Dynagas Partners inks long-term deals for two LNG Vessels
Dynagas LNG Partners LP enters into new long-term time charter agreements for two of its LNG carriers and maintains current level of cash distribution following its latest drop down from its Sponsor
Monaco – March 31, 2016 –Dynagas LNG Partners LP. (the “Partnership”) (NYSE: “DLNG”), an owner and operator of LNG carriers, today announced the following:
* Gazprom Global LNG Limited has extended its current charter for the 2007-built LNG carrier Ob River, on the same terms, until May 1, 2018 (plus or minus 15 days). In addition, the Partnership has entered into a new long-term time charter agreement with Gazprom Marketing and Trading Pte. Ltd., an affiliate of Gazprom, for the Ob River, which is expected to commence immediately following the vessel’s redelivery from its current charter with Gazprom, for a period of 10 years (plus or minus 15 days).
* The Partnership has entered into a new long-term time charter agreement for its 2013-built LNG carrier Lena River for the Yamal LNG Project. The Yamal LNG Project is an LNG production terminal that is currently being constructed on the Yamal Peninsula in Northern Russia. The completed terminal is expected to consist of three LNG trains with a total capacity of approximately 16.5 million metric tons of LNG per annum. The Yamal LNG Project is a joint venture between NOVATEK (50.1%), TOTAL (20%), China National Oil & Gas Exploration and Development Corporation (CNODC) (20%) and Silk Road Fund (9.9%). The Lena River is currently on time charter to Gazprom through late 2018. The vessel is expected to join the Yamal LNG Project to support LNG deliveries from the Yamal terminal from 2019 and is contracted to be time chartered for a minimum period of 15 years.
Following the new Lena River and Ob River time charters, the Partnership’s minimum contracted revenue backlog has increased, as of today’s date, from $586.2 million to $1.2 billion, and the average remaining minimum contract duration has increased from 3.7 to 7.9 years. In addition, the Partnership estimates that these new contracts will generate aggregate annualized net cash from operations of approximately $34.0 million, significantly enhancing the Partnership’s financial performance. These two new charters highlight the versatility of the Partnership’s fleet and operational capabilities.
Referring to the earlier press release issued on December 18, 2015 in connection with the acquisition from Dynagas Holding Ltd. (our “Sponsor”) of the Lena River, it was informed that due to the current cash distribution yield of the Partnership’s common units, management no longer intends to recommend to its Board of Directors an increase in the Partnership's cash distribution per common and subordinated unit.
Tony Lauritzen, Chief Executive Officer of the Partnership, commented, “We are pleased to report these two new charters, which are a testament of the Partnership’s expertise in harsh environment operations and of the close relationship with our customers. Following these transformative contracts, the Partnership now boasts an enviable minimum contracted revenue backlog of $1.2 billion and a fleet-wide minimum average remaining charter duration of 7.9 years, which we believe will enhance and support its cash flow stability going forward. The current trading price of our common units reflects concern over the sustainability of our current level of distributions per unit. We believe that we are addressing this concern, which is a high priority for us and our unitholders, by entering into these new long-term time charter agreements. Consistent with the Partnership’s growth strategy, we intend to continue to expand our business through vessel acquisitions and by securing additional charter coverage that will further enhance our contract backlog and financial flexibility.”