DORIAN LPG November 2016

Transcription

1 DORIAN LPG November 2016

2 Disclaimer 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. 2

3 Key Investment Highlights Company Overview 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 LPG Industry Overview 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 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 Average Fleet Age (Years)* Modern VLGCs 19 ECO VLGCs DLPG Fleet Global VLGC Fleet *Age Comparison: As of September 30,

4 Market Summary

5 VLGCs are a Critical Link in the Global Supply Chain Production LPG (Propane and Butane) is a by-product of oil and gas Shipping VLGCs are the most cost effective means of long haul LPG transportation End Use Broad range of end uses for LPG Europe & FSU North America Middle East Asia Africa Latin America 5 5

6 Global LPG Trade Continues to Expand Global Seaborne LPG Liftings Volume Metric tons (millions) YTD 2016 Jan-Sept Annual Potential U.S. VLGC Liftings based on Terminal Capacity Annual Liftings Source: IHS, Dorian LPG Analysis 6

7 Bifurcation of Supply Making LPG Increasingly Competitive Significant investment in US export capacity Significant investments in LPG export terminal capacity and midstream processing Confirms market commitment to exports Eliminates bottlenecks related to port infrastructure Emergence of US LPG has resulted in greater price competition amongst suppliers NGL production in excess of domestic demand has kept US LPG prices low relative to the world market Seaborne LPG by Source 100% 80% 60% 40% 20% 0% 14% 12% 10% 8% 8% 11% 10% 8% 10% 12% 10% 11% 51% 47% 15% 19% New Price Competition 45% 25% 43% 31% YTD 2016 US ME N.Sea Med Other The result is export growth and further price competition from the Middle East good for demand US residential and petchem demand is expected to be offset by increasing use of ethane and natural gas 1, Mont Belvieu Saudi CP Algeria Source: EIA, Bloomberg, IHS 7

8 North American LPG Export Capacity Up Significantly Petrogas Terminal (Ferndale, WA) Seasonally stronger in April-Sep, expect increase in butane cargoes Sunoco s Terminal (Marcus Hook, PA) Now exporting 3-4 VLGC cargoes per month Consistent supply contracts with offtake agreements Philips 66 s Terminal (Freeport, TX) Capacity for 8 VLGCs/month Scheduled start up for end Sep/early Oct 2016 Potential to add increased competition to terminal fees which could boost utilization Million MT/Year Announced North American VLGC Export Capacity 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) Phillips 66 Terminal (Freeport, TX) More than sufficient LPG export capacity, leaving room for large increases once production ramps back up Source: EIA, Bloomberg, IHS, Publically Available Information 8

9 US Exports Continue to Grow US Exports by Year (MM bbls/day) 1, YTD *Annualized (MM MT/yr): US VLGC by Month Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Source: IHS, EIA, *Note: Bbls/day converted to MT/yr (bbls per day/11.6 * 365) 9

10 Demand Overview China and India continue to drive demand Seaborne LPG imports into China tallied 12.1 mmt in 2015 up 70% from 7.9 mmt in 2014 (2014 was up 100% from 3.9 mmt in 2013) China s residential / commercial demand has been climbing in tandem with its initiative to displace solid biofuels in rural areas Seaborne LPG imports into India were up 8% in 2015, from 8,324,550 to 8,970,000. The Modi Government has called 2016 the year of the LPG consumer. Mangalore Import Terminal can now handle VLGCs Haldia and Kochi regions could both build new import terminals in the future Source: IHS, Dorian LPG Analysis 10

11 Growing Markets for LPG: INDIA India LPG Import Forecast Indian LPG Consumption Forecast 14 M 30 M 12 M 10 Power M conversion project 8 M with 8.9 Vitol M By April, LPG will be 6 M used as primary fuel 4 M source 2 M 10.5 M 12.5 M 25 M 20 M 15 M 10 M 5 M 18.7 M 21.0 M 24.0 M 0 M E 2017E 0 M E 2017E The Indian Government aggressively promoting LPG penetration in rural areas Approximately 7 Million new LPG consumers added between January and April 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 Source: IOC, FGE 11

12 Growing Markets for LPG: CHINA Annual China LPG imports 14 M will be used as 12 primary M fuel source 11.5 M 10 M 10.2 M 8 M 7.8 M 6 M 4 M 3.8 M 2 M 0 M YTD Source: IHS 12

13 Surge in Chinese PDH Adds to Global Demand Project Commenced & Planned Chinese PDH Projects Polypropylene production kt/year Operational Tianjin Bohai 600 Operating Ningbo Haiyue 600 Operating Main Application Propylene derivative, Acrylic acid etc. Propylene derivative, Acrylic acid etc. Satellite Petchem 450 Operating Polypropylene Sanyuan Petchem (JV O.E.) 450 Operating Yangtze Petchem 600 Operating Propylene derivative, Acrylic acid etc. Propylene derivative, Acrylic acid etc. Wanhua Petchem 750 Operating Polypropylene Hebei Haiwei 500 Meide Petchem 660 Expected 2016 Expected 2016 Polypropylene Polypropylene VLGC Equivalents Propane Feedstock Required New Cumulative Chinese PDH Propane New Cumulative Chinese PDH Propylene Production End 2013 End 2014 End 2015 End 2016 End 2017 Propylene Capacity (000 tonnes) 12,000 10,000 8,000 6,000 4,000 2,000 0 Ningbo Fortune (O.E.) 660 Expected 2017 Polypropylene PDH importers require high purity propane, best sourced from the US or Middle East 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 Note: Propylene production capacity to VLGC Equivalents of Propane demand: 1 tonne of propylene requires 1.18 tonnesof propane; 1 VLGC equivalent is 44,000 tonnes of propane Source: ICIS, Arrow 13

14 VLGC Day Rates Softer, yet Utilization Remains High Baltic VLGC Daily Spot TCE Rates (M USD) Global VLGC Fleet Utilization Oct YTD 96% 88% Daily VLGC Rate 4 Week Trailing Average 1 Year Trailing Average Drivers underlying current rate environment Incremental VLGC fleet growth has been absorbed without severely impacting utilization thus far (i.e. demand for seaborne transport continues to grow) Increased U.S. NGL production at ~$50 crude oil should help to stimulate exports Panama Canal expansion may reduce tonne miles near term but should help decrease costs to Asia and thus increase arbitrage movements West to East in the long term Source: Clarksons Research, Baltic Exchange 14

15 Propane Divergence from Naphtha Cost & Freight - Naphtha Asia vs. Saudi CP (USD) May was a record import month for China Typically takes 3+ months of price divergence before Petchem crackers switch feedstocks Cost & Freight Saudi CP Cost & Freight Naphtha Asia Source: Bloomberg, IHS 15

16 Panama Canal Expansion Theoretical Positive for Arbitrage $500 Houston-Chiba Arbitrage Analysis by Route (USD) $400 $ $200 $ $- Panama / Panama Panama / Cape Cape / Cape *Laden / Ballast Price Terminal Cost Freight Cost Arbitrage Current economics favor voyages through the Canal and may provide a catalyst to open the West-East arbitrage The Neo-Panama Canal opened June 27th with first VLGC passage Reduction in voyage time ex. Houston-Chiba via: Cape of Good Hope = 40 days Panama Canal = 25 days Source: FGE, Dorian LPG Analysis Note: Theoretical arbitrage used to portray arbitrage effect; Mont Belvieu = $230 pmt vs Cif Japan = $350 16

17 Competitive Advantages & Strategy

18 ECO-Vessels Built at World Class Korean Shipyards VLGC fleet constructed at top tier yards LPG vessels are highly engineered, and exacting technical specifications determine commercial acceptance VLGC deliveries by shipyard ( ) 13% HHI and DSME also design and build some of the world s most complex offshore vessels and rigs Dorian has built 19 vessels at HHI and DSME since 2014 and maintains a strong relationship with both yards 13% 7% 7% 60% Daily fuel savings between $2,000-3, Fuel Oil Consumption Analysis Dorian ME-G type NB (ECO) Traditional VLGC -17% -17% Scrubber / Scrubber Ready Babcock s New LGE Cooling Plant MAN B&W s New G-Type Engine Low Friction, Self Polishing Paint Optimized Hull Design 25 Marine Gas Oil (MGO) Heavy Fuel Oil (HFO) Source: Hyundai Heavy Industries (HHI), MAN B&W, FT Maritime Services, Company, Managers ¹ Fuel saving assuming loaded condition at 16 knots and a HFO price ranging from USD /MT 18

19 Fleet Designed to Meet Tomorrow s Regulations Outside an ECA 0.50% m/m on and after 1 January 2020 Inside an ECA 0.10% m/m on and after 1 January 2015 Dorian LPG has the youngest and most modern fleet of ECO VLGCs Modern With Scrubber Scrubber Ready Source: International Maritime Organization Note: Regulations established to limit SOx and particulate matter emissions; ECA means Emission Controls Areas 19

20 Major Oil Companies Require Experienced Operators Dorian LPG is a fully integrated LPG shipping company with in-house commercial and technical management services Dedicated, independent department for Health, Safety, Security, Environment and Quality Meets requirements of the most demanding Oil Majors US presence provides proximity to US based Oil Majors and traders and easy access to US export terminals Working Safely with Suppliers Award Tanker Company of the Year Lloyd s List 2014 Greek Shipping Awards Our mission is to arrange safe, reliable and trouble free transportation Long-standing customer relationships 20

21 Strategy for Creating Shareholder Value Ensure fleet remains best in class and vessel operations are of the highest quality to deliver superior customer service and low operating costs Optimize chartering and revenue opportunity through further pooling arrangements and time charters Strong, moderately leveraged balance sheet creates opportunities to fund growth or pay dividends Active $100 mm stock buyback program in place Select strategic partnership opportunities may offer meaningful and accretive growth 21

22 Balanced Chartering Strategy The 4 R s for Customers & Shareholders: Return on Capital Balance employment mix Regular Employment High fleet utilization Risk Management Strong counterparties Responsive To customers and the market FY 2017 Time Charter Coverage Spot Market Optimization 27% 73% Time Charter Spot Opportunistic approach to time chartering Four VLGCs currently on time charters Blue-chip counterparty relationships Significant commercial scale through Helios LPG Pool Founded by Dorian LPG and Phoenix Tankers in April 2015, the Helios Pool is the 2 nd largest LPG pool operator in the world Agreement with Oriental Energy Company, a major PDH operator and LPG importer into China Helios Pool will operate 8 VLGCs for Oriental Energy Company COA with Oriental Energy Company covering LPG shipments from US Gulf Coast The Helios Pool currently manages 28 VLGCs, inclusive of the vessels contributed by Oriental Energy Company. 22

23 Financials

24 Statement of Operations Data (USD) Statement of Operations Data Three Months Ended Sep 30, 2016 Three Months Ended Sep 30, 2015 Revenues $ 33,611,233 $ 74,946,432 Voyage expenses 466,218 3,541,546 Vessel operating expenses 16,339,345 9,459,889 General andadministrative expenses 5,203,915 5,281,535 Other income related parties 552, ,643 EBITDA 12,154,677 57,047,105 Depreciation and amortization 16,365,517 8,303,555 Operating income/(loss) (4,210,840) 48,743,550 Other income/(expenses), net (2,934,748) (7,530,286) Net income/(loss) $ (7,145,588) $ 41,213,264 Other Financial Data Time charter equivalent rate (1) $ 19,137 $ 68,330 Daily vessel operating expenses (2) $ 8,073 $ 8,663 Adjusted EBITDA (3) $ 13,253,766 $ 57,655,360 (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

25 Statement of Operations Data (USD) Statement of Operations Data Year Ended March 31, 2016 Year Ended March 31, 2015 Revenues $ 289,207,829 $ 104,129,149 Voyage expenses 12,064,682 22,081,856 Vessel operating expenses 47,119,990 21,256,165 Management fees related party 1,125,000 Impairment 1,431,818 General andadministrative expenses 29,836,029 14,145,086 Loss on disposal of assets 1,125,395 Other income related parties 1,945,396 93,929 EBITDA 201,007,129 44,183,153 Depreciation and amortization 42,591,942 14,093,744 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 Time charter equivalent rate (1) $ 55,087 $ 49,655 Daily vessel operating expenses (2) $ 8,581 $ 10,703 Adjusted EBITDA (3) $ 204,865,215 $ 47,346,202 (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. 25

26 Cash Flows Data (USD) Cash Flows Data Six Months Ended September 30, 2016 (Unaudited) Six Months Ended September 30, 2015 (Unaudited) Net income $ (8,436,709) $ 54,866,147 Adjustments 34,611,425 19,599,452 Changes in operating assets and liabilities 18,575,136 (27,623,907) Net cash provided by operating activities 44,749,852 46,841,692 Net cash used in investing activities (1,354,826) (486,298,974) Net cash (used in)/provided by financing activities (46,229,501) 315,162,225 Effects of exchange rates on cash and cash equivalents 4,413 (181,650) Net Increase/(decrease) in cash and cash equivalents $ (2,830,062) $ (124,476,707) 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, ,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) 26

27 Balance Sheet Data (USD) Balance Sheet Data September 30, 2016 (Unaudited) September 30, 2015 (Unaudited) Cash and cash equivalents $ 43,581,900 $ 80,344,476 Restricted cash, non-current 50,812,789 42,012,789 Total assets 1,786,002,314 1,488,041,949 Current portion of long-term debt 65,978,785 42,360,541 Long-term debt net of current portion & deferredfinancing fees 715,158, ,828,586 Total liabilities 819,203, ,515,117 Total shareholders' equity $ 966,798,705 $ 925,526,832 27

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