BERMUDA, 16 May 2017 - Avance Gas Holding Ltd (OSE: AVANCE) today reported unaudited results for the first quarter of 2017.
Freight rates saw marginal improvements in Q1 2017, but markets remain volatile:
- The average time charter equivalent (TCE) rate for the fleet was $10,505/day, up from $9,602/day in Q4 2016.
- TCE earnings in Q1 2017 were $13.1 million, up from $12.1 million in Q4 2016.
- Average daily operating expenses (OPEX) for Q1 2017 were $7,528/day, versus $7,686/day in Q4 2016.
- Avance Gas reported a net loss of $13.5 million in Q1 2017, compared with a net loss of $14.0 million in Q4 2016.
- As part of its cost-efficiency focus, Avance Gas repaid $75.0 million on its revolving credit facilities. At current interest rates, the quarterly interest cost savings is $700,000, or $550/day per ship, with effect from Q2 2017. The repaid funds remain fully accessible and, combined with the company's cash balance of $64.7 million, Avance Gas' available liquidity at quarter end was $139.7 million.
The FOB/CIF price differential between the US and Asia has in the last 12 months become a more significant driver of the freight market than it was in 2014 and 2015. Less of US export terminal capacity is now covered under "take-or-pay" contracts, where capacity holders pay terminal fees whether they lift a cargo or not. The marginal cargoes from the US are therefore more dependent on a positive price differential to be exported profitably to Asia. While the price differential was negative for most of the first quarter, the development of a positive differential in mid-March resulted in a strengthening of the freight market, illustrating the impact of marginal changes in US export volumes.
US VLGC exports averaged 47 cargoes per month in Q1 2017, compared with 40 cargoes per month in Q4 2016, with total volume rising to 6.9 million tons from 6.0 million tons in Q4 2016. Middle East export volumes declined to 8.5 million tons, from 9.5 million tons in Q4 2016, due to OPEC cut-backs and seasonally lower LPG trading activity. Asia continues to be the largest importer of US LPG exports, with a share of over 60%. Spot cargoes from the Middle East bound for India have recommenced, following redelivery of time-chartered tonnage by the Indian oil majors.
A total of 26 ships is scheduled for delivery in 2017. Five ships were delivered in Q1 and nine ships are expected in Q2. One ship was reported as sold for recycling during the quarter. No other changes to the global fleet have been reported.
The fleet utilization for the Avance Gas fleet was 84% in Q1 2017, compared to 96% in Q4 2016. The increased waiting time was largely due to less export volume from Middle East and declining export from US Gulf, mainly in February. The Avance Gas Spot index (adjusted 30 days) averaged $11,775/day in Q1 2017, compared with $7,846/day in Q4 2016.
The full report and interim financial statements are attached to this press release.
For further queries, please contact:
Christian Andersen, President Tel: +47 22 00 48 05 Email: c.andersen@avancegas.com
Peder C. G. Simonsen, CFO Tel: +47 22 00 48 15 Email: p.simonsen@avancegas.com
ABOUT AVANCE GAS
Avance Gas Holding Ltd operates in the global market for transportation of liquefied petroleum gas (LPG). The company is one of the world's leading owners and operators of very large gas carriers (VLGCs), operating a fleet of 14 modern ships.
For more information about Avance Gas, please visit: www.avancegas.com.
FORWARD LOOKING STATEMENTS
Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as "anticipate", "believe", "continue", "estimate", "expect", "intends", "may", "should", "will" and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Avance Gas believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements.
The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice.
This information is subject to disclosure requirements pursuant to Section 5-12 of the Norwegian Securities Trading Act.
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