Flex LNG, the Norwegian-listed company with a fleet of six carriers and seven other under construction and with controlling interests held by shipping magnate John Fredriksen, reported a fourth-quarter surge in net income and revenues.
Flex reported revenues of $52.0 million for the fourth quarter of 2019, compared with $29.8M for the third quarter and $36.1M for the fourth quarter of 2018.
Net income was $23.9M for the fourth quarter versus $500,000 for the previous three months and $15.2M for the fourth quarter of 2018.
“Lower than expected tonne-mile growth due to muted US-Asia trade and limited arbitrage opportunities has been a challenge for the LNG freight market,” said Flex.
“In spite of the lower than expected tonne-mile growth, LNG freight rates performed well in the fourth quarter, suggesting that the recent years fleet growth to a large degree has been absorbed by the market,” the company added.
“The glut of liquefaction volumes continues to affect LNG prices, with the average Asian benchmark prices (JKM) averaging $5.4 per million British thermal units in the fourth quarter compared to $9.1 per MMBtu the year before,” stated Flex.
Flex stated the average the Time Charter Equivalent (TCE) rate was $94,000 per day for the fourth quarter compared with $58,222 per day for the third quarter.
The company in November received firm commitments from a syndicate of 11 banks and the Export-Import Bank of Korea (Kexim) for a $629 million financing for five of the newbuilds scheduled for delivery in 2020.
Flex also entered into a long-term time-charter with Clearlake Shipping, a subsidiary of the commodities firm Gunvor, for the newbuild “Flex Artemis”. The period under the charter is up to 10 years, whereby the first five years are firm.
Then in December, Flex entered into a 12-month time-charter with Spanish utility Endesa for the vessel “Flex Ranger”.
Flex noted that it had also strengthened its commercial team with the appointment of Ben Martin as Chief Commercial Officer, who will join Flex LNG on or about April 1, 2020.
“The year was eventful and productive year for Flex LNG,” said Oystein M Kalleklev, Chief Executive of Flex LNG Management AS.
“We continue to build our organization with exceptional people, most recently with today's announcement of the recruitment of Ben Martin who will join us from Trafigura,” added Kalleklev.
“Furthermore, we are taking a greater responsibility of the management of our fleet with Flex LNG Fleet Management currently managing four of our six vessels on the water,” explained the CEO.
“Ship management continues to perform excellently with no loss time injuries recorded for the second year in a row,” he added.
Flex stated that due to the uncertainty and disruptions created by the coronavirus and associated low gas prices, the company had elected to be cautious by maintaining a $0.10 dividend for the fourth quarter, and for the time being rather preserve liquidity, which stood at close to $130M at year-end.
“While the freight and gas markets are currently challenging, LNG continues to be a long-term story with expected annual growth of around 3 to 4 percent for the next two decades as natural gas, and to a greater extent LNG, is the transition fuel for a cleaner and more sustainable future,” said the company.