FSRU preparations hit Höegh’s bottom line

Thursday, 24 November 2022
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Höegh LNG Holdings and its subsidiaries have reported total income of $96.1 mill and an EBITDA of $0.1 mill for the third quarter of 2022. 

These figures compare with $86.9 mill and $46.8 mill recorded for the preceding quarter.

The EBITDA decrease was to a large extent related to lost revenues and costs incurred to ready three FSRUs for long-term FSRU contracts commencing in the coming months and completing the acquisition of the publicly held common units of Höegh LNG Partners.

No charter revenue was earned by ‘Höegh Giant’ since late April, ‘Höegh Gannet’ was idle for about half of the third quarter while being repositioned to a shipyard for modifications, higher OPEX, fuel costs and administrative expenses related to several ongoing FSRU projects incurring costs for repositioning vessels, their modifications for FSRU operations and a settlement agreement reached with the previous charterer of ‘Höegh Giant’.

Moreover, ‘Neptune’ was out of service during 3Q22 for regular class renewal and incurred 22 days off-hire, as well as certain associated costs that were not reimbursable by the charterer.

Loss increase

The group recorded a net loss of $45.9 mill for the third quarter of 2022, down from a net loss of $7.5 mill in the preceding quarter. This was mainly related to the reduction in EBITDA, partly offset by unrealised foreign exchange gains on an unhedged portion of the NOK-denominated bonds, and a reduction of provision for potential tax liabilities related to the group’s operations in Indonesia.

Third quarter operating cash flows decreased by $5.4 mill to $32.7 mill, which was mainly driven by lower EBITDA, partly offset by a reduction in working capital.

On 30th September, 2022, Höegh LNG held $151.1 mill in unrestricted cash ($134.8 mill). Net interest-bearing debt, including lease liabilities, decreased during the quarter by $21 mill to $1,344 mill ($1,365 mill).

Following a surge in demand for FSRUs earlier this year, Höegh LNG has secured long-term FSRU employment for its entire fleet. As a result, the company’s main focus is to prepare the FSRUs for start-up of the new contracts and ensure the projects are delivered on time over the next three to
six months, except for the potential later start of an Australian contract.

After Höegh LNG’s termination of ‘Höegh Giant’s’ FSRU contract in India last April, an agreement was reached with the previous charterer in July dropping all claims and counter claims against a settlement amount to be paid by Höegh LNG.

‘Höegh Giant’ has now left India. She was modified and prepared for FSRU operations at a shipyard during October/November, and will be allocated to one of the group’s new FSRU contracts.

In October, the charterer of ‘Independence’ declared the purchase option to acquire the FSRU in December, 2024.

The situation in Ukraine has led to a surge in demand for LNG, LNGCs and FSRUs, which has caused LNG prices and FSRU charter rates to increase.

While near-term business opportunities have materialised for the company in Europe, the potential effects on the group’s business and operations are complex to project and therefore highly uncertain.

In the ongoing‘PGN FSRU Lampung’ (LOM) charter dispute, on 13 June 2022, PT Hoegh LNG Lampung filed its statement of claim, while a statement of defence was filed in September. 

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