Company Presentation June 2018 | 1 1 | 2017 1 | 2017 2018 - - PowerPoint PPT Presentation

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Company Presentation

June 2018

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• THIS PRESENTATION (THE “PRESENTATION”) HAS BEEN PRODUCED BY FLEX LNG LTD. ("FLEX LNG" OR "THE COMPANY”), SOLELY FOR PRESENTATION PURPOSES

AND DOES NOT PURPORTE TO GIVE A COMPLETE DESCRIPTION OF THE COMPANY, ITS BUSINESS OR ANY OTHER MATTER DESCRIBED HEREIN.

• THE PRESENTATION DOES NOT CONSTITUTE AN OFFER, INVITATION OR SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE OR SELL ANY SECURTIEIS. THIS

PRESENTATION IS STRICTLY CONFIDENTIAL AND MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON.

• NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION INCLUDED HEREIN IS GIVEN BY

THE COMPANY, AND THAT NOTHING CONTAINED IN THIS PRESENTATION IS OR CAN BE RELIED UPON AS A PROMISE OR REPRESENTATION BY THE COMPANY, WHO DISCLAIM ALL AND ANY LIABILITY, WHETHER ARISING IN TORT OR CONTRACT OR OTHERWISE.

• THE PRESENTATION SPEAKS AS OF THE DATE SET OUT ON ITS FRONT PAGE. THE COMPANY DOES NOT INTEND TO, OR WILL ASSUME ANY OBLIGATION TO,

UPDATE THE PRESENTATION OR ANY OF THE INFORMATION INCLUDED HEREIN.

• THE CONTENTS OF THE PRESENTATION ARE NOT TO BE CONSTRUED AS FINANCIAL, LEGAL, BUSINESS, INVESTMENT, TAX OR OTHER PROFESSIONAL ADVICE.

EACH RECIPIENT SHOULD CONSULT WITH ITS OWN PROFESSIONAL ADVISORS FOR ANY SUCH MATTER AND ADVICE.

• AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE

COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION.

• THE PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS RELATING TO THE BUSINESS, FINANCIAL PERFORMANCE AND RESULTS OF THE

COMPANY AND/OR THE INDUSTRY IN WHICH IT OPERATES, SOMETIMES IDENTIFIED BY THE WORDS "BELIEVES”, "EXPECTS”, “INTENDS”, “PLANS”, “ESTIMATES” AND SIMILAR EXPRESSIONS. THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESENTATION, INCLUDING ASSUMPTIONS, OPINIONS AND VIEWS OF THE COMPANY OR CITED FROM THIRD PARTY SOURCES, ARE SOLELY OPINIONS AND FORECASTS WHICH ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL EVENTS TO DIFFER MATERIALLY FROM ANY ANTICIPATED DEVELOPMENT. THE COMPANY DOES NOT PROVIDE ANY ASSURANCE THAT THE ASSUMPTIONS UNDERLYING SUCH FORWARD-LOOKING STATEMENTS ARE FREE FROM ERRORS NOR DOES THE COMPANY ACCEPT ANY RESPONSIBILITY FOR THE FUTURE ACCURACY OF THE OPINIONS EXPRESSED IN THE PRESENTATION OR THE ACTUAL OCCURRENCE OF THE FORECASTED

• DEVELOPMENTS. NO OBLIGATION IS ASSUMED TO UPDATE ANY FORWARD-LOOKING STATEMENTS OR TO CONFORM THESE FORWARD-LOOKING STATEMENTS

TO ACTUAL RESULTS.

• THIS PRESENTATION IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS PRESENTATION IS SUBJECT TO THE EXCLUSIVE

JURISDICTION OF THE NORWEGIAN COURTS.

Disclaimer

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02 03 01 04

About FLEX LNG LNG Shipping Review MEGI Propulsion Summary Table of contents

Summary

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2018 | 4

About FLEX LNG

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FLEX LNG at a Glance

Focus: LNG Shipping and Regasification

FLEX LNG aims to become a leading operator in LNG shipping markets

• FLEX LNG is focused on offering safe, reliable, and

cost effective solutions for the LNG shipping industry

• The Company is listed on Oslo Stock Exchange and

successfully raised over US$ 200m in 2017

FLEX’s fleet of eight LNG carriers will provide Charterers with highly efficient tonnage to lower fuel consumption and reduce boil off rate

• FLEX took delivery of their first two LNG carriers in

Jan-18

• The Company has six vessels under construction at

SHI (2), DSME (2), and HHI (2). These will be delivered throughout 2018-2020

• All FLEX vessels have two-stroke propulsion (MEGI
• r XDF) – the most fuel-efficient and technically

advanced LNG carriers in the world with ~30% lower fuel consumption than TFDE vessels

FLEX ENTERPISE

FLEX RANGER

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2 8 1 1 1 1 1

1 2 3 4 5 6 7 8 Q1 2018 Q2 2018 Q3 2018 Q2 2019 Q2 2020 Q3 2020 Q3 2019 # Vessels

6

173,400 173,400 174,000 174,000

• In 2017, FLEX chartered in four TFDE vessels and traded these

in the spot and short-term markets

• The purpose was to establish a market presence, operational

experience, and foster relationships with key LNG charterers in anticipation of FLEX own fleet delivering

• The last of the TC-in vessels were redelivered in Q1-18 as

FLEX’ focus shift to owned tonnage

• 8 LNG carriers (MEGI and X-DF)
• 2 vessels delivered in January 2018
• 6 vessels under construction del. 2018-2020

173,400 173,400

Fleet Deliveries FLEX LNG Fleet Chartered-in Vessels

FLEX LNGC Fleet Development

174,000 174,000

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FLEX LNG Fleet Breakdown – Owned and Chartered-In

Status Vessel Name Builder Prop. Built Capacity Head Owner Employment

• 1. Existing

FLEX ENDEAVOUR DSME MEGI 2018 173,400 m3 FLEX LNG Employed until Q2-19

• 2. Existing

FLEX ENTERPRISE DSME MEGI 2018 173,400 m3 FLEX LNG Spot Market

• 3. Newbuilding

TBN FLEX RANGER

SHI MEGI 2018 174,000 m3 FLEX LNG Available Jul 2018

• 4. Newbuilding

TBN FLEX RAINBOW

SHI MEGI 2018 174,000 m3 FLEX LNG Available Jul 2018

• 5. Newbuilding

TBN FLEX CONSTELLATION

DSME MEGI 2019 173,400 m3 FLEX LNG Available Jun 2019

• 6. Newbuilding

TBN FLEX COURAGEOUS

DSME MEGI 2019 173,400 m3 FLEX LNG Available Aug 2019

• 7. Newbuilding

HULL NO. 8010 HHI X-DF 2020 174,000 m3 FLEX LNG Available Q2 2020

• 8. Newbuilding

HULL NO. 8011 HHI X-DF 2020 174,000 m3 FLEX LNG Available Q3 2020

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Functional Organizational Chart of FLEX LNG

A highly experienced team is in charge of LNG shipping

LNGC

Owned Fleet (FLEX LNG) Technical Mgt (Frontline Mgt) Newbuild Supervision (Seatankers) Ship Mgt, Crewing (Bernhard Schulte) Newbuild Design (Ship Construction Strategies) Chartering (FLEX LNG) Commercial Operations (FLEX LNG) Chartered Fleet (FLEX LNG) Chartering (FLEX LNG) Commercial Operations (FLEX LNG) Finance & Admin (FLEX LNG) Finance (FLEX LNG) Accounting (Frontline Mgt) Insurance (Frontline Mgt) FLEX LNG Shared Services Third Party

Providing technical management and support services

• 160 vessels including LNG, tankers, dry

bulk, container, offshore supply

• Vessel construction, project management,

technical management, insurance, etc.

• HSE and Incident Response

Providing newbuild construction supervision services

• 47 vessels under construction including

LNG, tankers, dry bulk, containers, offshore

Providing ship management and crewing services

• 600 ships under crewing and/or technical

management

• Dedicated LNG crew for FLEX LNG vessels

Frontline Management Ltd Seatankers Management Ltd Bernhard Schulte Shipmanagement

Comparison of LNG Ship Types on UTC Basis*

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Marius Hermansen – Interim Chief Executive Officer

• Mr. Hermansen joined FLEX LNG Board in December 2015. Marius works for Frontline Management and manags S&P

activities for Frontline and all related companies

• Prior to FLEX and Frontline, Mr. Hermansen worked over 10 years at Fearnleys
• Mr. Hermansen was educated at the Norwegian School of Economics (NHH) in Bergen

Øystein Kalleklev - Chief Financial Officer

• Mr. Kalleklev joined FLEX LNG in October 2017, after serving as CFO of Knutsen NYK Offshore Tankers since 2013

and Chairman of the General Partner of the MLP KNOT Offshore Partners from 2015-2017

• Previous roles include CFO of industrial investment company Umoe Group, Managing Director of Umoe Invest,

Partner of investment bank Clarksons Platou and Business Consultant at Accenture

• Mr. Kalleklev holds a MSc in Business and Administration from Norwegian School of Economics and a Bachelor

in Business and Finance from Heriot-Watt University

Executive Management Team

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Board of Directors

David McManus (64) – Chairman

• Mr. McManus has served on the Board since August 2011, and was elected as chairperson in September 2011
• David’s background as an international business leader in the energy industry brings exceptional experience and strong technical

and commercial skills with 39 years of at BG Group, ARCO, Ultramar, Shell and Fluor Corporation

• Mr. McManus is currently a non-executive director for a number of listed companies including Hess Corporation, Rockhopper

Exploration plc, Costain plc, and Caza Oil & Gas Marius Hermansen (38) – Director

• Mr. Hermansen joined the Board in December 2015. Marius works for Frontline Management and is involved in S&P activities for

Frontline and all related companies

• Previously Mr. Hermansen worked for over 10 years at Fearnleys
• Mr. Hermansen was educated at the Norwegian School of Economics (NHH) in Bergen

Ola Lorentzon (68) – Director

• Mr. Lorentzon has been a Director on the Board since June 2017
• Ola served as Principal Executive Officer of Golden Ocean Group from 2010 to 2015 and held the role as Chief Executive Officer
• f Frontline Management from April 2000 to 2003. He is currently a Director of Frontline Ltd.
• Mr. Lorentzon is also a Director and Chairman of Golden Ocean Group, Director of Erik Thun AB and Dir. of Laurin Shipping AB

Georgina Souza (67) – Director

• Mrs. Sousa has been a Director of the Company since June 2017
• Mrs. Sousa has served as Secretary of Golden Ocean Group Limited since March 2007.
• Prior to joining Golden Ocean, Mrs. Sousa held the role as Vice President Corporate Services of Consolidated Services, a

Bermuda management company having joined that firm in 1993. From 1982 to 1993 she served as Senior Company Secretary at the law firm Cox & Wilkinson Nikolai Grigoriev (43) – Director

• Mr. Grigoriev joined the Board in September 2017
• From 2008 to 2016 Nikolai served as Managing Director of Shipping and Logistics at Gazprom Marketing & Trading. Prior to

Gazprom, Mr. Grigoriev worked for BG Group in senior LNG shipping, commercial and corporate finance roles. Nikolai holds a B.Sc. in Navigation from Admiral Makarov State Maritime Academy in St. Petersburg, Russia and an MBA from INSEAD

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LNG Shipping Review

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Key Trends in the LNG Shipping Market

Natural Gas becoming fuel of choice Strong growth expected in the LNG market

• Over the next three years, LNG annual supply is projected to rise by at least 130 million

tonnes (mt) to ~420 mt in 2021, coming from both new liquefaction plants and existing projects ramping up

• IEA predicts global energy demand will increase by 30% by 2040. Natural gas represents

25%

• f the world’s energy mix
• LNG is currently growing seven times faster than pipeline gas trade and is expected to

account for 50% of globally traded gas in 2035 (up from 32% today)

• Both total consumption and the number of countries importing LNG are expected to increase

significantly over the next 10-15 years from 39 to 80+ countries Transformation of LNGC fleet development

• The LNG shipping market is expected to tighten significantly as new LNG export projects

from primarily US, Australia and Russia becomes operational and soak up tonnage

• ~90% of the LNGC newbuildings on the orderbook are committed on long-term charters
• Modern two-stroke tonnage (MEGI and X-DF vessels) brings significant advantages to

Charterers in form of fuel savings and reduced boil off rates Activity in the LNG spot shipping market continues to grow

• The LNG shipping market has transitioned from traditional long-term chartering contracts

to an increasingly liquid spot market led by portfolio trading and more destination flexibility in supply contracts

• The level of spot chartering in LNG topped 300 fixtures in 2017 (up from 230 in 2016),

which corresponded to ~25% of all LNG produced globally

1 2 3

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LNG Shipping Market Balance

COMPANY SNAPSHOT

Source: Affinity

(150) (100) (50)

• 50

100 150 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2019 2020 # Vessels Vessel Demand Vessel Supply Shipping Balance Note: All vessel figures normalized to 165K m3, 35 years useful life, excludes vessels in layup and FSRU/FLNG/FSU

Underfunded LNG NB Orderbook Shipping market begins to tighten

The LNG shipping market is expected to gradually tighten from the end of 2018, with Australia, the U.S. and Russia being the driving forces for soaking up tonnage

• Q3 2018 shipping balance is forecasted to increase due to delivery of newbuildings ahead of project start-up. On the other hand,

new volumes from e.g. Cove Point and Yamal LNG may counter this effect

• Q4 2018 / Q1 2019 the shipping balance starts to tighten as new export capacity comes to the market and outdated tonnage

comes off charter and will result in vessel replacement

• By 2020, additional export projects starts producing, triggering vessel demand against a thin orderbook

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Right Ships at the Right Time

Majority of uncommitted tonnage delivers in 2020 – but market expected to tighten 2H 2018

Source: FLEX LNG

# Vessels

Majority of LNGC orderbook remains committed to long term charters

• Currently, there are 92 LNGC under construction
• Traditionally majority of orders are basis long-term

employment to dedicated projects or portfolios

FLEX LNG is one of the few Owners with uncommitted tonnage delivering in 2018-2019

• Shipping market is expected to tighten as projects from

US, Australia and Russia continues to ramp up

• Incremental LNGC demand 30-50 vessels by 2020
• Fleet renewals likely to add to demand for modern

efficient LNGCs

• Earliest shipyard delivery for LNGC is Q1 2021

Most Charterers prefer larger & more efficient LNGCs

• Most of the recent long-term charters have been MEGI or

X-DF vessels

39 20 10 2 7 14

5 10 15 20 25 30 35 40 45

2018 2019 2020

Long Term Employment Uncommitted

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03 03 03 03

2018 | 15

MEGI Propulsion

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A Three Tier Market is Emerging that Favors Modern LNGCs

MEGI and X-DF vessels are the most fuel-efficient and technically advanced LNG ships

USD/day

COMPANY SNAPSHOT

Three Tier Broker Assessments

• 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000

ST TFDE MEGI/X-DF Assessment

Introducing Two Stroke Propulsion for LNG Carriers

• For many years steam turbines was the only propulsion

system available for LNG ships, even though its efficiency was considerably lower than diesel engines

• However, with the introduction of the reliquefaction plant

and gas-driven diesel engines, it is today possible to install high-efficiency diesel engines as prime movers, and thereby significantly cut fuel costs

• Owners and Charterers are provided with maximum fuel

flexibility and, depending on the relative price and availability of gas and fuel oil, are free to choose the most competitive fuel as the engine operates with the same efficiency on both gas and fuel.

• The Diesel-cycle ensures stable gas combustion under all

weather conditions, such as heavy weather and high ambient temperatures, without any risk of misfiring or knocking.

• For a typical long-haul trade the new and more efficient

twin screw LNGC design with MEGI engines will have an average daily fuel consumption [gas and fuel oil] of ~30% less than the TFDE LNG carriers. This corresponds to a saving of more than 35 tonnes of fuel per day in HFO equivalents at 16 knots.

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• 10

20 30 40 50 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

ST DFDE/TFDE Other XD-F MEGI

0.2 0.4 0.6 0.8 1 ST 138k TFDE 160k X-DF 174k MEGI 174k $ / mmbtu

Ship Fuel Consumption Comparison

Transition Towards Modern Vessels is Visible in the Orderbook

LNGC Existing Fleet and Orderbook by Propulsion

Comparison of LNG Ship Types on UTC Basis*

Tons of FOE / Day (Laden) Speed (knots) MEGI 174k X-DF 174k TFDE 160k ST 145k 19.5 91.2 106.0 136 190 16.0 52.4 71.1 88 145 13.5 33.6 45.2 68 112

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MEGI / X-DF Leads LNG Fleet Evolution on Size and Efficiency

COMPANY SNAPSHOT

Source: Affinity LNG

120 160 200 240 280

• 5

10 15 20 25 30 35 40 45 Size (‘000 cbm) Age (years) ST TFDE & Other MEGI & X-DF

324 vessels 71 vessels Existing LNGC Fleet: 450 vessels

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U.S. Gulf - Far East via Panama 9,279 nm U.S. Gulf - Northwest Europe 4,961 nm Arabian Gulf – East Asia 5,760 nm Arabian Gulf - Northwest Europe via Suez 6,377 nm

US$ / mmbtu

N.B. US$70,000 per day applied as charter hire across vessel classes, LNG boil-off priced at US$5.50 / mmbtu

UTC Breakdown by Trade Route

Source: Poten & Partners

Unit Transportation Cost (UTC) Analysis - Critical Trade Route Summary

Critical Trade Routes Summary

0.50 0.30 0.18 0.26 0.16 0.10 0.34 0.20 0.13 0.30 0.18 0.11 0.19 0.17 0.15 0.18 0.16 0.14 0.19 0.16 0.14 0.19 0.16 0.14 1.09 0.95 0.83 0.58 0.52 0.45 0.74 0.66 0.58 0.67 0.59 0.52 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.21 0.20 0.20 0.21 0.20 0.19

0.0 0.5 1.0 1.5 2.0 2.5

145k ST 160k TFDE 180k MEGI / X-DF 145k ST 160k TFDE 180k MEGI / X-DF 145k ST 160k TFDE 180k MEGI / X-DF 145k ST 160k TFDE 180k MEGI / X-DF U.S. Gulf - Far East via Panama U.S. Gulf - NW Europe Arabian Gulf - Northwest Europe via Suez Arabian Gulf - East Asia

Boil Off Port Charges Charter Hire Fuel Canal Fees

2.01 1.63 1.37 1.23 0.85 0.70 1.49 1.17 1.05 1.04 0.79 0.95

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04

2018 | 20

Summary

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FLEX LNG has a modern fleet of LNG carriers offering Charterers significant fuel savings and reduced boil-off rate

• Fleet of 8 MEGI and X-DF vessels - the most advanced LNG ships on the water – delivering

during an attractive time when demand for tonnage is predicted to be high

• LNG shipping market is expected to gradually tighten on the back of new supply from export

projects coming onstream over the next three years

Majority shareholder Geveran Trading has a long history in the LNG industry and is committed to building FLEX LNG into a major provider of LNGCs and FSRUs

• As part of the John Fredriksen Group, FLEX LNG benefits from a wide range of commercial

and technical expertise, strong financial backing and access to competitive financing

FSRUs

Summary

LNG shipping market could experience significant shortage of tonnage from the end of 2018

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Thank You

June 2018