Höegh LNG - the FSRU provider 3Q 2018 Presentation of financial results 29 November 2018 1
Forward looking statements 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. 2
Agenda Highlights Operational update Market update Financials Summary 3
Highlights for the third quarter of 2018 and subsequent events 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 4
Agenda Highlights Operational update Market update Financials Summary 5
Commercial development 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 6
First mover advantage in the Chinese market under a 3+1 year contract with CNOOC Höegh Esperanza, Tianjin, China 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 7
USD per MMBtu A new market for FSRU growth: Investment in small-scale and Avenir LNG 20 18 16 14 12 10 8 6 4 2 0 Illustrative economics, small scale LNG Δ USD 4.3-9.6 5.7 LNG price 1 FOB 2 7.7 Δ USD 3.1 1.2 8.9 Handling2,3Delivered Handling3 Delivered bunkering powerplant Δ USD 7.5 0.9 9.8 Handling Delivered truck Cost of competing oil products 12 Rotterdam 380 CST 17.3 Rotterdam MGO 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 fullscale newbuilding FSRUs Avenir LNG listed at N-OTC in Oslo on 15 November 2018, Höegh LNG with 22.5% stake 8 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
Höegh LNG s FSRUs already providing multiple small-scale LNG services Small-scale LNG distribution LNG truck distribution Pipe-to-shore regasified LNG from FSRU Lithuania China Base service LNG bunkering Future Future ISO container distribution 9
Modern fleet marketed in growing long-term FSRU market Built EBITDA Charterer USDm/yr Höegh LNG Holdings Arctic Princess* 2006 19** Equinor 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 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 Delivery December 2018 Delivery Q2 2019 Long-term business under development FSRU and/or LNGC Long-term contract Extension option Under construction intermediate charter 10 * LNG carriers ** 100% basis, units are jointly owned
Agenda Highlights Operational update Market update Financials Summary 11
million tonnes Solid momentum in LNG trade, driven most prominently by growing Asian import demand 31 29 27 LNG trade by month, global Total trade of 236 million tonnes in 9M 2018, up 7.1% from 9M 2017 25 23 21 19 17 15 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 2014 2015 2016 2017 2018 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 12
million tonnes per month Additional regasification capacity required to meet growing Chinese LNG import demand 6 5 Chinese LNG imports and regasification capacity Total imports Total nameplate capacity Imports from time-to-time exceed available regasification capacity, particularly in northern China 4 3 During those periods, LNG is loaded as liquid onto trucks and distributed to the market 2 1 0 2016 2017 2018 One of Höegh LNG s FSRUs would add around USD 0.5 million tonnes of monthly regasification capacity November 2018e Source: Waterborne LNG / IHS Markit 13
Units 29 FSRUs currently on the water 13 new units scheduled to deliver through 2022 FSRU fleet and orderbook 1 by owner 12 10 8 2 1 Of 13 newbuilding orders, 5 are being built by developers for their own specific projects, and thus are not offered in the market 6 4 2 0 9 8 7 1 1 2 Botas Dynagas Java-1 Dynagas SWAN Maran Kol / Kal Exmar Gazprom MOL OLT Höegh LNG Excelerate Golar LNG BW Gas Other Single-purpose Existing Newbuilding LNGC-to-FSRU conversion Of the remaining 8 orders, 6 appear uncommitted with delivery through 2022 1 Orderbook defined as confirmed orders, excluding LOIs, options and conversions not firmed up Source: Höegh LNG 14
Large number of market opportunities backed by diverse drivers of demand Enabler Increasing supply of attractively priced LNG Demand drivers Security of supply Back-up for hydro Seasonal demand Transportation Balance of trade New gas-fired generation Replacement for coal and oil Region Existing In development Proposed N America 1 2 + S America 6 2 3 + Europe 4 2 4 + MENA 5 5 + Sub-Sahara Africa Existing and potential FSRU contracts 4 + South Asia 4 3 5 + Asia/Oceania 3 4 6 + Sum 22 12 30 + Source: IHS Markit 15
'000 USD per day Robust LNG carrier markets have several positive implications for the FSRU market 200 180 160 140 120 100 LNGC charter rates Steam spot DFDE spot Long-term 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 longterm rate levels 80 60 40 20 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 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 Data source: IHS Markit 16
Agenda Highlights Operational update Market update Financials Summary 17
USD million Financial highlights for the quarter ended 30 September 2018 USD million 3Q 2018 2Q 2018 Total incom e 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 financials -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 18 16 14 12 10 8 6 4 2 0 Net profit variation, Q2 to Q3 2018 7.8 Q2 2018 5.5 2.1 1.0 1.5 EBITDA ex. Reimbursement Net finance Net other Impairment Q3 2018 reimb. 9.0 6.0 18
Balance sheet 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% Redemption of marketable securities portfolio Interest bearing debt reduced due to scheduled amortization 38% adjusted equity ratio 19
Höegh LNG is fully financed at attractive terms Höegh Esperanza Höegh Gannet FSRU #10 Delivery April 2018 December 2018 Q2 2019 Structure Leverage (% of delivered cost) Amortisation profile Export credit and commercial debt Export credit and commercial debt Sale and leaseback 65-75% 65% 70-80% 16-18 years 16 years 20 years 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 Tenor 12 / 5 years 12 / 5 years 12 years Fixed interest rate ~4% ~5% ~6% 1 20 (1) Not yet swapped
USD million Refinancing of Höegh Grace and Höegh Gallant well ahead of maturity and at improved terms 450 Debt repayment schedule Refinancing of Höegh Gallant and Höegh Grace totalling USD 385 million 400 Refinancing of outstanding amount of USD 320 million 350 HLNG03 Availability of USD 65 million in RCF 300 250 200 150 100 HLNG02 Independence PGN FSRU Lampung Höegh Giant Höegh Esperanza Höegh Gannet Höegh Gallant Höegh Grace Tenor stretched from 5 to 7 years, lower interest rate margin Fixed interest expected to be approximately 5.3% 50 0 Q4 2018 2019 2020 2021 2022 2023 2024 2025 1 Amortisation Amortisation of refinanced debt Balloons Bonds Refinancing well ahead of Q4 2019 / Q2 2020 maturities 21 1) All balloons assumed refinanced in full, extending current amortisation profiles
USD million Outstanding capital expenditures fully matched by available liquidity Available liquidity at 30 Sept. 2018 USDm Capital expenditures and funding Cash, net of HMLP 168 Revolving credit facility 39 250 200 Debt for Höegh Gannet 177 Debt for FSRU #10 178 Available liquidity 562 Increased leverage on Höegh Giant / Höegh Esperanza / FSRU #10 Targeted available liquidity 562-649 87 150 100 50 177 178-206 Outstanding capital expenditures, 30 September ~370-390 0 Q4 2018 2019 2020 Höegh Gannet debt FSRU #10 debt Equity 22
Agenda Highlights Operational update Market update Financials Summary 23
Summary Record quarterly performance with EBITDA of 47.9 million and net profit of 6.0 million Busy market for FSRUs, in final selection round / secured exclusivity for four FSRU projects Positive impact from strong LNGC markets Solid market backdrop with expanding LNG demand, especially in Asia Newbuilding programme fully financed and successful refinancing of Höegh Grace / Höegh Gallant 24
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 25