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Spot LNG freight rates are at record low levels.
Awilco LNG said in its earnings report on Tuesday that the reason for this is threefold: too many new vessels delivered from the shipyards, slow ramp-up of new LNG production, and reduced ton-mile as most US-produced LNG heads for Europe to replace Russian pipeline gas and rebuild stock levels.
“The low market and utilization have and are likely to continue to increase demolition of uncompetitive steam vessels as well as entice lay-up, which over time will improve the balance and rates.,” the firm said.
“For the longer term, we expect the phase out of steam ships and ramp up of new production capacity will lead to an improving market over the next two-three years, and 2027 looks to be tight again with a strong market,” Awilco LNG said.
Awilco LNG said its TFDE LNG carrier, WilForce, had part of the fourth quarter covered by technical off-hire insurance as the vessel was commercially unavailable for this period due to an issue with its ballast water treatment system (BWTS).
The company accounted for $3.7 million in compensation from the loss of hire insurance as other income related to this.
However, Awilco LNG has not received the final settlement of the insurance claim and any adjustment to the final settlement will be booked in 2025.
On the other hand, the existing charter party for Awilco LNG’s WilPride runs until December 2025, and the charterer has an option to extend the charterparty for two more years at the current rate.
Net income down
Awilco LNG reported a net profit of $1.5 million and earnings per share of $0.01 in the fourth quarter of 2024, up from a net loss of $0.3 million and USD 0.00 per share in the third quarter 2024.
Awilco LNG’s net income reached $14.9 million in the fourth quarter of 2023.
The result for the year 2024 ended at $17.1 million and $0.13 per share.
This marks a significant drop compared to $38.2 million and $0.29 per share in 2023.
Net TCE came in at $56,800 for the fourth quarter, compared to $58,000 per day for the third quarter of 2024.
For the full year 2024, net TCE ended at $90,300 per day, down from $118.500 per day in 2023.
Awilco LNG “prepared to weather the current weak market”
Awilco LNG’s CEO, Jon Skule Storheill, said.WilForce is trading in a “very challenging spot market, where we so far have managed to keep the vessel employed and in cold and ready to
oad condition although utilization is looking challenging in the short term.”
“Phase out of uncompetitive older steam vessels, new LNG production, and improving ton-miles will eventually improve the situation,” he said.
Storheill said Awilco LNG’s financial position is “robust with a comfortable cash position and the WilPride employed until the end of 2025 securing decent cash flow.”
“Combined with a reduced cash break even following the recent refinancing the company is prepared to weather the current weak market,” he said.