BW LPG Limited · OSL:BWLPG
BW LPG — Argus India Oil & Gas Summit 2015
25 slides from BW LPG's conference presentation, Mar 18, 2015
Slide 1: NGLs and ethane – What's on the horizon?
NGLs and ethane – What’s on the horizon? Argus India Oil & Gas Summit March 18 2015 1
Slide 2: Important information and disclaimer
Important information and disclaimer This presentation has been produced by BW LPG Limited (“BW LPG”) exclusively for information purposes. This presentation may not be reproduced or redistributed, in whole or in part, to any other person. Matters discussed in this presentation and any materials dis
Slide 3: Section I: BW LPG Introduction
Section 1 Section I Business Update BW LPG Introduction
Slide 4: Our market leading position
Our market leading position Vision “BW LPG will be a driving force in the growth of the global NGL marketplace by providing market leadership in marine-based NGL logistics solutions across the globe.” BW LPG is the largest owner/operator of VLGCs, with a fleet of 38 VLGCs and 5 LGCs, including new
Slide 5: 35 years of operating experience to provide market-leading reliability
35 years of operating experience to provide market-leading reliability Oil companies have strict requirements on crewing Experience requirement for top 4 officers BW LPG BW LPG onshore 1 vessel 10 vessels (pool of 334 senior officers) (53 technical professionals) Time on gas 816 years 24 years 240 y
Slide 6: Section II: Indian LPG Fleet & Ethane Orderbook Overview
Section 1 Section II Business Update Indian LPG Fleet & Ethane Orderbook Overview
Slide 7: Indian flagged & owned LPG fleet
Indian flagged & owned LPG fleet Indian Flagged & Owned Ships As % of Fleet By Segment 100% 90% 80% 70% 60% 50% 40% 30% 20% 9.1% 9.1% 7.1% 10% 4.0% 2.2% 3.0% 1.7% 2.2% - - 0.4% 0.4% - LPG Fleet VLGC LGC MGC 5- 20k CBM <5k CBM Indian Flag Indian Owner • 3% of the LPG fleet is under Indian Ownership w
Slide 8: Ethane orderbook
Ethane orderbook Owner Yard # Vessels CBM Design Charterer Servicing Hartmann / Jaccar Sinopacific Offshore & Engineering 5 85,000 Tri-lobe Type C Oriental Energy China Reliance Industries Samsung Heavy Industries 6 87,000 Membrane Reliance Industries Jamnagar, India Navigator Gas Jiangnan S.Y. 4 35
Slide 9: Section III: VLGC Snapshot
Section 1 Section III Business Update VLGC Snapshot
Slide 10: VLGC rates still going strong while NB prices steady
VLGC rates still going strong while NB prices steady 2014 was a record year for VLGCs, with continued strength in the beginning of 2015 Trailing Ten Year Monthly Nominal VLGC One Year Timecharter-Equivalent Rates ($ Per Day) $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 - January Februa
Slide 11: VLGC fleet growth & rates; this time might be different?
VLGC fleet growth & rates; this time might be different? Fleet age: 10.8 years Orderbook: 85 vessels / 50% of delivered fleet 2015 Deliveries: 36 vessels 2016 Deliveries: 46 vessels Annual VLGC Fleet Growth vs. VLGC TCE Rates 25% Version 2015 $120,000 Fleet Growth Version 2008 20% Fleet Growth Forec
Slide 12: Section IV: U.S. NGL Snapshot
Section 1 Section IV Business Update U.S. NGL Snapshot
Slide 13: U.S. LPG export terminal capacity will nearly double
U.S. LPG export terminal capacity will nearly double Enterprise, P66 & Occidental all confirmed LPG export projects in quarterly earnings call with analysts, underpinned by term contracts US LPG Export Terminal Capacity Expansions 45 Petrogas 40 Trafigura/Buckeye DCP Midstream 35 Pembina Sage Midstr
Slide 14: Consensus U.S. LPG production & export forecast
Consensus U.S. LPG production & export forecast Production CAGR of 7% over next two years, export growth ranges from 12% - 30% p.a. US LPG Production & Exports (mmtpa) 90.0 30.0 External Export Forecast Range 80.0 LPG Production (LHS) 25.0 70.0 LPG Production Forecast (LHS) (2014 - 2016 CAGR - 7.2%)
Slide 15: NGL prices are too high! NGL prices are too low!
NGL prices are too high! NGL prices are too low! Prices must find the balance between keeping cargoes flowing and supporting U.S. production growth NGL Barrel as % of Crude Oil (Trailing 5 Years) 140% % of Brent % of WTI 120% 100% 80% 60% 40% 20% - NGL Barrel as % of Crude Oil (2014 - Present) 80% %
Slide 16: Total rig count down by 38%, oil production still rising
Total rig count down by 38%, oil production still rising Total U.S. Rig Count (1192) By Trajectory 2,500 10 Directional Horizontal Vertical Oil Prod (mmbpd) 2,250 9 2,000 8 1,750 7 1,500 6 MMBPD # Rigs 1,250 5 1,000 4 750 3 500 2 250 1 - - Rig Count Delta As % of Total Trajectory Current 26-Nov-14 #
Slide 17: Horizontal rig count at major shale plays down 31%
Horizontal rig count at major shale plays down 31% Horizontal Rigs (660) By Major Shale Play 1,200 Bakken Eagle Ford Haynesville Marcellus Niobrara Permian Utica 1,000 800 600 400 200 - Rig Count Delta As % of Total Shale Play Current 26-Nov-14 # Rigs % Current 26-Nov-14 Bakken 119 187 (68) (36%) 18
Slide 18: International propane price differentials have narrowed
International propane price differentials have narrowed Propane Prices ($ Per Ton) $1,400 $700 Asia - MB Spread Asia Propane Mont Belvieu $1,200 $600 $500 $1,000 $400 $800 $300 $600 $200 $400 $100 $200 - - ($100) 18 Source: Bloomberg, BW LPG analysis
Slide 19: Competitiveness of U.S. ethane over naphtha has eroded
Competitiveness of U.S. ethane over naphtha has eroded Ethane & MOPJ Prices ($ Per Ton) $1,200 $900 MOPJ - $503 Ethane - $136 MOPJ - Ethane Spread (RHS) $1,000 $750 $800 $600 $600 $450 $400 $300 $200 $150 - - • Oil price drop has given way to “wait and see” approach for new projects • U.S. ethane st
Slide 20: Section V: Conclusions
Section 1 Section V Business Update Conclusions
Slide 21: Consensus bull & bear views on effect of oil price drop on U.S. LPG exports
Consensus bull & bear views on effect of oil price drop on U.S. LPG exports • Lower oil price leads to lower naphtha price and narrower arbitrage • Rig counts, and thus production, will decline – Rig productivity has increased but average well productivity has decreased BEAR – Production can only be
Slide 22: Market-based corrective measures for NGLs
Market-based corrective measures for NGLs Increased steam cracker consumption Propane has been feedstock of choice till recently in U.S. helping to lower historically high inventories Asian crackers have switched some capacity from naphtha to propane Rejection Ethane rejection at very high
Slide 23: What is on the horizon?
STRICTLY PRIVATE & CONFIDENTIAL What is on the horizon? • >20% VLGC fleet growth p.a. over next two years SHIPPING • Peak of new orders was in 2014 • Cargoes still coming to market, greater importance of long-term shipping coverage • NGL prices could trade down to nat-gas equivalent levels in near-t
Slide 24: The value of long term shipping partners
The value of long term shipping partners Freight as a % of cargo is near all-time high, shipping coverage secured at favorable terms good for trading Spot Freight as % of CIF Asia Propane Price 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% - Term Charter as % of Spot 350% 300% 250% 200% 150% 100% 50% - 24 Sou
Slide 25: Thank You
Ww BW LPG Thank You