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Flex LNG: A Robust Outlook in LNG Shipping

Briggs McCriddle

Flex LNG has unveiled its December 2024 company presentation, highlighting a strong position in the LNG shipping market. With a modern fleet of 13 LNG carriers, including 4 X-DF and 9 MEGI vessels averaging 5.1 years of age, Flex LNG boasts one of the industry's youngest and most efficient fleets. The company strategically acquired its fleet at an average book value of $170 million per vessel, significantly below the current newbuild prices of $260 million.

Flex LNG has secured a substantial contract backlog, providing minimum charter coverage of 64 years, which could extend to 98 years with charterer options. Solid blue-chip clients bolster this earnings visibility, ensuring stability and predictability.

The company’s "fortress balance sheet" reflects no debt maturities until 2028, with cash reserves of $450 million as of Q3 2024. Additionally, interest rate swaps have generated $119 million in gains since 2021. Shareholders have reaped consistent benefits, with Flex LNG declaring its 13th consecutive quarterly dividend of $0.75 per share. This brings total dividends, including special distributions, to $569 million, offering an attractive yield of 13.5%.

Global LNG demand is shifting, with Asia emerging as a dominant importer. Flex LNG is well-positioned to capitalize on this trend as liquefaction capacity is projected to increase significantly, with a third wave of LNG projects adding over 200 MTPA by 2030. The company anticipates market tightening starting in 2027, as the shipping balance shifts in favor of suppliers.

Flex LNG’s dual listing on the New York and Oslo Stock Exchanges, combined with its strong market capitalization of $1.2 billion and average daily trading volume of 250,000 shares on the NYSE, underscores investor confidence. Its commitment to environmental efficiency, operational excellence, and shareholder returns cements its leadership in the LNG shipping industry.

With a robust fleet, long-term contracts, a strong financial foundation, and a favorable market outlook, Flex LNG is poised for sustainable growth. Its strategic investments and shareholder-centric policies ensure that it remains a key player in the evolving LNG landscape.


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