Avance Gas Holding Ltd Reports Unaudited Results for the Third Quarter and First Nine Months of 2018
BERMUDA, 8 November 2018 - Avance Gas Holding Ltd (OSE: AVANCE) today reported unaudited results for the third quarter and first nine months of 2018.
Freight rates strengthened in Q3 as higher US export and lower fleet growth balanced the market
- The average time charter equivalent (TCE) rate for the fleet was $15,289/day, up from $7,711/day in Q2 2018.
- TCE earnings for Q3 2018 were $19.1 million, up from $9.3 million in Q2 2018.
- Daily operating expenses (OPEX) were $7,457/day, down from $7,967/day in Q2 2018. Year to date 2018 OPEX was $7,611/day.
- A&G expenses were $1.3 million or $990/day in Q3 2018. Year to date 2018 A&G expenses are $967/day.
- A net loss of $8.9 million in Q3 2018, compared with a net loss of $19.3 million in Q2 2018.
- Avance Gas' available liquidity at quarter end was $67.3 million, including available undrawn revolving credit facilities of $25 million.
- Total liquidity at the date of this release was approximately $79 million.
- 74% of Q4 shipdays are fixed giving a TCE estimate at about $20,250/day.
The Middle East is the most active export market of LPG exports on VLGCs. Traditionally Saudi Arabia was the largest exporter, but though growing LNG production from mid-2000 combined with increased petrochemical use of LPG in Saudi Arabia, resulted in Qatar and UAE becoming the largest exporters. Today Qatar and UAE each export about 10 million tons annually, Saudi Arabia 8-9 million tons and Kuwait 4-5 million tons. The Iranian export, which recent years has been 3-4 million tons annually is expected to fall significantly by early November with new US sanctions coming into force. The only independent quoted price for VLGC freight is the Baltic LPG1, which is based on Middle East loading.
In 2012, the US changed from a being a net importer of LPG to an exporter, and LPG exports on VLGCs has grown from 7 million tons in 2012 to 24 million tons in 2017. Today USA is the largest single LPG exporting country. There is no independent US based freight index, however, some shipbrokers quote the US freight market on a weekly basis.
The Baltic LPG1 was quoted at $35/ton as we entered into Q3 2018. By end-October, the LPG1 was quoted at $42/ton, after peaking at $49/ton mid-October. In Q1, the monthly average of VLGC liftings in Middle East was 62, increasing to 67 in Q2. The average VLGC liftings in Middle East in Q3 was 65.
Although the US is the single largest VLGC LPG exporter, the number of liftings is still below Middle East. The monthly average has grown from 27 cargoes in 2015 to 37 in 2016 and 45 cargoes in 2017. During Q1 2018, US exported average 46 monthly VLGC cargoes, growing to 48 in Q2 and 53 cargoes in Q3.
With a continued growth in US VLGC exports, the volatility in Middle East freight rates is higher than in US freight rates, however with a high correlation. The improved freight market from Q2 to Q3 2018 is explained by growth in both main export markets with a high percentage long-haul export from US.
By end September seven of ten newbuildings due in 2018 were delivered. One ship was sold for recycling during Q1, followed by another three ships Q2 and one ship Q3 2018. Two more ships have been delivered and one more ship sold for recycling in October.
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.