Over the past two weeks, LNG's ocean freight indices have lost less than 14 points. Apparently nothing happened.
The news of last week is without doubt a drastic reduction in quarterly (NYSE:DLNG) distribution for Q4/18 from 0.25 USD to 0.0625, which announced on Friday evening. In after-hours market the unit lost about 25 % and web was full of angry investors.
There are spoken two reasons why this happened. 1) That the refinancing of 250 mio notes on October is harder than management thought and 2) that General Partner (GP) wants to squeeze off the common unitholders by buying 80 % of units and pushes the price low.
I will add one more reason, which is quite crazy. During last days I shared an article by S&P Global Platts about Asian spot prices. There was also written, that Cheniere (NYSEMKT:LNG) has sublet Lena River vessel for one spot to India at around $68k/day. This is a bit more than (DLNG) earns from Novatek.
The question is what will Dynagas do with the cash. I think, and admit it sounds really crazy in this situation, that they bought a new vessel from GP.
In SEC filling is written, that they had options for four vessels valid thru 31st December:
On February 6, 2018, the Partnership extended with retroactive effect the deadline for exercising the purchase option for the Clean Horizon and the Clean Vision, two of the four remaining Initial Optional Vessels, up to December 31, 2018. In addition, on March 30, 2018, by mutual agreement, the Partnership and its Sponsor further extended the deadline for exercising the purchase option of the Clean Ocean and the Clean Planet, the other two of the four remaining Initial Optional Vessels, from March 31, 2018 to December 31, 2018.
Following these extensions, the Partnership still retains the legal right to exercise an option to purchase from its Sponsor the four remaining Initial Optional Vessels up to December 31, 2018 and the right, but not the obligation, to acquire from its Sponsor its 49% ownership interest in the Additional Optional Vessels, after their respective delivery from the shipyard, at the period specified and as per the terms prescribed in the Omnibus Agreement.
I have asked the company whether they extend or executed these options and there is the answer:
This information will become available once the company issues its quarterly release publication and / or through the 20-F 6-k by incorporating its quarterly results.
Back to UP LNG shipping indices now.
Rising was (NYSE:HMLP) in tow with (NYSE:GLOP), the biggest loser was (NASDAQ:GLNG). (HMLP) is close to confirm uptrend. First, let's look at a chart comparing the UP Total Return index with the ETF SPY.
We see on it that UP index dropped while (NYSEARCA:SPY) did not. In the complete chart we see another drop in the volume of trades. While the average value is 1852, the third week was only 698. However, the volume is not significantly smaller in any company.
Chart of preferred shares slightly increased. This is obviously due to the fact that the course oscillates around the usual initial value, which is usually $25. Lower, around $21, we can see not only the (DLNG), but also the (GLOP).
VALUES OF UP LNG SHIPPING INDICES FOR 28th JANUARY
|UP Total Return Index||9.34|
|UP Simple Price Index||-266.73|
|UP Volume Trend Index||698.5|
|UP Preferred Simple Price Index||-174.19|
LNG highlights of the past week:
- GTT Bags Tanks order for GasLog's LNG carrier pair
- and shrinking Ophir moves to sell Fortuna FLNG prospect
- Qatar eyeing orders for 60 new LNG tanker
Disclosure: I am/we are long DLNG, GMLP, DLNG.PA.