FLEX LNG .(US:FLNG)2024-03-04 16:00Debt and Financial Exposure - As of December 31, 2023, the company had $1,826.5 million of outstanding indebtedness, including $400.0 million drawn under revolving credit facilities [476]. - $1,680.6 million of the outstanding indebtedness referenced variable interest rates based on SOFR, with a weighted average margin of 2.0% and a weighted average duration of 6.5 years [476]. - The company is exposed to interest rate fluctuations primarily due to floating rate interest-bearing long-term debt, which could adversely affect operating and financial performance [474]. - The company incurs expenditures in currencies other than its functional currency, mainly overhead costs in GBP and NOK, which may negatively affect cash flows due to currency fluctuations [473]. - The company monitors liquidity risk through a cash modeling forecast that considers payment profiles and projected cash flows [478]. - The company aims to balance continuity of funding and flexibility by raising funds from investors [479]. - The company is exposed to credit risk, with significant amounts held in banks rated A+ and AA- by S&P Global [480]. Competition and Market Conditions - The company expects significant competition in the LNG transportation market from experienced companies with greater financial resources and larger fleets [466]. - The company operates in a highly competitive market, with time charters awarded based on various factors including price and vessel condition [465]. - The company faces price risk related to the volatile charter rates for LNG carriers, influenced by natural gas prices and market conditions [481]. Operational Risks - Unique operational risks include potential damage to vessels from marine disasters, mechanical failures, and other unforeseen events [482]. - Dry-docking costs for repairs are unpredictable and may significantly impact the company's financial condition [483]. - The company must secure employment contracts for vessels and obtain financing on reasonable terms to mitigate operational risks [484]. Regulatory and Compliance - The company has a current protection and indemnity insurance coverage for pollution of $1 billion per vessel per incident [461]. - The company is required to comply with various security measures, which could have a significant financial impact [454]. - The company has obtained all necessary permits, licenses, and certificates required for vessel operation, but future regulations may increase operational costs [462]. Derivative Instruments - The company holds interest rate swap derivative agreements with an aggregate notional principal of $720.0 million, a weighted average fixed interest rate of 1.35%, and a weighted average duration of 3.3 years [477].