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Golar LNG Partners Q2 net income $41 million

Staff writer |
Golar LNG Partners reported net income attributable to unit holders of $41 million and operating income of $62.3 million for the second quarter of 2015.

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This compares to of $31.3 million and operating income of $58.7 million for Q1 2015 and net income attributable to unit holders of $37.8 million and operating income of $62.1 million for the second quarter of 2014.

Second quarter operating income was in line with the same period in 2014. Additional revenue in respect of the Golar Eskimo, which was acquired on January 20, 2015, was offset by reduced earnings from the Golar Freeze as a result of its drydock during the quarter, a full quarter of reduced earnings for the Golar Grand given its new contract rate and associated ownership and operating costs in respect of the Golar Eskimo FSRU.

Second quarter 2015 revenue increased by $4.1 million over Q2 2014 and includes an additional $12.4 million hire in respect of the Golar Eskimo. This was offset in part by a reduction in revenue due to the drydock of the Golar Freeze equivalent to $6.7 million and a $2.1 million revenue reduction in respect of the Golar Grand which was returned at the end of its contract by BG Group in mid-Febuary and re-chartered to Golar LNG Limited at a lower rate.

Vessel operating expenses, voyage and commission costs, administration expenses and depreciation and amortisation increased by a collective $4 million compared to the same period in 2014 primarily reflecting the additional ownership and operating costs of the Golar Eskimo. Despite additional debt servicing costs on financing of the Golar Eskimo, second quarter 2015 net financial expenses were $3.8 million lower than Q2 2014.

The reduction is predominantly reflective of a $6 million non-cash mark-to-market valuation gain on interest rate swaps compared to a $3.3 million loss in 2014. Taxes in respect of Q2 2015 were $0.8 million higher than the same period in 2014 when a credit to tax expense resulting from a year-to-date reassessment of current tax estimates was recognised.

An increase in revenue net of voyage expenses from $98.5 million in the first quarter to $103.6 million in the second quarter reflects a number of factors. An additional $8.6 million was recognised in respect of the Golar Igloo which was on charter for all of the second quarter, whereas two of its scheduled three months downtime occurred during the first quarter.

The Golar Eskimo was also receiving revenue for all of the second quarter compared to 71 days hire received in respect of the first quarter. This resulted in an additional $2.8 million of revenue being recognised in 2Q.

Offsetting these was a $6.9 million reduction in revenue from the Golar Freeze which commenced its scheduled drydock during Q2 resulting in 51 days of offhire and a $1.2 million reduction in hire from the LNG carrier Golar Grand which spent part of 1Q on hire to BG Group at a higher rate. The majority of the remaining $1.8 million increase in revenue reflects the longer quarter (91 days versus 90 days).

Vessel operating expenses at $17.2 million were $1.6 million higher than the first quarter cost of $15.6 million. This was mainly due to higher essential repair expenditures across the fleet and higher Golar Freeze non-drydock related repairs in particular. It also reflects a full quarter of operations in respect of the Golar Eskimo which operated for 71 of the 90 days in the first quarter. Administration expenses at $1.5 million were in line with the prior quarter.

Net interest expense at $13.8 million for the second quarter was $1.3 million higher than the first quarter due to a full quarters interest on a $162.8 million debt facility and a $220.0 million vendor loan from Golar, which together financed the acquisition of the Golar Eskimo on January 20.

On May 12, Golar Partners issued a $150 million bond in the Norwegian bond market, the majority of the proceeds of which were subsequently used to repay existing debt facilities.

Other financial items for the second quarter were a loss of $1.5 million compared to a $10.4 million loss in the first quarter. This included non-cash mark-to-market valuation gains on interest rate swaps of $6 million in the second quarter as a result of an increase in 3-year and 5-year interest swap rates by 14bps and 26bps respectively. This compares to a $5.9 million loss in the first quarter.

The Partnership's Distributable Cash Flow1 for the second quarter was $41.4 million as compared to $40.7 million in the first quarter and the coverage ratio was 1.07 as compared to 1.06 for the first quarter.

The coverage ratio was negatively impacted in the first quarter by 2 months of scheduled downtime for the Golar Igloo and in the second quarter by 51 days offhire for the Golar Freeze scheduled drydock.


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