The Cool Company is not expecting a dark fleet to form in LNG shipping as the market deals with short-term “indigestion”.
Chief executive Richard Tyrrell said vessels thought to be connected with Russia are not delivering many cargoes, leading him to conclude there is not a meaningful parallel shipping market for LNG the way there is for tankers.
“It doesn’t really feel to me that it’s getting established the same way it did on the liquids,” he said on the Idan Ofer-backed company’s third-quarter earnings call.
“Will it come? Maybe. It’s hard to say with any certainty.”
As it stands, the LNG sector is dealing with a dismal winter season, with rates at all-time lows, prompting concerns that ships could be headed to lay-up.
Tyrrell blamed a glut of newbuilding deliveries that are working in the spot market, waiting for the projects they are chartered to serve to begin operation.
Additionally, the market is dealing with several steam-powered ships.
Tyrrell said these vessels are smaller and less efficient than more modern vessels — with higher costs and speed restrictions due to emissions regulations — which will make scrapping candidates in the near future.
He identified this as a “period of indigestion” as the market works through absorbing the new vessels, new projects coming online and the removal of older tonnage.
“We’re expecting rates to steadily improve in the first half of 2025 as projects deliver,” Tyrrell said.
For the quarter, CoolCo reported net income of $8.1m on the back of $82.4m in operating revenue.
Its time charter-equivalent earnings came in at $81,600 per day up from $78,400 per day in the second quarter.
The company also announced it had received bank approval to refinance an existing $570m bank facility, boosting borrowing capacity by $120m.
The deal will extend maturity until later 2029 with two one-year extension options and leave its nearest debt maturity in four-and-a-half years.
In late trading in Oslo, CoolCo shares slipped NOK 14.60 ($1.32) from the previous close to NOK 102.70.
Its New York-listed shares dropped a $1.54 shortly after the opening, falling to $9.10.
