Avance Gas Holding Ltd Reports Unaudited Results for the Fourth Quarter and Twelve Months of 2018
Lower trading activity due to volatile oil prices offsets positive fundamentals
- The average time charter equivalent (TCE) rate for the fleet was $21,314/day, up from $15,289/day in Q3 2018. The achieved TCE for full year 2018 was $14,345/day, up from $10,684/day in 2017.
- Daily operating expenses (OPEX) were $8,183/day, up from $7,457/day in Q3 2018, an increase mainly due to non-recurring items. Full year 2018 OPEX was $7,755/day, marginally up from $7,621/day in 2017.
- A&G expenses were $1.3 million or $995/day in Q4 2018, materially unchanged from Q3 2018. Full year 2018 A&G expenses were $974/day, down from $1,084/day in 2017.
- Based on calendar days, EBITDA was $11,602/day compared to $6,356/day in Q3. Full year 2018 EBITDA was $4,884/day, up from $1,856/day in 2017.
- A net loss of $2.8 million in Q4 2018, compared with a net loss of $8.9 million in Q3 2018. Full year net loss 2018 was $43.2 million down from $54.6 million in 2017.
- Avance Gas' available liquidity at quarter end was $72.3 million, including available undrawn revolving credit facilities of $25 million, compared to $67.3 million per Q3 2018.
- Following a $25 million drawdown under the revolving credit facility, the cash position at the date of this release is approx. $80 million.
- Mistral and Monsoon are likely to install scrubbers in connection with their scheduled drydocking in Q4 2019.
Middle East LPG exports in Q4 2018 were down 1.0m tons (9.7%) compared to Q3 2018. Compared to Q4 2017, the exports are up 900 000 tons (10.5%). The Middle East LPG exports Q4 2018 have been higher than expected. As usual, the export variation between countries vary, with Iran - as expected - down 700 000 tons (65%) from Q3 to Q4 2018, with a marginal increase from Qatar and UAE.
The Middle East LPG export reached 38.7m tons in 2018 on 766 VLGC liftings, an average of 64 cargoes per month. The export in 2017 was 36.4m tons on 726 VLGC liftings. In 2016 Middle East exported same amount of LPG as in 2018, however, number of liftings amounted to 801.
US Gulf and USEC VLGC export was flat compared to Q3 2018, recording 7.1m tons and 154 cargoes in Q4 2018, compared to 7.0m tons and 159 liftings in the previous quarter. Comparing Q4 2018 to Q4 2017, the increase was 700 000 tons (10%) and 9 liftings (6%).
2018 was another year with record high VLGC export from US Gulf and USEC, totaling 26.7m tons and 594 liftings, compared to 24.0m tons and 535 liftings in 2017. Enterprise is the largest export terminal, representing 11.7 million tons and 256 liftings in 2018.
US Gulf had an average of 48 cargoes per month and USEC averaged two cargoes per month, leading to an average of 50 cargoes per month in 2018, up from 45 cargoes in 2017 and 36 cargoes in 2016. Although US has become an important area for the freight markets, the only official, independent freight index quoted daily for VLGCs is the Baltic LPG1 route from Middle East to Japan. Some shipbrokers quote the freight market from US to Asia and Europe on a weekly basis, suggesting that most of the time US freight offers a premium to Middle East freight.
Baltic LPG1 was quoted at $47/ton as we entered Q4 2018. The market softened during the quarter and by year-end Baltic LPG1 was at $35.8/ton. The 2018 average was $34.5/ton compared to $27.6/ton in 2017 and $29.7/ton in 2016.
Avance Gas Spot VLGC Index - which is calculated using Baltic LPG1 - started the quarter at $19,394/day and ended at $16,053/day. The average, adjusted 30 days prior to the calendar quarter, was $17,666/day for Q4 and full year 2018 was $11,600/day.
The soft freight markets have kept the newbuilding activity at modest levels. After record-high deliveries in 2015 (36 ships) and 2016 (43 ships), 11 ships were delivered during 2018. There are 38 ships under construction, representing 14.2% of existing fleet, of which 18 ships are scheduled for delivery in 2019 and 19 ships in 2020.
The weak freight markets have motivated for higher re-cycling activity and five ships sold for re-cycling in 2018. One more ship was sold for re-cycling but reappeared in the fleet towards year-end. By end 2018, the fleet consists of 268 ships.
The full report and interim financial statements are attached to this press release.
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ABOUT AVANCE GAS
Avance Gas Holding Ltd operates in the global market for transportation of liquefied petroleum gas (LPG). The company is one of the world's leading owners and operators of very large gas carriers (VLGCs), operating a fleet of 14 modern ships.
For more information about Avance Gas, please visit: www.avancegas.com.
Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as "anticipate", "believe", "continue", "estimate", "expect", "intends", "may", "should", "will" and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Avance Gas believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements.
The information, opinions and forward-looking statements contained in this announcement speak only as at its date and are subject to change without notice.
This information is subject to disclosure requirements pursuant to Section 5-12 of the Norwegian Securities Trading Act.