Höegh LNG retains positive outlook despite losses - 27/08/2014

  • Höegh LNG has a dwindling fleet of LNG carriers and a growing number of projects in the FRSU market.

Group shelves plans to list FLNG business, due to growing investor confidence

ALTHOUGH Höegh LNG, the Norwegian gas shipping and logistics group, has reported a net loss of $12.8m in the second quarter, compared to a $13.5m loss a year earlier, it retains a positive outlook for its infrastructure businesses.

Revenues for the quarter were $32.3m, down from $42.7m, and an operating loss of $300,000 was an improvement on the $2.4m loss a year earlier.

The improvement in the group’s operating loss was mainly due to a lack of income caused by a vessel being offhire in the second quarter last year and the recent contribution of revenues from studies into floating liquefied natural gas projects.

Höegh LNG has a dwindling fleet of LNG carriers and a growing number of projects in the floating storage regasification unit market. The company has recently seen two FSRU projects begin following the unit’s construction and delivery from South Korea’s Hyundai Heavy Industries.

The Lampung FSRU in Indonesia was positioned and began receiving LNG in July. It is on a 20-year contract, which Fearnley’s has said offers the group a time charter equivalent rate of $130,600 a day.

During the second quarter, the FSRU Independence was handed over to Höegh LNG. The vessel is currently on a short charter before it will be moored off Lithuania as the Baltic State begins to break its reliance on Russian piped gas.

At the end of the second quarter, Höegh LNG held $141.1m cash and securities and the book equity after adjustments was $445.2m, equivalent to an adjusted book equity ratio of 40%.

Net interest bearing debt was $433.7m, up from $145.5m at the start of the second quarter

Earlier this month, Höegh listed Höegh LNG Partners with an initial public offering of just over 11m common units on the New York exchange.

The partnership was formed to own assets that will be under long-term charters and to enable Höegh to access the US capital markets. The MLP’s initial fleet will consist of 50% stakes in two vessels and the full ownership of the FSRU moored in Indonesia.

Höegh LNG has a third FSRU newbuilding under construction in South Korea, due for delivery next month. In May, the group entered into a letter of intent with Egyptian Natural Gas Holding Company for the vessel to be berthed in the Red Sea at Ain Sokhna Port.

The company has one final FSRU under construction, to be delivered March 2015, and is bidding on three separate projects and days there should be announced by year-end.

Höegh LNG retains its belief that the demand for LNG will increase and its position of focusing on the FSRU market is the right strategy.

The group is also working on pre-feasibility studies for a new FLNG barge design, with a potential yard and contractor already identified.

While initially saying it was looking to perform a separate listing of its FLNG business, the group now says it has seen strong interest from the equity capital markets for FLNG exposure, and is now likely to retain full ownership and continue funding the business.

in www.lloydslist.com 22/08/2014