LNG carrier Gaslog considers buybacks, extra dividends as rates soar

GasLog Partners LP

01/11/2018 12:05

LONDON, Nov 1 (Reuters) - Gaslog  GLOG.N , a liquefied
natural gas (LNG) carrier, said on Thursday it was considering
extra dividends or a share buyback after reporting record profit
due to soaring shipping rates, which are expected to remain
elevated for the next year or two.
    The U.S.-listed company is the world's largest independent
owner of LNG shipping vessels with long-term charters with Royal
Dutch Shell  RDSa.AS , a major LNG trader, and Cheniere Energy
 LNG.A , a new U.S. LNG producer and trader, amongst others.
    LNG shipping spot rates have more than doubled since August
thanks to rising volumes needing to be shipped as new plants
come on stream, longer journeys made and an expected reduction
in availability that has prompted charterers to lock in
contracts.  urn:newsml:reuters.com:*:nL8N1X340A
    Gaslog reported revenue of $158.4 million in the third
quarter compared to $131.2 million a year ago with net profit
rising to $39.3 million compared to $24.2 million.  urn:newsml:reuters.com:*:nFWN1XC0NC
    Gaslog Chief Executive Paul Wogan said the recent upturn in
rates should continue, reflecting expectations of a large
addition in supply next year, mainly from new U.S. plants
starting up and continued robust demand for LNG. 
    "We believe that if we're correct in our assumptions ...
we'll be able to return capital to shareholders through share
buybacks or special dividends," Wogan told Reuters.
    The LNG industry is emerging from a multi-year downcycle
thanks in part to demand in China as it switches to gas from
coal for its energy generation but the concern for many players
is timing their investment correctly in the upcycle. 
    Wogan said while there will be a tightness in the LNG vessel
market for next few quarters, which is good for Gaslog's
prospects, companies should be wary of over-ordering newbuilds.
    For now, he said utilisation rates of LNG carriers is likely
to be over 90 percent for the industry, consistent with shipping
rates rising rapidly once the global fleet usage stands over 85
percent.
    The frenzy to lock in charters for vessels as winter sets in
in northern Asia and Europe has been such in recent weeks that
several carriers are now full of supply but stranded around
Singapore with nowhere to go.  urn:newsml:reuters.com:*:nL3N1X4461 
    Chief Financial Officer Alastair Maxwell said this was
partly due to the LNG market developing more akin to the far
more traded oil market, with a curve making it profitable to
store LNG on carriers now and sell it at a higher price later. 
    

 (Reporting by Sabina Zawadzki; editing by David Evans)
 ((sabina.zawadzki@thomsonreuters.com; +44 207 542 4051;))