Höegh LNG – The floating LNG services provider Fourth Quarter 2012 Presentation of financial results 15 February 2013
Höegh LNG – The floating LNG services provider
Fourth Quarter 2012
Presentation of financial results 15 February 2013
Forward looking statements
2
This presentation contains forward-looking statements which reflects management’s current expectations, estimates and projections about
its operations. All statements, other than statements of historical facts, that address activities and events that will, should, could or may
occur in the future are forward-looking statements. Words such as “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,”
“forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” or the negative of these terms and similar expressions are
intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to
certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes
and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue
reliance on these forward-looking statements, which speak only as of the date of this presentation. Unless legally required, Höegh LNG
undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or
otherwise.
Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changes
in LNG transportation and regasification market trends; changes in the supply and demand for LNG; changes in trading patterns; changes
in applicable maintenance and regulatory standards; political events affecting production and consumption of LNG and Höegh LNG’s
ability to operate and control its vessels; change in the financial stability of clients of the Company; Höegh LNG’s ability to win upcoming
tenders and securing employment for the FSRUs on order; changes in Höegh LNG’s ability to convert LNG carriers to FSRUs including
the cost and time of completing such conversions; changes in Höegh LNG’s ability to complete and deliver projects awarded; increases in
the Company’s cost base; changes in the availability of vessels to purchase; failure by yards to comply with delivery schedules; changes
to vessels’ useful lives; changes in the ability of Höegh LNG to obtain additional financing, in particular, currently, in connection with the
turmoil in financial markets; the success in achieving commercial success for the projects being developed by the Company; changes in
applicable regulations and laws; and unpredictable or unknown factors herein also could have material adverse effects on forward-looking
statements.
Agenda
3
Highlights
Financials
Operational review
Market outlook
Summary
Highlights
4
Total income USD 37.6 m, up 25 % from 4Q 2011
EBITDA USD 18.2 m (USD 3.5 m)
Profit before tax USD 11.3 m (loss of USD 8.5 m)
Port Meridian Energy Ltd. sold for USD 20 m
NOK 750 m (USD 130.3 m) bond issue closed
USD 250 m debt financing for Lithuania FSRU signed with
first draw-down made in January 2013
Agenda
5
Highlights
Financials
Operational review
Market outlook
Summary
Income statement
6
USD million 4Q2012 4Q2011 2012 2011
TOTAL INCOME 37,6 30,0 135,6 109,8
Charterhire expenses (5,2) (5,1) (20,7) (20,1)
Operating expenses (10,1) (10,6) (33,1) (32,4)
Administrative expenses 1,8 (6,5) (8,3) (17,0)
Business dvelopment expenses (5,8) (4,2) (26,5) (14,2)
EBITDA 18,2 3,5 47,0 26,1
Gain /(loss) on sale of assets 10,4 - 10,4 (0,1)
Depreciation and impairment (8,4) (5,8) (22,7) (19,6)
EBIT 20,2 (2,4) 34,7 6,4
Interest expenses (8,5) (6,3) (26,8) (25,2)
Interest income 0,0 0,0 0,1 0,7
Other financial items (0,4) 0,1 1,1 0,2
PROFIT OR (LOSS) BEFORE TAX 11,3 (8,5) 9,1 (18,0)
Taxes 0,0 (0,1) (0,2) 0,2
NET PROFIT OR (LOSS) 11,3 (8,6) 8,9 (17,8)
Financial position
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USD million 31.12.2012 30.09.2012 31.12.2011
Licences, design and other intangibles 74 74 83
Vessels, newbuildings and mooring 713 685 502
Other assets 38 41 33
Current cash, s/t deposits, marketable securities 247 133 127
TOTAL ASSETS 1 072 932 745
Total equity 344 328 133
Interest bearing debt 559 430 439
Hedging reserves 133 137 132
Other l iabilities 36 37 41
TOTAL EQUITY AND LIABILITIES 1 072 932 745
Total equity adjusted for MtM of interest rate swaps 477 465 265
Equity ratio adjusted for MtM of interest rate swaps 44% 50% 36%
Net interest bearing debt less cash, mark.securities and restricted cash 290 274 300
Cash flow statement
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USD million 4Q2012 4Q2011 2012 2011
Net profit or (loss) before tax 11 (9) 9 (18)
Adjustments of non-cash P&L items (1) 12 31 44
Net changes in working capital, other (0) 5 (8) (2)
Net cash flow from operating activities 10 9 32 25
Proceeds from sale of marketable
securities/receivables- - 183 52
Investments in marketable securities (50) - (205) (90)
Investments in vessels and newbuildings (32) (1) (221) (57)
Investments in intangibles and equipment (1) (3) (3) (7)
Proceeds from sale of projects and equimpent 20 20 -
Net cash flow from/(used in) investing activities (63) (4) (225) (102)
Proceeds from borrowings 130 - 130 -
Repayment of borrowings (3) (3) (13) (12)
Interest paid (6) (6) (24) (25)
Issue of share capital net of transaction cost - - 202 126
Other financing activities (6) (4) (6) (4)
Net cash flow from/(used in) financing activities 115 (13) 289 85
TOTAL CASH FLOW 63 (8) 96 8
Agenda
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Highlights
Financials
Operational review
Market outlook
Summary
10
No need for further equity in funding current investment plan
USD 0.8 billion of cash and undrawn bank financing available
USD 0.8 billion of additional bank financing to be raised
Assuming 75% leverage for FSRUs and 65% for STX Frontier
Uses Sources
FSRU#1-4 (remaining) 1,0 Cash at hand 31/12/12 0,2
STX Frontier 0,1 Undrawn bank financing (USD250m KN and USD288m bridge) 0,5
Mooring 0,1 Incremental bank financing (FSRU2,3,4 / STXF / Mooring) 0,8
Remaining capital expenditures 1,2 Cancellation USD288m bridge facility (0,3)
Proceeds from sale of Mooring 0,1
Cash buffer 0,2 Settlement of Mooring debt (0,1)
Total 1,3 Total 1,3
The figures shown in the table above have been rounded.
Planning for a Master Limited Partnership
US listed equity capital market entity
Provides access to equity capital at a
relatively low cost and funding for further
growth
Höegh LNG will hold all voting rigts in MLP
Process of engaging financial and legal
advisors has started
Planning for a potential MLP IPO in 2014
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Höegh LNG
Master Limited Partnership («MLP»)
Operating
asset #1
General
Partner
Public
Operating
asset #3
etc
Operating
asset #2
100%
Limited partner
interests
(common and
subordinated units)
2% General Partner
interests + IDR
Limited partner
interests
(common units)
FSRU
Newbuilding programme
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H2549
H2550
2011
Q1 Q2 Q3
2014
H2551
H2548
2012 2013 2015
Q2 Q2 Q2 Q1 Q1 Q1 Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q1
Steel Cutting
Keel Laying
Launch
H2549: Klaipédos Nafta
H2550: Colbun / AES
H2551: Uncommitted
H2548: Perusahaan Gas Negara
Today
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Structure for cargo tanks number 3 and 4 in hull 2549
FSRU
Construction well advanced at Hyundai Heavy Industries
Double bottom of hull 2549
14
FSRU
Klaipedos Nafta - Lithuania
Project on schedule for a 3Q 2014 start-up
FSRU construction on schedule
Client’s process of awarding contracts for
the construction of a jetty and a pipeline
connection well underway
Client has received offers for LNG supply
USD 250 million debt financing closed
First drawing made in January 2013
75 % guaranteed by K-sure and GIEK
Tenor of seven years and overall profile of
16 years
Construction in progress at Hyundai Heavy Industries
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FSRU and mooring arrangement construction on schedule
FSRU will connect to Indonesia's existing main grid and supply gas to Sumatra and Jakarta
Financing progressing well with offers received from several Asian and Australian banks
Financial close expected in the first half of 2013
PGN allocated LNG supply by authorities
Planned start-up in June 2014
FSRU
Perusahaan Gas Negara - Indonesia
Tower yoke mooring system Regasification Module
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FSRU
Colbún / AES Gener - Chile
Final agreement under negotiation
FSRU to be located in Quintero Bay close
to Santiago
Connect to the existing grid and provide
existing power plants in Chile with gas
Colbún S.A and AES Gener S.A among the
largest power producers in Chile
Contract length 10 + 5 years
Steel cutting started 31 December 2012
Financing process has started and is
expected to be completed during second
half 2013
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Near-term FSRU contract award opportunities
Project Pre-
qualified Bid Selection Contract Start-up
Indonesia Yes Submitted 2013 2013 2014/15
Uruguay Yes Q1 2013 Q2 2013 Q3 2013 2015
India Yes Q2 2013 Q3 2013 2013 2014/15
Lebanon Yes Q2 2013 Q3 2013 2013 2015
Port
Meridian Exclusive N/A N/A Q4 2013 2016
Fleet and operation
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Existing fleet operated safely and without incidents in the reported quarter
LNG Libra re-delivered on 10 January and commenced a voyage charter with NYK. Redelivered on 27
January 2013. The vessel is being marketed for chartering and/or sale
STX Frontier will be delivered either on 1 July or 1 October 2013 following Repsol’s declaration of the first
of two extension options, vessel being marketed in the medium term market
The time charter for Norman Lady ends in September 2013. The agreement may be extended with two
years at charterer’s option
LNG Libra STX Frontier Norman Lady
Höegh FLNG Ltd.
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Höegh FLNG Ltd. established as a stand-alone organisation and all FLNG assets and resources
transferred to the new entity
The Company is in advanced negotiations for a pre-FEED agreement with a large oil & gas
company for using a FLNG solution for LNG production
Working on the application of its FEED results on smaller scale barge based projects
The process of securing new investor(s) in Höegh FLNG Ltd. is expected to be completed during
the first half of 2013, in negotiations with 2-3 shortlisted companies
Agenda
20
Highlights
Financials
Operational review
Market outlook
Summary
Shale gas boom now visible from space
Source: Financial Times 27 January 2013
Oil companies at the heart of the US shale oil boom are burning off enough gas to power all the
homes in Chicago and Washington combined
The volume of gas flared in the US has tripled in just five years, according to World Bank estimates
and is now fifth highest in the world, behind Russia, Nigeria, Iran and Iraq
The lights of the flares burning in
the Bakken and Texas’ Eagle Ford
shale fields can clearly be seen
in night-time satellite photography
The main problem is no existing
pipeline infrastructure for associated
gas
Texas' Eagle Ford
Liquefaction Capacity Forecasts by Region (1) Liquefaction Drivers (2)
0
50
100
150
200
250
300
350
400
450
500
2007 2010 2013 2016 2019 2022 2025
(Mtpa)
Asia Pacific Europe Middle East North Africa
North America South America West Africa South & East Africa
• Australia to overtake Qatar as largest
exporter by 2017
• 3 liquefaction plants producing and online
• 7 liquefaction plants under construction
• ~50% of global incremental LNG capacity
over next 5 years
• +$10 / MMbtu gap between Henry Hub and
Asian gas prices plus vast shale gas
reserves driving North American LNG
capacity additions
• 22 LNG projects announced
• 16 export licenses from US DoE for FTA
countries, capable of ~202 Mtpa
• Several non-FTA exports licenses in
process (one approved for Sabine Pass)
• Cheniere’s Sabine Pass to be the first US
LNG liquefaction facility to come online,
expecting exports in 2016
___________________________
1. Barclays / LNG Service, Wood Mackenzie
2. Barclays / Wall Street Equity Research
Liquefaction capacity build-out driving demand for FSRU services
Worldwide liquefaction capacity expected to increase significantly over the next five years
Around 30 potential FSRU regasification projects worldwide
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Around 30 projects in pipeline
19 projects in Asia/Middle East
5 projects in South America
8 projects in Europe/Africa Existing
Under construction / awarded
Potential
Existing
Under construction / awarded
Potential
Owner Vessels Customers*
Höegh LNG 2+4 GDF Suez (2),
Perusahaan Gas Negara,
Klaipedos Nafta,
Colbun/AES Gener
Golar LNG 4+2 Petrobras (2), Pertamina,
Dubai Power Authority,
GasAtacama
Excelerate 8+1 YPF (2), Kuwait Oil
Corporation, Petrobras,
PREPA, Israel Electric
Corporation
BW Gas 0+1 N/A
* Projects in operation or awarded
Global LNG fleet overview
14 FSRUs in fleet
8 FSRU newbuildings on order plus 2
options to change from LNGC to FSRU
364 LNG vessels in fleet
88 newbuildings on order (24%)
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Type Delivered Newbuildings
on order
Under
conversion Total
LNGC 365 88 - 453
FLNG - 2 - 2
FSRU 14* 8** 1 23
Total 379 98 1 478
LNGC fleet FSRU fleet
* 10 newbuildings and 4 conversions
** In additional to six firm FSRU orders globally, Golar LNG has options to convert two LNGC orders to FSRUs
Source: Wood Mackenzie, LNG Unlimited, Fearnley LNG
Agenda
25
Highlights
Financials
Operational review
Market outlook
Summary
Summary
26
Strong 4Q 2012 results
No need for additional equity for current investment
programme
Planning for a Master Limited Partnership to be
operational in 2014
Projects on track and on budget
Strong market prospects driven by planned
liquefaction capacity increase