Höegh Sees Rise in Income, Prepares for FSRU Growth

Oslo-listed provider of floating LNG services Höegh LNG has reported an increase in its total income to USD 58.7 million for the third quarter of 2015, up from USD 54.6 million in the second quarter 2015, and compared to USD 32.7 million in the same period last year.

“The improved operating result is mainly due to a full quarter of commercial operations by Höegh Gallant, which started commercial operations under the time charter with Egas in April 2015. The improvement is offset by the scheduled dry docking of Arctic Lady and consequently fewer on-hire days during the quarter,” Höegh said.

Höegh added that its profit after tax was USD 2.5 million in the third quarter, down from USD 6 million, while the company’s EBITDA was at USD 26.5 million, up from USD 22.6 million in the second quarter 2015.

On September 10, the company issued 6,920,000 new common shares, approximately 9.9% of outstanding shares, in a private placement, raising USD 103 million in new equity.

“To enable the company to take advantage of an increasing number of opportunities in the FSRU market, Höegh LNG raised USD 103 million of equity in an over-night private placement and in addition, the company signed a new agreement for several firm priced FSRU options. The company is well positioned to further strengthen its position as the leading FSRU provider in a growing and attractive market segment,” Höegh LNG’s President and Chief Executive Officer, Sveinung J. S. Støhle, said.

According to Höegh, the LNG market is currently oversupplied and the additional LNG volumes that will enter the market over the next four to five years, strengthens the growth prospects for the FSRU market. Further, the LNG oversupply incentivises LNG suppliers to create demand for LNG in new markets, which increases the demand for FSRUs.

Within FLNG, the company believes the limited additional liquefaction capacity in the 2020 time frame represents an opportunity for nimbler, low cost solutions such as FLNG going forward.

The company is currently bidding on five FSRU projects and has a shortlist of an additional five active FSRU projects at various stages of development. The number of FSRU opportunities continues to increase, driven by LNG suppliers seeking to open new markets, the availability of LNG at very competitive prices and the significant time advantage of the FSRU solution compared to land-based LNG import terminals.

To position itself for the expected strong growth in demand for FSRUs, in addition to always having at least one FSRU on order and open for new business, the company has signed an agreement securing multiple firm priced options for additional FSRUs.

Höegh added that the Port Meridian LNG project, where the company has an exclusive right to supply the FSRU/LNGC’s made good progress when its U.S. LNG supplier Magnolia LNG received final environmental impact statement (EIS) from the relevant U.S. regulatory authority, FERC, and executed a binding contract for engineering, procurement and construction of the Magnolia project. Port Meridian LNG reports to be on schedule for making a final investment decision (FID) by mid-2016.

The LNGC market remains oversupplied and approximately 9% of the fleet, or around 35 LNG vessels, are currently without long term employment. With an order book representing 37% of the global fleet, the company expects the short-term LNGC market to remain oversupplied for the next two to three years, until all the new LNG liquefaction capacity enters the market. With one LNGC sold and two LNGCs on long term contracts, the company has no exposure to the LNGC spot market.