Awilco LNG Q2 2013 results presentation

www.awilcolng.no - 1 -

Q2

2013 Jon Skule Storheill

Snorre Krogstad


This presentation may include certain forward-looking statements, forecasts, estimates, predictions, influences and projections regarding the intent, opinion, belief, various assumptions or current expectations of Awilco LNG (the “Company”) and it’s management with respect to, among other things, (i) goals and strategies, (ii) evaluation of the Company’s markets, competition and competitive position, and (iii) anticipated future performance and trends which may be expressed or implied by financial or other information or statements contained herein.

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 forward-looking statements, forecasts, estimates, predictions, influences and projections are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that will occur in the future, some of which are beyond our control and difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, and no representation is made as to the accuracy of these. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements, forecasts, estimates, predictions, influences and projections are: changes in LNG transportation market trends; changes in the supply and demand for LNG; changes in trading patterns; changes in applicable maintenance and regulatory standards; changes in applicable regulations and laws; technological developments affecting gas and LNG demand; political events affecting production and consumption of LNG; changes in the financial stability of clients of the Company; the Company’s ability to secure employment for available vessels and newbuildings on order; increases in the Company’s cost base; failure by yards to comply with delivery schedules; changes to vessels’ useful lives and residual values; the Company’s ability to obtain financing of the newbuildings and lastly unpredictable or unknown factors with material adverse effects on forward-looking statements.

Neither the receipt of this presentation by any person, nor any information contained herein, constitutes, or shall be relied upon as constituting, any advice relating to the future performance of the Company. Each person should make their own independent assessment of the merits of the Company and its business and should consult their own professional advisors. The information and opinions contained in this presentation relate only as of the date of this presentation, and are subject to change without notice. Neither the Board of Directors of the Company or the Company and it’s management make any representation or warranty, express or implied, as to the accuracy or completeness of this presentation or of the information contained herein and none of such parties shall have any liability for the information contained in, or any omissions from, this presentation, nor for any of the written, electronic or oral communications transmitted to the recipient in the course of the recipient’s own investigation and evaluation of the Company or its business. Unless legally required, the Company assumes no responsibility or obligation to update publicly or review any of the forward-looking statements contained herein, whether as a result of new information, future events or otherwise.

Disclaimer


Agenda 27/8 2013

1. Company Overview and Highlights Q2

2. Financials Q2

3. Market update

4. Summary


Company Overview

Awilco LNG is a pure play LNG transportation provider, owning and

operating LNG vessels. The Group owns three 125,000 cbm LNG

vessels: WilGas, WilPower and WilEnergy. In addition, the Group will

take delivery of two 155,900 LNG newbuildings from Daewoo

Shipbuilding & Marine Engineering Co., Ltd. in Korea during the 3rd and

4th quarter of 2013. Awilco LNG is listed on Oslo Axess under the ticker

code ALNG.


2nd Quarter Highlights

2nd quarter 2013

• Awilco LNG reported:

− Net freight income of MUSD 7.5 MUSD 12.0 in Q1 2013

− EBITDA of MUSD 2.3 MUSD 5.9 in Q1 2013

− Net profit of MUSD (0.1) MUSD 4.0 in Q1 2013

• Vessel utilisation of 54 % (trading vessels), compared to 62 % in Q1 2013

Subsequent events

• Newbuilding program fully financed as firm financing agreement secured for newbuilding no. 1 through a sale-leaseback structure with Teekay LNG Partners L.P. The first newbuilding is scheduled for delivery in mid-September 2013. Secured option for financing of newbuilding no. 2 with Teekay on similar terms


Contract Overview

WilEnergy: Due for re-delivery end of August after a single voyage

Newbuilding no.1: Available from September 2013

Newbuilding no.2: Available from November 2013

WilGas: Available from November 2014

WilPower: Lay-up

WilEnergy Available

Newbuilding no 1 Construction Available

Newbuilding no 2 Construction Available

WilGas On charter (Petrobras) DD

WilPower Available Lay-up

20142013


Agenda 27/8 2013


2. Financials Q2

3. Market update

4. Summary


Q2 2013 Income statement

Total freight income MUSD 9.6

• Decrease from Q1 due to lower utilisation and charter rates for WilEnergy

• 54 % utilisation trading vessels (62 % in Q1 2013)

Voyage related expenses MUSD (2.1)

• Decrease from Q1 due to lower utilisation

Operating expenses MUSD (3.9)

• Decrease from Q1 was mainly due to lay-up of WilPower, in addition to MUSD 0.7 of maintenance and repairs on WilEnergy expensed in the previous quarter

Administration expenses MUSD (1.4)

• The increase in administration expenses of MUSD 0.2 from Q1 was mainly a result of two new employees in the quarter

Net finance MUSD (0.4)

• The increased finance expenses compared to Q1 was mainly related to fees and interest expenses incurred on the short term credit facility and the cancelled newbuilding senior bank facility

USD million Q2'13 Q1'13 2012

Freight income 9.6 14.6 56.6

Voyage related expenses (2.1) (2.6) (4.3)

Net freight income 7.5 12.0 52.3

Operating expenses (3.9) (4.9) (18.4)

Administration expenses (1.4) (1.2) (4.6)

EBITDA 2.3 5.9 29.3

Depreciation (2.0) (2.0) (7.7)

Impairment parts/equip. - - (1.4)

Net finance (0.4) (0.1) (0.3)

Profit/(loss) before tax (0.1) 3.8 19.9

Tax (0.1) 0.2 1.8

Profit/(loss) (0.1) 4.0 21.7


USD million 30.06.13 31.03.13 31.12.12

Vessels 70.5 72.1 73.6

Vessels under construction 125.2 122.8 121.9

Other non-current assets 0.4 0.3 0.3

Total non-current assets 196.1 195.2 195.8

Trade receivables 2.5 3.3 2.5

Other short term assets 3.7 5.3 2.2

Cash 2.9 2.0 2.6

Total current assets 9.0 10.6 7.3

Total assets 205.1 205.8 203.0

Total equity 197.2 197.3 193.3

Non-current liabilities 0.1 0.1 0.3

Short-term interest bearing debt 2.1 - 1.6

Trade payables 1.2 3.2 0.7

Other current liabilities 4.5 5.1 7.1

Total current liabilities 7.8 8.3 9.4

Total equity and liabilities 205.1 205.8 203.0

Q2 2013 Balance sheet

Vessels MUSD 195.7

• Book value existing vessels MUSD 70.5

• Supervision and construction cost newbuildings MUSD 2.3

during the quarter

Current assets MUSD 9.0

• Cash MUSD 2.9 vs. MUSD 2.0 Q1

Current liabilities MUSD 7.8

• Reduction from Q1 due to payment of trade payables, offset

by drawings on credit facility of MUSD 2.1

• Interest bearing debt MUSD 2.1 as of Q2


Q2 2013 Cash flow

Operating activities MUSD 1.6

• Decreased inventory and trade receivables offset by decreased trade payables

Investing activities MUSD (2.8)

• MUSD 2.3 supervision and construction of newbuildings

• MUSD 0.4 in minor upgrades of existing vessels

Financing activities MUSD 2.1

• Drawing of MUSD 2.1 on the credit facility

Cash at the end of the quarter MUSD 2.9

• MUSD 12.9 available under the MUSD 15.0 credit facility

USD million Q2'13 Q1'13 2012

Cash Flows from Operating Activities:

Profit/(loss) before taxes (0.1) 3.8 19.9

Taxes paid - - (0.1)

Depreciation and amortisation 2.0 2.0 7.7

Impairment of vessel parts and equipment - - 1.4

Trade receivables, inventory and other short term assets 2.4 (3.9) (0.1)

Accounts payable, accrued exp. and deferred revenue (2.7) 0.5 (0.8)

Net cash provided by / (used in) operating activities 1.6 2.4 28.0

Cash Flows from Investing Activities:

Investment in vessels (0.4) (0.4) (12.9)

Investment in vessels under construction (2.3) (1.0) (42.4)

Investment in other fixed assets (0.1) - (0.2)

Net cash provided by / (used in) investing activities (2.8) (1.4) (55.5)

Cash Flows from Financing Activities:

Proceeds from (repayment of) borrowings 2.1 (1.6) 1.6

Net cash provided by / (used in) financing activities 2.1 (1.6) 1.6

Net changes in cash and cash equivalents 0.9 (0.6) (25.9)

Cash and cash equivalents at start of period 2.0 2.6 28.4

Cash and cash equivalents at end of period 2.9 2.0 2.6


Sale-Leaseback

Main terms sale-leaseback Teekay LNG Partners L.P.

• Awilco LNG and Teekay LNG Partners L.P. entered into following transaction on 4 August:

- Vessel: Newbuilding no. 1, option newbuilding no. 2 at similar terms

- Sale price: MUSD 205

- Pre-paid hire: MUSD 50 (will not be used towards BB hire, and be constant for the period)

- Term: 5 years + 1 year option

- BB hire: Fixed for 5 years and option period

- Purchase obligation : Fixed after 5 years and further reduced after 6

- The transaction is pure financial: 75% gearing of the vessel at a competitive cost of capital

- Few covenants and no financial nor commercial covenants

- The transaction will be recognised as financial lease - vessel as long term asset - lease obligation as long term debt


Agenda 27/8 2013


2. Financials Q2

3. Market update

4. Summary


• Rates continued to decline during April and May, turning point in June and improved since

• Last reported DFDE USD 112,000 per day and 1st gen USD 40,000 per day

• Limited availability of vessels in Atlantic

• Increased number of vessels need for DD during 2013 compared to last year

Source: Fearnleys LNG

LNG spot charter rates

-

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

Week 40 46 52 6 12 18 24 30 36 42 48 2 8 14 20 26 32

Year 2011 2012 2013

USD / day

LNG spot charter rates

Average Spot Rate 138-145k ST Average Spot Rate 120-130k 1st Gen. Average Spot Rate 155-165k DFDE


LNG ton-mile

• Ton-mile down quarter on quarter compared to last year and last quarter

- Unplanned shutdowns and Force Majeure Nigeria

- Reduced gas price spread

Source: Arctic Securities

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013

Ton-mile

Ton-mile Q1 and Q2 2005 - 2013

Q1 Q2


• About 43 MTPA already approved for non-FTA export, additional 15 MTPA expected to be approved shortly

• First export scheduled for late 2015

• 63 MTPA from U.S. and Canadian projects have secured sales agreement corresponding to at least 90 vessels

• In total 177 MTPA under DOE review - if 50% of volumes are approved for export about 130 vessels needed

US LNG export potential

Source: Fearnleys LNG

7,7 10,7

13,0 6,1

9,6

16,1

10,6

21,5 3,8

11,5 8,2

19,9

8,4

190

16,9

10,5

15,3

0

20

40

60

80

100

120

140

160

180

200MTPA US LNG export potential

Non-FTA Approved FTA Approved


11 13

22 22

5

5

18

7 2

0

5

10

15

20

25

30

35

40

45

50

0

50

100

150

200

250

300

350

400

450

500

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Fleet Newbuildings

No contract Committed Total fleet

LNG Fleet (> 100 000 cbm) development and orderbook

World LNG Fleet by Year Built

Source: Fearnley LNG

• Total orderbook of 105 LNG carriers (excluding FSRU), of which 5 delivered so far in 2013

• 73 vessels committed and 32 vessels available

• Total fleet growth is not adjusted for deletion of old vessels (conversions /scrap/layup)


Agenda 27/8 2013


2. Financials Q2

3. Market update

4. Summary


Summary Awilco LNG Newbuildings

− Delivery mid-September and Q4

− Secured financing for newbuilding no.1 and option at similar terms for newbuilding no. 2

− Vessels marketed for both spot and medium contracts

− Onshore LNG organisation and crew in place

WilGas

− Dry-dock scheduled in Q1 2014

WilEnergy

− Spot voyages / short term trades being discussed


Summary Market

Short term market – rates held up during summer months despite lack of new LNG production

− Disruption in production remains a factor

− Tonnage surplus remains thin

Long term fundamentals – remain positive

− Demand for LNG is outpacing supply

− Liquefaction capacity is set for growth, especially in the U.S.

− Delays of new LNG capacity will remain an uncertainty, but LNG production from U.S. most likely more on time than other projects


Q&A

Experienced

management team

2nd gen. fleet of

3 LNG carriers

2 newbuildings

world class yard

Solid owners Tier 1 customer

Opportunistic strategy

A Pure Play LNG Transportation Provider


Jon Skule Storheill

CEO

Mobile: +47-9134 4356

E-mail: [email protected]

Snorre Krogstad

CFO

Mobile: +47-9085 8393

E-mail: [email protected]

Business

Awilco LNG Q2 2013 results presentation