Höegh LNG The FSRU services provider FSRUs - the key to growth for new LNG markets DNB s 10 th annual oil, shipping & offshore conference 02 March 2017 Sveinung J.S. Støhle President and CEO, Höegh LNG
Forward looking statements 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. 2
Company overview Markets Investment considerations 3
Höegh LNG the FSRU company LNG value chain: Liquefaction Transportation Focus for new investments Regasification / Infrastructure FLNG LNG carriers FSRU Put activities on hold in February 2016 2 units 6+4 1 units OSE NYSE 14 years USD 6.2bn 115 / 500 HLNG NO Listed OSE since 2011 Market cap USD ~820m HMLP US Listed NYSE since 2014 Market cap USD ~625m Average remaining contract length Revenue backlog Onshore / offshore employees (1) The Group also has 3 FSRUnewbuilding options at Samsung 4
Höegh LNG s current FSRU portfolio FSRUs Strategic rationale Location EBITDA Counterpart PGN FSRU Lampung FSRU #7 (newbuilding) To replace expensive liquid oil products in power generation Indonesia Asia Ghana Africa USD 40m USD ~36m Quantum Power Höegh Gallant Egypt Africa USD 40m Neptune FSRU #8 (newbuilding) To cover deficit in power production by using low cost LNG and to offset declining domestic gas production Turkey Europe Chile South America USD 33m USD ~36m FSRU #9 (newbuilding) Pakistan Asia USD ~36m GEI Höegh Grace To offset seasonal shortfalls in energy production Colombia South America USD 42m SPEC Independence Energy diversity and access to world markets for LNG Lithuania Europe USD 47m GDF Suez Cape Ann Operating as LNGC confirming FSRU s flexibility Worldwide trade USD 33m FSRU #10 (newbuilding) Uncommitted 5
Höegh LNG s business model at work Financing milestones Commercial milestones Long-term contract Ordered newbuilding Long-term contract Ordered newbuilding 20 year contract with Quantum Power in Ghana with startup 2018 LOI for one firm plus three optional FSRU newbuildings 20 year contract with GEI in Pakistan with startup 2Q 2018 Signed shipbuilding contract for one FSRU newbuilding with delivery 4Q 2018 Recycling of capital Sold 51% of Höegh Grace to HMLP HMLP raised USD 112 million Refinanced bond Issued new 5yr NOK 1,500 million senior unsecured bond to refinance HLNG01 6
Increasing diversification as revenue backlog grows Charter backlog 1 by charterer GEI 14 % Statoil 4 % Total 4 % Engie 9 % Revenue backlog of USD 6.2 billion 1 14 years average remaining tenor QP and GEI contracts further diversify backlog Quantum Power 14 % GNL Penco 14 % Each contract for 20 years with an average EBITDA contribution of USD 36 million annually No contract exceeding 17% of backlog EGAS 3 % PGN LNG 14 % SPEC 17 % Klaipedos Nafta 7 % 55% of backlog from counterparts operating in investment grade countries (Norway, France, Colombia, Chile, Lithuania) 1 Proportionate method 7
USDm Solid revenue growth trajectory as new FSRUs start contracts 500 T/C revenues existing fleet 1 Historical numbers 25 EBITDA (USDm) 27 27 26 31 400 300 200 4Q15 1Q16 2Q16 3Q16 4Q16 Total assets/adj. eq. ratio 100 1,502 1,667 1,644 1,644 1,713 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 40% 36% 36% 36% 40% Delivered fleet (end of 2015) Colombia (Höegh Grace) Pakistan (FSRU#9) Ghana (FSRU#7) Chile (FSRU#8) FSRU#10 (assumed) 2 4Q15 1Q16 2Q16 3Q16 4Q16 8 1 Reported figures (JVs by equity method). To be used as illustration only 2 Assumed contract
Höegh LNG Partners LP set to acquire the remaining 49% stake in Grace Drop down of Höegh Grace HMLP unit price development Asset 51% equity interest in owner of Höegh Grace 22 2500 Purchase price USD 188.7 million less USD 96.9 million in pro-rate deb outstanding (USD 91.8 million) 20 2000 Timing Transaction closed 4 January 2017 Grace transaction funded by equity issue Issuer Issue Size Use of Proceeds Höegh LNG Partners LP (NYSE: HMLP) 6,588,389 common units / net USD112 million Fund purchase price of 51% of Höegh Grace and partial repayment of seller s credit 18 16 14 12 LTM performance: HMLP: +30% Alerian MLP index: +31% S&P 500: +23% 10 feb 2016 apr 2016 jun 2016 aug 2016 okt 2016 des 2016 HMLP volume (r.a.) S&P500 (rebased) HMLP Alerian MLP index (rebased) 1500 1000 500 0 9
Pakistan FSRU project success in practice Jetty and pipeline to be built by consortium of HLNG, Qatar Petroleum, ExxonMobil, Total and Mitusbish Corp Easy access from sea FSRU site Onshore facilities 16 km offshore pipeline route, to be constructed by the consortium Pakistan project success parameters Bilateral negotiations FSRU under construction Charter Party signed HLNG/GEI Length and value: 20 years, USD 36m Licenses/permits to build infrastructure GEI/Pakistan authorities obtained Financing for infrastructure in progress Tolling agreement for terminal capacity signed consortium/gei in progress EPC agreement for infrastructure, led by HLNG in progress Final board approvals HLNG/GEI/consortium in progress Source: Navionics maps, HLNG, GEI 10
Company overview Markets Investment considerations 11
LNG volumes expanding on liquefaction capacity additions Liquefaction capacity and production 2000-2022 LNG demand rose by 17mt, or by ~7%, in 2016 The first year of meaningful growth since 2011 Liquefaction capacity was 37mt higher y/y at end-2016; utilization of newly added capacity to increase in 2017 35 countries imported LNG in 2016, up from 18 ten years ago Several countries started importing LNG in 2016 : Colombia, Jamaica, Pakistan demand Source: Clarksons Platou, Shell LNG outlook 2017 12
New market entrants clearly prefer FSRUs for their LNG imports LNG importing countries: Existing and planned/potential New markets 1 ~80% FSRUs Recent market entrants 2,3 ~65% FSRUs Established LNG markets Mostly land based terminals Already have FSRUs FSRUs planned or under construction Have FSRUs, but market is dominated by land based terminals Source: Cheniere 3Q16 presentation, amended by Höegh LNG 13
Pipeline of around 40 projects around the globe Existing Under construction / awarded Potential More than 40 projects in pipeline 14
Units More fragmented competition, but limited orderbook FSRU FSRU fleet fleet and and orderbook 1 by owner and and employment 12 10 1 1 8 3 1 6 2 4 8 7 6 1 3 2 1 1 1 0 Höegh LNG Excelerate Golar LNG BW Gas Other Maran Exmar Kolin Gazprom MOL OLT The orderbook stands at 12 FSRUs, of which 4 are uncommitted Uncommitted FSRUs (4 newbuildings, 1 existing vessel) compare to 14% of the total fleet and orderbook of FSRUs Four existing FSRUs are serving contracts that are about to expire, or at contracts with undetermined timelines On contract Available Committed NB Uncommitted NB 1 Orderbook defined as firm orders, excluding LOIs, options, conversions 15
Company overview Markets Investment considerations 16
Summary: Why invest in Höegh LNG The only pure play FSRU company Strong LNG/ FSRU market fundamentals Proven track record in securing longterm contracts USD 6.2 billion contract backlog and strong growth pipeline 17