Corporate presentation - BW LPG · Strictly private and confidential Important Note 3 In relation...
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BW LPG Corporate presentation January, 2014
Transcript of Corporate presentation - BW LPG · Strictly private and confidential Important Note 3 In relation...
BW LPG Corporate presentation
January, 2014
Strictly private and confidential
Important information and disclaimer
January 2014 2
This presentation has been produced by BW LPG Limited (“BW LPG”) exclusively for information purposes. This presentation may not be redistributed, in whole or in part, to any other person.
Matters discussed in this presentation and any materials distributed in connection with this presentation may constitute or include forward-looking statements. Forward-looking statements are
statements that are not historical facts and may be identified by words such as “anticipates”, “believes”, “continues”, “estimates”, “expects”, “intends”, “may”, “should”, “will” and similar expressions.
These forward-looking statements reflect BW LPG’s reasonable beliefs, intentions and current expectations concerning, among other things, BW LPG’s results of operations, financial condition,
liquidity, prospects, growth and strategies. Forward-looking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance
and potential for future growth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; developments of BW LPG’s markets; the impact of regulatory initiatives; and
the strength of BW LPG’s competitors. Forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.
The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s
examination of historical operating trends, data contained in BW LPG’s records and other data available from third parties. Although BW LPG believes that these assumptions were reasonable when
made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are
beyond its control. Forward-looking statements are not guarantees of future performance and such risks, uncertainties, contingencies and other important factors could cause the actual results of
operations, financial condition and liquidity of BW LPG or the industry to differ materially from those results expressed or implied in this presentation by such forward-looking statements. No
representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved and you are cautioned not to place any undue influence
on any forward-looking statement.
No representation, warranty or undertaking, express or implied, is made by BW LPG, its affiliates or representatives as to, and no reliance should be placed on, the fairness, accuracy, completeness
or correctness of the information or the opinions contained herein, for any purpose whatsoever. Neither BW LPG nor any of its affiliates or representatives shall have any responsibility or liability
whatsoever (for negligence or otherwise) for any loss whatsoever and howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. All
information in this presentation is subject to updating, revision, verification, correction, completion, amendment and may change materially and without notice. In giving this presentation, none of BW
LPG, its affiliates or representatives undertakes any obligation to provide the recipient with access to any additional information or to update this presentation or any information or to correct any
inaccuracies in any such information. The information contained in this presentation should be considered in the context of the circumstances prevailing at the time and has not been, and will not be,
updated to reflect material developments which may occur after the date of the presentation.
By attending this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of BW LPG and that you will conduct your own
analysis and be solely responsible for forming your view on the potential future performance of the business of BW LPG. This presentation must be read in conjunction with the recent financial
information and the disclosures therein.
This presentation and the information contained herein are not an offer of securities for sale in the United States and are not for publication or distribution to persons in the United States (within the
meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)). The securities referred to herein have not been and will not be registered under the Securities Act
and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act. Any failure to comply with this restriction may constitute a
violation of United States securities laws. BW LPG has not registered and does not intend to register its securities in the United States or to conduct a public offering of shares in the United States.
Copies of this presentation are not being made and may not be distributed or sent, directly or indirectly, in or into the United States, Canada, Australia or Japan, or any other jurisdiction in which such
distribution would be unlawful or would require registration or other measures.
In any EEA Member State other than Norway that has implemented Directive 2003/71/EC (as amended, together with any applicable implementing measures in any Member State, the “Prospectus
Directive”), this presentation is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive.
For the UK based investors - This presentation is only being distributed to and is only directed at persons in the United Kingdom that are (i) investment professionals falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (ii) high net worth entities, and other persons to whom this presentation may lawfully be
communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This presentation must not be acted on or relied on by persons who
are not relevant persons. Any investment or investment activity to which this presentation relates is available only to relevant persons and will be engaged in only with relevant persons.
Strictly private and confidential
Important Note
3
In relation to this presentation, it is important to note the following:
– BW LPG is a 31 December reporting entity, and we are presently in blackout on business updates
– Consequently, this presentation is deliberately constrained to market views and re-iteration of information already provided
publically
– Nothing in this presentation is intended to provide an update on corporate performance beyond information available on our
website
January 2014
Strictly private and confidential
Who are we?
4
BW LPG is the largest owner / operator of VLGCs, with a fleet of 31 VLGCs,
5 LGCs, and 6 VLGCs on order, with an additional 2 VLGC newbuild options
Largest shareholder and fleet manager is the BW Group, 100% owner pre-
IPO
Acquired the Maersk LPG fleet of 5 owned + 5 TC-in vessels between July
and November 2013
Listed 21st November 2013 on the Oslo Stock Exchange, raising gross
proceeds of USD 280 million in new equity
Concurrently raised USD 700 million 7-year secured facility at USD LIBOR +
190 bps
Reported TCE earnings of USD 76 million in Q3 2013, delivering EBITDA of
USD 42 million
Contracted 6 newbuildings due 2014 & 2015, with 2 options available for
additional newbuildings deliverable 2016
January 2014
Strictly private and confidential
LPG market highlights - 2013
January 2014
5
Strong positive market trends in 2nd half
– later than typical softening
– lows well above historic levels
Strong value generation in the duration of the peak reported at approx.
USD1.6m / month
This peak is not overwhelmingly high – important to apply careful analysis to
estimate realistic sustainable peak rates in the segment
Positive impact of US exports, with terminal capacity coming online on time
and a solid pipeline of new projects
Extensive newbuilding programs order and related business combinations
concluded
Strictly private and confidential
Fleet development
6
Growing fleet since Q2 2013
1. Fleet profile and orderbook showing sailing fleet and confirmed orders as of August 1, 2013 (Poten & Partners), and adjusted for known options declared by BW LPG and Scorpio Tankers.
Newbuildings delivered in the interim not reflected as sailing fleet
VLGC fleet profile1
0
5
10
15
20
25
30
Nu
mb
er
of
vessels
> 20 years:
32 vessels
BW owned BW chartered Other fleet BW newbuildings Other newbuildings
Newbuildings:
42 vessels
27
10
1
6
42
Fleet as at 30Jun 2013
APM acquisition Disposal - BWDanuta
Newbuildorders
Total Fleet atIPO (incl, NBs)
Current global sailing fleet of 151 vessels
BW LPG owns and operates a fleet of 36 vessels
42 new building VLGCs on order, of which 6 are contracted by
BW LPG
The acquisition of the AP Moller fleet was completed in Q4
2013, with the delivery of 5 owned and 5 chartered vessels
These vessels will add revenue going forward and full impact
of the vessels already delivered will be seen in Q1 2014
January 2014
5 owned +
5 charter-in
Strictly private and confidential
January 2014 7
Better US margins on propane (vs. methane) resulting in
a shift to NGL-rich fields
Source: EIA, Poten & Partners
0
5
10
15
20
25
30
35
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
Tri
llio
n c
ub
ic f
eet
Shale gas
Non-shale
Estimates
2.9
1.4 1.3 1.0
0.5 0.0 0.0 0.0
0.8
2.4
3.3 3.6
5.0
8.5
11.8
14.5
0
2
4
6
8
10
12
14
16
2008 2009 2010 2011 2012 2013E 2014E 2015E
Mil
lio
n t
on
ne
s L
PG
Imports Exports
∆‘12-’15E:
9.5 mill. mt.
Strong US natural gas production growth
US is expected to become one of the world’s leading LPG
exporters
US LPG imports/exports
The outlook for US contribution to LPG export
volumes continues to improve
Strictly private and confidential
Low US LPG marginal cost of production creates
sustainable export market
0
5
10
15
20
25
30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
US
D / m
mb
tu
US vs Arabian Gulf propane prices
Propane, US Propane, Arabian Gulf Methane, US (Henry Hub spot price)
Natural gas price (methane) has
decreased with shale gas production
Producers have incentive to develop
fields with higher LPG content (propane
and butane)
US LPG prices have delinked from AG
prices, creating an arbitrage opportunity
This results in a lower delivered LPG
price to Asia, even after terminal and
transportation costs
January 2014 8
US exports driven by Increasing volumes of LPG at competitive global prices Comments
Source: Bloomberg
Strictly private and confidential
Asia seems to be the likely home for a high
proportion of US exports, despite distance
64 63 65
68 70
78
10 13
15
16
18
28
73
76
80
84
88
106
40
50
60
70
80
90
100
110
2008 2009 2010 2011 2012 2015E
Mil
lio
n t
on
ne
s p
er
year
Retail demand Industrial
January 2014 9
LPG demand:
Asia-Pacific is the main importer
Increase in LPG demand supported
by retail and industrial consumption
Asian PDH plants contribute to
growing base load demand
Source: Poten & Partners
Asia-Pacific 55%
Middle East 1%
Europe 24%
Africa 8%
Americas 12%
Retail
(63%)
Mostly propane
Industrial
(37%)
Propane & butane
LPG demand breakdown
Seaborne LPG imports
2012 imports1: 67 million tonnes
∆‘12-’15E:
18.5 mill. mt.
Asia Pacific LPG consumption
0
2
4
6
8
10
12
2013E 2014E 2015E 2016E Beyond2016E
Est.
pro
pa
ne f
eed
ne
ed
(m
illi
on
to
nn
es / y
ear)
Chinese PDH project pipeline
Under construction Planning
Strictly private and confidential
Recent transactions indicate asset prices beginning
to reflect the positive rate trend
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
US
D ‘000 p
er
cale
nd
ar
mo
nth
2008 2009 2010 2011 2012 2013
50
55
60
65
70
75
80
85
90
95
100
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
US
Dm
US
D ‘000 p
er
cale
nd
ar
mo
nth
VLGC - short term TCE VLGC newbuild prices Column1
January 2014 10
VLGC short term TCE rate development VLGC short term TCE rate & newbuilding prices
Source: Poten & Partners
Rates by year Rates (LHS) & newbuild prices (RHS)
Strictly private and confidential
Fleet planning, route and ship allocation
Chartering / contracts
Voyage planning
Speed management
Weather routing and sea current
Port / harbour operations
Steam plant efficiency
Main engine efficiency
Aux engines efficiency and utilisation
Aux boilers efficiency and utilisation
January 2014
11 Note: BW LPG intend post IPO seek to continue to benefit from and purchase certain services from the BW Group at market terms. Including, but not limited to, fleet management, admin. and general support services
Voyage performance Primary consumers, main and aux engines
Hull condition
Propeller condition
Autopilot and rudder
Trim and draft
Hull appendages and technical modifications
Cargo operations
Thruster operations
Ventilation, HVAC and lights
Insulation and energy losses
Water production
Incineration
Ship performance Secondary energy consumption
Pre-bunkering
During bunkering
Post-bunkering
Performance management
Strategy and tactical plans
Roles and responsibilities
Culture and awareness
Competence and training
Cooperation and communication
Fuel management Management and organisation
Asset quality and operational excellence remain
critical, even in a tightening market
Strictly private and confidential
Market activity to watch in 2014
January 2014
12
US exports
– Terminal capacity build-out and new commitments
– Proportion of LPG captured finding its way to export markets
– Destinations of US cargoes
LPG pricing – ex-AG and ex-US. How do increasing export volumes impact
delivered price of LPG?
Contract structuring – emergence of longer-term charters?
Energy & feedstock replacement – emergence of new demand centres to
capitalize on price outlook & availability?
Newbuildings: capacity, pricing, delivered quality, and new ordering
Second hand disposals and business combinations to capitalize on efficiency
of strong operating platforms
Timeline for Panama Canal expansion
