US-listed Dynagas LNG Partners is seeing improved charter rates, longer hire periods and more robust contracts for project business.
Answering analysts’ questions on a first-quarter results briefing, chief executive Tony Lauritzen said there are many project tenders in the market for LNG tonnage at the moment, which he said most “pretty much any LNG shipowner” is looking at.
Laurtizen said it is early days with few commercial offers in for some of the large projects as yet.
But he said: “Our general feeling is that returns are better — less competitive than what they used to be.”
Lauritzen added that amortisation periods for vessels are shorter. But the market is being more conservative by offering longer charter periods and more robust charter contracts.
“I think LNG is a pretty interesting space at the moment,” he said.
Lauritzen said that it is not impossible in the future that the company could grow but he added that it would need to free up more capital and reduce its leverage first.
Sticking with the strategy
Dynagas Partners' net income jumped 127% to $15.9m from $7m in the same period last year.
The company, a spin-off of Dynagas, said the hike was largely due to a decrease in finance costs as well as to the increase in gain on its interest rate swap transaction entered into in May 2020.
Voyage revenues inched back to $33.5m from $34.5m in the same three months of 2020.
I think LNG is a pretty interesting space at the moment
Tony Lauritzen
Dynagas Partners said the lower figure is the result of variable hire revenues earned on the 155,165-cbm Lena River (built 2013) during the period.
The company said it intends to continue its strategy of using its cash flow generation to deleverage its balance sheet and give it greater liquidity.
At the end of March, the company had $603m of outstanding debt.
The company netted a new two-year charter for its 155,000-cbm Arctic Aurora (built 2013) during the period from Norway’s Equinor which will run in direct continuation from September with the charterer’s earlier deal on the vessel.
The Arctic Aurora remains Dynagas Partners’ earliest redelivering vessel and is due to be handed back in the third quarter of 2023.
The company’s 149,700-cbm Clean Energy (built 2007) is scheduled to become available in the first quarter of 2026.
The company reported 100% fleet utilisation for the quarter.
Dynagas Partners said it has an average remaining contract term of 7.7 years on its six vessel LNG carrier fleet.
The company has an estimated contracted revenue backlog is approximately $1.12bn.
