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Höegh LNG – The floating LNG services provider Third Quarter 2013 Presentation of financial results 19 November 2013
Höegh LNG – The floating LNG services provider
Third Quarter 2013
Presentation of financial results 19 November 2013
Forward looking statements
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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
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Highlights
Financials
Operational review
Market outlook
Summary
Highlights
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Total income USD 45.7 million
EBITDA USD 10.9 million
Loss before tax of USD 2.6 million
Signed USD 310 million limited recourse
facility
Awarded pre-FEED study for jetty-moored
barge FLNG solution for North American
LNG export project
Awarded pre-FEED study for offshore
moored FLNG project in Australia
13 month time-charter extension for LNG
Libra
Norman Lady sold in line with strategy to
focus on FSRU segment
Agenda
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Highlights
Financials
Operational review
Market outlook
Summary
Income statement
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USD million 3Q2013 2Q2013 1Q2013 4Q2012 3Q2012 YTD2013 YTD2012
TOTAL INCOME 45,7 51,3 29,5 37,6 38,0 126,5 98,0
Charterhire expenses (5,2) (5,1) (5,1) (5,2) (5,2) (15,4) (15,5)
Operating expenses (8,7) (8,5) (8,4) (10,1) (7,8) (25,6) (23,0)
Construction contract expenses (10,4) (22,5) - - - (32,9) -
Administrative expenses (4,6) (3,8) (3,9) 4,1 (3,5) (12,3) (10,1)
Business development expenses (5,9) (4,1) (4,6) (5,8) (8,2) (14,6) (20,7)
EBITDA 10,9 7,3 7,5 20,5 13,2 25,7 28,8
Gain /(loss) on sale of assets - - - 10,4 0,0 - -
Depreciation and impairment (7,8) (7,6) (7,3) (8,4) (6,2) (22,7) (14,3)
EBIT 3,2 (0,3) 0,1 22,5 7,0 3,0 14,5
Interest expenses (5,9) (5,9) (8,3) (8,5) (6,1) (20,1) (18,3)
Interest income 0,0 0,0 0,1 0,0 0,0 0,1 0,1
Other financial items 0,1 0,2 0,5 (0,4) 0,1 0,8 1,5
PROFIT OR (LOSS) BEFORE TAX (2,6) (6,0) (7,6) 13,6 1,1 (16,2) (2,2)
Taxes (0,2) (0,1) (0,4) 0,0 (0,2) (0,7) (0,2)
NET PROFIT OR (LOSS) (2,8) (6,1) (7,9) 13,6 0,9 (16,9) (2,4)
Financial position
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USD million 30.09.2013 30.06.2013 31.03.2013 31.12.2012 30.09.2012
Licences, design and other intangibles 74 74 74 74 74
Investments in newbuildings and vessels 813 814 797 713 685
Other assets 64 45 7 13 13
Hedging reserves 12 13 3 - -
Restricted cash 26 26 25 25 28
Current cash and marketable securities 104 112 176 247 133
TOTAL ASSETS 1 092 1 084 1 082 1 072 932
Total equity 381 381 349 344 328
Interest bearing debt 563 561 569 559 430
Hedging reserves 97 96 123 133 137
Other liabilities 51 47 41 36 37
TOTAL EQUITY AND LIABILITIES 1 092 1 084 1 082 1 072 932
Total equity adjusted for hedging reserves 461 463 469 477 465
Equity ratio adjusted for hedging reserves 42 % 43 % 43 % 44 % 50 %
Net interest bearing debt * 433 423 367 288 268
* Gross interest bearing debt less cash, marketable securities and restricted cash
Cash flow statement
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USD million 3Q2013 2Q2013 1Q2013 4Q2012 3Q2012 YTD2013 YTD2012
Net profit or (loss) before tax (3) (6) (8) 14 1 (16) (2)
Adjustments of non-cash P&L items 12 10 15 (1) 12 38 32
Net changes in working capital, other 3 (5) 1 1 (1) (2) (13)
Net cash flow from operating activities 13 (1) 9 14 12 20 17
Proceeds from sale of marketable securities - 80 - - 81 80 183
Investments in marketable securities - - - (50) - - (155)
Investments in vessels and newbuildings (14) (38) (90) (32) (98) (141) (189)
Investments in intangibles and equipment - - (3) (0) (0) (4) (2)
Proceeds from sale of projects and equipment (0) - - 20 - - -
Net cash flow from/(used in) investing activities (14) 42 (93) (62) (17) (65) (163)
Proceeds from borrowings 5 - 19 130 - 24 -
Repayment of borrowings (3) (3) (3) (3) (3) (10) (10)
Interest paid (8) (8) (8) (6) (6) (25) (18)
Net proceeds from issue of capital - - - - - - 202
Other financing activities (0) (1) (4) (6) (0) (5) (0)
Net cash flow from/(used in) financing activities (7) (13) 2 115 (10) (16) 174
TOTAL CASH FLOW (8) 28 (82) 67 (15) (61) 27
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Accounting changes
New segment reporting from the third quarter 2013
Commercial
Technical
FLNG
Other
With effect from 1 January 2014 , joint venture companies will be recognised
according to the equity method in the consolidated accounts of Höegh LNG
Höegh LNG’s share of net profit in joint venture companies will replace the proportionate
consolidation of joint venture profit and loss account items in the consolidated accounts
EBITDA will be reduced while pre-tax profit will remain unchanged
Investment in associated companies will replace the proportionate recognition of joint
venture balance sheet items in the consolidated balance sheet of Höegh LNG
Höegh LNG will continue to present the segment reporting according to the proportionate
consolidation method. This will include a full income statement and selected balance
sheet items
Agenda
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Highlights
Financials
Operational review
Market outlook
Summary
Main focus: FSRU newbuilding programme
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Hull Project Construction Delivery
2549 KN, Lithuania 93% February 2014
2548 PGN, Indonesia 82% April 2014
2550 On offer in tenders 69% June 2014
2551 On offer in tenders 0% March 2015
All four FSRU’s under construction at Hyundai Heavy Industries are on time and on budget
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Klaipedos Nafta FSRU
FSRU will be delivered ex shipyard end
February 2014
Klaipedos Nafta's jetty and pipeline
scheduled for completion 1 September
2014
Terminal scheduled to commence
operations in second half 2014
Pursuing interim employment of FSRU
before starting operations in Lithuania
Pipeline from jetty under construction
Jetty construction in progress in Klaipeda port
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Perusahaan Gas Negara FSRU
FSRU will be delivered ex shipyard in
April 2014 for operations to
commence according to schedule in
June 2014
Construction of FSRU and mooring is
progressing according to schedule
and budget
USD 310 million debt facility signed
Pump tower for cargo tank being installed
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Perusahaan Gas Negara Mooring
Mooring construction ahead of
schedule and on budget
Installation contract to be signed in Q4
2013
Mooring to be transferred to PGN upon
acceptance
Weather waning swivel Gas transfer lines
Platform
Transfer pipeline
Mooring jacket structure under construction
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Colbún / AES Gener FSRU
Final contract with Colbún and AES
Gener is delayed
Colbún and AES Gener are making
progress on the permitting and
commercial agreements in Chile,
but the timing of final completion is
uncertain
Höegh LNG is pursuing alternative
employment opportunities for FSRU
Hull 2550
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Vessels in operation
Existing fleet operated safely and without incidents
On 17 November, GDF Suez Cape Ann arrived in Tianjin to be used as China's first
FSRU for up to five years
On 13 November, Gas Natural extended LNG Libra's time charter by 13 months to
the end of 2014
Norman Lady's time charter ended on 14 September 2013. The vessel has been
sold for green recycling
Höegh FLNG Ltd.
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Pursuing barge based FLNG projects in Asia, North
America and Africa with liquefaction capacity 0.5 to
2 mtpa
Awarded a pre-FEED study for 2 mtpa jetty-moored
barge FLNG solution for a North American LNG
export project. Potential full FEED in 2014
Awarded pre-FEED study for 2 mtpa FLNG for a gas
field offshore Australia. Potential full FEED in 2014
Executing strategy based on barge FLNG solutions,
which includes the design and ordering of our first
FLNG. This order will form the basis for a separate
listing of the company. Selected Norwegian
investment bank to manage IPO process
Agenda
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Highlights
Financials
Operational review
Market outlook
Summary
LNG production forecast to 2030:
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(Source: Energy Outlook 2030, BP 2013)
LNG contributes an increasing
share of natural gas trade
LNG will account for more than
15% of global gas consumption
by 2030
Australia is set to overtake
Qatar as the largest LNG
supplier by 2018
Depending on export permits,
North America could overtake
Australia as the next leader in
LNG production
600
300
mtpa
Asian LNG imports 2013-2025, a doubling in demand
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(Source: BG Group)
FSRU market outlook
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Around 30 projects in pipeline
16 projects in Asia/Middle East
6 projects in the Americas
9 projects in Europe/Africa
Owner FSRUs (oper+constr)
Customers*
Höegh LNG 2+4 GDF Suez (2),
Perusahaan Gas Negara,
Klaipedos Nafta,
Colbún/AES Gener
Golar LNG 4+3 Petrobras (2), Pertamina,
Dubai Power Authority,
Jordanian Energy Ministry,
Kuwait Oil Corporation
Excelerate 8+1 YPF (2), Petrobras,
PREPA, Israel Electric
Corporation
OLT 1+0 E.ON, IREN (also owners)
MOL 0+1 GDF Suez (conditional)
BW Gas 0+1 N/A
* Projects in operation or awarded
Existing
Under construction / awarded
Potential
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Near-term FSRU contract award opportunities
Project Pre-
qualified Bid Selection
Contract
award Start-up
Columbia 2013 2014 2015
Egypt 2013 2013 2014
Lebanon 2014 2014 2016
India 2014 2014 2015
Chile 2014 2017
Port Meridian Exclusive 2014 2016
3 FLNGs under construction
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1) Shell's Prelude 5.2 mtpa1 FLNG (2017) 2) Petronas' Kanowit 1.2 mtpa FLNG (2015)
3) Exmar's 0.5 mtpa FLNG barge (2015) 4) Höegh LNG’s 1.0 mtpa inshore barge (FEED)
1 Whereof 3.6 mtpa of LNG
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Announced FLNG projects
COUNTRY LOCATION OF FIELD MAIN SPONSORS STATUS
Australia
Prelude In EPC phase
Cash Maple Completed pre-FEED studies
Sunrise Pending resolution with Timor, under review
Bonaparte Expecting EPC award soon
Browse Changed design from onshore plant to 3 FLNG units
Scarborough FEED
Canada
Douglas Channel Approved. Awaiting FID
Kitimat / Prince Rupert Pre-FEED
Colombia Caribbean coast In EPC phase
Indonesia Abadi In FEED phase
Malaysia Sarawak Kanowit In EPC phase
Sarawak Rotan Expecting EPC award soon
Mozambique Pre-FEED
USA Texas FEED completed, no off-take or approvals in place
Global LNG fleet overview
15 FSRUs in fleet
10 FSRU newbuildings on order plus two
options to change from LNGC to FSRU
365 LNG carriers in fleet
106 newbuildings on order (29%)
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Type Delivered Newbuildings
on order
Under
conversion Total
LNGC 365 106 - 471
FLNG - 3 - 3
FSRU 15* 10** - 25
Total 380 119 - 499
LNG carrier fleet FSRU fleet
• 10 newbuildings and 5 conversions
(Source: Wood Mackenzie, LNG Unlimited, Fearnley LNG)
Agenda
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Highlights
Financials
Operational review
Market outlook
Summary
Summary
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Strong market prospects for newbuilt FSRUs
Newbuilding programme on track and on
budget
LNG Libra on extended time charter
Norman Lady sold
Paid pre-FEED work for two FLNG projects
Pursuing separate listing of Höegh FLNG
