BW LPG Limited

Welcome to BWLPG's first quarter 2022 financial results presentation. Bringing you through the presentation today are CEO Anders Onderheim, CFO Elaine Ong, EVP Commercial Neil Srigo, and EVP Technical and Operations Pontus Burke. We are pleased to answer questions at the end of the presentation. Should you have any, please type them into the chat box in your Zoom panel. You may also use the raise hand option. Before we begin, we wish to highlight the legal disclaimers shown in the current slide. This presentation held on Zoom is also recorded. I now turn the call over to BWLPG CEO, Anders Anaheim.

Thank you, Lisa. And welcome to our first quarter results presentation for the financial period and the 31st of March 2022. As Lisa said, I'm joined here by Elaine, Niels and Pontus. If you go to slide three, they start with a good level of activity in the VLGC market and demonstrating the importance of our business in a context marked by global geopolitical and economic uncertainties. I also want to take the opportunity to congratulate colleagues on the completion of our ambitious LPG retrofitting program. I'd also like to thank all our partners and suppliers for their support. It's been a long journey from contract signing in 2018 through the re-delivery of our 15th retrofitted VLGC earlier this month. And even with complications from COVID-related restrictions, our site team spent the equivalent of one and a half years in quarantine. The team managed to complete the program ahead of schedule and within budget and with zero major safety incidents. We now own and operate the world's only fleet of retrofitted LPG powered vessels and the world's largest fleet to be powered by LPG. This is part of our strategy for smarter shipping. We decarbonize operations, deliver strong financial performance, and invest in innovation and technology. Let me quickly then talk about the key business highlights and market outlook. Please turn to slide four. In the first quarter, we reported $36,900 per day per VLGC fleet per calendar day, with 9% technical off-hire. This was primarily due to the retrofitting. Commercially, we achieved a strong TCE of $40,400 per day, available day, with a high commercial utilization of 96%. And we generated a net profit after tax of $58 million, and this translates into earnings per share of 41 cents. Moving on to the highlights for the quarter. We now report the highest available liquidity to date at $651 million, and a record low net leverage ratio of 25%. And today, I want to leave you with three key messages. Firstly, we now have a more optimistic view of 2023. Secondly, as mentioned, our leverage ratio is at record low levels. And thirdly, our dividend policy is updated to target a 75% dividend payout ratio when net leverage is below 30%, continued on a quarterly basis going forward. Our more optimistic outlook is driven by higher energy prices and growing political support for FBG as transitional fuel and an energy source. We believe the market fundamentals in 2023 are supported despite uncertainties from heavy new building delivery schedule. Neil will talk more about this later. For this quarter, with net leverage of 25%, we will return to shareholders a dividend payout that is 75% of MPAT or $0.31 per share. This amounts to a total of $42 million. And continuing our focus on generating returns for our shareholders, we have sold the BW Liberty in the second quarter at a very attractive price. We currently have no CapEx commitments other than just regular maintenance, but we still continue to value investment opportunities along the LPG value chain. Like with the LPG retrofit program, There are opportunities that are smarter, less capital intensive, and allow us to further strengthen our position in the LPG value chain without ordering new vessels. LPG is clearly a part of the solution towards a sustainable future. And as a member of the broader LPG industry, we must continue to communicate this strongly. On that note, we're also honored to be selected to form part of the OBX ESG Index that comprises 40 blue chip companies listed in Norway that demonstrates good ESG practices. There's no doubt in my mind that LPG is sustainable transition fuel and can power a cleaner energy future. To go quickly to slide five, the key financials. We generated an annual return on equity of 16% and with an annual return on capital employed of 12%. Our operational and free cash flows were $164 and $249 million respectively for the quarter, maintaining our flexibility, allowing us to evaluate sizable investment opportunities, and enabling us to continue to return cash to our shareholders. With that, I will let Niels take you through the market review and commercial update. Niels.

Thank you, Anders. Good morning and afternoon to all of you. On slide seven, we share our view of the market And as Anders mentioned, we have upgraded our market outlook for 2023 driven by expected increases in LPG production following the rapid surge in oil and gas prices. Of course, the order book is a concern. However, our analysis suggests that tightening emissions regulation and increased congestions in the Panama Canal combined with higher LPG production should partly offset the freight pressures from the new vessels. So far in Q2, we have fixed approximately 74% of our available fleet days on an average rate of $36,000 per day on a discharge to discharge basis. Turn to slide eight. The world needs LPG, and this is perfectly demonstrated in today's energy situation. Since the start of 22, WTI has increased by 40%, natural gas has more than doubled, and European NAFTA has jumped by 24%, while LPG prices have increased by only 8%, making it more competitively priced for both industrial and retail uses. A good thing about LPG is that you don't need expensive infrastructure investments compared to other gases such as LNG. It is practical and gives cost-competitive solutions to provide energy safety to both established and developing markets. Almost 50% of the world LPG demand goes into retail. The retail demand is continuing to grow strongly, well supported by progressive governments in emerging economies seeing the benefits from a clean and affordable source of energy. We also see strong demand from the petrochemical segments. Taking April as an example, seaborne LPG imports into Norway's Europe from the US rose by 22% from the previous month due to favorable propane NAFTA spreads. Countries such as China, Vietnam are ramping up their PDH and cracker projects, adding significant incremental demand for LPG. What I'm trying to emphasize here, until the world finds a green energy solution to completely replace fossil fuel, LPG is helping the world meeting its energy demand in a flexible manner that can integrate well with renewable energy production. Turn to slide nine. US is the main driver of global energy seaborne trade, and it will continue to be. With Europe looking to reduce their dependence on Russian gas, more seaborne LPG will be part of the solution. U.S. cell producers have the capacity and the capability to ramp up production. And under today's $100 oil price environments and an industry that is quick to react, we expect the LPG production to increase. EIA expects the US LPG export to grow by almost 15% in 2023. And in addition, we also have seen that midstream companies re-evaluating or planning for new NGL infrastructure investments. This has certainly given us more confidence in facing the high new building orders next year. Turning to slide 10. The current WLC order book holds 65 vessels, or 20% of the existing fleet. If we look from a percentage perspective, the fleet is expected to grow by 30% next year. While I just mentioned in the last slide, EIA expects the US LPG export to grow by 15% in 2023. We have not even talked about Middle East, which is also progressively adding back production. Our investments in the 15 dual fuel upgrades is the largest commitment towards decommunization in the sector. We believe that LPG as a fuel is both clean and economical. Looking at the price between compliant fuel and LPG for 23, LPG is priced over $100 cheaper, representing a TCE premium of about $4,500 per day compared to conventional vessels. We have for the last five years been active to sell our vintage vessels, total 23 ships. For the last 12 months, we have sold seven VLDC at price above book values. These transactions have generated a total net gain of 35 million or 26 cents per share for our shareholders. We are now comfortable with our current fleet profile, which will allow us to maneuver to all kinds of market conditions ahead. We have no vessel orders and no immediate plan of ordering vessels, despite a more positive market outlook. Please skip ahead to slide number 13, and I'll talk about our time shoulder overview. We have fixed 16% of our open days in 2023 at an average TCE of $3,300 per day, mostly are for our BW India business. We have a good position to capture the strong market ahead, and we will continue to focus on the US to Far East voyages. I'm confident and comfortable with our current portfolio. We have the critical mass, which is the key to optimize the spot earnings and help our clients with today's inefficiencies. That's it for me. Next, Pontus Berg will take you to the technical and operations update. Thank you.