For one, GasLog could grow its pipeline of potential drop-down transactions by acquiring vessels from marginal shipowners that ordered vessels speculatively; many of these inexperienced operators will face an uphill battle obtaining long-term fixtures for these vessels.
For example, rival Teekay LNG Partners LP (NYSE: TGP) last year inked an innovative sale-leaseback deal with the struggling Awilco LNG (Oslo: ALNG).
Under the terms of this agreement, Teekay LNG Partners agreed to purchase two of Awilco LNG’s newly built LNG carriers for US$205 million apiece and then lease the ships back to the Norwegian shipowner for a period of five years, with the option for a one-year extension. At the expiration of this term, Awilco LNG is obligated to repurchase the vessels for a predetermined price.
At the other end of the spectrum, GasLog could acquire additional vessels from integrated oil companies seeking to monetize noncore assets.
The shipowner has already acquired six of the 12 LNG carriers that the firm managed for BG Group, and management has hinted that similar transactions for the remaining vessels could be in the cards.
Meanwhile, Royal Dutch Shell’s fleet of LNG carriers comprises more than 50 owned and leased vessels; the integrated oil and gas company’s efforts to reduce capital expenditures and shore up its balance sheet could create an opportunity for GasLog to purchase some of these ships.
Finally, GasLog’s extensive experience managing LNG carriers and close relationship with BG Group, a leading player in the global market, give the firm a leg up on the competition in securing longer-term fixtures for its handful of on-the-water vessels and near-term deliveries that lack contracts.
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 Sep. 26, 2017
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.