Pareto conference 31 August 2011
Awilco LNG a short but eventful history November 2010 February March April May - Entered negotiations for acquisition of three vessels -Awilco LNG founded and funded for acquisition of the three vessels - WilGas delivered after 15 months in lay-up, went straight to yard for DD and upgrade -NewbuildLOI signed with DSME for 2 +2 156 cbmnewbuilding -Private placement completed, raising MUSD 98 in new equity -WilPowerdelivered, commenced trading end May June - WilGas completed DD below budget MUSD 5 -WilEnergydelivered July August September -MUSD 15 credit facility secured -WilGas secured first cargo - CFO, SVP chartering and Head of Operations joined -Awilco LNG approved for listing at Oslo Børs -Tentative listing 6 September www.awilcolng.no 2
Strong balance sheet Equity MUSD 176 in new equity raised during 1 st half 2011 Debt No debt, the 3 existing vessels were acquired without debt, and 1 st installments on newbuildingspaid by cash MUSD 15 credit line secured -but undrawn Newbuildingsexpected to be about 60% leveraged depending on employment Liquidity MUSD 59 cash available after payment of 1 st installments on newbuildingsand acquisition of the 3 existing vessels Cash flow from existing vessels will continue to strengthen balance sheet until delivery of newbuildings www.awilcolng.no 3
Awilco LNG Management Management CEO Jon Skule Storheill CFO Snorre S. Krogstad Head of Operations Jan Espen Andersen SVP Chartering Ian Walker Accounting Awilhelmsen (Outsourced) Technical* Awilco (Outsourced)) Combined more than 90 years of shipping experience Additional internal capacity will be added to both technical and accounting Outsourcing of services will continue to be utilized www.awilcolng.no 4
Overview of the LNG value chain Production Liquefaction Shipping Re-gasification Offtake Onshore LNG Plant Terminal Power plant Offshore Platform/ Installation LNG FPSO LNGC FSRU* Awilco LNG core focus Gas-to-Wire Expansion opportunity * FSRU: Floating Storage and Regasification Unit, i.e., a floating gas import terminal www.awilcolng.no 5
FSRU conversions: Proven technology, project management is key FSRU conversions Key components of an FSRU conversion The concept of converting older vessel to FSRU is proven Moss tankers are well suited for conversions due to their self-supporting aluminum tanks, which do not deteriorate and do not structurally weaken the hull Conversion of an old vessel is a 15-24 month exercise, of which 3-6 months is included in tendering process Capex for conversion typically USDm 85-125 depending on layout and complexity While conversion is a complex project, it can be done at multiple yards, and with multiple equipment suppliers All key items are readily available from several suppliers Long-lead items include regasunit, turbo generators, turret (if applicable) www.awilcolng.no 6
Why LNG? Gas is clean Gas is abundantly available Gas is cheap LNG shipping fundamentals are appealing www.awilcolng.no 7
Why has air quality in London and Tokyo improved? London The great smog of 1952 led to the introduction of the Clean Air Act Tokyo Gas is clean www.awilcolng.no 8
Natural gas reserves are steadily increasing Gas is abundantly available Source: BP www.awilcolng.no 9
Natural gas vs. oil ( Natural gas* vs. oil prices (USD/boe)) 120 113 100 80 60 40 25 54 70 75 The discount to oil price (Brent) is in the 30-80% range Historical average is 20-30% 20 0 US gas EU spot gas EU oil-linked gas Japanese LNG price Oil (Brent) Gas is cheap *As of August 2011. EU oil-linked and Japanese LNG price is based on Brent at USD 113/bbl Source: BP; IMF; Bloomberg; Pareto www.awilcolng.no 10
World LNG demand expected to grow strongly World LNG demand 1990 2025e World LNG demand (bcm/year) 800 700 600 500 400 300 200 100 0 1990 1995 2000 2005 2010 2015 2020 2025 1990-2010 Wood Mackenzie BP Source: BP; Wood Mackenzie; Pareto The outlook for LNG demand is strong Wood Mac forecasts 6.5% p.a. through 2025 BP forecasts 5.7% p.a. over 2010-2020 and 4.4% p.a. over 2010-2030. LNG demand at 610-765 bcm in 2025, or 105-160% higher than the 297 bcm consumed in 2010 Further upside potential due to Nuclear-to-gas switching (Japan and Germany) Increase in demand from China Continued growth in demand www.awilcolng.no 11
Strong growth in LNG production capacity Mtpa 45 Additional LNG capacity from new projects 40 35 30 25 20 15 10 5 70 Mtpain new capacity by 2015 from projects under construction Additional capacity from debottlenecking potentially 10-20 Mt annually in 2011 and 2012 Total new capacity 90 110 Mtpaby 2015 0 2011 2012 2013 2014 1.2 vessels are required to carry 1 Mptaon average By 2015 about 100 additional vessels required for incremental volume, not accounting for : - Cargo diversion East (Japan) - Conversions to FSRU/FSU - Scraping Source: TRI-ZEN; Pareto www.awilcolng.no 12
World LNG Fleet by Year of Built First half of 2011 has seen an increase in orders being placed orderbooknow at 43 units + 4 FSRU + 2 FLNG Limited yard capacity until end 2014 We expect the orderbookto grow in the tail end of the period (2014-2015) Limited available yard capacity until end 2014 Source: Fearnley LNG www.awilcolng.no 13
World Standard LNG Fleet Utilisation Market likely to only get tighter next year reflected already by low shipping availability 100 extra cargoes East = 5.8 mtto Japan / Korea / China 5 mt/ p.afrom Qatar = 6 vessels needed. Qatar recently chartered 8 vessels from the market We expect a continued strong market for LNG shipping Source: Fearnley LNG www.awilcolng.no 14
Improvement in utlization is reflected in the rates Older vessels less efficient and thus lower rates, current discount about USD 35 K Utilization expected to further improve due to winter market Source: Fearnley LNG www.awilcolng.no 15
Awilco LNG s existing fleet of 2 nd gen. LNG carriers WilGas WilPower WilEnergy Built Yard Capacity (m3) Manager Flag Main engine Next DD Cap 1984 1983 1983 Nagasaki Kawasaki Nagasaki 125,631 125,660 125,556 V.Ships LNG V.Ships LNG V.Ships LNG NIS MI MI Steam turbine Steam turbine Steam turbine Dec 2013 May 2012 June 2012 2/1 Due next DD 1 www.awilcolng.no 16
Order of 2+2 156 cbm newbuilding LNG carriers Yard: Daewoo Shipbuilding Cost approximately MUSD 200 Soft payment terms Firm vessels with delivery August and November 2013 2 options with deliveries in 2014 Options to build as FSRU (option vessels) www.awilcolng.no 17
Well positioned for strong LNG market Contract coverage and fleet status Vessel WilPower Delivey 15 May 2011 2011 2012 2013 2014 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Undisclosed@ 45k/day Option #1 Option #2 Option #3 Available WilGas Delivery 13 Apr 2011 WilEnergy Delivery 30 Jun 2011 D/ D Available Available N/B #1 TBN Delivery Q3 2013 N/B #2 TBN Delivery Q4 2013 Available Korea Available Korea Construction/yard Firm contract Option Start-up delays related to loss of approvals in connection with change of ownership Two out of three vessels employed for important first cargoes Two vessels marketed and available for anticipated strong winter market www.awilcolng.no 18
Summary Market Short Term Increased utilization through cargo diversions to Japan Increased production through debottlenecking/ optimization Limited deliveries of newbuildings next two years Thereby improving utilization and rates Long term Long term LNG demand expected to grow 5 7% p.a Transportation demand assumed to double in 10 12 years Limited yard capacity until 2015 Increasing demand for FSRU and FSU will further reduce the total fleet High barriers to entry in LNG shipping, www.awilcolng.no 19
Summary Awilco LNG Well positioned for a firm market with 3 existing vessels, of which two available for contracts all exposed to market rates All existing vessels ideal candidates for FSRU conversions 2 newbuildings at attractive prices for delivery in 2013 2 options with delivery in 2014 Strong balance sheet Lean but experienced organization Stock listing tentative 7 September www.awilcolng.no 20