Höegh LNG The floating LNG services provider Fourth Quarter 2011 Presentation of financial results 29 February 2012
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
Agenda Highlights Financials Operational review and market outlook Summary 3
Highlights 4Q 2011 including subsequent events Signed 20 year charter agreement with PT Perusahaan Gas Negara for the Medan FSRU Selected preferred bidder for a 10 year FSRU charter agreement with AB Klaipedos Nafta in Lithuania Signed six month charter agreement for LNG Libra for North West Shelf Raised USD 206 million in new equity in a private placement Exercised option for delivery of one additional FSRU new building from Hyundai Heavy Industries Awarded pre-feed contract for a floating LNG production solution for the Tamar gas field offshore Israel Signed USD 288 million debt facility agreement 4
Highlights Financials Operational review and market outlook Summary 5
Income statement USD million 4Q2011 4Q2010 2011 2010 TOTAL INCOME 30,0 25,4 109,8 94,9 - Charterhire expenses (5,1) (4,9) (20,1) (19,2) Operating expenses (10,6) (8,1) (32,4) (27,1) Administrative expenses (6,5) (5,1) (17,0) (13,5) Project development expenses (4,2) (4,1) (14,2) (11,1) - EBITDA 3,5 3,3 26,1 24,0 - Depreciation and impairment (5,8) (4,3) (19,6) (13,8) EBIT (2,4) (1,0) 6,5 10,2 - Interest expenses (6,3) (6,6) (25,2) (22,4) Interest income 0,0 0,1 0,7 0,2 Other financial items 0,1 (0,7) 0,2 0,9 Taxes (0,1) (0,2) 0,2 (0,8) NET LOSS (8,6) (8,3) (17,7) (12,0) 6
Financial position USD million 31-12-11 30-09-11 31-12-10 Licences, design and other intangibles 83 83 80 Vessels and newbuildings 502 505 466 Restricted cash 13 13 10 Other non-current assets 16 10 3 Promisssory Note / Interest bearing receivables 90 90 53 Other current receivables 5 3 7 Current cash and short term deposits 37 44 29 TOTAL ASSETS 745 748 649 Total equity 133 142 73 Interest bearing debt 439 442 451 MtM of interest rate swaps 132 131 83 Other liabilities 41 32 42 TOTAL EQUITY AND LIABILITIES 745 748 649 Total equity adjusted for MtM of interest rate swaps 264,9 273,6 155,9 Equity ratio (adjusted for MtM of interest rate swaps) 35,6% 36,6% 24,0% Net interest bearing debt (less cash, mark. securities and restriced cash) 299,9 295,1 359,4 7
Cash flow statement USD million 4Q 2011 4Q 2010 2011 2010 Net loss before tax (9) (8) (18) (11) Adjustments of non-cash P&L items 12 9 44 36 Net changes in working capital, other 5 4 (2) (1) Net cash flow operating activities 9 5 24 23 Proceeds from sale of marketable securities/prom.note - 6 52 19 Investments in marketable securities - - (90) - Investments in vessels and newbuildings (1) (2) (57) (57) Investments in intangibles / equipment (3) (3) (7) (6) Net cash flow investing activities (4) 1 (102) (45) Proceeds from borrowings - 5-55 Repayment of borrowings (3) (2) (12) (6) Interest paid (6) (7) (25) (21) Issue of share capital net of transaction cost (0) - 126 - Payment of finance cost (4) - (4) - Other financing activities 0 - - - Net cash flow financing activities (13) (3) 85 28 TOTAL CASH FLOW (8) 3 8 7 8
Highlights Financials Operational review and market outlook Summary 9
Shipping Existing fleet operated according to expectations, with the exception of an unscheduled dry docking and repair of the propeller shaft bearing and seal on Arctic Princess LNG Libra chartered six month to the North West Shelf project STX Frontier being marketed in the shipping market with availability from second half 2013 Discussing extension of existing charter for Norman Lady LNG Libra STX Frontier Norman Lady 10
Regasification Medan FSRU contract finalised Final agreement signed with Perusahaan Gas Negara (PGN) on 25 January 2012 20 year firm contract with EBITDA contribution of approx. USD 40 million p.a. 5+5 years extension periods with EBITDA contribution of approx. USD 60 million p.a. Project consists of FSRU newbuilding #1 and an offshore mooring package with an estimated all-in project cost of USD 320-330 million Planned start-up September 2013 Medan FSRU project execution team established and in operation Financing proceeding according to plan Medan 11
Regasification Contract award for Klaipeda FSRU project Höegh LNG selected as the preferred FSRU supplier for the Klaipeda LNG import terminal in Lithuania 10 year firm contract with EBITDA contribution of approx. USD 50 million p.a. The contract counterpart is AB Klaipedos Nafta (KN) owned 70.63 % by the Lithuanian government Project consists of upgraded jetty moored FSRU, HLNG to provide only FSRU, jetty provided by Klaipedos Nafta FSRU #2 from Hyundai with full trading capabilities and upgraded regas system designated for project Estimated all-in project cost of USD 320-330 million Planned start-up Q3 2014 Final agreement to be completed shortly 12
Regasification Höegh LNG participating in several tendering processes 1 2 3 4 Indonesia: Status: Bids to be submitted in Q1 2012 Expected contract award: Mid 2012 Chile 1: Status: Indicative bids submitted Expected contract award: End 2012 Chile 2: Status: Indicative bids submitted Expected contract award: Mid 2012 Undisclosed Asia project: Status: Bilateral negotiations with counterpart Expected contract award: End 2012 5 Caribbean: Status: Bids to be submitted in Q1 2012 Expected contract award: End 2012 13 Source: Höegh LNG
Regasification FSRU newbuilding programme Executed option for delivery of FSRU 3 and granted one new priced option FSRU 1 and 2 allocated Medan and Klaipeda, respectively FSRU 3 currently available in the market Two priced options with firm delivery dates Two options with terms to be negotiated Flexibility on final specifications, in particular storage size, regasification capacity and trading capability 14
FLNG Contracted to do pre-feed engineering work for the use of an FLNG on the Tamar gas field offshore Israel In discussions with several oil companies to conduct paid engineering work for developing their gas reserves using FLNGs Considering alternatives for optimising the structure, organisation and financing of the FLNG activities and in the final process of appointing a Financial Advisor 15
LNG demand fundamentals remain very strong LNG demand to double from 2010 until 2025 Demand driven by Asia-Pacific region followed by Europe Demand increase driven mainly by additional power generation and the shift in feedstock from oil, coal and nuclear to natural gas Incremental demand post 2016 to be supplied mainly from Australia and North America mmtpa 450 400 350 300 250 200 150 100 50 0 2005 2010 2015 2020 2025 Asia Pacific Europe & Middle East Africa America 16 Source: Wood Mackenzie
LNG supply growth backed by committed liquefaction projects Liquefaction capacity (nominal) Country Project Name FID Start-Up MTPA mmtpa 700 600 500 400 300 200 100 0 2005 2010 2015 2020 2025 Asia Pacific Europe & Middle East Africa America Australia is the "game changer" for LNG production post 2015 with approximately 50% of new potential liquefaction capacity Algeria Gassi Touil Taken 2013 4.7 Papua New Guinea PNG Taken 2014 6.6 Angola ALNG Taken 2012 5.2 Australia Australia Pacific Taken 2015 4.5+4.5 Browse 2013 2018 4.0+4.0 Gladstone Taken 2015 7.8+10.0 Gorgon Taken 2014 5.0+5.0+5.0 Ichtys Field Taken 2016 4.2+4.2 Pluto Taken 2012 4.8 Prelude Taken 2016 3.5 Queensland Curtis Taken 2014 4.25+4.25 Weatstone Taken 2015 4.4+4.4 Indonesia Tangguh 2012 2015 3.8+3.8 Nigeria Brass 2012 2016 5.0+5.0 NLNG 2012 2016 4.7 Papua New Guinea Liquid Niguini 2012 2014 2.0 Canada Kitimat 2012 2015 5.0+5.0 USA Freeport 2012 2015 4.4+4.4+4.4 Sabine Pass 2012 2015 9.0+9.0 TOTAL 130-165 17 Source: Wood Mackenzie, Fearnley LNG
Strong LNG transportation market Seasonal Peaks Fukushima Source: Fearnley LNG / Fearnley Fonds, 27.02.2012 18
30+ FSRU regasification projects in pipeline worldwide Owner Vessels Projects* Höegh LNG 2+3 Boston, Medan, Klaipeda Golar LNG 3+3 Petrobras VT1&2, Dusup/Dubai, West Java Excelerate 8+1 Bahia Blanca, Kuwait, Escobar, Petrobras VT3 * Projects in operation or awarded 30+ projects in pipeline 19 projects in Asia/Middle East Existing Under construction / awarded Potential 5 projects in South America 7 projects in Europe/Africa HLNG has several bids in process 19 Source: Höegh LNG
Global LNG fleet overview Type Delivered Newbuildings on order Under conversion Total LNGC 364 69-433 FLNG - 1-1 FSRU 13* 6** 2 21 Total 377 76 2 455 * 10 newbuildings and 3 conversions ** In additional to six firm FSRU orders globally, Golar LNG has options to convert two LNGC orders to FSRUs LNGC fleet 364 LNG vessels in fleet 69 newbuildings on order (18.9%) 13 FSRUs in fleet FSRU fleet 6 FSRU newbuildings on order plus 2 options to change from LNGC to FSRU Source: Wood Mackenzie, LNG Unlimited, Fearnley LNG 20
Floating LNG the next growth segment Shell s decision to develop the Prelude field using a FLNG solution a game changer for the floating liquefaction industry Undisclosed Noble Shell Inpex PTT GDF Suez InterOil Talisman Oil Search Inpex has chosen FLNG as technical solution for the Masela field, no FID yet A number of other upstream operators are considering FLNG solutions in developing existing gas reserves Due to shale gas production, the US will now start exporting LNG, creating new opportunities for the use of FLNG Petrobras Eni Anadarko 21
Agenda Highlights Financials Operational review and market outlook Summary 22
Summary Important milestones achieved during the quarter and in subsequent events one firm FSRU contract, one preferred supplier status for FSRU, successful equity raising and the exercise of one FSRU option Höegh LNG with a strong competitive position in a high barrier to entry market with attractive returns Thank you! 23