LNGC owner and operator, Cool Company (CoolCo) generated total operating revenues of $82.4 mill in the third quarter of this year, compared to $83.4 mill for the previous quarter.
The downturn was due to three vessels undergoing scheduled drydocking during 3Q24, the company said.
Net income of $8.11 mill, compared with $26.51 mill for 2Q24. This decrease primarily related to a loss in mark-to-market interest rate swaps.
During 3Q24, the company achieved average timecharter equivalent earnings (TCE) of $81,600 per day, compared to $78,400 per day for 2Q24. The rate rise was primarily due to a contribution from one vessel that recently commenced a charter at a higher level.
Adjusted EBITDA was $53.7 mill for Q3, compared to $55.7 mill for the previous quarter.
CEO Richard Tyrrell, explained: “Our contracted fleet and efficient drydocking enabled us to reach the upper end of TCE guidance for the third quarter, despite a soft market backdrop that is expected to impact us in the fourth quarter.
“While we work to secure their long-term employment, the newly delivered ‘Kool Tiger’ and the available ‘Kool Glacier’ are currently subject to weaker rates in the short-term market. However, by design, our backlog from our remaining 10 vessels and one newbuilding vessel, set for delivery in January, limits our exposure.
“This winter's market is expected to be impacted by unfavourable short-term trading dynamics and the delivery of orderbook vessels in the fourth quarter ahead of the new LNG supply they are intended to serve.
“LNG prices for immediate delivery have remained high, encouraging prompt delivery rather than the contango driven floating storage that is customary at the onset of winter. Additionally, high prices in Europe have closed the East/West arbitrage that would result in a greater number of cargoes shipping to the distant East.
“While these trading dynamics could quickly reverse, we nevertheless expect vessels delivered ahead of their intended liquefaction projects to be absorbed in stages throughout 2025, as those projects and their associated LNG volumes come online.
“If the current market has a silver lining, it is the knocking out of the steam turbine vessels from the fleet. These are falling off charter at a rate of 20-30 per year (in addition to the 92 that have already reached this stage), not being extended, and exiting the active market in a way that cannot be easily reversed.
“It is expected that the moratorium on new LNG export projects in the US will soon be relaxed, resulting in material additional shipping demand towards the end of this decade.
“We are in the process of refinancing our $570 mill bank facility into a reducing revolving credit facility, further increasing our liquidity by approximately $120 mill, while lowering the margin and extending the maturity from early 2027 to late 2029 (with options for two one-year extensions).
“After the transaction closes, our nearest debt maturity will come due in 4.5 years.
“In connection with our current drydocking cycle (with three drydockings either finishing or starting during the third quarter), we have also reduced the quarterly dividend payment in line with our variable dividend policy's parameters and expanded this policy to include a share repurchase programme, as a capital return alternative, approving a buyback programme of up to $40 mill over 24 months.
“By targeting repurchases of shares trading well below our net asset value, and our own assessment of the inherent value and prospects of the business, we aim to capitalise on the current market price of our shares and deliver enhanced value to our shareholders,” he concluded.
As of 30th September, 2024, CoolCo had cash and cash equivalents of $142.4 mill and total short and long-term debt, net of deferred finance charges, amounting to $1,063.7 mill.
Total contractual debt stood at $1,169.2 mill, which is comprised of $456.7 mill in respect of the $570 mill bank facility maturing in March, 2027, $442.5 mill in respect of the $520 mill term loan facility maturing in May, 2029, $155.2 mill of sale and leaseback financing in respect of the two vessels maturing in the first quarter of 2025 (‘Kool Ice’ and ‘Kool Kelvin’) and $114.8 mill in respect of the newbuildings' pre-delivery financing.
