Navigator Gas – A Very Healthy Storm Bolstering the Handysize Market

Highlights from the Capital Link Presentation Series

New York, January 20, 2023.

Capital Link hosted a presentation by the senior management of Navigator Holdings Ltd. (NYSE: NVGS) (“Navigator” or the “Company”) on Tuesday, January 10, 2023. During the 45-minute session, Mr. Mads Peter Zacho, CEO, Mr. Oeyvind Lindeman, CCO, and Mr. Randy Giveans, EVP of Investor Relations and Business Development, discussed promising new opportunities, corporate strategy, and their outlook on the sector as part of Capital Link’s Company Presentation Series.

A replay of the full session of the presentation and the extensive Q&A can be accessed at: 

Highlights from Navigator’s  session at the Capital Link Presentation Series include the following:

Navigator is the owner and operator of the World’s largest fleet of handysize liquified gas carriers. The Company’s fleet is extremely versatile, as its semi- and fully- refrigerated vessels can transport a wide variety of essential cargoes.

Ammonia, Carbon Dioxide Provide Business Opportunities 

While the Company transports a diverse mix of commodities, including petrochemicals, ammonia, and ethane, liquified petroleum gas (LPG) has historically made up the bulk of Navigator’s cargo. The efficient energy source is extremely versatile and has been in high demand due to the energy crisis in Europe.

Ammonia, which is an essential component of fertilizer, and in turn integral in the food production process, will likely become an even larger part of Navigator’s Business, Mr. Zacho stated. Blue ammonia, produced with very little carbon emissions, and Green ammonia, which is essentially carbon-free in its production, will become prominent green energy sources. “We think it’s going to be a large and growing business area for Navigator,” Mr. Zacho said.

Although Navigator does not currently transport carbon dioxide, Mr. Zacho stated that it amounts to an “emerging new business area” for the Company, due to its importance in the push for reducing greenhouse gas emissions. 

North American Natural Gas Liquids (NGL) Market, US LPG Exports Continue to Grow

As Mr. Lindeman noted, the production of NGLs in North America has continued to increase, while domestic demand has remained flat, opening up greater opportunities for exporting NGLs.

Navigator is taking advantage of this strength through its 50/50 joint venture with Enterprise Products Partners for their ethylene export terminal at Morgan’s Point, Houston.

Due to the high cost of oil, many have shifted to LPG propane, increasing demand for the multi-use energy source.

Although many LPG exports from the US are transported on larger ships, Mr. Lindeman pointed to the “increasing trend” of transporting US LPG exports on Handysize vessels.

“A Very Healthy Storm” Bolstering Handysize Market

Due to both high natural gas prices and a lack of supply from Ukraine, Europe has been required to search for adequate stores of ammonia in order to fill the demand for the key ingredient in fertilizer.

As Mr. Lindeman noted, the lack of ammonia supply has forced Europe to import tons of the product from far-off locations, increasing demand for Navigator’s vessels. Early last year, just three of the Company’s vessels transported ammonia, which has now jumped to ten. 

The healthy demand for LPG in Europe, which has only increased during the winter, the significant increase in the number of vessels transporting ammonia, and the strong ethylene market, have all led to “a very healthy storm” in the Handy size market, Mr. Lindeman stated.

When asked whether the impact China’s reopening has had on the Company, Mr. Lindeman stressed that “the reopening of China is a good thing” for Navigator, particularly in terms of petrochemicals, as 75% of North American ethylene is headed to China and the surrounding region. 

The supply of ships is tight, and demand is high, which improves both utilization and rates. Additionally, the orderbook for Handysize vessels is extremely low. 

Strong Balance Sheet Allows for Financial Flexibility

Navigator’s total liquidity numbered $177.1 million as of September 30, 2022, an increase of $30.1 million in nine months. The Company reduced its debt by $38.8 million during Q3. 

Mr. Giveans stated that the Company will have a “very clean balance sheet” in the coming months due to its plans to refinance maturities of about $130 million that are due in 2023, and push them by about five years. 

Navigator to Acquire Five New Vessels in Joint Venture with Greater Bay Gas

Navigator will acquire five new ethylene vessels through a 60/40 joint venture with Greater Bay Gas, with deliveries scheduled between December 2022 and November 2023.

The total price for the five vessels amounts to $233 million. As Navigator has 60% ownership in the joint venture, its portion of the cost equals $139.8 million.

Navigator recently announced the second vessel acquisition under its joint venture with Greater Bay Gas. The first vessel was on December 20, 2022.

CAPITAL LINK – DISCLAIMER

Capital Link is hosting a series of online Corporate Presentations, whereby the Senior Management teams of leading listed maritime companies present their business development, strategy, growth prospects, and overall sector outlook. The presentations are approximately 45 minutes and consist of a company presentation followed by live Q&A between company management and webinar participants. All presentations in the series can be accessed at https://webinars.capitallink.com/2023/company_presentation/

The webinars, including the ones mentioned above, are strictly for informational and educational purposes and should not be relied upon. They do not constitute an offer to buy or sell securities or investment advice or advice of any kind. The views expressed are not those of Capital Link which bears no responsibility for them.

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Founded in 1995, Capital Link provides Investor & Public Relations and Media services to several listed and private companies, including companies featured in the above mentioned webinars. Capital Link focuses mainly on the sectors of energy, commodities, maritime transportation, US Closed-End Funds and ETFs. Furthermore, Capital Link organizes a series of industry and investment conferences annually in key industry centers in the United States, Europe and Asia. Capital Link is a member of the Baltic Exchange. Based in New York City, Capital Link has presence in London, Athens & Oslo. For additional information, please visit: www.capitallink.com

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