Slide 1: First Quarter 2022 Results
First Quarter 2022 Results May 11, 2022 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS MATTERS DISCUSSED IN THIS PRESENTATION MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES SAFE HARBOR PROTECTIONS FOR FORWARD-LOOKING STATEMENTS IN ORDER TO ENCOURAGE COMPANIES TO PROVIDE PROSPECTIVE INFORMATION ABOUT T
Slide 3: Highlights
HIGHLIGHTS Soft spot market in Q1-22 due to European cargo pull Revenues of $74.6m in line with previous revenue guidance Net income and adj. Net income(1) of $55.8m and $23.8m Effective hedging strategy with gains of $31.9m in Q1-22 EPS and adj. EPS (1) of $1.05 and $0.45 Quarterly dividend of $0.7
Slide 4: Attractive backlog with 98% of 2022 already covered
ATTRACTIVE BACKLOG WITH 98% OF 2022 ALREADY COVERED 4
Slide 5: High earnings visibility while maintaining market exposure
HIGH EARNINGS VISIBILITY WHILE MAINTAINING MARKET EXPOSURE 5
Slide 6: Reiterate revenue guidance +/- 5% vs. 2021 with less volatility
REITERATE REVENUE GUIDANCE +/- 5% VS. 2021 WITH LESS VOLATILITY Revenues $m 120 100 Reiterate guidance Reiterate guidance 80 Guide ~$80m Delivered $74.6m 60 40 20 0 Q1 Q2 Q3 Q4 2021 Quarterly Revenues 1) Source: Company estimates, assumes regular operations of the ship with no unforeseen down-time 6
Slide 7: Earnings belongs to shareholders
EARNINGS BELONGS TO SHAREHOLDERS Cashflow expected to increase as we forecast higher revenues in Q2, Q3 and Q4 than in Q1 In 2021 we took delivery of our three last newbuildings with net capex of about $17.5m or about $0.33 per share 1) Adjusted net income and adjusted EPS are non-GAAP measures. A r
Slide 8: Financial highlights
FINANCIAL HIGHLIGHTS • TCE1 per day of $62,627 • Opex per day of $12,266 • Opex includes a $2.9m positive one-off adjustment • Adjusted for the positive one- off adjustment, the opex per day was impacted by higher Covid related costs for crew changes and handovers in Q1 than previous quarters. 1) TC
Slide 9: Robust and clean balance sheet
ROBUST AND CLEAN BALANCE SHEET Status Balance Sheet Optimization Program ✓ New $375m Facility: Signed Flex Ranger and Flex Rainbow refinanced. ✓ New $320m Leases: Signed Flex Courageous and Flex Rainbow to be refinanced in May • 13 state-of-the art LNGCs • Average fleet age of 2.5 years • The fleet
Slide 10: Solid cash balance with full effect of refinancings in Q2
SOLID CASH BALANCE WITH FULL EFFECT OF REFINANCINGS IN Q2 $m Note: Amortizations are higher in Q1 and Q3 due to semi annual repayments under the $629m ECA facility 10
Slide 11: Interest risk hedged by derivatives and fixed rate leases
INTEREST RISK HEDGED BY DERIVATIVES AND FIXED RATE LEASES • Added an aggregate of $200m of interest rate swaps with tenors of up to 10 years at average swap rate of ~1.7% (SOFR basis) during Q1. • Total interest rate derivative portfolio of $876m at average fixed rate of 1.25% and with a duration of
Slide 12: Inflation is also a newbuilding phenomenon
1) 170 180 190 200 210 220 240 230 Jan-05 $m May-05 Source: Clarksons SIN Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Modern LNG Carrier NB Price Sep-13 Jan-14 May-14 Sep-14 Ja
Slide 13: Global LNG volumes up by 5% in Q1-2022
GLOBAL LNG VOLUMES UP BY 5% IN Q1-2022 Mt Change in LNG Exports Q1-22 vs Q1-21 Mt Change in LNG Imports Q1-22 vs Q1-21 120 120 100 1.4 4.4 100 0.5 0.5 1 13 6 1 1 80 80 60 60 96 101 101 96 40 40 20 20 0 0 Q1-21 Qatar Indonesia Malaysia Russia USA Q1-22 Q1-21 Asia South North Europe Q1-22 America Amer
Slide 14: US exports +21% as of April 30, 2022
US EXPORTS +21% AS OF APRIL 30, 2022 EIA Short Term Energy Outlook, April 12, 2022 “We expect high levels of U.S. LNG exports to continue in 2022, Big Freeze Feb21 averaging 12.2 Bcf/d for the year, a 25% increase from 2021” Calcasieu Pass: 10MT Sabine Pass T6: 5MT 1) Source: Kpler, EIA 14
Slide 15: 73% of US cargoes exported to Europe in 2022 vs. 34% in 2021
73% OF US CARGOES EXPORTED TO EUROPE IN 2022 VS. 34% IN 2021 Pull to Europe 1) Source: Kpler 15
Slide 16: European pull has resulted in shorter sailing distances
EUROPEAN PULL HAS RESULTED IN SHORTER SAILING DISTANCES Average Nautical Miles 5,000 4,800 4,600 4,400 4,200 Q1-22 @ 4,2000 NM 15% shorter sailing distance than in Q4-21 4,000 Q1 Q2 Q3 Q4 2018 2019 2020 2021 2022 1) Source: Affinity 16
Slide 17: European LNG imports +52% Y-O-Y as of April 30, 2022
EUROPEAN LNG IMPORTS +52% Y-O-Y AS OF APRIL 30, 2022 Key import nations: +3.8 MT (+78%) +2.9 MT (+68%) +2.5MT (+49%) +1.6MT (+43%) +1.3MT (+62%) +1.3MT (+85%) + 0.5MT (+20%) 1) Source: Kpler 17
Slide 18: European LNG import capacity set to grow rapidly
EUROPEAN LNG IMPORT CAPACITY SET TO GROW RAPIDLY MT Spain has plenty of LNG European LNG import capacity: import capacity, but 60 very limited gas connectivity to rest of UK has high import 71 capacity but very 50 Europe Germany has zero limited storage 27 LNG import capacity capacity 184 40 but wil
Slide 19: But replacing Russian pipeline gas will take some time
BUT REPLACING RUSSIAN PIPELINE GAS WILL TAKE SOME TIME BCM/Y MT/Y Russian contracted pipeline flows to Europe and Turkey 200 180 160 140 120 100 80 60 40 20 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Natural Gas in BCM/Y Converted to LNG MT/Y 1)
Slide 20: Higher LNG demand create room for more projects
HIGHER LNG DEMAND CREATE ROOM FOR MORE PROJECTS Q4-21 presentation, Feb 16, 2022: Hot contenders for new volumes: Project Country Lead developer Capacity (MT) Status Fast LNG US New Fortress Energy 2,8 Start-up 2023 Congo LNG Congo Eni 3,0 Start-up 2023 Freeport LNG T4 US Freeport LNG 5,1 FID immine
Slide 21: Current status of the LNG product market
CURRENT STATUS OF THE LNG PRODUCT MARKET Spread between gas prices (TTF) and LNG prices in Europe (DES NWE) at highest ever due to glut of LNG but limited available regas capacity Arbitrage: $84m TTF: $28 JKM: $20 Henry Hub: $7 Cargo value: Cargo value: Cargo value: $112M $80m $28m DES NWE: $19 Carg
Slide 22: The LNG product market will continue to be tight
THE LNG PRODUCT MARKET WILL CONTINUE TO BE TIGHT $/MMbtu 40 Will bottlenecks in Europe result in continued high 35 TTF-DES NWE spread sending cargoes to Asia? 30 25 20 15 10 5 0 HHI JKM TTF Brent 13% DES NWE* 1) Source: Platts, EIA and ICE 2) Historical TTF defined as Platts DES NWE 22 3) DES NWE* i
Slide 23: Spot market bounced back and now above seasonal average
SPOT MARKET BOUNCED BACK AND NOW ABOVE SEASONAL AVERAGE Headline rate MEGI/XDF $200,000 $180,000 Affinity rate assessments May 6, 2022: $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $- 1 7 13 19 25 31 37 43 49 Week # Average 2018-2021 2022 Sparks + XDF/MEGI premium 1) Source: A
Slide 24: Active term market dried up spot market liquidity
ACTIVE TERM MARKET DRIED UP SPOT MARKET LIQUIDITY 1) Source: Poten 24
Slide 25: Term market going from strength to strength
TERM MARKET GOING FROM STRENGTH TO STRENGTH TC rate assessment per day basis prompt delivery $160,000 $160,000 $140,000 $140,000 $120,000 $120,000 $100,000 $100,000 $80,000 $80,000 $60,000 $60,000 $40,000 $40,000 $20,000 $20,000 $- $- 1 yr TC MEGI/XDF (LHS) 3 yr TC MEGI/XDF (RHS) 1) Source: Fearnley
Slide 26: Our 4th annual ESG report released today
OUR 4TH ANNUAL ESG REPORT RELEASED TODAY • We publish yearly ESG report according to SASB Estimated emission reduction of natural guidelines which includes information about: gas vs. coal in power generation(1) » Environmental Footprint of Fuel Use » Ecological Impacts » Business Ethics » Health & S
Slide 27: Summary
SUMMARY Q1 Revenues of $74.6m in line with the guidance Spot market bounced back and term market remains very strong Three attractive positions being marketed for ’23 & ’24 Revenues set to grow in the next quarters as 98% of year covered Quarterly dividend of $0.75 per share - attractive 12% yield S
Slide 28: Bon Voyage!
Bon Voyage! 28