Company presentation June 2018 1 Forward looking statements This - - PowerPoint PPT Presentation

company presentation
SMART_READER_LITE
LIVE PREVIEW

Company presentation June 2018 1 Forward looking statements This - - PowerPoint PPT Presentation

Hegh LNG - the FSRU provider Company presentation June 2018 1 Forward looking statements This presentation contains forward- looking statements which reflects managements current expectations, estimates and projections about Hegh LNGs


slide-1
SLIDE 1

Höegh LNG - the FSRU provider

1

Company presentation

June 2018

slide-2
SLIDE 2

Forward looking statements

2

This presentation contains forward-looking statements which reflects management’s current expectations, estimates and projections about Höegh LNG’s

  • perations. 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; changes to 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, including the impact from changes in financial markets; changes in the ability to achieve 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.

slide-3
SLIDE 3

HMLP / HMLP-A HLNG / HLNG02 / HLNG03

Höegh LNG at a glance

3

▪ Sector: Maritime energy infrastructure – Floating Storage & Regasification Units (FSRUs) ▪ Largest, most modern and most efficient FSRU fleet in the market ▪ Market cap / EV: USD 450m / USD 1.4bn ▪ Assets / equity ratio*: USD 2.0bn / 40% ▪ Revenues / EBITDA**: USD 290m / USD 150m ▪ Employees: 125 onshore / 525 offshore

9.4 years

  • Avg. remaining contract length

USD 3.2 bn

Revenue backlog

* 31 March 2018 ** Q1 2018 annualised

8 FSRUs in operation 2 FSRUs under construction 2 LNGCs in operation

slide-4
SLIDE 4

Höegh LNG: Unlocking access to the global LNG market

Regasification/ infrastructure Consumption Transportation Liquefaction Production The natural gas value chain Natural Gas Liquefied Natural Gas Natural Gas Höegh LNG focus

Construction, ownership and operation of FSRUs

  • n long-term contracts

Höegh LNG business model

slide-5
SLIDE 5

Consistently solid operational performance across the global fleet

5

GDF Suez Cape Ann PGN FSRU Lampung Neptune Independence Höegh Grace Höegh Giant Arctic Princess Arctic Lady Höegh Gallant FSRU NB FSRU intermediate trading LNG carrier FSRU FSRU contract with future start-up

1 Per million work hours

99.87% 99.70% 99.95% 99.94% 99.79% 100.00% >99.50%

2013 2014 2015 2016 2017 2018 YTD Target

Technical availability

1.07 0.44 0.73 0.00 0.38 0.00 <1.00

2013 2014 2015 2016 2017 2018 YTD Target

Lost time injury frequency1

Höegh Esperanza

slide-6
SLIDE 6

Solid strategic rationale backing existing FSRU contracts

6

PGN FSRU Lampung

Indonesia

Independence

Lithuania

Neptune

Turkey

GDF Suez Cape Ann

India

Höegh Gallant

Egypt

Höegh Grace

Colombia

Höegh Esperanza

China

Höegh Giant

WW trading Offsetting deficit in indigenous natural gas supply Security of supply in periods

  • f drought

Trading as LNGC, confirming FSRUs’ flexibility Offset seasonal variations in natural gas demand Diversification of natural gas supply, alternative to pipeline gas To replace expensive liquid

  • il products in

power generation To cover deficit in power production by using low cost LNG and to

  • ffset declining

domestic gas production Increase energy supply using alternative to coal Unit Charterer Strategic rationale

slide-7
SLIDE 7

Built EBITDA Charterer USDm/yr Höegh LNG Holdings

Arctic Princess* 2006 19** Statoil Arctic Lady* 2006 19** Total Independence 2014 47 KN Höegh Giant 2017 GNF Höegh Esperanza 2018 CNOOC / Tendering FSRU#9 2018 Tendering FSRU#10 2019 Tendering Höegh LNG Partners Neptune 2009 33** Engie GDF Suez Cape Ann 2010 33** Engie PGN FSRU Lampung 2014 40 PGN Höegh Gallant 2014 38 Egas Höegh Grace 2016 42 SPEC

Long-term contract LNGC interim trading Extension option Under construction

2036 2038 2024 2026 2028 2030 2032

FSRU and/or LNGC intermediate charter

2018 2031 2033 2035 2037 2020 2022 2034

Employment opportunities targeted for two FSRU newbuildings in otherwise busy tendering market

7 * LNG carriers ** 100% basis, units are jointly owned

Delivery Dec 2018 Delivery May 2019 Penco / other long-term contract

slide-8
SLIDE 8
  • 200

400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

Dalian LNG import Tangshan LNG import Tianjin (CNOOC) LNG import Qingdao LNG import Tianjin (Sinopec) LNG import Northern capacity

Northern coastal China: LNG imports by terminal

Thousand metric tons

3-yr charter to CNOOC: Höegh Esperanza to offset seasonal demand fluctuations in China

8

3-year time charter with CNOOC

▪ Höegh Esperanza entered a 3+1 year FSRU/LNGC contract with CNOOC on 5 June 2018 ▪ Guaranteed minimum utilisation in FSRU mode at the Tianjin LNG terminal in China ▪ The balance of the year in LNGC mode and/or FSRU mode ▪ Rate structure corresponding to the mode of use

China LNG market

▪ Aggressive coal-to-gas switch triggered a 46% hike in LNG demand in 2017 to 38.7 million tonnes ▪ Momentum continues into 2018 with imports reaching 12.4 million tonnes in Q1 2018 (up 61% from Q1 2017) ▪ Continued strength in Chinese LNG imports expected

Source: IHS Waterborne LNG, IHS Markit

Imports exceeding regas capacity

slide-9
SLIDE 9

Agenda

9

▪ Company overview ▪ Market update ▪ Financials

slide-10
SLIDE 10

LNG demand forecasted to continue its roboust long-term growth path

▪ Natural gas’ share of the global energy mix increasing

 Rapid growth of shale gas production in North America  Policy actions for clean energy support natural gas  Rapid growth in the supply of LNG and more flexible contract terms

▪ LNG available at attractive prices relative to competing fuels, such as

  • il

10 Source: Cheniere

LNG supply and demand, 2010-2030

slide-11
SLIDE 11

15 17 19 21 23 25 27 29 31 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

million tonnes

LNG trade by month, global

2013 2014 2015 2016 2017 2018

Strong momentum in LNG trade into 2018

11

LNG trade in 5M 2018: Up 8.1% y/y

▪ LNG trade reached 130 million tonnes by end-May, up 8.1% from year-ago levels ▪ Trade growth driven by expanding supply and growing demand for LNG ▪ LNG prices hit a three-year high in February

 Reflecting robust demand  Busy spot market activity, from Chinese buyers in particular

Source: Waterborne LNG / IHS Markit

slide-12
SLIDE 12

7% 8% 24% 29%

0% 5% 10% 15% 20% 25% 30% 35%

CAGR 2007 – 2017, LNG markets vs FSRUs

FSRUs have become instrumental in opening up new markets for LNG

12

LNG volumes LNG importers* FSRU importers FSRUs in operation 2007 172 17 2 2 2012 238 25 7 10 2017 297 35 14 22 5M 2018 130 36 15 23

Source: Höegh LNG / IHS Markit * Importers with greater import capacity than o.m million tonnes per annum

slide-13
SLIDE 13

Busy tendering market for FSRUs

13

FSRU contract awards, 2018 ▪ Caribbean (mid-scale) ▪ Hong Kong ▪ Bangladesh (barge) FSRUs installed in 2018 ▪ Bangladesh, 1st FSRU ▪ Turkey, 2nd FSRU 2018 start-up, scheduled ▪ India (October 2018) ▪ Bangladesh, 2nd FSRU (December 2018) Public domain FSRU tenders* ▪ Australia ▪ Brazil ▪ Colombia ▪ Croatia ▪ Cyprus ▪ Lebanon ▪ Mexico ▪ Myanmar

* Projects that have appeared in media. List is not complete

▪ Pakistan ▪ Sudan ▪ Thailand ▪ UAE

slide-14
SLIDE 14

29 FSRUs currently on the water – 11 on order

▪ Of 11 newbuilding orders, 4 are built for own projects ▪ Of the remaining 7 orders, 3 will not be delivered until 2020/2021

14

OLT MOL Gazprom Maran Kolin Kalyon SWAN Dynagas Dynagas Java-1 Exmar

Source: Höegh LNG 1 Orderbook defined as confirmed orders, excluding LOIs, options and conversions not firmed up

8 9 7 2 3 2 1 1 7 2 4 6 8 10 12 Höegh LNG Excelerate Golar LNG BW Gas Other Units

FSRU fleet and orderbook1 by owner

Fleet Orderbook

slide-15
SLIDE 15

Agenda

15

▪ Company overview ▪ Market update ▪ Financials

slide-16
SLIDE 16

Financial strategy: Funding diversification and financial risk management

16

Capital management strategies ▪ Diversification of funding sources ▪ Oslo and New York public listings ▪ HLNG and HMLP common equity, preference capital, Norwegian bond market ▪ Recycling of capital through Höegh LNG Partners ▪ Maintaining a strong balance sheet Financial risk management ▪ Equity portion in place before ordering newbuildings ▪ Sound projects with credible counterparts ▪ FX and interest rate hedges in place ▪ Compliance with relevant standards and regulations Access to diversified sources of both debt and equity Robust balance sheet supporting commercial processes Stable and predictable cash flows

slide-17
SLIDE 17

Key financials

17

USD million 1Q 2018 4Q 2017 2017 2016 2015 Income statement Total income 72.3 76.1 279.3 232.9 219.4 EBITDA 38.1 43.0 148.9 111.3 90.3 EBIT 26.8 31.7 106.2 76.4 25.7 Net profit 13.2 20.0 41.1 14.0

  • 26.8

Balance sheet FSRUs and new buildings 1617 1619 1619 1269 1033 Total assets 1970 1959 1959 1713 1502 Net interest-bearing debt 909 908 908 585 423 Equity adjusted for hedg. reserves 774 763 763 677 598 Equity ratio adjusted for hedging 40% 39% 39% 40% 40%

slide-18
SLIDE 18

Financing activities

▪ Main terms agreed with an export credit agency (ECA) for debt financing of FSRU #9, which are subject to credit approval ▪ Discussions have started over financing for FSRU #10, to be delivered in May 2019, with various sources under consideration ▪ Various sources of financing under consideration for the refinancing of Höegh Gallant / Höegh Grace facility maturing in Q4 2019 / Q2 2020

18 * Amortisation includes debt on FSRUs #8-10, assuming that financing for FSRUs #9-10 are structured similarly to FSRU #8. Amortisation of refinanced debt assumes similar amortisation profile as the current facilities, and that balloons are refinanced in full.

50 100 150 200 250 300 350 400 450 500 2018 2019 2020 2021 2022 USD million

Debt repayment schedule

Amortisation Amortisation refinanced debt Balloons Bonds

Independence Höegh Gallant HLNG02 Höegh Grace Lampung HLNG03 Höegh Giant

slide-19
SLIDE 19

Capital expenditures and financing status

19

Available liquidity at 31 Mar 2018 USDm

Cash, net of HMLP 142 Marketable securities 49 Revolving credit facility 58 Debt for FSRU #8 200 Available liquidity 449 Debt financing of FSRUs #9 and #10 340 – 390 Increased leverage on Höegh Giant / Höegh Esperanza 59 Planned financing 848 - 898 Outstanding capital expenditures, 31 Mar ~630

50 100 150 200 250 300 350 400 450 500 2018 2019 2020 USD million

Capital expenditures at 31 Mar 2018

Höegh Esperanza, delivered 5 April 2018

slide-20
SLIDE 20

Höegh LNG – Investment summary

20

Order backlog of USD 3.2 bn with credible counterparts producing stable cash flows Consistently solid operational performance across the global fleet Strong financial platform with diversified financing sources Rapid growth in the supply of LNG driving FSRU adaption FSRUs under construction marketed in a busy tendering market

slide-21
SLIDE 21

21