fsrus - the key to growth for new lng marketsepc agreement for infrastructure, led by hlng – in...
TRANSCRIPT
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Höegh LNG – The FSRU services provider
FSRUs - the key to growth for new LNG markets DNB’s 10th annual oil, shipping & offshore conference
02 March 2017
Sveinung J.S. Støhle
President and CEO, Höegh LNG
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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.
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Company overview
Markets
Investment considerations
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Focus for new investments
Höegh LNG – the FSRU company
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Transportation Liquefaction Regasification /
Infrastructure
FLNG LNG carriers FSRU
2 units 6+41 units
Put activities on hold
in February 2016
LNG value chain:
(1) The Group also has 3 FSRUnewbuilding options at Samsung
14 years
Average remaining
contract length
USD 6.2bn
Revenue backlog
OSE
HLNG NO
Listed OSE since 2011
Market cap USD ~820m
NYSE
HMLP US
Listed NYSE since 2014
Market cap USD ~625m
115 / 500
Onshore / offshore
employees
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Höegh LNG’s current FSRU portfolio
Strategic rationale Location Counterpart
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FSRUs
PGN FSRU
Lampung To replace expensive liquid oil
products in power generation
Indonesia
Asia USD 40m
Independence Energy diversity and access to
world markets for LNG
Lithuania
Europe USD 47m
SPEC Höegh Grace To offset seasonal shortfalls in
energy production
Colombia
South America USD 42m
EBITDA
GDF Suez
Cape Ann
Operating as LNGC – confirming
FSRU’s flexibility
Worldwide
trade USD 33m
Höegh Gallant Egypt
Africa USD 40m
Uncommitted FSRU #10
(newbuilding)
Quantum
Power
Ghana
Africa
FSRU #7
(newbuilding) USD ~36m
Pakistan
Asia
FSRU #9
(newbuilding) USD ~36m GEI
To cover deficit in power production
by using low cost LNG and to offset
declining domestic gas production FSRU #8
(newbuilding)
Chile
South America USD ~36m
Neptune Turkey
Europe USD 33m
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Höegh LNG’s business model at work
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Ordered newbuilding
Ordered newbuilding
Long-term contract
Long-term contract
•20 year contract with GEI in Pakistan with startup 2Q 2018
•LOI for one firm plus three optional FSRU newbuildings
•20 year contract with Quantum Power in Ghana with startup 2018
•Signed shipbuilding contract for one FSRU newbuilding with delivery 4Q 2018
Refinanced bond
•Issued new 5yr NOK 1,500 million senior unsecured bond to refinance HLNG01
Recycling of capital
•Sold 51% of Höegh Grace to HMLP
•HMLP raised USD 112 million
Fin
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ile
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C
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ile
sto
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Statoil4 % Total
4 %
Engie9 %
GNL Penco14 %
Klaipedos Nafta7 %
SPEC17 %
PGN LNG14 %
EGAS3 %
Quantum Power14 %
GEI14 %
Increasing diversification as revenue backlog grows
Revenue backlog of USD 6.2 billion1
14 years average remaining tenor
QP and GEI contracts further diversify
backlog
Each contract for 20 years with an average
EBITDA contribution of USD 36 million annually
No contract exceeding 17% of backlog
55% of backlog from counterparts
operating in investment grade countries
(Norway, France, Colombia, Chile,
Lithuania)
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Charter backlog1 by charterer
1 Proportionate method
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Solid revenue growth trajectory as new FSRUs start contracts
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Historical numbers
1 Reported figures (JVs by equity method). To be used as illustration only
2 Assumed contract
2
1,502 1,667 1,644 1,644
1,713
40% 36% 36% 36% 40%
4Q15 1Q16 2Q16 3Q16 4Q16
Total assets/adj. eq. ratio
2527 27 26
31
4Q15 1Q16 2Q16 3Q16 4Q16
EBITDA (USDm)
0
100
200
300
400
500
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
US
Dm
T/C revenues existing fleet1
Delivered fleet (end of 2015) Colombia (Höegh Grace) Pakistan (FSRU#9)
Ghana (FSRU#7) Chile (FSRU#8) FSRU#10 (assumed)
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Höegh LNG Partners LP set to acquire the remaining 49% stake in Grace
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Grace transaction funded by equity issue
Issuer Höegh LNG Partners LP (NYSE:
HMLP)
Issue Size 6,588,389 common units / net
USD112 million
Use of
Proceeds
Fund purchase price of 51% of Höegh
Grace and partial repayment of
seller’s credit
Drop down of Höegh Grace
Asset 51% equity interest in owner of Höegh
Grace
Purchase
price
USD 188.7 million less USD 96.9
million in pro-rate deb outstanding
(USD 91.8 million)
Timing Transaction closed 4 January 2017
HMLP unit price development
0
500
1000
1500
2000
2500
10
12
14
16
18
20
22
feb 2016 apr 2016 jun 2016 aug 2016 okt 2016 des 2016
HMLP volume (r.a.) HMLP
S&P500 (rebased) Alerian MLP index (rebased)
LTM performance:
• HMLP: +30%
• Alerian MLP index: +31%
• S&P 500: +23%
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Pakistan FSRU project success in practice
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Pakistan project success parameters
Bilateral negotiations
FSRU – under construction
Charter Party – signed HLNG/GEI
Length and value: 20 years, USD 36m
Licenses/permits to build infrastructure
GEI/Pakistan authorities obtained
Financing for infrastructure – in progress
Tolling agreement for terminal capacity
signed consortium/GEI – in progress
EPC agreement for infrastructure, led by
HLNG – in progress
Final board approvals
HLNG/GEI/consortium – in progress
FSRU site
Source: Navionics maps, HLNG, GEI
Easy access
from sea
Jetty and pipeline to be built by consortium of
HLNG, Qatar Petroleum, ExxonMobil, Total
and Mitusbish Corp
16 km offshore pipeline
route, to be constructed
by the consortium
Onshore facilities
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Company overview
Markets
Investment considerations
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LNG volumes expanding on liquefaction capacity additions
LNG demand rose by 17mt, or by
~7%, in 2016
The first year of meaningful growth
since 2011
Liquefaction capacity was 37mt
higher y/y at end-2016; utilization
of newly added capacity to
increase in 2017
35 countries imported LNG in
2016, up from 18 ten years ago
Several countries started
importing LNG in 2016 :
Colombia, Jamaica, Pakistan
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Liquefaction capacity and production 2000 - 2022
Source: Clarksons Platou, Shell LNG outlook 2017
demand
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New market entrants clearly prefer FSRUs for their LNG imports
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~80% FSRUs
~65% FSRUs
Mostly land
based
terminals
New markets1
Recent
market
entrants2,3
Established
LNG markets
LNG importing countries: Existing and planned/potential
Already have FSRUs
FSRUs planned or under construction
Have FSRUs, but market is dominated by land based terminals
Source: Cheniere 3Q16 presentation, amended by Höegh LNG
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Pipeline of around 40 projects around the globe
Existing
Under construction / awarded
Potential More than 40 projects in pipeline
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More fragmented competition, but limited orderbook
The orderbook stands at 12
FSRUs, of which 4 are
uncommitted
Uncommitted FSRUs (4
newbuildings, 1 existing
vessel) compare to 14% of
the total fleet and orderbook
of FSRUs
Four existing FSRUs are
serving contracts that are
about to expire, or at
contracts with undetermined
timelines
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6
8
7
1 1
1
3 1
1
3
1
1
2
0
2
4
6
8
10
12
Höegh LNG Excelerate Golar LNG BW Gas Other
Un
its
FSRU fleet and orderbook1 by owner and employment
On contract Available Committed NB Uncommitted NB
OLT
MOL
Gazprom
Exmar
Maran
Kolin
1 Orderbook defined as firm orders, excluding LOIs, options, conversions
FSRU fleet and orderbook1 by owner and employment
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Company overview
Markets
Investment considerations
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Strong LNG/
FSRU market
fundamentals
Summary: Why invest in Höegh LNG
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Proven track
record in
securing long-
term contracts
The only pure
play FSRU
company
USD 6.2 billion
contract
backlog and
strong growth
pipeline