US LPG carrier owner Navigator Holdings is expecting demand for more vessels to cater for exports from new terminals on the North American west and east coasts.
Chief commercial officer Oeyvind Lindeman said on a conference call with analysts that there will be opportunities after the Repauno terminal in New Jersey and the Pembina terminal in Prince Rupert, western Canada, came online.
In April, Navigator revealed it had won charters to operate four vessels carrying propane from Pembina for a year for Mitsui & Co.
"Now, they're also talking about the fifth ship, so there might be more coming from that opportunity," Lindeman said.
50% capacity
"On the Atlantic side, the Repauno terminal, we've loaded two cargoes in May and that translated to full employment for one ship."
Lindeman said the nameplate capacity of Repauno is 20,000 barrels per day or even more.
"Now, in the month of May, they only did 10,000, so half. So you'd be safe to say that that terminal, once fully operational, [will need] at least two handysize ships on an annual basis," he added.
That means the addition of a combined six or seven vessels from both facilities. Lindeman described that as "pretty cool in our little segment".
Repauno exported its first seaborne handysize cargo in April.
Ultragas merger moves closer
That same month, Navigator agreed to buy rival Ultragas in a $390m all-stock deal to create a $1.3bn company with 56 vessels, adding 18 ships from the Chilean owner.
The transaction is expected to close in the third quarter.
The company was asked if the merger limits future expansion plans for Navigator's own new ethylene export terminal at Morgan’s Point, Texas.
"No, it doesn't," responded chief executive Harry Deans. "So we're completing the merger. The cash in this merger ... is wonderful. It doesn't over-leverage our balance sheet."
He added that the merger provides much more opportunity.
Under the Ultragas deal, Navigator will take over 11 vessels of 12,000 cbm or smaller, a new size for the owner of vessels above 22,000 cbm.
Navigator Holdings, whose ships trade under the Navigator Gas banner, claims to be the world's largest owner of handysize LPG carriers.
Founded: 2000
Headquarters: London, with offices in New York and Gdynia, Poland
Listing: New York Stock Exchange under ticker symbol NVGS
Fleet: 38 fully and semi-refrigerated LPG carriers
Leadership: David Butters, chairman; Harry Deans, chief executive; Niall Nolan, chief financial officer; Oeyvind Lindeman, chief commercial officer
Deans said the company is still considering whether to expand further in this sector.
"On the small vessels, we're still looking at it. It is something that is new to us,"he added.
Good operator
"We're not allowed to discuss certain things ahead of the close of the merger, so we can't wait to get [in] and talk more details with our new partners at Ultragas to find out how these vessels operate and where they operate and look for other opportunities with them."
The CEO believes Ultragas runs the vessels "very efficiently and very well".
US investment bank Jefferies said Navigator's first-quarter earnings of $2.8m, compared with a loss of $8.2m in the first quarter of 2020, were in line with expectations.
Analysts Randy Giveans, Christopher Robertson and Chadd Tribo said the company has no debt maturities during 2021 and only $50m due in 2022.
"Looking ahead, we expect the company will look to refinance the majority of the $235m in debt maturing in 2023," they added.
