Slide 1: Flex LNG Webinar Market Outlook H2-2020
Flex LNG Webinar Market Outlook H2-2020 The Webinar will be followed by a Q&A session July 2020 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: Recent Events
RECENT EVENTS • Covid-19 has resulted in convergence of gas prices globally at very low levels • Low prices resulted in about 130 cargo cancellations in US during April-August representing about 9mt shortfall in volumes • Expect market improvement from autumn as cancellations taper off and floating
Slide 4: Spot Market Review
SPOT MARKET REVIEW Spot LNGC freight rates (2-Stroke, TFDE, Steam) Total Fixture Activity (Existing Vessels Only) Freight market rallied in March, but fell back April – Very high fixture activity but mostly focused on single June due to cargo cancellations voyages rather than term contracts 1) Sourc
Slide 5: Global Gas Prices Converged to Low Levels but in Contango
GLOBAL GAS PRICES CONVERGED TO LOW LEVELS BUT IN CONTANGO 12.00 10.00 Brent prices applicable for contract 8.00 cargoes (~70% of cargoes) 6.00 4.00 2.00 Lack of spread (netback) resulted in cargo cancellations - HHI JKM TTF Brent 331(14%) +0,8 $/Mmbtu Brent 331(13%) 1) Source: CME, Energy Aspect, IG
Slide 6: We Expect Around 10mt Growth in 2020 vs. 25mt Pre-Covid19
WE EXPECT AROUND 10MT GROWTH IN 2020 vs. 25MT PRE-COVID19 30.0 US Cargo cancellations about 130 Expected growth 2020: 25mt 25.0 2 12 35 40 40 20.0 Growth H1-20: 12.6mt Energy Aspect estimate 29 May: 14mt Δ 214 15.0 cargoes 10.0 Energy Aspect estimate 30 June : 10mt 5.0 2.3 2.7 4.3 4.8 3.5 4.0 3.5 2.
Slide 7: ~130 US Cargoes Cancelled April-August
~130 US CARGOES CANCELLED APRIL-AUGUST Feedgas deliveries (Bcf/d) to LNG plants US LNG Exports (Bcf/d) Cove Point (cheap feedgas) and Cameron (offtakers also Expect cargo cancellation to taper off from September, equity partners) limited impact from cancellations but risk of cancellations next summe
Slide 8: US Inherently Most at Risk of Cancellations
US INHERENTLY MOST AT RISK OF CANCELLATIONS Short Run Marginal Costs Liquefaction Trains ($/MMBtu) Most LNG projects are integrated oil and gas US projects projects benefiting from cheap (associated) feedgas benefited from “cheap” HHI 1) Source: Rystad 8
Slide 9: Another Year of Floating Storage
ANOTHER YEAR OF FLOATING STORAGE European gas storage “Given cargo cancellations will still be encouraged, more vessels should be available to float and we see floating storage potential as high as 50 vessels, up from the 34 seen last year.” “Go for float” June 30, 2020 1) Source: Fearnleys, Morgan
Slide 10: Finance Update
FINANCE UPDATE $m 400 Staggered debt maturity schedule(2) (1) $100M Bank Facility $156.4M Sale & Leaseback 350 Flex Ranger (2018) Flex Amber (Q3 2020) $250M Bank Facility 300 Flex Constellation (2019) 250 $300M Sale & Charterback Flex Courageous (2019) Flex Endeavour (2018) 200 Flex Enterprise (2018
Slide 11: Main Short Term Drivers
MAIN SHORT TERM DRIVERS 1. Weather 2. Politics 4. Events 3. Economics 11
Slide 12: Summary
SUMMARY • Flex LNG is well positioned with a mixed portfolio of fixed and variable TCP as well as spot ships • We expect incrementally tighter shipping market with less cargo cancellations from September • Winter temperatures and potential Covid-19 second wave will decide length of shipping tightnes
Slide 13: Q&A Session
Q&A SESSION This webinar was hosted by: To ask a question please use the chat function: Presenter Moderator Øystein M. Kalleklev, CEO Thorolf Aurstad, SVP Flex LNG Management Flex LNG Management 13