Eastern Pacific Shipping-controlled Cool Company (CoolCo) said it is in discussions with “multiple potential charterers” over the pair of two-stroke LNG newbuildings delivering in late 2024 which it has the option to acquire from its parent.
Reporting first quarter results today, CoolCo detailed that it can buy the ships at $234m per vessel — a price it said is about 10% lower than a 2027 to 2028 delivered vessel.
The company said that with its sale its 160,000-cbm LNG carrier Golar Seal (built 2013) to Hoegh LNG for $184.3m during the quarter, which released about $94.4m after the repayment of associated debt, it has sufficient funds to make the initial payment on the newbuilding option if by 30 June 2023.
CoolCo turned in net income of $70.1m for the first quarter of 2023, a huge hike from the $15.1m reported shortly after the company started trading in January 2022.
The company, which listed on the New York Stock Exchange on 17 March, saw its operating revenues more than double to $98.6m, up from $44.1m in the comparable quarter of 2022.
It reported marginally higher average time charter equivalent earnings for the first quarter up at $83,700 per day from $83,600 per day in the last three months of 2022.
CoolCo chief executive Richard Tyrrell identified three milestones for the company.
He said these are fixing its ship which falls open in September and the two LNG carriers that become available in 2024 — which he said are “currently trading at rates well below market levels”.
In addition, he said if the company exercises the option to acquire the two ships, CoolCo could add further earnings backlog by securing charters for those vessels and funding them with a mix of debt and cash on hand.
“The term market for modern LNG carriers has demonstrated both strength and stability, reflecting the long-term nature of the LNG business and the sector’s supportive fundamentals,” he said. “For the few owners with available tonnage, including CoolCo, charterers have remained eager to secure multi-year charters at attractive rates for owners.”
Tyrrell added: “This stands in sharp contrast to the seasonal lows and high volatility of the spot market, which is currently made up almost entirely of sublets, rather than owners with available tonnage.”
During the quarter CoolCo said one of its vessels started a three-year charter on 11 February at a rate that averages $120,000 per day over the hire period.
On 17 May, the company said it had fixed one of its tri-fuel diesel-electric vessels to an energy major in a multi-year deal starting in early 2024.
The CEO also highlighted the company’s ESG report for 2022 which he said shows the annual efficiency ratio for CoolCo’s fleet dropped by 4.5%.
He said the company’s new performance plan includes upgrades to its TFDE vessels that are expected to reduce its annual efficiency ratio to 6.4 by 2030, a 35% reduction from 2019 levels.