Höegh LNG Reports Profit Jump
- Business & Finance
Floating energy solutions provider Höegh LNG ended the second quarter of this year with a profit after tax of USD 8.5 million, up from USD 3.6 million seen in the same period a year earlier.
Total income stood at 70.6 million in the quarter ended June 30, 2017, compared to a total income of USD 57.1 million posted in the three-month period of 2016.
The company’s EBITDA for the period rose to USD 37.7 million from USD 27 million seen in the corresponding period of 2016. The increase is mainly attributable to reimbursement for accrued costs related to the Pakistan infrastructure project, lower administrative expenses, and time-charter income for Höegh Giant since its delivery on 27 April 2017.
“Höegh LNG’s revenues and EBITDA remained stable at record levels in the second quarter… Operating performance remained strong, with technical availability of 100% in the quarter. At 30 June, Höegh LNG’s revenue backlog was USD 6.1 billion, with an average remaining contract term of around 13.5 years across 10 different counterparties,” the company said.
During the quarter, Höegh LNG Partners entered into a term sheet with its joint venture partner Mitsui O.S.K. Lines (MOL) to acquire a 23.5% equity interest in the two joint venture companies that own the FSRUs Neptune and GDF Suez Cape Ann for a compensation of USD 27.3 million. The transaction brings Höegh LNG Partners’ interest in the joint venture companies up to 73.5% and the acquisition is expected to close by 30 September 2017, pending board approvals at MOL and Höegh LNG Partners.
Subsequently, Höegh LNG secured commitments for a USD 230 million debt financing for its eight FSRU. The vessel is under construction at South Korean Hyundai Heavy Industries (HHI) and slated for delivery in the first quarter of 2018.
In July, Höegh LNG and shipping company Nakilat inked MoU with the objective of creating an alliance to develop new FSRU projects. The structure of the alliance is planned to be a joint venture (JV) to own and operate FSRUs that fall within the agreement.
“Working with LNG suppliers is an important part of Höegh LNG’s growth strategy, and the alliance with Qatar’s LNG shipping company Nakilat announced in July represents a milestone from this perspective. Entering into a partnership with the world’s largest LNG shipping company gives Höegh LNG access to additional growth opportunities,” Höegh added.
Currently, Höegh LNG is involved in several commercial processes with potential FSRU clients on projects at various stages of development, and has also submitted an offer for a long-term FSRU contract in June.
Höegh LNG said that the Global Energy Infrastructure Ltd. (GEI) project in Pakistan is progressing according to its timeline with start-up under the FSRU contract in the second half of 2018.
However, the Quantum Power/Höegh LNG FSRU project in Ghana remains subject to final governmental approval. As the approval was expected by mid-2017, delays could affect the project’s timeline, according to the company.
What is more, the revised environmental process is well under way for Penco LNG Chile project, with the anticipated finalization towards the end of the year.
Höegh LNG now has a total of 10 FSRUs in operation and on order. A total of three FSRUs under construction at Hyundai Heavy Industries and Samsung Heavy Industries. These newbuildings have scheduled delivery dates in the first quarter of 2018, the fourth quarter of 2018 and the second quarter of 2019, respectively.
“With the current timeline of newbuilding deliveries and contract start-ups, Höegh Giant remains allocated to the contract with Quantum Power in Ghana, while FSRU #9 is intended for the contract with GEI in Pakistan. FSRU #8 remains earmarked for the Penco LNG project, with FSRU #10 being a fully adequate candidate for the project should alternative employment opportunities arise for FSRU #8,” the company further said.
“With a solid operational and financial platform in place, and backed by a positive market environment, the company is continuing to pursue additional business opportunities and remains confident it will reach its goal of a fleet of 12 units in operation or under construction by 2019,” the company said in its outlook, adding that it will continue preparing for the three long-term FSRU contracts awarded in Ghana, Pakistan and Chile.