A global owner and operator of liquefied natural gas (“LNG”) carriers, GasLog Partners LP (“GasLog Partners” or the “Partnership”) (NYSE: GLOP) released its financial results for the third quarter of 2022 today.
Highlights
- Entered into a new two-year time charter agreement for the tri-fuel diesel electric (“TFDE”) LNG carrier GasLog Shanghai with Woodside Energy Shipping Singapore Pte. Ltd. and a one-year time charter for the TFDE carrier Solaris with an energy major
- Entered into a three-year time charter agreement for the Methane Heather Sally, a steam turbine propulsion (“Steam”) LNG carrier, with a Southeast Asian charterer and executed a sale and lease-back agreement for the same vessel, with no repurchase option or obligation, for $50.0 million. The sale and lease-back transaction is expected to be completed in the fourth quarter of 2022
- Completed the previously announced sale of the Methane Shirley Elisabeth, a Steam LNG carrier, to an unrelated third party for a gross sale price of approximately $54.0 million
- Repurchased $20.0 million of preference units in the open market in the third quarter of 2022 and a total of $38.7 million of repurchased preference units in the first nine months of 2022
- Repaid $37.1 million of debt and lease liabilities during the third quarter of 2022 and $94.0 million in the first nine months of 2022 and additionally prepaid an amount of $32.2 million of debt outstanding pursuant to the sale of the Methane Shirley Elisabeth
- Quarterly Revenues, Profit, Adjusted Profit(1) and Adjusted EBITDA(1) of $95.7 million, $42.7 million, $39.8 million and $73.3 million, respectively
- Quarterly Earnings per unit (“EPU”) of $0.69 and Adjusted EPU(1) of $0.63
- Declared cash distribution of $0.01 per common unit for the third quarter of 2022
CEO Statement
The third quarter of 2022 saw solid operating results from GasLog Partners thanks to favourable market conditions for LNG shipping, said CEO Paolo Enoizi. By securing long-term charters for our vessels, we have effectively tapped into the market’s strength. The most recent charters we signed were for two of our TFDE LNG carriers, one for two years and one for one year, as well as a three-year charter for a Steam LNG ship. These charters will increase our cash flow visibility by adding a total of about $134.0 million in additional EBITDA (1).
Overall, our recent performances are in line with our business strategy, which is focused on deleveraging, improving the Partnership’s all-in break-even levels in our fleet, and de-risking our balance sheet. This strategy is complemented by our continued attention to our preference unit repurchase programme.
We also agreed to a sale and lease-back arrangement for a second Steam vessel after the third quarter of 2022, with no repurchase option or obligation at the end of her bareboat charter in mid-2025, following the completion of the sale of one of our Steam vessels in that quarter.
Financial Summary
| For the three months ended | % Change | |||||||
| (All amounts expressed in thousands of U.S. dollars, except per unit amounts) | September 30, 2021 | September 30, 2022 | ||||||
| Revenues | 80,535 | 95,679 | 19 | % | ||||
| Profit | 26,487 | 42,651 | 61 | % | ||||
| EPU, common (basic) | 0.37 | 0.69 | 86 | % | ||||
| Adjusted Profit (1) | 24,700 | 39,814 | 61 | % | ||||
| Adjusted EBITDA (1) | 57,314 | 73,289 | 28 | % | ||||
| Adjusted EPU, common (basic) (1) | 0.34 | 0.63 | 85 | % | ||||
There were 1,359 available days (2) for the third quarter of 2022, as compared to 1,321 available days (2) for the third quarter of 2021, due to the scheduled dry-dockings of three of our vessels in the third quarter of 2021 (compared to nil in the same period in 2022), partially offset by a decrease of available days (2) due to the sale of the Methane Shirley Elisabeth in September 2022.
Revenues were $95.7 million for the third quarter of 2022, compared to $80.5 million for the same period in 2021. The increase of $15.2 million is mainly attributable to a net increase in revenues from our vessels operating in the spot market in the third quarter of 2022, in line with the improvement of the LNG shipping spot and term markets, combined with an increase in revenues resulting from the 59 off-hire days due to the scheduled dry-dockings of three of our vessels in the third quarter of 2021 (compared to nil in the same period in 2022).
Vessel operating costs were $16.7 million for the third quarter of 2022, compared to $18.6 million for the same period in 2021. The decrease of $1.9 million in vessel operating costs is mainly attributable to a decrease in technical maintenance expenses and crew costs. Both decreases were largely related to the favourable movement of the EUR/USD exchange rate in the third quarter of 2022 compared to the same period in 2021, partially offset by an increase of operating costs from inflationary pressures, as well as due to the in-house management of the Solaris (after her redelivery into our managed fleet on April 6, 2022). As a result, daily operating costs per vessel decreased to $12,276 per day for the third quarter of 2022 from $14,406 per day for the third quarter of 2021.
General and administrative expenses were $4.3 million for the third quarter of 2022, compared to $3.3 million for the same period in 2021. The increase of $1.0 million is mainly attributable to the increase in administrative services fees for our fleet, effective January 1, 2022, in connection with the increase in the annual fee per vessel payable to GasLog Ltd. compared to the prior year (approximately $0.3 million per vessel per year). As a result, daily general and administrative expenses increased to $3,127 per vessel ownership day for the third quarter of 2022 from $2,388 per vessel ownership day for the third quarter of 2021.
Adjusted EBITDA (1) was $73.3 million for the third quarter of 2022, compared to $57.3 million for the same period in 2021. The increase of $16.0 million is mainly attributable to the increase in revenues of $15.2 million and the decrease in vessel operating costs of $1.9 million described above.
Financial costs were $13.4 million for the third quarter of 2022, compared to $9.4 million for the same period in 2021. The increase of $4.0 million in financial costs is mainly attributable to the increase in interest expense on loans, mainly due to an increase in the London Interbank Offered Rate (“LIBOR”) rates in the third quarter of 2022 as compared to the same period in 2021. During the third quarter of 2022, we had an average of $1,025.9 million of bank borrowings outstanding under our credit facilities with a weighted average interest rate of 4.3%, compared to an average of $1,232.9 million of bank borrowings outstanding under our credit facilities with a weighted average interest rate of 2.4% during the third quarter of 2021.
Gain on derivatives was $3.0 million for the third quarter of 2022, compared to a loss of $0.2 million for the same period in 2021. The decrease of $3.2 million in the loss on derivatives is attributable to a decrease in realized loss on interest rate swaps and an increase in unrealized gain from the mark-to-market valuation of interest rate swaps, which were carried at fair value through profit or loss, mainly due to changes in the forward LIBOR curve.
Profit was $42.7 million for the third quarter of 2022, compared to $26.5 million for the same period in 2021. The increase in profit of $16.2 million is mainly attributable to the increase in revenues of $15.2 million and the decrease of $1.9 million in vessel operating costs, as described above.
Adjusted Profit (1) was $39.8 million for the third quarter of 2022, compared to $24.7 million for the same period in 2021. The increase in Adjusted Profit of $15.1 million is mainly attributable to the increase in revenues discussed above.
As of September 30, 2022, we had $139.0 million of cash and cash equivalents, out of which $44.5 million was held in current accounts and $94.5 million was held in time deposits with an original duration of fewer than three months. An additional amount of $25.0 million of time deposits with an original duration greater than three months was classified under short-term cash deposits.
As of September 30, 2022, we had an aggregate of $970.8 million of bank borrowings outstanding under our credit facilities, of which $122.9 million was repayable within one year. Current bank borrowings include an amount of $32.6 million with respect to the associated debt of the Steam vessel Methane Heather Sally, classified as held for sale as of September 30, 2022. As of September 30, 2022, we also had an aggregate of $48.2 million of lease liabilities mainly related to the sale and lease-back of the GasLog Shanghai, of which $10.5 million was payable within one year.
As of September 30, 2022, our current assets totalled $251.3 million and current liabilities totalled $194.9 million, resulting in a positive working capital position of $56.4 million.
(1) Adjusted Profit, EBITDA, Adjusted EBITDA and Adjusted EPU are non-GAAP financial measures and should not be used in isolation or as substitutes for GasLog Partners’ financial results presented in accordance with International Financial Reporting Standards (“IFRS”). For the definitions and reconciliations of these measures to the most directly comparable financial measures calculated and presented in accordance with IFRS, please refer to Exhibit II at the end of this press release.
(2) Available days represent total calendar days in the period after deducting off-hire days where vessels are undergoing dry-dockings and unavailable days (for example days before and after a dry-docking where the vessel has limited practical ability for chartering opportunities).
Steam Vessel Transactions
In September 2022, GasLog Partners completed the sale of the Methane Shirley Elisabeth, a 145,000 cubic meter (“cbm”) Steam LNG carrier built in 2007, to an unrelated third party for a gross sale price of approximately $54.0 million. The sale resulted in the recognition of a loss on disposal of $0.2 million. The outstanding indebtedness of $32.2 million associated with the vessel was prepaid pursuant to its sale.
In October 2022, GasLog Partners entered into an agreement for the sale and lease-back of the Methane Heather Sally, a 145,000 cbm Steam LNG carrier, built in 2007, for $50.0 million. The vessel was sold to an unrelated third party and leased back under a bareboat charter until mid-2025 with no repurchase option or obligation. The completion of the transaction in the fourth quarter of 2022 is expected to release approximately $17.0 million of incremental net liquidity (net sale proceeds less debt prepayment) to the Partnership, while the vessel remains on its new three-year charter with a Southeast Asian charterer.
Preference Unit Repurchase Programme
In the third quarter of 2022, under the Partnership’s preference unit repurchase programme (the “Repurchase Programme”) established in March 2021, GasLog Partners repurchased and cancelled 233,179 8.625% Series A Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series A Preference Units”), 198,746 8.200% Series B Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series B Preference Units”) and 178,544 8.500% Series C Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series C Preference Units”). The aggregate amount paid under the Repurchase Programme in the third quarter of 2022 was $20.0 million, including commissions and an amount of $4.7 million relating to 90,841 Series A Preference Units, 70,000 Series B Preference Units and 27,000 Series C Preference Units, which were repurchased during the third quarter of 2022 and cancelled post-quarter-end, on October 3, 2022.
Since the inception of the Repurchase Programme in March 2021 and up to October 27, 2022, GasLog Partners has repurchased and cancelled 415,406 Series A Preference Units, 1,051,066 Series B Preference Units and 827,043 Series C Preference Units at a weighted average price of $25.08, $25.04 and $25.18 per preference unit for Series A, Series B and Series C, respectively, for an aggregate amount of $57.7 million, including commissions.
LNG Market Update and Outlook
Global LNG demand was forecasted to be 97.3 million tonnes (“mt”) in the third quarter of 2022, according to Wood Mackenzie, Energy Research and Consultancy (“WoodMac”), compared to 88.6 mt in the third quarter of 2021, an increase of approximately 9.8%, primarily led by continued strong demand from Europe in response to the continued disruption of gas pipeline imports from Russia. As a result of increased LNG imports, European inventories have recovered to seasonal average levels (88.7%), however Russian flows via Nord Stream 1 have completely ceased since the beginning of September, reducing possible sources of supply during the winter.
Global LNG supply was approximately 97.9 mt in the third quarter of 2022, growing by 5.3 mt, or 5.7%, compared to the third quarter of 2021, according to WoodMac. During 2022 year-to-date, LNG supply has increased by 15.5 mt with United States (“U.S.”) exports accounting for 5.5 mt. 62% of U.S. exports were directed to Europe year-to-date 2022, compared to about 34% in 2021, according to Kpler Analytics. Norwegian exports have also recovered to historical levels following the restart of Snøhvit.
Headline spot rates for TFDE LNG carriers, as reported by Clarkson Research Services Limited (“Clarksons”), averaged $94,464 per day in the third quarter of 2022, a 60% increase over the $58,788 per day average in the third quarter of 2021. Headline spot rates for Steam LNG carriers averaged $42,518 per day in the third quarter of 2022, a 2% increase over the average of $41,692 per day in the third quarter of 2021. Headline spot rates in the third quarter of 2022 began to exhibit seasonal tightness earlier than in 2021 due to anticipated volatility and tight availability of vessels for the winter. Demand for period employment has continued to define the third quarter of 2022 resulting in a lack of available independently owned vessels. This, in conjunction with the unwillingness of deponent owners to release vessels in anticipation of strong winter demand, has contributed to market tightness. Due to this and strong European demand, despondent owners have also been unwilling to allow vessels to leave the Atlantic Basin, creating further distortions.
One-year time charter rates for TFDE LNG carriers averaged $125,125 per day in the third quarter of 2022, a 29% increase over the $97,167 per day average in the third quarter of 2021. One-year time charter rates for Steam LNG carriers averaged $56,250 per day in the third quarter of 2022, 10% lower than the $62,650 daily average in the third quarter of 2021.
As of September 30, 2022, Poten & Partners Group Inc. estimated that the orderbook totalled 248 dedicated LNG carriers (>100,000 cbm) with deliveries between 2022 and 2028, representing 42% of the on-the-water fleet. Of these, 217 vessels (or 87.5%) have multi-year charters already contracted, leaving 31 vessels uncommitted with deliveries clustered between 2024-2026. There were 126 orders for newbuild LNG carriers in the first three quarters of 2022 compared with 75 orders for all of 2021.
Preference Unit Distributions
On October 26, 2022, the board of directors of GasLog Partners approved and declared a distribution on the Series A Preference Units of $0.5390625 per preference unit, a distribution on the Series B Preference Units of $0.5125 per preference unit and a distribution on the Series C Preference Units of $0.53125 per preference unit. The cash distributions are payable on December 15, 2022, to all unitholders of record as of December 8, 2022.
Common Unit Distribution
On October 26, 2022, the board of directors of GasLog Partners approved and declared a quarterly cash distribution of $0.01 per common unit for the quarter that ended September 30, 2022. The cash distribution is payable on November 10, 2022, to all unitholders of record as of November 7, 2022.
ATM Common Equity Offering Programme (“ATM Programme”)
The Partnership did not issue any common units under the ATM Programme during the third quarter of 2022.
Conference Call
GasLog Partners will host a conference call to discuss its results for the third quarter of 2022 at 8.00 a.m. EDT (3.00 p.m. EEST) on Thursday, October 27, 2022. The Partnership’s senior management will review the operational and financial performance for the period. Management’s presentation will be followed by a Q&A session.
A live webcast of the conference call will be available on the Investor Relations page of the GasLog Partners website (http://www.gaslogmlp.com/investors).
The conference call will be accessible domestically or internationally, by pre-registering using the link provided at http://www.gaslogmlp.com/investors. Upon registering, each participant will be provided with a Participant Dial-in Number, and a unique Personal PIN.
For those unable to participate in the conference call, a replay of the webcast will be available on the Investor Relations page of the GasLog Partners website (http://www.gaslogmlp.com/investors).
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Source: Global News Wire
