Results hampered by weak VLGC market

BW Gas, Hamilton, Bermuda, 18 February 2009

Highlights

• Slight increase in TC earnings for the LNG segment
• Decreasing TC earnings for the LPG segments
• Environmental tranche reclassified to equity
• Debt covenants under pressure - waiver put in place
• No dividend payments proposed for 2008

Results

BW Gas recorded a fourth quarter operating profit before depreciation and disposals of USD 46.7 million, compared to USD 63.0 million in the fourth quarter of 2007. Operating profit was USD 2.9 million in the fourth quarter of 2008, compared to USD 32.2 million in the same period of 2007. Impairment charges amounted to USD 16.1 million in the fourth quarter of 2008, compared to USD 4.5 million in the same period of 2007. Gain on sale of vessels amounted to USD 0.1 million, compared to USD 0.3 million in the fourth quarter of 2007.

The fourth quarter of 2008 showed substantially decreasing freight rates for the VLGCs, slightly increasing freight rates for the LGCs and decreasing freight rates for the MGCs, compared to the same period in 2007. Bunker prices decreased sharply during the fourth quarter of 2008, but the bunkering being done in third quarter of 2008 at peak prices still had an adverse effect on earnings. In addition, changes in the marked to market value of bunker hedges resulted in a loss of USD 2.1 million in the fourth quarter of 2008, compared to a loss of USD 0.2 million in 2007.

The operating loss in the LPG segment amounted to USD 18.8 million in the fourth quarter of 2008, compared to a profit of USD 15.8 million in the fourth quarter of 2007. Impairment charges amounted to USD 16.1 million in the fourth quarter of 2008, compared to USD 4.5 million in the fourth quarter of 2007. The average number of LPG vessels owned and chartered-in decreased from 46.4 to 44.6.

The operating profit in the LNG segment amounted to USD 24.1 million in the fourth quarter of 2008, compared to USD 22.8 million in the fourth quarter of 2007. The average number of LNG vessels decreased from 6.5 to 5.5 as one small LNG vessel was sold in February 2008.

Operating expenses decreased by USD 12.1 million from USD 61.7 million in the fourth quarter of 2007 to USD 49.6 million in the fourth quarter of 2008, mainly due to a decrease in number of vessels and to lower expenses related to the shore based organization.

The accounts show net financial items of USD -8.5 million in the fourth quarter of 2008 (USD -25.9 million in 2007).

Loss before tax amounted to USD 5.6 million in the fourth quarter of 2008, compared to a profit of USD 6.3 million in the fourth quarter of 2007. Net profit was USD 90.9 million (USD 0.7 per share) in the fourth quarter of 2008, compared to a net loss of USD 508.3 million in the fourth quarter of 2007 (USD -4.1 per share).

Income tax benefit amounted to USD 96.5 million in the fourth quarter of 2008, compared to a tax expense of USD 514.6 million in the fourth quarter of 2007, and is mainly related to the environmental tranche being de-recognised as a tax liability and reversed to equity in line with changes in the tranche's regulations. The tax expense in 2007 is mainly related to the transition tax following the changes in the Norwegian tonnage tax regime.

The equity of BW Gas decreased substantially following the changes in the Norwegian tonnage tax regime in 2007. The board of directors' believes it is important to rebuild the equity to a level that appropriately reflects the risk inherent in the company's business and proposes not to pay dividends for 2008.

BW GAS - THE LEADING CLEAN ENERGY CARRIER
BW Gas is a leading global provider of gas marine transportation services. The company is the largest owner and operator of LPG (liquefied petroleum gas) carriers and one of the largest independent owners and operators of LNG (liquefied natural gas) carriers. BW Gas owns, part-owns and/or operates a fleet of 70 vessels including newbuildings, of which 57 are LPG vessels transporting mainly LPG and ammonia and 13 are LNG vessels. Currently the company employs approximately 1,630 seagoing personnel and 150 onshore employees.

BW Gas Limited