Höegh LNG is upbeat on the group’s FSRU prospects as it reports increase in net profit after tax for the first quarter of 2016 amounting to USD 6.3 million, up from USD 4 million adjusted for FLNG impairments.
Höegh LNG reported an EBITDA of USD 26.6 million for the first quarter of 2016, up from USD 24.6 million in the previous quarter.
The profit rise comes on the back of an almost tripled average regasification flow rate on Höegh LNG’s FSRU fleet compared with the same quarter last year, owing to increased imports driven by ample supplies of LNG being available at low prices.
“The improved utilisation of all the FSRUs in Höegh LNG’s fleet confirms that the increase in LNG supply has strengthened the FSRU market fundamentals and provided additional support for the strategic drivers in the group’s long-term FSRU contracts,” the company said.
“Höegh LNG’s excellent operational track record, combined with a strong balance sheet and proven access to capital markets, creates a solid foundation for delivering on the group’s FSRU growth plan: 12 FSRUs in operations and/or under construction by 2019.”
According to Höegh LNG, the large increase in LNG liquefaction capacity has turned the LNG market into a buyers’ market, attracting new LNG importers. Typical new importers are said to be pursuing LNG as an additional source of energy and/or an increasing demand for electricity and represent the main focus for the FSRU market, since they normally will have very short lead times for starting to import LNG.
Höegh LNG said that it continues to pursue three FSRU projects with expected start-up dates which match the delivery of FSRU#7 in March 2017.
Since a new FSRU order would not have delivery before late 2018, the group is considering alternatives enabling it to secure more than one project with an early start-up date.
In addition, the group is considering conversions of newbuilt DFDE LNGCs instead of ordering a new vessel to meet early start-up dates, which would include firm plans for ordering long lead items.
Furthermore, Höegh LNG said that it has investment capacity on hand to cover the equity portion of one additional FSRU newbuilding order.
“While the MLP equity market is the preferred source of additional growth capital, Höegh LNG is continuously considering alternative sources of capital in the event that this market should be unavailable or unattractively priced over a longer period,” the company said, adding that “should the recent recovery in the MLP equity market continue, Höegh LNG could be in a position to dropdown Höegh Grace to HMLP towards the end of the year.”
Höegh Grace will be eligible for drop-down upon starting commercial operations in Colombia, which is scheduled to take place during the fourth quarter of 2016.