Idan Ofer-controlled Cool Company is looking to fix an LNG carrier newbuilding and two 2024-redelivering vessels in a market that it sees as leaning towards multi-year and long-term deals.
In a first-quarter results statement on Wednesday, the company pointed to its recently announced 14-year charter agreement for one of its two LNG newbuildings, set to be delivered in late 2024, to Gail (India) and said that this deal sets “a strong precedent” for the second vessel, adding that discussions with potential charterers are ongoing.
“CoolCo is also developing leads for its other two vessels redelivering in the second half of 2024,” the company said, explaining that both ships are slated for upgrades during their scheduled dry-dockings in the first half of 2025.
Company chief executive Richard Tyrrell said: “Our next available vessels are well spaced and do not come open before the second half of 2024, when the market is anticipated to be in a seasonal upswing.”
He added that CoolCo expects to see longer voyage distances in the second half of 2024 as greater volumes of LNG head east.
Tyrrell said the 14-year long-term charter to Gail (India) takes CoolCo’s firm revenue backlog to more than $1.2bn and total revenue backlog, including extensions, to almost $1.9bn as of 31 March 2024.
He said this “underscores the significant gap between the prevailing spot market and the long-term employment prospects for the high-quality, fuel-efficient LNG carriers”.
CoolCo said: “In the near term, the spot LNG carrier market is likely to remain substantially detached from prospects for either multi-year secondhand employment or very long-term charters for newbuilds,” citing buoyed charterer comfort levels and delays to new liquefaction start-ups.
“Current prevailing spot rates are more indicative of a market in a holding pattern than a longer-term call on overall market direction.”
Tyrrell said: “The first quarter was a transitional quarter for both the market and CoolCo after the winter season in the northern hemisphere ended early and two of CoolCo’s vessels delivered into new charters.”
He said that while one of CoolCo’s 13 LNG carriers delivered into a higher rate charter, the other was off-hire for “a handful of days” before delivery.
Coupled with lower rates on its single variable-rate contract, this led to a decrease in the company’s overall fleet first-quarter time charter equivalent earnings, averaging $77,200 per day, compared to $87,300 in the previous three months and $83,700 in the comparable period a year ago.
CoolCo’s first-quarter net income almost halved to $36.8m from $70.1m in the same period of 2023.
Operating revenue for the three months from January to March 2024 slipped to $88.1m from $98.7m in the comparable quarter a year earlier, mainly due to a scheduled dry-docking and lower returns.
The company boasted a first-quarter fleet utilisation of 95%, down slightly on the 97% logged for the last three months of 2023.
CoolCo said this primarily reflected 51 offhire days for its 160,000-cbm Kool Husky (built 2014) before it started a new charter in early March.
The company had no scheduled dry-dockings during the quarter. One vessel has started its dry-docking in the second quarter, with a further three LNG carriers due to begin theirs in the July to September period.
CoolCo said the average cost of these dry-dockings is around $6.5m per vessel, with the ship offhire for up to 30 days.
It added that one of the dry-dockings for the Kool Husky, which is scheduled for the third quarter, will include a vessel upgrade to the company’s LNGe specification, adding a further $15m in costs and an additional 20 days offhire.
