Special energy cargoes/LPG - www .iene .gr
Special energy cargoes/LPG - www .iene .gr
Special energy cargoes/LPG - www .iene .gr
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Christian Krohn-Hansen<br />
StealthGas Inc.<br />
<strong>LPG</strong> SHIPPING – A RISING STAR<br />
Chartering Manager – Stealth Maritime Corp. S.A.<br />
IENE Seminar Athens – Nov 2011
Disclaimer<br />
Forward-Looking Statements<br />
This presentation contains forward-looking statements within the meaning of applicable<br />
federal securities laws. Such statements are based upon current expectations that<br />
involve risks and uncertainties. Any statements contained herein that are not statements<br />
of historical fact may be deemed to be forward-looking statements. For example, words<br />
such as “may,” “will,” “should,” “estimates,” “intends,” and similar expressions are<br />
intended to identify forward-looking statements. Actual results and the timing of certain<br />
events may differ significantly from the results discussed or implied in the forwardlooking<br />
statements. Among the factors that might cause or contribute to such a<br />
discrepancy include, but are not limited to the risk factors described in the Company’s<br />
Registration Statement filed with the Securities and Exchange Commission, particularly<br />
those describing variations on charter rates and their effect on the Company’s revenues,<br />
net income and profitability as well as the value of the Company’s fleet.
Executive summary<br />
• What is <strong>LPG</strong>, where does it come from,<br />
what is it used for, and how is it<br />
transported?<br />
• Fully refrigerated segment<br />
– Freight Market development<br />
– Production / Trades<br />
– Fleet profile<br />
• Semi ref / pressurized segment<br />
– Freight Market development<br />
– Production / Trades<br />
– Fleet profile<br />
• StealthGas Inc.<br />
– An introduction into the leading provider of pressurized short sea<br />
<strong>LPG</strong>/Petrochemical gas transportation<br />
2
Despite a “stop” in new ordering, lots of ships<br />
will be delivered<br />
But not in the <strong>LPG</strong> space<br />
*<br />
3
<strong>LPG</strong> (LIQUID PETROLEUM GAS)<br />
4
Type of Carriers and Products<br />
Vessel type Size cbm Type Pressure Freight<br />
Qmax 255 - 265k SSD/Reliquefactio<br />
n<br />
0.25 bar LNG<br />
Qflex 200 - 230k SSD/DFDE 0.25 bar LNG<br />
Standard LNG 125 - 165k DFDE/ST 0.25 bar LNG<br />
Small – Med<br />
Max<br />
1 - 75k DFDE/ST 0.25 bar LNG<br />
VLGC VLGC<br />
60 60 - 85k 85k Fully Refrigerated 0.5 0.5 bar bar <strong>LPG</strong>,CPP<br />
<strong>LPG</strong>,CPP<br />
LGC 50 - 60k Fully Refrigerated 0.5 bar <strong>LPG</strong>, NH3, CPP<br />
MGC 18 - 42k Fully Refrigerated 0.5 bar <strong>LPG</strong><br />
Small 2 - 23k Semi Refrigerated<br />
Source: Lorentzen & Stemoco<br />
Ethylene<br />
Fully pressurized<br />
7.5 bar<br />
18 bar<br />
<strong>LPG</strong><br />
NH3<br />
Petro-<br />
chemicals<br />
5
MARKET STRUCTURE<br />
60<br />
45<br />
30<br />
15<br />
0<br />
45<br />
30<br />
15<br />
0<br />
2010 gas trades breakdown (Mio ton)<br />
<strong>LPG</strong> NH3 Petchem products<br />
Sub 23Cbm MGC LGC VLGC<br />
VLGC LGC MGC Sub 23Cbm<br />
Source: Joachim Grieg<br />
2010 gas trades breakdown (Mio ton)<br />
<strong>LPG</strong> NH3 Petchem products<br />
• VLGC segment is the dominant<br />
segment and predominantly<br />
taking longhaul <strong>LPG</strong>. The<br />
relevance for the smaller<br />
segments is part part-<strong>cargoes</strong> <strong>cargoes</strong><br />
• LGCs and MGCs used to be an<br />
inte<strong>gr</strong>ated segment transporting<br />
NH3 and short(er)haul <strong>LPG</strong><br />
• In addition to <strong>LPG</strong> and NH3, the<br />
small segment services also<br />
petchem markets<br />
⇒ Substitution Substitution effects effects limited limited in in<br />
the the larger larger segments segments<br />
6
Fully Refrigerated segment<br />
Clipper Sun – 84000cbm 2008 built – owned by Solvang<br />
7
FREIGHT MARKETS RECOVERING<br />
1400<br />
1200<br />
1000<br />
800<br />
600<br />
400<br />
200<br />
80+ Fr<br />
Series2<br />
35k Fr<br />
28/30k<br />
24k Fr<br />
1 year time charter rates ($/month)<br />
0<br />
jan. 00 jan. 02 jan. 04 jan. 06 jan. 08 jan. 10<br />
Source: Joachim Grieg<br />
• Rates following world<br />
economic fundamentals and<br />
concerting in the longer run<br />
• VLGC market have<br />
absorbed oversupply and<br />
are rebounding. Future<br />
LGCs questioned. Effect<br />
trickling down to lower<br />
segments<br />
• Midsize and Handy looking<br />
stronger<br />
⇒ New New shipping shipping cycle cycle was was<br />
well well anticipated anticipated and and<br />
rather rather obvious obvious<br />
8
OPEC PRODUCTION CRUCIAL<br />
34<br />
32<br />
30<br />
28<br />
26<br />
24<br />
1995-01<br />
1997-01<br />
Opec production (incl. Angola) 1000 bpd<br />
Baltic $/day (right axis)<br />
1999-01<br />
2001-01<br />
Source: Joachim Grieg<br />
2003-01<br />
2005-01<br />
2007-01<br />
2009-01<br />
2011-01<br />
90<br />
75<br />
60<br />
45<br />
30<br />
15<br />
0<br />
150<br />
135<br />
120<br />
105<br />
90<br />
75<br />
60<br />
1995-01<br />
1997-01<br />
No VLGCs Baltic $/day (right axis)<br />
• Fleet supply booms rather an exception in VLGC shipping<br />
• Clearly supply driven market in terms of volumes:<br />
lackluster 2011 but still record additions<br />
• Increase in VLGC rates due to LNG output, much less<br />
because of OPEC additions<br />
1999-01<br />
2001-01<br />
2003-01<br />
2005-01<br />
2007-01<br />
2009-01<br />
2011-01<br />
90<br />
75<br />
60<br />
45<br />
30<br />
15<br />
0<br />
9
MEG KEY PLAYER<br />
40<br />
30<br />
20<br />
10<br />
0<br />
5,8<br />
Middle East <strong>LPG</strong> supply (Mio ton)<br />
7,2<br />
10,2<br />
• Increasing volumes will be on account of the VLGCs and sourced from mainly 3<br />
players: Qatar, Abu Dhabi and Saudi Arabia (+/ (+/-)<br />
• Qatar added 3mio ton of trade in 2011<br />
• Saudi exports still strong in 2011 despite pledge to massive direct <strong>LPG</strong> to petchem<br />
markets<br />
⇒ Strong Strong increase increase expected expected of of <strong>LPG</strong> <strong>LPG</strong> volumes volumes to to 70 70 mio mio ton ton<br />
11,4<br />
12<br />
12,8<br />
13,3<br />
5,2 6,2 7,3 8,1 9,1 10,1 11,1<br />
2009 2010 2011 2012 2013 2014 2015<br />
Abu Dhabi Iran Kuwait Qatar<br />
Saudi Arabia Sharjah Bahrain Oman<br />
Source: Joachim Grieg<br />
10
US TRADE AND OTHER <strong>LPG</strong> EXPORTS<br />
0,6 US <strong>LPG</strong> trade (Mio ton)<br />
0,5<br />
0,4<br />
0,3<br />
0,2<br />
0,1<br />
0,0<br />
2004 2005 2006 2007 2008 2009 2010 2011<br />
Imports<br />
Exports<br />
1 000 <strong>LPG</strong> exports (Mio ton)<br />
• US has become an <strong>LPG</strong> exporter because of adverse <strong>LPG</strong> pricing and shale<br />
gas revolution (?)<br />
• Other <strong>LPG</strong> regions are more stable in terms of exports, although Algeria and<br />
North Sea have seen production problems in 2010 explaining lower output<br />
• Exports out of Brazil have doubled in the period 2005 2005-2010 2010 (0.7 to 1.6mio<br />
ton)<br />
• Indian <strong>LPG</strong> imports increasing to 4mio ton <strong>LPG</strong> (almost entirely on MGCs)<br />
Source: Joachim Grieg<br />
900<br />
800<br />
700<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
2007 2008 2009 2010 2011<br />
Algeria<br />
WAFR<br />
NWE<br />
11
FLEET PROFILE<br />
3,0<br />
2,3<br />
1,5<br />
0,8<br />
0,0<br />
-0,8<br />
-1,5<br />
Mio Cbm<br />
• Orderbook largely delivered<br />
VLGC<br />
⇒ Risk for tonnage oversupply has evaporated<br />
% Growth<br />
1995<br />
1996<br />
1997<br />
1998<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
2011<br />
2012<br />
2013<br />
2014<br />
2015<br />
Scrap Deliveries Fleet <strong>gr</strong>owth<br />
24%<br />
18%<br />
12%<br />
6%<br />
0%<br />
-6%<br />
-12%<br />
Source: Joachim Grieg<br />
12
Semi ref / pressurized - segment<br />
Gas Elixir – 5000cbm built 2011 – owned by StealthGas<br />
13
1400<br />
1200<br />
1000<br />
800<br />
600<br />
400<br />
200<br />
FREIGHT RATES RECOVERING<br />
1 year time charter rates ($/month)<br />
54k Fr 35k Fr 24k Fr 20-22k Sr 15k Sr<br />
0<br />
jan. 00 jan. 02 jan. 04 jan. 06 jan. 08 jan. 10<br />
• Freight rates adjusted upwards by all shipbrokers<br />
• Fairly unique tightness in the small gas market<br />
⇒ recovering recovering global global economics economics or or simply simply more/new<br />
more/new<br />
volumes volumes to to be be shipped? shipped?<br />
700<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
1 year time charter rates ($/month)<br />
8-10k eth 6.5k Sr 5k Pr 3.5k Pr 3.2k Sr<br />
0<br />
jan. 00 jan. 02 jan. 04 jan. 06 jan. 08 jan. 10<br />
Source: Joachim Grieg<br />
14
1-Year TC Rate Volatility Since 2000<br />
But, small <strong>LPG</strong> rates remain relatively stable<br />
Small <strong>LPG</strong> tanker rates are significantly less volatile than crude tanker and<br />
drybulk rates<br />
1-Year TC Rate Volatility Since 2000<br />
Data source: Clarkson Research<br />
Services<br />
Rates: 1-year TC measured<br />
weekly<br />
Dry Bulk: average of Cape,<br />
Panamax, Handymax, and<br />
Handysize rates<br />
Crude Tanker: average of VLCC,<br />
Suezmax, and Aframax rates<br />
15
PETCHEM TRADE<br />
RECOVERING<br />
Mio ton Seaborne chemical gas trade<br />
18<br />
16<br />
14<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
% Growth<br />
• Cyclical petchem trades rebounding from the crisis<br />
75%<br />
60%<br />
45%<br />
30%<br />
15%<br />
0%<br />
-15%<br />
-30%<br />
Ethylene Propylene VCM Butad<strong>iene</strong> Ton % Cbm %<br />
2009<br />
2010<br />
2011<br />
2012<br />
2013<br />
2014<br />
2015<br />
300<br />
250<br />
200<br />
150<br />
100<br />
144<br />
Seaborne trade vs production 2010<br />
(Mio ton)<br />
• The trade % production shares are stable over time<br />
• More More longhaul longhaul volumes volumes will will add add to to handy handy ship ship demand demand over over time time<br />
50<br />
0<br />
77<br />
40<br />
5 3 10 2 3<br />
246<br />
149<br />
Ethylene PropyleneButad<strong>iene</strong>s VCM <strong>LPG</strong> NH3<br />
57<br />
17<br />
Production Trade Trade % Production<br />
Source: Joachim Grieg<br />
16<br />
25 %<br />
20 %<br />
15 %<br />
10 %<br />
5 %<br />
0 %
CHINA, CHINA,<br />
CHINA?<br />
5<br />
4<br />
3<br />
2<br />
1<br />
0<br />
Chinese petchem imports (mio ton)<br />
VCM<br />
Propylene<br />
Ethylene<br />
2003 2004 2005 2006 2007 2008 2009 2010 2011<br />
Thousands ton<br />
800<br />
700<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
Chinese <strong>LPG</strong> trade<br />
• Strong expansion in Chinese petchem imports halted? 2009 boost explained<br />
by stimulus pro<strong>gr</strong>am, lack of and delays in domestic cracker projects<br />
• Distribution trading to close neighbors emerged overnight and provides<br />
significant employment for Pressurized ships<br />
0<br />
jan<br />
mar<br />
mai<br />
jul<br />
sep<br />
nov<br />
jan<br />
mar<br />
mai<br />
jul<br />
sep<br />
nov<br />
jan<br />
mar<br />
mai<br />
jul<br />
sep<br />
nov<br />
jan<br />
mar<br />
mai<br />
jul<br />
sep<br />
nov<br />
jan<br />
mar<br />
mai<br />
jul<br />
sep<br />
nov<br />
jan<br />
mar<br />
mai<br />
jul<br />
sep<br />
nov<br />
jan<br />
mar<br />
mai<br />
jul<br />
sep<br />
nov<br />
jan<br />
mar<br />
mai<br />
jul<br />
sep<br />
nov<br />
jan<br />
mar<br />
mai<br />
jul<br />
sep<br />
nov<br />
2003 2004 2005 2006 2007 2008 2009 2010 2011<br />
Exports Imports<br />
Source: Joachim Grieg<br />
17
Fleet Profile<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
-100<br />
-200<br />
-300<br />
1000 Cbm 0-23k<br />
1995<br />
1996<br />
1997<br />
1998<br />
1999<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
2011<br />
2012<br />
2013<br />
2014<br />
2015<br />
Scrapping Deliveries<br />
Orderbook Expected scrapping<br />
Growth<br />
Negative fleet <strong>gr</strong>owth from 2013 and onwards<br />
24%<br />
% Growth<br />
18%<br />
12%<br />
6%<br />
0%<br />
-6%<br />
-12%<br />
Source: Joachim Grieg<br />
18
NB PRICES<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
Gas NB Prices ($ Mio)<br />
0<br />
jan.1980 jan.1985 jan.1990 jan.1995 jan.2000 jan.2005 jan.2010<br />
24k Fr 5k Pr 8-10k/12k (from 2009) Eth<br />
160 $ mio<br />
120<br />
80<br />
40<br />
Overall NB values<br />
0<br />
1980 1984 1988 1992 1996 2000 2004 2008<br />
VLGC VLCC<br />
Capesize Container 2k TEU<br />
Chemical 32/40k dwt<br />
- Strong Yen resulting in expensive n/b’s as Japan is the main builder of smaller <strong>LPG</strong><br />
carriers, this again leads to very limited ordering<br />
Source: Joachim Grieg<br />
19
Summary<br />
• Significant increase in <strong>LPG</strong> production<br />
• Changes in trade patterns<br />
• Small orderbook<br />
• Expensive n/b in the small segments due to<br />
strong Yen<br />
• Most factors in the equation point towards a<br />
strong period for <strong>LPG</strong> transportation throughout<br />
the size segments<br />
20
StealthGas Inc.<br />
Gas Haralambos – 7000cbm 2007 built – trading for Petrobras in Brazil<br />
21
Business Strategy<br />
Business Strategy Implementation<br />
Consolidation and<br />
fleet renewal<br />
Moderate Leverage<br />
Visible Revenue<br />
Stream –<br />
Consistency<br />
Modern Fleet<br />
Close Customer<br />
Relations<br />
Cost Cost-Efficient Efficient<br />
Operations<br />
Share Repurchases<br />
Took delivery of 3 Newbuilding <strong>LPG</strong> carriers in 2011 and sold 4<br />
<strong>LPG</strong> carriers<br />
2 N/B N/B <strong>LPG</strong> carriers to be delivered in 2012, and one vessel sold<br />
Third Quarter 2011 net debt to capitalization: 44.3%<br />
75% of voyage days fixed for FY 2012<br />
40% of voyage days fixed for FY 2013<br />
Our fleet average age is approx 10 years<br />
High quality customer base – low counterparty risk<br />
Net Income Breakeven of $5,975 per day in Q3 2011 (net net of<br />
realized loss on interest rate swaps swaps) compared to $6,161in Q2<br />
2011 and $6,426 in Q1 2011.<br />
Bought 550,000 shares during August & September, 1.8million<br />
shares since the pro<strong>gr</strong>am’s inception.<br />
22<br />
2
Business Overview<br />
• Fleet:<br />
34 <strong>LPG</strong> Carriers<br />
Core Product:<br />
Natural Gas Production<br />
10% of Natural Gas is <strong>LPG</strong><br />
Crude Oil Refining<br />
3% of Crude Oil Refined into <strong>LPG</strong><br />
Uses:<br />
Propane<br />
Butane<br />
Ethane<br />
VCM<br />
Butad<strong>iene</strong><br />
Propylene<br />
60%<br />
40%<br />
Cars& Buses Cooking& Heating Petrochemical<br />
Feedstock<br />
3 Product Tankers 1 Aframax Tanker<br />
Diesel<br />
Jet Fuel<br />
Naphtha<br />
Liquid Petroleum Gases<br />
Propane<br />
Butane<br />
Ethane<br />
Petrochemical<br />
Feedstock<br />
Crude<br />
Oil<br />
Petrochemical Gases<br />
VCM<br />
Butad<strong>iene</strong><br />
Propylene<br />
Ethylene<br />
Car Components Plastics Styrofoam Synthetic Rubber<br />
2<br />
23
<strong>LPG</strong> Fleet composition<br />
• Pressurized<br />
– 6300-7500cbm: 6300 7500cbm: 8 vessels<br />
– 5000cbm: 12 vessels<br />
– 3300-4100cbm: 3300 4100cbm: 10 vessels<br />
• Semi Semi-ref ref<br />
– 3200-4100cbm: 3200 4100cbm: 4 vessels<br />
24
OPERATORS OF<br />
PRESSURIZED TONNAGE<br />
Source: Inge Steensland<br />
25
Fleet Development<br />
• Newbuilding pro<strong>gr</strong>am of of 3 <strong>LPG</strong> carriers delivered in 2011 and 2<br />
delivering in 2012<br />
• Newbuilding pro<strong>gr</strong>am has committed financing<br />
• Selective sale of older & smaller tonnage in 2011/12<br />
26<br />
3
Fleet Employment Profile<br />
27<br />
4
Company Contact:<br />
StealthGas Inc.<br />
Konstantinos Sistovaris<br />
Chief Financial Officer<br />
StealthGas Inc.<br />
+30 +30-210 210-6250 6250-001 001<br />
E-mail: mail: sistovaris@stealthgas.com<br />
<strong>www</strong>.stealthgas.com<br />
Chartering contact:<br />
Christian Krohn Krohn-Hansen<br />
Krohn Krohn-Hansen Hansen<br />
Chartering Manager<br />
Stealth Maritime Corp. S.A.<br />
+30 +30-210 210-6252 6252-849 849<br />
E-mail: mail: chartering@stealth.<strong>gr</strong><br />
18