Corporate Presentation July 2020 Delfin Midstream - North American LNG export using FLNG
Key Take-Aways 1 Fully permitted project with 13 MTPA export licence from Department of Energy 2 Lowest cost project and smallest FID increment (<550 $/tpa (all-in) for 3.5 MTPA) FLNG design development with SHI and Black&Veatch on a full “LSTK EPC wrap” basis 3 4 No need for new pipelines - Re-purposing of offshore pipelines connecting into existing onshore grid 5 Leveraging low cost Asian shipyard fabrication and Export Credit support 6 Developing Upstream JVs and Downstream integrations (LNG-to-power, LNG bunkering, break-bulk) 7 Supported by strong and committed shareholders to fund the Delfin project to FID 8 Key differentiators: (A) Low cost, (B) Smaller scale, (C) Commercial flexibility, (D) Expansions 2
Capitalizing on two major Industry Revolutions Floating LNG Revolution Shale Revolution The Combination: >35 FSRUs have opened up 7 FLNGs in operation or under new markets and many new construction (supplying ~5% import countries, importing 10- of global LNG) 15% of global LNG supply The LNG market is stuck with traditional models that do not address the world’s demand for low cost flexible LNG to become a preferred fuel-of-choice over coal and liquids ▪ The Traditional Model is pursuing “Economies -of- Scale” with major projects of 10+ MTPA requiring many long -term offtake contracts to underpin the financing ▪ The world markets need low-cost, flexible LNG supply and has limited capacity to underpin major conventional projects ▪ The Solution : Standardized Floating LNG allows the costs to be 20-40% cheaper with FID thresholds of just 2-2.5 MTPA 3
Gulf of Mexico Project Overview GoM Projects Anchor project: Delfin LNG ▪ Delfin LNG will consist of: Delfin LNG Avocet LNG o Terminal with moorings for 4 FLNG Vessels located 50 miles offshore of Grand Chenier Cameron Parish, Louisiana Station 44 Station o Existing 42” UTOS (owned) and HIOS (long -term leased) subsea pipeline systems re-purposed to transport gas from shore to the terminal o Subsea pipeline end manifold, spur flowline to single-point, disconnectable UTOS Grand Chenier mooring system for FLNG Vessels Pipeline Pipeline o Existing pipeline interconnects with several major onshore natural gas (42”, 30 miles) (30”) pipelines, including onshore natural gas compression facility (owned) ▪ Delfin owns the intellectual property: environmental permits, export licenses, WC 167 completed FEED studies, right to operate FLNG vessels, marketing organization ▪ Delfin’s FLNG Vessels are based on the “offshore proven” Black & Veatch WC 171 PRICO liquefaction technology HIOS ▪ Delfin’s FLNG Vessels offer significant advantages over onshore liquefaction FLNGV5 Pipeline facilities: (42”, 21 miles) o Lower capital costs per ton for smaller FID threshold o Shorter construction periods, reducing financing costs FLNGV1 o Lower environmental / community impact FLNGV6 o Mobility allowing for maximized economic value FLNGV3 ▪ Each FLNG Vessel to be financed (debt and equity) at the project level with its own commercial/financial structure FLNGV2 Expansion project: Avocet LNG FLNGV4 Delfin Midstream owns a second pipeline system (Grand Chenier pipeline) which may be developed for either: ▪ A second Deepwater Port (Avocet LNG) for an additional 2 FLNGV ▪ Increased feedgas supply to the Delfin DWP to enhance gas supply flexibility and security or expand with additional FLNG Vessels at the Delfin Deepwater Port 4
Key differentiators: Lower Costs & Faster FIDs 950 Total Costs ($/ton) (nameplate basis) 900 850 800 750 700 650 Delfin 600 FLNG Vessels 550 500 450 0 3 6 9 12 15 18 21 24 27 30 LNG Nameplate Capacity (MTPA) FLNG FID with 2.0-2.5 MTPA of Offtake compared to 10+ MTPA for land-based projects Lower Unit Costs Lower Project Viability Thresholds Faster FIDs Note: Delfin’s total costs are around 500 -550 $/tpa and includes all costs up to start of commercial operations (incl. FLNG Vessel, disconnectable mooring system, pipeline connections, owner ’s costs, transit, installation, commissioning, contingencies), excl. finance costs, on a nameplate capacity basis 5
Lower Costs & Smaller Scale offer opportunities 950 Benefits of cost differences Total Costs ($/ton) (nameplate basis) 900 ▪ Delfin can offer a discount on a toll of 0.20 to 0.40 850 800 $/tpa $/mmbtu (depending on term, credit and other details) 800 ▪ Delfin can offer discounted rates for shorter terms of 15, 750 12 or even 10 years 700 ▪ Delfin can offer enhanced flexible pricing. For example, a 650 flexible tolling structure with a floor of 1.70 $/mmbtu and a Delfin ceiling of 2.40 $/mmbtu, fluctuating based on a an agreed 600 550 $/tpa FLNG Vessels index (Brent, HH, JKM, etc) 550 ▪ Intrinsic value of a floating asset enhances the viability for 500 shorter term contracts 450 ▪ Successful marketing of the Delfin vessels will enable 0 3 6 9 12 15 18 21 24 27 30 Delfin to provide solid returns to its shareholders while LNG Nameplate Capacity (MTPA) maintaining lowest competitive rates for its customers 3.5 MTPA 12+ MTPA How to achieve material cost savings? Benefits of FID threshold differences ▪ Utilizing existing pipelines (i.e. Delfin LNG is partly “brownfield”) ▪ Each FLNG will have full commercial flexibility (toll / SPA / integrated, etc.) ▪ ▪ With firm, creditworthy offtake of 2.0 to 2.5 MTPA, which secures debt No need for new onshore pipelines financing, Delfin can take FID. Large projects need to secure many offtake ▪ Low cost Asian labor deals before FID is in sight providing uncertainty to the foundation Buyers. ▪ Standardization of generic liquefier FLNG technology ▪ Delfin can offer equity participation to a buyer on the FLNG (at Project Level) ▪ Manufacturing-like construction process in shipyard ▪ Delfin can offer slot flexibility to customers that wish to maintain optionality on their FID timing, i.e. a firm offtake agreement with optionality on FLNG slots ▪ Construction at existing yard which eliminates investments on sites and utilities to enable plant fabrication ▪ A dedicated slot in a downstream value chain can link its FID to the downstream FID (e.g. a large power plant can decide the FLNG FID) ▪ LNG offloading is done in a side-by-side configuration, which ▪ eliminates the need for long cryogenic pipelines and marine Allocating 250 mmscfd from upstream reserves to an integrated project is a infrastructure (i.e. the LNGC berth is an integral part of the FLNG) feasible option for many upstream producers and would already take 50% of an FLNGV capacity, enabling more easily and Upstream integrated project 6
Commercial Structuring – Maximum Flexibility Financing of US Export Projects Illustration of Delfin’s commercial optionality ▪ Financing is a key commercial constraint for each project ▪ US projects have been financed on the back of HH+ offtake commitments with credit worthy offtakers. Upstream hydrocarbon reserves Delfin is Uniquely Different ▪ FID in smaller increments at lower unit costs ▪ Build in an Asian shipyard to support vendor and Export Credit Agency financing ▪ Flexible asset, which can be re-deployed (facilitate shorter contracts, asset intrinsic value) ▪ Each FLNG Vessel can make FID independently, with it’s own Upstream Integration JV of upstream reserves with financing and commercial model UTOS Avocet a dedicated FLNGV slot selling LNG on SPA basis A) Traditional Toll or HH Indexed FOB (10-20 years) Toll can be flexible and be partially indexed to LNG prices, Brent, or Toll / LNG SPA FOB indices or a mix (e.g. fixed, flexible, HH, Brent, HIOS TTF, JKM, mixed, . . .) B) Integrated Upstream-Liquefaction Joint Venture LNG bunkering FOB FLNGV-1 FLNGV-2 Reserves+FLNG vessel are in a JV that produces gas, transports gas LNGC Bunker to the FLNG vessel and sells FOB LNG (on an index basis) FLNGV-3 FLNGV-4 C) Strategic Partnerships (e.g. Traders/Producers) Delfin and Partner Joint Venture with some balance sheet support from Partner supporting debt financing LNGC LNGC D) Integrated LNG-to-Power project LNG DES SPA Delfin contributes a dedicated FLNG slot to an integrated value chain (e.g. fixed, flexible, development, creating full value chain alignment Downstream Integration HH, Brent, TTF, JKM, JV of liquefaction and mixed, . . .) Gas-to-Power FSRU downstream market E) LNG FOB to bunker / small-scale buyers Gas distribution Bunkering and small-scale volumes sold on small parcel basis LNG break-bulk 7
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