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.

Nov 30 (LNGJ) - The UK LNG import terminals at the port of Milford Haven, the South Hook facility and Dragon LNG, are scheduled to receive three LNG vessels in the first week of December. The “Flex Ranger” of 174,100 cubic metres capacity is scheduled to berth on December 3 after previously loading a shipment at the Cameron export plant in Louisiana.

   Two days later the “Flex Vigilant” with the same capacity will bring a cargo from the Calcasieu Pass facility in Louisiana that was lifted on November 23. On December 7, the carrier “Sevilla Knutsen” with 173,400 cubic metres of capacity will unload a shipment at the UK Dragon LNG terminal in Milford Haven lifted on November 5 from the Pampa Melchorita plant on the Pacific Coast of Peru.

Flex LNG, the Norwegian shipping company with a fleet of 13 modern vessels, said it had extended the time-charters for three ships with Cheniere Energy, owner of the Sabine Pass and Corpus Christi exporting plants on the Gulf Coast, and meaning that Cheniere now has five Flex vessels chartered.

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.

Flex LNG, the growing LNG shipping company with four vessels operating and nine others on order and whose largest shareholder is a company controlled by Norwegian magnate John Fredriksen, said it completed a sale-and-charterback transaction for two vessels.

Flex completed the transaction with Hyundai Glovis Co. of South Korea, a logistics company that normally specializes in car-shipping vessels.

The Flex deal involved the 174,000 cubic metres capacity LNG carriers “Flex Endeavour” and “Flex Enterprise”. Planning for the transaction was first disclosed in April 2019.

Under the agreement, Flex LNG sold the vessels to Hyundai Glovis for a combined gross sum of $420 million, with a net consideration of $300M adjusted for a non-interest bearing seller's credit of $120M in total.

Flex explained that both carriers were then charted back for a period of 10 years.

Flex, which is listed on the Oslo bourse in Norway and the New York Stock Exchange, will have options to acquire the vessels during the term of the time-charters.

At the end of the 10-year charter period, Flex will have the right to acquire the vessels and Hyundai Glovis will have the right to sell them back to Flex for a total consideration of $150M, net of the $120M seller's credit.

The “Flex Endeavour” and “Flex Enterprise” were, together with sister ship, the “Flex Ranger”, financed under a $315m term loan facility due in 2023.

In addition to the Hyundai Glovis deal, Flex said it also closed the refinanced the remaining payment tranche for the “Flex Ranger”, and the total outstanding of $294M under the $315M facility has been prepaid in full.

Other terms and conditions are similar to the $250M financing for the 174,000 cubic metres capacity “Flex Constellation” and “Flex Courageous” announced in February 2019.

“We are very satisfied with the successful closing of the Glovis sale-and-charterback according to plan, and highly appreciate the close and good working relationship with Hyundai Glovis throughout this process,” said Oystein Kalleklev, Chief Executive of Flex LNG Management AS.

“In connection with the Glovis SCB we also decided to improve our capital structure by refinancing ‘Flex Ranger’ at better terms and conditions,” he added.

“The two transactions improve our financial flexibility to return earnings to our shareholders when market conditions improve,” stated Kalleklev.