GasLog's two ships that are in the water, GasLog Savannah and GasLog Singapore, are on multi-year charters to a subsidiary of BG Group and have performed at 100 percent utilization since 2010. GasLog has 8 ships under construction at Samsung Heavy Industries. 2 of these ships are on schedule to be delivered in Q1/2013 and a total of 5 have commenced construction in the shipyard. All ships on are schedule and on budget.
GasLog has staggered its charters among different nations. It has strategic relationships with BG and Shell Strategic, companies that will likely be involved in future new LNG projects.
The outlook for the LNG shipping industry remains positive. Spot rates have continued to strengthen. GasLog has heard $175 for short-term charters, which is an all time record. It has seen the mid-$90s for forward multi-year commitments.
Newly announced projects, such as the floating LNG project announced by Petronas of Malaysia, Australia's commencement of LNG production, the planned LNG exports in the United States, and the potential for East African LNG development, should increase demand for LNG carriers. Additionally, there is strong demand for LNG from Japan and China. GasLog expects to see consolidation in the industry.
GasLog's estimated contracted revenues are rising over the next 10 years, which reflects the growth of its fleet over the period and the commencement of committed charters upon delivery of the 6 of the 8 LNG ships. The projections do not include the last 2 ships, which have not yet been committed to a charter. The optimal time to charter the last two ships would be Q1/2013. BG and Shell has options to continue the charters on the existing ships when they expire, so it is unlikely the ships can be re-chartered at higher rates.
Financials.
Revenues increased 1.4 percent in Q2.
EBITDA declined from $10 million to $8.4 million due mostly to higher administrative expenses. Most of the increase in administrative expenses was compensation related to the IPO and expenses connected with reporting required of a public company.
Adjusted EPS for Q2 was $.04 versus $.12 last year. Unadjusted EPS was a loss of $.06 versus $.12 profit last year. Losses on interest rate swaps, currency fluctuations, and an increase in the number of shares outstanding negatively impacted results.
GasLog is on track to pay an $.11 dividend in Q4. Its payout ratio between now and the time it has a full fleet should be around 50 percent and it expects to pay an aggressive dividend.
The construction of the ships is fully funded from the IPO, the private placement and from debt facilities with Danish Ship Finance and a European bank.
The transcript of the earnings conference call can be found on Seeking Alpha at the following link:
http://seekingalpha.com/article/820321-gaslog-s-ceo-discusses-q2-2012-results-earnings-call-transcript?part=single
Copyright 2012 Jaygo's Earnings Conference Call Summaries
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
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