Q2 2022 Hoegh LNG Partners LP Earnings Call
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Good morning and welcome to the Hoag LNG Partners second quarter 2022 earnings conference call. All participants will be in listen only mode.
Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Please note this event is being recorded.
I would now like to turn the conference over to Hovard Furu, Chief Financial Officer and Interim CEO . Please go ahead.
Thank you, Andrea. And good morning, ladies and gentlemen, and welcome to Herg L&D Partners Earrings Call for the second quarter of 2022. My name is Robert Féreux and I'm the Chief Financial Officer of the partnership and I also fill the role as interim CEO .
For your convenience, this presentation is available on our website.
Turning to page 2 in today's presentation, we have an overview of the content of the presentation.
I will start with some highlights from the quarter and then cover the quarterly financials.
Thereafter, I will give a market update before summarising the presentation.
Before we start, please take note of the forward-looking statements on page 3 and a glossary on page 4.
Turning to page 5 and the highlights.
I am pleased to report that the fleet had 100% availability in the quarter. This resulted in total revenues of 36.9 million and a segment EBITDA of 31 million in the quarter.
As of today, the partnership has not been materially impacted by the COVID-19 pandemic.
Thanks to the hard work of our crew on board and personnel on shore, the fleet is operating as expected.
Despite the pending arbitration with the Charter under the Lease and Maintenance Agreement for the PJ and FSA Ulambung, both parties have continued to perform their respective obligations under the agreement.
No assurance can be given at this time as to the outcome of the dispute with the torturer.
Until the arbitration is resolved or dismissed, the subsidiary that owns the PG&FSU lampoon is unable to transfer cash flow to HM&P.
The refinancing of the Cape and Debt Society, which was agreed on 15 December 2021, was closed on 1 June 2032.
The partnership has established a record date of 22 August 2022 for a special meeting of its common unit holders currently planned to take place on 20 September 2022.
At a special meeting, the holders of the partnership's common units will vote on the previously announced proposed merger agreement with Herculean G, pursuant to which Herculean G will acquire, through cash, all of the outstanding public-ahead common units of the partnership, at a price of $9.25 per common unit.
Turn to page 6.
We are showing the overview of the partnerships fleet of modern assets.
The partnership has approximately 8.3 years average remaining contract length and a full contract coverage until late 2026.
Turning to page 8, we have the key figures for the quarter, showing an operating performance which was weaker than in the same quarter of 2021, with a segment EBT of 31 million in the quarter, compared to 34.2 million in the second quarter of 2021.
The decrease is mainly due to increased un
The limited partner's interest in the net result was 9.2 million in the quarter, up from a loss of 1.2 million in the same quarter of 2021, which was impacted by negative effects from debt issues, costs and tax provisions.
Turn it to page 9.
We are showing the development in key meshes over time, and as you can see from the graphs, the operating performance remains relatively stable.
Two quarters have marked negative deviations, the second quarter of 2019 and the second quarter of 2021.
In the first instance, the deviation was primarily caused by the dry docking and maintenance of the hook gallant in 2019.
The deviation in the second world war of 2021 was primarily caused by tax provision for previous periods following the result of a tax audit which we disagree to and have disputed.
Turning to page 10, we are showing the income statement in more detail.
The total revenues of 36.9 million in quarter was about 2.2 million more than in the same period in 2021.
best operating expenses of 7.6 million in the quarter were about 1.5 million more than in the same period of last year.
The increase is primarily caused by 1.1 million in modification costs for the her gallant.
of which 50% is expected to be reimbursed by Hergalangy in the second half of 2022.
Administrative expenses of 6.5 million a quarter.
We're 3.7 million higher than in the second quarter of 2021.
The increase is primarily caused by expenses incurred in relation to the proposed murder agreement with Hoge-Lengie.
Equity in earnings of joint ventures for the quarter was 4.5 million and increased from 3.3 million in the same period of 2021.
Unrealised gains from derivative instruments impacted the equity and earnings of joint ventures from the second quarter of 2022 and 2021 respectively.
Excluding these three items, the Equity and Earnings of Joint Ventures would have been 3.7 million this quarter and increased from 3.2 million for the same period in 2021.
Total financial expense of 5.8 million in a quarter equals a decrease of 4.4 million from the same quarter of 2021.
The decrease is mainly explained by debt issuance costs being expensed in the second quarter 2021.
income tax expense of 3.4 million in the quarter represents a decrease of 7.8 million from the same quarter of 2021. The decrease is mainly explained by significant provision for potential tax liabilities being expensed in the second quarter of 2021.
Turning to page 11.
The balance sheet has not changed much since year end 2031, with total liabilities and equity standing at 1 billion at the end of the quarter.
The 85 million revolving credit facility from Herculean G, which is currently drawn with the 4.5 million, is now classified as current debt, as it matures on January 1, 2023.
Turning to page 13 on the LNG market.
Global L&D trade rose 4.5% in the second quarter of 2022 compared to the second quarter of 2021.
Europe continues to be driving the demand for energy covers on the back of the uncertainty around flow of Russian pipeline gas.
European LNG imports have increased by 52% in the first half of 2022 compared to the first half of 2031.
Turning to page 14.
Here we have two graphs illustrating the projected development in the global energy markets from now until 2026.
In the chart to the left, the incremental volume supply is projected for the most part to come from the USA and the Middle East.
The recent surge in demand and higher LNG prices have led to more long-term LNG sale and purchase agreements concluded lately.
bringing potential mulex reduction capacity closer to FID.
Depending on construction time, this would potentially add to the long-term supply growth at the back end of this period.
The graph to the right shows the projected growth in LG imports globally.
As you can see, the global energy in the Mongols is projected to remain robust, mainly driven by Europe and the Asian region.
In the current geopolitical situation, European countries are determined to secure both LNG and LNG import capacity to safeguard the energy supply and shift away from Russian pipeline gas.
This has led to an increase in demand for FSI use as import facilities from countries such as Germany, the Netherlands, Italy, Poland, Finland and others typically looking to secure large capacity FSI use with prompt delivery.
With that I turn to page 16 for summary where I would like to highlight the following.
100% availability of the feed during the quarter.
Sigma TBT of 31 million in the quarter.
Refinancing on the Cape and Death facility closed on June 1st 2022.
At a special Common Unit Holder meeting currently planned to take place on September 20, 2022, the holders of the partnership's common units will vote on the previously announced proposed merger agreement with Hergalindi, pursuant to which Hergalindi will acquire for cash all of the outstanding publicly held common units of the partnership at a price of $9.25 to common units.
The partnership is expecting to issue a final version of the proxy statement in the next few days.
We urge all our Common Unit holders to study this in detail ahead of the special Common Unit holder meeting.
With that, I would like to thank everyone for dialing in and participating on the call today. Thank you.
The conference is now concluded. Thank you for attending today's presentation and you may now disconnect.
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