Teekay LNG Partners, one of the world’s largest owners of LNG carriers, reported a significant rise in net income for the third quarter of the year 2018.
The net income for the third quarter jumped to $25.9 million from $2.7 million in the previous quarter and an $18.9 million loss in the corresponding quarter in 2017, boosted by the deliveries of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) carrier newbuildings between July 2017 and September 2018.
Teekay LNG added that the results were also helped by the commencement of short-term charter contracts for certain of the vessels in the partnership’s 52 percent-owned joint venture with Marubeni Corporation.
The adjusted net income reached $19.5 million, slightly below the $20.9 million reported in the corresponding quarter of 2017, but up 44.4 percent on the previous quarter’s $13.5 million
Quarterly voyage revenues also increased during the period under review, reaching $123 million, 18.2 percent up on the $104.3 million in the corresponding quarter last year and slightly up on $122.3 million in the previous quarter.
Speaking of the results, Mark Kremin, president and CEO of Teekay Gas Group said, “The earnings and cash flow from the delivery and contract start-up of our recent LNG carrier newbuildings are beginning to have a positive impact on our financial results.”
He added that eight newbuilds having now delivered since the start of 2018 and an additional seven LNG carriers, and the Bahrain regasification facility, are expected to commence their fixed-rate contracts during 2019.
The company is benefiting from the fundamental strength in the current spot LNG carrier market and the partnership’s direct exposure to it.
“In early-September 2018, we agreed to in-charter the Magellan Spirit from the Teekay LNG- Marubeni Joint Venture for two years, allowing us to take advantage of the strengthening spot LNG shipping market and I’m pleased to report that we have now fixed that ship on a five-month charter contract to the end of March 2019, which we expect will add approximately $8 million in incremental profit to Teekay LNG over the length of this charter alone,” Kremin said.
In addition, the Torben Spirit LNG carrier and two Teekay LNG-Marubeni Joint Venture LNG carriers are scheduled to come off-charter between December 2018 and May 2019 and Kremin said the company is currently in discussions to secure employment for these vessels at significantly higher rates.