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Höegh LNG - the FSRU provider
1
3Q 2018Presentation of financial results
29 November 2018
Forward looking statements
2
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
3
▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Highlights for the third quarter of 2018 and subsequent events
4
Highlights
▪ EBITDA of USD 47.9 million
▪ Net profit of USD 6.0 million, including impairment of USD 9.0 million
▪ Dividend of USD 0.025 per share paid in the third quarter of 2018
▪ Secured commitments for the debt financing for Höegh Gannet (FSRU #9) and FSRU #10
Subsequent events
▪ Dividend of USD 0.025 per share declared in the fourth quarter of 2018
▪ Investment in Avenir LNG to develop small-scale LNG market position
▪ Höegh Esperanza commencing FSRU operations in Tianjin, China
▪ Secured commitments for refinancing of Höegh Gallant and Höegh Grace at
improved terms
Agenda
5
▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Commercial development
6
FSRU market
▪ Active market with 5 FSRU contract awards so far this year
▪ FSRU activity concentrated in Asian and Middle East markets
▪ Tight LNGC markets positively impacting competitive situation for FSRUs
Commercial
development
▪ Achieved exclusivity on 2 FSRU projects, and in final selection round for another 2
▪ Höegh Esperanza commencing regasification operations in Tianjin, China
▪ Highly complementary investment in Avenir LNG for small-scale LNG position
Outlook
▪ Solid underlying demand for FSRUs amid growing supply of LNG
▪ Höegh LNG in strong competitive position with newbuilding FSRU fleet to secure attractive
long-term FSRU contracts
Höegh Esperanza, Tianjin, China
First mover advantage in the Chinese market under a 3+1 year contract with CNOOC
7
▪ Höegh LNG has in place a 3+1 year
FSRU/LNGC contract with CNOOC
for the FSRU Höegh Esperanza
Serving as a regasification terminal
in Tianjin for a minimum period each
year
Balance of the year in LNGC and/or
FSRU mode
▪ FSRUs filling acute import
infrastructure shortage amid rapid
LNG demand growth
▪ Höegh LNG in a favourable position
by operating the sole FSRU in the
Chinese market
A new market for FSRU growth: Investment in small-scale and Avenir LNG
8
▪ Strong synergies since small-scale LNG projects
depend on storage and reloading capabilities
provided by FSRUs
▪ Avenir LNG: Supplying LNG to new markets using
small-scale LNG carriers and terminals
Main driver: Oil-to-gas switch
Aggregating demand across regions
Capturing margins across the LNG value chain
▪ Small-scale LNG to stimulate FSRU demand by
expanding the number of viable markets for full-
scale newbuilding FSRUs
▪ Avenir LNG listed at N-OTC in Oslo on
15 November 2018, Höegh LNG with 22.5% stake
5.7
2 7.7
1.2 8.9
0.9 9.8
12
17.3
0
2
4
6
8
10
12
14
16
18
20
LNG priceFOB
Handling Deliveredbunkering
Handling Deliveredpowerplant
Handling Deliveredtruck
Rotterdam380 CST
RotterdamMGO
US
D p
er
MM
Btu
Illustrative economics, small scale LNG
Δ USD 4.3-9.6
Δ USD 7.5
Δ USD 3.1
1
1) Henry Hub spot price of USD 2.75 per MMBtu + 15% + USD per MMBtu in tolling fee
2) Shipping, FSU and small-scale expenses; assuming large LNG carrier to Europe with 10% economics on charter,
fully utilised FSU with 10% to FSU owner
3) Small-scale cash breakeven including operating costs and 10% economics on capex
2,3 3
Cost of competing
oil products
Höegh LNG’s FSRUs already providing multiple small-scale LNG services
9
LNG bunkering
LNG truck distribution
ISO container distribution
Small-scale LNG distribution
Pipe-to-shore regasified LNG
from FSRU
Base service
Future
Lithuania China
Future
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 / LT contract
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
GDF Suez 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 constructionFSRU and/or LNGC
intermediate charter
2036 20382024 2026 2028 2030 2032 2033 2035 203720342027 2029 20312020 20222019 2021 2023 2025
Modern fleet marketed in growing long-term FSRU market
10
* LNG carriers
** 100% basis, units are jointly owned
Long-term business under developmentDelivery December 2018
Delivery Q2 2019
Agenda
11
▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Solid momentum in LNG trade, driven most prominently by growing Asian import demand
12
▪ Total trade of 236 million
tonnes in 9M 2018, up 7.1%
from 9M 2017
▪ Combination of new supply of
LNG and robust demand in
Asia driving LNG trade growth
▪ Full-year trade forecasted to
be around 320 million tonnes,
up 7.7% from 2017
Source: Waterborne LNG / IHS Markit
15
17
19
21
23
25
27
29
31
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
mill
ion t
onnes
LNG trade by month, global
2013 2014 2015 2016 2017 2018
Additional regasification capacity required to meet growing Chinese LNG import demand
13
▪ Imports from time-to-time exceed
available regasification capacity,
particularly in northern China
▪ During those periods, LNG is
loaded as liquid onto trucks and
distributed to the market
▪ One of Höegh LNG’s FSRUs
would add around USD 0.5 million
tonnes of monthly regasification
capacity
0
1
2
3
4
5
6
2016 2017 2018
mill
ion t
onnes p
er
month
Chinese LNG imports and regasification capacity
Total imports Total nameplate capacity
November 2018e
Source: Waterborne LNG / IHS Markit
89
7
2
2
1
1
1
0
2
4
6
8
10
12
Höegh LNG Excelerate Golar LNG BW Gas Other Single-purpose
Un
its
FSRU fleet and orderbook1 by owner
Existing Newbuilding LNGC-to-FSRU conversion
29 FSRUs currently on the water – 13 new units scheduled to deliver through 2022
▪ Of 13 newbuilding orders, 5 are
being built by developers for
their own specific projects, and
thus are not offered in the
market
▪ Of the remaining 8 orders, 6
appear uncommitted with
delivery through 2022
14
OLTMOL
Gazprom
Kol / Kal
SWAN
Java-1
Exmar
Source: Höegh LNG1 Orderbook defined as confirmed orders, excluding LOIs, options and conversions not firmed up
Maran
Dynagas
Dynagas
Botas
Large number of market opportunities backed by diverse drivers of demand
Region Existing In development Proposed
N America 1 2 +
S America 6 2 3 +
Europe 4 2 4 +
MENA 5 5 +
Sub-Sahara
Africa4 +
South Asia 4 3 5 +
Asia/Oceania 3 4 6 +
Sum 22 12 30 +
15
Enabler
Security of supply
Seasonal demand
Back-up for hydro
Balance of trade
New gas-fired generation
Demand drivers
Increasing
supply of
attractively
priced LNG
Transportation
Replacement for coal and oil
Existing and potential FSRU contracts
Source: IHS Markit
Robust LNG carrier markets have several positive implications for the FSRU market
▪ Fall-back option well in the
money
FSRUs with full trading
capabilities earn the same rates
as purpose-built LNGCs
Höegh LNG has fixed its non-
FSRU trading capacity at long-
term rate levels
▪ Booming spot LNGC rates
have:
Reduced competition in the
FSRU market as LNGC owners
take advantage of strong rates
Put effective stop to speculative
LNGC-to-FSRU conversions
16
0
20
40
60
80
100
120
140
160
180
200
2011 2012 2013 2014 2015 2016 2017 2018 2019
'000 U
SD
per
day
LNGC charter rates
Steam spot DFDE spot Long-term
Data source: IHS Markit
Agenda
17
▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Financial highlights for the quarter ended 30 September 2018
18
USD million 3Q 2018 2Q 2018
Total income 82.3 75.8
Charterhire and other expenses -8.9 -10.5
Operating expenses -14.1 -14.0
Administrative and BD expenses -11.3 -11.0
EBITDA 47.9 40.3
Depreciation -13.5 -13.6
Impairment -9.0 0.0
EBIT 25.3 26.7
Net interest expense -15.1 -15.7
Net other f inancials -1.3 -1.7
Profit before taxes 8.9 9.3
Corporate income tax -3.0 -1.4
Profit for the period 6.0 7.8
7.8
5.5
2.1
1.0 1.5
9.0
6.0
0
2
4
6
8
10
12
14
16
18
Q2 2018 EBITDA ex.reimb.
Reimburse-ment
Net finance Net other Impairment Q3 2018
US
D m
illio
n
Net profit variation, Q2 to Q3 2018
Balance sheet
19
▪ Redemption of marketable
securities portfolio
▪ Interest bearing debt reduced due
to scheduled amortization
▪ 38% adjusted equity ratio
USD million 30-Sep-18 30-Jun-18 31-Dec-17
Investments in FSRUs 1,658 1,671 1,386
Investments in new buildings 172 167 233
Other 95 102 92
Long-term restricted cash 13 13 14
Marketable securities 0 50 74
Cash and short-term restricted cash 201 145 160
Total assets 2,139 2,147 1,959
Equity attributable to the parent 510 507 479
Non-controlling interests 269 253 226
Total equity 779 760 705
Interest bearing debt 1,297 1,317 1,156
Other 63 69 98
Total equity and liabilities 2,139 2,147 1,959
NIBD 1,082 1,109 908
Adjusted equity 792 782 763
Adjusted equity ratio 38% 37% 39%
Höegh LNG is fully financed at attractive terms
20
Höegh Esperanza Höegh Gannet FSRU #10
Delivery April 2018 December 2018 Q2 2019
StructureExport credit and
commercial debt
Export credit and
commercial debtSale and leaseback
Leverage (% of
delivered cost)65-75% 65% 70-80%
Amortisation
profile16-18 years 16 years 20 years
Tenor 12 / 5 years 12 / 5 years 12 years
Fixed interest rate ~4% ~5% ~6%1
▪ With commitments received for
the financing of FSRU #10,
Höegh LNG is fully equity and
debt financed
▪ Diverse lending group
consisting of leading
international banks and credit
institutions
(1) Not yet swapped
0
50
100
150
200
250
300
350
400
450
Q4 2018 2019 2020 2021 2022 2023 2024 2025
US
D m
illio
n
Debt repayment schedule
Amortisation Amortisation of refinanced debt Balloons Bonds
Refinancing of Höegh Grace and Höegh Gallant well ahead of maturity and at improved terms
211) All balloons assumed refinanced in full, extending current amortisation profiles
▪ Refinancing of Höegh Gallant and Höegh Grace
totalling USD 385 million
Refinancing of outstanding amount of USD 320 million
Availability of USD 65 million in RCF
▪ Tenor stretched from 5 to 7 years, lower interest
rate margin
▪ Fixed interest expected to be approximately 5.3%
▪ Refinancing well ahead of Q4 2019 / Q2 2020
maturities
1
Independence
PGN FSRU
Lampung
HLNG02
HLNG03
Höegh
GiantHöegh
Esperanza
Höegh
Gannet
Höegh
Gallant
Höegh
Grace
Outstanding capital expenditures fully matched by available liquidity
22
Available liquidity at 30 Sept. 2018 USDm
Cash, net of HMLP 168
Revolving credit facility 39
Debt for Höegh Gannet 177
Debt for FSRU #10 178
Available liquidity 562
Increased leverage on Höegh Giant /
Höegh Esperanza / FSRU #1087
Targeted available liquidity 562-649
Outstanding capital expenditures,
30 September~370-390
177 178 - 206
0
50
100
150
200
250
Q4 2018 2019 2020
US
D m
illio
n
Capital expenditures and funding
Höegh Gannet debt FSRU #10 debt Equity
Agenda
23
▪ Highlights
▪ Operational update
▪ Market update
▪ Financials
▪ Summary
Summary
24
Record quarterly performance with EBITDA of 47.9 million and net profit of 6.0 million
Solid market backdrop with expanding LNG demand, especially in Asia
Positive impact from strong LNGC markets
Busy market for FSRUs, in final selection round / secured exclusivity for four FSRU projects
Newbuilding programme fully financed and successful refinancing of Höegh Grace / Höegh Gallant
25
Q&A session
29 November 2018 - 09:00 CET
Call-in details:
Norway +47 2350 0187
United Kingdom +44 (0)330 336 9104
United States +1 323 794 2558
Participant passcode: 040814
Alternatively, click here to be called directly and placed into the event
Webcast:
http://webtv.hegnar.no/presentation.php?webcastId=97451619