LNG carrier operator CoolCo is working to secure charter deals for its second newbuild LNG carrier as well as for two vessels redelivering in the second half of 2024.
NYSE and Oslo-listed CoolCo recently entered into a 14-year charter deal with India’s largest gas utility GAIL for one of the company’s two newbuild LNG carriers currently under construction in South Korea.
The time charter increases CoolCo’s firm revenue backlog to more than $1.2 billion and total revenue backlog including extensions to almost $1.9 billion as of March 31, 2024.
CoolCo purchased these two LNG carriers from its largest shareholder Eastern Pacific Shipping.
The shipping firm exercised its option with affiliates of EPS Ventures in June 2023 to acquire newbuild contracts for the two 2-stroke LNG carriers scheduled to deliver in the fourth quarter of 2024.
South Korea’s Hyundai Samho is building these 174,000-cbm ME-GA vessels and they feature GTT’s Mark III Flex membrane cargo tank system, reliquification, air-lubrication, and shaft generators.
CoolCo said in its first quarter report on Wednesday that the chartering of one of CoolCo’s two newbuilds “sets a strong precedent” for the second newbuild.
The shipping firm said it continues to be in discussions with potential charterers regarding its employment.
Besides the second newbuild, CoolCo is also “developing leads” for its other two vessels redelivering in the second half of 2024, both of which are earmarked for an upgrade to LNGe specification during their scheduled drydocks during the first half of 2025, it said.
CoolCo said last year it will invest about $50 million to install reliquefaction units on five of its vessels.
The company has seven TFDE LNG carriers it acquired from Golar LNG and the four LNG carriers it purchased from EPS. It also manages vessels owned by other companies.
“Transitional quarter”
CoolCo generated total operating revenues of $88.1 million in the first quarter, down compared to $97.1 million for the fourth quarter of last year primarily related to brief off-hire on its LNG carrier Kool Husky as it transitioned to a new charter, and a lower floating rate on another vessel, it said.
The company’s net income of $36.81 million in the first quarter rose compared to $22.41 million in the prior quarter with the increase primarily related to unrealized mark-to-market gains on the company’s interest rate swaps.
CoolCo achieved average time charter equivalent earnings (TCE) of $77,200 per day for the first quarter, compared to $87,300 per day for the fourth quarter.
Also, the company started drydock cycle with one vessel during the second quarter this year, with a further three vessels scheduled to follow in the third quarter.
CEO Richard Tyrrell said the first quarter was a “transitional quarter for both the market and CoolCo after the winter season in northern hemisphere ended early and two of CoolCo’s vessels delivered into new charters.”
“While one of the vessels delivered into a higher rate charter, the other was off-hire for a handful of days before delivery and this, combined with lower rates on our single variable rate contract reduced our overall fleet TCE to $77,200 per day,” he said.
“Energy security concerns continue to support the price of LNG at above $9/MMBtu, which is supportive of shipping as average cargo values now exceed $30 million,” Tyrrell said.
He said CoolCo’s next available vessels are “well spaced” and do not come open before the second half of 2024, when the market “is anticipated to be in a seasonal upswing”.
“Additionally, following two atypically warm winters in the northern hemisphere, during which China and India relied heavily upon significant coal inventories, we expect to see longer voyage distances in the second half of 2024 as greater volumes of LNG head east,” Tyrrell said.