Flex LNG Reports Loss but Expects Improvement

first_imgzoomIllustration; Image Courtesy: Flex LNG Due to the weaker LNG shipping market, Bermuda-based LNG carrier owner Flex LNG closed the first half of this year with a net loss.The company’s net loss rose to USD 7.4 million in H1 2019 from USD 4.6 million posted in the corresponding period a year earlier.Vessel operating revenues were USD 38.2 million in the first half of 2019, compared to USD 22.1 million for the six months ended June 30, 2018.“The first half of 2019 has been a cold shower for most LNG industry participants with the exception of the end consumers,” Øystein M Kalleklev, CEO of Flex LNG Management AS, commented.“Low gas prices during the first half of the year have also negatively affected the results of Flex LNG, as excess gas supply has predominantly been absorbed by European consumers, cutting sailing distances and thus affecting shipping demand and rates,” he explained.On June 17, 2019, the company’s ordinary shares commenced trading on the NYSE. Following the listing, the company’s ordinary shares are listed for trading on both the NYSE and the Oslo Stock Exchange (OSE) under the ticker symbol ‘FLNG’.Also in June, Flex LNG accepted delivery of its fifth newbuilding LNG carrier, the Flex Constellation, which was built at Daewoo Shipbuilding and Marine Engineering (DSME). The vessel was delivered to a charterer ex-yard for its maiden voyage.Flex LNG currently has five vessels on the water and eight additional newbuildings under construction, which are scheduled for delivery between the third quarter of 2019 and the second quarter of 2021.What is more, the company wrapped up in July the USD 300 million sale and charterback transaction with Hyundai Glovis for the two 2018-built ships, the Flex Endeavour and Flex Enterprise. Both units would be chartered back on a time-charter basis to subsidiaries of Flex LNG for a period of ten years, and the company will have options to acquire the vessels during the term of the time-charters.OutlookAccording to Flex LNG, outlook for LNG shipping demand is compelling due to rapidly increasing demand for LNG. The market has absorbed new tonnage as it has arrived, and despite lower than expected tonne mile growth due to muted US – Asia trade and limited arbitrage opportunities, the company believes the market is “reasonably balanced.”“Despite this challenging market environment, we do see improved outlook for the second half as the LNG shipping market is expected to become increasingly tight and the likelihood of a repeat of last winter’s El Nino is low,” Kalleklev further said.“These factors should provide tailwinds into 2020 and we expect the LNG product market to become increasingly tight from next year. Tighter product markets generally result in higher shipping demand due to arbitrage and re-loads. Hence, we think a tighter product market will positively affect the market balance in 2021.”The company expects the market for energy-efficient modern LNG carriers to improve going forward.“We believe that Flex LNG is well positioned to capitalize on the global shift for cleaner energy,” the company concluded.last_img read more