Avance Gas in $515m refinancing deal


Avance Gas Holding reported unaudited results for the first quarter 2019.

Rates rebound with higher US activity – Marcus Hook volumes come on stream

The average time charter equivalent (TCE) rate for the fleet was $11,133/day, compared to $12,637/day in Q1 2018 and $21,314/day in Q4 2018.
Daily operating expenses (OPEX) were $7,952/day, down from $8,183/day in Q4 2018.
A&G expenses were $1.1 million or $907/day, down from $995/day in Q4 2018.
Avance Gas’ available liquidity at quarter end was $65.2 million, following drawdown of revolving credit facilities of $25 million during the quarter. The cash position at the date of this release is approx. $67.3 million.

Key events after quarter end:

  • Received commitments for a $515 million credit facility, enabling full refinancing the company’s outstanding debt, evidencing the strong support from the shipping banks, maintaining attractive cash break even of $22,500/day.
  • 66% of total Q2 2019 ship days have been fixed at a rate approx. $26,000/day.
  • Agreed with the Wartsila group to acquire two exhaust gas cleaning systems, with the option for further six units. The estimated total project cost is $2.9 million per unit.
  • Mr. Ulrik Andersen appointed new CEO of Avance Gas, starting in August 2019.

We normally see lower trading activity in the first quarter as colder weather increases domestic demand in exporting regions, impacting product prices and trading activity. Further, Middle East normally performs maintenance on exporting facilities, reducing export volumes.

Middle East LPG exports in Q1 2019 were 7.7 million tons, down 1.6 million tons from Q4 2018. Compared to three year average exports for Q1, volumes are down by 1.2 million tons. Exports volumes vary between the main export terminals but compared to three year averages, 2019 volumes generally indicate lower Saudi Arabian and UAE exports, while Qatar have maintained higher volumes on a relative basis. Iran exported 1.1 million tons in Q4 2019, in line with 2018 average. Average monthly cargoes exported was 59, down from 62 in Q1 2018 and down from an average of 64 cargoes per month in 2018.

US Gulf and USEC VLGC exports were 6.9 million tons in Q1 2019, slightly down from 7.1 million tons in Q4 2018 but up from 6.2 million in Q1 2018. As for 2018, the Q1 US exports were impacted by a period of cold temperatures in February, resulting in higher domestic consumption and increasing LPG prices. In March, operational problems caused lower than expected exports and delays, at the same time causing freight rates to improve due to lack of available tonnage.

After recording 55 cargoes in January, US Gulf and USEC VLGC exports fell to 37 cargoes in February. March volumes rebounded to 56 cargoes, of which 7 cargoes were lifted from Marcus Hook terminal, as the Mariner East II pipeline commenced operations. The average of 50 cargoes in Q1 2019 compares to 46 cargoes in Q1 2018 and 50 cargoes per month in 2018.

Per year end 2018 the global fleet totaled approx. 265 ships with an orderbook totaling 38 ships (14%). During the quarter, three ships have been delivered, leaving 15 ships due for delivery for the balance of the year. Three new orders have been placed, bringing the global fleet and orderbook to 268 and 38 ships respectively at quarter end. As we move closer to implementation of the IMO 2020 emission rules in January 2020, we expect to see further ships removed from active trade. This may be further emphasized as US sanctions on Iranian trade are intensified.



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