Special energy cargoes/LPG - www .iene .gr

Christian Krohn-Hansen
StealthGas Inc.
LPG SHIPPING – A RISING STAR
Chartering Manager – Stealth Maritime Corp. S.A.
IENE Seminar Athens – Nov 2011

Disclaimer
Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of applicable
federal securities laws. Such statements are based upon current expectations that
involve risks and uncertainties. Any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements. For example, words
such as “may,” “will,” “should,” “estimates,” “intends,” and similar expressions are
intended to identify forward-looking statements. Actual results and the timing of certain
events may differ significantly from the results discussed or implied in the forwardlooking
statements. Among the factors that might cause or contribute to such a
discrepancy include, but are not limited to the risk factors described in the Company’s
Registration Statement filed with the Securities and Exchange Commission, particularly
those describing variations on charter rates and their effect on the Company’s revenues,
net income and profitability as well as the value of the Company’s fleet.

Executive summary
• What is LPG, where does it come from,
what is it used for, and how is it
transported?
• Fully refrigerated segment
– Freight Market development
– Production / Trades
– Fleet profile
• Semi ref / pressurized segment
– Freight Market development
– Production / Trades
– Fleet profile
• StealthGas Inc.
– An introduction into the leading provider of pressurized short sea
LPG/Petrochemical gas transportation
2

Despite a “stop” in new ordering, lots of ships
will be delivered
But not in the LPG space
*
3

LPG (LIQUID PETROLEUM GAS)
4

Type of Carriers and Products
Vessel type Size cbm Type Pressure Freight
Qmax 255 - 265k SSD/Reliquefactio
n
0.25 bar LNG
Qflex 200 - 230k SSD/DFDE 0.25 bar LNG
Standard LNG 125 - 165k DFDE/ST 0.25 bar LNG
Small – Med
Max
1 - 75k DFDE/ST 0.25 bar LNG
VLGC VLGC
60 60 - 85k 85k Fully Refrigerated 0.5 0.5 bar bar LPG,CPP
LPG,CPP
LGC 50 - 60k Fully Refrigerated 0.5 bar LPG, NH3, CPP
MGC 18 - 42k Fully Refrigerated 0.5 bar LPG
Small 2 - 23k Semi Refrigerated
Source: Lorentzen & Stemoco
Ethylene
Fully pressurized
7.5 bar
18 bar
LPG
NH3
Petro-
chemicals
5

MARKET STRUCTURE
60
45
30
15
0
45
30
15
0
2010 gas trades breakdown (Mio ton)
LPG NH3 Petchem products
Sub 23Cbm MGC LGC VLGC
VLGC LGC MGC Sub 23Cbm
Source: Joachim Grieg
2010 gas trades breakdown (Mio ton)
LPG NH3 Petchem products
• VLGC segment is the dominant
segment and predominantly
taking longhaul LPG. The
relevance for the smaller
segments is part part-cargoes cargoes
• LGCs and MGCs used to be an
integrated segment transporting
NH3 and short(er)haul LPG
• In addition to LPG and NH3, the
small segment services also
petchem markets
⇒ Substitution Substitution effects effects limited limited in in
the the larger larger segments segments
6

Fully Refrigerated segment
Clipper Sun – 84000cbm 2008 built – owned by Solvang
7

FREIGHT MARKETS RECOVERING
1400
1200
1000
800
600
400
200
80+ Fr
Series2
35k Fr
28/30k
24k Fr
1 year time charter rates ($/month)
0
jan. 00 jan. 02 jan. 04 jan. 06 jan. 08 jan. 10
Source: Joachim Grieg
• Rates following world
economic fundamentals and
concerting in the longer run
• VLGC market have
absorbed oversupply and
are rebounding. Future
LGCs questioned. Effect
trickling down to lower
segments
• Midsize and Handy looking
stronger
⇒ New New shipping shipping cycle cycle was was
well well anticipated anticipated and and
rather rather obvious obvious
8

OPEC PRODUCTION CRUCIAL
34
32
30
28
26
24
1995-01
1997-01
Opec production (incl. Angola) 1000 bpd
Baltic $/day (right axis)
1999-01
2001-01
Source: Joachim Grieg
2003-01
2005-01
2007-01
2009-01
2011-01
90
75
60
45
30
15
0
150
135
120
105
90
75
60
1995-01
1997-01
No VLGCs Baltic $/day (right axis)
• Fleet supply booms rather an exception in VLGC shipping
• Clearly supply driven market in terms of volumes:
lackluster 2011 but still record additions
• Increase in VLGC rates due to LNG output, much less
because of OPEC additions
1999-01
2001-01
2003-01
2005-01
2007-01
2009-01
2011-01
90
75
60
45
30
15
0
9

MEG KEY PLAYER
40
30
20
10
0
5,8
Middle East LPG supply (Mio ton)
7,2
10,2
• Increasing volumes will be on account of the VLGCs and sourced from mainly 3
players: Qatar, Abu Dhabi and Saudi Arabia (+/ (+/-)
• Qatar added 3mio ton of trade in 2011
• Saudi exports still strong in 2011 despite pledge to massive direct LPG to petchem
markets
⇒ Strong Strong increase increase expected expected of of LPG LPG volumes volumes to to 70 70 mio mio ton ton
11,4
12
12,8
13,3
5,2 6,2 7,3 8,1 9,1 10,1 11,1
2009 2010 2011 2012 2013 2014 2015
Abu Dhabi Iran Kuwait Qatar
Saudi Arabia Sharjah Bahrain Oman
Source: Joachim Grieg
10

US TRADE AND OTHER LPG EXPORTS
0,6 US LPG trade (Mio ton)
0,5
0,4
0,3
0,2
0,1
0,0
2004 2005 2006 2007 2008 2009 2010 2011
Imports
Exports
1 000 LPG exports (Mio ton)
• US has become an LPG exporter because of adverse LPG pricing and shale
gas revolution (?)
• Other LPG regions are more stable in terms of exports, although Algeria and
North Sea have seen production problems in 2010 explaining lower output
• Exports out of Brazil have doubled in the period 2005 2005-2010 2010 (0.7 to 1.6mio
ton)
• Indian LPG imports increasing to 4mio ton LPG (almost entirely on MGCs)
Source: Joachim Grieg
900
800
700
600
500
400
300
200
100
0
2007 2008 2009 2010 2011
Algeria
WAFR
NWE
11

FLEET PROFILE
3,0
2,3
1,5
0,8
0,0
-0,8
-1,5
Mio Cbm
• Orderbook largely delivered
VLGC
⇒ Risk for tonnage oversupply has evaporated
% Growth
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Scrap Deliveries Fleet growth
24%
18%
12%
6%
0%
-6%
-12%
Source: Joachim Grieg
12

Semi ref / pressurized - segment
Gas Elixir – 5000cbm built 2011 – owned by StealthGas
13

1400
1200
1000
800
600
400
200
FREIGHT RATES RECOVERING
1 year time charter rates ($/month)
54k Fr 35k Fr 24k Fr 20-22k Sr 15k Sr
0
jan. 00 jan. 02 jan. 04 jan. 06 jan. 08 jan. 10
• Freight rates adjusted upwards by all shipbrokers
• Fairly unique tightness in the small gas market
⇒ recovering recovering global global economics economics or or simply simply more/new
more/new
volumes volumes to to be be shipped? shipped?
700
600
500
400
300
200
100
1 year time charter rates ($/month)
8-10k eth 6.5k Sr 5k Pr 3.5k Pr 3.2k Sr
0
jan. 00 jan. 02 jan. 04 jan. 06 jan. 08 jan. 10
Source: Joachim Grieg
14

1-Year TC Rate Volatility Since 2000
But, small LPG rates remain relatively stable
Small LPG tanker rates are significantly less volatile than crude tanker and
drybulk rates
1-Year TC Rate Volatility Since 2000
Data source: Clarkson Research
Services
Rates: 1-year TC measured
weekly
Dry Bulk: average of Cape,
Panamax, Handymax, and
Handysize rates
Crude Tanker: average of VLCC,
Suezmax, and Aframax rates
15

PETCHEM TRADE
RECOVERING
Mio ton Seaborne chemical gas trade
18
16
14
12
10
8
6
4
2
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
% Growth
• Cyclical petchem trades rebounding from the crisis
75%
60%
45%
30%
15%
0%
-15%
-30%
Ethylene Propylene VCM Butadiene Ton % Cbm %
2009
2010
2011
2012
2013
2014
2015
300
250
200
150
100
144
Seaborne trade vs production 2010
(Mio ton)
• The trade % production shares are stable over time
• More More longhaul longhaul volumes volumes will will add add to to handy handy ship ship demand demand over over time time
50
0
77
40
5 3 10 2 3
246
149
Ethylene PropyleneButadienes VCM LPG NH3
57
17
Production Trade Trade % Production
Source: Joachim Grieg
16
25 %
20 %
15 %
10 %
5 %
0 %

CHINA, CHINA,
CHINA?
5
4
3
2
1
0
Chinese petchem imports (mio ton)
VCM
Propylene
Ethylene
2003 2004 2005 2006 2007 2008 2009 2010 2011
Thousands ton
800
700
600
500
400
300
200
100
Chinese LPG trade
• Strong expansion in Chinese petchem imports halted? 2009 boost explained
by stimulus program, lack of and delays in domestic cracker projects
• Distribution trading to close neighbors emerged overnight and provides
significant employment for Pressurized ships
0
jan
mar
mai
jul
sep
nov
jan
mar
mai
jul
sep
nov
jan
mar
mai
jul
sep
nov
jan
mar
mai
jul
sep
nov
jan
mar
mai
jul
sep
nov
jan
mar
mai
jul
sep
nov
jan
mar
mai
jul
sep
nov
jan
mar
mai
jul
sep
nov
jan
mar
mai
jul
sep
nov
2003 2004 2005 2006 2007 2008 2009 2010 2011
Exports Imports
Source: Joachim Grieg
17

Fleet Profile
600
500
400
300
200
100
0
-100
-200
-300
1000 Cbm 0-23k
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Scrapping Deliveries
Orderbook Expected scrapping
Growth
Negative fleet growth from 2013 and onwards
24%
% Growth
18%
12%
6%
0%
-6%
-12%
Source: Joachim Grieg
18

NB PRICES
60
50
40
30
20
10
Gas NB Prices ($ Mio)
0
jan.1980 jan.1985 jan.1990 jan.1995 jan.2000 jan.2005 jan.2010
24k Fr 5k Pr 8-10k/12k (from 2009) Eth
160 $ mio
120
80
40
Overall NB values
0
1980 1984 1988 1992 1996 2000 2004 2008
VLGC VLCC
Capesize Container 2k TEU
Chemical 32/40k dwt
- Strong Yen resulting in expensive n/b’s as Japan is the main builder of smaller LPG
carriers, this again leads to very limited ordering
Source: Joachim Grieg
19

Summary
• Significant increase in LPG production
• Changes in trade patterns
• Small orderbook
• Expensive n/b in the small segments due to
strong Yen
• Most factors in the equation point towards a
strong period for LPG transportation throughout
the size segments
20

StealthGas Inc.
Gas Haralambos – 7000cbm 2007 built – trading for Petrobras in Brazil
21

Business Strategy
Business Strategy Implementation
Consolidation and
fleet renewal
Moderate Leverage
Visible Revenue
Stream –
Consistency
Modern Fleet
Close Customer
Relations
Cost Cost-Efficient Efficient
Operations
Share Repurchases
Took delivery of 3 Newbuilding LPG carriers in 2011 and sold 4
LPG carriers
2 N/B N/B LPG carriers to be delivered in 2012, and one vessel sold
Third Quarter 2011 net debt to capitalization: 44.3%
75% of voyage days fixed for FY 2012
40% of voyage days fixed for FY 2013
Our fleet average age is approx 10 years
High quality customer base – low counterparty risk
Net Income Breakeven of $5,975 per day in Q3 2011 (net net of
realized loss on interest rate swaps swaps) compared to $6,161in Q2
2011 and $6,426 in Q1 2011.
Bought 550,000 shares during August & September, 1.8million
shares since the program’s inception.
22
2

Business Overview
• Fleet:
34 LPG Carriers
Core Product:
Natural Gas Production
10% of Natural Gas is LPG
Crude Oil Refining
3% of Crude Oil Refined into LPG
Uses:
Propane
Butane
Ethane
VCM
Butadiene
Propylene
60%
40%
Cars& Buses Cooking& Heating Petrochemical
Feedstock
3 Product Tankers 1 Aframax Tanker
Diesel
Jet Fuel
Naphtha
Liquid Petroleum Gases
Propane
Butane
Ethane
Petrochemical
Feedstock
Crude
Oil
Petrochemical Gases
VCM
Butadiene
Propylene
Ethylene
Car Components Plastics Styrofoam Synthetic Rubber
2
23

LPG Fleet composition
• Pressurized
– 6300-7500cbm: 6300 7500cbm: 8 vessels
– 5000cbm: 12 vessels
– 3300-4100cbm: 3300 4100cbm: 10 vessels
• Semi Semi-ref ref
– 3200-4100cbm: 3200 4100cbm: 4 vessels
24

OPERATORS OF
PRESSURIZED TONNAGE
Source: Inge Steensland
25

Fleet Development
• Newbuilding program of of 3 LPG carriers delivered in 2011 and 2
delivering in 2012
• Newbuilding program has committed financing
• Selective sale of older & smaller tonnage in 2011/12
26
3

Fleet Employment Profile
27
4

Company Contact:
StealthGas Inc.
Konstantinos Sistovaris
Chief Financial Officer
StealthGas Inc.
+30 +30-210 210-6250 6250-001 001
E-mail: mail: sistovaris@stealthgas.com
www.stealthgas.com
Chartering contact:
Christian Krohn Krohn-Hansen
Krohn Krohn-Hansen Hansen
Chartering Manager
Stealth Maritime Corp. S.A.
+30 +30-210 210-6252 6252-849 849
E-mail: mail: chartering@stealth.gr
18