Flex LNG’s Q1 revenue up, net income down

Norwegian shipping firm Flex LNG, the owner of 13 liquefied natural gas carriers, reported higher revenue in the first quarter, while its net income dropped when compared to the same period last year.

Vessel operating revenues were $92.5 million for the January-March period, up from $74.6 million in the first quarter last year.

However, vessel operating revenues dropped when compared to $97.9 million in the prior quarter, the shipping firm controlled by billionaire John Fredriksen said on Tuesday.

The company’s first-quarter net income of $16.5 million dropped when compared to $55.8 million in the same quarter last year and also compared to $41.4 million in the prior quarter.

Average time charter equivalent (TCE) rate was $80,175 per day in the first quarter of 2023, compared to $81,699 per day for the fourth quarter 2022.

Flex LNG declared a dividend for the first quarter of $0.75 per share.

Revenue to rise in second half

Flex LNG has 12 LNG carriers on fixed hire time charters, including to US LNG exporter Cheniere, and one ship, Flex Artemis, on a variable time charter.

In March, Flex LNG completed its refinancing process, boosting the company’s cash position by $382.4 million.

“As we completed the balance sheet optimization program during the first quarter, we had some additional financing costs in our accounts for the first quarter. However, we have now put in place new attractive long-term financing for all our thirteen ships boosting our cash balance to $475 million at quarter-end or about $9 per share,” Flex LNG CEO Øystein Kalleklev said in the report.

During the quarter, Flex LNG’s Flex Enterprise left Sembcorp Marine’s Sembawang yard in Singapore after completing its first five-year special survey.

This was also the case with Flex Endeavour and the LNG carrier completed its drydocking in April.

Kalleklev said that that these surveys have been carried out according to both time and costs, while minimizing off-hire periods.

During the second quarter, Flex Rainbow and Flex Ranger will undergo special surveys as well.

“Revenues are therefore expected to pick up in the second half of the year when the drydocking program for the year is expected to be completed by end of June,” Kalleklev said.

In addition, Flex LNG also reaffirmed its guidance for the year.

“Despite off-hire in connection with four ships carrying out dry-docking, we do expect revenues to increase from $348 million in 2022 to about $370 million for 2023,” he said.

“Positive” long-term view

“While the spot market right now is at a seasonable low, we maintain a positive long-term view,” Kalleklev said.

He noted that the company’s exposure to the spot market is limited to one of the thirteen ships which is on a variable time charter where earnings are typically higher in the winter season.

“Our first fully open ships are not open before 2027 and with newbuilding prices are now exceeding $260 million for ships with deliveries in 2027 this is putting upward pressure on charter rates,” he said.

“Hence, we believe Flex LNG continues to be very well positioned for opportunities to re-contract our ships for longer periods at higher rates in the near future, like we have evidenced in the past,” Kalleklev said.

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