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Flex LNG releases results for 2Q and 1H 2018

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LNG Industry,

Flex LNG Ltd. has reported its unaudited results for the quarter and half ended 30 June 2018.

Highlights for 2Q 2018:

  • On 18 April 2018 Flex LNG entered into a 12 month time-charter agreement with Enel Trade S.p.A. The time charter period of 12 months will commence during the second half of 2019. Enel also has the option to extend the contract by an additional 12 months subsequent to the firm period.
  • On 28 May 2018, Flex LNG received credit approval for a sale-leaseback (Rainbow SLB) of the LNG carrier newbuild Flex Rainbow with an Asian lessor based on term sheet signed by the parties on 20 March 2018. The sale price under the lease is approx. 75% of the relevant ship building price for Flex Rainbow and where the remaining 25% represent the advance hire for the ten year lease period.
  • On 28 May 2018 Flex LNG entered into an agreement to acquire two 174 000 m3 LNG carrier newbuilds fitted with low pressure two stroke engines (X-DF) under construction at HHI for an attractive price of US$184 million each vessel which includes building supervision. Payment terms are favorable with 20% due following signing of the purchase agreement with remaining 80% payable at delivery. Seller is funding part of pre-delivery CAPEX which illustrates commitment and support of the largest shareholder.
  • On 22 June 2018 Flex LNG successfully took delivery of its third LNG carrier newbuild the Flex Ranger from Samsung Heavy Industries (SHI) in South Korea.
  • Reported revenues for 2Q 2018 of US$7.0 million compared to US$8.0 million in 2Q 2017 and for 1H 2018 US$22.1 million compared to US$9.7 million for 1H 2017.
  • Reported a positive EBITDA of US$3 million compared to a negative EBITDA of US$7.4 million in 2Q 2017. The EBITDA for 1H 2018 was US$5.4 million compared to a negative EBITDA for 1H 2017 of US$9.8 million.
  • Reported Net Loss for 2Q and 1H 2018 of US$2.9 million and US$4.6 million respectively, compared to a Net Loss in 2Q and 1H of 2017 of US$ 6.7 million and US$7.6 million respectively.

Subsequent Events:

  • On 9 July 2018, the company took delivery of Flex Rainbow from Samsung Heavy Industries according to schedule. The Flex Rainbow is the company's fourth LNG carrier on the water while four LNG carriers are currently under construction. Flex Rainbow is a large state-of-the-art 174 000 m3 LNG carrier with fifth generation ME-GI machinery giving considerable fuel savings compared to traditional LNG carriers.
  • On 12 July 2018 Flex Rainbow entered into a 6+3 months Time Charter with a major European energy company following mobilisation at yard in South Korea.
  • On 12 July 2018 the company announced that it has executed the Rainbow Sale and Lease Back (SLB) which was announced in connection with the first quarterly presentation, 29 May 2018. The acquisition of the two LNG carrier newbuildings with X-DF machinery from an affiliate of the company’s largest shareholder, Geveran Trading & Co Ltd., announced on 29 May 2018 was subject to final documentation and execution of the Rainbow SLB.
  • On 1 August 2018, the company announced the appointment of Øystein Kalleklev as Chief Executive Officer of Flex LNG Management AS, the main management company of company. Kalleklev will also serve as Chief Financial Officer until a suitable candidate has been recruited to this position.
  • On 1 August 2018 Marius Foss also joined the company as Head of Commercial and Operations. With these changes the board has increased its focus on building a strong team around the company’s modern LNG carrier fleet, and given the market outlook, transportation of LNG will be the company’s main focus going forward.

Øystein M Kalleklev, CEO/CFO commented:

“During 1H 2018, Flex LNG delivered unsatisfactory financial results due to disappointing utilisation of Flex Enterprise which has operated in the spot market in this period. As we are in the start-up phase, one idle vessel makes a big impact on our financial accounts. We are however making good progress on building a very substantial LNG shipping company based on large modern fuel-efficient LNG carriers which we are very confident will be the preferred vessels in the increasing market for seaborne transportation of LNG. As we remain confident that the market will become tighter going forward we do expect that our financial performance will improve given the fact that we are well positioned with our current fleet of modern LNG carriers.”

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