GasLog Partners LP Reports Lower First Quarter Revenue, on Decrease in Spot Market Performance

GasLog Partners LP, an international owner and operator of liquefied natural gas (“LNG”) carriers, today reported its financial results for the three-month period ended March 31, 2022.

Highlights
• Signed a new multi-month time charter agreement for the GasLog Sydney with Naturgy Aprovisionamientos S.A. (“Naturgy”).
• Repurchased $10.0 million of preference units in the open market in the first quarter of 2022.
• Repaid $37.0 million of debt and lease liabilities during the first three months of 2022.
• Quarterly Revenues, Profit, Adjusted Profit(1) and Adjusted EBITDA(1) of $85.5 million, $35.0 million, $28.3 million and $60.9 million, respectively.
• Quarterly Earnings per unit (“EPU”) of $0.53 and Adjusted EPU(1) of $0.41.
• Declared cash distribution of $0.01 per common unit for the first quarter of 2022.

CEO Statement
Paolo Enoizi, Chief Executive Officer, commented: “The global LNG market was already tight before the conflict in Ukraine began to unfold. This further need to secure energy supply has led to a significant increase in demand for LNG in recent months. This has resulted in a tight term market, despite volatility in the spot market in the first quarter of 2022.

We expect that the Partnership’s contracted revenues in 2022 will more than fulfill its operational and financial obligations, whilst also retaining significant market exposure, particularly in the seasonally stronger second half of the year. Given the scarcity of independently-owned vessels available for term charters, based on current market conditions, we expect to recognize material upside well above our contracted revenues. We continue to execute on our business strategy, de-leveraging our balance sheet and simultaneously increasing our potential for free cash flow generation in order to create long-term value for our stakeholders.”

There were 1,350 available days for the quarter ended March 31, 2022, as compared to 1,336 available days for the quarter ended March 31, 2021, due to the scheduled dry-docking of one of our vessels in the first quarter of 2021.

Management classifies the Partnership’s vessels from a commercial point of view into two categories: (a) spot fleet and (b) long-term fleet. The spot fleet includes all vessels under charter party agreements with an initial duration of less than (or equal to) five years (excluding optional periods), while the long-term fleet comprises all vessels with charter party agreements of an initial duration of more than five years (excluding optional periods).

For the three months ended March 31, 2021 and 2022, an analysis of available days, revenues and voyage expenses and commissions per category is presented below:

Revenues decreased by $1.6 million, from $87.1 million for the quarter ended March 31, 2021, to $85.5 million for the same period in 2022. The decrease is mainly attributable to a net decrease in revenues from our vessels operating in the spot market in the first quarter of 2022 for an additional 112 days due to the lower average headline rates earned by our spot fleet in 2022 compared to the same period in 2021, as the premium winter spot market ended much earlier this year.

Voyage expenses and commissions decreased by $0.6 million, from $2.1 million for the three-month period ended March 31, 2021, to $1.5 million for the same period in 2022. The decrease in voyage expenses and commissions is attributable to a decrease in bunker consumption costs due to the increased utilization of our vessels operating in the spot market in the first three months of 2022, as compared to the same period in 2021.

Vessel operating costs increased by $0.8 million, from $17.8 million for the three-month period ended March 31, 2021, to $18.6 million for the same period in 2022. The increase in vessel operating costs is mainly attributable to an increase of $1.4 million in crew costs, largely related to additional costs in 2022 following our COVID-19 enhanced protocols in relation to crew extension bonuses to support our seafarers, travelling and extended quarantine days for seafarers prior to embarkation. This increase was partially offset by a decrease of $0.4 million in vessel management fees in connection with the decrease of the annual fee payable to our manager (approximately $0.1 million per vessel per year). As a result, daily operating costs per vessel (after excluding calendar days for the Solaris, the operating costs of which are covered by the charterers) increased from $14,132 per day for the three-month period ended March 31, 2021, to $14,741 per day for the three-month period ended March 31, 2022.

General and administrative expenses increased by $1.6 million, from $3.1 million for the three-month period ended March 31, 2021, to $4.7 million for the same period in 2022. The increase in general and administrative expenses is mainly attributable to an aggregate increase of $1.0 million in administrative services fees for our fleet in connection with the increased annual fee per vessel payable to GasLog in 2021 (approximately $0.3 million per vessel per year), and an increase in legal and other professional fees of $0.4 million. As a result, daily general and administrative expenses increased from $2,275 per vessel ownership day for the three-month period ended March 31, 2021, to $3,472 per vessel ownership day for the three-month period ended March 31, 2022.

The decrease in Adjusted EBITDA(1) of $3.2 million, from $64.1 million in the first quarter of 2021 as compared to $60.9 million in the same period in 2022, is attributable to the decrease in revenues of $1.6 million and the increase in general and administrative expenses of $1.6 million, as described above.

Financial costs decreased by $0.6 million, from $9.4 million for the three-month period ended March 31, 2021, to $8.8 million for the same period in 2022. The decrease in financial costs is attributable to a decrease of $1.0 million in interest expense on loans, primarily due to the lower debt balances year-over-year, partially offset by an increase of $0.4 million in interest expense on leases, pursuant to the sale and leaseback of the GasLog Shanghai in October 2021. During the three-month period ended March 31, 2021, we had an average of $1,287.8 million of bank borrowings outstanding under our credit facilities with a weighted average interest rate of 2.4%, compared to an average of $1,083.4 million of bank borrowings outstanding under our credit facilities with a weighted average interest rate of 2.5% during the three-month period ended March 31, 2022.

Gain on derivatives increased by $3.7 million, from $1.3 million for the three-month period ended March 31, 2021, to $5.0 million for the same period in 2022. The increase is attributable to a $3.2 million increase in unrealized gain from the mark-to-market valuation of derivatives (interest rate swaps) held for trading, which were carried at fair value through profit or loss, mainly due to changes in the forward yield curve, and a decrease of $0.5 million in realized loss on derivatives held for trading.

The decrease in profit of $0.4 million from $35.4 million in the first quarter of 2021 to $35.0 million in the first quarter of 2022 is mainly attributable to the decrease in revenues of $1.6 million, the increase in general and administrative expenses of $1.6 million and the increase in operating expenses of $0.8 million, partially offset by the increase of $3.7 million in gain on derivatives, as described above.

The decrease in Adjusted Profit of $3.5 million, from $31.8 million in the first quarter of 2021, to $28.3 million in the first quarter of 2022, is mainly attributable to the decrease in Adjusted EBITDA(1) discussed above.

As of March 31, 2022, we had $135.9 million of cash and cash equivalents, out of which $33.5 million was held in current accounts and $102.4 million was held in time deposits with an original duration of less than three months.

As of March 31, 2022, we had an aggregate of $1,052.4 million of borrowings outstanding under our credit facilities, of which $99.4 million was repayable within one year, and an aggregate of $53.4 million of lease liabilities mainly related to the sale and leaseback of the GasLog Shanghai, of which $10.4 million was payable within one year.

As of March 31, 2022, our current assets totaled $153.8 million and current liabilities totaled $169.1 million, resulting in a negative working capital position of $15.3 million. Current liabilities include $24.2 million of unearned revenue in relation to hires received in advance (which represents a non-cash liability that will be recognized as revenues after March 31, 2022 as the services are rendered).

(1) Adjusted Profit, Adjusted EBITDA and Adjusted EPU are non-GAAP financial measures and should not be used in isolation or as substitutes for GasLog Partners’ financial results presented in accordance with International Financial Reporting Standards (“IFRS”). For the definitions and reconciliations of these measures to the most directly comparable financial measures calculated and presented in accordance with IFRS, please refer to Exhibit II at the end of this press release.

Preference Unit Repurchase Programme
In the three months ended March 31, 2022, under the Partnership’s preference unit repurchase programme (the “Repurchase Programme”) established in March 2021, GasLog Partners repurchased and cancelled 7,838 8.625% Series A Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series A Preference Units”), 172,590 8.200% Series B Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series B Preference Units”) and 213,335 8.500% Series C Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series C Preference Units”), for an aggregate amount of $10.0 million, including commissions.

Since inception of the Repurchase Programme and up to April 28, 2022, GasLog Partners has repurchased and cancelled 7,838 Series A Preference Units, 640,619 Series B Preference Units and 483,537 Series C Preference Units at a weighted average price of $25.32, $25.00 and $25.18 per preference unit for Series A, Series B and Series C, respectively, for an aggregate amount of $28.4 million, including commissions.

LNG Market Update and Outlook
Global LNG demand was forecasted to be 104.1 million tonnes (“mt”) in the first quarter of 2022, according to Wood Mackenzie, Energy Research and Consultancy (“WoodMac”), compared to 96.4 mt in the first quarter of 2021, an increase of approximately 8%, primarily led by increased demand in Europe and South-East Asia. European demand in the first quarter of 2022 was primarily in response to seasonal heating demand, low inventories and lower pipeline supply from Russia.

Global LNG supply was approximately 102.5 mt in the first quarter of 2022, growing by 5 mt (or 5%) year-over-year, according to WoodMac. Supply growth in the first quarter of 2022 was dominated by output from the United States (“U.S.”), which increased by 4 mt, or 24% year-over-year, primarily due to increased utilization of existing liquefaction terminals. Growth in U.S. production offset declines from many other supply sources around the world, including Norway, Nigeria, Malaysia and Oman, either due to continued feedstock issues or downtime. Looking ahead, approximately 112 mt of new LNG capacity is currently under construction and scheduled to come online between 2022 and 2026.

Headline spot rates for tri-fuel diesel electric (“TFDE”) LNG carriers, as reported by Clarkson Research Services Limited (“Clarksons”), averaged $34,850 per day in the first quarter of 2022, a 60% decrease over the $84,400 per day average in the first quarter of 2021. Headline spot rates for steam turbine propulsion (“Steam”) vessels averaged $21,750 per day in the first quarter of 2022, 74% lower than the average of $60,000 per day in the first quarter of 2021. Headline spot rates in the first quarter of 2022 suffered from increased availability of sublet tonnage, limited spot vessel enquiries and declining inter-basin demand. However, demand for charters for periods of one year or longer continues to be high in spite of the lack of activity in the spot market. One-year time charter rates for TFDE LNG carriers averaged $89,000 per day in the first quarter of 2022, a 70% increase over the $52,800 per day average in the first quarter of 2021. One-year time charter rates for Steam vessels averaged $47,100 per day in the first quarter of 2022, a 37% increase over the $34,250 daily average in the first quarter of 2021.

As of April 1, 2022, Clarksons assessed headline spot rates for TFDE and Steam LNG carriers at $39,500 per day and $31,500 per day, respectively. Forward assessments for LNG carrier spot rates indicate rising spot rates through the remainder of the year.

As of April 1, 2022, Poten & Partners Group Inc. estimated that the orderbook totaled 186 dedicated LNG carriers (>100,000 cbm), representing 29% of the on-the-water fleet. Of these, 158 vessels (or 85%) have multi-year charters. There were 42 orders for newbuild LNG carriers in the first quarter of 2022 compared with 82 orders for all of 2021.

Preference Unit Distributions
On February 25, 2022, the board of directors of GasLog Partners approved and declared a distribution on the Series A Preference Units of $0.5390625 per preference unit, a distribution on the Series B Preference Units of $0.5125 per preference unit and a distribution on the Series C Preference Units of $0.53125 per preference unit. The cash distributions were paid on March 15, 2022 to all unitholders of record as of March 8, 2022.

Common Unit Distribution
On April 27, 2022, the board of directors of GasLog Partners approved and declared a quarterly cash distribution of $0.01 per common unit for the quarter ended March 31, 2022. The cash distribution is payable on May 12, 2022 to all unitholders of record as of May 9, 2022.

ATM Common Equity Offering Programme (“ATM Programme”)

The Partnership did not issue any common units under the ATM Programme during the first quarter of 2022.

Conference Call
GasLog Partners will host a conference call to discuss its results for the first quarter of 2022 at 8.30 a.m. EDT (3.30 p.m. EEST) on Thursday, April 28, 2022. The Partnership’s senior management will review the operational and financial performance for the period. Management’s presentation will be followed by a Q&A session.
Source: GasLog Partners