We have a special focus on LNG shipping 2018 - 2028

An animation describing the full LNG value chain of production, liquefaction, transportation, and regasification. Source : Exxon Mobil 2016. 4,13 minutes (Youtube.com).

 

 

Company recommendation :

The shipping company Flex LNG Ltd. to take a lead position, as we expects LNG shipping freight market-rates to rise on limited supply and increased demand.

FlexLNG is listed on OSLO STOCK EXCHANGE (OSE). See below for stock chart.

Homepage : https://www.flexlng.com/

 

DATE : 01. March 2019 : FlexLNG, Fleet List :

DATE : 01. march 2019 : Flex LNG Ltd. sees profit jump in the fourth quarter of 2018.

Sourse : https://www.flexlng.com/

Read market comments here :
https://www.hellenicshippingnews.com/flex-lng-ltd-sees-profit-jump-in-2018/

DATE : 2. November 2018 : A Kepler Cheuvreux Presentation of Flex LNG ltd.

Sourse : https://www.flexlng.com/

 

 

More about Flex LNG & LNG shipping market news :

DATE : 14. february 2019 : US LNG: here comes the second wave

Last week, LNG giants ExxonMobil and Qatar Petroleum announced final investment decision (FID) on Golden Pass LNG Terminal (Sabina Pass, Texas). Built originally to handle imports from Qatar, Golden Pass LNG will now add liquefaction facilities to handle exports from the US.

The Golden Pass FID is just the first of many proposed US projects jockeying for position to catch the second wave of US LNG export projects with start-up dates in the mid-2020s. It is important to note that the first wave of US LNG exports has not even fully hit yet.

 

https://www.lngworldshipping.com/news/view,us-lng-here-comes-the-second-wave_56803.htm?utm_source=news&utm_medium=news&utm_campaign=LNG19-02-14&utm_content=2

 

DATE : 08. January 2019 : Growing LNG marketplace to drive spot shipping rates in 2019

DATE : 5. January 2019 : LNG Shipping: Demand is About to Drive Rates Even Higher in 2019

DATE : 12. November 2018 : New global emissions rules boost LNG shipping fuel.

DATE : 23. October 2018 : 2018-2019 : Could LNG shipping spot rates hit $250,000/day?

Spot day charter rates for LNG carriers have hit their highest levels since mid-2012 on the back of low prompt availability of vessels in both the Atlantic and Pacific basins.
- International Shipping News, 

https://www.hellenicshippingnews.com/could-lng-shipping-spot-rates-hit-250000-day/

DATE : 15. October 2018 : LNG shipping fleet poised for record growth

The global fleet of liquefied natural gas carriers is slated for record growth this year as LNG becomes easier to trade, with 12 new U.S. exports ramps coming up. The growth is largely driven by natural gas demand in China and other Asian countries, because of environmental concerns.


https://www.hellenicshippingnews.com/lng-shipping-fleet-poised-for-record-growth/

 

DATE : 12. October 2018 : FLEX LNG Ltd: $300 million Fredriksen-backed private placement successfully placed.

Sabine Pass Terminal in Texas, USA.

Date : 12. October 2018

https://www.hellenicshippingnews.com/flex-lng-ltd-300-million-fredriksen-backed-private-placement-successfully-placed/

 

Reference is made to the stock exchange release by FLEX LNG Ltd. on 10 October 2018 regarding a contemplated private placement (the “Private Placement”) of new shares in the Company.

The Private Placement has been successfully placed, raising gross proceeds of the NOK equivalent of USD 300 million, corresponding to approximately NOK 2,464 million (based on a currency exchange rate of USD/NOK 8.21), through the placing of 172,938,947 new shares (the “Offer Shares”) at a subscription price of NOK 14.25 per share. The Private Placement was significantly oversubscribed. Geveran Trading Co. Ltd. (“Geveran”), the Company’s largest shareholder, has been allocated 57,646,316 Offer Shares for approximately USD 100 million, and will retain a 44.6% ownership in the Company following the Private Placement.

Notices of allocation will be distributed to the investors on 11 October 2018.

Completion of the Private Placement is conditional upon the Offer Shares having been fully paid and legally issued. Settlement in the Private Placement will take place on 15 October 2018 (DVP T+2). Following issuance of the Offer Shares, the Company will have an issued share capital of USD 5,409,992.87 divided into 540,999,287 common shares, each with a nominal value of USD 0.01.

In order to facilitate timely delivery of already listed shares, delivery of Offer Shares allocated in the Private Placement will be made by delivery of existing shares in the Company borrowed by the Managers from Geveran. The shares delivered to investors in the Private Placement will thus be tradable on Oslo Børs immediately after allocation. The Managers will settle the share loan from Geveran with the new shares issued in connection with the Private Placement. The new shares will be registered under a separate ISIN pending approval of a listing prospectus by the Financial Supervisory Authority of Norway, and will not be listed or tradable on Oslo Børs until the listing prospectus has been approved, expected during December 2018.

The share issue has been carried out as a Private Placement in order to take advantage of the current market conditions. Different transaction alternatives have been considered, and it has been concluded that the Private Placement structure would best attend to the common interest of the Company and its shareholders, taking into consideration inter alia limited discount, pre-announced and broadly marketed placement, transaction risk, availability and expected terms of alternative transaction structure and financing sources.

DNB Markets, a part of DNB Bank ASA, Pareto Securities AS, ABN AMRO Bank N.V., Arctic Securities AS, Fearnley Securities AS and Skandinaviska Enskilda Banken AB (publ.) (Oslo Branch) act as managers in the Private Placement. Advokatfirmaet BAHRAS acts as legal advisor in connection with the Private Placement.

 

STIFEL - LNG Energy Update 2018-10-01

Stifel is a diversified global wealth management and investment banking company in USA. www.stifel.com

DATE : 03. July 2018 : FLEX LNG: The journey from LNG innovator to spot market player

 

Lngworldshipping.com : Tue 03 Jul 2018 by, Craig Jallal, tankers and markets editor

https://www.lngworldshipping.com/news/view,flex-lng-the-journey-from-lng-innovator-to-spot-market-player_53365.htm

The technology involved in the seaborne transportation of LNG develops quickly. FLEX LNG embodies just how quickly, writes Craig Jallal

FLEX LNG was founded on a unique concept of using offshore liquefaction and transportation of LNG from marginal gas fields. Now, 12 years later, it is in the mainstream of LNG seaborne transportation.

FLEX LNG was founded in 2006 and floated on the Oslo Axxes, the junior board of the Oslo Stock Exchange, to develop its proposed multi-purpose 170,000 m3 M-FLEX LNGP carrier: a combined conventional LNG carrier, floating storage and regasification unit (FSRU) and floating production, storage and offloading (FPSO) vessel.

Four M-FLEX LNGPs were ordered from Samsung Heavy Industries at a reported cost of US$459M each (approximately twice the price of a standard vessel at the time), with delivery scheduled for 2011. However, by 2010 and with the global financial crisis in full swing, FLEX LNG was struggling to raise finance and attract interest in its concept.

In 2013 Samsung declared to the South Korean Stock Exchange that the project had collapsed. FLEX LNG persuaded the yard to switch the order to a pair of conventional 174,000 m3 LNG carriers, paying a reported US$210M per vessel from the original down payments.

This announcement was followed by the news that Norwegian energy transportation sector investor John Fredriksen had purchased a stake in FLEX LNG through his private investment vehicle, Geveran Trading.

Mr Fredriksen sold his shares in his other LNG venture, Golar LNG, and today indirectly holds 52% of FLEX LNG. Following Mr Fredriksen’s takeover, FLEX LNG converted the two 174,000 m3 LNG carriers on order at Samsung to MEGI engines, from DFDE propulsion systems. A third LNG carrier was ordered from Samsung and Mr Fredriksen brought in Jonathan Cook*, the former chief marketing officer of TMS Cardiff Gas, to head up FLEX LNG. At about this time, the remaining founders of FLEX LNG stepped down.

In 2017 FLEX LNG moved to the main board of the Oslo Stock Exchange, raising US$200M. As with other John Fredriksen companies, the non-core activities are outsourced. The management of FLEX LNG is provided by a separate limited company, FLEX LNG Management Limited. As at the end of 2017, Bermuda-registered FLEX LNG Ltd had only two employees.

In what is almost a signature move for Mr Fredriksen, his private company, Geveran Trading, sold two M-type electronically controlled gas injection (MEGI)-engined LNG carrier newbuildings on order at DSME to FLEX LNG. FLEX LNG paid for the vessels by issuing 78M new shares to Geveran Trading and raising US$100M via a private placement. FLEX LNG took on the remaining US$20.4M debt on the newbuildings.

Thus, in a relatively short space of time, FLEX LNG was transformed from an innovative LNG carrier start-up into a conventional operator of LNG carrier companies, albeit of the latest generation.

The fleet was reinforced by further orders from either Mr Fredriksen’s private entities or directly by FLEX LNG, but supported by funds underwritten by Mr Fredriksen.

The company took delivery of its first two LNG carriers in January 2018 and there are another six under construction: two at Samsung, two at DSME and two at Hyundai Samho, with deliveries scheduled for between 2018 and 2020. As things now stand, by the end of 2019 FLEX LNG will have a fleet of eight near-identical, latest-generation LNG carriers.

All eight have two-stroke propulsion systems of either the MEGI or XDF (low pressure gas, dual fuel technology) type. FLEX LNG claims the ships will be among the most fuel-efficient and technically advanced LNG carriers in the world, with around 30% lower fuel consumption than tri-fuel diesel electric propulsion (TFDE) vessels.

Before taking delivery of the first newbuilding in January 2018, FLEX LNG had taken several LNG carriers on various short-term charters. The stated aim is to build up commercial and operational experience.

FLEX LNG does not name the LNG carriers chartered-in, but according to brokers, these are believed to be the 2013-built YeniseiRiver, the 2013-built LenaRiver and the 2014-built Pskov.

The aim of the revised FLEX LNG of 2018 is clear – to be a leading operator of the latest generation of LNG carriers available on the spot market. FLEX LNG emphasises that its fleet offers charterers the lowest fuel costs and, by extension, the lowest unit transport costs.

However, it remains the case that FLEX LNG is essentially a start-up, with only two vessels in the water: one on a 12-month charter (with option for another 12 months) and the other on the spot market. In Q1 2018 the company reported a turnover of US$15M, and a loss of US$1.8M.

The company continues to be heavily underwritten by Mr Fredriksen and it is his presence that likely gave comfort to the banks, which have provided a term loan with some very flexible covenants. Under the terms of the US$315M loan, which is to finance the first three newbuildings, FLEX LNG can swap the collateral base without incurring costs. Thus, one of the three newbuildings could be sold on a sale and leaseback basis, and another vessel substituted as collateral. It would allow that un-drawdown part of the loan to be used to finance another newbuilding.

Another flexible aspect of the loan is that the financial covenants are not linked to earnings, as FLEX LNG is geared toward the spot market and is not looking to lock away the vessels on 10-15 year time charters. Rather, the covenants rely on the balance sheet values of book equity level exceeding 25% and free cash being higher than US$15M. The combination of there being no requirement of employment and non-earnings-based covenants allows FLEX LNG to take an opportunistic approach, designed to maximise exposure to periods of strength in the LNG carrier rate environment.

Seeking employment in the spot market does however expose the company to fluctuating earnings, and FLEX LNG has secured working capital through a US$270M revolving credit facility from Sterna Finance Ltd, an affiliate of Geveran Trading. Again, this gives FLEX LNG flexibility to seek alternative loans should the company wish to pursue other newbuilding projects, such as FSRUs.

This is very much on the company’s agenda. The corporate brochure states “FLEX LNG is selectively pursuing various opportunities in the FSRU market.” And while FLEX LNG currently has no FSRUs on order, and nor do any companies in the John Fredriksen group, that is not a barrier to entry, given the available resources of the main shareholder. It seems to be a question of when, not if.

*Following the recent resignation of Jonathan Cook to pursue other interests, Marius Hermansen has been appointed interim chief executive, while Marius Foss has been hired as head of commercial. Mr Foss comes from a similar role at Golar LNG Ltd.

FlexLNG is listed on OSLO STOCK EXCHANGE (OSE).

Chart 14. mars 2019.

The stockprice fluctuates with the spotprice in LNG shipping rates. The market best yearly season starts in or about May. In addition demand for LNG and the total shipping fleet must be taken into considering.