US-listed GasLog has seen its third-quarter revenue slide as five steam-turbine LNG carriers redeliver from their long-term contracts with energy major Shell.
In its third-quarter results statement, the company flagged up that another three tri-fuel diesel-electric ships will be handed back next year as their multi-year contracts end.
Speaking about its subsidiary GasLog Partners LP, the company said: “Although the partnership has been successful in finding continued employment for certain of its available vessels, term employment to date has been concluded at current market rates, which are below those achieved during the initial charters.”
Listing its primary sources of funding, GasLog said it anticipates it has sufficient funds to meet its needs for at least the next 12 months.
But the company added that its cost of capital remains elevated for its partnership and there continues to be a high degree of Covid-19-related uncertainty in the near-term LNG and LNG shipping markets.
GasLog reported improved profit of $10.1m for the third quarter, up from $8.9m in the comparable three months of 2019.
Revenue for the quarter slipped back to $156.7m, down from $165.6m in the same period a year ago.
The company said the decrease was attributable to a drop of $23.7m from subsidiary company GasLog Partners LP and the expiry of contracts on five of its ships.
GasLog said a favourable movement in its derivative financial instruments for the quarter and a decrease in finance costs were partially offset by a fall in profit from operations affected by restructuring costs and by foreign-exchange losses.
The company reported contracted time charter revenues of approximately $164.1m for the fourth quarter of 2020, representing 95% charter coverage, based on signed contracts up to 10 November.
Speaking in the results call, GasLog chief executive Paul Wogan said GasLog has 70% charter fleet coverage over the next three years.
Wogan said 30% to 40% of the fleet is fixed on floating rates, giving the company the opportunity to take advantage of the current upswing in levels.
He said the company’s focus remains on the maximum utilisation of its vessels.
In the period up to the end of 2021, GasLog is scheduled to take delivery of seven X-DF LNG carriers, which are all fixed on multi-year charters to names comprising Total, Shell, Centrica, Endesa, JERA and Cheniere Energy.
Wogan stressed that these newbuildings will produce 65% lower CO2 emissions than the company's steam ships.
He said the pandemic continued to impact the company’s dry-dockings into the third quarter, but its newbuildings are delivering on time and budget.
Crew changes are improving but are below average numbers for the year.
Despite the huge disruptions brought on by the Covid-19 pandemic, Wogan said demand for LNG is expected to grow this year, in stark contrast to other hydrocarbons.
This gives the company confidence that LNG will remain integral to the world’s transitioning energy needs for many years to come, Wogan added.
