GasLog Orders Two LNG Carriers from SHI, South Korea

GasLog announced that it has ordered two new 174,000 cbm Tri-Fuel Diesel Electric LNG carriers from Samsung Heavy Industries Co. in South Korea. The vessels are expected to be delivered in Q1 and Q2 2016, respectively, and upon delivery will commence firm ten-year charters with a subsidiary of BG Group.

The two vessels are expected to have a combined fully delivered cost of approximately US$410-$420million and are expected to generate a combined annualized EBITDA1 of approximately US$47–$48million over the first twelve months of operation. In addition, GasLog has secured a total of four options from Samsung at similar prices and terms until the end of July 2013.

GasLog has also agreed to modify and extend the charter currently in place for its Hull Number 2017, chartered to a subsidiary of BG Group and scheduled for delivery in Q3 2013. Under the new arrangement the ship will deliver into an eight year charter in which the first three years remain as previously contracted. The subsequent five years are a seasonal charter under which the ship is committed to BG Group for seven consecutive months for which it will pay a fixed monthly charter hire and available to accept other charters for the remaining five months. This seasonal charter is expected to generate approximately US$14-16 million of EBITDA1 during the seven months on hire and will provide GasLog with the opportunity to secure additional upside in a period of potentially strong demand.

Following the successful delivery of the GasLog Shanghai into a BG Group charter on January 29, 2013, GasLog now has a twelve-ship fully owned fleet, of which three ships have been delivered and are on charter and nine ships are either under construction or to be constructed through Q2 2016. The strength of GasLog’s existing fleet commitments and the addition of these new long term charters allow GasLog to look at a range of charter periods for its two open vessels, scheduled for delivery at the end of 2014 and beginning of 2015. In particular, these factors allow GasLog to be opportunistic in placing these vessels into shorter-term charters if the Company determines such charters would be beneficial to the overall earnings of the fleet.

Due to the support of Samsung Heavy Industries and the consequently attractive terms achieved, GasLog does not currently foresee the need to raise new equity within the next few years to fund these two new orders. In addition, as previously announced, GasLog is currently reviewing capital structure to ensure that the company is are to finance these vessels in a way that maximizes shareholder value.

Paul Wogan, CEO, said “It is very pleasing to be able to conclude these significant contracts with our largest customer. These contracts reinforce our strategy of building high quality ships at competitive prices for charter to strong, creditworthy customers. The seasonal charter also demonstrates our flexibility in meeting customer needs whilst also being able to capitalize on opportunities in the LNG spot market during a period where we expect increased demand for shipping from planned liquefaction projects. We are very pleased to be building the new vessels at Samsung as they have a solid track record for delivering vessels on time and on budget for GasLog and the options we have secured show a strong commitment between GasLog and Samsung to continue to support each other’s growth ambitions. We believe that these new orders further enhance our position as one of the worlds leading LNG ship owners.”

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LNG World News Staff, February 08, 2013; Image: Gaslog