Dynagas LNG Partners LP(DLNG) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2020, the company reported net income of $10 million, an increase of approximately 313% compared to Q3 2019 [6][10] - Adjusted EBITDA for the quarter was $24.3 million, reflecting a 1.7% increase from the same period in 2019 [6][10] - The weighted average interest expense decreased from 6.5% in Q3 2019 to 3.27% in Q3 2020, due to lower LIBOR rates and reduced indebtedness [12][16] Business Line Data and Key Metrics Changes - All 6 LNG carriers in the fleet achieved 100% utilization for Q3 2020, despite operational challenges from COVID-19 [4][24] - The fleet's cash breakeven rate was $48,300 per day per vessel, compared to contracted rates of $61,000 per day per vessel [18] Market Data and Key Metrics Changes - The charter market for LNG carriers faced challenges in Q2 and Q3 2020, but the prompt LNG shipping spot market improved significantly due to reduced cancellations of U.S. cargoes and better gas pricing [22] - The company holds a market share of about 82% of the global Arc-4 equivalent LNG carrier fleet, indicating strong competitive positioning [26] Company Strategy and Development Direction - The company aims to continue deleveraging its balance sheet using cash flow generation, with a focus on building equity value over time [9][30] - The fleet has a contract backlog of approximately $1.15 billion, with an average remaining charter period of about 7.9 years per vessel [10][30] Management's Comments on Operating Environment and Future Outlook - Management noted that while revenue has not been affected by COVID-19 due to long-term contracts, they are closely monitoring the situation [24] - The company expects net leverage to decrease from 5.7x to 3.5x by 2024, assuming stable market conditions [17] Other Important Information - The company has no scheduled capital expenditures until 2022, when three LNG carriers will undergo special surveys [15] - The partnership has issued and sold 122,580 common units under an aftermarket offering program, resulting in net proceeds of about $0.4 million [7] Q&A Session Summary Question: Details on the Arctic Aurora contract option - Management confirmed that the option for Arctic Aurora is priced at an escalated rate compared to the current charter rate, but market conditions will influence Equinor's decision to exercise it [32] Question: Long-term prospects related to Arctic LNG 2 - Management expressed interest in Arctic LNG 2 but noted that most Arc-7 LNG contracts are likely to go to a joint venture, limiting opportunities for the company [35] Question: ATM program activity - Management indicated that they do not anticipate being active on the ATM program at current prices, suggesting a wait for better pricing [36]