DORIAN LPG - s21.q4cdn.com growth in both LPG supply and demand creating new dynamic Bifurcation of...

February 2017

DORIAN LPG ®

Forward-Looking Statements

This Presentation contains certain forward-looking statements relating to the business, future financial

performance and results of the Company and/or the industry in which it operates. In particular, this Presentation

contains forward-looking statements such as those with respect to cost of construction of the Company’s

newbuildings and timing of their delivery, values of the assets of the Company and the potential future revenue

and EBITDA these assets may yield under current or future contracts, the potential future revenues and cash flows

of the Company, the potential future demand and market for the Company’s assets and the Company’s equity and

debt financing requirements and its ability to obtain financing in a timely manner and at favorable terms.

Forward-looking statements concern future circumstances and results and other statements that are not historical

facts, sometimes identified by the words “believes”, “expects”, “predicts”, “intends”, “projects”, “plans”,

“estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar expressions. The forward-looking

statements contained in this Presentation, including assumptions, opinions and views of the Company or cited

from third party sources, are solely opinions and forecasts which are subject to risks, uncertainties and other

factors that may cause actual events to differ materially from any anticipated development. Potential investors

are expressly advised that financial projections, such as the revenue and cash flow projections contained herein,

cannot be used as reliable indicators of future revenues or cash flows. Neither the Company, nor any of their

parent or subsidiary undertakings or any such person’s officers or employees provides any assurance that the

assumptions underlying such forward-looking statements are free from errors nor does any of them accept any

responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of

the forecasted developments. No obligation is assumed to update any forward-looking statements or to conform

these forward-looking statements to our actual results.

Disclaimer

2

2.71

8.99

0

2

4

6

8

10

DLPG VLGC Fleet Global VLGC Fleet

1

2

3

Key Investment Highlights

US shale revolution has created a fundamental shift in trade flows

Rapid growth in both LPG supply and demand creating new dynamic

Bifurcation of major supply sources makes LPG increasingly competitive

VLGCs are a critical link in the global LPG supply chain

Company Overview LPG Industry Overview

*Age Comparison: As of February 24th, 2017

Average Vessel Age (Years)*

4

3 Modern VLGCs

19 ECO VLGCs

3

Strong market position with the youngest and largest ECO VLGC fleet

Integrated technical and commercial management with proven track record

Conservative balance sheet ensures flexibility and ability to capitalize on growth opportunities

Alignment of management and shareholder interest given significant CEO investment

Balanced mix of time charters and spot exposure, targeting high quality credit counterparties

Global presence with offices in Stamford, CT (Headquarters), London, UK and Athens, Greece and Singapore (Helios Pool office).

Supply and Export Dynamics

Global Liftings showing steady growth

Global liftings (MM Tons)

5Source: IHS, EIA, *Note: Bbls/day converted to MT/yr (bbls per day/11.6 * 365)

U.S. Exports Middle East Exports

61.263.7

75.4

85.189.9

0

10

20

30

40

50

60

70

80

90

100

2012 2013 2014 2015 2016

Met

ric

ton

s (m

illions)

Annual

32.334.9 35.7

38.9

0

5

10

15

20

25

30

35

40

45

2013 2014 2015 2016

Middle East

9.4

13.9

20.6

25.4

0

5

10

15

20

25

30

2013 2014 2015 2016

United States

15% 19% 25% 29%

51% 47%45%

44%

12% 11%10% 10%

8% 11% 10% 4%8% 7% 6% 12%6% 5% 4% 1%

0%

20%

40%

60%

80%

100%

2013 2014 2015 2016

US Middle East N.Sea Med Other Latin America

U.S. LPG has significantly increased its share of global supply

Source: EIA, Bloomberg, IHS

A New Era of Supply

6

• Emergence of U.S. as largest exporting nation has

forced price competition amongst all suppliers

• Middle East supply has surprised on the upside with

more export growth than expected

• The Asian market has become increasing reliant on

US LPG

Seaborne LPG by Source

North American Export capacity extending beyond USGC

Mil

lio

n M

T/Y

ea

r

Firm North American VLGC Export Capacity

East Coast U.S. and West Coast U.S. now

covered and expanding, creating new

and improved arbitrage opportunities

Philips 66’s Terminal (Freeport, TX)

• Capacity for 8 VLGCs/month

• Started up in November 2016

• Potential to add increased competition to

terminal fees which could boost utilization

Sunoco’s Terminal (Marcus Hook, PA)

• Now exporting 3-4 VLGC cargoes per month

• Consistent supply contracts with offtake

agreements

• Further expansion in 1Q 2017 will add capacity

for another 5 VLGCs/month

Petrogas’ Terminal (Ferndale, WA)

• Outperforming seasonality, expect increase in

butane cargoes

• Operated by Alta gas

Altagas’ Terminal (Ridley Island, BC)

• Final investment decision on October 20, 2016

• Entered into Memorandum of Understanding

with Astomos energy corporation for purchase

of 50% of the propane exported.

7Source: EIA, Bloomberg, IHS, Publicly Available Information

0

5

10

15

20

25

30

35

2015 YE 2016 YE 2017 YE

Enterprise (Houston)

Targa (Houston)

Sunoco (Nederland)

Sunoco (Marcus Hook)

Oxy (Ingleside)

Trafigura (Corpus Christi)

PetroGas (Ferndale, WA)

Phillips 66 (Freeport, TX)

Near Term Export Terminal Expansions

38

57

65

0

10

20

30

40

50

60

70

2015 YE 2016 YE 2017 YE

Potential U.S. VLGC liftings per month

8

Propane Production (M bbls/day)

Source: EIA, Dorian LPG Analysis

• US Propane production has remained resilient despite

decreases in Gas production and Oil production

• NGL values relative to crude have incentivized

production of NGL rich fields, such as the Permian

field

• Rig count, uncompleted wells, and E&P break evens

are all moving favorably for production increases.

North American Rig Count

US LPG Production resilient in spite of oil and gas production volatility

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

Pro

pan

e P

rod

uct

ion

(M

bb

ls/d

ay)

Oil

& G

as P

rod

uct

ion

(M

bb

ls/d

ay)

Oil Production Gas Production Propane Production

443404

751

0

100

200

300

400

500

600

700

800 BH Rig Count

Demand & Consumption

Growing Markets for LPG: CHINA

• will be used as

primary fuel source

Annual China LPG imports

10Source: IHS

4.2 M

7.0 M

12.1 M

14.4 M

0 M

2 M

4 M

6 M

8 M

10 M

12 M

14 M

16 M

2013 2014 2015 2016

Note: Propylene production capacity to VLGC Equivalents of Propane demand: 1 tonne of propylene requires 1.18 tonnes of propane; 1 VLGC equivalent is 44,000 tonnes of propane

Source: ICIS, Arrow, Platts

Commenced & Planned Chinese PDH Projects

• It is estimated that total new propane demand from

Chinese PDH plants in 2015 was up 185% (from 1.09 to

3.1mm tons)

• Sinopec, Tianjin Bohai, Oriental Energy, Fujian Meide,

and Shaoxing Sanyuan Petrochemical have all signed

long term supply contracts for US LPG

ProjectPropyleneproduction kt/year

Operational Main Application

Tianjin Bohai 600 OperatingPropylene derivative,Acrylic acid etc.

Ningbo Haiyue 600 OperatingPropylene derivative,Acrylic acid etc.

Satellite Petchem 450 Operating Polypropylene

Sanyuan Petchem450

OperatingPropylene derivative,Acrylic acid etc.

Yangtze Petchem (O.E.) 600 OperatingPropylene derivative,Acrylic acid etc.

Wanhua Petchem 750 Operating Polypropylene

Hebei Haiwei 500 Operating Polypropylene

Ningbo Fortune (O.E.) 660 Operating Polypropylene

Juzhenyuan 900Expected in 2018

Polypropylene

Chinese PDH demand is a game changer

11

• Chinese PDH Plants average operating rates were estimated

to be around 75% of capacity in 2016 and are expected to

increase to 85% in 2017. The two new PDH plants that came

online in Q4 ‘16 are expected to run at around 60% in the

first year

• Ningbo Plant Started in Nov and they recently reported

producing on-spec propylene

• Despite Chinese refinery LPG yields rising y-o-y, imports up

43% from 2015

Average VLGC Demand created from one PDH plant

Propylene Production (kt/year)Propane Consumption

(kt/year)VLGCs Cargoes

per Year

660 780 18

16

56

106

124

141

0

2,000

4,000

6,000

8,000

10,000

12,000

0

20

40

60

80

100

120

140

160

End 2013 End 2014 End 2015 End 2016 End 2017

New Cumulative Chinese PDH Propane New Cumulative Chinese PDH Propylene Production

Propylene Capacity (000 tonnes)

VLGC Equivalents

Average VLGC demand created from one PDH Plant

China LPG Demand by Sector

Chinese demand expanding far beyond PDH

12Source: FGE, Platts

0.00

10.00

20.00

30.00

40.00

50.00

60.00

2013 2014 2015 2016 2017E 2018E

Steam Cracking PDH Gasoline Additives or Blending Residential Others

• Chinese PDH Demand is estimated to increase by 1.3million MT in 2017 and total and total import demand by 3

mm tons from 15mmtons this year to 18mm tons

• Butane demand from processing plants that use butane-rich LPG as feedstock is expected to increase LPG

demand by a combined 500,000 MT in 2017

• LPG demand in 2016 was estimated at about 49 million MT. Demand growth in 2017 is forecasted to be around

10%

• China’s residential / commercial demand has been climbing in tandem with its initiative to displace solid

biofuels in rural areas

• Middle Eastern supply alone will not be able to meet demand

27%

23%12%

12%

27% Iran

US

Abu Dhabi

Qatar

Others

China LPG Imports by source

Korean and Japanese PDH & Petchems fueling demand

13

Illustrative increase from Korean PDH Plant

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

2013 2014 2015 2016

Korean LPG Demand by Sector (mmtons)

Petrochemical Feedstocks Residential

Road Commercial and Public Services

Others

• Korean market is saturated but saw a major increase in

demand this year from a new PDH facility

• PDH importers require high purity propane, best sourced from

the US or Middle East

Japan Upgrades cracker capacity

• Japan’s Idemitsu Kosan’s JV with Mitsui Chemicals

recently announced plans to expand the processing of

propane at Idemitsu’s naphtha cracker

• The upgrade will boost the Cracker’s capacity to process

propane as feedstock by three or four times.

• It will mainly rely on LPG imports for feedstock rather

than a small quantity of LPG produced at the plant

“The Year of the LPG Consumer”: INDIA

• Power conversion

project with Vitol

• By April, LPG will be

used as primary fuel

source

India LPG Import Forecast Indian LPG Consumption Forecast

• The Modi Government aggressively promoting LPG penetration in rural areas calling 2016 “the year of the

LPG Consumer”

• Approximately 7 Million new LPG consumers added between January and April of 2016

• Non subsidized market growing due to lower international LPG Prices

• Increased tax on gasoline has also led to increased LPG auto-gas consumption

• Paradip refinery startup marks last major domestic supply addition – supporting further imports

• Seaborne LPG imports into India were up 8% in 2015, from 8,324,550 to 8,970,000.

14Source: IOC, FGE

8.9 M10.0 M

12.5 M

0 M

2 M

4 M

6 M

8 M

10 M

12 M

14 M

2015 2016 2017E

18.7 M

21.0 M

24.0 M

0 M

5 M

10 M

15 M

20 M

25 M

2015 2016 2017E

Indonesia also emerging as a major demand center

15Source: FGE

7.13

11.15

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

2013 2014 2015 2016 2017E 2018E 2019 2020 2021 2022 2023 2024 2025

Mill

ion

to

ns

Residential Commercial and Public Services Industry

• The surge in LPG demand and imports has come on the back of the Governments subsidized Kerosene-to-LPG

conversion program

• Lower prices have brought Pertamina’s imports back into profit in spite of the subsidy program

• The program is regionally limited and from 2018 onwards the program will be extended further into the

eastern islands

Vietnam & Bangladesh Residential Demand to Drive Consumption

16Source: FGE

• Second largest SE Asia country by population

• Manufacturing growth and domestic consumption remains

strong

• LPG buyers in N Vietnam receive pressure cargoes and have

benefitted from the cheaper LPG available from Siam Gas on

the back of cheaper Iranian LPG received into its cavern

storage in China. This trade appears to have been increasing

in 2016.

Vietnam (mmtons) Bangladesh (mmtons)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Industry Commercial and Public Services Residential

• Huge population with potential to drive demand

• The total market which was around 120,000 MT two

years ago now stands at 205,000 MT.

• Domestic gas production will start declining after

2019 and LNG imports will have to start by then.

• Moving forward, the government is encouraging

households to convert from natural gas to LPG and

has also suspended natural gas supply to commercial

sector.

-

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

Supply Imports

Power Generation Fueling Demand in Ghana and Virgin Islands

17

Vitol Power Conversion: Virgin Island GE LPG Power Plant: Ghana

• In late October, the Ghanaian government approved the

development of the 400 megawatt Bridge Power plant at

Ghana’s Tema port.

• Once both stages have been completed the power plant

will account for 14% of electricity capacity but Ghana

has plans to double total capacity, leaving room for

further LPG power projects

• The success of the power generation project could lead

to other countries in the continent adopting the model

to supplement their insufficient power supplies.

• Vitol is leading the transformation of the power

sector in the US Virgin Islands

• Upon completion of the $150 MM project, Virgin

Island power consumers can expect savings of up to

30%

• Since July 2016, both St. Thomas and St Croix have

derived 100% of their electricity needs from propane

• Green house gas emissions slated to decline 20%

Source: Bloomberg news, VTTI

18

Key Factors Favoring LPG Adoption for Power Generation and Retail Consumption

Economic Environmental

Established production hubs

Global supply base

Maritime and land transport options

Price competitive product

Low cost “last mile” infrastructure

Lower greenhouse gas emissions

20% less CO2 than heating oil

50% less CO2 than coal

Safe fuel source

Avoids harmful and dangerous waste

LPG should be the fuel of choice for emerging economies

Source: ExceptionalEnergy.com

VLGC Shipping Market Dynamics

0

10000

20000

30000

40000

50000

60000

70000

Daily TCE 4-Week Trailing Ave

Continued high VLGC Utilization

• Incremental VLGC fleet growth has been absorbed without

severely impacting utilization thus far (i.e. demand for seaborne

transport continues to grow in excess of fleet growth)

• Panama Canal expansion was limited to smaller vessels initially

due to draft restrictions which limited trade through the canal and

allowed VLGCs to obtain transit slots. The draft issue has been

resolved and the Panama Canal Authority expects only 5% of slots

to be booked by VLGCs

Drivers underlying current rate environment

20Source: Clarksons Research, Baltic Exchange, Panama Canal Authority

Baltic VLGC Daily Spot TCE Rates (M USD) Fleet Utilization

96%

86%

2015

2016E

Container90%

LPG5%

LNG3%

Oil0% RoRo

1%

Passenger1%

Forecast Canal Transit by Vessel Type

VLGC Fleet & Orderbook Review

VLGC Orderbook (2013-Onwards)

21Source: Clarksons Research, Dorian LPG analysis

Fleet Profile (12/31/17) Potential Scrapping Candidates

138

35

45

25

4 70

5

10

15

20

25

30

35

40

45

50

2013 2014 2015 2016 2017 2018 2019

3 2 17

Modern With Scrubber Scrubber Ready

BWTS + IMO Low Sulphur Regulations

• BWTS Convention

• Abt. 65-71 VLGCs will be required to DD and subsequently install BWTS between 9/8/2017-1/1/2019

• 2020 Low Sulphur regulations

• Suggest 25% increase in bunker cost

126

55

31

1913

26

0

20

40

60

80

100

120

140

< 5 5-10 10-15 15-20 20-25 > 25

Dorian’s VLGC Fleet is ready:

Arbitrage widening leading to increased VLGC demand

22

Houston-Chiba Arbitrage Analysis by Route (USD)

Source: Bloomberg, Braemar, Dorian LPG Analysis, Argus

Arb calculations: : C3 price at destination minus (MB C3 + Terminalling)

31

64

26.8

-30

-10

10

30

50

70

90

110

23-Feb 23-Mar 23-Apr 23-May 23-Jun 23-Jul 23-Aug 23-Sep 23-Oct 23-Nov 23-Dec 23-Jan 23-Feb

$/M

T

Houston-Europe (Arb) Houston-Chiba (Arb) Baltic ($/MT)

Financials

Statement of Operations Data (USD)

Statement of Operations Data Three Months Ended

Dec 31, 2016

(Unaudited)

Three Months Ended

Dec 31, 2015

(Unaudited)

Revenues $ 35,734,988 $ 93,283,708

Voyage expenses 1,193,265 4,347,222

Vessel operating expenses 17,114,358 14,265,183

General and administrative expenses 5,166,239 7,506,740

Other income—related parties 670,836 383,642

EBITDA 12,931,962 67,548,205

Depreciation and amortization 16,385,921 13,536,900

Operating income/(loss) (3,453,959) 54,011,305

Other income/(expenses), net 8,493,583 650,018

Net income $ 5,039,624 $ 54,661,323

Other Financial Data

Time charter equivalent rate (1) $ 17,796 $ 56,253

Daily vessel operating expenses (2) $ 8,456 $ 8,180

Adjusted EBITDA (3) $ 13,927,649 $ 68,738,066

(1) Our method of calculating time charter equivalent rate is to divide revenue net of voyage expenses by operating days for the relevant time period.

(2) Calculated by dividing vessel operating expenses by calendar days for the relevant time period.

(3) Represents net income excluding the potentially disparate effects between periods of derivatives, interest and finance costs, stock-based compensation expense, impairment, and depreciation

and amortization expense and is used as a supplemental financial measure by management to assess our financial and operating performance.24


Statement of Operations Data Nine Months Ended

Dec 31, 2016

(Unaudited)

Nine Months Ended

Dec 31, 2015

(Unaudited)

Revenues $ 119,861,997 $ 203,872,600

Voyage expenses 2,415,287 11,411,841



Loss on disposal of assets — 105,549

Other income—related parties 1,776,659 1,150,927

EBITDA 53,692,650 143,024,424


Operating income 4,748,467 116,326,542

Other income/(expenses), net (8,145,552) (6,799,072)

Net income/(loss) $ (3,397,085) $ 109,527,470

Other Financial Data



Adjusted EBITDA (3) $ 56,757,693 $ 145,793,680




and amortization expense and is used as a supplemental financial measure by management to assess our financial and operating performance.25


Statement of Operations Data Year Ended

March 31, 2016

(Audited)

Year Ended

March 31, 2015

(Audited)

Revenues $ 289,207,829 $ 104,129,149

Voyage expenses 12,064,682 22,081,856


Management fees – related party — 1,125,000

Impairment — 1,431,818


Loss on disposal of assets 1,125,395 —

Other income—related parties 1,945,396 93,929

EBITDA (1) 201,007,129 44,183,153


Operating income 158,415,187 30,089,409

Other income/(expenses), net (28,726,805) (4,828,627)

Net income $ 129,688,382 $ 25,260,782

Other Financial Data (1)



Adjusted EBITDA (4) $ 204,865,215 $ 47,346,202

(1) Non-GAAP metrics are unaudited for the periods presented.




and amortization expense and is used as a supplemental financial measure by management to assess our financial and operating performance.

26

Cash Flows Data (USD)

Cash Flows Data Nine Months Ended

December 31, 2016

(Unaudited)

Nine Months Ended

December 31, 2015

(Unaudited)

Net income $ (3,397,085) $ 109,527,470

Adjustments 29,066,675 28,126,434

Changes in operating assets and liabilities 23,535,260 (54,668,586)

Net cash provided by operating activities 49,204,850 82,985,318

Net cash used in investing activities (1,762,861) (855,874,634)

Net cash (used in)/provided by financing activities (61,699,686) 590,427,830

Effects of exchange rates on cash and cash equivalents (314,626) (324,778)

Net Increase/(decrease) in cash and cash equivalents $ (14,572,323) $ (182,786,264)

Cash Flows Data Year Ended

March 31, 2016

(Audited)

Year Ended

March 31, 2015

(Audited)

Net income $ 129,688,382 $ 25,260,782

Adjustments 59,421,412 19,069,505

Changes in operating assets and liabilities (38,082,294) (18,707,067)

Net cash provided by operating activities 151,027,500 25,623,220

Net cash used in investing activities (910,414,841) (312,326,844)

Net cash provided by financing activities 601,090,409 213,694,591

Effects of exchange rates on cash and cash equivalents (112,289) (1,301,579)

Net decrease in cash and cash equivalents $ (158,409,221) $ (74,310,612)

27

Balance Sheet Data (USD)

Balance Sheet Data December 31, 2016

(Unaudited)

December 31, 2015

(Unaudited)

Cash and cash equivalents $ 31,839,639 $ 22,034,919

Restricted cash, non-current 50,812,789 49,712,789

Total assets 1,760,213,403 1,823,011,675

Current portion of long-term debt 65,978,786 65,708,060

Long-term debt – net of current portion & deferred financing fees 700,715,644 724,401,250

Total liabilities 787,313,926 847,656,439

Total shareholders' equity $ 972,899,477 $ 975,355,236

28

Our Mission is to arrange safe, reliable and trouble free transportation

DORIAN LPG - s21.q4cdn.com growth in both LPG supply and demand creating new dynamic Bifurcation of...

Documents

Transcript of DORIAN LPG - s21.q4cdn.com growth in both LPG supply and demand creating new dynamic Bifurcation of...