GasLog Partners sees Q2 profit drop

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GasLog Partners LP, an international owner and operator of liquefied natural gas carriers, reported its financial results for the three-month period ended June 30, 2019.

Highlights

  • Completed the acquisition of the GasLog Glasgow from GasLog Ltd. (“GasLog”) for $214.0 million, with attached multi-year charter to a subsidiary of Royal Dutch Shell plc (“Shell”).
  • Successfully re-chartered the GasLog Shanghai, previously operating in the LNG carrier spot market through The Cool Pool (the “Cool Pool”), to a subsidiary of Gunvor Group Ltd. (“Gunvor”) for a period of approximately three and a half years.
  • Agreed to eliminate GasLog’s incentive distribution rights (“IDRs”), effective June 30, 2019.
  • Repurchased 476,351 of the Partnership’s common units under its unit repurchase programme of up to $25.0 million, authorized in January 2019, for a total amount of $9.9 million.
  • Quarterly IFRS (as defined below) Reported Results and Partnership Performance Results for Revenues, Profit, Adjusted Profit and EBITDA of $91.8 million, $19.1 million, $27.8 million and $67.5 million, respectively.
  • Highest-ever Partnership Performance Results for Revenues and EBITDA of $91.8 million and $67.5 million, respectively.
  • Cash distribution of $0.55 per common unit for the second quarter of 2019, unchanged from the first quarter of 2019 and 3.8% higher than the second quarter of 2018.
  • Distribution coverage ratio of 1.10x, or adjusted distribution coverage ratio of 1.16x to reflect the impact on revenues of the scheduled dry-docking of the Solaris.

CEO Statement

Mr. Andrew Orekar, Chief Executive Officer, commented: “I am pleased to announce a strong quarterly operating and financial performance by GasLog Partners, as demonstrated by our highest-ever quarterly Partnership Performance Results for Revenues and EBITDA. The Partnership continued to execute our strategy in the quarter, closing the accretive acquisition of the GasLog Glasgow and securing a three-and-a-half-year charter with Gunvor for the GasLog Shanghai, which increases our contracted revenue days to 99% in the second half of 2019 and 81% in 2020.

During the second quarter, the Partnership and its general partner, GasLog, announced an agreement to eliminate GasLog’s IDRs, reducing our cost of capital through a transaction structure that is immediately accretive to Distributable cash flow per unit.

In addition, while we expect distributions to continue serving as our primary means of returning capital to unitholders, in keeping with our focus on total unitholder returns, GasLog Partners repurchased $9.9 million of common units in the second quarter. With no future IDR obligations, we are reiterating our distribution growth guidance of 2% to 4% for 2019. This guidance reflects our positive outlook for the LNG shipping market and our recently completed commercial and strategic transactions, while also considering our one scheduled dry-docking and one vessel coming off charter later this year.”

Acquisition of the GasLog Glasgow

On April 1, 2019, GasLog Partners acquired from GasLog 100% of the shares in the entity that owns and charters to Shell the GasLog Glasgow, a 174,000 cubic meter (“cbm”) tri-fuel diesel electric (“TFDE”) LNG carrier built in 2016 and operated by GasLog since delivery. The vessel is currently on a multi-year time charter with Shell through June 2026 and Shell has an option to extend the charter for a period of five years.

The aggregate purchase price for the acquisition was $214.0 million, which included $1.0 million for positive net working capital balances transferred with the vessel. GasLog Partners financed the acquisition with cash on hand, including proceeds from the 8.500% Series C Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series C Preference Units”) public offering in November 2018, and the assumption of the GasLog Glasgow’s outstanding indebtedness of $134.1 million.

GasLog Shanghai New Charter Agreement

On June 14, 2019, GasLog Partners entered into a three-and-a-half-year time charter agreement for the GasLog Shanghai, a 155,000 cbm TFDE LNG carrier built in 2013, with a subsidiary of Gunvor. The charter commenced on June 24, 2019 and has a variable rate of hire within an agreed range during the charter period. On June 23, 2019, the GasLog Shanghai exited the Cool Pool, an LNG carrier pooling arrangement operated by GasLog and Golar LNG Ltd. (“Golar”), following a termination agreement dated June 6, 2019 which GasLog and GasLog Partners entered into with the Cool Pool and Golar in order to assume commercial control of GasLog’s and GasLog Partners’ vessels operating in the spot market.

IDRs Elimination

On June 24, 2019, GasLog and GasLog Partners entered into an agreement, effective as of June 30, 2019, to modify the Partnership Agreement, thereby eliminating GasLog’s IDRs. In exchange for the IDRs, GasLog received 2,532,911 common units and 2,490,000 Class B units (of which 415,000 are Class B-1 units, 415,000 are Class B-2 units, 415,000 are Class B-3 units, 415,000 are Class B-4 units, 415,000 are Class B-5 units and 415,000 are Class B-6 units), issued on June 30, 2019. The Class B units have all of the rights and obligations attached to the common units, except for voting rights and participation in earnings and distributions until such time as GasLog exercises its right to convert the Class B units to common units. The Class B units will become eligible for conversion on a one-for-one basis into common units at GasLog’s option on July 1, 2020, July 1, 2021, July 1, 2022, July 1, 2023, July 1, 2024 and July 1, 2025 for the Class B-1 units, Class B-2 units, Class B-3 units, Class B-4 units, Class B-5 units and the Class B-6 units, respectively. Following the IDR elimination, the Partnership’s profit allocation is based on the revised distribution policy for available cash stated in the Partnership Agreement as amended, effective June 30, 2019, and under which 98.0% of the available cash is distributed to the common unitholders and 2.0% is distributed to the general partner.

Unit Repurchase Programme

On January 29, 2019, the board of directors of GasLog Partners authorized a unit repurchase programme of up to $25.0 million covering the period from January 31, 2019 to December 31, 2021. Under the terms of the repurchase programme, GasLog Partners may repurchase common units from time to time, at its discretion, on the open market or in privately negotiated transactions. In the three months ended June 30, 2019, GasLog Partners repurchased and cancelled 476,351 of the Partnership’s common units, at a weighted average price of $20.81 per common unit for a total amount of $9.9 million, including commissions. Since the authorization of the unit repurchase programme and through July 25, 2019, GasLog Partners has repurchased and cancelled a total of 541,541 units at a weighted average price of $20.85 per common unit for a total amount of $11.3 million, including commissions, representing a discount of 0.1% to the volume weighted average trading price of GasLog Partners’ common units on the days on which common units were repurchased.

ATM Common Equity Offering Programme (“ATM Programme”)

On May 16, 2017, GasLog Partners commenced an ATM Programme under which the Partnership may, from time to time, raise equity through the issuance and sale of new common units having an aggregate offering price of up to $100.0 million in accordance with the terms of an equity distribution agreement entered into on the same date. Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC agreed to act as sales agents. On November 3, 2017, the size of the ATM Programme was increased to $144.0 million and UBS Securities LLC was included as a sales agent. On February 26, 2019, the size of the ATM Programme was further increased from $144.0 million to $250.0 million.

No issuances of common units were made under the ATM Programme in the first six months of 2019. Since the commencement of the ATM Programme through June 30, 2019, GasLog Partners has issued and received payment for a total of 5,291,304 common units, with cumulative gross proceeds of $123.4 million at a weighted average price of $23.33 per unit and net proceeds of $121.2 million. In connection with the issuance of common units under the ATM Programme during this period, the Partnership also issued 107,987 general partner units to its general partner. The net proceeds from the issuance of the general partner units were $2.5 million.

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