Norway’s Avance Gas Holding is staying positive about VLGC prospects in the best markets since 2015.
The Oslo-listed John Fredriksen company argues that a potential oversupply of gas carriers due to newbuilding deliveries in 2023 may only be temporary.
The shipowner achieved average time charter equivalent (TCE) rates of $46,478 per day in the fourth quarter, up from $33,000 per day in the previous three months.
Spot rates peaked at $130,000 in December, with operating expenses at $8,738 per day.
So far in 2023, TCEs are estimated at $58,000 per day.
Net profit was $34.7m compared with $7.5m a year ago, while revenue rose from $52m to $67m.
Earnings for the year of $89m were the best since 2015.
Executive chairman Oystein Kalleklev said: “After a shortlived slump in freight rates at the start of the year, the freight market has rebounded sharply lately.
“This has enabled us to replicate the strong earnings from [the] fourth quarter in the first quarter.”
The company has now fixed 98% of its vessel days for the first three months of this year.
“The combination of solid earnings and a very robust balance sheet, with no unfunded capex and $224m of free cash, puts Avance Gas in a very good financial position,” Kalleklev said.
Dividend level raised
As a result, the dividend has been increased from $0.20 per share in the first three quarters to $0.50 for the final period.
Avance Gas admitted that 2023 “holds a significant amount of newbuilding VLGCs to be delivered”.
“But we remain cautiously optimistic on the freight outlook, as we believe possible oversupply of vessels will only be temporary amid the strong demand outlook,” the company said.
Avance Gas’ scrubber-fitted ships were earning a premium of nearly $10,000 per day in the final three months, due to the spread between high and low-sulphur fuel prices.
The company believes that pent-up demand for scrapping continues to be a key factor to watch, with 15% of the VLGC fleet being older than 20 years.
“However, the overhang of older ships is likely to remain in service until either the market fundamentals deteriorate, or the sanctions related to Iranian exports are lifted,” the owner said.
