Awilco LNG

Quarterly Report • Nov 18, 2016

Q3 2016

Jon Skule Storheill Snorre Krogstad

18/11/16

Disclaimer

This presentation may include certain forward-looking statements, forecasts, estimates, predictions, influences and projections regarding the intent, opinion, belief, various assumptions or current expectations of Awilco LNG (the "Company") and it's management with respect to, among other things, (i) goals and strategies, (ii) evaluation of the Company's markets, competition and competitive position, and (iii) anticipated future performance and trends which may be expressed or implied by financial or other information or statements contained herein.

All statements, other than statements of historical facts, that address activities and events that will, should, could or may occur in the future are forward-looking statements. Words such as "may," "could," "should," "would," "expect," "plan," "anticipate," "intend," "forecast," "believe," "estimate," "predict," "propose," "potential," "continue" or the negative of these terms and similar expressions are intended to identify such forward-looking statements.

These forward-looking statements, forecasts, estimates, predictions, influences and projections are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that will occur in the future, some of which are beyond our control and difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements, and no representation is made as to the accuracy of these. Among the important factors that could cause actual results to differ materially from those in the forwardlooking statements, forecasts, estimates, predictions, influences and projections are: changes in LNG transportation market trends; changes in the supply and demand for LNG; changes in trading patterns; changes in applicable maintenance and regulatory standards; changes in applicable regulations and laws; technological developments affecting gas and LNG demand; political events affecting production and consumption of LNG; changes in the financial stability of clients of the Company; the Company's ability to secure employment for available vessels and newbuildings on order; increases in the Company's cost base; failure by yards to comply with delivery schedules; changes to vessels' useful lives and residual values; the Company's ability to obtain financing of the newbuildings and lastly unpredictable or unknown factors with material adverse effects on forward-looking statements.

Neither the receipt of this presentation by any person, nor any information contained herein, constitutes, or shall be relied upon as constituting, any advice relating to the future performance of the Company. Each person should make their own independent assessment of the merits of the Company and its business and should consult their own professional advisors. The information and opinions contained in this presentation relate only as of the date of this presentation, and are subject to change without notice. Neither the Board of Directors of the Company or the Company and it's management make any representation or warranty, express or implied, as to the accuracy or completeness of this presentation or of the information contained herein and none of such parties shall have any liability for the information contained in, or any omissions from, this presentation, nor for any of the written, electronic or oral communications transmitted to the recipient in the course of the recipient's own investigation and evaluation of the Company or its business. Unless legally required, the Company assumes no responsibility or obligation to update publicly or review any of the forwardlooking statements contained herein, whether as a result of new information, future events or otherwise.

Company Overview

Awilco LNG is a pure play LNG transportation provider, owning and operating LNG vessels. The Company owns two 2013 built 156,000 cbm TFDE membrane LNG vessels, WilForce and WilPride. Awilco LNG is listed on Oslo Axess under the ticker code ALNG.

Agenda 18/11 2016

1. Highlights and financials Q3

2. Market update

3. Summary

3 rd Quarter Highlights

3 rd quarter 2016

• Awilco LNG reported:

−	Net freight income of	MUSD 7.8	MUSD 7.2 in Q2 2016
−	EBITDA of	MUSD 4.6	MUSD 4.2 in Q2 2016
−	Net profit/(loss) of	MUSD (4.2)	MUSD (11.5) in Q2 2016

• WilEnergy and WilGas were sold and delivered to new owner on 18 August 2016, contributing with a net positive cash effect of MUSD 32.2 including settlement of bunkers and lubes.
• Vessel utilisation of 80 %, compared to 76 % in Q2 2016 (trading vessels)

Q3 2016 Income statement

USD million	Q3'16	Q2'16	2015
Freight income	8.4	8.3	37.4
Voyage related expenses	(0.7)	(1.1)	(4.9)
Net freight income	7.8	7.2	32.5
Operating expenses	(2.2)	(2.3)	(12.7)
Administration expenses	(0.9)	(0.7)	(4.0)
EBITDA	4.6	4.2	15.8
Depreciation	(2.9)	(3.4)	(16.6)
Impairment	-	(6.6)	(11.5)
Net finance	(5.9)	(5.8)	(24.0)
Profit/(loss) before tax	(4.2)	(11.5)	(36.3)
Tax	-	-	-
Profit/(loss)	(4.2)	(11.5)	(36.3)

Q3 2016 Balance sheet

USD million	30.09.16	30.06.16	31.12.15
Vessels	374.7	377.6	422.5
Other non-current assets	0.1	0.1	0.1
Total non-current assets	374.8	377.7	422.6
Trade receivables	2.6	3.0	2.5
Other short term assets	4.0	4.6	3.1
Cash	34.5	5.7	17.3
Total current assets	41.1	13.2	22.8
Vessels held for sale	-	32.2	-
Total assets	415.9	423.1	445.5
Total equity	135.3	139.5	155.6
Long-term interest bearing debt	262.6	266.1	272.8
Other non-current liabilities	0.3	0.3	0.2
Non-current liabilities	262.9	266.4	273.0
Short-term interest bearing debt	13.5	13.3	12.8
Other current liabilities	4.2	4.0	4.1
Total current liabilities	17.8	17.3	16.9
Total equity and liabilities	415.9	423.1	445.5

Q3 2016 Cash flow

USD million	Q3'16	Q2'16	2015
Cash Flows from Operating Activities:
Profit/(loss) before taxes	(4.2)	(11.5)	(36.3)
Income taxes paid	-	-	-
Interest and borrowing costs expensed	5.8	5.8	24.1
Depreciation, amortisation and impairment	2.9	10.0	28.1
Trade receivables, inventory and other short term assets	0.9	(0.3)	(0.2)
Accounts payable, accrued exp. and deferred revenue	0.2	-	(4.0)
Net cash provided by / (used in) operating activities	5.7	3.9	11.8
Cash Flows from Investing Activities:
Investment in vessels / sale of vessels	32.2	-	17.4
Proceeds from sale of other fixed assets	-	-	0.1
Net cash provided by / (used in) investing activities	32.2	-	17.5
Cash Flows from Financing Activities:
Repayment of borrowings	(3.3)	(3.2)	(10.7)
Interest and borrowing costs paid	(5.8)	(5.8)	(22.1)
Net cash provided by / (used in) financing activities	(9.0)	(9.0)	(32.8)
Net changes in cash and cash equivalents	28.8	(5.1)	(3.5)
Cash and cash equivalents at start of period	5.7	10.8	20.8
Cash and cash equivalents at end of period	34.5	5.7	17.3

Agenda 18/11 2016

1. Highlights and financials Q3

2. Market update

3. Summary

LNG rates

• Activity and rates came off at the end of Q3 but rates still remained at a higher level than seen for 18 months
• Flurry of activity so far in Q4, with at least 10 vessels fixed on 6 36 months charter and 4 vessels for long term ( +7 years )
• From November Sabine producing with 2 trains high demand in East improving ton-mile
• Freight rates have improved but still far below historical average and profitable territory

Gas price

• Gas price in Far East and Europe continued to rise in Q3 and in Q4 while HH price is coming off
• US LNG is now starting to exploit the arbitrage USA Far East improving ton-mile

Source: Clarksons Platou

Monthly global LNG trade

• As of end October global LNG trade is up abt 7.5% yoy or about 15 MT

• Seasonality is still valid in LNG trading, but new production capacity starting up is lifting volumes

Source: Clarksons Platou

LNG trade

• LNG production increased by 7.5% first 9 months 2016 compared to same period last year
• New Australian LNG is materialising, US has just started ….

LNG export yoy end October LNG import yoy end October

• China, India and Egypt showing continued strong demand
• Europe is price sensitive and has massive capacity
• Japan is down YOY but up in October

Source: Clarksons Platou

LNG spot market

• Increased production, new buyers and short term trading is increasing number of spot fixtures substantially
• Number of spot fixtures increased by 62% YTD and more than doubled since 2014!
• LNG is on the verge of becoming a fully commercially traded commodity

Source: Pareto Sec.

www.awilcolng.no - 14 -

LNG production

• About 32 MTPA of new production capacity has been added first 9 months 2016 and another 10MTPA due
• Ramp up operations take time only 10 MT has been produced by these trains
• Full effect on the market will come
• Expect for Angola, most of the startups have been pretty much on schedule

Source: Clarksons Platou

LNG fleet and orderbook

• Orderbook for 2016 was 41 vessels
• 23 vessels delivered YTD, 13 vessels scheduled for delivery 2016 but further delays expected
• Orderbook as of end Q3 2016 was 115 LNG carriers, only 8 available for contract from 2018 onwards
• 5 newbuildings placed in 2016 vs 20 for same period last year

Source: Fearnley LNG

Agenda 18/11 2016

1. Highlights and financials Q3

2. Market update

3. Summary

Summary

• The market has turned
• ─ Activity and rates came off shortly in October but on the rise again
• ─ Flurry of activity for short TC, Charterers taking advantage of depressed rates
• ─ Only a handful of independent owners left with spot trading ships
• Mid- and long-term demand for LNG transportation remains strong
• ─ We are at the start of the biggest increase of LNG volumes in history
• ─ Limited newbuilding orders and limited finance available
• ─ Very few newbuildings available
• ─ 17 % of existing fleet is built prior to 2000 and is smaller and inefficient and likely to struggle
• Improving market but will be volatile
• ‒ Seasonal variations
• ‒ Newbuilding delivery schedules
• ‒ Fluctuating ton-mile due to price variations

Awilco LNG – summary

• Sale of 2nd gen vessels secures solid cash position
• Soft earnings and utilisation on WilPride in 2016, expect improving with firmer market going forward
• WilForce redelivering from TC into improving market
• With two modern TFDE vessels available from 2017 ALNG is perfectly positioned for the improving market
• Awilco LNG is the only listed player with focused LNG spot market exposure

A Pure Play LNG Transportation Provider

Jon Skule Storheill CEO Mobile: +47 -9134 4356 E -mail: jss@awilcolng.no

Snorre Krogstad CFO Mobile: +47 -9085 8393 E -mail: ssk@awilcolng.no