Dynagas LNG Partners finished the first quarter in the black, but its efforts to refinance upcoming debt might force it to axe distributions.
The Tony Lauritzen-led company posted $1.9m in profit for the first three months of 2019, two cents lower than the $0.01 loss per share predicted by Wall Street.
The company also disclosed that it may have to eliminate distributions to common shares in a deal to refinance the 6.25% $250m notes coming due in October.
Dynagas' distributions have been a source of contention, with one shareholder filing suit in Manhattan federal court, alleging the company lied about charter rates for two ships, the 149,000-cbm Ob River (built 2007) and the 155,000-cbm Arctic Aurora (built 2013), to buoy its share price while cutting distributions back.
In its first quarter earnings, the company said those two ships' lower rates continue to drag on revenues, which dropped to $31.4m from $33.9m year-over-year.
Stifel analyst Ben Nolan said there was "not much unexpected" in Dynagas' earnings.
"[T]he trading action on DLNG units could go either way," he wrote.
"If investors are sufficiently satisfied that a refinancing is coming, units could trade up sharply despite a distribution cut. Alternatively, yield buyers may sell which could outweigh a value bid."
The company also disclosed that the 155,165-cbm Lena River (built 2013) would be going on charter to Yamal LNG starting in July.
The ship came off a charter with Gazprom in 2018 and dry dock and survey expenses for the ship hurt Dynagas' fourth quarter earnings.
"Our fleet performed with 100% fleet utilization reflecting our manager's operational performance," Lauritzen said in a statement."Our underlying charter business remains healthy with our fleet of six LNG carriers all contracted on charters to international gas producers with an average renaming duration of 9.3 years."
Lauritzen also said the company was in "an advanced stage" to refinance the 6.25% $250m notes due in October.
