Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Flex LNG Ltd (FLNG, Financial) reported revenues of $90.5 million for Q3, aligning with their guidance.
- The company has secured new long-term contracts for Flex Resolute and Flex Courageous, extending their backlog significantly.
- Flex LNG Ltd (FLNG) maintains a strong cash position with $450 million, representing about 35% of their market cap.
- The company declared its 13th consecutive ordinary dividend of $0.75 per share, maintaining an attractive yield of 13%.
- Flex LNG Ltd (FLNG) has a robust financial position with no near-term debt maturities and a large contract backlog ensuring stable cash flow.
Negative Points
- The spot market is currently soft, impacting the revenue potential for one of their ships on an index rate.
- Q4 revenue guidance is slightly lower than Q3 due to the soft spot market conditions.
- The LNG export market is experiencing low growth, with only 1% growth reported, affecting overall market dynamics.
- There is a significant number of ships being delivered, outpacing demand and contributing to lower spot rates.
- The company faces higher operational costs due to increased crew change expenses, particularly in Asia.
Q & A Highlights
Q: With Trump being President and the lifting of the permitting moratorium, when do you expect US LNG projects to start ordering for long-term contracts?
A: Many US projects are nearing export readiness, such as Plaquemines and Golden Pass, and have secured shipping for upcoming volumes. However, for the next wave of projects, which include expansions, we anticipate significant shipping requirements from 2028 to 2030. Given the current packed shipyard orders, some new projects might opt for existing tonnage, supporting the shipping balance from 2028 onwards. - Oystein Kalleklev, CEO
Q: Why are the Courageous and Resolute ships being fixed so far in advance, and is it project-specific?
A: The contracts are not project-specific but are part of a portfolio for a super major, which can allocate ships to various projects. The early fixing is due to the charterer's satisfaction with our service and the ships' compliance with new environmental regulations, making them desirable for long-term use. - Oystein Kalleklev, CEO
Q: What is the strategy for the Constellation ship given the current market conditions?
A: We are prepared to handle tough market conditions, as demonstrated in 2020. We will evaluate whether to fix the ship on a long-term charter or trade it in the spot market, depending on what benefits our shareholders most. We expect market conditions to improve in the next two years. - Oystein Kalleklev, CEO
Q: What is your view on the options for the Aurora and Ranger vessels?
A: Aurora and Volunteer are fixed until Q1 2026, with options for extension. If the charters do not extend, they lose the last option, which is from 2027 into 2028. We anticipate a tighter market from 2027, so we are not concerned about these options. - Oystein Kalleklev, CEO
Q: Can you explain the differences between ME-GI and X-DF technologies from a sustainability and cost efficiency perspective?
A: ME-GI ships have better combustion efficiency and lower methane slip compared to X-DF, making them more environmentally friendly. Despite being more expensive, ME-GI ships are gaining preference due to stricter environmental regulations. MAN has decided to focus on ME-GI engines, discontinuing ME-GA engines. - Oystein Kalleklev, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
