PRESENTATION AT PARETO ENERGY CONFERENCE 17 September 2020 1 - - PowerPoint PPT Presentation

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PRESENTATION AT PARETO ENERGY CONFERENCE 17 September 2020 1 - - PowerPoint PPT Presentation

HEGH LNG A FULLY INTEGRATED LNG INFRASTRUCTURE COMPANY Sveinung J.S. Sthle President & CEO PRESENTATION AT PARETO ENERGY CONFERENCE 17 September 2020 1 Forward looking statements This presentation contains forward-looking


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SLIDE 1

HÖEGH LNG – A FULLY INTEGRATED LNG INFRASTRUCTURE COMPANY

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PRESENTATION AT PARETO ENERGY CONFERENCE

17 September 2020

Sveinung J.S. Støhle President & CEO

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SLIDE 2

Forward looking statements

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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.

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SLIDE 3

3 Summary 2 Market update

Agenda

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1 Company update

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SLIDE 4

Höegh LNG at a glance

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HMLP: Mcap USD ~350m HMLP-A preferred HLNG NO: Mcap USD ~100m HLNG03 / HLNG04 bond loans

USD 2.5 bn / 30%

Assets / Equity ratio¹

USD ~340m / ~230m

Revenues / EBITDA²

175 onshore / 600 offshore

Employees

1: 30 June 2020, adjusted for mark-to-market of interest rate swaps 2: LTM Revenues and EBITDA

Long-term contracts – stable cash flows – strong distribution coverage

Future business

Business development Drop-down candidates Fleet ownership and operation

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SLIDE 5

99,9 % 99,8 % 99,8 % 99,5 % 99,8 %

2016 2017 2018 2019 2020 YTD

Technical availability

Sustainable, safe and reliable operations

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  • Health and safety of our personnel has the highest priority
  • Limited operational and no contractual impacts from Covid-

19

− All charter parties in force and unchanged − All units fully operational and crewed according to relevant safety requirements

0,00 0,38 0,00 0,31 0,00

2016 2017 2018 2019 2020 YTD

500 days passed without any LTIs1

1: Calculated per million exposure hours for sea going personnel only

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SLIDE 6

Financial performance

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10 20 30 40 50 60 70 80 90

2q17 3q17 4q17 1q18 2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20

USD million

EBITDA

EBITDA Recognition of future revenue

20 40 60 80 100 120 140

2q17 3q17 4q17 1q18 2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20

USD million

Total income

Total income Recognition of future revenue

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SLIDE 7

Cost-saving plan implemented and on schedule

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  • Target to save/postpone:

− USD 6-8 million in reduced Opex and SG&A − USD 3 million in dry docking off-hire to be postponed to 2021 − All savings are estimated compared with original plans and budget for 2020

  • SG&A expenses declined 38% q-o-q

− USD 3.5 million decline in SG&A q-o-q − Two thirds a result of implemented cost-saving plan, with some aid from Covid-19 related savings with virtually no travel expenses incurred in Q2 − About one third is explained by seasonality due to holiday pay − Favourable FX development for non-USD SG&A

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SLIDE 8

FSRUs 2 247 Other 146 Cash & eq. 152 Asset-backed debt 1 358 Bonds; 221 Other 186 Equity 780 500 1 000 1 500 2 000 2 500 3 000 Assets Liabilities

USD million

Balance sheet1 at 30 June 2020

Solid financial position – no additional capex commitments

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1: HMLP consolidated, adjusted for mark-to-market of hedging reserves

USD 152 million in unrestricted cash end Q2 Cash and capital commitments No material capital commitments 6.7x net debt to trailing 12-month EBITDA 30% adjusted book equity ratio Balance sheet metrics

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SLIDE 9

Built EBITDA Charterer USDm/yr Höegh LNG Holdings

Arctic Princess* 2006 19** Equinor Arctic Lady* 2006 19** Total Independence 2014 47 KN Höegh Giant 2017 Naturgy Höegh Esperanza 2018 CNOOC / AGL Höegh Gannet 2018 Trafigura Höegh Galleon 2019 Cheniere / AIE Höegh Gallant (TC in) 2014 Mitsui Höegh LNG Partners Neptune 2009 33** Total Cape Ann 2010 33** Total PGN FSRU Lampung 2014 40 PGN Höegh Gallant 2014 HLNG Höegh Grace*** 2016 42 SPEC

Long-term contract Extension option Under construction

2020 2022 2021 2023

FSRU and/or LNGC intermediate charter

2036 2038 2024 2026 2028 2030 2032 2033 2035 2037 2034 2027 2029 2031 2025

Fleet and contract overview

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  • LNG carriers

** 100% basis, units are jointly owned

AGL - Conditional on FID AIE - Conditional on FID

*** The initial term of the charter is 20 years. However, each party has an unconditional option to cancel the charter after 10 and 15 years without penalty. However, if SPEC waives its right to terminate in year 10 within a certain deadline, Höegh LNG Partners LP will not be able to exercise its right to terminate in year 10.

Lease back period from HMLP expires mid-2025

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SLIDE 10

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2020 2021 2022

Charter coverage1

Charter coverage Charter coverage incl. Options

Charter coverage 2020-2022

  • 98% charter coverage in 2020
  • 85% charter coverage in 2021 if options are

executed by charterers (66%)

  • Near-term charter coverage will be covered by

short-term FSRU contracts and/or interim LNGC contracts before long-term FSRU contracts kick-in

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1: On 100% basis for 12 vessels, four units are jointly owned

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SLIDE 11

Project pipeline

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Selected as FSRU provider

FSRU project #3

Bilateral projects

  • Atlantic basin

− Ongoing negotiations − Potential FID 2020 − Potential start-up 2021

  • Cyprus

− Proposal receives interest − Constructive dialogue with authorities

Ongoing tenders

  • Secured pipeline access
  • HLNG exclusivity
  • EES approval expected H1

2021

  • TCP signed

FSRU project #4 FSRU project #5 FSRU project #6

  • Indian subcontinent
  • FID targeted in 2020
  • Latin America
  • HLNG shortlisted
  • FID targeted in 2020
  • Latin America
  • HLNG preferred bidder
  • Start-up 2023
  • Possible competition from
  • ther solutions
  • Indian subcontinent
  • HLNG exclusivity
  • Batangas City, Philippines
  • HLNG one of three tenderers
  • Start-up Q1 2022
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SLIDE 12

2 4 6 8 10 12 Höegh LNG Excelerate Golar LNG BW LNG Other Captive

Units

FSRU fleet1 and orderbook2 - by owner

Conv FSRU NB FSRU NB order Conv order

37 FSRUs on the water – 8 units in orderbook

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1: Including purpose built FSRUs and conversions, barges excluded

  • 2. Orderbook defined as confirmed orders, excluding LOIs, options and conversions not firmed up

Source: publicly available company information, Höegh LNG

Botas MOL Gazprom Kol / Kal SWAN Java-1 Maran Dynagas Botas Dynagas

4 purpose built FSRUs on order 37 FSRUs on water

KARMOL

4 conversions on order

El Salvador

OLT VPower

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SLIDE 13

Natural gas – soon the world’s largest energy source

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  • Natural gas projected to be the world’s largest

energy source by the mid-2020s

  • Lower carbon intensity combined with policies to

maintain energy security underpins demand for natural gas

  • Greater China and the Indian subcontinent will

account for more than 75% of natural gas imports from 2035

  • 25% of world gas demand will be traded between

regions by 2035

− A large share will be in the form of LNG − LNG exports projected to more than double by 2050 − This will require new import facilities

Source: DNVGL Energy Transition 2020

Natural Gas/LNG

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SLIDE 14

6.5% growth in global LNG trade in H1 2020

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Europe continues to be the main growth market Global LNG trade up 6.5% y-o-y in H1 2020 Chinese LNG import growth bounced back in Q2 2020 with 20% y-o-y

15 20 25 30 35 40 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Million tonnes

Global monthly LNG trade

2015 2016 2017 2018 2019 2020

Source: IHS Markit. The use of this content was authorized in advance. Any further use or redistribution of this content is strictly prohibited without written permission by IHS Markit

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SLIDE 15

LNG continues to be a growth market

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LNG demand growth expected to return from 2021 2020 expected demand growth revised due to Covid-19 Growth led by China and emerging markets in South/Southeast Asia

Source: IHS Markit. The use of this content was authorized in advance. Any further use or redistribution of this content is strictly prohibited without written permission by IHS Markit

11,9 4,0 4,6 4,2 10,9

300 320 340 360 380 400 420 440 2019 2020 2021 2022 2023 2024

Million tonnes

Impact of H1 2020 market shock on near-term LNG demand

Reduction Pre-COVID LNG outlook COVID outlook: July 2020

Note: Outlook from July 2020, Pre-Covid outlook from February 2020

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SLIDE 16

Spot LNG is now cheaper than coal

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2 4 6 8 10 12 14 16 18

Fuel price comparison, LNG vs liquids and coal (USD / MMBtu)

MGO, Global 20 ports average (USD/MMBtu) HFO / IFO380, Global 20 ports average (USD/MMBtu) LNG Platts Japan Korea Marker (USD/MMBtu) LNG Platts Mediterranean (USD/MMBtu) LNG Platts North West Europe (USD/MMBtu) HH Spot Price (USD/MMBtu) Coal delivered North West Europe, USD/MMBtu

Sources: S&P Global Platts, US Energy Information Administration, Ship&Bunker

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SLIDE 17

Summary

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Stable EBITDA and world class operations despite Covid-19 Spot LNG now cheaper than coal 9 FSRU projects in the development pipeline