höegh lng the floating lng services provider · shell australia offshore flng petronas malaysia...
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Höegh LNG – The floating LNG services provider
4Q 2014 Presentation of financial results
26 February 2015
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.
Höegh LNG Holdings; Agenda for presentation of 4Q 2014 results
3
Sveinung J.S. Støhle
President & CEO
Highlights/Markets/Summary
Additional information
Steffen Føreid
CFO
Financials
Dedededw
Fourth Quarter 2014 highlights: Entering the operational phase of the
current FSRU expansion
4
EBITDA USD 6.8 million and net loss USD 57.7 million in fourth quarter 2014
PGN FSRU Lampung and Independence in operation and contributing to improved
operating performance
Net profit adversely impacted by impairment charges totalling USD 44.8 million mainly
relating to Port Dolphin expenditures capitalized in 2008 and 2009
Signature of two new long term FSRU contracts
Started the next FSRU expansion phase by ordering FSRU#7/HN2552
First quarterly dividend payment announced; USD 0.10 per share – HLNG share
trading ex dividend as of 5 March 2015 (subsequent event)
Signed pre-FEED agreement for a second North American FLNG project
Five FSRUs in operation in 2015…
5
… All employed on long term contracts
* Based on: 1) Income from existing assets and signed long term
FSRU contracts 2) JVs consolidated by equity method
2013-2016 CAGR 20%
100
120
140
160
180
200
220
240
260
280
2013 2014 2 015 2016
Total income
Existing fleet operated according to contract and without incidents
6
Current fleet
100% availability/charter hire on LNGCs and GDF SUEZ FSRUs
PGN FSRU Lampung operating according to contract since end October; USD 7.2
million charged in Q3 (6.1) and Q4 (1.1) due to delayed start-up
FSRU Independence finalized commissioning according to schedule and operated
according to contract since end November
Höegh Gallant on schedule for start-up in Egypt by end of first quarter 2015
FSRUs under construction
FSRU#6/HN2551 (with employment) on schedule for the SPEC project
FSRU#7/HN2552 offered for various projects with the objective to sign a long term
FSRU contract by mid-2015
7
Strong pipeline of MLP drop-down candidates
HLNG average remaining contract length = 10 years
HMLP average remaining contract length = 17 years
Contracted Extension option Under construction Spot market
Unit Type Built Charterer
HMLP drop-
down
candidate? 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033
Höegh LNG Holdings Ltd
Libra LNGC 1979 Gas Natural No
Arctic Princess LNGC 2006 Statoil Maybe
Arctic Lady LNGC 2006 Total Maybe
Independence FSRU 2014 Klaipedos Nafta Yes
Höegh Gallant FSRU 2014 Egas Yes
2551 FSRU May 2015 SPEC Yes
2552 FSRU 1Q 2017 Yes
Höegh LNG Partners LP
GDF Suez Neptune FSRU 2009 GDF Suez
GDF Suez Cape Ann FSRU 2010 GDF Suez
PGN FSRU Lampung FSRU 2014 PGN
Significant increase in demand for LNG in fast growing markets expected
over the next five years…
8 (Source: Shell)
Production Demand
Potential FSRU clients
… driven by fuel substitution and increased electricity generation from
natural gas …
9
LNG prices follow oil prices
For countries looking to replace expensive oil products with natural gas; LNG is the
most competitive substitute
For countries looking to replace pollutive coal with LNG; lower LNG prices makes
this decision easier
Sources: * Ship&Bunker (Singapore) , ** Platts LNG
0
5
10
15
20
25
Sep-14 Oct-14 Nov-14 Dec-14 Jan-15
USD
/MM
Btu
Diesel* LNG (JKM)** ARA Coal **
…driving demand for FSRU solutions in new markets
10
Egypt expected to import 75 cargos over
the next two years – all imported through
FSRU Höegh Gallant
China expected to continue to increase
their LNG import over the next five years
and due to short schedule FSRUs are
needed
Pakistan, India, Bangladesh, Indonesia,
Lebanon and Ghana all need to increase
their power generation capacity – at
current LNG prices their LNG import
projects are clearly more likely to
materialize
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f
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450
300
150
MTPA
Sources: BP
11
Close to 30 projects in pipeline
17 projects in Asia/Middle East
4 projects in the Americas
8 projects in Europe/Africa
FSRU market outlook
Owner FSRUs
(oper+constr) Customers
Höegh LNG 5+2 GDF Suez (2),
Perusahaan Gas Negara,
Klaipedos Nafta, Egas,
SPEC
Golar LNG 5+2 Petrobras (2), Pertamina,
Dubai Power Authority,
Jordanian Energy
Ministry, Kuwait Oil
Corporation
Excelerate 9 YPF (2), Petrobras,
PREPA, Israel Electric
Corporation, Engro and
Sui Southern Gas
OLT 1 E.ON, IREN (also owners)
MOL 0+1 GDF Suez /Marubeni
BW Gas 0+2 N/A
Exmar/PR 0+1* N/A
Existing
Under construction / awarded
Potential
*Non-propelled barge FSRU plus FSO
Low oil/gas price makes majority of land based LNG export projects still in
development phase not commercial
12
HLNG barge based FLNG
Source: IHS Cera
High cost LNG export projects (1500 USD/ton+) likely to be delayed and redesigned to
reduce project cost
Long term prospects for FLNG are still positive due to lower capex, smaller volumes to be
sold, lower unit cost and generally higher flexibility compared to land based export
projects
13
FLNG Projects under construction
Main sponsor Country Technical solution
Shell Australia Offshore FLNG
Petronas Malaysia Offshore FLNG
Petronas Malaysia Offshore FLNG
Pacific
Rubiales/Exmar
Colombia Barge FLNG
Exmar MOU - Kitimat Barge FLNG
Golar MOU - Cameroon LNGC conversion
Golar N/A LNGC conversion
The Company’s FLNG market focus
Main focus is North America; four potential projects
Under construction/Awarded other companies
Pre-FEED/FEED HLNG
Potential Barge FLNG HLNG
Summary
14
Improved operating results as 2 newbuild FSRUs entered operational stage
Net result adversely affected by one off impairment of assets mostly capitalized
pre-IPO phase
Dividend payment marks the Company’s entry into the operation and cash
generation phase from latest expansion program, with EBITDA expected to
increase significantly when all 4 new units in operation
Fast growing markets increasingly prefer FSRUs – positive outlook for FSRUs
going forward
Continued success with its FSRU strategy by winning two new long-term
contracts and ordering its seventh large size FSRU
Höegh LNG Holdings; Agenda for presentation of 4Q 2014 results
15
Additional information
Dedededw
Sveinung J.S. Støhle
President & CEO
Highlights/Markets/Summary
Steffen Føreid
CFO
Financials
16
Consolidated Income Statement
Jan-Dec
2014 USD 162.6 million USD 1.6 million USD (87.1) million
Jan-Dec
2013 USD 145.6 million USD (1.9) million USD (20.8) million
USDm USDm USDm
45,5
51,3
32,3 33,8
45,3
0
10
20
30
40
50
60
Q4-13 Q1-14 Q2-14 Q3-14 Q4-14
Total Income
1,5
-1 -0,3
-3,9
6,8
-6
-4
-2
0
2
4
6
8
Q4-13 Q1-14 Q2-14 Q3-14 Q4-14
EBITDA
-3,9 -4,5 -8,6
-16,3
-57,5
-70
-60
-50
-40
-30
-20
-10
0
Q4-13 Q1-14 Q2-14 Q3-14 Q4-14
Net Profit/(Loss)
Cash flow statement
17
USD million 4Q2014 3Q2014 2Q2014 1Q2014 Jan-Dec 2014 Jan-Dec 2013
Net profit or (loss) before tax (56) (16) (8) (4) (85) (20)
Adjustments of non-cash P&L items 57 10 3 (3) 66 (3)
Dividend received from joint ventures 1 1 1 1 3 14
Proceeds from sale of mooring 11 - 97 - 108 -
Net changes in working capital, other 1 (1) (5) 6 0 (1)
Net cash flow from operating activities 14 (7) 87 (1) 92 (11)
- -
Net (investments) proceeds in marketable securities 42 (145) - - (103) 101
Investments newbuildings under construction and vessels (231) (9) (369) (52) (661) (186)
Investments in intangibles and equipment (1) (0) (1) (0) (2) (4)
Proceeds of repayment on shareholders loans 2 1 2 2 7 6
Net cash flow from/(used in) investing activities (189) (153) (367) (50) (759) (83)
- -
Net proceeds form equity issuance - 203 - - 203 -
Proceeds from borrowings 188 - 349 108 645 45
Repayment of borrowings (23) (36) - (30) (88) -
Dividend paid to non-controllling interest (MLP) (2) - - - (2) -
Interest paid (9) (7) (2) (2) (20) (10)
Increase in restricted cash (37) - - - (37) -
Other financing activities (1) (1) (5) (8) (15) (12)
Net cash flow from/(used in) financing activities 116 161 342 67 686 23
- -
TOTAL CASH FLOW (59) 1 61 16 19 (70)
421 455
814 818
1 030 75
82
141
286
207
188 203
150
160
132
-
200
400
600
800
1 000
1 200
1 400
1 600
Q4-13 Q1-14 Q2-14 Q3-14 Q4-14
Other assets
Current cash and marketable securities (incl. current restricted cash)
Vessels, newbuildings and installations under construction
Financial position
18
USDm
Assets Equity ratio and NIBD USDm
173
255
434
248
476
67% 61%
40% 50%
42%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Q4-13 Q1-14 Q2-14 Q3-14 Q4-14
-
100
200
300
400
500
600
700
800
Net Interest Bearing Debt
Equity ratio (adjusted MTM of financial derivatives)
Strong share price development of Höegh LNG Partners LP
19
0
500
1 000
1 500
2 000
2 500
3 000
0
5
10
15
20
25
30
Volu
me'0
00
Un
it p
rice r
ebse
d to
HM
LP
HMLP US Equity - Volume
HMLP US Equity
AMZ Index
Maritme MLPs(1)
Two quarterly distributions totalling
USD 13.7 million announced to date,
in line with expectations, of which
58% or USD 8.0 million flows to
HLNGH
Share trading at a current yield of
approximately 6.2% compared to an
IPO yield of 6.75%
Höegh LNG Partners outperformed
the MLP sector and its Maritime MLP
peers since listing in August 2014
(1) DLNG, GLOP, TGP, GLNG
Financial summary fourth quarter 2014
20
Improved operating performance mainly due to Independence
Net profit adversely impacted by impairment charges
Strong balance sheet with capacity to fund further growth
Strong share price performance of Höegh LNG Partners LP
A dial-in Q&A session will be held at 3pm Oslo time / 9am EST time
See www.hoeghlng.com for dial-in details
Höegh LNG Holdings; Agenda for presentation of 4Q 2014 results
21
Additional information
Dedededw
Sveinung J.S. Støhle
President & CEO
Highlights/Markets/Summary
Steffen Føreid
CFO
Financials
Income Statement
22
USD million 4Q2014 3Q2014 2Q2014 1Q2014 4Q2013 Freight revenues 34,6 29,3 17,2 17,2 17,9 Voyage expenses (2,4) (3,9) - - (0,1) Construction contract revenue 8,1 6,1 10,0 28,2 14,6 Management and other income 2,4 (0,4) 2,7 3,6 8,9 Share of results from investments in joint ventures 2,7 2,6 2,5 2,2 4,2 TOTAL INCOME 45,3 33,8 32,3 51,3 45,5 Charterhire expenses (8,9) (8,9) (8,8) (8,7) (8,9) Construction contract expenses (6,0) (6,6) (6,8) (24,0) (12,8) Operating expenses (10,3) (8,5) (6,1) (6,9) (6,2) Project administrative expenses (4,5) (3,8) (4,8) (3,2) (4,9) Group administrative expenses (3,5) (5,1) (3,1) (4,7) (2,5) Business development expenses (5,3) (4,7) (3,1) (4,8) (8,7) EBITDA 6,8 (3,9) (0,3) (1,0) 1,5
Depreciation (7,8) (6,2) (4,2) (2,9) (4,6) Impairment (44,8) - - - - EBIT (45,8) (10,1) (4,5) (3,9) (3,1)
Interest expenses (8,9) (5,4) (3,6) (0,4) (0,6) Interest income 0,4 0,4 0,4 0,5 0,5 Other financial items (2,1) (0,8) (0,6) (0,7) (1,1) PROFIT OR (LOSS) BEFORE TAX (56,4) (15,9) (8,3) (4,5) (4,2)
Taxes (1,3) (0,4) (0,3) 0,0 0,3 NET PROFIT OR (LOSS) (57,7) (16,3) (8,6) (4,5) (3,9)
Financial position
23
USD million 31.12.2014 30.09.2014 30.06.2014 31.03.2014 31.12.2013
Licences, design and other intangibles 37 74 74 74 74
Investments in newbuildings under construction and vessels 1 029 818 814 455 421
Shareholder loans to joint ventures 19 21 21 23 25
Investments in joint ventures 0 0 0 0 0
Mark-to market on hedging reserves 5 11 10 14 18
Other assets 55 50 45 10 19
Restricted cash (non-current) 15 - - - -
Unbilled construction contract receivable 0 5 - 81 53
Current cash and marketable securities* 207 286 141 82 75
TOTAL ASSETS 1 369 1 264 1 106 739 684
Total equity 460 540 347 374 389
Investments in joint ventures 95 88 92 89 86
Interest bearing debt 683 534 575 227 165
Mark-to market on hedging reserves 53 32 27 14 14
Other liabilities 78 70 65 34 31
TOTAL EQUITY AND LIABILITIES 1 369 1 264 1 106 739 684
Total equity adjusted for MtM on interest rate swaps 574 633 445 453 457
Equity ratio adjusted for MtM on interest rate swaps 42 % 50 % 40 % 61 % 67 %
Net interest bearing debt * 476 248 434 146 90
* Includes restricted cash
Cash flow statement
24
USD million 4Q2014 3Q2014 2Q2014 1Q2014 4Q2013
Net profit or (loss) before tax (56) (16) (8) (4) (4) Adjustments of non-cash P&L items 57 10 3 (3) (1) Dividend received from joint ventures 1 1 1 1 9 Proceeds from sale of mooring 11 - 97 - - Net changes in working capital, other 1 (1) (5) 6 0 Net cash flow from operating activities 14 (7) 87 (1) 5 Net (investments) proceeds in marketable securities 42 (145) - - 21 Investments newbuildings under construction and vessels
(231) (9) (369) (52) (45)
Investments in intangibles and equipment (1) (0) (1) (0) (0) Proceeds of repayment on shareholders loans 2 1 2 2 2 Net cash flow from/(used in) investing activities (189) (153) (367) (50) (23) Net proceeds form equity issuance - 203 - - - Proceeds from borrowings 188 - 349 108 21 Repayment of borrowings (23) (36) - (30) - Dividend paid to non-controllling interest (MLP) (2) - - - - Interest paid (9) (7) (2) (2) (2) Increase in restricted cash (37) - - - - Other financing activities (1) (1) (5) (8) (7) Net cash flow from/(used in) financing activities 116 161 342 67 12 TOTAL CASH FLOW (59) 1 61 16 (6)