Hoegh LNG Partners LP Common Units representing Limited Partner Interests

Good morning, ladies and gentlemen, and welcome to the Hogue LNG Partners Q1 2021 conference call. All participants will be in a listen-only mode. Should you need assistance, please email a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Stolle. CEO of Hoag LNG. Please go ahead.

Thank you, Jamie. Good morning, ladies and gentlemen, and welcome to Hoag LNG Partners earnings call for the first quarter of 2021. For your convenience, this webcast and presentation is available on our website. With me today, I have Mr. Robert Huru, the CFO of the partnership. So turning to page two in today's presentation, I will take you through the quarter and then hand over the word to Mr. Furuk, who will take you through the financials. Then I will present a market update and the summary. You will have the opportunity to ask questions to both of us at the end of the presentation. So turning to page three, before we start, please take a note of the forward-looking statements and also the glossary on page four. Turning to page five and the highlights. I would like to start with some comments relating to the COVID-19 pandemic. As of today, the partnership has not been materially impacted by the pandemic. The Högan Energy Group has taken steps to mitigate risks from COVID-19 and ensure the health and safety of our crews and staff, which is our highest priority. This includes developing mitigating actions for crew rotation, and I'm happy to say that safe crew changes are now being done at an acceptable frequency for both officers and ratings at all vessels. Thanks to the hard work of our people on board the vessels and onshore, the fleet is operating as expected despite the pandemic. All charter parties remain in full course, and the effect and revenues are being collected in accordance with contractual terms. I am therefore happy to report that all units in the fleet had a 100 percent availability in the quarter. This resulted in total revenues of 34.8 million and a segment EBITDA of 34.5 million in the quarter. Based on a distribution of 44 cents per common unit, this resulted in a solid coverage ratio of 1.14 in the quarter. Turning to page six, where we address the Take Private initiative at the parent level. On 8th of March this year, Leif Hogan Company Limited, the company in which the Hogan family holds their shares in the parent company and funds managed by Morgan Stanley Infrastructure Partners, launched an offer to acquire all outstanding shares in the parent, not already controlled by Leif Hogan Company, by way of amalgamation. This transaction was subsequently approved by the shareholders and the bondholders and the parents, and closed in the beginning of this month, leading to the parent now being wholly owned by Leipzig and Company and funds managed by Morgan Stanley Infrastructure Partners. The main consequence for the partnership is that some provisions of the omnibus agreement entered into in connection with the IPO are terminated by the terms. The most important changes are that the parent can now acquire, own, and operate vessels on long-term contracts. The partnership can now acquire, own, and operate vessels on short-term contracts. And that the parent is no longer obliged to offer any vessels on long-term contracts to the partnership. Furthermore, Högel & G is allowed to compete with HMNP. The parent, though, has indicated that it remains focused on ways to further enhance the partnership between Högel & G and HMLP and remains open to the opportunity to offer vessels to HMLP if market conditions warrant. Turning to page seven, we are showing the overview of the partnership's fleet of modern assets. where there are no changes since the previous quarter. The partnership has more than eight years average remaining contract length in its portfolio. With that, I would like to hand the word over to Mr. Furry, who will take us through the finances. Thank you, Sveinong, and good morning, everyone. Turning to page nine, we have the key figures for the quarter showing an operating performance which slightly weaker than in the same quarter of 2020 with a segment EBITDA of 34.5 million in the quarter compared to 26.1 million in the first quarter of 2020. The operating result led to a distributable cash flow of 17.1 million which was about 1 million less than in the same quarter of 2020. The coverage ratio was 1.14 times and that is a decline from 1.2 times in the first quarter of 2020. I would like to thank all of our seafarers and onshore staff, enabling the partnership to continue to operate all of its assets without interruptions during these unprecedented times. Turning to page 10, we are showing the development in key measures over time, and as you can see from the graphs, the operating performance remains relatively stable. The only exception is the second quarter of 2019, which was impacted by the dry docking and maintenance of the Herg Gallant. Herg Grace is the next residue for periodic survey and this commenced in the first quarter of 2021 and is expected to be completed during the second quarter. However, this is carried out afloat and is not expected to cause significant downtime or off-hire. I would further like to highlight the stability and distributions from the partnership through the pandemic. Moving on to page 11, here we are showing the income statement in more detail. Total revenues of 34.8 million in the quarter was about 1.9 million less than in the same period in 2020, mainly due to reduced time charter revenue for the herd gallant under its new charter. Vessel operating expenses of 6.2 million in the quarter are up by 0.7 million from the same period in 2020. The increase is driven by higher operating expenses for the PGN FSA ULAMPO under her grace, as well as less need for spare parts and lower use of external services in 2020. Equity in earnings of joint ventures for the quarter was 11.1 million, an increase from a loss of 10 million for the same period in 2020. Unrealized gains and losses on derivative instruments, significantly impacted the equity in earnings of joint ventures for the first quarter of 2021 and 2020 respectively. Excluding these derivative items, the equity in earnings from joint ventures would have been 3.4 million this quarter and increased from 1.7 million in the same period 2020. Total financial expense of 6.2 million in the quarter is down by 0.8 million from the same quarter of 2020, mainly due to lower interest expense as debt is amortized. Turning to page 12, the balance sheet has not changed much since year end 2020, with total liabilities and equities standing at just below 1 billion at the end of the quarter. The commercial tranche of P&G and FSU Lampung's debt facility is maturing in the fourth quarter of this year, and the export tranche can also be called if the commercial tranche is not refinanced. Also, one of the debt facilities in the joint ventures mature in the same quarter. To address the liquidity needs, the partnerships has commenced these refinancing processes and is at an advanced stage of completing the refinancing of the Lampung facility. The loan documentation has been finalized and is now subject to satisfaction of closing conditions before drawdown. For the joint venture, the refinancing is in a planning stage. I will now hand it back to Mr. Sterling to take us through the remaining sections of the presentation. Thank you, Håla. So turning to page And the LNG market, looking at the total market, so global LNG trade rose with about 1.2% year-on-year in the first quarter. Asia keeps being the region with the highest growth in LNG input volumes. And the first quarter of 2021 is the quarter with the highest volume of imported LNG in history. China had a strong year-on-year growth of 14.4% in the first quarter, mainly due to the fact that in the same quarter last year, of course, the Chinese economy was affected by COVID. Turning to page 15, we have two graphs illustrating the expected development in the global LNG markets from now until 2025. The graph on the left shows the expected growth in LNG imports globally. And once again, you can see most of the growth is expected to be in the Asian region, excluding the legacy markets of Japan, South Korea, and Taiwan. The countries accounting for around three-quarters of the expected import growth are all either existing or potential markets for FSU import terminals. mainly China, India, Pakistan and Thailand. The total market growth in the period 2020 to 2025 is expected to be, according to this forecast, about 23%. On the supply side, the incremental volume will for the most part come from Europe and the Americas, more specifically the US and Russia. Turning to page 16, which gives an overview of the expected development in floating regasification terminal projects and also when these are expected to come on stream versus the assumed FSAU fleet import capacity illustrated by the green dashed line. The dark blue line, blue dashed line, sorry, represents all announced floating regas projects But as some of these have a low probability of materializing, they are not all included in the forward projections. As you can see, the current capacity surplus in the FSU market is expected to be reduced. And an important point to make here is that FSUs will be committed to projects several months or even years before the start date of the project, meaning that the market balance can balance and become tight at an earlier point in time than what can be seen on this graph. With that, I would like to turn to page 18 for a summary where I would like to highlight the following. No material impact from the COVID-19 pandemic to date. 100% availability of the fleet resulting in stable operating performance and a solid coverage ratio in the quarter. And finally, as just explained, very strong market fundamentals, both in the short term and in the long term. With that, we will now open for questions from the audience. Yeah, handing over to the operator.

Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one using a touchtone telephone. If you are using a speaker phone, we do ask that you please pick up your handset before pressing the keys. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue. Our first question today comes from Chris Weatherby from Citigroup. Please go ahead with your question.