W|EPC: LNG Canada – Updated Satellite Image Analysis & Construction Progress – Q420 Project Monitor

 Shell ∙ Fluor ∙ Mitsubishi ∙ PetroChina ∙ PETRONAS ∙ KOGAS

Table Of Contents:

• LNG Canada Q4 Monitor: Key Takeaways…………………………..….…Page 2
• LNG Canada Cost & Schedule Updates
  • Updated Estimates…………………………..……………….….……..Page 4
  • Project Milestones………………………………………………………Page 5
  • Progress Analysis…………………………………………….….….….Page 6
  • Analyzing Fluor’s 27.5% Reported Progress…….…………….……Page 7
  • Project Staffing……………………………………………..……….….Page 8
• Satellite/Aerial Image Analysis
  • July 2020 Overview………………….…………………….….………Page 10
  • Sep 2020 Site Analysis……………………………………….………Page 11
  • Jul vs. Sep 2020 – LNG Storage Tank…………………………..….Page 12
  • Module Yard Analysis………………………………………………….Page 13

Key Takeaways:

• Delays At LNG Canada Continue to Build   (Pages 4 – 7, 10 – 13)
  • Fluor reported ~27.5% Engineering, Procurement, Fabrication, & Construction (EPFC) progress in September, vs our current estimate of…
  • We believe Fluor’s 27.5% guidance implies module fabrication progress of ~45%, which is ~9x…
  • Fluor also referenced COVID-related project delays (without getting specific)
  • Our Current Delay Estimate:…..
  • Estimated Probability Of Maintaining Schedule:…..
  • Mind The Gap: There are several potential explanations for such a degree of progress variance…
• Examining Fluor’s Goal of 2,500 On-Site Workers By Dec-20 (Pages 4, 8, 10 – 13)
  • Aerial images suggest meaningful concrete, structural steel, and significant construction activities have yet to start (beyond piling)…
  • Pre-COVID, Fluor’s reported onsite labor was higher than the project’s publicly reported staffing levels, leading to cost overruns (Pages, 4, 8)
  • Limited construction work fronts could constrain Flour’s ability to…
• Kicking The Can Down The Road… LNG Canada Starting to Resemble Another Fluor/JGC Project… (Pages 4, 8)
  • In 3Q13, CPChem awarded Fluor & JGC a ~$6B EPC contract for an Ethylene Cracker in Texas. ~39-months later, Fluor/JGC announced the project would be over budget. The project was finished in mid-2018 (a year behind its baseline plan).
  • ~23-months after FID, we believe the LNG Canada (JFJV) schedule is slipping and costs are…

W|EPC: LNG Canada – Updated Satellite Image Analysis & Construction Progress – Q420 Project Monitor

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