LNG

Flex LNG, the Norwegian shipping company with a fleet of 13 modern vessels and several chartered to the largest US exporter Cheniere Energy, reported higher third-quarter revenues and profits as global demand soared for cargoes.

“The gas crunch is not going away anytime soon and arbitrage between the US and import nations in Europe and Asia will stay at elevated levels supporting freight market economics,” said Flex in presenting its earnings.

Flex explained that about 40 LNG carriers in the global fleet were tied up in floating storage due to traffic congestion and contango - when the futures price was at a higher level than the spot price as has happened throughout the third quarter.

Flex’s vessel operating revenues in the third quarter amounted to $91.3 million to the end of September 2022 compared with $81.8M in the same three months of 2021 and $84.2M for the second quarter of 2022.

Net income increased to $46.6M from $32.8M in the prior-year quarter and $44.3M in the second quarter this year.

Charter rates

The Bermuda-based company’s average time charter equivalent (TCE) rates for the three months came to $75,941 per day versus $68,341 per day a year ago and $70,707 per day for the second quarter of this year.

“During the third quarter, ‘Flex Enterprise’ and ‘Flex Amber’ commenced their new seven-year time charters agreed in June 2022,” said Øystein Kalleklev, Chief Executive of Flex LNG Management AS.

“Additionally, ‘Flex Aurora’ was delivered to Cheniere as the fifth and last ship under the agreement announced in April 2021,” he added.

“Flex LNG today has 12 LNG carriers on fixed-hire time charters and one ship, ‘Flex Artemis’, on a variable time charter,” stated Kalleklev.

The CEO noted that Flex’s first fully open ship, after charterer’s options, is in the middle of 2026 with three other ships coming open in 2027.

“With 2027 the earliest newbuilding delivery window and newbuilding prices at around $250M, we are therefore upbeat about the prospects of re-contracting our ships at attractive levels thereby adding further backlog to the company,” said Kalleklev.

Rate derivative gain

“For the first nine months of 2022, total net income was $147M, fuelled by $75M gains on interest rate derivatives, as we have been ahead of the curve locking in long-term interest rates at very attractive levels before the Federal Reserve started to hike US rates,” he explained.

Flex said it planned to optimize financing for the remaining seven ships in the fleet with the aim of increasing its cash position by a further $100M while at the same time improving overall financing terms.

“We have now secured refinancing for four of the seven ships with net proceeds of $110M. We are thus already ahead of the $100M target, and we expect the cash release to grow further as we are also making good progress on the refinancing of the remaining three ships,” said the CEO.

“Given the strong freight market, our extensive contract backlog and our super strong financial position we are therefore pleased to declare an ordinary quarterly dividend of $0.75 per share which should provide our shareholders with an attractive yield of approximately 10 percent,” added Kalleklev.

The company noted in its presentation that the fleet had been acquired at “historical attractive prices” compared to the newbuilding prices today, while book equity values reflect historical costs adjusted with regular depreciations.

July 6 (LNGJ) - Flex LNG, the owner of 13 LNG carriers, has updated its market and revenues guidance to be presented at a conference organized by Norwegian investment bank Arctic Securities. “Given the recently announced Time Charter Agreements for ‘Flex Rainbow’, ‘Flex Enterprise’ and ‘Flex Amber’ which have secured in total 24 years of fixed hire employment, Flex LNG has made positive adjustments to its revenue guidance for the year,” said the company.

   Flex LNG now expects revenues for the second quarter of 2022 to be around $85 million compared with $80M previously, $90M in the third quarter and $90 to $100M in the fourth quarter. The company added that it expected higher Time Charter Equivalent Earnings (TCE) in 2023 compared with 2022. “This was due to repricing of its employment portfolio and significantly reduced spot exposure which had dragged down revenues in the first quarter of 2022 due to the pull of US cargoes to Europe in this period,” said the company.

Flex LNG, the growing Norwegian-listed fleet owner with 13 modern carriers, 10 now on the water and three other newbuilds, swung back to profits in the third quarter as four new vessels were delivered from South Korean shipyards.