Norway: Awilco LNG Posts Q2 2011 Results

Awilco LNG today announced second quarter 2011 results.

Highlights Second Quarter

• In April and May Awilco LNG completed private placements raising a total of MUSD 150.5 in new equity.

• In May Awilco LNG signed Shipbuilding contracts and Option agreements for the construction of two (+ two optional) 156,000 cbm LNG newbuilding vessels to be delivered from Daewoo Shipbuilding and Marine Engineering (DSME) in August and November 2013.

• WilPower was delivered to the company in mid-May. The vessel commenced trading under the first contract at the end of May for a period of six months, with 3×6 months options for extension in charterer’s option.

• WilGas completed docking below budget in May. The vessel commenced a short term 30 days T/C at the beginning of August.

• WilEnergy was delivered to the Company at the end of June and has been marketed for contract since.

Statement of Comprehensive Income Second Quarter 2011

The company took delivery of its three vessels during 1 st half of 2011. WilPower commenced its charter at the end of May at USD 45,000 per day, WilGas was available for employment from end May and WilEnergy was delivered at the last day of the quarter. As a consequence, the total operating income of MUSD 1.6 for the 2 nd quarter derives only from one vessel.

Voyage related expenses were MUSD -1.8 and is mainly related to reposition of vessels. Vessel operating expenses for the quarter were MUSD -4.0, and administration costs were MUSD -0.7. EBITDA for the quarter was MUSD -4.9. Depreciation for the quarter was MUSD -0.5, and net financial income was MUSD 0.2. Loss before tax was MUSD -5.2.

Statement of Comprehensive Income for First Half 2011

Freight income for 1 st half 2011 was MUSD 1.6, voyage related expenses were MUSD 1.8, vessel operating expenses MUSD 5.0 and Administration expenses were MUSD 1.1. EBITDA for the 1 st half year 2011 was MUSD -6.2. Loss before tax for the period was MUSD -6.2.

Statement of Financial Position

Book value of the three existing vessels was MUSD 110.5 of which MUSD 71.2 relates to existing vessels and MUSD 39.2 to installments on newbuildings. Total current assets were MUSD 66.4, of which MUSD 59.0 was cash. The company did not have any interest bearing debt as of 30.06. Total current liabilities were MUSD 9.1.

During first half of 2011, the Company raised USD 178 mill in new equity, of which USD 126 million was raised in April 2011. Initially, USD 39 million of the funding was issued as shareholder loans, however these loans were converted to equity in the second quarter in connection with the private placement in April. Transaction costs related to the funding represents approx. USD 2.5 million. Book equity was MUSD 167.9 as per 30.06.

Corporate, market conditions and company strategy

Organization

The Company had no employees working in the Company during the first half 2011. However, during the second quarter the Company has employed Snorre S. Krogstad as CFO, Ian Walker as SVP chartering and Jan Espen Andersen as Head of Operations, all have joined the Company during August 2011.

In March 2011 the Company entered into a management-on-hire agreement with Awilco AS related to the CEO, Jon Skule Storheill. In addition, Awilco LNG entered into an administrative management agreement with Awilhelmsen Management AS, a commercial agreement with Awilco As and a supervisory technical management agreement with Wilhelmsen Marine Services AS, which again entered into a technical management agreement with V.Ships LNG in the UK.

Newbuildings

Awilco LNG has entered into a firm newbuilding contract for two 156,900 cbm LNG carriers at DSME with expected delivery in August and November 2013. The construction cost is approximately MUSD 200 each, subject to final specifications. In addition, the Company holds an option for delivery of two additional LNG vessels, which the Company can exercise at any point before 20 September 2011.

The financing of the first three installments will be by equity, while the last installment will be a combination of debt and equity. The company has not secured debt financing of the two newbuildings as per today.

In June 2011, Awilco LNG entered into a technical management agreement with Wilhelmsen Marine Services in June 2011 for supervision of the newbuilding contracts in Korea.

Vessel contract status and market conditions

As anticipated, it has taken some time to find suitable employment for all existing vessels. This is partly due to loss of major approvals as a result of change of ownership of the vessels, requirement for SIRE reports, as well as the constraints related to time available at berths related to cooling of the tanks.

Currently WilPower and WilGas are employed for short term periods with options for extensions, while WilEnergy is currently marketed for employment.

The general positive trend in the market for LNG vessels continued during 1 st half of 2011, with an anticipated ease of activity during the summer months. The average day rates have increased from USD 41,000 per day in 2010 to above USD 80,000 per day in 2011 for modern vessels, and approximately USD 30,000 less for older tonnage.

The global market outlook for LNG demand continues to be strong, with a forecasted annual growth of about 6% for the period 2010 to 2020. The current order book is at approximately 17%, of which only about 3% supply growth is expected during 2012 (including FSRU orders). The current shipyard capacity is limited prior to late 2014.

[mappress]

Source: Awilco LNG, August 31, 2011;