $36.3 million, respectively.
Vessels write-downs to fair market value in the three and nine-month periods ended
September 30, 2003, were determined using the estimated net proceeds from the sales. </FONT></TD>
</TR>
</TABLE>
<BR>
<BR>
<BR>
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<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>NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS <BR>
(all tabular amounts stated in thousands of U.S. dollars, except share and per share data)<BR>
(Information as at September 30, 2003 and for the Three and Nine-Month Periods<BR>
Ended September 30, 2003 and 2002 is unaudited) </FONT></H1>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>14.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Segment Reporting</B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
Company has two reportable segments: its spot tanker segment and its fixed-rate segment.
The Company&#146;s spot tanker segment consists of conventional crude oil tankers, O/B/Os,
and product carriers operating on the spot market or subject to time charters or contracts
of affreightment priced on a spot-market basis or on short-term fixed-rate contracts. The
Company considers contracts that have an original term of less than three years in
duration to be short-term. The Company&#146;s fixed-rate segment consists of shuttle
tankers, FSO vessels, an LPG carrier and conventional crude oil and product tankers
subject to long-term fixed-rate time-charter contracts or contracts of affreightment.
Segment results are evaluated based on income from vessel operations. The accounting
policies applied to the reportable segments are the same as those used in the preparation
of the Company&#146;s consolidated financial statements. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
following tables present results for these segments for the three- and nine-month periods
ended September 30, 2003 and 2002. </FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
         ---------------------------------------------- -------------------- -------------------- ------------------
<B>                                                               Spot Tanker          Fixed-Rate
                                                                 Segment              Segment              Total</B>
         Three months ended September 30, 2003          <B>            $                    $                   $</B>
         ---------------------------------------------- -------------------- -------------------- ------------------

         Net voyage revenues - external................         150,471              124,387              274,858
         Vessel operating expenses.....................          31,793               23,488               55,281
         Time-charter hire expense.....................          50,112               45,843               95,955
         Depreciation and amortization.................          27,004               22,881               49,885
         General and administrative (1)................          14,839                9,279               24,118
                                                        -------------------- -------------------- ------------------
         Income from vessel operations.................          26,723               22,896               49,619
                                                        ==================== ==================== ==================

         Net voyage revenues - intersegment............               -                4,986                4,986
         Total assets at September 30, 2003............       1,335,183            1,649,299            2,984,482
         ---------------------------------------------- -------------------- -------------------- ------------------
<B>                                                               Spot Tanker          Fixed-Rate
                                                                 Segment              Segment              Total</B>
         Three months ended September 30, 2002          <B>            $                    $                   $</B>
         ---------------------------------------------- -------------------- -------------------- ------------------

         Net voyage revenues - external................          86,691               36,070              122,761
         Vessel operating expenses.....................          33,014               11,351               44,365
         Time-charter hire expense.....................          11,430                    -               11,430
         Depreciation and amortization.................          26,454               10,841               37,295
         General and administrative (1)................          11,536                2,794               14,330
                                                        -------------------- -------------------- ------------------
         Income from vessel operations ................           4,257               11,084               15,341
                                                        ==================== ==================== ==================

         Net voyage revenues - intersegment............               -                    -                    -

         ---------------------------------------------- -------------------- -------------------- ------------------
<B>                                                               Spot Tanker          Fixed-Rate
                                                                 Segment              Segment              Total</B>
         Nine months ended September 30, 2003           <B>           $                    $                   $</B>
         ---------------------------------------------- -------------------- -------------------- ------------------

         Net voyage revenues - external................         546,125              294,715              840,840
         Vessel operating expenses.....................          95,821               57,636              153,457
         Time-charter hire expense.....................         113,851               88,498              202,349
         Depreciation and amortization.................          81,671               57,119              138,790
         General and administrative (1)................          39,421               21,333               60,754
                                                        -------------------- -------------------- ------------------
         Income from vessel operations.................         215,361               70,129              285,490
                                                        ==================== ==================== ==================
         Net voyage revenues - intersegment.............              -               18,850               18,850
</PRE>
<BR>
<BR>
<BR>
<BR>
<BR>


<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS <BR>
(all tabular amounts stated in thousands of U.S. dollars, except share and per share data)<BR>
(Information as at September 30, 2003 and for the Three and Nine-Month Periods<BR>
Ended September 30, 2003 and 2002 is unaudited)</FONT></H1>

<PRE>
         ---------------------------------------------- -------------------- -------------------- ------------------
<B>                                                               Spot Tanker          Fixed-Rate
                                                                 Segment              Segment              Total</B>
         Nine months ended September 30, 2002           <B>            $                    $                   $</B>
         ---------------------------------------------- -------------------- -------------------- ------------------

         Net voyage revenues - external................         281,176              107,552              388,728
         Vessel operating expenses.....................          96,671               30,744              127,415
         Time-charter hire expense.....................          37,640                    -               37,640
         Depreciation and amortization.................          77,556               32,580              110,136
         General and administrative (1)................          34,622                8,202               42,824
                                                        -------------------- -------------------- ------------------
         Income from vessel operations.................          34,687               36,026               70,713
                                                        ==================== ==================== ==================

         Net voyage revenues - intersegment............               -                    -                    -
</PRE>
<BR>

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<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD>
<TD ALIGN=LEFT WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
(1) Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated
use of corporate resources).  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD ALIGN=LEFT WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
A reconciliation of total segment assets to amounts presented in the consolidated balance sheet is as
follows:  </FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
<B>                                                                                                       September 30,
                                                                                                            2003
                                                                                                              $</B>
                                                                                                  ------------------

         Total assets of all segments................................................                   2,984,482
         Cash, restricted cash and marketable securities.............................                     408,009
         Accounts receivable and other assets........................................                     231,195
                                                                                                  ------------------
         Consolidated total assets...................................................                   3,623,686
                                                                                                  ==================
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>15.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Recent Accounting Pronouncements</B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><BR>&nbsp;</FONT></TD>
<TD ALIGN=LEFT WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
In January
2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46 (&#147;FIN
46&#148;), &#147;Consolidation of Variable Interest Entities.&#148; FIN 46 requires that
if a business enterprise has a controlling financial interest in a variable interest
entity, the assets, liabilities and results of the activities of the variable interest
entity should be included in the consolidated financial statements of the business
enterprise. FIN 46 applies immediately to variable interest entities created after
January 31, 2003. For variable interest entities created or acquired prior to February 1,
2003, the provisions of FIN 46 must be applied for the first interim or annual period
beginning after December 15, 2003. FIN 46 also sets forth certain disclosures regarding
interests in variable interest entities that are deemed significant, even if
consolidation is not required. The Company is currently evaluating the effect that the
adoption of FIN 46 will have on its financial position, results of operations and cash
flows.  </FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>16.</B></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>Subsequent Event</B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD ALIGN=LEFT WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Subsequent to September 30, 2003, the Company repurchased $29.9 million of its 8.32% Notes at a
total cost of $33.2 million.  In addition, the Company has also cancelled $57.8 million of its
8.32% Notes, which previously had been outstanding, although held by the Company.</FONT></TD>
</TR></TABLE>
<BR>
<BR>
<BR>
<BR>
<BR>


<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>SCHEDULE A&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CONDENSED STATEMENTS
OF INCOME AND RETAINED EARNINGS <BR>
(in thousands of U.S. dollars)<BR>
(unaudited) </FONT></H1>

<PRE>
                                                               <B>Three Months Ended September 30, 2003</B>
                                           -------------------------------------------------------------------------------
<B>                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $</B>
                                           -------------------------------------------------------------------------------

Net voyage revenues                                   -        17,203          275,470       (17,815)         274,858
Operating expenses                                2,916         8,786          231,352       (17,815)         225,239
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations          (2,916)        8,417           44,118             -           49,619
Net interest expense                            (16,063)            -           (4,965)            -          (21,028)
Equity in net income of subsidiaries             51,427             -                -       (51,427)               -
Other income (loss)                             (12,121)            -            3,857             -           (8,264)
                                           -------------------------------------------------------------------------------
<B>Net income</B>                                       20,327         8,417           43,010       (51,427)          20,327
Retained earnings (deficit), beginning of
the period                                    1,087,367       (11,617)       1,326,299    (1,314,682)       1,087,367
Dividends declared                               (8,588)            -                -             -           (8,588)
                                           -------------------------------------------------------------------------------
<B>Retained earnings (deficit), end of the
period</B>                                        1,099,106        (3,200)       1,369,309    (1,366,109)       1,099,106
                                           ===============================================================================


                                                               <B>Three Months Ended September 30 , 2002</B>
                                           -------------------------------------------------------------------------------
                                           <B>                  8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $</B>
                                           -------------------------------------------------------------------------------

Net voyage revenues                                   -         9,260          149,480       (35,979)         122,761
Operating expenses                                3,442         9,031          130,926       (35,979)         107,420
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations          (3,442)          229           18,554             -           15,341
Net interest expense                            (10,623)            -           (3,154)            -          (13,777)
Equity in net income of subsidiaries             15,566             -                -       (15,566)               -
Other loss                                         (858)            -              (63)            -             (921)
                                           -------------------------------------------------------------------------------
<B>Net income</B>                                          643           229           15,337       (15,566)             643
Retained earnings (deficit), beginning of
the period                                      938,285       (13,008)       1,078,472    (1,065,464)         938,285
Dividends declared                               (8,535)            -                -             -           (8,535)
Repurchase of Common Stock                         (967)            -                -             -             (967)
                                           -------------------------------------------------------------------------------
<B>Retained earnings (deficit), end of the
period</B>                                          929,426       (12,779)       1,093,809    (1,081,030)         929,426
                                           ===============================================================================
</PRE>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(See Notes 7 and 9)</FONT></P>
<BR>
<BR>
<BR>
<BR>
<BR>


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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>SCHEDULE A&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CONDENSED STATEMENTS
OF INCOME AND RETAINED EARNINGS <BR>
(in thousands of U.S. dollars) <BR>
(unaudited) </FONT></H1>

<PRE>
                                                                <B>Nine Months Ended September 30, 2003</B>
                                           -------------------------------------------------------------------------------
<B>                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $</B>
                                           -------------------------------------------------------------------------------

Net voyage revenues                                   -        35,104          841,452       (35,716)         840,840
Operating expenses                                9,380        25,192          556,494       (35,716)         555,350
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations          (9,380)        9,912          284,958             -          285,490
Net interest expense                            (40,790)            -          (14,191)            -          (54,981)
Equity in net income of subsidiaries            233,809             -                -      (233,809)               -
Other loss                                      (12,857)            -          (46,870)            -          (59,727)
                                           -------------------------------------------------------------------------------
<B>Net income</B>                                      170,782         9,912          223,897      (233,809)         170,782
Retained earnings (deficit), beginning of
the period                                      954,005       (13,112)       1,145,412    (1,132,300)         954,005
Dividends declared                              (25,681)            -                -             -          (25,681)
                                           -------------------------------------------------------------------------------
<B>Retained earnings (deficit), end of the
period</B>                                        1,099,106        (3,200)       1,369,309    (1,366,109)       1,099,106
                                           ===============================================================================
</PRE>
<PRE>
                                                                <B>Nine Months Ended September 30, 2002</B>
                                           -------------------------------------------------------------------------------
<B>                                                             8.32% Notes                                      Teekay
                                           Teekay Shipping    Guarantor    Non-Guarantor                  Shipping Corp.
                                                Corp.       Subsidiaries   Subsidiaries    Eliminations   &amp; Subsidiaries
                                                  $               $              $              $               $</B>
                                           -------------------------------------------------------------------------------

Net voyage revenues                                   -        27,237          467,263      (105,772)         388,728
Operating expenses                                9,276        24,738          389,773      (105,772)         318,015
                                           -------------------------------------------------------------------------------
   (Loss) income from vessel operations          (9,276)        2,499           77,490             -           70,713
Net interest expense                            (31,441)            -           (9,722)            -          (41,163)
Equity in net income of subsidiaries             59,907             -                -       (59,907)               -
Other income (loss)                               1,095             -          (10,360)            -           (9,265)
                                           -------------------------------------------------------------------------------
<B>Net income</B>                                       20,285         2,499           57,408       (59,907)          20,285
Retained earnings (deficit), beginning of
the period                                      935,660       (15,278)       1,036,401    (1,021,123)         935,660
Dividends declared                              (25,552)            -                -             -          (25,552)
Repurchase of Common Stock                         (967)            -                -             -             (967)
                                           -------------------------------------------------------------------------------
<B>Retained earnings (deficit), end of the
period</B>                                          929,426       (12,779)       1,093,809    (1,081,030)         929,426
                                           ===============================================================================
</PRE>
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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(See
Notes 7 and 9)</FONT></P>
<BR>
<BR>
<BR>
<BR>
<BR>


<!-- MARKER FORMAT-SHEET="Head Right-TNR" FSL="Project" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>SCHEDULE A&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<A NAME=A092></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CONDENSED BALANCE
SHEETS <BR>
(in thousands of U.S. dollars)<BR>
(unaudited) </FONT></H1>

<PRE>
                                                                      <B>As at September 30, 2003</B>
                                          ---------------------------------------------------------------------------------
                                          <B>                  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                            -               -         335,951               -           335,951
Other current assets                             2,026             371         261,956         (96,000)          168,353
                                          ---------------------------------------------------------------------------------
     Total current assets                        2,026             371         597,907         (96,000)          504,304
Vessels and equipment (net)                          -         246,409       2,400,146               -         2,646,555
Advances due from subsidiaries                 335,259               -               -        (335,259)                -
Net investment in direct financing leases            -               -          46,280               -            46,280
Investment in joint ventures                         -               -          55,082                            55,082
Other assets (principally marketable
securities                                   1,922,675               -         124,663      (1,922,675)          124,663
     and investments in subsidiaries)
Intangible assets - net                              -               -         116,511               -           116,511
Goodwill                                             -               -         130,291               -           130,291
                                          ---------------------------------------------------------------------------------
                                             2,259,960         246,780       3,470,880      (2,353,934)        3,623,686
                                          =================================================================================
<B>LIABILITIES &amp; STOCKHOLDERS'
EQUITY</B>
Current liabilities                             16,239           1,437         359,388         (96,000)          281,064
Long-term debt and other long-term             666,670               -       1,057,646               -         1,724,316
liabilities
Due (from)/to affiliates                             -        (120,787)        500,573        (379,786)                -
                                          ---------------------------------------------------------------------------------
     Total liabilities                         682,909        (119,350)      1,917,607        (475,786)        2,005,380
                                          ---------------------------------------------------------------------------------
Minority interest                                    -               -          19,232               -            19,232
Stockholders' Equity
Capital stock                                  477,945              23           5,943          (5,966)          477,945
Contributed capital                                  -         369,307         136,766        (506,073)                -
Retained earnings (deficit)                  1,099,106          (3,200)      1,369,309      (1,366,109)        1,099,106
Accumulated other comprehensive income               -               -          22,023               -            22,023
                                          ---------------------------------------------------------------------------------
     Total stockholders' equity              1,577,051         366,130       1,534,041      (1,878,148)        1,599,074
                                          ---------------------------------------------------------------------------------
                                             2,259,960         246,780       3,470,880      (2,353,934)        3,623,686
                                          =================================================================================

                                                                       <B>As at December 31, 2002</B>
                                          ---------------------------------------------------------------------------------
                                           <B>                 8.32% Notes                                        Teekay
                                               Teekay        Guarantor     Non-Guarantor                   Shipping Corp.
                                           Shipping Corp.   Subsidiaries   Subsidiaries     Eliminations   &amp; Subsidiaries
                                                 $               $               $               $                $</B>
                                          ----------------- ------------- ---------------- --------------- ----------------
<B>ASSETS</B>
Cash and cash equivalents                            -              -           284,625              -           284,625
Other current assets                             1,500             43           197,390        (96,000)          102,933
                                          ----------------- ------------- ---------------- --------------- ----------------
     Total current assets                        1,500             43           482,015        (96,000)          387,558
Vessels and equipment (net)                          -        258,664         1,807,993              -         2,066,657
Advances due from subsidiaries                 263,105              -                 -       (263,105)                -
Investment in joint ventures                         -              -            56,354              -            56,354
Other assets (principally marketable
securities and
     investments in subsidiaries)            1,701,937              -           123,748     (1,701,937)          123,748
Goodwill                                             -              -            89,189              -            89,189
                                          ----------------- ------------- ---------------- --------------- ----------------
                                             1,966,542        258,707         2,559,299     (2,061,042)        2,723,506
                                          ================= ============= ================ =============== ================
<B>LIABILITIES &amp; STOCKHOLDERS'
EQUITY</B>
Current liabilities                             22,320          7,574           255,661        (96,000)          189,555
Long-term debt and other long-term
liabilities                                    519,229              -           572,500              -         1,091,729
Due (from)/to affiliates                             -       (105,085)          425,788       (320,703)                -
                                          ----------------- ------------- ---------------- --------------- ----------------
     Total liabilities                         541,549        (97,511)        1,253,949       (416,703)        1,281,284
                                          ----------------- ------------- ---------------- --------------- ----------------
Minority interest                                    -              -            20,324              -            20,324
Stockholders' Equity
Capital stock                                  470,988             23             5,943         (5,966)          470,988
Contributed capital                                  -        369,307           136,766       (506,073)                -
Retained earnings (deficit)                    954,005        (13,112)        1,145,412     (1,132,300)          954,005
Accumulated other comprehensive loss                 -              -            (3,095)             -            (3,095)
                                          ----------------- ------------- ---------------- --------------- ----------------
     Total stockholders' equity              1,424,993        356,218         1,285,026     (1,644,339)        1,421,898
                                          ----------------- ------------- ---------------- --------------- ----------------
                                             1,966,542        258,707         2,559,299     (2,061,042)        2,723,506
</PRE>
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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>

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<A NAME=A096></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(See
Notes 7 and 9)</FONT></P>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>


<!-- MARKER FORMAT-SHEET="Head Right-TNR" FSL="Project" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>SCHEDULE A&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B> </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CONDENSED STATEMENTS
OF CASH FLOWS <BR>
(in thousands of U.S. dollars)<BR>
(unaudited) </FONT></H1>
<BR>

<PRE>
                                                                       <B>Nine Months Ended September 30, 2003</B>
                                                     -------------- --------------- ------------- ------------ ---------------
<B>                                                        Teekay       8.32% Notes                                   Teekay
                                                       Shipping       Guarantor     Non-Guarantor              Shipping Corp.
                                                         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            (52,434)         16,211        390,041          -         353,818
                                                     --------------- -------------- ------------ ------------- ---------------
<B>FINANCING ACTIVITIES</B>
Net proceeds from long-term debt                        138,509               -      1,540,788          -       1,679,297
Scheduled repayments of long-term debt                        -               -        (49,182)         -         (49,182)
Prepayments of long-term debt                                 -               -     (1,023,000)                (1,023,000)
Other                                                   (86,075)        (15,702)        95,868          -          (5,909)
                                                     --------------- -------------- ------------ ------------- ---------------
     Net cash flow from financing activities
                                                         52,434         (15,702)       564,474          -         601,206
                                                     --------------- -------------- ------------ ------------- ---------------

<B>INVESTING ACTIVITIES</B>
Expenditures for vessels and equipment                        -            (509)      (249,752)         -        (250,261)
Expenditures for purchase of Navion AS                        -               -       (704,734)         -        (704,734)
Proceeds from disposition of assets                           -               -         91,080          -          91,080
Other                                                         -               -        (39,783)         -         (39,783)
                                                     --------------- -------------- ------------ ------------- ---------------
     Net cash flow from investing activities                  -            (509)      (903,189)         -        (903,698)
                                                     --------------- -------------- ------------ ------------- ---------------
<B>Increase in cash and cash equivalents</B>                         -               -         51,326          -          51,326
Cash and cash equivalents, beginning of the period            -               -        284,625          -         284,625
                                                     --------------- -------------- ------------ ------------- ---------------
<B>Cash and cash equivalents, end of the period</B>                  -               -        335,951          -         335,951
                                                     =============== ============== ============ ============= ===============
</PRE>
<BR>
<BR>
<PRE>
                                                                      <B>Nine Months Ended September 30 , 2002</B>
                                                     --------------- -------------- ------------ ------------- ---------------
<B>                                                        Teekay       8.32% Notes                                   Teekay
                                                       Shipping       Guarantor     Non-Guarantor              Shipping Corp.
                                                         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            (68,951)        15,661         190,457           -        137,167
                                                     -------------- --------------- ------------- ------------ ---------------
<B>FINANCING ACTIVITIES</B>
Net proceeds from long-term debt                              -              -          78,890           -         78,890
Scheduled repayments of long-term debt                        -              -         (34,676)          -        (34,676)
Prepayments of long-term debt                                 -              -          (8,000)          -         (8,000)
Other                                                    68,951        (11,792)        (80,633)          -        (23,474)
                                                     -------------- --------------- ------------- ------------ ---------------
     Net cash flow from financing activities             68,951        (11,792)        (44,419)          -         12,740
                                                     -------------- --------------- ------------- ------------ ---------------

<B>INVESTING ACTIVITIES</B>
Expenditures for vessels and equipment                        -         (3,869)       (112,273)          -       (116,142)
Other                                                         -              -         (47,210)          -        (47,210)
                                                     -------------- --------------- ------------- ------------ ---------------
     Net cash flow from investing activities                  -         (3,869)       (159,483)          -       (163,352)
                                                     -------------- --------------- ------------- ------------ ---------------
<B>Decrease in cash and cash equivalents</B>                         -              -         (13,445)          -        (13,445)
Cash and cash equivalents, beginning of the period            -              -         174,950           -        174,950
                                                     -------------- --------------- ------------- ------------ ---------------
<B>Cash and cash equivalents, end of the period</B>                  -              -         161,505           -        161,505
                                                     ============== =============== ============= ============ ===============
</PRE>
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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=1><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(See
Notes 7 and 9)</I></FONT></P>

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


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES <BR>
SEPTEMBER 30, 2003 <BR>
PART I &#150; FINANCIAL INFORMATION </FONT></H1>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>ITEM 2 - </B></FONT></TD>
<TD ALIGN=LEFT WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS </B> </FONT></TD>
</TR>
</TABLE>
<BR>

<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>RESULTS OF OPERATIONS </FONT></H1>

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

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>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 September 30, 2003,
the Company&#146;s fleet (excluding vessels managed for third parties) consisted of 149
vessels (including 46 vessels time-chartered-in, 13 newbuildings on order, and 4 vessels
owned by joint ventures), for a total cargo-carrying capacity of approximately 15.6
million deadweight tonnes. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company&#146;s net voyage
revenues are derived from:</FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD>
<TD WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&#149;</FONT></TD>
<TD WIDTH=93%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Spot
voyages,</FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD>
<TD WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&#149;</FONT></TD>
<TD WIDTH=93%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Time
charters, whereby vessels are chartered to customers for a fixed period, and </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD>
<TD WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&#149;</FONT></TD>
<TD WIDTH=93%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>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. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company&#146;s fleet is divided
into two main segments, the spot tanker segment and the fixed-rate segment. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company&#146;s spot tanker
segment consists of conventional crude oil tankers, oil/bulk/ore carriers
(&#147;OBOs&#148;), and product carriers operating on the spot market or subject to time
charters or COAs priced on a spot-market basis or short-term fixed-rate contracts. The
Company considers contracts that have an original term of less than three years in
duration to be short-term. All of the Company&#146;s very large crude carrier
(&#147;VLCC&#148;) fleet and Suezmax conventional tanker fleet and substantially all of
the Company&#146;s conventional Aframax, large product and small product tanker fleets are
among the vessels included in the spot tanker segment. Net voyage revenues earned by the
vessels in the spot tanker segment accounted for approximately 55% and 65% of the
Company&#146;s net voyage revenues for the three- and nine-month periods ended September
30, 2003, as compared to 71% and 72% for the same periods last year. These decreases are
due primarily to the Company&#146;s acquisition of Navion and its shuttle tanker fleet
that is part of the Company's fixed-rate segment, partially offset by an increase in
spot tanker rates compared to the same periods last year.
The Company&#146;s 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. 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 spot markets have historically exhibited
seasonal variations in charter rates. Tanker spot 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. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company&#146;s fixed-rate segment
includes the Company&#146;s shuttle tanker operations (Navion and Ugland Nordic Shipping
(&#147;UNS&#148;)), floating storage and off-take (&#147;FSO&#148;) vessels, a liquid
petroleum gas (&#147;LPG&#148;) carrier, and certain conventional crude oil, methanol and
product tankers on long-term fixed-rate time-charter contracts or COAs. Net voyage
revenues earned by the vessels in this segment accounted for approximately 45% and 35% of
the Company&#146;s net voyage revenues for the three- and nine-month periods ended
September 30, 2003, as compared to 29% and 28% for the same periods last year. The
Company&#146;s shuttle tanker operations provide services to oil companies, primarily in
the North Sea, under long-term fixed-rate COAs or time-charter agreements. Historically,
the utilization of shuttle tankers in the North Sea is higher in the winter months as
favorable weather conditions in the summer months provide opportunities for repairs and
maintenance to the offshore oil platforms, which generally reduces oil production. The
Company currently has five newbuilding vessels on order in its fixed-rate segment, with
two Suezmax tankers scheduled to deliver in the first quarter of 2004 (to be converted to
shuttle tankers upon delivery) and three conventional crude oil tankers (two Suezmax and
one Aframax tankers) expected to deliver in the fourth quarter of 2003 and early 2004. The
three conventional crude oil tankers will be employed on 12-year contracts with
ConocoPhillips when delivered, along with two other tankers that were delivered in
September 2003. In August 2003, the Company entered into an agreement to provide an FSO
vessel to Unocal Thailand for a minimum period of 10 years. Teekay&#146;s 1988-built
Aframax tanker, the Namsan Spirit, will undergo conversion in preparation for delivery to
Unocal in April 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<A NAME=A109></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Acquisition of Navion AS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>In April 2003, Teekay completed its
acquisition of 100% of the issued and outstanding shares of Navion for approximately
$774.2 million in cash, including transaction costs of approximately $7 million. The
Company made a deposit of $76.0 million towards the purchase price on December 16, 2002.
The remaining portion of the purchase price was paid on closing. The Company funded its
acquisition of Navion by borrowing under a $500 million 364-day facility (subsequently
replaced by a $550 million revolving credit facility), together with available cash, and
borrowings under other existing revolving credit facilities. Navion&#146;s results of
operation have been consolidated with the Company&#146;s results commencing April 1, 2003. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Navion,
based in Stavanger, Norway, operates primarily in the shuttle tanker and the conventional
crude oil and product tanker markets. Its modern shuttle tanker fleet, which as of June
30, 2003, consisted of eight owned and 12 chartered-in vessels (excluding five vessels
chartered-in from the Company&#146;s shuttle tanker subsidiary UNS), provides logistical
services to the Norwegian state-owned oil company, Statoil ASA, and other oil companies in
the North Sea under fixed-rate, long-term contracts of affreightment. Navion&#146;s
modern, chartered-in, conventional tanker fleet, which as of September 30, 2003, consisted
of 12 crude oil tankers, and 10 product tankers, operates primarily in the Atlantic
region, providing services to Statoil and other oil companies. In addition, Navion owns
two FSO vessels currently trading as conventional crude oil tankers in the Atlantic
region, three chartered-in methanol carriers, and one LPG carrier on long-term charter to
Statoil. Through Navion Chartering AS, an entity owned jointly with Statoil, Navion has a
first right of refusal on Statoil&#146;s oil transportation requirements at the prevailing
market rate until December 31, 2007. In addition to tanker operations, Navion also
constructs, installs, operates and leases VOC Equipment, which reduces volatile organic
compound emissions during loading, transportation and storage of oil and oil products. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<A NAME=A110></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Acquisition of 50 % of
Petrotrans Holdings Ltd. </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On September 30, 2003, Teekay
acquired 50% of the issued and outstanding shares of Petrotrans Holdings Ltd., the parent
company of Skaugen Petrotrans Inc. (SPT). The acquisition was completed for approximately
$25 million in cash, and an &#147;earn-out element&#148; to be calculated based on the
financial performance of SPT over the next five years. The Company funded this acquisition
with available cash. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>SPT is a leading lightering company
operating out of Houston, Texas. Lightering is the process of ship-to-ship transfer of oil
cargo, which is required when vessels transporting oil are too large to enter ports that
are not deep enough, or have narrow entrances or small berths. The lightering process
consists of maneuvering a smaller tanker (service vessel) alongside the larger tanker,
typically with both vessels underway. The service vessel transports the oil cargo to the
port. SPT lighters approximately 1.1 million barrels of crude per day, or approximately
15% of all seaborne crude oil into US ports. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<A NAME=A111></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Critical Accounting
Policies </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company&#146;s consolidated
financial statements are prepared in accordance with accounting principles generally
accepted in the United States, which require the Company to make estimates in the
application of its accounting policies based on the best assumptions, judgments, and
opinions of management. Following is a discussion of the accounting policies that involve
a higher degree of judgment and the methods of their application. For a further
description of the Company&#146;s material accounting policies, see Note 1 to the
Company&#146;s consolidated financial statements for the year ended December 31, 2002
included in the Company&#146;s Annual Report on Form 20-F filed with the SEC. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><I>Revenue Recognition</I> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company generates a majority of
its revenues from voyage charters. Within the shipping industry, the two methods used to
account for voyage revenues and expenses are the percentage of completion and the
completed voyage methods. For each method, voyages may be calculated on either a
load-to-load or discharge-to-discharge basis. Most shipping companies, including the
Company, use the percentage of completion method. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>In applying the percentage of
completion method, management believes that in most cases the discharge-to-discharge basis
of calculating voyages more accurately reflects voyage results than the load-to-load
basis. At the time of cargo discharge, the Company generally has information about the
next load port and expected discharge port, whereas at the time of loading the Company
normally is less certain what the next load port will be. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<A NAME=A113></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><I>Vessel Lives and
Impairment </I></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The carrying value of each of the
Company&#146;s vessels represents its original cost at the time of delivery or purchase
less depreciation calculated using an estimated useful life of 25 years from the date the
vessel was originally delivered from the shipyard. In the shipping industry, the use of a
25-year vessel life has become the prevailing standard. However, the actual life of a
vessel may be different from the 25-year life, with a shorter life potentially resulting
in an impairment loss. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On June 4, 2003, the European Union ("EU")
Parliament passed legislation that will accelerate the phase-out of single-hull tankers between now
and 2010, ban the carriage of heavy oils on single-hull tankers in European waters, and
impose a Condition Assessment Scheme (&#147;CAS&#148;) for single-hull tankers older than
15 years. The regulations became effective on October 21, 2003, and immediately banned
approximately 11 percent of the existing world tanker fleet from trading in European
waters. Following the EU&#146;s lead, in July 2003 the International Maritime Organization ("IMO")
agreed to accelerate the phase-out of Category 1 tankers (single-hull tankers built prior to 1982) by 2005. None of
the single-hull tankers the Company operates are Category I tankers. In addition, the IMO
is considering an accelerated phase-out for the world&#146;s remaining single-hull tankers
&#151; known as Categories 2 and 3 &#151; but deferred its decision on this issue until
its next meeting in December 2003. The IMO has indicated that it will also consider at
that meeting a global ban on the carriage of heavy oils on single-hull tankers and the
application of CAS to single-hull tankers over 15-years old. As of October 31, 2003,
the Company owned fourteen single-hull Aframax tankers, one single-hull VLCC and
one single-hull shuttle tanker. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>If the EU regulations regarding
Categories 2 and 3 tankers are adopted by the IMO, management believes that they could
result in an impairment loss and higher depreciation expense for the Company related to a
reduction of the estimated useful life of its single-hull vessels for accounting purposes.
However, management believes that these regulations could also result in a tightening of
the world tanker supply and a reallocation of affected tonnage. This could result in
firmer tanker market conditions and increased tanker freight rates for modern vessels. The
Company has not determined the impact, if any, that the adoption of these regulations will
have on the Company&#146;s results of operation or financial position. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The carrying values of the
Company&#146;s vessels may not represent their fair market value at any point in time
since the market prices of secondhand vessels tend to fluctuate with changes in charter
rates and the cost of newbuildings. Both charter rates and newbuilding costs tend to be
cyclical in nature. The Company reviews vessels and equipment for impairment whenever
events or changes in circumstances indicate the carrying amount of an asset may not be
recoverable. Recoverability of these assets is measured by comparing their carrying amount
to future undiscounted cash flows that the assets are expected to generate over the useful
remaining life. If vessels and equipment are considered to be impaired, the impairment to
be recognized equals the amount by which the carrying value of the assets exceeds their
fair market value. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><I>Goodwill</I> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company adopted Statement of
Financial Accounting Standards No. 142 (&#147;SFAS 142&#148;), &#147;Goodwill and Other
Intangible Assets&#148; and as a result has discontinued amortization of goodwill
effective January 1, 2002. Goodwill and other intangible assets with indefinite lives are
tested for impairment annually or whenever an impairment indicator arises. An impairment
test requires the Company to make estimates of future cash flows. If events or
circumstances change, including reductions in anticipated cash flows generated by
operations, goodwill could become impaired and result in a charge to earnings. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Results of Operations </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>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 of the Company&#146;s two reportable segments. See Item
1 &#151; Notes to Consolidated Financial Statements: Note 14 &#150; Segment Reporting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Spot Tanker Segment</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TCE rates for the vessels in the
Company&#146;s spot market segment primarily depend 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 TCE rates will impact the
Company&#146;s revenues and earnings. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The average fleet size of the
Company&#146;s spot tanker fleet (including vessels chartered-in) increased 26.5% and 19.8%, respectively, for the three-
and nine-month periods ended September 30, 2003, compared to the same periods last year,
primarily due to the acquisition of Navion, and the delivery of three in-chartered
newbuildings (two Aframax tankers delivered in April 2003 and August 2003, and a VLCC
delivered in June 2003) and a vessel under capital lease (an Aframax tanker delivered in
September 2003). These increases were partially offset by the disposal of 12 older
tankers in the spot tanker segment during the nine-month period ended September 30, 2003.
The average fleet size of the Company's owned spot tanker fleet decreased 7.8% and 4.1%,
respectively, for the three- and nine-month periods ended September 30, 2003,
compared to the same periods last year, primarily due to the aforementioned reasons.</FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Average TCE rates declined during the
third quarter of 2003 from the very high levels in the previous quarter, mainly as a
result of seasonal factors normally experienced in the summer months, and an increase in
oil supplies from short-haul sources. However, charter rates increased in October 2003.
During the third quarter, global oil supply increased from the previous quarter as
non-OPEC producers increased their oil production. Iraqi oil production rebounded during
the third quarter compared to the previous quarter, with most of the exports routed out of
the Middle East. The increase in Iraqi oil production was partially offset as other Middle
East OPEC oil producers reduced their production to make room for the resumption of Iraqi
exports. In September 2003, OPEC members (excluding Iraq) voted to cut oil production by
0.9 million barrels per day (mb/d) effective November 1, 2003 in anticipation of further
increases in Iraqi oil production. The Company&#146;s average TCE rate for the vessels in
its spot tanker segment decreased 31.3% to $18,387 for the three-month period ended September
30, 2003, from $26,761 for the previous quarter, but increased 38.5% from $13,278 for the
quarter ended September 30, 2002. In addition, the Company&#146;s average TCE rate for the
vessels in its spot tanker segment increased 66.3% to $24,140 for the nine-month period ended
September 30, 2003, from $14,518 for the same period last year. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net voyage revenues for the spot
tanker segment increased 73.6% to $150.5 million and 94.2% to $546.1 million,
respectively, for the three- and nine-month periods ended September 30, 2003, from $86.7
million and $281.2 million for the same periods last year. These increases were primarily
due to the increases in average fleet size and average TCE rates from the same periods
last year. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Vessel operating expenses, which
include crewing, repairs and maintenance, insurance, stores and lubes, and communication
expenses, decreased 3.7% to $31.8 million and 0.9% to $95.8 million, respectively, for the
three- and nine-month periods ended September 30, 2003, from $33.0 million and $96.7
million in the same periods last year. The decreases in vessel operating expenses were
mainly attributable to the previously mentioned sale of older vessels, substantially
offset by the increase in the number of vessels resulting from the acquisition of Navion. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Time-charter hire expense increased
338.4% to $50.1 million and 202.5% to $113.9 million, respectively, for the three- and
nine-month periods ended September 30, 2003, from $11.4 million and $37.6 million for the
same periods last year. The increases were due primarily to the acquisition of Navion and
the previously mentioned delivery of three in-chartered vessels. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Depreciation and amortization expense
increased 2.1% to $27.0 million and 5.3% to $81.7 million, respectively, for the three-
and nine-month periods ended September 30, 2003, from $26.5 million and $77.6 million for
the same periods last year. The increase in depreciation and amortization for the three-
and nine-month periods ended September 30, 2003, was primarily attributable to the larger fleet
size resulting from the Navion acquisition and increased drydock amortization substantially offset as a result of the
previously mentioned vessel dispositions that took place during the nine-month period
ended September 30, 2003. Drydock amortization was $6.0 million and $17.1 million,
respectively, for the three- and nine-month periods ended September 30, 2003, compared to
$4.5 million and $12.6 million for the same periods last year. The increases in drydock
amortization were primarily due to an increase in the amount of work done in drydock and
an increase in the frequency of required drydockings for older vessels. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Fixed-Rate Segment</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The average fleet size of the
Company&#146;s fixed-rate segment (including vessels chartered-in) increased 177.7% and 114.2%, respectively, for the
three- and nine-month periods ended September 30, 2003, compared to the same periods last
year, primarily due to the acquisition of Navion as well as the addition of one shuttle
tanker during the fourth quarter of 2002, two shuttle tankers during first quarter of
2003, and one shuttle tanker during the third quarter of 2003. In addition, the first two
of five conventional tankers on 12-year charters to ConocoPhillips were delivered in the
third quarter of 2003. The average fleet size of the Company&#146;s owned fixed-rate segment
increased 74.6% and 53.3%, respectively, for the three- and nine-month periods ended
September 30, 2003, compared to the same periods last year, primarily due to the
aforementioned reasons. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net voyage revenues increased 244.8%
to $124.4 million and 174.0% to $294.7 million, respectively, for the three- and
nine-month periods ended September 30, 2003, from $36.1 million and $107.6 million for the
same periods last year due primarily to the increase in fleet size. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Vessel operating expenses increased
106.9% to $23.5 million and 87.5% to $57.6 million, respectively, for the three- and
nine-month periods ended September 30, 2003, from $11.4 million and $30.7 million for the
same periods last year primarily due to the increase in fleet size. Other less significant
reasons for the increases in vessel operating expenses were higher repair, maintenance and
crewing costs, and the appreciation of the Norwegian Kroner against the U.S. Dollar. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Time-charter hire expense increased
to $45.8 million and $88.5 million for the three- and nine-months periods ended September
30, 2003, from $nil for the same periods last year. The Company did not have any
chartered-in tankers in the fixed-rate segment prior to the acquisition of Navion. As at
September 30, 2003, the Company had 12 chartered-in shuttle tankers, three chartered-in
methanol carriers, and one chartered-in LPG carrier. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Depreciation and amortization expense
increased 111.1% to $22.9 million and 75.3% to $57.1 million, respectively, for the three-
and nine-month periods ended September 30, 2003, from $10.8 million and $32.6 million for
the same periods last year. The increases were mainly due to increased vessel cost
amortization as a result of the increases in fleet size and the amortization of the
estimated fair market value of the COAs the Company acquired as part of the Navion
acquisition. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<A NAME=A118></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Other Operating Results </U></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>General and administrative expenses
increased 68.3% to $24.1 million and 41.9% to $60.8 million, respectively, for the three-
and nine-month periods ended September 30, 2003, from $14.3 million and $42.8 million for
the same periods last year. These increases were primarily the result of the acquisition
of Navion, and one-time costs relating to the consolidation of two of the Company&#146;s
offices in Australia, the planned closure of the Company&#146;s Oslo office, and a
one-time compensation expense. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Interest expense increased 48.7% to
$21.8 million and 32.1% to $57.9 million, respectively, for the three- and nine-month
periods ended September 30, 2003, from $14.7 million and $43.9 million for the same
periods last year. The increases reflect the additional debt resulting from the purchase
of Navion. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Interest income decreased 11.0% to
$0.8 million in the three-month period ended September 30, 2003 from $0.9 million in the
same period last year. This decrease was due to lower interest rates compared to the same
period in 2002, partially offset by higher average cash balances. Interest income
increased 9.0% to $2.9 million in the nine-month period ended September 30, 2003, from
$2.7 million in the same period last year. This increase was primarily due to interest
earned on higher average cash balances, partially offset by lower interest rates. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>In connection with sales and proposed
sales of vessels, the Company incurred write-downs of vessel values and losses on vessel
sales of $5.8 million and $36.3 million, respectively, for the three- and nine-month
periods ended September 30, 2003. There were no write-down on vessel values or losses on
vessel sales for the same periods last year. See Item 1 &#151; Notes to Consolidated
Financial Statements: Note 13 &#150; Write-Downs and Loss on Sale of Vessels. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Other loss for the three- and
nine-month periods ended September 30, 2003 was $2.4 million and $23.4 million,
respectively, and was primarily comprised of income taxes, write-down of
available-for-sale securities, minority interest expense, and foreign exchange loss. Such
other loss was partially offset by equity income from 50%-owned joint ventures, dividend
income from Nordic American Tanker Shipping Ltd. (&#147;NAT&#148;), and a gain on
disposition of available-for-sale securities. Income taxes for the three- and nine-month
periods ended September 30, 2003 included $4.0 million and $3.0 million, respectively, in deferred
income tax expense relating to unrealized foreign exchange gains. Other loss of $0.9
million and $9.3 million for the three- and nine-month periods ended September 30, 2002,
was comprised primarily of income taxes, loss on disposition 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. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>As a result of the foregoing factors,
net income was $20.3 million and $170.8 million, respectively, for the three- and
nine-month periods ended September 30, 2003, compared to $643,000 and $20.3 million for
the same periods last year. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>LIQUIDITY AND CAPITAL
RESOURCES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>As at September 30, 2003, the
Company&#146;s total cash and cash equivalents was $336.0 million, compared to $284.6
million at December 31, 2002. The Company&#146;s total liquidity, including cash,
short-term marketable securities and undrawn long-term borrowings, was $697.3 million as
at September 30, 2003, up from $525.3 million as at December 31, 2002. The increase in
liquidity was mainly the result of net proceeds from the Equity Units used to pre-pay a
portion of the outstanding balance of the Company&#146;s Revolvers and the net cash flow
from operating activities generated during the first nine months of 2003, partially offset
by cash used for capital expenditures (including the purchase of Navion and SPT), debt
repayments, and payment of dividends. In the Company&#146;s opinion, working capital is
sufficient for the Company&#146;s present requirements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net cash flow from operating
activities increased to $353.8 million in the nine-month period ended September 30, 2003,
from $137.2 million in the same period last year, mainly reflecting the significant
increase in the Company&#146;s average spot TCE rates and the increase in the
Company&#146;s fleet size. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Scheduled debt repayments were $49.2
million during the nine-month period ended September 30, 2003, compared to $34.7 million
during the same period last year. Debt prepayments were $1,023.0 million during the
nine-month period ended September 30, 2003, compared to $8.0 million during the same
period last year. As previously mentioned, $500 million of the Company&#146;s debt
prepayments resulted from the Company funding its acquisition of Navion by borrowing under
a $500 million 364-day facility which was subsequently replaced by a $550 million
revolving credit facility. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>As at September 30, 2003, the
Company&#146;s total debt was $1,749.4 million, compared to $1,130.8 million as at
December 31, 2002. As at September 30, 2003, the Company&#146;s Revolvers provided for
borrowings of up to $931.3 million, of which $361.3 million was undrawn. The amount
available under the Revolvers reduces semi-annually, by a combined $59.3 million, with
final balloon reductions scheduled for one Revolver in 2006 and for the other two
Revolvers in 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 on February 1 of each year, commencing 2004. The
Company&#146;s Equity Units and unsecured 8.875% Senior Notes are due May 18, 2006 and
July 15, 2011, respectively. The Company&#146;s outstanding term loans reduce in quarterly
or semi-annual payments with varying maturities through 2013. See Item 1 &#150; Notes to
Consolidated Financial Statements: Note 7 &#150; Long-Term Debt. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>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 $506.7 million as of
September 30, 2003. Certain of the loan agreements require that a minimum level of free
cash be maintained. As at September 30, 2003, this amount was $131.2 million. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Dividends declared during the nine
months ended September 30, 2003 were $25.7 million, or 64.5 cents per share. Subsequent to
September 30, 2003, the Company increased its quarterly dividend by 16 percent to $0.25
per share. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>During the nine months ended
September 30, 2003, the Company incurred capital expenditures for vessels and equipment of
$227.1 million. These capital expenditures primarily represented the installment payments
on the Company&#146;s newbuildings. Cash expenditures for drydocking remained relatively
stable at $23.2 million for the nine-month period ended September 30, 2003, compared to
$23.0 million during the same period last year. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>In July 2003, the Company purchased a
16 percent ownership interest in A/S Dampskibsselskabet Torm (&#147;Torm&#148;) for a
total investment of approximately $37.3 million. See Item 1 &#151; Notes to Consolidated
Financial Statements: Note 4 &#150; Investments in Marketable Securities. Torm&#146;s
common shares are listed on the Copenhagen Stock Exchange and its American Depository
Shares are quoted on the NASDAQ. Headquartered in Copenhagen, Denmark, Torm is a leading
carrier of refined petroleum products, operating three product tanker pools totaling over
60 vessels, including 21 owned vessels, as of September 30, 2003.
In addition, Torm operates a drybulk carrier pool with 19 vessels. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>As at September 30, 2003, the Company
was committed to the construction of four Suezmax (including two scheduled for
conversion to shuttle tankers upon delivery) and nine Aframax tankers.
See Item 1 &#151; Notes to Consolidated Financial Statements: Note 9 &#150; Commitments
and Contingencies. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company is also committed to a
15-year capital lease on an Aframax tanker that was delivered in September 2003. The lease
will require minimum payments of $66.6 million (including a purchase obligation payment)
over the remaining term of the lease. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The following table summarizes the
Company&#146;s long-term contractual obligations as at September 30, 2003 (in millions of
U.S. dollars). </FONT></P>

<PRE>
- ------------------------------------------ ---------- --------- --------- --------- --------- ----------- ----------

                                                2003      2004      2005      2006      2007  There-after     Total

- ------------------------------------------ ---------- --------- --------- --------- --------- ----------- ----------
Long-term debt                                  14.3     129.8     192.0     387.2     156.2       869.9    1,749.4
- ------------------------------------------ ---------- --------- --------- --------- --------- ----------- ----------
Chartered-in vessels (operating leases)         84.2     297.4     218.0     189.7     153.5       308.0    1,250.8
- ------------------------------------------ ---------- --------- --------- --------- --------- ----------- ----------
Commitment for chartered-in vessel
(capital lease)                                  1.1       4.1       4.1       4.1       4.1        49.1       66.6
- ------------------------------------------ ---------- --------- --------- --------- --------- ----------- ----------
Newbuilding and conversion installments         37.4     324.9     117.9                   -           -      480.2
- ------------------------------------------ ---------- --------- --------- --------- --------- ----------- ----------
VOC Equipment                                      -      42.0         -         -         -           -       42.0
- ------------------------------------------ ---------- --------- --------- --------- --------- ----------- ----------
  Total                                        137.0     798.2     532.0     581.0     313.8     1,227.0    3,589.0
- ------------------------------------------ ---------- --------- --------- --------- --------- ----------- ----------
</PRE>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company and certain subsidiaries
of the Company have guaranteed their share of the outstanding mortgage debt in four
50%-owned joint venture companies. See Item 1 &#151; Notes to Consolidated Financial
Statements: Note 9 &#150; Commitments and Contingencies. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>In February 2003, the Company
completed its offering of Equity Units for gross proceeds of $143.75 million. See Item 1
&#151; Notes to Consolidated Financial Statements: Note 7 &#150; Long-Term Debt. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>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 facilities, additional debt
borrowings, and the issuance of additional shares of capital stock. </FONT></P>

<BR>
<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<A NAME=A120></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
FORWARD-LOOKING STATEMENTS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>This Report on Form 6-K for the
quarterly period ended September 30, 2003 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: TCE rates; future capital expenditures, including the expected cost of VOC
Equipment; delivery dates of newbuildings; the impact on the Company&#146;s operations and
business resulting from the acquisition of SPT; utilization of the Company&#146;s fleet;
the effect of changes in applicable regulations on the tanker market, tanker rates and the
Company, including potential impairment losses and higher depreciation expenses; and the
Company&#146;s growth strategy and measures to implement such strategy. Forward-looking
statements include, without limitation, any statement that may predict, forecast, indicate
or imply future results, performance or achievements, and may contain the words
&#147;believe&#148;, &#147;anticipate&#148;, &#147;expect&#148;, &#147;estimate&#148;,
&#147;project&#148;, &#147;will be&#148;, &#147;will continue&#148;, &#147;will likely
result&#148;, or words or phrases of similar meanings. 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; 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, adoption by the IMO of regulations phasing out Category 2 and 3
tankers, and 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, including political instability; currency exchange rate fluctuations;
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; 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, 2002, 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. </FONT></P>
<BR>
<BR>
<BR>
<BR>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES <BR>
SEPTEMBER 30, 2003<BR>
PART I &#150; FINANCIAL INFORMATION </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>ITEM 3 - </B></FONT></TD>
<TD ALIGN=LEFT WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK </B> </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The Company is exposed to market risk
from foreign currency fluctuations, changes in interest rates, and bunker fuel prices. The
Company uses forward currency contracts, interest rate swap agreements, and bunker fuel
swap contracts to manage currency, interest rate, and bunker fuel price risks, but does
not use these financial instruments for trading or speculative purposes. See Item 1 &#151;
Notes to Consolidated Financial Statements: Note 12 &#151; Derivative Instruments and
Hedging Activities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>The following table sets forth the
magnitude of these foreign exchange forward contracts, interest rate swap agreements, and
bunker fuel swap contracts: </FONT></P>

<PRE>
                                                Contract               Carrying Amount                 Fair
(in USD 000's)                                   Amount            Asset         Liability             Value
- ------------------------------------------- ------------------ -------------- ----------------- --------------------
<U>September 30, 2003</U> - unaudited
Foreign Exchange Forward Contracts          $    162,181       $   12,275        $         -        $    12,275
Interest Rate Swap Agreements                    710,000                              13,798            (13,798)
Bunker Fuel Swap Contracts                         1,260              266                                   266
Debt                                           1,749,405                           1,749,405         (1,809,607)

<U>December 31, 2002</U>
Foreign Exchange Forward Contracts          $     65,821       $      545         $        -        $       545
Interest Rate Swap Agreements                     20,000                -                802               (802)
Bunker Fuel Swap Contracts                         2,366              254                  -                254
Debt                                           1,130,822                -          1,130,822         (1,143,753)
- ------------------------------------------- ------------------ -------------- ----------------- --------------------
</PRE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>For a more comprehensive discussion
related to the general characteristics of Quantitative and Qualitative Disclosures about
Market Risk, please refer to Item 11 &#151; 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, 2002. </FONT></P>
<BR>
<BR>
<BR>
<BR>
<BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>TEEKAY SHIPPING
CORPORATION AND SUBSIDIARIES<BR>
SEPTEMBER 30, 2003<BR>
PART II &#150; OTHER INFORMATION </FONT></H1>

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<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Item 1 &#150; Legal Proceedings</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Item 2 &#150; Changes in Securities</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Item 3 &#150; Defaults Upon Senior Securities</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Item 4 &#150; Submission of Matters to a Vote of Security Holders</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></P>


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<A NAME=A136></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Item 5 &#150; Other Information</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></P>

<A NAME=A138></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Item 6 &#150; Exhibits
and Reports on Form 6-K </U></FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>a. </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Exhibits </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>15.1 </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Letter
from Ernst &amp; Young LLP, as independent chartered accountants, dated November 14, 2003,
regarding unaudited interim financial information.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>b.</FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Reports on Form 6-K </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>(i) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
On July 11, 2003 the Company filed a copy of its press release on Form 6-K with
respect to its acquisition of 2,906,000 shares of A/S Dampkibsselskabet TORM.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>(ii) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On
July 22, 2003 the Company filed a copy of its press release on Form 6-K with respect to
the announcement of the appointment of a new Director.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>(iii) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On
July 24, 2003 the Company filed a copy of its press release on Form 6-K
with respect to its results for the quarter ended June 30, 2003.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>(iv) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On
August 14, 2003 the Company filed a copy of its press release on Form 6-K
with respect to its contract with Unocal Thailand to provide a Floating
Storage Offtake vessel.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>(v) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On
September 3, 2003 the Company filed a copy of its press release on Form 6-K
               with respect to a contract to provide two shuttle tankers on long-term charter to
               Petrobras Transporte S.A. (Transpetro), a wholly owned subsidiary of
Petroleo                Brasileiro S.A..  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>(vi) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>On
September 11, 2003 the Company filed a copy of its press release on Form 6-K
               with respect to its acquisition of 50% of Skaugen PetroTrans.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>THIS REPORT ON FORM 6-K IS HEREBY
INCORPORATED BY REFERENCE INTO THE FOLLOWING REGISTRATION STATEMENTS OF THE COMPANY. </B></font></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
<B>&#149;       &nbsp;&nbsp;&nbsp;REGISTRATION STATEMENT ON FORM F-3 (NO. 33-97746) FILED WITH THE SEC ON OCTOBER 4, 1995;<BR>
&#149;        &nbsp;&nbsp;&nbsp;REGISTRATION STATEMENT ON FORM S-8 (NO. 333-42434) FILED WITH THE SEC ON JULY 28, 2000; AND<BR>
&#149;        &nbsp;&nbsp;&nbsp;REGISTRATION STATEMENT ON FORM F-3 (NO. 333-102594) FILED WITH THE SEC ON JANUARY 17, 2003.</B>
</FONT></P>

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

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&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.
</font></P>


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<TR>
<TD WIDTH=45% VALIGN=MIDDLE>
<FONT FACE="Times New Roman, Times, Serif" SIZE=3>Date:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;November 14, 2003</font>
</TD>
<TD WIDTH=55% VALIGN=TOP>
<FONT FACE="Times New Roman, Times, Serif" SIZE=3>&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 Evensen&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Peter Evensen<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)
</font>
</TD>
</TR>
</TABLE>

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<!-- MARKER FORMAT-SHEET="Head Right-TNR" FSL="Project" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>Exhibit 15.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B> </FONT></P>
<BR>

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<A NAME=A141></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>ACKNOWLEDGEMENT OF
INDEPENDENT CHARTERED ACCOUNTANTS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>We are aware of the incorporation by
reference in the Registration Statement (Form S-8 No. 333-42434) pertaining to the Amended
1995 Stock Option Plan of Teekay Shipping Corporation (&#147;Teekay&#148;), in the
Registration Statement (Form F-3 No. 333-102594) and related Prospectus of Teekay for the
registration of up to $500,000,000 of its common stock, preferred stock, warrants, stock
purchase contracts, stock purchase units or debt securities and in the Registration
Statement (Form F-3 No. 33-97746) and related Prospectus of Teekay for the registration of
2,000,000 shares of Teekay common stock under its Dividend Reinvestment Plan of our report
dated October 23, 2003, relating to the unaudited consolidated interim financial
statements and the financial schedule listed in Index: Item 1 of Teekay and its
subsidiaries that is included in its interim report (Form 6-K) for the quarter ended
September 30, 2003 </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>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. </FONT></P>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR>
<TD WIDTH=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vancouver, Canada,<BR>
November 14, 2003</font></TD>

<TD WIDTH=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ ERNST &amp; YOUNG LLP<BR>
Chartered Accountants</font></TD>
</TR>
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