Q1 2025 FLEX LNG Ltd Earnings Call
[music], hi, everybody and welcome to first quarter 2025 results presentation. My name is modest force I'm, the interim CEO of flex LNG and as usual I'm joined by our CFO <unk> neutral Holt, who will guide you through the financials in a bit.
Operator: Hi, everybody, and welcome to the first quarter 2025 result presentation.
Marius Voss: My name is Marius Voss. I am the interim CEO of Flex LNG.
Marius Voss: And as usual, I'm joined by our CFO, Knut Traaholt, who will guide you through the financials in a bit.
Marius Voss: We will cover the financials, market updates and conclude the earnings presentation with a Q&A session. If you have any questions, you can use the chat function or send questions to our IR at flexlng.com.
We will cover the financials market update and conclude the earnings presentation with a Q&A session.
If you have any questions you can use the chat function or send questions to our IR at <unk> com.
And before we begin as a quick reminder, today's presentations will include forward looking statements and we will also be using non-GAAP measures and there is limited.
Marius Voss: And before we begin is a quick reminder today's presentations will include forward-looking statements. We will also be using non-gap measures and there is limit to the completeness of detail point seven million dollars in buying and earnings per share at 35 cents. Adjusting for non-cash items We booked $29.4 million in adjusted net income, implying a $0.54 in adjusted earnings per share.
Did a completeness of detailed point $7 million impact.
Buying an earnings per share of 35 seven.
Adjusting for noncash items.
We booked $29 4 million in adjusted net income implying at 54 cents in adjusted earnings per share.
Last quarter, we ended up at 37 years on new contracts backlog for flex constellation and flex gracious Netflix resolute.
Marius Voss: Last quarter we added up the 37 years on new contracts backlog for Flex Constellation, Flex Coratius and Flex Resolute. This opened up for a very attractive refinancing.
This open up for a very attractive refinancing we have therefore initiated the balance sheet optimization program three points hero and can neutral guide on this later in the presentation.
Marius Voss: We have therefore initiated the Balance Sheet Optimization Program 3.0, and Knut will guide on this later in the presentation. On the fleet, Flex Constellation was redelivered from Time Charter in late February and has been traded in the spot market since. Lastly, Flex Artemis, who is currently trading on a variable index, will be re-delivered from a five-year time charter and we expect to get her back sometime in Q3 2025. We reconfirmed the full year 2025 revenues and earnings guidance provided last quarter. We expect full year revenues to come in at a range of $340 to $360 million, and we expect the TCE to be between $72,000 and $77,000 per day.
On the fleet flex constellation was redelivered from time charter in late February and has been traded in the spot market sense.
Lastly, flex Artemis, who is currently trading in the variable index will be redelivered from up five years time charter and we expect to get her back sometime in Q3 of 2025.
We reconfirm the full year 2025 revenues and earnings guidance provided last quarter.
We expect full year revenues to come in at the range of $340 million to $360 million.
And the expected TCE to be between 72 and $77000 per day.
Similarly, we expect the EBITDA to Brooks $250 million to $270 million.
Marius Voss: Similarly, we expect EBITDA to approximately $250-$270 million.
The board has declared 75 cents per share of dividends imply in the last 12 months dividends of $3 per share.
Marius Voss: The board has declared $0.75 per share dividend, implying the last 12 months dividends of $3 per share, or a dividend yield of 12%. This distribution to shareholders is supported by our Fortress balance sheet with 410 million dollars in cash and a solid contract backlog. Looking at our contract coverage, we are well covered over the next years, with 59 years of minimum firm backlog, which may grow to 88 years if the charters declare all their options. Flex Artemis is currently on a variable market hire and the financial impacts for having her re-delivered in 2025 is limited.
Or a dividend yield of 12%.
These distributions to shareholders is supported by our fortress balance sheet with $410 million in cash and a solid contract backlog.
Looking at our contract coverage, we are well covered over the next years with 59 year, so minimum firm backlog, which may grow to 88 years is a charters declare all their options.
Flex Artemis as current donor variable markets higher and the financial impacts for having her relived in 2025 is limited.
Marius Voss: The vessel has the full relic on board and making her very attractive to charters, in particular for long haul transportation of LNG. Flex Constellation was relived from her 312-day charter in the end of February and has since then been trading in the spot market. The vessel will commence her 15-year time charter during first half of 2026.
The vessel has a full re Lincoln board and making her very attractive to charters in particular for long haul transportation of LNG.
Flex constellation was redelivered from her 312 <unk> chartered in the end of February and has since then been trading in the spot market.
The vessel will commence her 15 year time charter during first half of 2026.
Overall, we have a solid backlog and we well positioned to benefit from the increasing LNG export volumes coming 2020 to 2030.
Marius Voss: Overall, we have a solid backdog, and we are well positioned to benefit from the increasing LNG export volumes coming 2028 to 2030. Despite lower freight rates and two of our vessels open by Q3 2025, our strong backlog means that we expect 2025 revenues to be similar to the 2024 levels. TCE is expected to be in the mid-70s per day, translating to revenues between $340 and $360 million. We have four ships undergoing special five-year survey in 2025 compared to just two last year, which we have factored into our guidance. Flex Aurora and Flex Resolute will enter dry dock no later in the quarter, whereas Flex Artemis and Flex Amber will enter into the third quarter.
Despite lower freight rates in two of our vessels open by Q3 2025, our strong backlog means that we expect 2025 revenues to be similar to the 2024 levels.
TCE is expected to be in the mid seventies per day translating to revenues between $3 40 entry and a $60 million.
We have four ships undergoing special five year survey in 2025 compared to just two last year, which we have factored into our guidance flex Aurora inflection salute will enter drydock no later in the quarter, whereas flex Artemis and flex Amber will enter into the third quarter.
We aim to provide a clear and transparent framework for dividends payouts guided by a defined set of decision factors. These factors include earnings and cash flow contract backlog balance sheet strengths capex and debt maturity profile.
Marius Voss: We aim to provide a clear and transparent framework for dividends payouts, guided by a defined set of decision factors. These factors include earnings and cash flow, contract backlog, balance sheet strength, capex, and debt maturity profile.
Over the last three to four quarters, we have maintained a cautious outlook for near term LNG market and this year remains unchanged.
Marius Voss: Over the last three to four quarters, we have maintained a cautious outlook for the near-term LNG market, and this view remains unchanged. Worth noticing the traffic lights. and we are bullish on the long-term story.
Worth noticing that traffic lights.
And we are bullish on the long term story, however, as shown on the previous slides flex benefits from a strong charter backlog and as neutral.
Marius Voss: However, as shown on the previous slides, Flex benefits from a strong charter backlog and, as Knut will guide shortly, maintains a fortress balance sheet.
Speaker Change: <unk> shortly.
Maintaining a fortress balance sheets.
Speaker Change: Considering these factors the board has declared an ordinary quarterly dividends of 75 cents per share. This brings our trailing 12 months' dividend to $3 per share representing a yield of 12%.
Marius Voss: Considering these factors, the board have declared an ordinary quarterly dividend of $0.75 per share. This brings our trialing 12-month dividend to $3 per share, representing a yield of 12%.
Knut Traaholt: With that, I will hand it over to you, Knut. Thank you, Marius. So let's look at the financial highlights for the first quarter. Headline revenues came in at 88.4 million. Or when we exclude EUAs, so related to EU's emission trading systems, the revenues were 86.8 million. That's equivalent to time charter per day of 73,900. The reduction in revenues compared to the fourth quarter is primarily due to seasonal lower spot market impacting the variable hire contract for Flex Artemis. and also then Flex Constellations traded in the spot market in March after she was redelivered from her TC contract.
Speaker Change: With that I will hand, it over to you <unk>.
Speaker Change: Lawyers.
Speaker Change: So let's look at the financial highlights for the first quarter.
Speaker Change: Headline revenues came in at $88 4 million.
Speaker Change: Or when we exclude our E race, so related to ear. So emission trading systems. The revenues were 86.8 million that's equivalent to time charter per day of 73900.
Speaker Change: The reduction in revenues compared to the fourth quarter is primarily due to seasonal lower spot market impacting their variable higher contract for flex Artemis.
Speaker Change: And also then flex constellations traded in the <unk>.
Speaker Change: In this book market and then in March after she was redelivered from her Tc contract.
Speaker Change: Operating expenses came in at $18 1 million or around the 15500 per day and this is in line with our full year guidance and slightly higher than the fourth quarter.
Knut Traaholt: Operating expenses came in at 18.1 million or around 15,500 per day and this is in line with our Fulja guidance and slightly higher than the fourth quarter. But Vessel OPEX, they can be a bit bumpy, depending on timing effects.
Speaker Change: But the vessel opex, there can be a bit bumpy, depending on timing effects.
Knut Traaholt: So for the full quarter, or for the full year, we maintain our OPEX guidance of 15,500. Interest expense came in at $22.2 million, a reduction of $3.3 million compared to the fourth quarter. This is explained by lower base rates, but also the effect of amending one of the term loans to an RCF and therefore reducing our drawn debt during the quarter. On the derivative portfolio we have a net loss of 7.3 million and this includes a net unrealized loss of 11 million and a realized gains of 3.7 million. And the 3.7 million is a positive carry, reducing our interest expense.
Speaker Change: So for the first quarter or for the full year, we maintain our opex opex guidance of 15500.
Speaker Change: Interest expense came in at 22.2 million, a reduction of $3 3 million compared to the fourth quarter.
Speaker Change: This is explained by lower base rates, but also the effect of amending our one of the term loans due in Rcs.
Speaker Change: And therefore, reducing our drawn debt during the quarter.
Speaker Change: On the derivative portfolio, we have a net loss of $7 3 million and this includes a net unrealized loss of 11 million and realized gains of $3 7 million.
Speaker Change: And the $3 7 million as stand a positive carry and reducing our interest expense.
Speaker Change: Net income came in at $18 7 million, however, adjusting for noncash items like the <unk>.
Knut Traaholt: Net income came in at 18.7 million. However, adjusting for non-cash items like the unrealized losses on the derivative portfolio, the adjusted net income came in at 29.4 million or 54 cents per share in adjusted earnings. As a reminder, we adjust our numbers for non-cash items to have comparable numbers quarter over quarter. If we look at the differences in net income of 26.5 million compared with the fourth quarter, all of this is related to unrealized gains and losses on our interest rate derivative portfolio. In the fourth quarter, we had 15 million on the unrealized gains, while in this quarter have 11 million of unrealized losses, in total 26 million.
Speaker Change: Unrealized losses on the derivative portfolio. The adjusted net income came in at $29 4 million or 54 cents per share and adjusted earnings.
Speaker Change: As a reminder, we adjust our numbers for noncash items to have comparable numbers quarter over quarter.
Speaker Change: If we look at the differences in net income.
Speaker Change: $26 5 million compared with the fourth quarter. All of this is related to unrealized gains and losses on our interest rate derivative portfolio.
Speaker Change: In the fourth quarter, we had 15 million on the unrealized gains while we in this quarter have 11 million of unrealized losses in total 26 million.
Speaker Change: Looking at the cash flow for the quarter, we generated 49 million in cash flow from operations.
Knut Traaholt: Looking at the cash flow for the quarter, we generated 49 million in cash flow from operations, which was offset by negative working capital movements of 5.7 million. We have also paid 2.6 million in prepayment of dry dock expenditures for the four upcoming dockings this year. In addition, we have $27 million in scheduled debt installments, and we distributed $41 million to our shareholders for the dividend. ending the quarter with a solid cash balance of 410 million.
Speaker Change: This was offset by negative working capital movements of our $5.7 million.
Speaker Change: We have also paid $2 6 million in prepayment of a dry dock expenditures for the four upcoming dockings this year.
Speaker Change: In addition, we have a 27 million in scheduled depth installments, and we distribute a $41 million to our shareholders for the dividend.
Speaker Change: Ending the quarter with a solid cash balance of $410 million.
Speaker Change: Looking at the balance sheet.
Knut Traaholt: Looking at the balance sheet. We have an overall clean and transparent balance sheet with mainly cash and chips on the asset side. And as a reminder, these 13 modern vessels with an average age of 5.5 years were ordered and delivered in low point in the cycle. Therefore, these are recorded on the balance sheet at 165 million per version. Looking at our capitalization, we have a decent book equity ratio and with a net deposition of 1.4 billion, this equates to a net debt per vessel of approximately 106 million per ship. Once again, interest rate markets have experienced significant volatility, and this is also in the first quarter.
Speaker Change: We have an overall clean and transparent balance sheet with mainly cash and chips on the asset side.
Speaker Change: And as a reminder, these 13 modern vessels with an average age of five five years were ordered and delivered in a low point in the cycle.
Speaker Change: Therefore, these are recorded on the balance sheet at 165 million per vessel.
Speaker Change: Looking at our captors capitalization, we have a decent book equity ratio.
Speaker Change: And with a net debt position of $1 4 billion. This equates to a net debt per vessel of approximately a 106 million per ship.
Speaker Change: Okay.
Speaker Change: Once again that interest rate markets has.
Speaker Change: Experienced significant volatility and this is also in the first quarter.
Knut Traaholt: In response, we have remained active in adding exposure when we deem it attractive. In the first quarter, $35 million of our existing interest rate swaps matured. And on the final day of the quarter, we entered into $100 million in new interest rate swaps, bringing our total notional swap exposure to $700 million at the end of the quarter. This swap of the volume have a weighted average duration of 3.5 years and a weighted average fixed rate of 2.1%. Following the Liberation Day, there was further volatility, and we added an additional $150 million for two-year swaps, and increased our swap portfolio to $850 million.
Speaker Change: In response, we have remained active in adding exposure when we deem it.
Speaker Change: Attractive.
Speaker Change: In the first quarter of $35 million of our existing interest rate swaps matured and on the final day of the quarter, we entered into 100 million in new interest rate swaps, bringing our total notional swap exposure to 700 million at the end of the quarter.
Speaker Change: This swap of the Voya have a weighted average duration of three five years and the wait.
Speaker Change: Weighted average fixed rate of two point the 1%.
Speaker Change: Following their liberation date of a further volatility and we added additional 150 million for two years folks and increased our swap portfolio to $850 million.
Knut Traaholt: These additional swaps were entered into at a weighted average rate of approximately 3.5% and a duration of two years. and these swaps provides us with the 75 to 80 basis point positive carry until the Fed begins to cut rates. If we look at our exposure, we have a hedge ratio of about 70% over the next 24 months, and we will continue to monitor the market to add even more exposure if both short-term and long-term rates drop.
Speaker Change: These additional swaps were entered into at a weighted average rate of approximately three point.
Speaker Change: 5% and a duration of two years.
Speaker Change: And are these swaps provides us with the 75 to 80 basis point positive Gary until the fed begins to cut rates.
Speaker Change: If you look at our exposure we have in our export a hedge ratio of about 78% over the next 24 months and we will continue to monitor the market.
Speaker Change: To add even more.
Speaker Change: More exposure.
Speaker Change: If both short term and long term rates drops.
Speaker Change: As announced earlier, we have initiate that AR balance sheet optimization program 3.0, with the aim to free up additional hundred infante million and free cash.
Knut Traaholt: As announced earlier we have initiated the balance sheet optimization program 3.0 with the aim to free up additional 120 million in free cash. Today we also announce that we have secured an attractive Jolko financing. It's a lease for the FlexCourageous on the back of the new contract announced last quarter. This financing is expected to be closed in the second quarter and will release about 40 million in cash proceeds. It will reduce our cost of debt by 1.5% per annum and then further extend our debt maturity. The two other ships we are targeting are the Flex Resolute and the Flex Constellation.
Speaker Change: Today, we also announced that we have secured an attractive.
Speaker Change: Joel co financing is elyse for the flex courageous on the back of the new contract announced last quarter.
Speaker Change: This financing is expected to be closed in the second quarter.
Speaker Change: And we'll release about 40 million in cash proceeds.
Speaker Change: It will reduce our cost.
Speaker Change: Cost of death by one 5% per annum and unfair Dara.
Speaker Change:
Speaker Change: Extend our debt maturities.
Speaker Change: The two other ships we are targeting.
Speaker Change: Targeting other flex resolute and the flex constellation.
Knut Traaholt: If we look here, we are addressing the depth maturity in 2028 for Flex Resolute. And the aim here is to secure a similar geolco financing as the Flex Courage. The Flex Constellation has a very attractive 15-year contract to a solid counterparty. So we are targeting here a back-to-back financing for that ship.
Speaker Change: If we look at them we are addressing them.
Speaker Change: The debt maturity in 2028, four flex grass roots.
Speaker Change: And the aim there is to secure has similar geological financing as their flex courageous.
Speaker Change: The flex constellation as a very attractive 15 year contract to a solid counterpart. There. So we are targeting here.
Speaker Change: Back to backed financing for that ship.
Speaker Change: We are in discussions for both the flex of absolute the flex constellation and we target to secure commitments and signing and drawdown of these in the second half of 2025.
Knut Traaholt: We are in discussions for both FlexResolute and FlexConstellation and we target to secure commitments and signing and drawdown of these in the second half of 2025. Both today's balance sheet but also after this balance sheet optimization 3.0, we maintain our fortress balance sheet. We have stable cash flows from our contract portfolio and we have a very solid cash position at the quarter end of 410 million which is then set to grow following the planned refinance. And as a reminder, we maintain a RCF capacity of 414 million, which is used for cash management and reduce interest rate costs.
Speaker Change: Yes.
Speaker Change: Both today's balance sheet, but also after this balance sheet optimization 3.0, we maintain our fortress balance sheet, we have a stable cash flows from our contract portfolio that we have.
Speaker Change: Have a very solid cash position at quarter end of $410 million, which is down is set to grow following the planned refinancings.
Speaker Change: And as a reminder, we maintain a rcs capacity of.
Speaker Change: $414 million.
Speaker Change: <unk>, which is used for cash management and reduce interest rate cost.
Knut Traaholt: We have limited CAPEX liabilities. Our first F maturity is for Flex Resolute in 2028, but as just mentioned, this is being addressed and then our next maturity would be in 2029. So the Fortis balance sheet supports the Flex journey and giving commercial and financial flexibility.
Speaker Change: We have a limited capex liabilities, our first debt maturity is for flex resolute in 2028, but as just mentioned this is being addressed and then our next maturity would be in 2029.
Speaker Change: So the fortress balance sheets support staff flex journey, and giving commercial and financial flexibility.
Speaker Change: Today, we have also released our seven the ESG report.
Knut Traaholt: Today we have also released our seventh ESG report. It's the ESG report for 2024 and we recommend that you have a reading of it. It explains how we deal with ESG matters and in particular also the emissions and safety and governance in our operation.
Speaker Change: As they achieve report for 2024.
Speaker Change: And we recommend that you have a reading of it. It explains how we deal with the ESG matters and in particular also them.
Speaker Change: Emissions and safety and governance.
Speaker Change: In our operations.
Knut Traaholt: We are proud to to show that we have a very efficient and safe operations with zero lost time injury frequency for 2024. And that's a true testament to the health and security of our seafarers and in Flex everyone deserves to be safe at their workplace and get home and safely to their loved ones afterwards.
Cyril: We are proud to show that we have a very efficient and safe operations, which Cyril.
Cyril: <unk> lost time injury frequency for 'twenty 'twenty four.
Cyril: And that's a true testament to the health and security of our seafarers.
Cyril: And in flex everyone deserves to be safe at the workplace and get home safely to their loved ones after work.
Cyril: As reported earlier.
Knut Traaholt: As reported earlier, we have also this CDP rating where we achieved a B scoring for 2024. So thank you to the Flex LNG team for great achievements and also for helping out producing this report.
We have also this CDP rating, where we achieved a be scoring for 'twenty 'twenty four.
Cyril: So thank you to the flex LNG team for a great achievements and also for helping out producing this reports.
Cyril: Today, we have also submitted the application for the delisting to Oslo stock exchange.
Knut Traaholt: Today we have also submitted the application for the delisting to Oslo Stock Exchange. The proposal to delist was approved by our AGM on the 8th of May and we have now commenced the full process for a formal delisting on the stock exchange. We expect that the Oslo Stock Exchange will conclude on the application to delist within the second quarter and that the last day of trading will be sometime in the second half of 2025.
Cyril: The proposal to Drs was approved by our our AGM on the eighth of May.
Cyril: And we have now commenced the full process for a formal delisting on the stock exchange.
Cyril: We expect that Oh slower circumstance will conclude on the application to delist within the second quarter and.
Cyril: And at the last day of trading will be.
Cyril: Sometime in the second half of 2025.
Cyril: The last day of trading is decided by Oslo stock exchange and I will separately announced this by a stock exchange disclosure.
Knut Traaholt: The last day of trading is decided by Oslo Stock Exchange and they will separately announce this by a stock exchange disclosure. If you have shares trading on Oslo Stock Exchange and you would like to continue on the Flex journey, we encourage you to reach out to your bank or your broker to initiate the process of transferring from Euronext Oslo Securities to our New York Stock Exchange traded shares.
Cyril: If you have shares trading on Oslo stock exchange than you would like to continue.
Cyril: On the flex journey.
Cyril: We encourage you to reach out to your bank or your broker to initiate the process of transferring from.
Cyril: Euronext Oslo Securities.
Cyril: To our New York stock exchange traded the chefs.
Cyril: We have prepared a a Q&A section on our website.
Knut Traaholt: We have prepared a Q&A section on our website under investors and OCD listing where you may find more information about the next steps and the process.
Cyril: Under our investors and also de listing where you may find more information about the next steps in the process.
Marius Voss: And that concludes the financial sections and over to you Marius for an update on the LNG. Thank you, Knut. I'm sure you will have more questions about Oslo delisting. The LNG trade from January to April 2025 grew approximately 1% to 143 million tons compared to the same period last year. The top three main exporters, USA, Qatar and Australia, represent more than 60% of the total LNG trade. U.S. LNG exports increased with more than 20 percent year-over-year, and this is explained by new volumes arrived from venture global plaquemines and expansion at the Chenier Scorpus Christi. Australia exports declined with circa 7 percent in the period and is largely explained by Woodside shutting down a train at Northwest Shelf LNG terminal due to declining feedstock and slow upstream development.
Cyril: And that concludes the financial sections and always do lawyers.
Cyril: An update on the LNG market. Thank you Knut I'm sure you'll have more questions about how slow the listing.
Cyril: The LNG trade from January to April 2025 grew approximately 1% to 143 million tonnes compared.
Cyril: To the same period last year, the top three main exporters, USA, Qatar and Australia represent more than 60% of the total LNG trades.
Speaker Change: U S LNG exports, increasing more than 20% year over year and this is explained by new volumes, our eyes from venture Global's Plaquemines and expansion at the Juniors Corpus Christi.
Speaker Change: Ausiello exports declined with circa 7% in the period and is largely explained by Woodside shutting down the train at North West shelf LNG terminal due to declining feedstock and slow upstream developments.
Speaker Change: Europe has really increased its LNG appetite over the last few months and it comes as a Russia halted its pipeline gas export Ukraine last December.
Marius Voss: Europe has really increased its LNG appetite over the last few months and it comes as Russia halted its pipeline gas export through Ukraine last December. and the European gas inventory levels are at low levels, currently at only 45% full. It should also be noted that we are seeing recovery in overall European gas consumption. as the last four months have seen decline in renewables consumption. While Europe's LNG imports have soared as the continent tries to maintain a fragile gas balance, this has been driven up the LNG prices globally, and overall Asian LNG imports have retreated. This is especially evident by a drop in LNG imports to China, which is down with 24%.
Speaker Change: And the European gas inventory levels are at low levels currently at only 45% full.
Speaker Change: It should also be noted that we are seeing recovery in overall European gas consumption.
Speaker Change: As the last four months have seen declining in renewables consumption.
Speaker Change: While Europe LNG imports have soared as the continent thrice maintain the fragmented gas balance.
Speaker Change: This has been driven up the LNG prices globally, and overall Asian LNG imports have.
Speaker Change: Retreated.
Speaker Change: This is especially evident by a drop in LNG imports to China, which is down with 24%.
Marius Voss: China has completely halted the import from US LNG since February and is rather reselling its contracted volume in the market. India has also set the flattest growth year-over-year, and this compares by double-digit LNG imports growth last year. Relatively high LNG prices and other sources of more affordable energy help to explain this trend as many of the developing Asian countries are price sensitive when it comes to LNG imports. The more mature JKT Economics, Japan, South Korea and Taiwan have seen their LNG imports drop by only 3%. The new building prices for modern LNG carriers built in South Korea have stabilized and shipbrokers continue to call prices of 250 to 255 million per vessel.
Speaker Change: China has completely halted the input from U S. LNG since February and is rather reselling, it's contracted volume in the markets.
Speaker Change: India has also set the flattish growth year over year and this compares by double digit LNG imports growth last year.
Speaker Change: Relatively high LNG prices and other sources of more affordable energy helped explain this trend.
Speaker Change: Many of the developing Asian countries are price sensitive with that when it comes to LNG import.
Speaker Change: The more mature J K T economics, Japan, South Korea, and Taiwan have seen their LNG imports dropped by only 3%.
Speaker Change: The new building prices for modern LNG carriers built in South Korea has stabilized and ship brokers continue to quote prices of $250 million to $255 million per vessel it.
Marius Voss: It should be noted that shipyards are quite busy and slots offered on these levels are delivered in 2028 and onward. This means that the cost of carrying from financing in the period and building supervision would probably push up the all-in-all delivery price for new buildings substantially. We expect new building prices to stay at these levels going forward. Term rates for 5-year and 10-year TCPs are currently quoted between $75,000 and $85,000 per day. However, there are very few recent deals concluded. Approximately 300 LNG vessels are scheduled for delivery over the next five to six years, with over 90 percent of these secured on a long-term charter.
Speaker Change: It should be noted that shipyards are quite busy and slots offered on these levels our deliveries in 2028 and onwards.
Speaker Change: This means that the cost of carrying from financing in the period and building supervision would probably push up the all in all delivered price for new building substantially.
Speaker Change: We expect new building prices to stay at these levels going forward.
Speaker Change: Terminate for five year and 10 year Tcp's are currently quoted between 75 and 85000 per day.
Speaker Change: However, there are very few recent deals concluded.
Speaker Change: Approximately 300 LNG vessels are scheduled for delivery over the next five to six years with over 90% of these secured on a long term charters.
Marius Voss: A significant portion of this order book relates to Qatar Fleet Renewal Program. In a complying chart, the dark blue bars represent vessels either ordered by Qatar Energy or tied up to Qatar-related TCPs. while the light blue bars reflect non-Qatar-related new buildings. Notably, while more than 70 vessels were already planned for delivery now in 2024, only around 60 were actually delivered from the shipyards. Approximately 10 vessels have been pushed into the 2025 delivery window, and we will not rule out the possibility of similar slippage occurring now in 2025 into 2026.
Speaker Change: A significant proportion of this order book relates to Qatar Fleet renewal program in a compliant chart. The dark blue bars represent vessels either ordered by cathode copper energy or tied up to cover really related tcp's.
Speaker Change: While the light blue bars reflects non Qatar related new buildings.
Speaker Change: Notably while more than 70 vessels were ordered lepton for delivery now in 2024 only around 60 were actually delivered from the shipyards approximately 10 vessels have been pushed into 'twenty five delivery window.
Speaker Change: We will not rule out the possibilities to similar slippage occurring now in 2025 into 2026.
Speaker Change: Now when we talk about the new building delivery profile is crucial to look at the full picture not just what's coming in but also what quietest slipping out of the active fleet.
Marius Voss: Now when we talk about the new building delivery profile, it's crucial to look at the full picture, not just what's coming in, but also what quite is slipping out of the active fleet. Take a look at this chart. On the left you will see the number of idle vessels split between steamers in grey and tri-fuel ships in blue. What we are witnessing is a growing group of older vessels, those with inefficient cargo economics and outdated propulsion system, essentially being parked. By the end of March 2025, close to 60 vessels were idling. That's not a small number, and it matters because fewer available vessels means less supply, which helps bring balance to the overall market.
Speaker Change: You can look at this chart on the left you will see number of idle vessels split between steamers in gray and Tri fuel blue chips in blue.
Speaker Change: What we are witnessing is a growing group of older vessels dose will dose with insufficient cargo economics and outdated propulsion system.
Speaker Change: And slip being parked.
Speaker Change: By the end of March 2025, close to 60 vessels were idling.
Speaker Change: That's not a small number and it matters because fewer available vessels means less supply with helps bring balance to the overall markets.
Speaker Change: But it doesn't stop there more and more of these vessels are being put in lay up.
Marius Voss: But it doesn't stop there. More and more of these vessels are being put in layup. Are they warm or cold? And it's not just steamers anymore. We see trifures also starting to join that list. Bringing a cold layup vessel back into service is not cheap. It's very costly and it's very time consuming. So what happens next? Well, the natural conclusion is scrapping. So far in 2025, only three steamers have already gone for recycling. But the number might be even higher. Several others are quietly being offered for sale. And frankly, the chance for them finding a new buyer is slim.
Speaker Change: The warm or cold.
Speaker Change: And it's not just steamers anymore, we see Tri fuels also starting to join that list.
Speaker Change: Bringing a cold lay up vessels back into service is not cheap, it's very costly and it's very time consuming.
Speaker Change: So what happens next.
Speaker Change: Well the natural conclusion is scrapping so.
Speaker Change: So far in 2025, only three seamers have already gone for recycling.
Speaker Change: But the number might be even higher several others are quietly being offered for sale.
Speaker Change: Frankly, the chance deferred in finding a new buyer is slim.
Speaker Change: Scrapping is therefore, becoming a more realistic option.
Marius Voss: Scrapping is therefore becoming a more realistic option.
Speaker Change: Bottom line, while the order book is substantial the Marcus is shedding the lost efficient vessels and their plays a big role shaping a big future for balance between supply and demand.
Marius Voss: Bottom line, while the order book is substantial, the market is shedding the last efficient vessels and the place of big role shaping a big future for balance between supply and demand.
Speaker Change: Let's wrap up the market section of the slide that might look familiar but one that's very important to revisiting.
Marius Voss: Let's wrap up the market section with a slide that might look familiar, but one that's very important to revisiting. The outlook for new LNG supply remains strong and the wave is building. Over the next few years, we will see a steady stream of new volumes entering into the markets, driven in particular by Qatar and the United States. And in just a few past weeks, we have seen two major developments from the U.S. that underscore this momentum. Woodside have taken FID on the Luciana LNG project. This is a significant greenfield development. Three trains, each of 5.5 million tons per annum for a total of 16.5 yearly tons.
The outlook for new LNG supply remains strong and the wave is building well.
Speaker Change: Over the next few years, we will see a steady stream of new volumes entering into the markets driven in particular by Qatar and the United States and in just few past weeks, we have seen two major developments from the U S that underscore this momentum.
Woodside has taken on the Louisiana LNG project. This is a significant greenfield development three trains each of $5 5 million tons per on them for a total of six and a half year at homes.
Marius Voss: The project has been expansion capacity and permits for two additional trains, which would bring the total capacity up to 27.6 yearly tons. First LNG is expected in 2029. Energy Transfer made their headlines during its first quarter call, announcing its ambition to take FID on the Lake Charles LNG project. Also 16.5 million tons per year by the end of the year. Another major step forward.
Speaker Change: The project has been expansion capacity and permits for two additional trains which would bring the total capacity up to 27 six Elliott homes.
Speaker Change: First LNG is expected in 2029.
Speaker Change: Energy transfer made their headlines during its first quarter call announcing its ambition to take F. D on the Lake Charles LNG project.
Speaker Change: Also 16.5.
Speaker Change: A million tons per year by the end of the year another major step forward.
So what does that mean for flex LNG.
Marius Voss: So what does that mean for Flex LNG? It means momentum, it means confidence in the long-term demand for LNG, and most importantly, it means more ships will be needed. With these projects in the horizon, we see a bright future for LNG shipping, and we are well positioned to ride the next wave. We deliver strong quarterly results with solid profit and robust cash generation. Our balance sheet optimization program is underway and our guidance for 2025 remains firmly intact. with continued earning strength and healthy charter outlook, as well as supported dividend yield of 12%, we are well positioned to deliver long-term value to our shareholders.
Speaker Change: It means momentum it means confidence in the long term demand for LNG and most importantly, it means more ships will be needed.
Speaker Change: With these projects in the horizon that we see a bright future for LNG shipping and we are well positioned to ride the next wave.
Speaker Change: We delivered strong quarterly results with solid profitability and robust cash generation, our balance sheet optimization program is underway and our guidance for 2025 remain firmly intact with.
Speaker Change: With continued earnings strength and healthy charter outlook as well as reported dividend yield of 12%, we are well positioned to deliver long term value to our shareholders.
Marius Voss: With that, let's open the floor for questions. Then we're ready for the Q&A session, and we have received a number of questions, so thank you for everyone who has submitted. A number of these questions relate to the market, with soft spot market rates and Artemis being delivered and Constellation trading in the spot market until she commences her long-term contract. How do you view the summer market and the winter market and prospects for these two ships? Thank you, Knut. Artemis has not been delivered yet. She will be redelivered later in the year, but if you look at 2025 so far, we have amazingly seen the highest amount of fixtures being concluded in the spot market for two strokes.
Speaker Change: With that let's open the floor for questions.
Speaker Change: Then we are ready for the Q&A session and we.
Speaker Change: We have received a number of questions. So thank you for everyone who will have submitted.
Speaker Change: A number of these question as relates to the market.
Speaker Change: And what's the soft spot market rates.
Speaker Change: And Artemis being delivered and constellation trading in the spot market until she commenced a long term contract.
Speaker Change: How do you view the summer market in the winter market and the prospects for these two ships.
Speaker Change: Thank you Knut Artemis has not been delivered yet she will be redelivered later in the air but.
Speaker Change: If you look at the 2025, so far we have amazing the scene.
Speaker Change: The highest.
Speaker Change: Amount of fixtures been concluded in the spot markets for two strokes.
Knut Traaholt: And at the same time, we have seen the rates are hoovering on the very low side from single digits up to double digits, maxing at say $35,000 to $40,000 per day. So Flex Constellation is currently trading in the spot market and we plan to do so until delivery in first quarter 2026. While as you mentioned Flex Artemis is coming back to us in August and she will do a dry dock so we are marketing the vessel open thereafter. She has since delivery been trading on the market index with our customer and I'm sure when we put her back to market we will at least be able to play on the market.
Speaker Change: And at the same time, we have seen the rates are who ring on the very low side from seeing the this up to double digits and.
Speaker Change: Maxing out say 35 to $40000 per day.
Speaker Change: And so so flex constellation is currently trading in.
Speaker Change: In this book market and she will we plan to do so until delivery in first quarter 2026 wireless you mentioned flex Artemis is coming back to us in August and she will do a dry dock. So we are marketing the vessel open thereafter, she has instill Arabian trading on the market index with our customer and I'm sure when.
Speaker Change: We put her back to the market, we will at least stable too.
Speaker Change: Player in the market. She has been one of our best contributor since delivery.
Knut Traaholt: She has been one of our best contributors since delivery and of course we are seeking term employment on her this autumn. You mentioned that there's been very high activity in the spot market. Some of the questions are related to activity in more of the longer term context. What can you say about the number of fixtures or activity tenders in so for long-term context? The charters are in a rush to secure long-term contracts while the spot market is as it is right now. So while we have high activity on the spot the levels are really low.
Speaker Change: And of course, we are seeking a term employment of her.
Speaker Change: This autumn.
Speaker Change: You mentioned that there's been a very high activity in the spot market. Some of the questions are relates to activity and more of the longer term contracts, but.
Speaker Change: But can you say about the number of fixtures or activity tenders in so for long term contracts. The charters are in no rush to secure long term contracts, while the spot market is as it is right now so while we have high activity on the spot the levels. Our hoovering are low. So we are currently in the doldrums waiting for things to pick up.
Knut Traaholt: So we are currently in the doldrums waiting for things to pick up and then I'm sure there are a lot of people who will enter and secure tonnage but it's a little bit early as of now but we are seeing signs of contracts and interest for particularly the Artemis this autumn and also into the Q1 26. So we are hopeful that she will be employed.
Speaker Change: And then I'm sure there are a lot of people who are.
Speaker Change: Enter and secure tonnage, but it's.
Speaker Change: It's a bit early as of now, but we are seeing signs of.
Speaker Change: Contracts.
Speaker Change: And interests for particularly the optimist is ulta minoso into the Q1 2006. So we are hopeful that she will be employed.
Speaker Change: And then we have a number of questions a four hour delisting.
Knut Traaholt: Then we have a number of questions for our D-listing on the Oslo Stock Exchange. Some of them are detailed, so we do recommend to go to our website, we have a special or separate Q&A session for our delisting, and if there are further questions, please reach out to us on our investor email ir at flexlng.com And as a reminder, first Oslo Stock Exchange will need to conclude on the application and they will have a separate announcement of that, also them announcing the last day of trading.
Speaker Change: On the Oslo stock exchange.
Speaker Change:
Speaker Change: Some of them are.
Speaker Change: A detailed so we do recommend to a to go to our website, where you have a special or a separate Q&A session for our delisting.
Speaker Change: And if there are further questions.
Speaker Change: Please reach out to us on our investor email IR at Flex LNG Dot com.
Speaker Change: <unk>.
Speaker Change: And as a reminder, our first Oslo stock exchange will need to.
Speaker Change: To conclude on on the application and they will have a separate.
Speaker Change: Announcement of that old show them announcing the last day of trading.
Speaker Change: Yeah.
Speaker Change: With that I would like to thank everybody to listening into our broadcast and we sure or want to welcome you back to our Q2 presentation in August.
Operator: With that, I would like to thank everybody to listening into our broadcast and we wish you or want to welcome you back to our Q2 presentation in August. Thank you.
Speaker Change: Thank you.