Flex Lng Ltd. · NYSE:FLNG
Flex Lng — 4th Credit Agricole CIB Shipping Conference at Marine Money Week NYC 2022
20 slides from Flex Lng's conference presentation, Jun 21, 2022
Slide 1: 4th Credit Agricole CIB Shipping Conference at Marine Money Week NYC 2022
4th Credit Agricole CIB Shipping Conference at Marine Money Week NYC 2022 June 21, 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: First, we invested at the bottom of the cycle
1) $m 170 180 190 200 210 220 230 Jan-05 240 Source: Clarksons SIN Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Modern LNG Carrier NB Price Jan-14 Jul-14 Jan-15 Jul-15 FIRST, WE INVESTED AT THE BOTTOM OF THE CYCLE Jan-16 Jul-1
Slide 4: Then we started fixing out ships from 2021, but three left
THEN WE STARTED FIXING OUT SHIPS FROM 2021, BUT THREE LEFT 5
Slide 5: The term market remains super tight
THE TERM MARKET REMAINS SUPER TIGHT TC rate assessment per day basis prompt delivery $180,000 $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: Fearnle
Slide 6: Despite a cooldown of spot market after Freeport closure
DESPITE A COOLDOWN OF SPOT MARKET AFTER FREEPORT CLOSURE Headline rate MEGI/XDF Flex LNG has no direct exposure to Freeport closure, all ships are on TC and the effect is thus limited to the 200,000 achievable earnings on the three ships on variable hire linked to the spot market 180,000 160,000 Fre
Slide 7: So now we are returning cash to shareholders
SO NOW WE ARE RETURNING CASH 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 m
Slide 8: And we are continuously optimizing our balance sheet
AND WE ARE CONTINIOUSLY OPTIMIZING OUR BALANCE SHEET Status Balance Sheet Optimization Program ✓ New $375m: 2/3 ships done ✓ New $320m Leases: Executed in May • 13 state-of-the art LNGCs • Average fleet age of 2.5 years • The fleet has been acquired at historical attractive prices compared to the ne
Slide 9: 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 Japan LNG imports as of end 60 60 May at 31.6m vs China 21.6m 101 (China was 32m Jan-May 2021) 101 96 96 40 40 20 20 0 0 Q1-21 Qatar
Slide 10: Europe been soaking up spot LNG cargoes this year
EUROPE BEEN SOAKING UP SPOT LNG CARGOES THIS YEAR 1) Source: Kpler 11
Slide 11: 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 12: 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 13: 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 14: Current status of the LNG product market
CURRENT STATUS OF THE LNG PRODUCT MARKET Arbitrage: $124m TTF: $38 JKM: $36 Henry Hub: $7 Cargo value: Cargo value: Cargo value: $152M $144m $28m DES NWE: 35 Cargo value: Arbitrage: $116m $140M Full price US cargo typically Henry Hub +15% = $8 + tolling fee of $2-3 (however sunk costs) meaning full
Slide 15: ESG is part of our business
ESG IS PART OF OUR BUSINESS • 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 & Safety This ye
Slide 16: Why we started using natural gas
WHY WE STARTED USING NATURAL GAS 17
Slide 17: Air pollution is a silent killer matching Covid-19 in lethality
AIR POLLUTION IS A SILENT KILLER MATCHING COVID-19 IN LETHALITY 18
Slide 18: China's environmental Kuznets moment
CHINA’S ENVIRONMENTAL KUZNETS MOMENT 19 Source: BCA, PEW Research, Energy Policy vol 62 2013
Slide 19: LNG is a health policy
LNG IS A HEALTH POLICY • In South Asia, air pollution larger health risk than tobacco, cancer, water sanitation and on par with dietary risk • If the air pollution improves from China's level to the American EPA standard level, that means that would improve everyone's education by around one year 20
Slide 20: Have a great Marine Money Week!
HAVE A GREAT MARINE MONEY WEEK! 21
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