LNG

Flex LNG, the Norwegian shipping company with a fleet of 13 vessels and several chartered to some of the largest market players, reported a halving of fourth-quarter net profits and forecast a challenging next two years for the sector with more ships in the global fleet.

“We see a somewhat more challenging freight market as there are more ships for delivery compared to the expected new export volumes,” said Øystein Kalleklev, Chief Executive of Flex LNG Management whose charterers include Cheniere of the US and UK major BP.

“Hence, we think Flex LNG is very well positioned as we have 94 percent charter coverage for 2024 and 50 years minimum firm charter backlog, which may increase to 71 years if all charterer’s options are extended,” Kalleklev explained.

Fuel savings

“Additionally, our fleet consists entirely of large LNG carriers fitted with the most modern two-stroke propulsion system resulting in significant fuel savings compared to older generation tonnage,” the CEO added.

Flex earnings showed a halving of fourth-quarter net income to $19.39 million from $41.47M in the same three months of 2022.

Annual net profits dropped to $120.04M from $188.04M in the 2022. Vessel operating revenues in 2023 came to $371.02M versus $347.91M in the previous year.

“The increase is due to a higher proportion of our fleet on improved longer term fixed-rate contracts as well as a relatively stronger spot market compared to 2022,” said Kalleklev.

“This is offset by scheduled dry-dockings of the vessels ‘Flex Enterprise’, ‘Flex Endeavour,’ ‘Flex Ranger’ and ‘Flex Rainbow’ in 2023, resulting in 77 off-hire days,” the CEO said.

Vessel expenses for the fourth quarter came to $97.2M compared with $94.6M for the third quarter 2023.

Average Time Charter Equivalent (TCE) rates amounted to $81,114 per day for the fourth quarter versus $79,207 per day for the third quarter 2023.

Revenues

“We guided that our revenues would increase from $348M in 2022 to approximately $370M in 2023 and we delivered revenues of $371M in 2023, while revenues for the fourth quarter came in at $97.2M in line with quarterly guidance,” Kalleklev stated.

In an overview the LNG fright market, Flex noted that there were 630 live ships in the fleet at the end of 2023, with 210 steamers still in service.

“An additional 33 newbuilds were added to the fleet last year while 68 newbuild orders were placed, representing a significant decrease from the 145 orders in 2022 and 69 newbuilds are scheduled to be delivered in 2024, with seven uncommitted for long-term contracts,” Flex said.

Flex also stated that newbuild prices for the base specifications have “somewhat tapered off” from the peak of $265M, with ship brokers quoting $258M to 262M as of early February 2024.

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.

Sept 19 (LNG) – The UK continues to receive a steady stream of LNG shipments. The 174,000 cubic metres capacity carrier “Flex Rainbow” is scheduled to discharge a cargo from Nigeria on September 24 at the UK Dragon import terminal in the Port of Milford Haven in Wales, according to shipping data.

   The cargo, which was lifted from the Bonny Island plant on September 11, was heading for the UK with the National Balancing Point market price for wholesale natural gas at the equivalent of $33.20 per million British thermal units. The UK gas price exactly a year ago, long before the war in Ukraine, was $22.35 per MMBtu.

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 shipping company with a fleet of 13 carriers, achieved charter equivalent rates of almost $96,000 per day in the fourth quarter to help reach record revenues and net income.

Dec 26 (LNGJ) - As the US LNG export plant build-out continues and the volumes of shipments grow, the UK Port of Milford Haven in Wales is scheduled to receive three shipments from the Gulf Coast in the next five days.

   The 155,000 cubic metres capacity vessel “Gaslog Savannah” is scheduled to deliver a cargo on December 29 from the Cameron export facility on the shore of the Calcasieu Ship Channel in Louisiana to the UK South Hook terminal, according to port authorities.

   Then on December 31, the 138,000 cubic metres capacity carrier “Iberica Knutsen” will unload a shipment from Cheniere Energy’s Sabine Pass plant in Louisiana at the Welsh port’s Dragon regasification terminal. The third cargo also comes from Sabine Pass and will be delivered by the 174,000 cubic metres capacity carrier “Flex Rainbow” on the last day of 2019 to the South Hook terminal.

Flex LNG, the growing LNG shipping company with four vessels operating and nine others on order and whose shareholders include trusts connected to Norwegian magnate John Fredriksen, reported rising third-quarter revenues of $19 million and a booming winter charter market.

July 12 (LNGJ) - Flex LNG, the Oslo-listed operator of a growing fleet, said it completed a sale-leaseback transaction for the 1740,000 cubic metres capacity carrier, the “Flex Rainbow”, after taking delivery of the vessel from the Samsung Heavy Industries shipyard in South Korea. “The ‘Flex Rainbow’ is the company's fourth LNG carrier on the water while four (other) carriers are currently under construction,” said Flex. The ship has electronically-controlled, gas-injection (MEGI) propulsion provided by German engine-maker MAN Energy Solutions.

Flex LNG, the Oslo-listed shipping and projects company backed by funds controlled by Norwegian shipping magnate John Fredriksen, reported a widened first-quarter loss and the departure of Chief Executive Jonathan Cook.