Eastern Pacific Shipping-led Cool Company (CoolCo) could morph into more than an LNG carrier owner over time.
Speaking to TradeWinds at the Gastech meeting in Milan, new chief executive Richard Tyrrell explained the fledgling company’s three legs for growth, and the reason he has made a change to its mission statement.
This now reads: “Connecting the world with cleaner, more secure energy.”
Tyrrell said this leaves the door open to do something beyond LNG.
“We’re more than happy with the LNG market right now,” he said.
But he revealed that analysis is being done across the broader group on its future areas of focus.
“We are looking at all the options,” he said, highlighting that Eastern Pacific has ordered several LNG-fuelled ships and is looking at ammonia fuelling.
“It’s too early to say what CoolCo will be. It’s evolving. But I want people to be thinking more broadly than just LNG in the medium to longer term.”
CoolCo was born in December 2021 from the spin-off of Golar LNG’s shipping interests.
CoolCo was born in December 2021 from the spin-off of Golar LNG’s shipping interests
It has 40 staff in Oslo, 14 in Split, Croatia, working on crewing and commercial management, and a management team of five in London.
Tyrrell — an engineer who has worked offshore and in investment banking but who describes himself as an industrialist at heart — was headhunted for the CEO role. He joined the company from Norwegian floating storage and regasification unit specialist Hoegh LNG and is now based in London.
He said the CoolCo role was one of those opportunities where everything aligned from a professional and personal standpoint.
“I did enjoy FSRUs, but it was a hard slog,” he said.
He was also keen to join a larger organisation with what he described as a “very dynamic leadership” that is very engaged in the day-to-day business, allowing CoolCo to move “extremely quickly”.
Since Tyrrell was offered the job, Eastern Pacific has made six LNG carrier acquisitions, buying four existing vessels and two resales, none of which were on the table when he was employed.
He is keen to stress the importance of CoolCo’s two main shareholders. Eastern Pacific is shipping-focused and imaginative, with fantastic access to deal makers, he said, while Golar, which has pivoted to work on floating LNG production, has the LNG knowledge.
Tyrrell said CoolCo will grow: this will come from vessel redeliveries and chartering these ships out at higher rates, newbuildings and consolidation.
It has a fleet of eight tri-fuel diesel-electric vessels and provides technical management for a further 21 vessels.
Tyrrell said CoolCo’s approach will differ from some companies in the sector such as Flex LNG, which he sees as pursuing a more infrastructure-style strategy, with vessels fixed on longer-term business and the focus on capital structure.
In contrast, CoolCo has more of a shipping mindset and plans to charter its vessels on a short-term basis, “hopefully in a smart way”, with others on medium and long-term contracts with redeliveries spaced out.
“We try and make above market rates over the cycle,” the CEO said. “We have a capital structure that enables us to take a lot of risk.”
- Listed: Euronext Growth.
- Shareholders: Eastern Pacific Shipping 40%, Golar LNG 31%, free float 29%.
- Fleet: eight tri-fuel diesel-electric LNG carriers, built between 2013 and 2015.
- Technically managed fleet: 21 vessels comprising 12 LNG carriers and nine FSRUs.
Four of CoolCo’s fleet will not redeliver until around 2024. Two more have been fixed in recent months on one-year deals at rates of $120,000 and $140,000 per day.
Tyrrell said the remaining two are being redelivered into a very good market where there is a rate reset and the level of enquiry is strong. “We will get very interesting pricing on those assets.”
Aside from chartering, CoolCo will look at ordering new ships.
He said the current $250m price tag for newbuildings is a bit difficult to justify. But he is confident about the market for the second half of this decade, based on the new liquefaction due onstream.
CoolCo is also looking at modifying its existing ships as they come up for their routine dry-dockings so they are well positioned for incoming emissions regulations.
Tyrrell believes there will be a consolidation story for LNG in the next three to five years, although there are few sellers in the current strong market.
But he also acknowledged that he has landed at a good time: “I’ve got a bit of a blank sheet of paper and I’ve got a fair market.”
While what has happened in Ukraine and Europe is tragic, it does extend LNG’s story by “a good few decades”.
