Dynagas LNG Partners LP, Greek shipping magnate George Prokopiou’s first publicly traded company, owns three vessels that transport liquefied natural gas (LNG) from liquefaction terminals in producing countries to regasification units for consumption.
The MLP’s three ships–Clean Energy (built 2007), Ob River (2007) and Clean Energy (2008)–operate under agreements that expire in 2016 and 2017, though the charterers have options to extend these fixtures.
Of these three ships, Clean Force and Ob River are fully winterized and have received the Ice Class designation for their hulls and machinery, indicating that they can call at ice-bound and harsh-environment terminals.
The Ob River carrier, for example, late last year made headlines after the vessel successfully navigated the Northern Sea Route to deliver a cargo of LNG from Norway’s Snohvit LNG project to Japanese power company Kyushu Electric Power (Tokyo: 9508).
This emerging route through the Arctic waters north of Europe–a month-long journey that’s only navigable a few months each year when the ice recedes–shaves about 6,000 miles and three weeks off the circuitous voyage through the Mediterranean Sea, the Suez Canal and around Asia.
Only five operating LNG carriers (1.4 percent of the global fleet) have achieved Ice Class status, giving Dynagas LNG Partners a strong foothold in this niche market–an advantage that could help to reduce these vessels’ re-contracting risk in 2016 and 2017.
Management’s forecast calls for the fleet to generate operating income of almost $51 million and distributable cash flow of $48 million, which appears to be a reasonable assumption based on the ships’ recent results, utilization rates and planned maintenance.
With an expected annual distribution of $43.8 million, Dynagas LNG Partners would cover its distribution by almost 1.1 times–provided that the MLP hits its projections.
As for growth opportunities, the fledgling LNG shipping company has the right to purchase three operational LNG carriers and four vessels slated for delivery in 2014 and 2015 from the shipyards. These purchase options will expire 24 months after the delivery of each Ice Class vessel.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Mar. 20, 2018
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.