Awilco LNG’s Q1 net loss grows, freight income down

Oslo-based Awilco LNG, the owner of two 156,000-cbm LNG carriers, widened its net loss in the first quarter of this year due to low activity of its vessels and lower spot rates.

Awilco LNG’s net loss rose to $10.4 million in the first quarter, as compared to $4.6 million in the same quarter last year and $2.5 million in the previous quarter.

The shipping company’s freight income dropped to $2.5 million as compared to $8.9 million in the first quarter of 2016 and $9.1 million in the fourth quarter.

Both of the company’s 2013-built LNG vessels, WilForce and WilPride, were operating in the spot market in the quarter under review. Fleet utilisation for the quarter ended at 41 percent, compared to 78 percent on year and 83 percent in the fourth quarter.

Awilco LNG said in its first-quarter report that the LNG shipping market weakened unexpectedly in the beginning of this year, after a steady improvement in rates and utilisation in the second half of last year.

According to Awilco LNG, activity in the market has shown signs of improvement thus far in Q2, but “market rates are still significantly below current cash breakeven levels.”

Rates are reported to be at $52,000 per day in the Atlantic and $38,000 per day East of Suez, the company said.

“Due to the difficult current spot market conditions negatively impacting liquidity, the group is in the process of evaluating its capital structure, and is in positive discussions with its main creditor Teekay LNG Partners,” it said.

Awiclo LNG expects the process to be completed within a short period of time.

Looking forward, Awilco LNG said the volatility and seasonality in the LNG shipping market are likely to continue, but as additional LNG production comes on stream the current overcapacity is expected to gradually be reduced, resulting in an improvement in the market going forward.

The long-term outlook for LNG shipping “remains promising” as a result of scheduled LNG production capacity coming on stream over the next couple of years, it added.