Dynagas Partners Strong In First Quarter

Dynagas_Lena-River

Dynagas Partners, an owner and operator of liquefied natural gas carriers, announced its results (unaudited) for the three months ended March 31, 2016.

Three Months Ended March 31, 2016 Highlights:

  • Distributable Cash Flow (1) during the three months ended March 31, 2016 of $22.7 million;
  • Entrance into new long-term charters for three of the Partnership’s modern ice-class LNG carriers;
  • Adjusted EBITDA (1) for the three months ended March 31, 2016 of $35.2 million;
  • Adjusted Net Income (1) for the three months ended March 31, 2016 of $18.9 million;
  • Adjusted Earnings per common unit (1), after taking into account the Series A Preferred Units interest on the Partnership’s net income, for the three months ended March 31, 2016 of $0.48;
  • $79.0 million of reported cash as of March 31, 2016;
  • Quarterly cash distribution of $0.4225 per common unit and $0.5625 per preferred unit.

(1)Adjusted Net Income, Distributable Cash Flow, Adjusted EBITDA, and Adjusted Earnings per common unit are not recognized measures under U.S. GAAP. Please refer to the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP in Appendix B.

Recent Developments:

New long-term charters for the Lena River and the Yenisei River: The Partnership, through its wholly owned vessel owning subsidiaries, entered into long-term time charter contracts with Yamal Trade Pte. (“Yamal”) for the employment of the Lena River and the Yenisei River in the Yamal LNG Project. The Yamal LNG Project is an integrated operation involving the production, liquefaction and marketing of natural gas, which is currently under construction on the Yamal Peninsula in Northern Russia. Natural gas produced at the plant will require ice-class designated vessels to transport LNG from this facility to the international markets. The Yenisei River and Lena River charters have an initial term of 15 years, and one year delivery windows starting January 1, 2019 and June 30, 2019, respectively, and may be extended by the charterer for three consecutive periods of five years each. The Yenisei River time charter contract is subject to the satisfaction of important conditions, which, if not satisfied, or waived by the charterer, may result in its cancellation, in which case the Partnership will not receive the contracted revenues thereunder.

New long-term charter for the Ob River: In March 2016, the Partnership, through one of its wholly owned vessel owning subsidiaries, entered into a time charter contract with Gazprom Marketing and Trading Singapore Pte. Ltd. (“Gazprom”), an affiliate of Gazprom Global LNG Limited, for the Ob River, for a firm charter period of 10 years. This charter will be in direct continuation of the current charter with Gazprom, which was extended to the second quarter of 2018.

Quarterly Common and Subordinated Unit Cash Distribution: On April 19, 2016, the Partnership’s Board of Directors declared a quarterly cash distribution of $0.4225 per common and subordinated unit in respect of the first quarter of 2016. This cash distribution was paid on May 12, 2016, to all unitholders of record as of May 5, 2016.

Series A Preferred Units Cash Distribution: On April 19, 2016, the Partnership’s Board of Directors also declared a cash distribution of $0.5625 per unit of its Series A Preferred Units (NYSE:DLNG PR A) for the period from February 12, 2016 to May 11, 2016. This cash distribution was also paid on May 12, 2016 to all unitholders of record as of May 5, 2016.

Management Commentary:

Tony Lauritzen, Chief Executive Officer of the Partnership, commented:

“We are pleased to report our earnings for the first quarter of 2016.

The quarter ended March 31, 2016 has been another strong financial quarter for us. In comparison to the corresponding quarter ended March 31, 2015, this first quarter of 2016 resulted in a 25.3% increase in Adjusted EBITDA, mainly due to the acquisition of the Lena River in late December 2015. Our current fleet of six LNG carriers performed at 100% utilization for the quarter, which also contributed to our strong results. Our Adjusted Earnings per common unit amounted to $0.48 per common unit for the first quarter of 2016.

Our income is derived from the employment of our vessels on fixed long-term charter contracts. The revenues we earn under those charter contracts are not directly linked to commodity prices. Since our initial public offering in November 2013, we have paid total cash distributions amounting to $3.83 per common and subordinated unit including the quarterly cash distribution paid on May 12, 2016.

As stated in our previous earnings release, the Partnership has been focused on securing additional vessel contract coverage. During the first quarter of 2016 and under challenging market conditions, the Partnership successfully obtained three new long-term charter contracts and the charter extension for the Ob River as discussed above. Two of the long-term charters are with Yamal for the Yenisei River and the Lena River, each with an initial term of 15 years and one year delivery windows starting January 1, 2019 and June 30, 2019, respectively. The third long-term charter is with Gazprom for the Ob River for a firm charter period of 10 years, which commences in direct continuation of the charter extension described above. As a result, our total contract revenue backlog (4) has increased to $1.6 billion with an average remaining contract duration of 10.3 years, including the Yenisei River time charter contract.

The Partnership intends to continue to focus on increasing contract coverage, maintaining high utilization rates and managing operating expenses in order to support sustainability of distributions. I look forward to working with our team towards meeting our goals, which we believe will benefit our unitholders.”

Financial Results Overview:

Three Months Ended
(U.S. dollars in thousands, except per unit data) March 31, 2016 (unaudited) March 31, 2015 (unaudited)
Voyage Revenues $ 42,741 $ 35,620
Net Income $ 17,135 $ 14,878
Adjusted Net Income (1) $ 18,928 $ 15,213
Operating Income $ 26,004 $ 21,710
Adjusted EBITDA(1) $ 35,178 $ 28,066
Earnings per common unit $ 0.43 $ 0.42
Adjusted Earnings per common unit (1) $ 0.48 $ 0.43
Distributable Cash Flow(1) $ 22,736 $ 17,974

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