BW LPG Decides Not to Buy Dorian Stake

BW LPG Limited has decided not to exercise the option to purchase an equity interest in New York-listed liquefied petroleum gas shipping company Dorian LPG Ltd.

On 20 July 2015, BW LPG was granted an option from a subsidiary of BW Group Limited, BW Euroholdings Limited, to purchase a total of 6 million shares (representing 10.2% of the total equity interest) in Dorian LPG  at a price of USD 15.34 per share, amounting to a total of USD 92 million.

“After careful deliberation, the company has elected not to exercise the above option,” BW LPG said in its business results for the first half of 2015.

BW LPG reported a net profit after tax of USD 80.7 million in Q2 2015, up from USD 72.4 million posted in Q2 2014. The company’s half year profit amounts to USD 138 million, also up from USD 103.2 million in H1 2014, mainly due to stronger Time Charter Equivalent (TCE) earnings and enlarged fleet.

The fleet size of the group comprises 33 VLGCs and five LGCs owned/operated, plus eight VLGC newbuilds.

In terms of the LPG market outlook, the expectation for 2016 is continued positive development in demand.

According to BW LPG, there is some degree of risk to US LPG production if oil prices remain low, albeit so far there has been no negative impact on availability of LPG to meet export demand.

“The increasing rate of VLGC newbuild deliveries is likely to result in some degree of further softening in charter rates from the relative highs experienced in 2014 and 2015. The build-out of the VLGC fleet has been supported by a robust expansion in US export terminal capacity in 2015, with even stronger growth expected in 2016.

“Beyond 2016, the LPG export market is anticipated to continue growing, with supply of US export LPG, global LPG import demand, and incremental newbuild ordering all having the potential to significantly impact the charter rate environment,” the company said.