Avance Gas Holding Ltd (OSE: AGAS) reported unaudited results for the first quarter 2021.
- The average time charter equivalent (TCE) rate was $42,552/day on a load-to-discharge (IFRS 15 accounting principles) and $36,754 on a discharge-to-discharge basis and, compared to $36,130/day and $40,759/day in Q4 2020 respectively.
- Daily operating expenses (OPEX) were $9,440/day, compared to $9,419/day in Q4 2020. OPEX was impacted by Covid-19 crew and freight cost of $800/day, seasonal up storing of spares and maintenance totaling approx. $800/day. A&G expenses were $1,191/day, up from $701/day in Q4 2020.
- In April 2021, the Company increased its dual fuel VLGC newbuilding program from four to six 91,000 CBM vessels highlighting the company’s commitments towards de-carbonisation of the LPG industries.
- In April 2021, the company successfully completed a private placement raising $65 million in new equity securing fully funding of the newbuilding program assuming a normalised financing structure at delivery.
- In May 2021, the company received credit approval for the financing of the two first dual fuel newbuildings for delivery Q4 and Q1 2022 in a $104 million facility with commercial banks, subject to normal documentation and closing procedures.
- The board declared a dividend of $0.14 per share for Q1 2021 corresponding to 57% of net profit or $10.7 million which includes issued shares following the private placement in April 2021.
- For the second quarter of 2021, we estimate TCE rate on a discharge-to discharge basis of approx. $28,000/day contracted for 95% of vessel days.
Q1 LPG production was severely impacted by the extreme cold weather in the US. This black swan event, coupled with a higher than usual US domestic demand narrowed the product price arbitrage and curtailed shipments. Coming in to Q1, the VLGC spot freight rates were around $100,000/day early January but subsequently crashed to OPEX levels by March as US Gulf exports slowed down due to the big freeze. US production rebounded quickly in early April with US terminals reporting a record high 89 liftings. By mid Q2, the freight market had gained new momentum and has now returned to a more normal trajectory in line with our market view reflecting a healthy balance on supply and demand.
US Gulf and USEC VLGC exports were 67 cargoes on monthly average for the first quarter compared to 74 cargoes in Q4. Preliminary numbers show high activity into Q2, with Targa, Nederland and Markus Hook expansions starting to materialize. Middle East export activity follows the OPEC+ production cuts but we expect increasing output from May onwards and further growth in the second half of the year and in 2022. In Q1, Middle East VLGC exports were 54 cargoes on a monthly average, compared to 50 cargoes per month in Q4 2020.