Awilco LNG

Earnings Release • Aug 31, 2016

Q2 2016

Jon Skule Storheill Snorre Krogstad

31/08/16

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.

Agenda 31/08 2016

1. Company Overview and Highlights Q2

2. Financials Q2

3. Market update

4. Summary

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.

2 nd Quarter Highlights

2 nd quarter 2016

• Awilco LNG reported:

−	Net freight income of	MUSD 7.2	MUSD 8.2 in Q1 2016
−	EBITDA of	MUSD 4.2	MUSD 4.9 in Q1 2016
−	Net profit/(loss) of	MUSD (11.5)	MUSD (4.6) in Q1 2016

• WilEnergy and WilGas agreed sold for a combined gross price of MUSD 31.6 leading to an impairment of MUSD 6.6
• Net loss excluding impairment of MUSD 4.9 vs MUSD 4.6 in Q1
• Vessel utilisation of 76 %, compared to 78 % in Q1 2016 (trading vessels)

Subsequent events

• 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.

Contract Overview

	2016	2017
WilPride		Available
WilForce	On charter	Available

WilPride: Available NW Europe mid-September

WilForce: Employed until January 2017

Agenda 31/08 2016

1. Company Overview and Highlights Q2

2. Financials Q2

3. Market update

4. Summary

Q2 2016 Income statement

USD million	Q2'16	Q1'16	2015
Freight income	8.3	8.9	37.4
Voyage related expenses	(1.1)	(0.7)	(4.9)
Net freight income	7.2	8.2	32.5
Operating expenses	(2.3)	(2.4)	(12.7)
Administration expenses	(0.7)	(1.0)	(4.0)
EBITDA	4.2	4.9	15.8
Depreciation	(3.4)	(3.6)	(16.6)
Impairment	(6.6)	-	(11.5)
Net finance	(5.8)	(5.8)	(24.0)
Profit/(loss) before tax	(11.5)	(4.6)	(36.3)
Tax	-	-	-
Profit/(loss)	(11.5)	(4.6)	(36.3)

Q2 2016 Balance sheet

USD million	30.06.16	31.03.16	31.12.15
Vessels	377.6	418.9	422.5
Other non-current assets	0.1	0.1	0.1
Total non-current assets	377.7	419.0	422.6
Trade receivables	3.0	3.1	2.5
Other short term assets	4.6	5.1	3.1
Cash	5.7	10.8	17.3
Total current assets	13.2	18.9	22.8
Vessels held for sale	32.2	-	-
Total assets	423.1	437.9	445.5
Total equity	139.5	151.0	155.6
Long-term interest bearing debt	266.1	269.5	272.8
Other non-current liabilities	0.3	0.3	0.2
Non-current liabilities	266.4	269.8	273.0
Short-term interest bearing debt	13.3	13.0	12.8
Other current liabilities	4.0	4.2	4.1
Total current liabilities	17.3	17.2	16.9
Total equity and liabilities	423.1	437.9	445.5

Q2 2016 Cash flow

USD million	Q2'16	Q1'16	2015
Cash Flows from Operating Activities:
Profit/(loss) before taxes	(11.5)	(4.6)	(36.3)
Income taxes paid	-	-	-
Interest and borrowing costs expensed	5.8	5.9	24.1
Depreciation, amortisation and impairment	10.0	3.6	28.1
Trade receivables, inventory and other short term assets	(0.3)	0.4	(0.2)
Accounts payable, accrued exp. and deferred revenue	-	-	(4.0)
Net cash provided by / (used in) operating activities	3.9	5.4	11.8
Cash Flows from Investing Activities:
Investment in vessels / sale of vessels	-	-	17.4
Proceeds from sale of other fixed assets	-	-	0.1
Net cash provided by / (used in) investing activities	-	-	17.5
Cash Flows from Financing Activities:
Repayment of borrowings	(3.2)	(4.1)	(10.7)
Interest and borrowing costs paid	(5.8)	(7.8)	(22.1)
Net cash provided by / (used in) financing activities	(9.0)	(11.9)	(32.8)
Net changes in cash and cash equivalents	(5.1)	(6.5)	(3.5)
Cash and cash equivalents at start of period	10.8	17.3	20.8
Cash and cash equivalents at end of period	5.7	10.8	17.3

Agenda 31/08 2016

1. Company Overview and Highlights Q2

2. Financials Q2

3. Market update

4. Summary

LNG rates

LNG CHARTER RATES 138 – 165K MODERN VESSELS

• After 3 years of declining rates the market has turned
• New LNG production is finally starting to show an impact
• Freight rates have improved but still far below historical average and profitable territory

Source: Fearnley LNG

www.awilcolng.no - 12 -

LNG price

• LNG is becoming a competitive energy source which will ensure demand
• Arbitrage opportunities from Atlantic to Far East have been eliminated putting pressure on ton-mile, but now surprisingly opening up again

Source: Clarksons Platou

Inter-Basin trade

• As a result of lack of arbitrage inter-basin trade has been declining, but the trend may be changing
• ‒ 1 st Half 2016 average distance was down 8% and trade was down 13% compared to same period 2015
• Volumes bottomed in Q4 15, positive trend since but distances down
• First cargo from Sabine to China 70 days r/v… 2.6 ships / 1 MTPA

Source: Clarksons Platou

LNG spot market

SPOT FIXTURES PER QUARTER

• Increased production, new buyers and short term trading is increasing number of spot fixtures substantially
• 1H 2016 number of spot fixtures increased by 60% from last year

Source: Pareto

LNG trade

LNG EXPORT LNG IMPORT

• Start of a new production boom
• LNG production increased by 6.5% first half 2016 compared to same period last year

• The significant increased production capacity from Australia is materialising, US next….

• EU increasing price sensitive

• Egypt and Jordan show impact of FSRU
• India alone replacing lost demand in Japan
• ‒ All produced LNG will be consumed it is only a question of where

Source: Clarksons Platou

LNG production

MTPA LNG PRODUCTION CAPACITY UNDER CONSTRUCTION

• About 20 MTPA of new production capacity has been added first half 2016, ramp up to full capacity normally takes 6 months
• Additional 26 MTPA scheduled for startup remaining of year
• 2015 production was 250 MTPA, new LNG under construction is 140 MTPA or 56% of 2015 production!

Source: Clarksons Platou

www.awilcolng.no - 17 -

LNG fleet orderbook

NEWBUILDING DELIVERIES BY QUARTER

• At start of 2016, orderbook was 41 vessels due for delivery in 2016
• 14 vessels delivered YTD 2016, 21 vessels scheduled for delivery remainder of 2016 further delays expected
• Orderbook as of end Q2 2016 was 119 LNG carriers with only 10 available for contract
• Only four newbuildings ordered first half 2016 vs 15 for same period last year
• A total of 81 (17% of the fleet) steam vessels are built pre-2000 considerable room for reduction of sailing fleet

Source: Fearnley LNG

Agenda 31/08 2016

1. Company Overview and Highlights Q2

2. Financials Q2

3. Market update

4. Summary

Summary

• The market has finally turned
• ─ Rates still not good but trend is
• ─ Several charterers looking for medium term contracts with options
• 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
• ─ Very few newbuildings available
• ─ 17% of existing fleet are smaller steam vessels which will struggle to compete
• Improving market may still see volatility in short term due to
• ‒ Seasonal variations
• ‒ Newbuilding deliveries
• ‒ Fluctuating ton-mile

Awilco LNG – summary

• Sale of 2nd gen vessels secures solid cash position
• Soft earnings and utilisation on WilPride in 2nd quarter, improving in Q3
• Market recovering as expected

With two modern TFDE vessels available from 2017 ALNG is perfectly placed for the improving market conditions expected in the coming years

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