Belgian gas carrier owner Exmar has posted one of its best results in recent years, as well as securing new financing for its fleet.
The company said it had received an offer from a Japanese sale-and-leaseback company for post-delivery financing of the first VLGC under construction at Jiangnan Shipyard in China, and is progressing well for a similar structure for the second vessel.
The deals will cover the remaining instalments due from April and July 2021, and will also repay pre-delivery financing of $20m.
The unnamed Japanese company will pay $62m per 86,000-cbm ship.
Finalisation of the transaction is expected in the fourth quarter.
Exmar also said the company's joint venture with Teekay LNG Partners — Exmar LPG — will receive between $280m and $310m from a syndicate of banks led by Nordea to refinance its current credit facility expiring in June 2021.
Again, final documents will be signed in the fourth quarter.
But the company said part of a €18m loan ($21.3m), granted by KBC, BNP Fortis and Belfius, has been suspended due to the halting of charter payments by Argentina's YPF for the floating LNG unit Tango FLNG.
Profit despite provision
Exmar has made a provision for $17.7m of $30.3m owing from YPF in its first half accounts.
Net profit in the six months to 30 June was $4.4m, against a loss of $7.8m in the same period of 2019.
Revenue jumped to $85.4m from $57m last year.
Exmar's shipping division produced operating earnings of $11.3m, compared to $6.9m a year ago.
This was mainly due to increased time charter rates for the midsize LPG carrier and VLGC fleets.
Strong recovery for VLGCs
"Despite the slowdown in oil and gas production due to the pandemic, with a subsequent drop in rates for the VLGCs during the second quarter, the rates recovered strongly and also benefited the midsize segment that resulted in one of the best semesters in recent years," the company said.
The recovery in freight rates was inspired by strong US LPG production and long-haul LPG shipments. There was also a rebound in Indian LPG demand.
Contract coverage for its midsize ships stands at 94% for the rest of 2020.
For 2021, the midsize fleet already has cover in excess of 50%.
"For the remainder of the year, it is expected that the strong LPG market will set the tone for freight market conditions, while the ammonia recovery may be somewhat more sluggish and take more time," Exmar said.
Pressurised and under pressure
But the pressurised vessel market was hit hardest of all LPG carrier sectors in the pandemic, the company added.
Exmar has decided to reposition a vessel to Asia in order to take advantage of the better freight market conditions there.
The shipowner expects this vessel type to remain under pressure during 2021.
"The current market conditions have led management to reassess the useful life of this fleet and reduce it from 30 years to 20 years as of 2020 onwards," Exmar added.
This meant a $2.6m depreciation in the first-half accounts.
The company's single LNG carrier continues on charter to Excelerate until the end of 2021 or the beginning of 2022 at "rewarding levels", the shipowner added.
