Gas shipowner Teekay LNG Partners chartered out three of its vessels to cash in on the strong market rates experienced in the spot market from March.
Reporting first-quarter results, Teekay Gas Group president and chief executive Mark Kremin said the company’s fixed-rate LNG contract portfolio continued to generate strong earnings during the quarter.
But he said that as LNG demand rebounded counter-seasonally in late-March and into the second quarter of 2021 the company chartered out three LNG vessels.
Detailing these he said, the 173,500-cbm Creole Spirit (built 2016), was fixed on a 12-month deal from March for a spot market-linked contract. Kremin said this allows the company to “achieve full utilisation of the vessel while also retaining upside to strong markets”.
In April, Teekay also secured a fixed-rate, one-year charter contract on the 173,500-cbm Oak Spirit (built 2016), which is expected to begin in August or September.
The company said that in March the charterer of its 52%-owned, 165,500-cbm Arwa Spirit (built 2008) exercised its one-year option to extend the charter to May 2022 at a fixed rate.
Kremin added: “As a result of these recent charters, our LNG fleet is now 98% fixed for the remainder of 2021 and 89% fixed for 2022, providing us with a great deal of forward visibility on our business and cash flows.”
Turnaround
Teekay LNG Partners turned around its first-quarter results, reporting a net income attributable to its partner and preferred unit holders of $87.6m compared with a net loss of $33m in the same period last year.
The company said the more positive result was largely due to a decrease in operational claims under its charter contracts and higher rates earned for some of its LPG carriers, in which it holds 50% stakes.
Teekay said the increases were partially offset by more scheduled dry dockings, the redeployment of certain LNG carriers at lower rates, and the timing of certain vessel operating expenses during the first quarter of 2021.
The company also flagged up the positive impact of some unrealised gains on non-designated derivative instruments in the first quarter of 2021 and writedowns of its multi-gas carriers in the first quarter of 2020.
The LNG carriers in the partnership’s 52%-owned MALT joint venture with Marubeni Corp logged lower charter rates due to the redeployment of vessels between May 2020 and February 2021, more off-hire days for scheduled dry dockings and unscheduled repairs, and an increase in vessel operating expenses in the first quarter of 2021 over the same period last year.
But the LPG carriers in the partnership’s 50%-owned joint venture reported higher earnings year on year.
