Dynagas LNG Partners LP on Tuesday posted $9.6 million in net profit for the first quarter, a decline both sequentially and year-over-year amid lower earnings on forward contracts and higher financing interest.
But the downward impact was partially offset by higher travel revenue of $37.263 billion, up more than $4 billion or 12 percent from the first quarter of 2022 and about $2.2 billion between October and December 2022.
“This increase is primarily due to the increase in deferred revenue amortization related to the new temporary charter agreement with Equinor ASA for the new occupation of the Arctic Aurora commencing in September 2023, as well as the days of higher Net Energy revenues in the three months ended March 31, 2023 compared to the corresponding period in 2022, due to Net Energy’s scheduled drydocking that took place in the three months ended on March 31, 2022,” the Athens-based liquidator. the natural gas (LNG) carrier said in a press release.
The company made an early repayment of $31.3 million in March on a $675 million loan.
“Net interest and finance costs were $9.2 million for the three months ended March 31, 2023, compared to $5.1 million for the corresponding period in 2022, representing an increase of $4.1 million, or 80.4% due to the increase in the weighted average interest rate in the three-month period ended March 31, 2023, compared to the corresponding period of 2022, which was partially offset by the reduction in interest-bearing debt compared to the corresponding period of 2022,” Dynagas LNG said.
It had total cash of $52.9 million at the end of Q1 2023.
“All six LNG carriers in our fleet operate under their respective long-term charters with international gas companies with an average remaining contract duration of 6.1 years. As of June 20, 2023, our estimated portfolio of contracted revenue was $0.96 billion,” CEO Tony Lauritzen said in the announcement.
Impact of the war
Lauritzen noted: “Gas prices in the main price centers are currently significantly lower compared to a year ago, when gas prices were pushed to new highs as a result of the Russian-Ukrainian situation.”
The Henry Hub international standard for natural gas spot prices averaged $6.45 per million British thermal units (Btu) last year, the highest for the U.S. distribution hub since 2008. according to the US Energy Information Administration (EIA). But after peaking in 2022 at $8.81 per Btu monthly average in August, Henry Hub failed to exceed $6 per Btu monthly average in the last quarter of 2022 and remained below of $2.5 during the last four months of this year, according to the EIA. data
But Dynagas LNG said the current sanctions imposed by the European Union and the US on Russia over the war “do not materially affect the business, operations or financial condition of the Association”.
However, he acknowledged: “The full impact of the trade and economic consequences of the Russian conflict with Ukraine is uncertain at this time.”
Positive outlook for LNG
Although gas prices have weakened following the pull-up effect of the war, the gap between feed gas prices in the US and LNG prices in Europe and the Far East has kept “healthy,” Lauritzen said.
“We believe this is positive for economic sustainability and therefore global growth, as well as for gas producers,” he said, also noting that LNG has gained momentum in the energy transition clean
“There is growing appreciation that LNG is a necessary ingredient for managing global emissions and energy security, and despite cost increases, we expect mature LNG production projects to continue with final investment decisions, the “implementation of new long-term projects. LNG purchase and sale agreements and, consequently, continued demand for LNG shipments,” the CEO said.
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