Höegh LNG - the FSRU provider
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Q1 2019Presentation of financial results
29 May 2019SHI 2220 on gas trials
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
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; 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.
Agenda
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▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Highlights for the first quarter of 2019 and subsequent events
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Highlights
▪ EBITDA of USD 55.9 million
▪ Net profit of USD 4.5 million
▪ Dividend of USD 0.025 per share paid in the first quarter of 2019
Subsequent events
▪ Dividend of USD 0.025 per share declared for the second quarter of 2019
▪ AIE’s Port Kembla FSRU project received development consent
▪ First class renewal survey afloat completed for FSRU Independence
▪ HMLP has issued new units under its ATM programme: net proceeds of USD 2.2 million
Agenda
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▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Höegh LNG: Commercial progress – continued operational excellence – financing according to plan
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▪ Höegh Grace and Höegh Gallant refinancing completed (as announced in 4Q report)
▪ Contract backlog providing solid support for up-coming refinancings
▪ Sale and leaseback financing of FSRU #10 in final documentation phase
Financing
Operational
▪ 100.0% technical availability across the global fleet
▪ Excellent HSEQ statistics - Zero LTIs last 20 months
▪ First class renewal afloat completed
Commercial
▪ Selected as the FSRU provider for three projects and in final round of one ongoing tendering
process. Important progress made for all four projects
▪ Continued firm demand for FSRUs and busy business development activity. Backed, among other
factors, by the drive to replace polluting fuels with natural gas, especially in Asia
Progress made for projects with near-term FID decision
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▪ Crib Point, Victoria,
Australia
▪ Höegh LNG signed
TCP in December 2018
− 10-year contract
− Annual EBITDA
USD 29-31 million
▪ Conditional on FID
− EIS well under way
▪ Start-up 2020/21
▪ Port Kembla, New South
Wales, Australia
▪ Höegh LNG has achieved
exclusivity
− TCP under negotiation
▪ Conditional on FID
− Governmental development
consent given in April
− Gas supply contract
negotiations with industrial
customers ongoing
▪ Start-up 2020/21
▪ South Asian market
▪ Höegh LNG has achieved
exclusivity
▪ Conditional on FID
− In the process of securing
necessary operating permits
▪ Start-up 2020/21
▪ Tendering, Höegh LNG
in final round
FSRU project
#3
FSRU project
#4
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 / AGL
Höegh Esperanza 2018 CNOOC / LT contract
Höegh Gannet 2018 Naturgy / LT contract
FSRU#10 2019 Spot / LT contract
Höegh LNG Partners
Neptune 2009 33** Total
Cape Ann 2010 33** Total
PGN FSRU Lampung 2014 40 PGN
Höegh Gallant 2014 38*** Egas / Gunvor
Höegh Grace 2016 42 SPEC
Long-term contract Extension option Under construction
2036 20382024 2026 2028 2030 2032 2033 2035 203720342027 2029 20312025
FSRU and/or LNGC
intermediate charter
2020 20222019 2021 2023
Improving contract coverage
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* LNG carriers
** 100% basis, units are jointly owned
AGL - Conditional on FID
Long-term business under development
AIE - Conditional on FID
*** Currently on LNG charter with Clearlake Shipping (Guvor subsidiary) with annual EBITDA contribution of around USD 16
million. The difference in revenue between the original FSRU contract with Egas and the new LNG carrier time charter for the
balance of the charter was recognised in Q4 2018 although Egas continues to compensate for this difference on a monthly
basis until the expiration of the original FSRU contract
Long-term business under development
Long-term business under development
Agenda
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▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Natural gas is the backup and bridge fuel for the renewable future
▪ Natural gas is displacing coal
and oil – contributing to
reduced greenhouse gas
emissions and improved local
air quality
▪ LNG gives markets with
insufficient indigenous gas
supply the opportunity to
replace pollutive fuels with
gas
▪ FSRUs represent the most
cost- and time efficient import
access to global LNG markets
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Global fuel consumption by source
Source: BP Energy Outlook
LNG supply: Significant volume growth potential as new projects ramp up production and take FID
▪ Supply growth driven by Atlantic
Basin capacity additions:
− Ramp-up at Yamal LNG
− Corpus Christi LNG T1, Sabine Pass
T5 entering commercial operations
− First cargoes from Elba Island LNG
and Cameron LNG expected soon
− Ichthys LNG and Prelude LNG
(Australia) also contributing
▪ Solid momentum for US LNG
− LNG contracting volumes increase
− 3 US LNG projects with recent
regulatory approvals
− Golden Pass LNG FID Feb-2019
▪ LNG Canada, Qatargas V-VIII
adding to future volumes
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Source: IHS Markit
291
28 319
24
3120
91 485
0
100
200
300
400
500
2017 volumes 2018 volumegrowth
2018 volumes 2018 additionsramping up
2019 additions 2020 additions 2021-2025additions
End-2025potential
mill
ion t
onnes p
er
annum
LNG supply additions
Additions from FIDed projects FID taken 2018/19 Qatargas V-VIII
LNG demand: Solid LNG trade growth continues in 2019
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Source: IHS Markit / Waterborne
15
17
19
21
23
25
27
29
31
33
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
mill
ion t
onnes
LNG trade by month, global
2014 2015 2016 2017 2018 2019
▪ Total volumes up 12% y/y in the
first quarter of 2019
▪ Europe taking a larger share of
imports due to pricing
▪ Continued growth in China;
imports up 24% y/y first 3
months of 2019 to around 16
million tonnes
Strong FSRU market potential
▪ Kaliningrad FSRU inagurated in
January 2019
▪ FSRUs arriving and preparing
for long-term business in
Bangladesh and Brazil
▪ India and Turkey will have new
FSRUs installed later in 2019
▪ Potential new FSRU projects
not included (30 - 40)
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FSRU terminals in operation (24)
FSRU projects under development (10 – 12)
0
2
4
6
8
10
12
Höegh LNG Excelerate Golar LNG BW LNG Other Captive Barge
Units
FSRU fleet by owner and orderbook1 by owner
Conv FSRU NB FSRU NB order Conv order Potential NB Barge Barge order
34 FSRUs currently on the water – 12 new units scheduled to deliver through 2022
▪ World fleet: 34 FSRUs
− 27 purpose-built FSRUs
− 5 LNGC-to-FSRU conversions
− 2 barges
▪ Global orderbook: 12 units
− 8 purpose-built FSRUs
− 2 LNGC-to-FSRU conversions
− 1 LNGC-to-powership conversion
− 1 barge
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OLTMOL
Gazprom
Kol / Kal
SWAN
Java-1
Source: Höegh LNG1 Orderbook defined as confirmed orders, excluding LOIs, options and conversions not firmed up
Maran
Dynagas
KALMOL
Botas
JSK
Exmar
GasfinDynagas
Agenda
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▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Income statement for the quarter ended 31 March 2019
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45,0 40,3
9,3
5,5 9,1
6,1
0,2 4,5
0,0
10,0
20,0
30,0
40,0
50,0
US
D m
illio
n
Net profit variation
IFRS 16
effects
USD million1Q 2019 4Q 2018
Total income 84.3 122.3
Charterhire and other expenses 0.2 -9.7
Operating expenses -15.8 -18.0
Administrative and BD expenses -12.8 -13.2
EBITDA 55.9 81.4
Depreciation -26.1 -17.0
Impairment 0.0 0.0
EBIT 29.7 64.4
Net finance -23.5 -17.5
Profit before taxes 6.2 46.9
Corporate income tax -1.7 -1.9
Profit for the period 4.5 45.0
Financial position at 31 March 2019
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▪ IFRS 16 – Leases implemented with an increase in
the balance sheet at 31 March 2019
− Right-of-use assets: USD 215 million
− Interest-bearing lease liabilities: USD 217 million
▪ Book equity ratio (adjusted for mark-to-market of
hedges) of 33%, down from 36% owing to effects of
implementation of IFRS 16 – Leases
▪ Net interest bearing debt at 31 March 2019 of USD
1,463 million
USD million31-Mar-19 31-Dec-18
Investments in FSRUs 2,106 1,908
Investments in newbuildings 91 89
Other 130 144
Cash and short-term restricted cash 165 164
Total assets 2,492 2,305
Equity attributable to the parent 474 500
Non-controlling interests 281 287
Total equity 755 787
Interest bearing debt 1,647 1,433
Other 91 85
Total equity and liabilities 2,492 2,305
NIBD 1,463 1,251
Adjusted equity 822 830
Adjusted equity ratio 33% 36%
Cash flow statement for the quarter ended 31 March 2019
▪ Stable cash position quarter-on-quarter
▪ HMLP’s USD 63 million credit facility was undrawn
at 31 March 2019
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USD million1Q 2019 4Q 2018
Net CF from operating activities 50.2 52.2
of which working capital adjustments -0.6 -22.6
Net CF from investing activities -3.5 -204.1
of which investments in FSRUs -3.9 -179.5
Net CF from financing activities -46.3 117.4
of which new debt 320.0 175.0
of which debt repayment -330.8 -21.5
of which interest paid -16.1 -17.4
of which distributions to NCI -11.2 -11.2
of which HLNG dividends -1.9 -1.9
Net change in cash and cash eq. 0.4 -34.5
Current cash and cash eq., start 158.0 192.4
Current cash and cash eq., end 158.4 158.0
Manageable and laddered-out debt repayment profile
191) All balloons assumed refinanced in full, extending current amortisation profiles
▪ Financing/refinancing completed in 1Q2019:
− Höegh Grace / Höegh Gallant refinancing:
▪ USD 303 million under previous financing repaid / USD 320
million drawn in Q1 2019.
− Sale and leaseback financing for FSRU#10 is currently in the
final documentation phase
▪ Next refinancing - debt maturing in 2020:
− Independence, commercial tranche: USD 61 million
− HLNG02 bond loan: USD 130 million
0
50
100
150
200
250
300
350
400
450
2-4Q19 2020 2021 2022 2023 2024 2025 2026
US
D m
illio
n
Debt repayment schedule
Amortisation Amortisation of new/refinanced debt Balloons Bonds1
HL
NG
02
HL
NG
03
Capex commitments and sources
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▪ FSRU#10: Remaining installments and expenses:
USD 184 million
− To be funded by sale and leaseback financing with USD 178
million upon delivery. Remaining amount to be funded by existing
cash in the group
▪ Avenir: USD 18 million remaining capital commitment
− To be funded by existing cash in the group
▪ Class survey/dry dockings in 2019: Estimate a total
cost of USD 7-8.5 million for Höegh Gallant and PNG
FSRU Lampung in 2019.
− To be funded by existing cash in the group
▪ Additional sources of funding:
− USD 63 million credit facility in HMLP (undrawn)
− Potential for up to USD 87 million in increased leverage from
existing debt arrangements on Höegh Giant, Höegh Esperanza
and FSRU#10. Availability is subject to long-term FSRU contracts
FSRU#10
AvenirOther
Debt
Cash at hand
Additional sources of
funding (incl. potential)
0
50
100
150
200
250
300
350
400
Capex Funding
US
D m
illio
n
Capex and funding
Agenda
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▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Summary
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Firm progress on 4 new FSRU contracts
Continued strong growth in demand for LNG - driven by both price and environmental factors
EBITDA of USD 55.9 million and net profit of USD 4.5 million for Q1 2019
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Q&A session
29 May 2019 - 09:00 CET
Call-in details:
Norway +47 2350 0296
United Kingdom +44 (0)330 336 9411
United States +1 646 828 8143
Participant passcode: 5661091
Webcast:
http://webtv.hegnar.no/presentation.php?webcastId= 97815904