Epic Gas Q1 2019 Earnings Presentation 15 May 2019
Disclaimer This Presentation (hereinafter collectively referred to as the “Presentation”) has been produced by Epic Gas Ltd . (the “Company”, or “Epic”) for information purposes only. This Presentation contains information obtained from third parties. As far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading. To the best of the knowledge of the Company, the information contained in this Presentation is in all material respects in accordance with the facts as of the date hereof. However, no independent verifications have been made and no representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Company or any of its parent or subsidiary undertakings or any such person’s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. This 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. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, “expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, 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. None of the Company or any of its parent or subsidiary undertakings or any such person’s officers or employees provides any assurance that the assumptions underlying such forward -looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual results. 2
Q1 2019 Highlights – Improvement in business performance and EBITDA Revenue of $39.6 million, up 3.1% Time Charter Equivalent revenues of $9,718 per vessel calendar day, up 9.4% Operational Utilisation up 230 basis points to 94.2% Operating Expenses of $4,400 per vessel calendar day, up 2.9% Adjusted EBITDA of $11.0 million, up 29.4% Net Loss of $0.3 million, an improvement of 89% Fleet: as of 31 March 2019, 39 vessels on the water, with projects ongoing to add incremental profitable vessels. All figures are year on year and in US dollars unless stated 3
Constrained vessel supply Smaller LPG Vessels have Smallest Order Book Pressure Vessel Global Fleet Development (Chinese Fleet Excluded) Source: Clarksons Register x Source: Clarksons Register 80% 600 140,000 115,000 60% 500 90,000 47 Number of Vessels 400 40% 65,000 10 300 40,000 20% 5 200 394 331 15,000 7 0% 100 202 -10,000 116 0 -35,000 -20% 3k - 13k 3k - 13k >13k - 25k >25k 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 PR SR (incl Eth) FR & SR (incl Eth) FR & SR (incl Eth) 3,000 - 4,999cbm 5,000 - 6,999cbm 7,000 - 8,999cbm 9,000 - 13,000cbm Scrapping Expected Scrapping On Water On Order YoY growth (right axis) • 4/5/1 newbuild pressure vessels to be delivered in 2019/2020/2021 representing a 1.2%/1.3%/0.2% increase in existing fleet capacity. • 1/2 newbuild small-sized semi-ref (non-Ethylene) vessels to be delivered in 2019/2020 representing a 1.6%/3.3% increase in existing fleet capacity, considering the 4,200cbm scrapped in Q1 2019. • A 28-year-old 4,200cbm semi-ref vessel and a 35-year-old 12,000cbm ethylene capable vessel were scrapped in the quarter. • A scrapping pool of 21 pressure and 12 semi-ref (non-Ethylene) vessels aged 28 years and over. 4
Growing demand for LPG Global LPG Seaborne Trade Q1’19 US Total LPG Exports -2% qoq, +12% yoy. Strong Demand Growth 9% 2020 Source: Drewry Butane +6% qoq, +62% yoy Source: IHS Markit (MT) 12,000,000 150.0 16.0% 12.4% 119.1 10,000,000 125.0 114.3 11.4% 12.0% 109.8 108.7 99.8 97.7 95.6 92.9 8,000,000 100.0 8.0% Million Tonnes 8.0% 9.0% 5.7% 4.8% 4.9% 6,000,000 75.0 4.3% 4.0% 2.2% 3.9% 4.1% 4,000,000 50.0 2.1% 1.9% 2.9% 0.0% 2,000,000 -0.5% 25.0 1.0% 0 0.0 -4.0% 2016 2017 2018 2019 2020E 2021E 2022E 2023E Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 14 14 14 14 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 Global Seaborne Trade % growth (Seaborne Trade) % growth (tonne-mile demand) Ethane Propane Butane IsoButane Big Volumes Regional Demand Growing China & India Remain Key Demand Drivers Source: FGE x Source: Drewry LPG Imports (million tonnes) LPG Imports (million tonnes) 2017 2018 2019 2020 2025 ∆ 2017 2018 2019 2020 2025 ∆ China 18.3 18.9 19.9 20.8 23.6 29% Indonesia 5.5 5.3 5.6 6.0 7.2 31% India 11.9 12.4 14.8 16.8 19.9 67% Philippines 1.2 1.2 1.3 1.5 2.1 75% Japan 10.6 10.9 11.1 11.4 11.6 9% Thailand 0.6 0.7 0.9 1.3 1.7 183% S Korea 6.1 6.2 7.2 7.4 8.4 38% Vietnam 1.3 1.2 1.3 1.4 3.1 138% 5
Strong US LPG exports, stable Chinese Propylene imports USA pressurised and small sized semi-ref (SR) vessels Growing demand drives import Growth LPG exports almost double year on year Source: IHS Markit Source: FGE Million Tonnes 2017 2018 2025 2030 120,000 Pressure Vessels 100,000 Indonesia 5.5 5.3 7.2 8.4 SR Vessels 80,000 Philippines 1.2 1.2 2.1 2.7 60,000 Vietnam 1.3 1.2 3.1 3.5 40,000 20,000 West Africa 0.7 0.7 1.3 1.5 0 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 South Africa 0.3 0.2 0.7 1.0 Morocco 2.8 3.0 3.0 3.0 Carib Cargo Qty Cen/S. Amer Cargo Qty Med Cargo Qty WAF Cargo Qty SR (<12k cbm) Total Cargo Qty China Propylene Imports hold up as Polypropylene production drives Propylene demand and balances increased PDH capacity, with developing Imports from other Asian countries Source: Argus China Derivative Demand Creates Propylene Defecit 10,000 3,000,000 16% 28,000 (Million Tonnes) 8,000 12% 24,000 2,000,000 6,000 20,000 8% 4,000 3,099 16,000 2,903 1,000,000 3,048 2,844 2,771 2,641 4% 2,000 12,000 0 8,000 - 0% 2013 2014 2015 2016 2017 2018 2019E 2020E 2013 2014 2015 2016 2017 2018 2019E 2020E Year End PDH Capacity ('000 tonnes) Chinese Propylene Imports ('000 tonnes) Production Defecit Derivative Demand % Growth Chinese Polypropylene Prod ('000 tonnes) (right-axis) 6
Rebalancing between supply and demand – distinct sector rate recovery 12 Month Time Charter Market (USD/day) $17,000 $15,000 $13,000 $11,000 $9,000 $7,000 $5,000 Jan-12… Jan-13… Jan-14… Jul-12 Jul-13 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 3,500cbm-Steem1960 5,000cbm-Steem1960 7,500cbm-Grieg, Gibson, Braemar, BRS 11,000cbm-Epic Q1 2019 – freight levels remain level • 3,500cbm, 5,000cbm, 7,500cbm & 11,000cbm market daily rates averaged $8,610, $9,596, $10,699 and $12,963 respectively. • Average rates up by 3-4% for 3,500cbm and 7.500cbm, and down by 1-2% for 5,000cbm and 11,000cbm compared to Q1 2018. 7
Geographic and commodity diversity provides options and relative earnings stability Diversified Geographical Location of Fleet Cargo Operations Summary, Q1 2019 ✓ Vessels by Segment Americas EMEA Asia Total Fleet Loaded approximately 760,115 tonnes 3,300 – 4,100cbm 2 0 4 6 ✓ 640 cargo operations 5,000 – 6,300cbm 1 3 6 10 7,000 – 7,500cbm 2 11 2 15 ✓ 103 different ports 9,500cbm - 2 - 2 ✓ 11,000cbm - 4 2 6 LPG (77%) Total 5 20 14 39 ✓ Petchems (23%) Fleet Capacity (cbm) 267,400 ✓ 5 vessels in the Americas, 20 in Europe/Middle East/Africa, 14 in Asia. Avg. Vessel Size (cbm) 6,856 Diversified Geographical Trade Route Options Cargoes (Tonnes) Transported in Q1 2019, +5.3% YoY Higher in the Middle East 350 4 Total No. of Load Operations 174,317 250 3 150 2 50 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -50 0 585,798 2014 2015 2016 2017 2018 2019 AFRICA ASIA EUROPE MIDDLE EAST LPG Petchems OCEANIA THE AMERICAS 8 Loads per Day (right-axis)
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