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Höegh LNG – The floating LNG services provider
First Quarter 2012
Presentation of financial results 31 May 2012
Forward looking statements
2
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
3
Highlights
Financials
Operational review
Market outlook
Summary
Highlights Q1 2012
4
• Signed 20 year FSRU charter agreement with
Perusahaan Gas Negara (PGN) in Indonesia
• Signed 10 year FSRU charter agreement with
Klaipedos Nafta in Lithuania
• Signed six month charter agreement for LNG
Libra with North West Shelf
• Raised USD 208 million in new equity in a
private placement and a subsequent offering
• Exercised option for construction of one
additional FSRU new building from Hyundai
Heavy Industries
Agenda
5
Highlights
Financials
Operational review
Market outlook
Summary
Income statement
6
USD mill ion1Q2012 4Q2011 1Q2011 2011
TOTAL INCOME 27,7 30,0 25,9 109,8
Charterhire expenses (5,2) (5,1) (5,0) (20,1)
Operating expenses (7,7) (10,6) (7,3) (32,4)
Administrative expenses (3,7) (6,5) (3,7) (17,0)
Business dvelopment expenses (5,4) (4,2) (3,2) (14,2)
EBITDA 5,8 3,5 6,7 26,1
Depreciation and impairment (4,0) (5,8) (4,5) (19,6)
EBIT 1,8 (2,4) 2,2 6,5
Interest expenses (6,1) (6,3) (6,3) (25,2)
Interest income 0,0 0,0 0,4 0,7
Other financial items 0,4 0,1 (0,5) 0,2
Taxes - (0,1) - 0,2
NET LOSS (3,9) (8,6) (4,3) (17,7)
Financial position
7
USD mill ion31.03.2012 31.12.2011
Licences, design and other intangibles 83 83
Vessels and newbuildings 578 502
Restricted cash 23 13
Other non-current assets 23 16
Marketable securities / Interest bearing receivables 186 90
Current cash and short term deposits 38 37
Other current receivables 6 5
TOTAL ASSETS 937 745
Total equity 343 133
Interest bearing debt 436 439
MtM of interest rate swaps 120 132
Other l iabilities 38 41
TOTAL EQUITY AND LIABILITIES 937 745
Total equity adjusted for MtM of interest rate swaps 463,1 264,9
Equity ratio (adjusted for MtM of interest rate swaps) 49,4% 35,6%
Net interest bearing debt (less cash, mark.securities and restricted cash) 189,2 299,9
Cash flow statement
8
USD mill ion1Q2012 4Q2011 1Q2011 2011
Net loss before tax (4) (9) (4) (18)
Adjustments of non-cash P&L items 10 12 10 44
Net changes in working capital, other (13) 5 (4) (2)
Net cash flow operating activities (7) 9 3 25
Proceeds from sale of marketable securities/prom.note 60 - - 52
Investments in marketable securities (155) - - (90)
Investments in vessels and newbuildings (85) (1) - (57)
Investments in intangibles / equipment / other (2) (3) (2) (7)
Net cash flow investing activities (182) (4) (2) (102)
Repayment of borrowings (3) (3) (3) (12)
Interest paid (6) (6) (7) (25)
Issue of share capital net of transaction cost 202 - - 126
Other financing activities (3) (4) 0 (4)
Net cash flow financing activities 190 (13) (9) 85
TOTAL CASH FLOW 1,6 (7,7) (8,8) 7,8
Agenda
9
Highlights
Financials
Operational review
Market outlook
Summary
10
Regasification Status for Klaipedos Nafta FSRU
Project on time and budget
10 year time charter signed, and all subjects
lifted, in March 2012
Höegh LNG's scope is the FSRU. Steel
cutting for the FSRU in September 2012.
Delivery ex-yard in March 2014. Start of
operations around October 2014
Klaipedos Nafta will build the jetty and the
pipeline. Pipeline FEED was completed in
March 2012. Construction awards expected
in Q3 2012. Jetty and pipeline expected to be
completed by mid 2014
Project financing well under way. DNB
appointed as structuring bank, on-going
discussions with commercial banks and
ECAs. The plan is to achieve financial close
by Q3 2012
FSRU
pipeline
Baltic Sea Klaipeda City
11
Regasification Status for Perusahaan Gas Negara FSRU
20 year lease agreement between PGN and Höegh LNG signed in January 2012
19 March 2012 government decides to move FSRU from Medan to Lampung, Sumatra
26 March 2012 Höegh LNG informed by Perusahaan Gas Negara (PGN)
No change to specifications of the FSRU, but change of mooring design
PGN covers all costs and risks associated with change of location
No changes to the agreement and Q1 2014 remains contractual start-up date
The plan is to achieve financial close for project financing by Q4 2012
New location of FSRU
Regasification FSRU newbuilding programme
12
Executed option for delivery of FSRU #3
and granted one new priced option
FSRU #1 and #2 allocated to Indonesia
and Lithuania, respectively
FSRU #3 currently offered to the market
Two priced options with firm delivery dates
remaining
One option with terms to be negotiated
Flexibility on final specifications, in
particular storage size, regasification
capacity and propulsion
FLNG
13
Pre-FEED engineering work for the use of an
FLNG on the Tamar gas field offshore Israel
progressing well
Awarded a second paid pre-FEED study for
an FLNG by an undisclosed oil major
Process of establishing the FLNG business
as a stand-alone company under way:
J.P. Morgan engaged as financial
advisor to run the process of identifying
and shortlisting one or more external
investors
The plan is to conclude the process by
year-end 2012
Shipping
14
Existing fleet operated according to expectations
Pre-emptive maintenance of the propeller shaft seals on Arctic Lady
LNG Libra chartered six months to the North West Shelf project – start-up in June/July 2012
STX Frontier being marketed in the long-term shipping market with availability from second
half 2013
Extension of existing time charter for Norman Lady for 1+2 years at improved terms
(subsequent event)
LNG Libra STX Frontier Norman Lady
Agenda
15
Highlights
Financials
Operational review
Market outlook
Summary
Strong LNG transportation market
16
Source: Fearnley LNG, Fearnley Fonds, 29 May 2012
Current
Long-term
TC rate
Around 30 FSRU regasification projects in pipeline
17
Source: Höegh LNG
Around 30 projects in pipeline
16 projects in Asia/Middle East
6 projects in South America
1 project in North America
8 projects in Europe/Africa
HLNG has several bids in process
Existing
Under construction / awarded
Potential
Existing
Under construction / awarded
Potential
Owner Vessels Customers*
Höegh LNG 2+3 GDF Suez, Perusahaan
Gas Negara, Klaipedos
Nafta
Golar LNG 4+2 Petrobras (2), Pertamina,
Dubai Power Authority
Excelerate 8+1 YPF (2), Kuwait Oil
Corporation, Petrobras,
PREPA
* Projects in operation or awarded
18
Near term FSRU contract award opportunities
Project Bid submitted Selection Contract Start-up New / Conversion
Indonesia x Q2 2012* Q2 2012* Q3 2013* Conversion
Chile 1 x Q2 2012 Q3 2012 Q4 2014 New
Chile 2 x Q2 2012 Q4 2012 Q3 2015 New
Middle East Q4 2012 Q3 2013 Q2 2015 New
India 1 Q4 2012 Q1 2013 Q4 2014 New
India 2 Q4 2012 Q1 2013 Q4 2014 New
* Indonesia project (Central Java) original schedule delayed, still Q2 decision
Estimated timing of near-term FSRU project awards
Evolving FLNG project portfolio
19
Source: Höegh LNG
Under construction / awarded
Potential
Country Location
of field
Main
sponsors Status
Australia Prelude FID achieved
Australia Cash Maple On-going pre-FEED
Australia Sunrise Pending resolution
with Timor
Australia Bonaparte On-going pre-FEED
Brazil Santos FID delayed until or
post 2013
Colombia Caribbean
coast
Signed service
agreement
Indonesia Abadi FEED to start 2012
Isreal Tamar On-going pre-FEED
Malaysia Sarawak
Kanowit
FEED Completed
Malaysia Sarawak
Rotan
On-going pre-FEED
P. New
Guinea
Gulf FLNG Under review
P. New
Guinea
Gulf of
Papua
In Process
USA US Gulf On-going FEED
North America – Proposed liquefaction projects – "The Upside"
20
Source: Cheniere, EIA, Platts, CSUG
APPROVED
Potential US Export Facilities
Name Capacity
MTPA Start-up
Sabine Pass 8+8 2015
Freeport 4,4+4,4+4,4 2015
Cameron 4+4+4 2016
Cove Point 7,8 2016
Jordan Cove 9 2017
Lake Charles 5+5+5 2018
Total 61
This represents 13 % of annual US
gas production - Manageable
Potential Canadian Export Facilities
Name Capacity
MTPA Start-up
Kitimat 10 2015
Douglas Island 2 NA
Prince Rupert
Island 13 NA
Texada Island 3,8 NA
Total 29
This represents 27 % of annual
Canadian gas production - Manageable
Global LNG fleet overview
14 FSRUs in fleet
6 FSRU newbuildings on order plus 2
options to change from LNGC to FSRU
364 LNG vessels in fleet
74 newbuildings on order (20%)
21
Type Delivered Newbuildings
on order
Under
conversion Total
LNGC 364 74 - 438
FLNG - 1 - 1
FSRU 14* 6** 1 21
Total 378 81 1 460
LNGC fleet FSRU fleet
* 10 newbuildings and 4 conversions
** In additional to six firm FSRU orders globally, Golar LNG has options to convert two LNGC orders to FSRUs
Source: Wood Mackenzie, LNG Unlimited, Fearnley LNG
Agenda
22
Highlights
Financials
Operational review
Market outlook
Summary
Summary
23
Full contract coverage of all existing assets
Firm contracts for two new FSRUs, third
new FSRU currently offered to the market
LNG market shows strong sustainable long-
term growth, the main driver is natural gas
for power generation
FSRU is expected to grow quicker than the
rest of the market
Höegh LNG has a strong competitive
position in a high barrier to entry market
with attractive returns
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