GasLog Partners LP (“GasLog Partners” or the “Partnership”) (NYSE: GLOP), an international owner and operator of liquefied natural gas (“LNG”) carriers, reported its financial results for the three-month period ended March 31, 2023.

Highlights

• Announced an Agreement and Plan of Merger pursuant to which GasLog Ltd. (“GasLog”) will acquire all of the outstanding common units of the Partnership not beneficially owned by GasLog (the “Transaction”), subject to approval of the Transaction by holders of a majority of the common units of the Partnership and the satisfaction of certain closing conditions.
• Completed the sale and lease-back of the GasLog Sydney, a tri-fuel diesel electric propulsion (“TFDE”) LNG carrier with a wholly-owned subsidiary of China Development Bank Leasing (“CDBL”), with no repurchase option or obligation.
• The time charter agreement of the GasLog Geneva, a TFDE LNG carrier, with a wholly-owned subsidiary of Shell plc (“Shell”) was extended by five years, following the exercise of their extension option.
• Repaid $32.1 million of debt and lease liabilities during the first three months of 2023 and prepaid $87.8 million pursuant to the sale and lease-back of the GasLog Sydney.
• Quarterly Revenues, Profit, Adjusted Profit⁽¹⁾ and Adjusted EBITDA⁽¹⁾ of $99.1 million, $36.4 million, $39.3 million and $76.3 million, respectively.
• Quarterly Earnings per unit (“EPU”) of $0.56 and Adjusted EPU⁽¹⁾ of $0.62.
• Declared cash distribution of $0.01 per common unit for the first quarter of 2023.

CEO Statement

Paolo Enoizi, Chief Executive Officer, commented: “The entering into an Agreement and Plan of Merger with GasLog is a transformative transaction for the Partnership that will enable its unitholders to take advantage of a significant premium to the unit trading price. Both the conflicts committee and the Partnership’s board of directors have unanimously approved and determined the transaction to be fair and in the best interests of the Partnership and the common unitholders unaffiliated with GasLog. Subject to the affirmative vote of the majority of the common unitholders, we expect the transaction to close in the third quarter of this year. We are excited to join GasLog and look forward to continuing to build our business while maintaining our focus on operational excellence and our strategy execution.

Overall, the term fixtures executed so far have enabled the execution of our capital allocation strategy, helping us make meaningful progress towards our leverage targets and strengthening our balance sheet with the repurchase of $49.2 million in preference units in the past year, or approximately $68.0 million since inception of the repurchase plan in August 2021, which is also improving the Partnership’s all-in break-even levels in our fleet. The Partnership has capitalized on the strong LNG market through profitable fixtures, exercised charterers’ options and sale and lease-backs.”

Financial Summary

There were 1,203 available days ⁽²⁾ for the quarter ended March 31, 2023, as compared to 1,350 available days ⁽²⁾ for the quarter ended March 31, 2022. The quarter-over-quarter decrease is attributable to the sale of the Methane Shirley Elisabeth in September 2022 and the scheduled dry-docking of the GasLog Shanghai in the first quarter of 2023.

Revenues were $99.1 million for the quarter ended March 31, 2023, compared to $85.5 million for the same period in 2022. The increase of $13.6 million is mainly attributable to a net increase in revenues from our vessels operating in the spot and short-term markets in the first quarter of 2023, under time charters that were executed in 2022. This net increase was partially offset by a decrease in revenues due to the off-charter days of the scheduled dry-docking of the GasLog Shanghai and also the sale of the Methane Shirley Elisabeth in the third quarter of 2022.

Vessel operating costs were $15.9 million for the quarter ended March 31, 2023, compared to $18.6 million for the same period in 2022. The decrease of $2.7 million in vessel operating costs is mainly attributable to a decrease of $1.5 million in crew costs, largely related to cost savings in 2023 following the relaxation of our COVID-19 enhanced protocols and a more favorable EUR/USD exchange rate in the first quarter of 2023 compared to the same period in 2022. There was also a decrease of $0.7 million in technical maintenance costs, mainly due to timing of the fleet maintenance needs in the first quarter of 2023, compared to the same period in 2022. As a result, daily operating costs per vessel decreased from $14,741 per day for the quarter ended March 31, 2022, to $12,640 per day for the quarter ended March 31, 2023.

General and administrative expenses were $5.6 million for the quarter ended March 31, 2023, compared to $4.7 million for the same period in 2022. The increase of $0.9 million in general and administrative expenses is mainly attributable to transaction costs of $0.8 million incurred by the Partnership in the first quarter of 2023, mainly comprising legal and other professional fees in connection with the evaluation of the terms of GasLog’s offer to acquire all of the outstanding common units representing limited partner interests of the Partnership not already beneficially owned by GasLog. As a result, daily general and administrative expenses increased from $3,472 per vessel ownership day for the quarter ended March 31, 2022, to $4,482 per vessel ownership day for the quarter ended March 31, 2023.

Adjusted EBITDA ⁽¹⁾ was $76.3 million for the quarter ended March 31, 2023, compared to $60.9 million for the same period in 2022. The increase of $15.4 million is mainly attributable to the increase in revenues of $13.6 million and the decrease in vessel operating costs of $2.7 million described above.

Financial costs were $17.4 million for the quarter ended March 31, 2023, compared to $8.8 million for the same period in 2022. The increase of $8.6 million in financial costs is mainly attributable to an increase of $8.9 million in interest expense on loans, primarily due to an increase in base interest rates (London Interbank Offered Rate, “LIBOR”, and Secured Overnight Financing Rate, “SOFR”) year-over-year. During the quarter ended March 31, 2023, we had an average of $872.4 million of bank borrowings outstanding under our credit facilities with a weighted average interest rate of 7.2%, compared to an average of $1,083.4 million of bank borrowings outstanding under our credit facilities with a weighted average interest rate of 2.5% during the quarter ended March 31, 2022.

Loss on derivatives was $0.2 million for the quarter ended March 31, 2023, compared to a gain of $5.0 million for the same period in 2022. The decrease in gain of $5.2 million is attributable to a net decrease of $7.6 million in unrealized gain from the mark-to-market valuation of derivatives (interest rate swaps and forward foreign exchange contracts) held for trading, which were carried at fair value through profit or loss, mainly due to changes in the forward yield curve, partially offset by a decrease of $2.4 million in realized loss on derivatives held for trading.

Profit was $36.4 million for the quarter ended March 31, 2023, compared to $35.0 million for the same period in 2022. The increase in profit of $1.4 million is mainly attributable to the increase in revenues of $13.6 million and the decrease in vessel operating costs of $2.7 million, partially offset by an increase of $8.6 million in financial costs and a decrease of $5.2 million in gain on derivatives and an increase of $0.9 million in general and administrative expenses, as described above.

Adjusted Profit ⁽¹⁾ was $39.3 million for the quarter ended March 31, 2023, compared to $28.3 million for the same period in 2022. The increase in Adjusted Profit of $11.0 million is mainly attributable to the increase in revenues of $13.6 million, a decrease in operating costs of $2.7 million and an increase in financial income of $2.3 million, partially offset by the increase in interest expense on loans of $8.9 million discussed above.

As of March 31, 2023, we had $225.6 million of cash and cash equivalents, of which $80.1 million was held in current accounts and $145.5 million was held in time deposits with an original duration of up to three months. An additional amount of $57.0 million of time deposits with an original duration of greater than three months was classified under short-term cash deposits.

As of March 31, 2023, we had an aggregate of $805.6 million of bank borrowings outstanding under our credit facilities, of which $224.2 million was repayable within one year, and an aggregate of $114.8 million of lease liabilities mainly related to the sale and lease-backs of the GasLog Shanghai, the Methane Heather Sally and the GasLog Sydney, of which $27.9 million was payable within one year.

As of March 31, 2023, our current assets totaled $309.9 million and current liabilities totaled $312.1 million, resulting in a negative working capital position of $2.2 million. Current liabilities include $25.9 million of unearned revenue in relation to hires received in advance (which represents a non-cash liability that will be recognized as revenues after March 31, 2023, as the services are rendered). Current liabilities also include $156.2 million of current debt (net of fees) related to the loan facility with Credit Suisse AG, Nordea Bank Abp, filial i Norge, Iyo Bank Ltd., Singapore Branch and the Development Bank of Japan, Inc., which matures in February 2024.

1. Adjusted Profit, Adjusted EBITDA and Adjusted EPU are non-GAAP financial measures and should not be used in isolation or as substitutes for GasLog Partners’ financial results presented in accordance with International Financial Reporting Standards (“IFRS”). For the definitions and reconciliations of these measures to the most directly comparable financial measures calculated and presented in accordance with IFRS, please refer to Exhibit II at the end of this press release.
2. Available days represent total calendar days in the period after deducting off-hire days where vessels are undergoing dry-dockings and unavailable days (for example, days before and after a dry-docking where the vessel has limited practical ability for chartering opportunities).

Merger Agreement with GasLog

On April 6, 2023, the Partnership entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GasLog and subsidiaries of GasLog. Pursuant to the Merger Agreement, GasLog will acquire the outstanding common units of the Partnership not beneficially owned by GasLog for overall consideration of $8.65 per common unit in cash, consisting in part of a special distribution by the Partnership of $3.28 per common unit in cash that will be distributed to the Partnership’s unitholders in connection with the closing of the Transaction and the remainder to be paid by GasLog as merger consideration at the closing of the Transaction.

The conflicts committee (the “Conflicts Committee”) of the Partnership’s board of directors, comprised solely of independent directors and advised by its own independent legal and financial advisors, unanimously recommended that the Partnership’s board of directors approve the Merger Agreement and determined that the Transaction was in the best interests of the Partnership and the holders of its common units unaffiliated with GasLog. Acting upon the recommendation and approval of the Conflicts Committee, the Partnership’s board of directors unanimously approved the Merger Agreement and the Transaction and recommended that the common unitholders of the Partnership vote in favor of the Transaction.

The Transaction is expected to close by the end of the third quarter of 2023, subject to approval of the Transaction by holders of a majority of the common units of the Partnership and the satisfaction of certain closing conditions. GasLog owns 30.2% of the common units of the Partnership and has entered into a support agreement with the Partnership committing to vote its common units in favor of the Transaction. Upon closing of the Transaction, the Partnership’s preference units will continue to trade on the New York Stock Exchange.

Sale and Lease-Back of the GasLog Sydney

On March 30, 2023, GasLog Partners completed the sale and lease-back of the GasLog Sydney, a 155,000 cubic meter (“cbm”) TFDE LNG carrier, built in 2013, with CDBL. The vessel was sold and leased back under a bareboat charter with CDBL for a period of five years with no repurchase option or obligation, at a price of $140.0 million. The completion of the transaction resulted in the recognition of an impairment loss of $0.1 million and a loss on disposal of $1.0 million in the three months ended March 31, 2023.

LNG Market Update and Outlook

Global LNG demand was estimated to be 103.5 million tonnes (“mt”) in the first quarter of 2023, according to Wood Mackenzie, Energy Research and Consultancy (“WoodMac”), compared to 103.7 mt in the first quarter of 2022, a decrease of approximately 0.2%. The continuing disruption of Russian pipeline imports was outweighed by mild weather in Europe, reduced consumption initiatives and lower demand from Asia, especially from China as a result of continuing lockdowns and fuel switching. This resulted in European inventories reaching seasonal highs of 55.65% on March 31, 2023.

Global LNG supply was approximately 103.3 mt in the first quarter of 2023, growing by 2.5 mt, or 2.4%, compared to the first quarter of 2022, according to WoodMac. Over 2023, WoodMac estimates LNG supply will rise by about 12.2 mt, or 3%, with the majority of the increase coming from the United States (“U.S.”). During the first quarter of 2023, an average of 75% of U.S. exports were directed to Europe, a further increase from the 69% observed in 2022, according to Kpler Analytics.

Headline spot rates in the first quarter of 2023 for 160,000 cbm TFDE vessels fell to an average of about $71,560 per day as per weekly assessment by Clarksons Research Services Limited (“Clarksons”), or about 78% lower compared to the average of the fourth quarter of 2022 ($330,330 per day). This fall in rates is mainly due to the seasonal downturn, high inventories, continuing strong flows from the U.S. to Europe and bearish sentiments caused by delays in the operation of Freeport and Calcasieu pass. This has been compounded by increased availability of relets.

One-year time charter rates for TFDE LNG carriers averaged $155,000 per day in the first quarter of 2023, about 18% lower than rates in the fourth quarter of 2022, reflecting the seasonal downturn. One-year time charter rates for Steam LNG carriers averaged $71,550 per day in the first quarter of 2023, 13% lower than the fourth quarter of 2022.

As of March 31, 2023, Poten & Partners Group Inc. estimated that the orderbook totaled 300 dedicated LNG carriers (>100,000 cbm) with deliveries between 2023 and 2028 representing 49.5% of the on-the-water fleet. Of these, 264 vessels (or 88%) have multi-year charters already contracted, leaving 36 vessels uncommitted with deliveries clustered between 2023 and 2027.

Preference Unit Distributions

On January 25, 2023, the board of directors of GasLog Partners approved and declared a distribution on the 8.625% Series A Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series A Preference Units”) of $0.5390625 per preference unit, a distribution on the 8.200% Series B Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series B Preference Units”) of $0.5125 per preference unit and a distribution on the 8.500% Series C Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units (the “Series C Preference Units”) of $0.53125 per preference unit. The cash distributions were paid on March 15, 2023 to all unitholders of record as of March 8, 2023.

Since March 15, 2023, the Series B Preference Units are redeemable, wholly or partially, at our option, while distributions have been accruing based on a floating rate equal to three-month LIBOR plus a spread of 5.839% per annum. As a result, the Series B distribution for the period from March 15, 2023 to June 15, 2023 will be accrued based on an aggregate rate of 10.78% on an annualized basis (or $0.67375 per preference unit for this quarter) and will be reset every three months going forward.

Common Unit Distribution

On April 26, 2023, the board of directors of GasLog Partners approved and declared a quarterly cash distribution of $0.01 per common unit for the quarter ended March 31, 2023. The cash distribution is payable on May 11, 2023 to all unitholders of record as of May 8, 2023.

Preference Unit Repurchase Programme (“Repurchase Programme”)

In the three months ended March 31, 2023, there were no repurchases of preference units, due to an extended blackout period in relation to the Transaction.

Since inception of the Repurchase Programme and up to April 27, 2023, GasLog Partners has repurchased and cancelled 665,016 Series A Preference Units, 1,103,618 Series B Preference Units and 938,955 Series C Preference Units at a weighted average price of $24.64, $25.01 and $25.03 per preference unit for Series A, Series B and Series C, respectively, for an aggregate amount of $67.6 million including commissions.