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IPO Analysis: Exmar Energy Partners LP (NYSE: XMLP)

By Peter Staas on Nov. 19, 2014

Exmar Energy Partners LP publicly filed its initial F-1 registration statement on Sept. 24, 2014, roughly 10 months after confidentially pre-filing with the Securities and Exchange Commission.

Belgium-based Exmar (Brussels: EXM, OTC: EXMRFF), which already operates a joint venture with Teekay LNG Partners LP (NYSE: TGP) focused on midsize tankers to carry liquefied propane and butane, will contribute all its existing liquefied natural gas (LNG) assets to the MLP.

(Click table to enlarge.)XMLP Initial Asset base

Exmar Energy Partners initial portfolio includes a 50 percent interest in one LNG carrier, the Excalibur, which operates under charter through March 2022.

The MLP will also own four LNG regasification vessels (LNGRV) that the company developed in cooperation with privately held Excelerate Energy, a Houston-based outfit that specializes in floating LNG solutions.

These vessels feature an innovative design that enables them to act as LNG carriers that can moor offshore, re-gasify their cargo and discharge the high-pressure natural gas directly into consumer grid pipelines, bypassing the need for capital-intensive import terminals onshore.

After Exmar and Excelerate Energy brought LNGRVs to the market in 2005, other shipowners began to develop floating storage regasification units (FSRU) by retrofitting decommissioned LNG carriers with the necessary equipment.

Although custom-built FSRUs entail an additional $250 million to $300 million in expense and take 24 to 30 months to construct, these units usually have superior propulsion systems and export capacity relative to converted carriers.

LNGRVs differ from the fully docked FSRUs marketed by Golar LNG Partners LP (NYSE: GMLP) and Hoegh LNG Partners LP (NYSE: HMLP)—see New MLPs on the Seas—in that these earlier vessels can also function as conventional LNG carriers.

In fact, three of the four LNGRVs in which Exmar Energy Partners will own a 50 percent interest currently operate as LNG carriers; the lone exception, the Express, operates as a floating regasification unit offshore Argentina.

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