Risk Factors Some of the risks summarized below and discussed in greater detail in the following pages relate principally to the industries in which we operate and to our business in general. Other risks relate principally to the securities market and to ownership of our common shares. The occurrence of any of the events described in this section could materially and adversely affect our business, financial condition, operating results and ability to pay dividends on, and the trading price of our common shares. Risk Factor Summary Risks Related to Our Industry •Changes in the oil markets could result in decreased demand for our vessels and services. •The cyclical nature of the tanker industry may lead to volatile changes in charter rates and significant fluctuations in the utilization of our vessels, which may adversely affect our earnings. •Changes in the spot tanker market may result in significant fluctuations in the utilization of our vessels and our profitability. •Our vessels operate in the highly competitive international tanker market. •High oil prices could negatively impact tanker freight rates. •Marine transportation is inherently risky, and an incident involving loss or damage to a vessel, injury to crew, significant loss of product or environmental contamination by any of our vessels could harm our reputation and business. •Terrorist attacks, increased hostilities, political change or war could lead to further economic instability, increased costs and business disruption. •Acts of piracy on ocean-going vessels continue to be a risk, which could adversely affect our business. •Public health threats, including pandemics, epidemics and other public health crises, could have adverse effects on our operations and financial results. •Governments could requisition our vessels during a period of war or emergency, which may adversely affect our business and results of operations. 7 Table of Contents Risks Related to Our Business •Economic downturns, including disruptions in the global credit markets, could adversely affect our ability to grow. •Economic downturns may affect our customers’ ability to charter our vessels and pay for our services and may adversely affect our business and results of operations. •We may not be able to grow or to manage our growth effectively. •An increase in operating costs, due to increased inflation or otherwise, could adversely affect our cash flows and financial condition. •The timing of dry dockings of our vessels during peak market conditions could adversely affect our profitability. •Delays in the delivery of and installation of new vessel equipment could result in significant vessel off hire and have adverse impacts on our results of operations. •Technological innovation could reduce our charter hire income and the value and operational lives of our vessels. •Over time, the value of our vessels may decline, which could adversely affect our existing loan and other financial obligations we may incur in the future, our ability to obtain new financing or our operating results. •We depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations and to make any dividend payments or repurchase shares. •Financing agreements containing operating and financial restrictions may restrict our business and financing activities. •We may be required to make substantial capital expenditures should we decide to expand the size of our fleet, involving significant installment payments. Our financial leverage could increase and, our shareholders’ ownership interest in us could be diluted. •Our revolving credit facility and any future financing agreements may limit our flexibility in obtaining additional financing, pursuing other business opportunities, paying dividends and repurchasing shares. •Our ability to repay or refinance debt or future financing obligations and to fund our capital expenditures will depend on certain financial, business and other factors. To the extent we are able to finance these obligations and expenditures, our ability to pay cash dividends and repurchase shares may be diminished, our financial leverage may increase, and our shareholders may be diluted. •Many of our seafaring employees are covered by collective bargaining agreements, and the failure to renew those agreements or any future labor agreements may disrupt operations and adversely affect our cash flows. •We may be unable to attract and retain qualified, skilled employees or crew necessary to operate our business, and the cost of attracting and retaining such personnel may increase. •We anticipate that we may need to accelerate our fleet renewal in coming years, the success of any such program will depend on newbuilding and second-hand vessel availability and prices, market conditions and available financing, and which may require significant expenditures. •Increased demand for and supply of vessels fitted with scrubbers to comply with International Maritime Organization (or IMO) sulfur reduction requirements could reduce demand for our existing vessels and impair our ability to charter out our vessels at competitive rates. •Our insurance may be insufficient to cover losses that may occur to our vessels or result from our operations. •Maritime claimants could arrest, or port authorities could detain, our vessels, which could interrupt our cash flow from these vessels. •Exposure to interest rate fluctuations will result in fluctuations in our cash flows and operating results. •Our cash, cash equivalents and short-term investments are exposed to credit risk, which may be adversely affected by market conditions, interest rates and failures of financial institutions. •We may be unable to take advantage of favorable opportunities in the spot market to the extent any of our vessels are employed on medium to long-term charters. •Our U.S. Gulf lightering business competes with alternative methods of delivering crude oil to ports and exports to offshore for consolidation onto larger vessels, which may limit our earnings in this market. •Our full service lightering (or FSL) operations are subject to specific risks that could lead to accidents, oil spills or property damage. •Our and many of our customers' substantial operations outside the United States (or U.S.) expose us and them to political, governmental and economic instability, as well as tariffs and protectionist policies, which could harm our operations. •The loss of any key customer or its inability to pay for our services could result in a significant loss of revenue in a given period. •Exposure to currency exchange rate fluctuations could result in fluctuations in our cash flows and operating results. •Our operating results are subject to seasonal fluctuations. •Our failure to renew or replace fixed-rate charters could cause us to trade the related vessels in the spot market, which could adversely affect our operating results and make them more volatile. •We have recognized asset impairments in the past and we may recognize additional impairments in the future, which will reduce our earnings and net assets. •Certain of our executive officers and directors and certain executive officers and directors of Teekay may favor interests of Teekay and its other affiliates above our interests and those of our Class A common shareholders. 8 Table of Contents Legal and Regulatory Risks •We are bound to adhere to sanctions from many jurisdictions, including the U.S., United Kingdom (or UK), European Union and Canada, due to our domicile and location of offices. •Past port calls by our vessels or third-party vessels participating in Revenue Sharing Agreements (or RSAs) to countries that are subject to sanctions imposed by the U.S., European Union and the United Kingdom could harm our business. •Failure to comply with the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, the UK Criminal Finances Act, the UK Economic Crime and Corporate Transparency Act and similar laws in other jurisdictions could result in fines, criminal penalties, contract terminations and an adverse effect on our business. •The shipping industry is subject to substantial environmental and other regulations, which may significantly limit operations and increase expenses and adversely impact insurance coverage and costs. •Climate change and greenhouse gas restrictions may adversely impact our operations and markets. •Scrutiny and expectations from certain investors, lenders, customers and other market participants with respect to ESG policies and practices may impose additional costs on us or expose us to additional risks. •Our operations may be subject to economic substance requirements in Bermuda, the Marshall Islands and other offshore jurisdictions, which could impact our business. •The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us. Information and Technology Risks •A cyber-attack could materially disrupt our business. •We rely on our information systems to conduct our business, and failure to protect these systems against viruses and security breaches could adversely affect our business and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed. •Our failure to comply with data privacy laws could damage our customer relationships and expose us to litigation risks and potential fines. •The use of artificial intelligence in our operations may not result in expected benefits, and the use of artificial intelligence by any of our competitors may give them advantages relative to us. Risks Related to an Investment in Our Securities •The superior voting rights of our Class B common shares held by Teekay limit our Class A common shareholders’ ability to control or influence corporate matters. •We are incorporated in Bermuda and, as a result, shareholders may have fewer rights and protections under Bermuda law than under a typical jurisdiction in the U.S. •Because we are organized under the laws of Bermuda, it may be difficult to enforce judgments against us, our directors or our management. Tax Risks •U.S. tax authorities could treat us as a “passive foreign investment company”, which could have adverse U.S. federal income tax consequences to our U.S. shareholders and other adverse consequences to us and all of our shareholders. •The imposition of taxes, including as a result of any change in tax law or accounting requirements, may reduce our cash available for distribution to shareholders, cash flows and results of operations. •We are subject to taxation in Bermuda and changes to Bermuda tax policies may impact our financial position. •Changes to the United Kingdom tonnage tax or corporate tax regimes applicable to us, or to the interpretation thereof, may impact our future operating results. Risks Related to Our Industry Changes in the oil markets could result in decreased demand for our vessels and services. Demand for our vessels and services in transporting oil depends upon world and regional oil markets. Any decrease in shipments of crude oil in those markets could have a material adverse effect on our business, financial condition and results of operations. Historically, those markets have been volatile as a result of the many conditions and events that affect the price, production and transport of oil, including competition from alternative energy sources. Past slowdowns of the U.S. and world economies have resulted in reduced consumption of oil products and decreased demand for our vessels and services, which reduced vessel earnings. Additional slowdowns could have similar effects on our operating results and may limit our ability to expand or renew our fleet. 9 Table of Contents The cyclical nature of the tanker industry may lead to volatile changes in charter rates and significant fluctuations in the utilization of our vessels, which may adversely affect our earnings. Historically, the tanker industry has been cyclical, experiencing volatility in profitability due to changes in the supply of and demand for tanker capacity and changes in the supply of and demand for oil and oil products. The cyclical nature of the tanker industry may cause significant increases or decreases in the revenues we earn from our vessels and may also cause significant increases or decreases in the value of our vessels. If the tanker market is depressed, our earnings may decrease. Our exposure to industry business cycles is more acute because of our exposure to the spot tanker market, which is more volatile than the tanker industry generally. Our ability to operate profitably in the spot market and to recharter our other vessels upon the expiration or termination of their charters will depend upon, among other factors, economic conditions in the tanker market. The factors affecting the supply of and demand for tankers are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable. Key factors that influence the supply of tanker capacity include: •the number of newbuilding deliveries; •the scrapping rate of older vessels; •conversion of tankers to other uses; •the price of steel and other raw materials; •the number of vessels that are out of service; •environmental concerns and regulations; and •international sanctions. Key factors that influence demand for tanker capacity include: •supply of oil and oil products; •demand for oil and oil products; •regional availability of refining capacity; •global and regional economic and political conditions; •the distance oil and oil products are to be moved by sea; •demand for floating storage of oil; •changes in seaborne and other transportation patterns; •environmental and other legal and regulatory developments; •weather and natural disasters; •competition from alternative sources of energy; and •international sanctions, embargoes, import and export restrictions, tariffs, trade protectionism and other barriers to trade, nationalizations, and wars. Historically, the tanker markets have been volatile as a result of the many conditions and factors that can affect the price and the supply of, and demand for, tanker capacity. Changes in demand for transportation of oil over longer distances and in the supply of tankers to carry that oil may materially affect our revenues, profitability and cash flows. The Russia-Ukraine war and the consequent sanctions imposed on Russia have significantly increased tanker demand and rates by reshaping global oil trading patterns, including the rerouting of Russian oil exports away from Europe and the subsequent backfilling of imports into Europe from other more distant sources. Changes in or resolution of the conflict in Ukraine and the lifting of those sanctions may lead to a reversal of these trading patterns or other effects that could significantly decrease tanker demand and rates. War, terrorism and geopolitical tensions in the Middle East could have material adverse effects on the tanker industry. Since December 2023, Houthi rebels in Yemen have carried out numerous attacks on vessels in the Red Sea area. As a result of these attacks, many shipping companies have routed their vessels away from the Red Sea, which has affected trading patterns, rates and expenses. The Houthi group in Yemen has pledged to stop attacks on shipping in the Red Sea should the current ceasefire in Gaza hold. This could result in the resumption of tanker transits through the Red Sea area, which could impact seaborne trade patterns and reduce tanker tonne-mile demand. In addition, the recent U.S., Israel and Iran conflict has escalated throughout the region leading to uncertainty and heightened security risks for shipping in that region and severe disruptions to voyages through the Strait of Hormuz, further disrupting trade routes. U.S. action in Venezuela during 2026, including the removal of President Nicolás Maduro, greater involvement in Venezuelan oil production and exports, and the seizures of certain sanctioned oil tankers calling on Venezuelan ports, has added uncertainty in that region and led to changes in crude oil flows. Continuing instability or further escalation or expansion of hostilities in the Middle East, Ukraine, Venezuela or elsewhere could 10 Table of Contents continue to affect the price of crude oil and the oil industry, the tanker industry, demand for our services, and our business, results of operations, financial condition and cash flows. Changes in the spot tanker market may result in significant fluctuations in the utilization of our vessels and our profitability. During 2025 and 2024, approximately 93.1% and 93.9%, respectively, of our aggregated net revenues from voyage charters and time charters were derived from vessels operating in the spot tanker market, either directly or by means of participation in RSAs (which includes vessels operating under full service lightering contracts and charters with an initial term of less than one year). Due to our involvement in the spot-charter market, declining spot rates in a given period generally will result in corresponding declines in our operating results for that period. The spot-charter market is highly volatile and fluctuates based upon tanker and oil supply and demand. The successful operation of our vessels in the spot-charter market depends upon, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spent traveling unladen to load cargo. Future spot rates may not be sufficient to enable our vessels trading in the spot tanker market to operate profitably or to provide sufficient cash flow to service our debt obligations. In addition, as charter rates for spot charters are fixed for a single voyage that may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases. In addition, the impact of changes in the spot tanker market may be further impacted by our tankers participating in RSAs, as an RSA may include vessels of third-party owners that do not perform as well as our vessels. As a result, we may earn less net revenue than we could by operating our vessels independently. For further information about the RSAs, please read "Item 4 – Information on the Company: B. Business Overview – Revenue Sharing Agreements". Our vessels operate in the highly competitive international tanker market. The operation of oil tankers and transportation of crude oil and refined petroleum products are extremely competitive businesses. Competition arises primarily from other tanker owners, including major oil companies and independent tanker companies. Competition for the transportation of oil and oil products can be intense and depends on price and the location, size, age, and condition of the tanker and the acceptability of the tanker and its operators to the charterers. Our competitive position may erode over time. In addition, we may not be able to compete profitably to the extent we seek to expand our business into new geographic regions. New markets may require different skills, knowledge or strategies than those we use in our current markets, and the competitors in those new markets may have greater financial strength and capital resources than we do. High oil prices could negatively impact tanker freight rates. High oil prices could negatively impact tanker freight rates due to reduced oil demand and weaker refining margins. In addition, fuel, or bunkers, is a significant operating expense for our vessels employed in the spot market and can have a significant impact on earnings. For any vessels which may be employed on time charters, the charterer is generally responsible for the cost and supply of fuel; however, such cost may affect the time charter rates we may be able to negotiate for such vessels. Changes in the price of fuel may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including, among other factors, geopolitical developments, supply and demand for oil and gas, actions by the Organization of Petroleum Exporting Countries (or OPEC) and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns, and environmental concerns. Marine transportation is inherently risky, and an incident involving loss or damage to a vessel, injury to crew, significant loss of product or environmental contamination by any of our vessels could harm our reputation and business. Our vessels, crew and cargoes are at risk of being damaged, injured or lost because of events such as: •marine disasters; •bad weather or natural disasters; •mechanical or electrical failures; •grounding, capsizing, fire, explosions and collisions; •piracy (hijackings and kidnappings); •cyber-attacks; •acute-onset illness in connection with global or regional pandemics or similar public health crises; •mental health of crew members; •human error; and •war and terrorism. An accident involving any of our vessels could result in any of the following: •significant litigation with our customers or other third parties; •death or injury to persons, loss of property or damage to the environment and natural resources; •delays in the delivery of cargo; 11 Table of Contents •liabilities or costs to recover any spilled oil or other petroleum products and to restore the environment affected by the spill; •loss of revenues from charters; •governmental fines, penalties, or restrictions on conducting business; •higher insurance rates; and •damage to our reputation and customer relationships generally. Any of these events could have a material adverse effect on our business, financial condition, and operating results, and the associated costs could exceed our insurance coverage. If our vessels suffer damage, they may need to be repaired and spend time at a dry-docking facility. The costs of dry-dock repairs are unpredictable and may be substantial. We may have to pay dry-docking costs if our insurance does not cover them in part or in full. The total loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator. If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs or loss, which could adversely affect our business, results of operations and financial condition. In addition, any damage to, or environmental contamination involving, oil production facilities serviced by our vessels could result in the suspension or curtailment of operations by our customers, which would, in turn, result in loss of revenues. Terrorist attacks, increased hostilities, political change or war could lead to further economic instability, increased costs and business disruption. Terrorist attacks, current or future conflicts in Ukraine, the Middle East, the Red Sea, Libya, East Asia, Southeast Asia, West Africa, Venezuela and elsewhere, and political change, may adversely affect the tanker industry and our business, operating results, financial condition, and ability to raise capital and fund future growth. Hostilities in Ukraine, the Middle East (including, among others, the recent U.S., Israel and Iran conflict) and elsewhere may lead to additional armed conflicts or to further acts of terrorism and civil disturbance in the U.S. or elsewhere, which may contribute further to economic instability and disruption of oil production and distribution, which could result in reduced demand for our services and have an adverse impact on our operations and our ability to conduct business. Furthermore, following Russia’s invasion of Ukraine, in addition to sanctions previously announced by several world leaders and nations against Russia, further and increased sanctions against these interests may also adversely impact our business given Russia’s role as a major global exporter of crude oil. Our business could be harmed by trade tariffs, trade embargoes or other economic sanctions by the U.S., the European Union or other countries against Russia, companies with Russian connections or the Russian energy sector, or by any retaliatory measures by Russia or other countries in response. While much uncertainty remains regarding the global impact of the Russia-Ukraine war, it is possible that such tensions could adversely affect our business, financial condition, results of operation and cash flows. In addition, it is possible that third parties with which we have charter contracts may be impacted by events in Russia and Ukraine, which could adversely affect our operations and financial condition. In addition, oil facilities, shipyards, vessels, pipelines, oil fields or other infrastructure could be targets of future terrorist attacks or warlike operations and our vessels could be targets of hijackers, terrorists, or warlike operations. For example, the conflict in Ukraine continues to include missile attacks on commercial vessels in the Black Sea, and since December 2023, Houthi rebels in Yemen have carried out numerous attacks on vessels in the Red Sea area resulting in many shipping companies routing their vessels away from the Red Sea, which has affected trading patterns, rates and expenses. In addition, the recent U.S., Israel and Iran conflict has escalated throughout the region, leading to uncertainty and heightened security risks for shipping in that region and severe disruptions to voyages through the Strait of Hormuz, further disrupting trade routes. Any such hostility or attacks could lead to, among other things, bodily injury or loss of life, vessel or other property damage, increased vessel operational costs, including insurance costs, and the inability to transport oil to or from certain locations. Terrorist attacks, war, hijacking or other events beyond our control that adversely affect the distribution, production or transportation of oil to be shipped by us could entitle customers to terminate charters which would harm our cash flow and business. Acts of piracy on ocean-going vessels continue to be a risk, which could adversely affect our business. Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, Gulf of Guinea and the Indian Ocean off the coast of Somalia. There continues to be a significant risk of piracy incidents off the coast of Somalia and in the Gulf of Guinea. The frequency and severity of unmanned aerial vehicle, drone, missile, and navigation interference related attacks in the southern Red Sea have risen significantly. There has also been an escalation in the Straits of Malacca and Singapore in the number of theft and armed robbery incidents year on year. In addition, the threat of armed robbery and theft continues to exist to varying degrees in certain ports of South America and the Gulf of Mexico. If these piracy attacks result in regions in which our vessels are deployed being named on the Joint War Committee Listed Areas, war risk insurance premiums payable for such coverage may increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including costs which are incurred to the extent we employ onboard security guards and escort vessels, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention or hijacking as a result of an act of piracy or other attacks against our vessels, or an increase in cost or unavailability of insurance for our vessels, could have a material adverse impact on our business, financial condition and results of operations. Enhanced regulatory, flag-state, port-state, and customer scrutiny, including compliance requirements of the International Ship and Port Facility Security Code (or ISPS) and customer-imposed trading restrictions, may further limit vessel deployability or commercial opportunities. Public health threats, including pandemics, epidemics and other public health crises, could have an adverse effect on our operations and financial results. Public health threats and highly communicable diseases could adversely affect our operations, the operations of our customers or suppliers and the global economy. In response to a pandemic or epidemic, countries, ports and organizations, including those where we conduct a large part of our operations, could implement measures to combat such outbreaks, such as quarantines and travel restrictions. Such measures could cause severe trade disruptions. In addition, pandemics, epidemics and other public health crises may result in a significant decline in global demand for crude oil and refined petroleum products, as was the case during the COVID-19 pandemic. As our business is the transportation of crude oil and refined oil 12 Table of Contents products on behalf of oil majors, oil traders and other customers, any significant decrease in demand for the cargo we transport could adversely affect demand for our vessels and services. The extent to which any pandemic, epidemic or any other public health crises may impact our business, results of operations and financial condition, including possible impairments, will depend on future developments, which are uncertain and cannot be predicted. Governments could requisition our vessels during a period of war or emergency, which may adversely affect our business and results of operations. A government could requisition for title or seize our vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Also, a government could requisition our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of our vessels could adversely affect our business, results of operations and financial condition. Risks Related to Our Business Economic downturns, including disruptions in the global credit markets, could adversely affect our ability to grow. Economic global or regional downturns, bank failures and financial crises in the global markets could produce illiquidity in the capital markets, market volatility, heightened exposure to interest rate and credit risks, and reduced access to capital markets. If global financial markets and economic conditions deteriorate in the future, we may face restricted access to the capital markets or bank lending, which may make it more difficult and costly to fund future growth. Decreased access to such resources could have a material adverse effect on our business, financial condition and results of operations. Global financial markets and economic conditions have been, and continue to be, volatile. Global economic growth is expected to remain below pre-pandemic average levels during 2026. Economic downturns may affect our customers’ ability to charter our vessels and pay for our services and may adversely affect our business and results of operations. Economic downturns in the global financial markets or economy generally may lead to a decline in our customers’ operations or ability to pay for our services, which could result in decreased demand for our vessels and services. Our customers’ inability to pay could also result in their default on our current contracts and charters. A decline in the amount of services requested by our customers or their default on our contracts with them could have a material adverse effect on our business, financial condition and results of operations. We may not be able to grow or to manage our growth effectively. Our future growth will depend upon a number of factors, some of which are beyond our control. These factors include our ability to: •identify suitable tankers or shipping companies for acquisitions or joint ventures; •successfully integrate any acquired tankers or businesses with our existing operations; and •obtain required financing for our existing and any new operations. In addition, competition from other companies, many of which have significantly greater financial resources than we do, may reduce our acquisition opportunities or cause us to pay higher prices. Our failure to effectively identify, purchase, develop and integrate any tankers or businesses could adversely affect our business, financial condition and results of operations. Furthermore, any acquisition of a vessel or business may not be profitable at or after the time of acquisition and may not generate cash flows sufficient to justify the investment. Tanker asset values have increased significantly since 2022 and approached all-time highs during 2024 and 2025 on a non-inflation adjusted basis, which could increase the cost to us of any acquisitions. In addition, we may incur additional debt or issue additional equity securities in connection with any acquisitions. Incurring additional debt may significantly increase our interest expense and financial leverage, which could limit our financial flexibility and ability to pursue other business opportunities. Issuing additional equity securities may result in significant shareholder ownership dilution and could increase the aggregate amount of cash required to pay quarterly dividends. To the extent we acquire existing vessels, they typically do not carry warranties as to their condition, unlike newbuilding vessels. While we generally inspect existing vessels prior to purchase, such an inspection would normally not provide us with as much knowledge of a vessel’s condition as we would possess if it had been built for us and operated by us during its life. Repairs and maintenance costs for existing vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. These costs could decrease our cash flows and liquidity and harm our financial condition and performance. An increase in operating costs, due to increased inflation or otherwise, could adversely affect our cash flows and financial condition. Our levels of vessel operating expenses depend upon a variety of factors, many of which are beyond our control, such as competition for crews and inflation. Inflation has increased significantly on a worldwide basis since mid-2021. While the rate of inflation moderated in recent years, inflationary pressures could re-emerge depending on developments in the global economy. Inflation has increased our vessel operating expenses, voyage expenses and certain other expenses. To the extent our charter rates do not cover increased vessel operating expenses or voyage expenses for which we are responsible, or if other costs and expenses increase, our earnings would decrease and our cash flows and financial condition would be adversely affected. The timing of dry dockings of our vessels during peak market conditions could adversely affect our profitability. We periodically dry dock each of our vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. Generally, each vessel is dry docked every two and a half years to five years depending on the age of the vessel. 13 Table of Contents Depending on the type of dry docking required, a vessel will incur a number of off-hire days when it will not be in service. During times of favorable market conditions, any increase in the number of required dry dockings in a given timeframe and the lost revenue days arising from this off hire could result in a material loss of earnings. Delays in the delivery of and installation of new vessel equipment could result in significant vessel off hire and have adverse impacts on our results of operations. In order to maximize fleet performance and efficiency, we plan to invest from time to time in new technologies to be installed on our fleet. However, the delivery and installation of any new equipment depends on a number of factors, some of which are within our control, such as the location of the vessels on a given date, and other factors which are outside of our control, such as the delivery due date, the availability of qualified personnel to install new equipment and potential bottlenecks in the supply chain. Depending on the type of new equipment to be installed, we may need to coordinate delivery and installation in line with vessel dry dockings. Any delays in the delivery or installation of new equipment could result in an increase in the number of dry-docking days and adversely impact our results of operation. Technological innovation could reduce our charter hire income and the value and operational lives of our vessels. The charter hire rates and the value and operational life of a vessel are determined by a number of factors, including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter various harbors and ports, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. If new tankers are built that are more efficient or more flexible or have longer physical lives than our vessels, competition from these more technologically-advanced vessels could adversely affect the amount of charter hire payments, if any, we receive for our vessels and the resale value of our vessels could significantly decrease. As a result, our business, financial condition and results of operations could be adversely affected. Over time, the value of our vessels may decline, which could adversely affect our existing loan and other financial obligations we may incur in the future, our ability to obtain new financing or our operating results. Vessel values for oil tankers can fluctuate substantially over time due to a number of different factors. Vessel values may decline from existing levels. If the operation of a tanker is not profitable, rather than continue to incur costs to maintain and finance the vessel, we may seek to dispose of it. Our inability to dispose of the vessel at a fair market value or the disposition of the vessel at a fair market value that is lower than its book value could result in a loss on its sale and adversely affect our results of operations and financial condition. In addition, vessel value declines may result in impairment charges against our earnings. As of December 31, 2025, our revolving credit facility contained loan-to-value financial covenants tied to the value of the vessels that collateralize the credit facility. We are required to maintain a vessel value to outstanding loan principal balance ratio of 125%. As at December 31, 2025, we were in compliance with these requirements. However, a decline in the market value of these tankers may result in a default under the credit facility (or any future financing agreements) or may require us to prepay portions of the outstanding principal or pledge additional collateral to avoid a default. If we are unable to cure any such breach within the prescribed cure period, the lenders could accelerate our debt and foreclose on our vessels and other assets pledged as collateral or require an early termination of the credit facility. In addition, a significant decline in the market value of our tankers may prevent us from refinancing tankers with a similar amount of debt or obtaining additional debt using the tankers as collateral, thereby requiring us to either reduce debt levels in facilities collateralized by the tankers or seek alternative financing structures. In addition, if we determine at any time that a vessel’s future useful life and earnings require us to impair its value on our consolidated financial statements, we may need to recognize a significant charge against our earnings. We depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations and to make any dividend payments or repurchase shares. Our subsidiaries, which are all directly and indirectly wholly owned by us, own all of our substantive operating assets. As a result, our ability to satisfy our financial obligations and to pay any dividends to, or repurchase shares from, our shareholders depends on the ability of our subsidiaries to generate profits available for distribution to us and our subsidiaries being permitted by law and contract to make such distributions to us; to the extent that they are unable to generate or distribute profits to us, we may be unable to pay our creditors or any dividends to, or repurchase shares from, our shareholders. Financing agreements containing operating and financial restrictions may restrict our business and financing activities. The operating and financial restrictions and covenants in our revolving credit facility and in any future financing agreements could adversely affect our ability to finance future operations or capital needs or to pursue and expand our business activities. For example, these financing arrangements may restrict our ability to: •incur additional indebtedness and guarantee indebtedness; •pay dividends or make other distributions or repurchase or redeem our share capital; •prepay certain debt; •issue certain preferred shares or similar equity securities; •make loans and investments; •enter into a new line of business; •incur or permit certain liens to exist; •enter into transactions with affiliates; •create unrestricted subsidiaries; •transfer, sell, convey or otherwise dispose of assets; 14 Table of Contents •make certain acquisitions and investments; •enter into agreements restricting our subsidiaries’ ability to pay dividends; and •consolidate, merge or sell all or substantially all of our assets. In addition, our debt agreement requires us to comply with certain financial covenants. Our ability to comply with covenants and restrictions contained in debt agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If any such events were to occur, we may fail to comply with these covenants. If we breach any of the restrictions, covenants, ratios or tests in our debt agreements and we are unable to cure such breach within the prescribed cure period, our obligations may, at the election of the relevant lender, become immediately due and payable, and the lenders’ commitment under our credit facilities, if any, to make further loans available to us may terminate. A default under debt agreements could also result in cross-defaults under other financing agreements and foreclosure on any of our vessels and other assets securing related loans or our need to sell assets or take other actions in order to meet our debt or other financial obligations. We may be required to make substantial capital expenditures should we decide to expand the size of our fleet. We generally will be required to make significant installment payments for any acquisitions of newbuilding vessels prior to their delivery and generation of revenue. Depending on whether we finance our expenditures through cash from operations or by issuing debt or equity securities, our financial leverage could increase and/or our shareholders’ ownership interests in us could be diluted. We will be required to make substantial capital expenditures should we decide to increase the size of our fleet, including acquiring tankers from third parties. Our acquisitions may also include newbuildings. We generally will be required to make installment payments on any newbuildings prior to their delivery. We typically pay 10% to 20% of the purchase price of a newbuilding tanker upon signing the purchase contract, even though delivery of the completed vessel does not occur until much later (approximately two to three years from the order). To fund expansion capital expenditures, we may be required to use cash balances or cash from operations, incur borrowings or raise capital through the incurrence of debt or issuance of additional equity securities. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering, as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain funds for capital expenditures could have a material adverse effect on our business, results of operations and financial condition. Even if we are successful in obtaining the necessary funds, incurring additional debt may significantly increase our interest expense and financial leverage, which could limit our financial flexibility and ability to pursue other business opportunities. In addition, issuing additional equity securities may result in significant shareholder ownership dilution. Our revolving credit facility and any future financing agreements may limit our flexibility in obtaining additional financing, pursuing other business opportunities, paying dividends and repurchasing shares. As of December 31, 2025, we had no outstanding long-term debt, and $171.7 million was available to us under our revolving credit facility. We will continue to have the ability to incur additional debt, subject to limitations in our revolving credit facility. Our level of debt could have important consequences to us, including the following: •our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may not be available on favorable terms, if at all; •we will need a portion of our cash flow to make principal and interest payments on our debt and to satisfy any other financial obligations we incur, reducing the funds that would otherwise be available for operations, business opportunities, share repurchases and dividends to our shareholders; •incurring additional debt or other financial obligations in the future may make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our industry or the economy generally; and •incurring additional debt or other financial obligations in the future may limit our flexibility in responding to changing business and economic conditions. Our ability to service our debt and any other financial obligations we incur depends upon, among other things, our financial and operating performance, which is affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms, or at all. Our ability to repay or refinance debt or future financial obligations and to fund our capital expenditures will depend on certain financial, business and other factors, many of which are beyond our control. To the extent we are able to finance these obligations and expenditures with cash from operations or by issuing debt or common shares, our ability to pay cash dividends and repurchase shares may be diminished, our financial leverage may increase, and our shareholders may be diluted. To fund our existing and future debt or future financial obligations and capital expenditures, we may be required to use our existing liquidity or cash from operations, incur borrowings, raise capital through the sale of assets or ownership interests in certain assets, issue debt or additional equity securities and/or seek to access other financing sources. Our access to potential funding sources and our future financial and operating performance will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control. 15 Table of Contents If we are unable to access additional financing and generate sufficient cash flow to meet our debt, other financial obligations, capital expenditure and other business requirements, we may be forced to take actions such as: •restructuring our debt or other financial obligations; •selling additional assets or equity interests in certain assets; •not paying dividends or repurchasing shares; •reducing, delaying or canceling business activities, acquisitions, investments or capital expenditures; or •seeking bankruptcy protection. Such measures might not be successful, and additional debt or equity capital may not be available on acceptable terms or enable us to meet our debt, capital expenditure and other obligations. Some of such measures may adversely affect our business and reputation. In addition, financing agreements may restrict our ability to implement some of these measures. Use of cash from operations for capital purposes will reduce cash available for dividends to shareholders. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering as well as by adverse market conditions in general. Even if we are successful in obtaining necessary funds, the terms of such financings could limit our ability to pay cash dividends to shareholders or operate our business as currently conducted. In addition, incurring additional debt may significantly increase interest expense and financial leverage, and issuing additional equity securities may result in significant shareholder dilution. The sale of certain assets would reduce cash from operations and the cash available for distribution to shareholders. For more information on our liquidity requirements, please read “Item 18 – Financial Statements: Note 21a – Commitments and Contingencies – Liquidity". Our expected primary liquidity needs in the next few years are to pay for operating expenses, dry-docking expenditures, costs associated with modifications to our vessels, vessel acquisitions, funding our other working capital requirements, scheduled repayments of debt, debt servicing costs and dividends on equity and/or repurchases of shares as and if determined by our Board of Directors. We anticipate that our primary sources of funds in the next few years will be existing liquidity, cash flows from operations, long-term debt, and equity issuances or other sources of financing. Many of our seafaring employees are covered by collective bargaining agreements, and the failure to renew those agreements or any future labor agreements may disrupt operations and adversely affect our cash flows. A significant portion of our seafarers are employed under collective bargaining agreements. We may become subject to additional labor agreements in the future. We may suffer labor disruptions if relationships deteriorate with the seafarers or the unions that represent them. The collective bargaining agreements may not prevent labor disruptions, particularly when the agreements are being renegotiated. Salaries are typically renegotiated annually or biannually for seafarers. Although these negotiations have not caused labor disruptions in the past, any labor disruptions could harm our operations and could have a material adverse effect on our business, results of operations and cash flows. We may be unable to attract and retain qualified, skilled employees or crew necessary to operate our business, and the cost of attracting and retaining such personnel may increase. Our success depends on our ability to attract and retain highly skilled and qualified personnel. In crewing our vessels, we require technically skilled employees with specialized training who can perform physically demanding work. Competition to attract and retain qualified crew members is intense. The shipping industry continues to forecast a shortfall in qualified personnel, and crew and other compensation has increased and may continue to increase in the future. If crew costs increase and we are not able to increase our rates to compensate for any such increases, our financial condition and results of operations may be adversely affected. Any inability we experience in the future to hire, train and retain a sufficient number of qualified employees or crew could impair our ability to manage, maintain and grow our business. We anticipate that we may need to accelerate our fleet renewal in coming years, the success of any such program will depend on newbuilding and second-hand vessel availability and prices, market conditions and available financing, and which may require significant expenditures. As approximately 65% of our fleet is currently aged 15 years and older, we anticipate that we may need to accelerate our fleet renewal in the coming years. Our ability to successfully execute a renewal program will depend on the availability and prices of newbuilding and second-hand vessels, market conditions and charter rates (primarily spot tanker rates), and access to sufficient financing at acceptable rates. The cost of newbuilding or second-hand vessels will be significant, which could affect our financial condition, cash flows and results of operations. Failure to execute a timely renewal program may adversely impact our business and financial condition. Increased demand for and supply of vessels fitted with scrubbers to comply with IMO sulfur reduction requirements could reduce demand for our existing vessels and impair our ability to charter out our vessels at competitive rates. As of December 31, 2025, owners of approximately 50% of the worldwide fleet of crude tankers and 23% of the worldwide fleet of product tankers had fitted scrubbers on their vessels. One vessel we own is fitted with a scrubber. In February 2026, we agreed to sell this vessel, which is expected to be delivered to its purchaser during the second quarter of 2026. Scrubbers allow a ship to consume high sulfur fuel oil, which is less expensive than the low sulfur fuel oil that ships without scrubbers must consume to comply with the IMO 2020 low sulfur emission requirements. Generally, owners of vessels with higher operating fuel requirements (generally larger ships) are more inclined to install scrubbers to comply with IMO 2020. Fuel expense reductions from operating scrubber-fitted ships could result in a substantial reduction of bunker cost for charterers compared to the vessels in our fleet, which do not have scrubbers. If (a) the supply of scrubber-fitted vessels increases, (b) the differential between the cost of high sulfur fuel oil and low sulfur fuel oil is high and (c) charterers prefer such vessels over our vessels to the extent they do not have 16 Table of Contents scrubbers, demand for our vessels may be reduced and our ability to charter out our vessels at competitive rates may be impaired, which may have a material adverse effect on our business, financial condition and results of operations. Our insurance may be insufficient to cover losses that may occur to our vessels or result from our operations. The operation of oil tankers and lightering support vessels and the transfer of oil is inherently risky. Although we carry hull and machinery (marine and war risks), protection and indemnity insurance, and other liability insurance, all risks may not be adequately insured against, and any particular claim may not be paid or paid in full. In addition, we do not carry insurance on our vessels covering the loss of revenues resulting from vessel off-hire time. Any significant unpaid claims or off-hire time of our vessels could harm our business, operating results and financial condition. Any claims covered by insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. Certain of our insurance coverage is maintained through mutual protection and indemnity associations, and as a member of such associations we may be required to make additional payments over and above budgeted premiums if member claims exceed association reserves. In addition, the cost of this protection and indemnity coverage has significantly increased and may continue to increase. Even if our insurance coverage is adequate to cover our losses, we may not be able to obtain a timely replacement vessel in the event of a total loss of a vessel. We may be unable to procure adequate insurance coverage at commercially reasonable rates in the future. For example, more stringent environmental regulations have led to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. A catastrophic oil spill, marine disasters or natural disasters could exceed the insurance coverage, which could harm our business, financial condition and operating results. Any uninsured or underinsured loss could harm our business and financial condition. In addition, the insurance may be voidable by the insurers as a result of certain actions or inactions, such as vessels failing to maintain certification with applicable maritime regulatory organizations. Changes in the insurance markets attributable to structural changes in insurance and reinsurance markets and risk appetite, economic factors, the impact of any pandemics, epidemics or other public health crises, war, terrorist attacks, environmental catastrophes or political changes may also make certain types of insurance more difficult to obtain. In addition, the insurance that may be available may be significantly more expensive than existing coverage or be available only with restrictive terms. Maritime claimants could arrest, or port authorities could detain, our vessels, which could interrupt our cash flow from these vessels. Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of funds to have the arrest or attachment lifted. In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel that is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one vessel in our fleet or the RSAs in which we operate for claims relating to another of our ships. Also, port authorities may seek to detain our vessels in port, which could adversely affect our operating results or relationships with customers. Exposure to interest rate fluctuations will result in fluctuations in our cash flows and operating results. As of December 31, 2025, no principal amount was outstanding under our revolving credit facility, which facility bears interest based on the Secured Overnight Financing Rate (or SOFR), a variable, floating rate. We anticipate, however, that we will draw funds under our revolving credit facility or enter into additional variable rate financing obligations in the future. Accordingly, we may be exposed to the impact of interest rate changes through any borrowings or obligations that require us to make interest or other payments based on floating rates. To the extent we are exposed to floating interest rates in the future, significant increases in interest rates could adversely affect our profit margins, results of operations and our ability to service our debt. Interest rates have increased significantly since 2021. In accordance with our risk management policy, we may use interest rate swaps to reduce our exposure to market risk from changes in interest rates. The principal objective of these contracts is to minimize the risks and costs associated with our floating rate debt. However, any hedging activities entered into by us may not be effective in mitigating our interest rate risk from our variable rate indebtedness. Returns on our cash and short-term investments and the value of any marketable securities in which we may invest could be adversely affected by changes in interest rates. For further information about our financial instruments as at December 31, 2025 that are sensitive to changes in interest rates, please read "Item 11 - Quantitative and Qualitative Disclosures About Market Risk". Our cash, cash equivalents and short-term investments are exposed to credit risk, which may be adversely affected by market conditions, interest rates and failures of financial institutions. As of December 31, 2025, we had a total of $852.6 million of cash, cash equivalents and short-term investments. We manage our available cash through various financial institutions and primarily invest our cash reserves in U.S. Government treasury bills and bank deposits. A collapse or bankruptcy of any of the financial institutions in which or through which we hold or invest our cash reserves, or rumors or the appearance of any such potential collapse or bankruptcy, might prevent us from accessing all or a portion of our cash, cash equivalents and short-term investments for an uncertain period of time, if at all. The collapse of a financial institution may occur very rapidly. Any material limitation on our ability to access our cash, cash equivalents and short-term investments could adversely affect our liquidity, results of operations and ability to meet our obligations. In addition, our returns on our cash invested in short-term investments and the value of any marketable securities in which we may invest could be adversely affected by changes in interest rates and/or by the performance of the capital markets or particular companies. For further information 17 Table of Contents about our financial instruments as at December 31, 2025 that are exposed to credit risk, please read "Item 11 - Quantitative and Qualitative Disclosures About Market Risk". We may be unable to take advantage of favorable opportunities in the spot market to the extent any of our vessels are employed on medium to long-term charters. As of the date of this Annual Report, two of our owned Aframax / LR2 vessels and one of our owned Suezmax vessels operate under fixed-rate time-charter contracts, and three of our owned Aframax / LR2 vessels operate under fixed-rate bareboat charter-out contracts. To the extent we enter into medium or long-term charters in the future, the vessels committed to such charters may not be available for spot charters during periods of increasing charter hire rates, when spot charters might be more profitable. Our U.S. Gulf lightering business competes with alternative methods of delivering crude oil to ports and exports to offshore for consolidation onto larger vessels, which may limit our earnings in this market. Our U.S. Gulf lightering business faces competition from alternative methods of delivering crude oil shipments to port and exports to offshore loading facilities for consolidation onto larger vessels, including the Louisiana Offshore Oil Platform and deep water terminals in Corpus Christi and Houston, Texas which can partially load Very Large Crude Carriers (or VLCCs). While we believe that lightering offers advantages over alternative methods of delivering crude oil to or from U.S. Gulf ports, our lightering revenues may be limited due to the availability of alternative methods. Our full service lightering operations are subject to specific risks that could lead to accidents, oil spills or property damage. Lightering is subject to specific risks arising from the process of safely bringing two large moving tankers next to each other and mooring them for lightering operations in which oil, refined petroleum products or other cargoes are transferred from one ship to the other. These operations require a high degree of expertise and present a higher risk of collision or spill compared to when docking a vessel or transferring cargo at port. Lightering operations, similar to marine transportation in general, are also subject to risks due to events such as mechanical failures, human error and weather conditions. Our and many of our customers' substantial operations outside the U.S. expose us and them to political, governmental and economic instability, as well as tariffs and protectionist policies, which could harm our operations. Since our operations and the operations of our customers are primarily conducted outside of the U.S., they may be affected by economic, political and governmental conditions in the countries where we or our customers engage in business or where our vessels are registered. Any disruption caused by these factors could harm our business, including by reducing the levels of oil exploration, development, and production activities in these areas or restricting the pool of customers. We derive some of our revenues from shipping oil from politically unstable regions. Conflicts in these regions have included attacks on ships and other efforts to disrupt shipping. Hostilities or other political instability in regions where we operate or where we may operate could have a material adverse effect on the growth of our business, results of operations and financial condition and ability to pay dividends. In addition, tariffs, trade embargoes and other economic sanctions by the U.S. or other countries against countries in which we operate, to which we trade, or to which we or any of our customers, joint venture partners or business partners become subject, may limit trading activities with those countries or with customers, which could also harm our business and ability to pay dividends and repurchase shares. For example, the U.S., the European Union, the United Kingdom and numerous other nations have imposed substantial sanctions on Russia for its invasion of Ukraine. In addition, since 2025 the U.S. administration and other governments have announced or taken actions to implement widespread new or increased tariffs on foreign imports. These actions have resulted in, and may result in additional retaliatory tariffs being levied on various goods and commodities, which may trigger trade wars. In February 2026, the U.S. Supreme Court ruled that the U.S. International Emergency Economic Powers Act (or IEEPA) does not authorize presidential tariff actions and invalidated prior IEEPA-based global duties imposed by the U.S. administration; however, in response, the administration imposed a temporary 10% global tariff under another federal statute, which was increased to 15% prior to becoming effective on February 24, 2026. The specific implications of the Supreme Court’s ruling and related administrative actions remain uncertain. These types of trade activities have disrupted global markets, resulting in an increase in general global economic uncertainty, including an increased risk of economic recessions. As a result of the rapidly changing and unpredictable geopolitical climate, the shipping industry has experienced uncertainty as to future vessel demand, trade routes, rates and operating costs. In April 2025, the U.S. proposed legislation aimed at counteracting what it perceives as unfair Chinese maritime practices. As part of this legislation, operators of Chinese-built vessels and Chinese-owned or operated vessels could be charged a fee of up to $1.5 million (and increasing thereafter) when calling at a U.S. port, with additional fees for operators that have vessels on order at Chinese shipyards. Given that we currently have certain Chinese-built vessels in our fleet, this legislation could lead to higher costs and may impact our ability to utilize Chinese-built ships on voyages to and from the U.S. In October 2025, China responded with similar legislation aimed at U.S.-built or flagged vessels and U.S.-owned or operated vessels. Both China and the U.S. have suspended implementation of the fees until October 2026. If the new U.S. and Chinese port fees become effective in the future, they may redirect trading patterns and port calls of U.S. and Chinese-related tankers, affect chartering decisions of customers, lead to restructuring steps by affected companies, and adversely affect our business and operating results. As there remains uncertainty about whether the port fees measures will be implemented in the future and about how they will be interpreted and enforced, we currently are unable to determine with certainty the impact these additional fees will have on us, our business and operations. The loss of any key customer or its inability to pay for our services could result in a significant loss of revenue in a given period. We have derived, and believe that we will continue to derive, a significant portion of our revenues from a limited number of customers. While no customer accounted for over 10% of our consolidated revenues during 2025, 2024 or 2023, the loss of any significant customer or a substantial decline in the amount of services requested by a significant customer, or the inability of a significant customer to pay for our services, could have a material adverse effect on our business, financial condition and results of operations. 18 Table of Contents We could lose a customer or the benefits of a contract if: •the customer fails to make payments because of its financial inability, disagreements with us or otherwise; •we agree to reduce the payments due to us under a contract because of the customer’s inability to continue making the original payments; •upon a breach by us of the relevant contract, the customer exercises certain rights to terminate the contract; •the customer terminates the contract because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire or we default under the contract; •under some of our contracts, the customer terminates the contract because of the termination of the customer's sales agreement or a prolonged force majeure affecting the customer, including damage to or destruction of relevant facilities, war or political unrest preventing us from performing services for that customer; or •the customer becomes subject to applicable sanctions laws which prohibit our ability to lawfully charter our vessel to such customer. Exposure to currency exchange rate fluctuations could result in fluctuations in our cash flows and operating results. Our primary economic environment is the international shipping market, which utilizes the U.S. Dollar as its functional currency. Consequently, the majority of our revenues and expenses are in U.S. Dollars, with the exception of our Australian operations which earn revenues and incur expenses primarily in Australian Dollars. However, we incur certain voyage expenses, vessel operating expenses, dry-docking expenditures and general and administrative expenses in foreign currencies, the most significant of which are the Canadian Dollar, Singapore Dollar, British Pound, Euro, Philippine Peso and Japanese Yen. This partial mismatch in revenues and expenses could lead to fluctuations in our net income due to changes in the value of the U.S. Dollar relative to other currencies. Since we report our operating results in U.S. Dollars, changes in the value of the U.S. Dollar relative to other currencies also result in fluctuations of our reported revenues and earnings. Under U.S. accounting standards, all foreign currency-denominated monetary assets and liabilities, such as cash and cash equivalents, accounts receivable, restricted cash, accounts payable, accrued liabilities, advances from affiliates and long-term debt are revalued and reported based on the prevailing exchange rates at the end of the applicable period. This revaluation historically has caused us to report significant unrealized foreign currency exchange gains or losses each period. Our operating results are subject to seasonal fluctuations. Our tankers operate in markets that have historically exhibited seasonal variations in tanker demand and, therefore, in spot-charter rates. This seasonality may result in quarter-to-quarter volatility in our results of operations. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a result of lower oil consumption in the northern hemisphere and refinery maintenance. In addition, unpredictable weather patterns during the winter months tend to disrupt vessel scheduling, which historically has increased oil price volatility and oil trading activities in the winter months. As a result, revenues generated by the tankers in our fleet have historically been weaker during our fiscal quarters ended June 30 and September 30, and stronger in our fiscal quarters ended December 31 and March 31. Our failure to renew or replace fixed-rate charters could cause us to trade the related vessels in the spot market, which could adversely affect our operating results and make them more volatile. Our general vessel employment strategy includes using a mix of spot and fixed-rate charters, and we expect to enter into fixed-rate charters in the future. As of the date of this Annual Report, two of our owned Aframax / LR2 vessels and one of our owned Suezmax vessels operate under fixed-rate time-charter contracts, which are scheduled to expire between October 2026 and April 2027, and three of our owned Aframax / LR2 vessels operate under fixed-rate bareboat charter-out contracts, which are scheduled to expire between April 2026 and June 2026. If upon their scheduled expiration, or any early termination, we are unable to renew or replace these fixed-rate charters on favorable terms, or if we choose not to renew or replace these fixed-rate charters, we may employ the vessels in the volatile spot market. Increasing our exposure to the spot market, particularly during periods of unfavorable market conditions, could harm our results of operations and make them more volatile. We have recognized asset impairments in the past and we may recognize additional impairments in the future, which will reduce our earnings and net assets. If we determine at any time that an asset has been impaired, we may need to recognize an impairment charge that will reduce our earnings and net assets. We review our vessels and operating lease right-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable, which occurs when an asset's carrying value is greater than the estimated undiscounted future cash flows the asset is expected to generate over its remaining useful life. We review our goodwill for impairment annually and if a reporting unit's goodwill carrying value is greater than the estimated fair value, the goodwill attributable to that reporting unit is impaired. We evaluate an investment in an equity-accounted joint venture for impairment when events or circumstances indicate that the carrying value of such investment may have experienced an other-than-temporary decline in value below its carrying value. Further, if we determine at any time that a vessel’s future useful life and cash flows require us to impair its value on our financial statements, we may need to recognize a significant impairment charge against our earnings. Such a determination involves numerous assumptions and estimates, some of which require more judgment and are less predictable. In 2025 and 2024, we recognized asset impairment charges of $0.8 million and $1.4 million, respectively, related to certain operating lease right-of-use assets. There were no impairment charges in 2023. 19 Table of Contents Certain of our directors and executive officers and certain directors and executive officers of Teekay have conflicts of interest and limited fiduciary and contractual duties, which may permit them to favor interests of Teekay and its other affiliates above our interests and those of our Class A common shareholders. Conflicts of interest may arise between Teekay and its other affiliates, on the one hand, and us and our shareholders, on the other hand. As a result of these conflicts, Teekay may favor its own interests and the interests of its other affiliates over our interests and those of our shareholders. These conflicts include, among others, the following situations: •our Chief Executive Officer, Chief Financial Officer and five of our directors (including our CEO) also serve as executive officers or directors of Teekay. As a result, these individuals have fiduciary duties to manage the business of Teekay and its affiliates in a manner beneficial to such entities and their shareholders or partners, as the case may be. Consequently, these officers and directors may encounter situations in which their fiduciary obligations to Teekay or its affiliates, on the one hand, and us, on the other hand, are in conflict. The resolution of these conflicts may not always be in our best interest or that of our shareholders. We have limited their fiduciary duties regarding corporate opportunities that may be attractive to both Teekay and us; and •certain of our executive officers do not spend all their time on matters related to our business. Legal and Regulatory Risks We are bound to adhere to sanctions from many jurisdictions, including the U.S., United Kingdom, European Union and Canada, due to our domicile and location of offices. The U.S. continues to impose sanctions on several countries or regions such as Cuba, North Korea, Syria, Iran, Russia and Ukraine's Crimea, Luhansk and Donetsk regions. The U.S. also has imposed substantial restrictions on trade with Yemen and Venezuela. Since February 2022, the U.S. and numerous other organizations and nations, notably including the European Union and United Kingdom, have imposed substantial sanctions on Russia regarding its invasion of Ukraine. During 2022, Australia, the United Kingdom, the U.S. and the European Union prohibited the import of Russian oil into their territories. As of December 2022 for crude oil, and February 2023 for petroleum products, the U.S., European Union and United Kingdom in particular have also prohibited the provision of financial, legal, brokering, shipping and insurance services to any person of any nationality carrying Russian origin oil unless it is at or below a stated cap (currently $44.10 per barrel for crude oil and $100 per barrel for petroleum products), which is reviewed every six months. These Russian sanctions, together with the continuing global reaction to the Russian invasion of Ukraine, may reduce our revenues. The European Union is considering replacing the price cap regulations with a complete ban on the provision of maritime services to vessels carrying Russian origin oil and if other nations follow suit that could have significant implications on our tanker fleet. Past port calls by our vessels or third-party vessels participating in RSAs to countries that are subject to sanctions imposed by the U.S., European Union and the United Kingdom could harm our business. Several years ago, oil tankers owned or chartered-in by us, or third-party vessels participating in RSAs from which we derived revenue, made port calls in certain countries that are currently subject to sanctions imposed by the U.S., European Union and United Kingdom, for the loading and discharging of oil products. Those port calls did not violate U.S., European Union or United Kingdom sanctions, and we intend to maintain our compliance with all U.S., European Union and United Kingdom sanctions. These historical port calls have not adversely affected our business, which we believe is due to such port calls being legal at the time and that we are able to demonstrate our compliance. However, some charterers may choose not to utilize a vessel that had previously called at a port in a now sanctioned country. Some investors might decide not to invest in us simply because we previously called on, or through our participation in RSAs previously received revenue from calls on, ports in these sanctioned countries. Any such investor reaction could adversely affect the market for our common shares. Despite our policies, in the future our vessels may inadvertently breach sanctions due to orders given by charterers. Use of our vessels by charterers in a manner that violates sanctions may result in fines, penalties or other sanctions imposed against us. Sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended over time. Additionally, certain sanctions exist under a strict liability regime. This means that for a party to be liable under the sanctions, it is not a requirement that the party knew they were violating sanctions or that they intended to violate sanctions. We could be subject to monetary fines, civil or commercial penalties or other sanctions for violating applicable sanctions or embargo laws even in circumstances where our conduct or the conduct of one of our charterers was inconsistent with our sanctions-related policies, whether unintentionally or inadvertently. Failure to comply with the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, the UK Criminal Finances Act, the UK Economic Crime and Corporate Transparency Act and similar laws in other jurisdictions could result in fines, criminal penalties, contract terminations and an adverse effect on our business. We operate our vessels worldwide, which may require our vessels to trade in countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics which is consistent and in full compliance with the Foreign Corrupt Practices Act of 1977 (or the FCPA) of the United States, the Bribery Act 2010 (or the UK Bribery Act), the Criminal Finances Act 2017 (or the CFA) and the Economic Crime and Corporate Transparency Act 2023 (or the ECCTA) of the United Kingdom. We are subject, however, to the risk that we, our affiliated entities or their respective officers, directors, employees and agents may take actions determined to be in violation of applicable anti-corruption and anti-money laundering laws, including the FCPA, the UK Bribery Act, the CFA and the ECCTA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, or curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations 20 Table of Contents could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management. The shipping industry is subject to substantial environmental and other regulations, which may significantly limit operations and increase expenses and adversely impact our insurance coverage and costs. Our operations are affected by extensive and changing international, national and local environmental protection laws, regulations, treaties and conventions which are in force in international waters, the jurisdictional waters of the countries in which our vessels operate, as well as the countries of our vessels’ registration, including those governing oil spills, discharges to air and water, and the handling and disposal of hazardous substances and wastes. Many of these requirements are designed to reduce the risk of oil spills and other pollution. In addition, we believe that the heightened environmental, quality and security concerns of insurance underwriters, regulators and charterers will lead to additional regulatory requirements, including enhanced risk assessment and security requirements and greater inspection and safety requirements on vessels. For example, new or amended legislation relating to ship recycling, sewage systems, emission control (including emissions of greenhouse gases and other pollutants) as well as ballast water treatment and ballast water handling have been or may be adopted. The IMO, the United Nations agency for maritime safety and the prevention of pollution by vessels, has also established progressive standards that continue to limit emissions from ships as they strive to meet their 2030 and 2050 goals. These and other laws or regulations may require significant additional capital expenditures or operating expenses in order for us to comply with the laws and regulations and maintain our vessels in compliance with international and national regulations. The environmental and other laws and regulations applicable to us may affect the resale value or useful lives of our vessels, require a reduction in cargo capacity, ship modifications or operational changes or restrictions, lead to decreased availability of insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in, certain ports. Under local, national, and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including cleanup obligations, if there is a release of petroleum or other hazardous substances from our vessels or otherwise in connection with our operations. We could also become subject to personal injury or property damage claims relating to the release of or exposure to hazardous materials associated with our operations. In addition, failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations, including, in certain instances, seizure or detention of our vessels. For further information about regulations affecting our business and the related requirements imposed on us, please read "Item 4 – Information on the Company: B. Business Overview – Regulations". Climate change and greenhouse gas restrictions may adversely impact our operations and markets. Concern for and focus on climate change has promoted extensive existing and proposed international, national and local regulations intended to reduce greenhouse gas emissions (including from various jurisdictions and the IMO). These regulatory measures may include the adoption of cap and trade regimes, carbon taxes, use of alternate fuels, increased efficiency standards and incentives or mandates for renewable energy. Compliance with these or other regulations and our efforts to participate in reducing greenhouse gas emissions are expected to increase our compliance costs and require additional capital expenditures to reduce vessel emissions and may require changes to our business and could have an adverse impact on our financial condition. Our business includes transporting oil and oil products. Regulatory changes and public concern about the environmental impact of climate change may lead to reduced demand for our assets and decreased demand for our services, while increasing or creating greater incentives for use of alternative energy sources. Regulatory and consumer efforts aimed at combating climate change may intensify and accelerate. Although we do not expect demand for oil to decline dramatically over the short-term, in the long-term, climate change initiatives will likely significantly affect demand for oil and for alternatives. Any such change could adversely affect our ability to compete in a changing market and our business, financial condition and results of operations. For example, as of January 1, 2024, the European Union expanded the existing EU Emissions Trading System (or EU ETS) to include carbon dioxide (or CO2) emissions from vessels of 5,000 gross tonnage and above. Shipping companies which perform voyages to, from or within the EU or the EEA (Iceland, Liechtenstein and Norway) in a given year will need to acquire and surrender EU allowances (or EUAs) through their Union Registry account by September of the following year to cover their annual emissions. In addition to the EU ETS, the introduction of the FuelEU Maritime regulation by the European Union as of January 1, 2025, requires us to pay a financial penalty in relation to certain voyages which call on EU or EEA ports when not using low emission intensity fuels. Effective July 1, 2026, the UK Emissions Trading Scheme (or UK ETS) will be expanded to include the domestic maritime sector and applies to commercial vessels of 5,000 gross tonnage and above. Compliance is required for all domestic voyages, which are defined as journeys between two UK ports or voyages that start and end at the same UK port. This includes all emissions generated while at anchor or moored in UK ports. As part of compliance, the registered owner of a vessel must acquire and surrender one UK allowance for every tonne of CO2 equivalent emitted. For further information on EU ETS, FuelEU and UK ETS, please see “Item 4. Information on the Company – B. Business Overview – Regulations” in this Annual Report. Scrutiny and expectations from certain investors, lenders, customers and other market participants with respect to ESG policies and practices may impose additional costs on us or expose us to additional risks. Certain investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants remain focused on ESG practices and place significant importance on the implications and social cost of their investments. This increased focus and activism related to ESG and similar matters may hinder access to capital, as these investors and lenders may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Companies that do not comply with ESG expectations and standards by these investors, lenders or other industry stakeholders, or companies, may lack the support of such third parties. We may face increasing pressures from such third parties, which are focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result, we may determine that it is appropriate to implement more stringent ESG procedures or standards so that our interested existing and future investors and lenders remain invested in us and make further investments in us, or in order for customers to consider conducting future business with us, especially given our business of transporting oil and oil products. 21 Table of Contents At the same time, anti-ESG sentiment has been gaining momentum in certain jurisdictions, including the U.S., and certain investors, other stakeholders and regulators may express or pursue opposing views, legislation and investment expectations with respect to ESG initiatives. Several states in the U.S. and the U.S. government have enacted or proposed policies or executive action restricting ESG-focused investment practices, some of which may conflict with other regulatory requirements, resulting in regulatory uncertainty. Failure to comply with ESG-related or anti-ESG-related laws, exchange policies or stakeholder expectations could materially and adversely impact an investment in our common shares and have an adverse effect on our business. As a Bermuda exempted company, and with a majority of our subsidiaries being Marshall Islands entities and also having subsidiaries in other offshore jurisdictions, our operations may be subject to economic substance requirements, which could impact our business. Finance ministers of the European Union rate jurisdictions for tax transparency, governance, real economic activity and corporate tax rate. Countries that do not adequately cooperate with the finance ministers are placed on a list of non-cooperative jurisdictions for tax purposes. As of December 31, 2025, neither Bermuda nor the Marshall Islands were listed by the European Union on the list of non-cooperative jurisdictions. If Bermuda or the Marshall Islands were placed onto the list of non-cooperative jurisdictions and sanctions or other financial, tax or regulatory measures were applied by European Union member states to countries on the list, or further economic substance requirements were imposed by Bermuda or the Marshall Islands, our business could be harmed. European Union member states have agreed upon a set of measures, which they can choose to apply against countries on the list of non-cooperative jurisdictions, including increased monitoring and audits, withholding taxes, special documentation requirements and anti-abuse provisions. The European Commission has stated it will continue to support member states' efforts to develop a more coordinated approach to sanctions for the listed countries. European Union legislation prohibits European Union funds from being channeled or transited through entities in countries on the list of non-cooperative jurisdictions. Other jurisdictions in which we operate could be placed on the list of non-cooperative jurisdictions in the future. We are a Bermuda exempted company with our headquarters in Bermuda and we have subsidiaries organized in Bermuda. Additionally, a majority of our subsidiaries are Marshall Islands entities. These jurisdictions have enacted economic substance laws and regulations with which we may be obligated to comply. We believe that we and our subsidiaries are compliant with the Bermuda and the Marshall Islands economic substance requirements. However, if there were a change in the requirements or interpretation thereof, or if there were an unexpected change to our operations, any such change could result in noncompliance with the economic substance legislation and related fines or other penalties, increased monitoring and audits, and dissolution of the noncompliant entity, which could have an adverse effect on our business, financial condition or operating results. The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us. Production of cocaine and various narcotics has risen dramatically in recent years, and the demand for such substances has seen an increase in many countries as well. As a result, new hubs and new routes for cocaine and narcotics smuggling have emerged, and seizures by law enforcement agencies are reaching record highs around the world. Many of these seizures have a direct impact on merchant ships. Detentions of vessels and crew members are possible when cocaine or certain narcotics are discovered, leading to operational delays, lengthy legal proceedings, psychological impacts on employees and associated costs. Our vessels call on certain ports, such as Brazil, Venezuela and Colombia, where there is a higher risk that smugglers may attempt to hide drugs and other illegal substances and contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with illegal substances or contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims and detention of the vessel, which could have a material adverse effect on our business, financial condition and results of operations. Information and Technology Risks A cyber-attack could materially disrupt our business. We rely on information technology systems and networks in our operations and the administration of our business. Cyber-attacks have increased in number and sophistication in recent years, and will likely continue to accelerate as artificial intelligence is further employed in cyber-attacks. Our operations could be targeted by individuals or groups seeking to sabotage, disrupt or gain unauthorized access to our information technology systems and networks, or to steal data. A successful cyber-attack could disrupt our operations, including the safety of our operations, or lead to the unauthorized release of information or alteration of information on our systems. Any such attack or other breaches of our information technology systems could have a material adverse effect on our business and results of operations. We rely on our information systems to conduct our business, and failure to protect these systems against viruses and security breaches could adversely affect our business and results of operations. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed. Our business is international in scope, and the efficient operation of our business, including processing, transmitting and storing electronic and financial information and aspects of the control and operation of our vessels, is dependent on computer hardware and software systems. Information systems are vulnerable to security breaches and other attacks by computer hackers and cyber terrorists. We rely on what we believe are industry-accepted security measures and technology in seeking to secure confidential and proprietary information maintained on our information systems and to protect our assets. However, these measures and technology may not adequately prevent security breaches or cyber-attacks. We may be required to spend significant capital and other resources to further protect us, our information systems and our assets against threats of security breaches, computer viruses and cyberattacks, or to alleviate problems caused by such matters. Security breaches, viruses and cyber-attacks could also harm our reputation and expose us to claims, litigation and other possible liabilities. Any inability to prevent security breaches (including the inability of our third-party vendors, suppliers or counterparties to prevent security breaches) could also cause existing customers to 22 Table of Contents lose confidence in our information systems and harm our reputation, cause losses to us or our customers, damage our reputation and increase our costs. Any vulnerabilities attributable to third-party vendors, suppliers or counterparties relating to artificial intelligence tools or other products or services we may purchase or use might not be identified or discovered by them or by us, and such vulnerabilities could increase our exposure to security breaches and cyber-attacks. In addition, the unavailability of information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business and could result in decreased performance and increased operating costs. Any significant interruption or failure of our information systems or any significant breach of security could adversely affect our business, financial condition and results of operations. Our failure to comply with data privacy laws could damage our customer relationships and expose us to litigation risks and potential fines. Data privacy is subject to frequently changing laws, rules and regulations, which sometimes conflict among the various jurisdictions and countries in which we provide services and continue to develop in ways which we cannot predict, including with respect to evolving technologies such as cloud computing and artificial intelligence. These data privacy laws, rules and regulations often include significant penalties for non-compliance. Our failure to adhere to or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability or impairment to our reputation in the marketplace, which could have a material adverse effect on our business, financial condition and results of operations. The use of artificial intelligence in our operations may not result in expected benefits, and the use of artificial intelligence by any of our competitors may give them advantages relative to us. We are investigating the use of artificial intelligence to improve productivity and streamline processes. However, any further investment in and use of artificial intelligence may not achieve the expected benefits, and the use of artificial intelligence by our competitors may give them advantages relative to us. Risks Related to an Investment in Our Securities The superior voting rights of our Class B common shares held by Teekay limit our Class A common shareholders’ ability to control or influence corporate matters. Our Class B common shares have five votes per share, and our Class A common shares have one vote per share. However, the voting power of the Class B common shares is limited such that the aggregate voting power of all outstanding Class B common shares can at no time exceed 49% of the voting power of our outstanding Class A common shares and Class B common shares, voting together as a single class. As of the date of this Annual Report, Teekay indirectly owns Class A and Class B common shares representing a majority of the voting power of our outstanding share capital. Through its ownership of all of our Class B common shares, Teekay has substantial control and influence over our management and affairs and over all matters requiring shareholder approval, including the election of directors and significant corporate transactions. In addition, because of this dual-class common share structure, Teekay will continue to be able to control matters submitted to our shareholders for approval even though it owns significantly less than 50% of our outstanding common shares. This voting control limits our remaining Class A common shareholders’ ability to influence corporate matters and, as a result, we may take actions that our Class A common shareholders do not view as beneficial. We are incorporated in Bermuda and, as a result, shareholders may have fewer rights and protections under Bermuda law than under a typical jurisdiction in the U.S. We are a Bermuda exempted company. Our corporate affairs are governed by our memorandum of continuance, bye-laws and the Companies Act, 1981 of Bermuda (or the Companies Act). The Companies Act does not as clearly establish the rights and fiduciary responsibilities of our directors as do statutes and judicial precedent in some U.S. jurisdictions. Therefore, our shareholders may have more difficulty in protecting their interests in the face of actions by management, directors or any controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction. Because we are organized under the laws of Bermuda, it may be difficult to enforce judgments against us, our directors or our management. We are organized under the laws of Bermuda, and substantially all of our assets are located outside of the U.S. In addition, most of our directors and officers are non-residents of the U.S., and all or a substantial portion of the assets of these non-residents are located outside the U.S. As a result, it may be difficult or impossible to bring an action against us or against these individuals in the U.S. Even if successful in bringing an action of this kind, the laws of Bermuda and of other jurisdictions may prevent or restrict the enforcement of a judgment against us or our assets or our directors and officers. Tax Risks In addition to the following risk factors, you should read "Item 4E – Taxation of the Company", "Item 10 - Additional Information – Material United States Federal Income Tax Considerations" and "Item 10 - Additional Information – Non-United States Tax Considerations" for a more complete discussion of the expected material U.S. federal and non-U.S. income tax considerations relating to us and the ownership and disposition of our Class A common shares. 23 Table of Contents U.S. tax authorities could treat us as a “passive foreign investment company” (or PFIC), which could have adverse U.S. federal income tax consequences to our U.S. shareholders and other adverse consequences to us and all of our shareholders. A non-U.S. entity treated as a corporation for U.S. federal income tax purposes will be treated as a PFIC for such purposes in any tax year in which, after taking into account the income and assets of the corporation and, pursuant to a “look-through” rule, any other corporation or partnership in which the corporation directly or indirectly owns at least 25% of the shares or equity interests (by value) and any partnership in which the corporation directly or indirectly owns less than 25% of the equity interests (by value) to the extent the corporation satisfies an "active partner" test and does not elect out of "look through" treatment, either (i) at least 75% of its gross income consists of “passive income,” (or the PFIC income test) or (ii) at least 50% of the average value of the entity’s assets is attributable to assets that produce or are held for the production of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, gains from the sale or exchange of investment property and rents and royalties (other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business). By contrast, income derived from the performance of services does not constitute “passive income.” With respect to the PFIC income test, there are legal uncertainties involved in determining whether the income derived from our and our look through subsidiaries’ time-chartering activities constitutes rental income or income derived from the performance of services, including the decision in Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), which held that income derived from certain time-chartering activities should be treated as rental income rather than services income for purposes of a foreign sales corporation provision of the U.S. Internal Revenue Code of 1986, as amended (or the Code). However, the Internal Revenue Service (or the IRS) stated in an Action on Decision (AOD 2010-01) that it disagrees with, and will not acquiesce to, the way that the rental versus services framework was applied to the facts in the Tidewater decision, and in its discussion stated that the time charters at issue in Tidewater would be treated as producing services income for PFIC purposes. The IRS’s statement with respect to Tidewater cannot be relied upon or otherwise cited as precedent by taxpayers. Consequently, in the absence of any binding legal authority specifically relating to the statutory provisions governing PFICs, there can be no assurance that the IRS or a court would not follow the Tidewater decision in interpreting the PFIC provisions of the Code. Nevertheless, based on our and our look-through subsidiaries’ current assets and operations, we intend to take the position that we are not now and have never been a PFIC. No assurance can be given that this position would be sustained by a court if contested by the IRS. Furthermore, based on our current estimates and assumptions relating to our current PFIC asset test modeling, including our assumptions on the tanker market, value of our fleet and our significant cash assets, no assurance can be given that we would not constitute a PFIC for the 2026 tax year or any future tax year if there were to be changes in these estimates and assumptions and in our and our look-through subsidiaries’ assets, income or operations. If we or the IRS were to determine that we are or have been a PFIC for any tax year during which a U.S. Holder (as defined below under “Item 10 – Additional Information – Material United States Federal Income Tax Considerations”) held our common shares, such U.S. Holder would face adverse U.S. federal income tax consequences. For a more comprehensive discussion regarding the tax consequences to U.S. Holders if we are treated as a PFIC, please read "Item 10 - Additional Information - Material United States Federal Income Tax Considerations - United States Federal Income Taxation of U.S. Holders - Consequences of Possible PFIC Classification." The imposition of taxes, including as a result of any change in tax law or accounting requirements, may reduce our cash available for distribution to shareholders, cash flows and results of operations. We, our joint venture or our subsidiaries are subject to tax in certain jurisdictions in which we, our joint venture or our subsidiaries are organized own assets or have operations, which reduces the amount of our cash available for distribution. In computing our tax obligations in these jurisdictions, we are required to take various tax accounting and reporting positions, including in certain cases estimates, on matters that are not entirely free from doubt and for which we may not have received rulings from the governing authorities. We cannot assure you that upon review of these positions the applicable authorities will agree with our positions. A successful challenge by a tax authority could result in additional tax imposed on us, our joint venture or our subsidiaries, further reducing the cash available for distribution. We have established reserves in our financial statements that we believe are adequate to cover our liability for any such additional taxes. We cannot assure you, however, that such reserves will be sufficient to cover any additional tax liability that may be imposed on our subsidiaries. Additionally, tax laws, including tax rates, in the jurisdictions in which we operate may change as a result of macroeconomic or other factors outside of our control. A change in tax laws or regulations, or in the interpretation thereof, could result in a materially higher tax expense or a higher effective tax rate on our earnings. For example, various governments and organizations such as the European Union and the OECD are increasingly focused on tax reform and other legislative or regulatory action to increase tax revenue. In October 2021, members of the OECD put forth two proposals: (i) Pillar One reallocates profit to the market jurisdictions where sales arise versus physical presence; and (ii) Pillar Two compels multinational enterprises with €750 million or more in annual revenue to pay a global minimum tax of 15% on income received in each country in which they operate. The reforms aim to level the playing field between countries by discouraging them from reducing their corporate income taxes to attract foreign business investment. Over 140 countries have agreed to enact the two-pillar solution to address the challenges arising from the digitalization of the economy and, in 2024, these guidelines were declared effective and must now be enacted by those OECD member countries. Qualifying international shipping income is exempt from many aspects of this Pillar Two framework if the exemption requirements are met, which may minimize the tax effect on qualifying shipping companies. As of 2025, legislatures of over 60 OECD member states both within and outside of the European Union have either introduced draft legislation or enacted final legislation to implement the OECD's minimum tax proposal, including the countries of Canada, the UK, Australia, the Netherlands, Norway and Singapore, in which we (or one of our “constituent entities,” as determined consistent with the Pillar Two framework) operate. The application of the Pillar Two rules continues to evolve and its implementation may result in additional tax imposed on us or our subsidiaries and increase the cost of operating in certain countries. We continue to monitor the development and evaluate the impact of these rules and assess whether to take any available mitigating actions to reduce the potential impact under the current Pillar Two rules. Additionally, changes in our operations or ownership could result in additional tax being imposed on us or on our subsidiaries in jurisdictions in which operations are conducted. For example, changes in the ownership of our shares may cause us to be unable to claim an exemption from U.S. federal income tax under Section 883 of the Code. If we were not exempt from tax under Section 883 of the Code, we would be subject to U.S. federal income tax on income we earn from voyages into or out of the U.S., the amount of which is not within our complete control. In addition, we 24 Table of Contents may rely on an exemption to be deemed non-resident in Canada for Canadian tax purposes under subsection 250(6) of the Canada Income Tax Act for (i) corporations whose principal business is international shipping and that derive all or substantially all of their revenue from international shipping, and (ii) corporations that are holding companies that have over half of the cost base of their investments in eligible international shipping subsidiaries and receive substantially all of their revenue as dividends or interest from those eligible international shipping subsidiaries are exempt under subsection 250(6). If we were to cease to qualify for the subsection 250(6) exemption, we could be subject to Canadian income tax and to the extent Teekay Tankers was to distribute dividends as a corporation determined to be resident in Canada, shareholders who are not resident in Canada for purposes of the Canada Income Tax Act would generally be subject to Canadian withholding tax in respect of such dividends paid by Teekay Tankers. Typically, most of our time-charter and spot voyage charter contracts require the charterer to reimburse us for a certain period of time in respect of taxes incurred as a consequence of the voyage activities of our vessels while performing under the relevant charter. However, our rights to reimbursement under charter contracts may not survive for as long as the applicable tax statutes of limitations in the jurisdictions in which we operate. As such, we may not be able to obtain reimbursement from our charterers where any applicable taxes that are not paid before the contractual claim period has expired. We are subject to taxation in Bermuda and changes to Bermuda tax policies may impact our financial position. As a response to the introduction of the OECD Pillar Two framework and the enactment by various countries of the Pillar Two rules, Bermuda enacted the Bermuda Corporate Income Tax Act 2023 (or Bermuda CIT Act) on December 27, 2023, which became operative with respect to the imposition of corporate income tax on January 1, 2025. The Bermuda CIT Act applies only to Bermuda entities that are part of multinational enterprise groups with €750 million or more in annual revenues in at least two of the four fiscal years immediately preceding the fiscal year in question (or Bermuda Constituent Entity Group). Where corporate income tax is chargeable to a Bermuda Constituent Entity Group, the amount of corporate income tax chargeable for a fiscal year will be 15% of the net taxable income of the Bermuda Constituent Entity Group as determined in accordance with and subject to the adjustments set out in the Bermuda CIT Act (including in respect of foreign tax credits applicable to the Bermuda constituent entities). In general, income arising from international shipping is exempted from the scope of such tax to the extent applicable requirements relating to strategic or commercial management in Bermuda are satisfied. As a result of the redomiciliation of Teekay Tankers to Bermuda on October 1, 2024, the provisions of the Bermuda CIT Act apply to tax years starting on January 1, 2025 to our Bermuda Constituent Entity Group, which may result in corporate income tax being payable, depending on the nature of our income, profits or gains. Under current Bermuda tax law (including the Bermuda CIT Act), there are no withholding taxes payable in Bermuda on dividends distributed by us to our shareholders. Bermuda is expected to continue to monitor further developments around the world as other jurisdictions address the OECD’s standards. Future changes to the Bermuda CIT Act could, if applicable to the Teekay Tankers' Bermuda Constituent Entity Group, have an adverse effect on the Teekay Tankers’ Bermuda Constituent Entity Group’s financial condition and results of operations. Changes to the United Kingdom tonnage tax or corporate tax regimes applicable to us, or to the interpretation thereof, may impact our future operating results. In November 2024, Teekay Tankers' subsidiaries elected jointly as a group to participate in the United Kingdom tonnage tax regime and, following the group's admission, is eligible for this regime for an initial eight-year period. At any time during the eight-year eligibility period, the Teekay Tankers tonnage tax group can elect to renew its election to apply the tonnage tax regime for another eight-year period on a rolling basis. The tonnage tax system applies to shipping income, expenses and profits and replaces factors that are normally taken into account in traditional tax calculations, such as profit or loss, operating costs, depreciation, gains and the offsetting of past losses of the revenues taxable in the United Kingdom. However, under the tonnage tax rules, which are part of the normal corporate tax regime in the United Kingdom, the taxable income of a qualifying shipping operation such as that of the Teekay Tankers tonnage tax group is instead calculated based on the net registered tonnage of the qualifying seagoing vessels that the Teekay Tankers tonnage tax group owns, charters or, in some cases, manages that generate income from shipping activities. A deemed daily profit figure is applied to the specific net tonnage of the vessels based on a sliding scale to determine the taxable income under the tonnage tax regime. The total annual deemed profit is then subjected to United Kingdom corporation tax in the normal manner (currently at the rate of 25%), such that tonnage tax companies remain United Kingdom corporation taxpayers and remain entitled to the benefits of the United Kingdom’s double taxation agreements with other countries. Changes to the United Kingdom tax regime applicable to us, or the interpretation thereof, may impact our future operating results. There is no guarantee that the tonnage tax regime will not be reversed or that other forms of taxation will not be imposed, such as, among other things, further or amended taxes imposing the global minimum effective tax rate rules, a carbon tax or emissions trading system in the context of the discouragement of the use of fossil fuels. To the extent that such changes were to be implemented or we do not continue to meet the applicable qualification requirements, we may be required to pay higher income tax in the United Kingdom and this may adversely impact our financial condition and results of operations.