Avance Gas Holding Ltd Reports Unaudited Results for the Second Quarter of 2020
BERMUDA, 26 August 2020 – Avance Gas Holding Ltd (OSE: AVANCE) today reported unaudited results for the second quarter 2020.
- The average time charter equivalent (TCE) rate was $28,932/day on the basis of IFRS 15 accounting standard, compared to $44,990/day in Q1 2020.
- Daily operating expenses (OPEX) were $8,576/day, compared to $8,650/day in Q1 2020.
- A&G expenses were $608/day, down from $1,042/day in Q1.
- In August, the Company agreed to sell its oldest ship, Avance (2003), for a net price of $35 million. Closing is expected in early September. The sale will generate a book profit of approx. $6 million in Q3 and net cash proceeds of approx. $17 million, and further reduce scheduled drydock capex due in 2020 by $2 million.
- In August, the company received credit approval for the refinancing of VLGC Pampero (2015) in a $45 million sale leaseback transaction with a Chinese leasing house, subject to normal documentation and closing procedures. The financing bears an implied 24 year age adjusted repayment profile and a credit margin of 3.10%. The transaction will generate net cash proceeds of approx. $10 million and a cash break-even of approx. $19,500/day and is expected to close in Q4.
- By Q3, seven ships will have completed special survey and five scrubbers have been installed.
After a seasonally strong Q1, freight markets weakened in Q2 due to COVID 19 related reduced demand and unfavorable LPG trading environment. With a closed LPG price arbitrage and reduced Asian demand, freight rates started to drop in May/June. During July/August, the demand has started to return to normal trajectories, and the LPG price differential has developed positively. Combined with lower fleet capacity, due to drydocking and slowsteaming of the fleet, this has led to a rebound in freight markets Q3 to date.
The fall in oil prices has increased the volatility in the US export volumes, mainly due to unfavorable US/Asia price differential. US Gulf and USEC VLGC exports were 9.0 million tons in Q2 2020, up from 8.9 million tons in Q1 2020 and 8.5 million in Q2 2019. US Gulf and USEC recorded 65 monthly VLGC cargoes in Q2 2020, unchanged from Q1 2020 and compared to 63 cargoes in Q2 2019. Preliminary numbers suggest another month up to 70 cargoes in July, illustrating this volatility.
Middle East export activity has followed OPEC+ production increases and cuts and has been volatile during first half 2020. Middle East VLGC exports totaled 7.8 million tons in Q2 2020, compared to 7.6 million tons in Q1 2020 and 7.9 million in Q2 2019. Middle East exported on average 59 cargoes per month in Q2, up from 57 cargoes in Q1, while preliminary data for July shows 55 cargoes.
The global fleet totaled 299 ships by end July 2020, with an orderbook of 33 ships (11%). Three new ships have been confirmed ordered, for delivery in 2022. Five ships are due for delivery for the remainder of 2020, 20 ships are due for delivery in 2021 and eight ships due for delivery in 2022. It is expected that the effect of fleet growth will be partly mitigated by large number of special surveys due 2020-2022.
PRESENTATION AND WEBCAST
Avance Gas will host an audio webcast and conference call to discuss the company’s results for the period ended 30 June 2020 on Wednesday, 26 August 2020, at 15:00 CET. There will be a Q&A session following the presentation.
The presentation and webcast will be hosted by:
Mr. Peder C. G. Simonsen – Interim CEO and CFO
The presentation will also be available via audio webcast, which can be accessed at Avance Gas’ website www.avancegas.com. Dial in details are +44 (0)2071 928 000 (UK and International), +1 631-510-7495 (US) or +47 23 96 02 64 (Norway). Please quote the passcode: 6348139. Phone lines will open 10 minutes before the conference call.
For further queries, please contact:
Peder C. G. Simonsen, Interim CEO and CFO
Tel: +47 22 00 48 15
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 fourteen modern ships and two Dual Fuel LPG newbuildings due for delivery in 2021 and 2022. For more information about Avance Gas, please visit: www.avancegas.com (http://www.avancegas.com).
This information is subject to disclosure requirements pursuant to Section 5-12 of the Norwegian Securities Trading Act.