Höegh LNG – The floating LNG services provider
Third Quarter 2012
Presentation of financial results 30 November 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
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Highlights
Financials
Operational review
Market outlook
Summary
Highlights Q3 2012
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Pre-tax profit USD 1.1 m (loss of USD 2.0 m 3Q’11)
EBITDA of USD 13.2 m (USD 8.6 m)
Selected preferred bidder for FSRU project in Chile
Ordered a fourth new FSRU
Exercised option to purchase 50% of STX Frontier
Took delivery of and started charter for LNG Libra
Issued USD 130 m five year corporate bond
Subsequent events
Sold Port Meridian for USD 20 m
Signed revised agreement for PGN FSRU
Signed USD 250 m loan facility for KN FSRU
Agenda
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Highlights
Financials
Operational review
Market outlook
Summary
Income statement
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USD million 3Q2012 3Q2011 Jan Sep 2012 Jan Sep 2011 2011
TOTAL INCOME 38,0 27,4 98,0 79,8 109,8
Charterhire expenses (5,2) (5,1) (15,5) (15,1) (20,1)
Operating expenses (7,8) (7,2) (23,0) (21,8) (32,4)
Administrative expenses (3,5) (3,0) (10,1) (10,5) (17,0)
Business dvelopment expenses (8,2) (3,5) (20,7) (9,9) (14,2)
EBITDA 13,2 8,6 28,8 22,6 26,1
Depreciation and impairment (6,2) (4,7) (14,3) (13,7) (19,6)
EBIT 7,0 3,9 14,5 8,9 6,5
Interest expenses (6,1) (6,5) (18,3) (18,9) (25,2)
Interest income 0,0 0,1 0,1 0,6 0,7
Other financial items 0,1 0,4 1,5 0,0 0,2
PROFIT OR (LOSS) BEFORE TAX 1,1 (2,0) (2,2) (9,4) (17,9)
Taxes (0,2) - (0,2) 0,3 0,2
NET PROFIT OR (LOSS) 0,9 (2,0) (2,4) (9,1) (17,7)
Financial position
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USD million 30.09.2012 30.06.2012 31.12.2011
Licences, design and other intangibles 74 83 83
Vessels and newbuildings 685 578 502
Other assets 41 53 33
Current cash, s/t deposits, marketable securities 133 223 127
TOTAL ASSETS 932 937 745
Total equity 328 326 133
Interest bearing debt 430 433 439
MtM of interest rate swaps 137 138 132
Other l iabilities 37 40 41
TOTAL EQUITY AND LIABILITIES 932 937 745
Total equity adjusted for MtM of interest rate swaps 465 464 265
Equity ratio adjusted for MtM of interest rate swaps 50% 50% 36%
Net interest bearing debt less cash, mark.securities and restricted cash 274 187 300
3Q2012 subsequent events
USD 130 million in bond issue proceeds received in Q4 2012
USD 20 million in Port Meridian sales proceeds received in Q4 2012 – asset moved from licences to other assets
(assets held for sale)
Cash flow statement
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USD million 3Q2012 3Q2011 Jan Sep 2012 Jan Sep 2011 2011
Net profit or (loss) before tax 1 (2) (2) (9) (18)
Adjustments of non-cash P&L items 12 11 32 32 44
Net changes in working capital, other 4 (2) (8) (7) (2)
Net cash flow from operating activities 17 7 22 15 25
Proceeds from sale of marketable
securities/receivables81 - 183 52 52
Investments in marketable securities - (90) (155) (90) (90)
Investments in vessels and newbuildings (98) (30) (189) (56) (57)
Investments in intangibles and equipment (1) (1) (2) (4) (7)
Net cash flow from/(used in) investing activities (17) (121) (163) (99) (102)
Repayment of borrowings (3) (3) (10) (9) (12)
Interest paid (6) (6) (18) (19) (25)
Issue of share capital net of transaction cost - 126 202 126 126
Other financing activities (0) - (0) 0 (4)
Net cash flow from/(used in) financing activities (10) 117 174 99 85
TOTAL CASH FLOW (10) 3 33 16 8
Agenda
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Highlights
Financials
Operational review
Market outlook
Summary
Corporate matters
10
Bond issue
Raised NOK 750 m in Norwegian bond market (USD 130 m)
Proceeds to be used as substitute for equity
Swapped from NOK to USD and floating to fixed base rate resulting in a USD total fixed
interest rate of 7.3% p.a.
Financing of KN FSRU for Lithuania
Signed USD 250 million senior secured credit facility with DNB, Nordea, SEB and
Swedbank
K-Sure and GIEK guaranteeing 75% of the facility
7 year tenor door-to-door, 16 year profile, 12 year swap, 5.1% total fixed interest rate
Sale of Port Meridian project
Sold for USD 20 million with a profit of USD 10 million to be recorded in Q4 2012
Exclusive right to build, own and operate FSRU for the project
Funding of remaining capex
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(*) Includes cash, marketable securities, proceeds from bond issue and Port Meridian sale
(**) Assuming 75% leverage for FSRUs and 65% leverage for STX Frontier
Pro forma as at 30 September 2012 USD billion USD billion
Remaining capital expenditure 1.2
Cash & cash equivalents* 0.3
Committed financing (bridge loan + Klaipedos Nafta) 0.5
Incremental financing** 0.5
Mooring settlement 0.1
Total funds 1.4
Cash buffer 0.2
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Regas unit at Sinopacific Offshore & Engineering's yard in China Stripe coat in water ballast tank
Double bottom block
FSRU
Construction in progress
FSRU
Newbuilding programme
13
H2549
H2550
2011
Q1 Q2 Q3
2014
H2551
H2548
2012 2013 2015
Q2 Q2 Q2 Q1 Q1 Q1 Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q1
Steel Cutting
Keel Laying
Launch
H2549: Klaipédos Nafta
H2550: Colbun / AES
H2551: Uncommitted
H2548: Perusahaan Gas Negara
Today
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FSRU
Klaipedos Nafta - Lithuania
FSRU will provide a second import gate for
natural gas to Lithuania and add to the
domestic energy supply security
Project on schedule for a planned start-up
in Q3 2014. Client progress:
Environmental impact analysis approved
for jetty and pipeline
Multiple offers for LNG supply
EPC contracts for jetty and pipeline in
progress
Financing of FSRU secured through USD
250 million debt facility and paid-in equity
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FSRU will connect to Indonesia's existing main grid and supply gas to Sumatra and Jakarta
Amended commercial agreement signed for the new location in Lampung signed 17 October 2012
PGN will take title to and reimburse Höegh LNG for investments in mooring upon completion
Delivery of FSRU from yard re-scheduled for April 2014. Planned start-up moved to June 2014. Höegh
LNG receives full compensation for delayed start-up
Debt financing work with our advisors Standard Chartered and Bank of Tokyo Mitsubishi UFJ
progressing well and scheduled to be completed by mid 2013
FSRU
Perusahaan Gas Negara - Indonesia
Jumper Hoses
(gas & utilities)
Gas Export
Regasification Module
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FSRU
Colbún / AES Gener - Chile
FSRU will be located in Quintero Bay close
to Santiago, connect to the existing grid
and provide natural gas to existing power
plants in Chile
Colbún S.A and AES Gener S.A among the
largest power producers in Chile
Chile rated A+, Colbún rated BBB- and
AES Gener rated BBB- (Standard & Poor's)
Contract length 10 + 5 years
Scheduled start-up late 2014
Selected preferred bidder with exclusive
contract negotiations on-going
Financing will commence upon signing of
contract and is expected to be completed
during second half 2013
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FSRU
Contract award opportunities
Project Pre-
qualified Bid Selection Contract
Official
Start-up
Indonesia Yes Submitted 2012/13 2013 2014
Uruguay Yes Q1 2013 Q2 2013 Q3 2013 2015
Jordan Yes Q4 2012 Q1 2013 Q2 2013 2014
Kuwait Yes Q1 2013 2013 2013 2014
Lebanon Yes Q2 2013 Q3 2013 2013 2015
England* Exclusive N/A N/A Q4 2013 2016
Estimated timing of near-term FSRU project awards
Höegh LNG has one uncommitted FSRU on order for delivery in March 2015
(*) Port Meridian
Fleet and Operation
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Existing fleet operated safely and without incidents
Norman Lady time charter extended for 1+2 years at improved commercial terms
LNG Libra delivered and commenced a six month charter to North West Shelf project in
Australia in July. Vessel being marketed for chartering and/or sale
Option to purchase 50% of STX Frontier exercised. Vessel being marketed for chartering
with availability from second half 2013
LNG Libra STX Frontier Norman Lady
FLNG
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Höegh FLNG Ltd. established as stand-alone
organisation and all FLNG assets and
resources transferred to new entity
Discussions with potential partners/investors
in progress, shortlist of 2-3 companies
Detailed discussions on FEED contracts for
projects in Israel and Asia
Agenda
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Highlights
Financials
Operational review
Market outlook
Summary
Continued strong demand growth for LNG
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Demand for FSRU services driven by
incremental demand for natural gas to
fuel power production
Fuel switch for existing plants
New combined-cycle gas turbines
Natural gas projected to be the fastest
growing major energy source globally
LNG production in 2011 was 242 million
tonnes - expected to reach 330 million
tonnes p.a. by 2017
In main markets, such as Japan, Korea
and Taiwan, LNG covers close to 100%
of demand for natural gas
Source: Wood Mackenzie, BP Energy Outlook 2030
Main focus markets
Around 30 FSRU regasification projects in pipeline
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Around 30 projects in pipeline
19 projects in Asia/Middle East
5 projects in South America
8 projects in Europe/Africa
HLNG has bids in process
Existing
Under construction / awarded
Potential
Existing
Under construction / awarded
Potential
Owner Vessels Customers*
Höegh LNG 2+4 GDF Suez (2),
Perusahaan Gas Negara,
Klaipedos Nafta,
Colbun/AES Gener
Golar LNG 4+2 Petrobras (2), Pertamina,
Dubai Power Authority,
GasAtacama
Excelerate 8+1 YPF (2), Kuwait Oil
Corporation, Petrobras,
PREPA, Israel Electric
Corporation
* Projects in operation or awarded
Global LNG fleet overview
14 FSRUs in fleet
7 FSRU newbuildings on order plus 2
options to change from LNGC to FSRU
364 LNG vessels in fleet
78 newbuildings on order (21%)
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Type Delivered Newbuildings
on order
Under
conversion Total
LNGC 364 78 - 442
FLNG - 2 - 2
FSRU 14* 7** 1 22
Total 378 87 1 466
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
Evolving FLNG project portfolio
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Source: Höegh LNG
Under construction / awarded
Potential
Country Location
of field
Main
sponsors Status
Australia Prelude Under construction
Australia Cash Maple Pre-FEED done
Australia Sunrise Pending resolution
with Timor
Australia Bonaparte Gov’t approval
Brazil Santos FID delayed until or
post 2013
Colombia Caribbean
coast
Under construction
Indonesia Abadi FEED on-going
Israel Tamar Pre-FEED done
Malaysia Sarawak
Kanowit
Under construction
Malaysia Sarawak
Rotan
FEED on-going
P. New
Guinea
Gulf of
Papua
In approval process
USA US Gulf FEED on-going
Speculative Conversion
Agenda
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Highlights
Financials
Operational review
Market outlook
Summary
Summary of 3Q 2012 and subsequent events
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Strong operating performance
Selected preferred bidder for a FSRU project
Signed revised agreement for PGN FSRU
Ordered a fourth new FSRU
Exercised option to purchase 50% of STX
Frontier
Sold Port Meridian
Issued corporate bond
Closed the KN FSRU debt financing
Strong market prospects