Avance Gas Holding Ltd. · OTC:AVACF
Avance Gas — Q3 2023 Earnings Presentation
30 slides from Avance Gas's earnings presentation, Nov 28, 2023
Slide 1: Third Quarter Results 2023
Third Quarter Results 2023 November 28, 2023
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Matters discussed in this announcement may constitute forward-looking statements. All statements other than statements of historical facts included in this announcement, including those regarding Avance Gas' plans, strategies, business prospects, changes and trends in its
Slide 3: Q3 Highlights
Q3 HIGHLIGHTS Q3-23 TCE (discharge-to-discharge) of $55,300/day versus guidance high ~$50,000/day RESULTS Q3-23 TCE (load-to-discharge) of $46,700/day impacted by FFA’s and IFRS 15 timing effects Net Profit of $102 million or EPS of $1.33– strongest YTD Q3 results since 2015 Sale of Iris Glory expec
Slide 4: Q3/Q4 Commercial Performance
Q3/Q4 COMMERCIAL PERFORMANCE Q3-Commercial Performance: Q4-Commercial Guidance: (discharge-to discharge) (discharge-to discharge) Spot Rates: 36% Spot Rates: 30% $75,700/day ~$90-100,000/day Fleet TCE/day Q3-23 TC Rates: Fleet TCE/day Q4-231) TC Rates: $41,700/day ~$50,000/day $63,600 excl. FFA impa
Slide 5: Q3 Impacted by IFRS15, Timing Effects & FFA Hedges
Q3 IMPACTED BY IFRS15, TIMING EFFECTS & FFA HEDGES Discharge-to-discharge day Load-to-discharge On Discharge-to-discharge freight revenue is $180 000 Q3 In financial reports, IFRS spot revenue is only calculated on a round trip basis (i.e. from cargo recognized on laden voyage (i.e. load-to-discharg
Slide 6: The Avance Fleet
THE AVANCE FLEET Combined LPG and 20 10 Dual-fuel vessels Vessels1 8 Ammonia Carriers DF class MGCs Scrubber fitted Vessels ready for Avg. Age ~4.5 years 6 vessels 4 2 Ammonia Engine Polaris (2022) MGC #1 (2025) 2008/2009 class 2015 eco class Capella (2022) MGC #2 (2026) Venus Glory (2008) Chinook P
Slide 7: Employment Overview
EMPLOYMENT OVERVIEW 2023 2024 Vessel Size (CBM) Built EGCS LPG NH3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Iris Glory 83 700 2008 v Vessel sold Venus Glory 83 700 2008 v Breeze 83 000 2015 v Chinook 83 000 2015 Levant 83 000 2015 v Mistral 83 000 2015 v Monsoon 83 000 2015 v Pampero 83 000 2015 Passat 83 000 2015 v
Slide 8: Ramping Up Dividend in Line with Increased Earnings
RAMPING UP DIVIDEND IN LINE WITH INCREASED EARNINGS Dividend distribution Dividend decision criteria's $ / Share Q2-23 Q3-23 0,60 1 Earnings and cashflow Net Profit $102m - Strongest YTD Q3 since 2015 $0,50 $0,50 $0,50 $0,50 Q4-23 TCE/day guidance at $70-75kpdr and forward 0,50 2 Market outlook mark
Slide 9: Income Statement and Key Financial Figures
INCOME STATEMENT AND KEY FINANCIAL FIGURES ▪ TCE of $55,300/day for Q3 on discharge-to- Income Statement (in million $) Q3 2023 Q2 2023 Variance discharge basis. TCE on load-to-discharge basis was $46,700/day down from $52,000/day for TCE earnings 59 63 (3.3) Q2. Adjustment related to load to discha
Slide 10: Balance Sheet and Key Financial Figures
BALANCE SHEET AND KEY FINANCIAL FIGURES Balance Sheet (in million $) Q3 2023 Q2 2023 Variance ▪ Total assets consist primarily of 14 VLGCs on Cash & cash equivalents 146 192 (46) water (incl. asset held for sale) as well as two VLGCs & newbuildings under construction 918 907 11 dual fuel VLGCs and t
Slide 11: Robust Cash Position of $146M at Quarter-End
ROBUST CASH POSITION OF $146M AT QUARTER-END $m +$45 million from sale of Iris Glory, refinancing of Pampero and financing of VLGC NBs at delivery Changes in working capital primarily related to increase in prepayments Pre-delivery instalment of $19 million for MGC 1 & 2 and dry-docking expense 11
Slide 12: Flexible Financing Structure
FLEXIBLE FINANCING STRUCTURE Outstanding debt and committed financing Q3-2023 VLGC Newbuilding financing exceeds remaining capex (in million $) (in million $) Terminated by Q1-2024: ▪ Iris Glory: vessel sold ▪ Pampero: refinanced Final Maturity 2034 $200 Cash release of ~$14 million $72 $180 on deli
Slide 13: New Attractive Financing Secured
NEW ATTRACTIVE FINANCING SECURED New attractive bank financing secured Maintaining industry low cash break-even 1 ▪ Financing amount: $43 million for the VLGC Pampero (2015-built) ▪ Repayment profile: 20 years age-adjusted ▪ Maturity: January 2028 ▪ Margin: SOFR + 190bps $1,000 $4,400 ▪ Cash release
Slide 14: VLGC Spot Freight Rates Remains on "Fire"
VLGC SPOT FREIGHT RATES REMAINS ON “FIRE” $134/pmt $350/pmt $2.6m $2.3m TCE: $162,000/day YTD 45,000 KT YTD 37,000 KT + 14 % Y-o-Y + 6 % Y-o-Y $153/pmt $239/pmt TCE: $138,000/day TCE: $145,000/day YTD 28,400 KT YTD 9,500 KT + 23 % Y-o-Y - 3 % Y-o-Y Source: Fearnley, Baltic Exchange, Gibson, Braemar
Slide 15: Continued Strong Export Growth
CONTINUED STRONG EXPORT GROWTH Seaborne LPG export (Jan-Oct) Seaborne LPG Imports (Jan-Oct)2 VLGCs & MGC share1 KT KT YTD 2023 60 000 30 000 +17% +32% 50 000 25 000 +26% 83% 40 000 20 000 VLGC MGC OTHER 30 000 15 000 +4% YTD 2021 +58% 20 000 10 000 10 000 5 000 81% - - N. America Middle East Norther
Slide 16: U.S. Fundamentals Supporting Arbitrage Trade
U.S. FUNDAMENTALS SUPPORTING ARBITRAGE TRADE Strong production growth in the US US Propane stock levels at historical highs Continued strong export trend MT Million 100 % Bbl Estimates 90 % 120 120 80 % 110 +28% (From ‘20 to ’23) 100 70 % 100 60 % 80 90 50 % 80 60 40 % Continued muted domestic 70 co
Slide 17: Price Arbitrage Are Highly Supportive to Freight Rates
PRICE ARBITRAGE ARE HIGHLY SUPPORTIVE TO FREIGHT RATES Propane price differential US and Far East Spot freight rates are driven by the arbitrage 400 350 300 250 $/ton 350 200 150 100 300 50 0 250 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 TCE/day 200 $ / ton US-Japan 160 000 Frei
Slide 18: US Fields Are Becoming More Gaseous
US FIELDS ARE BECOMING MORE GASEOUS 1. US Gas-Oil-Ratio trending upwards 2. Higher GOR means more associated gas 3. And the associated gas is saturated in NGLs Gas-Oil-ratio (GOR) for fields generally increase Associated gas production in Permian, close to And the associated gas is saturated with NG
Slide 19: NGL Production Growth >50% Higher Than Crude
NGL PRODUCTION GROWTH >50% HIGHER THAN CRUDE Source: RBN Energy 19
Slide 20: For Every Barrel US Crude There Is Now ½ Barrel of NGL
FOR EVERY BARREL US CRUDE THERE IS NOW ½ BARREL OF NGL Natural gasoline/pentanes+ Isobutane Butane LPG Propane Ethane Source: RBN Energy and EIA 20
Slide 21: NGL/LPG 36% of Global Oil Demand Growth Since 2010
NGL/LPG 36% OF GLOBAL OIL DEMAND GROWTH SINCE 2010 Source: Enterprise Product Partners 21
Slide 22: Panama Canal Cut Transits 50% Thus Pricing Out VLGCs
PANAMA CANAL CUT TRANSITS 50% THUS PRICING OUT VLGCs Daily transits Neo-Panamax locks Auction price for spot Neo-Panamax slot # of Transits 12 New record of $3.98m paid for one-way northbound transit on $4 500 000 top of regular toll fee of ~$0.4m 10 US – China via Suez $4 000 000 14,500 NM 8 81 day
Slide 23: VLGC Orderbook Offset by Strong Fundamentals
VLGC ORDERBOOK OFFSET BY STRONG FUNDAMENTALS VLGC global fleet 373 Shrinking Orderbook currently Orderbook delivery schedule # vessels vessels on water # vessels stands at ~69 vessels or 18% of 50 existing fleet 14 12 45 44 10 “Dark” fleet currently consist of 52 vessels [13]% 35 8 40 6 of the total
Slide 24: Q3 Highlights
Q3 HIGHLIGHTS Q3-23 TCE (discharge-to-discharge) of $55,300/day versus guidance high ~$50,000/day RESULTS Q3-23 TCE (load-to-discharge) of $46,700/day impacted by FFA’s and IFRS 15 timing effects Net Profit of $102 million or EPS of $1.33– strongest YTD Q3 results since 2015 Sale of Iris Glory expec
Slide 25: Q&A and Appendix
Q&A and Appendix y
Slide 26: Appendix – Comments to the Income Statement
APPENDIX – COMMENTS TO THE INCOME STATEMENT Q3 2023 Q2 2023 Variance Income Statement (in thousands $) 3-months 3-months 3-months Operating revenue 79,475 84,575 (5,100) • TCE earnings (net of operating revenue and voyage expenses) of $59.2 million for the third quarter, down from $62.6 million in p
Slide 27: Appendix – Comments to the Balance Sheet
APPENDIX – COMMENTS TO THE BALANCE SHEET Q3 2023 Q2 2023 Variance Balance Sheet (in thousands $) 30.09.2023 30.06.2023 3-months ASSETS • Total assets consist primarily of 14 VLGCs on water (incl. asset held for Cash and cash equivalents 146,078 191,619 (45,541) sale) as well as two dual fuel VLGCs a
Slide 28: Appendix – Comments to the Cash Flow
APPENDIX – COMMENTS TO THE CASH FLOW Q3 2023 Q2 2023 Cash flow statement (in thousands $) Variance 3-months 3-months Cash flows from operating activities: Cash generated from operations 33,720 35,482 (1,762) • Cash and cash equivalents were $146.1 million on 30 September 2023, Interest paid (6,632)
Slide 29: Glossary
GLOSSARY A&G = Administrative and general CBE = Cash break even CAPEX = Capital expenditure EEXI = Energy Efficiency Existing Ship Index EPS = Earnings Per Share FY = Fiscal year IFRS = International Financial Reporting Standards IMO = International Maritime Organisation LPG = Liquefied petroleum ga
Slide 30: Contact Details
Contact Details Avance Gas Bryggegata 3 0112 Oslo, Norway +47 23 11 40 00 www.avancegas.com Investor Relations https://www.avancegas.com/Investor-Relations Stock Exchange ticker: AGAS