Which Tanker Company Will Rule LNG?

Investing in LNG Tankers: The Opportunity

In • 200 million tons of LNG capacity to come online between now and 2020• Longer Routes (US to Asia) require more tankers for constant delivery volumes

Photo Source: NASA

Not All LNG Tankers Are the Same3 Primary types of tankers:

• Transport tankers • Categorized by type of product itcan ship (methane, ethane, etc.)

• FSRU: Floating Storage and Regasification Units• Small scale, low cost method for on-site LNG gasification

• FLNG: Floating LNG Liquefaction Units• Ideal for offshore production where pipeline infrastructure is

weak

Investing in LNG Tankers: The Opportunity

Like LNG liquefaction/regasification facilities, LNG Tankers work off of long term contracts (charters)

Stable, predictable cash flows

Well suited for MLP structure (high yielding investments)

Points of Research for LNG Companies

Photo Source: NASA

1) Contract Coverage• Look for companies with long-term charters in place• Do tankers under construction already have a charter?

2) Healthy Utilization Rate (>90%)

3) Since most are Master Limited Partnerships, Distribution Coverage Ratios

Who Are the Major Players?

GasLog

Photo Source: NASAPhoto Credit: Wes Peck via Flickr. com

GasLog

Photo Source: NASA

What you Need to Know:• Young fleet (average age: 2.6 years) of Liquefied Natural Gas carriers

• Contract Coverage for 2014= 100%

• 16 vessels in operation, 9 under construction• 4 vessels under construction already under contract

• Recent IPO of GasLog Partners to dropdown assets,

• Only LNG Tanker Company that deals exclusively with LNG transportation

Teekay LNG Partners LP

Photo Source: NASA

Teekay LNG Partners LP

Photo Source: NASA

What you Need to Know:• 2nd largest global operator of LNG and LPG tankers

• 100% contract coverage for LNG fleet with average contract duration of 13 years

• 50/50 Joint Venture for six icebreaker LNG tankers for Russia’s Yamal LNG Terminal in Siberia (25-27 year contracts)

• Largest Fleet Additions for LPG tankers (11 LPG new-builds/ 5 LNG new-builds)

Golar LNG

Photo Source: NASA

Photo Credit: Wes Peck via Flickr. com

Golar LNG

Photo Source: NASA

What you Need to Know:• Most diversified LNG Tanker offering: Looking to compete in

liquefaction, transport, and regasification

• Converting 3 of its older tankers into FLNG stations for on-site, remote liquefaction needs

• 17 vessels, 9 under construction (not including conversions)

• Contracts some of its vessels on spot market, causing troubles since so many others brining on new vessels (utilization rate at 82.6%)

• Expects demand pickup by 2016

Navigator Holdings

Photo Source: NASA

Photo Credit: Wes Peck via Flickr. com

Navigator Holdings

Photo Source: NASA

What you Need to Know:• Only player focused exclusively on transport of LPG products, looking

to export LPG and NGL from shale as chemical feedstock

• Only 13% of global gas transportation fleet capable of transporting ethane & ethylene (45% of Navigator fleet ethylene capable)

• 23 vessels in operation with 13 under construction. Newbuilds expected to increase EBITDA by over 66%

• Utilization rate of 96.9%

What does this all mean to me?Each LNG Tanker provides a unique investment opportunity:GasLog: Lower risk pure play on LNG transportation, tied very closely to success of BG Group and Royal Dutch Shell Teekay LNG Partners: Diversified mix of LNG and LPG with a bet that Arctic gas exploration & treansport will be successfulGolar LNG: Highest risk, betting that several new offshore gas fields (E.Africa, Arctic) will require FLNG and that FSRU’s will be needed in certain regions that don’t have regasifaction terminalsNavigator Holdings: Bet that US based NGL and LPG will see significant uptick in production and will replace other chemical feedstocks worldwide via exports

Photo Source: NASA

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