Business Context and Reporting Period
Company: GasLog Partners LP (a Marshall Islands limited partnership)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2015
Business Overview: GasLog Partners is a growth-oriented limited partnership focused on owning, operating, and acquiring LNG carriers engaged in long-term time charters. As of December 31, 2015, the Partnership owned a fleet of eight LNG carriers (three with tri-fuel diesel electric propulsion and five steam-powered vessels). All vessels were chartered to a single customer, Methane Services Limited (MSL), a subsidiary of BG Group (which was acquired by Royal Dutch Shell in early 2016). The Partnership is controlled by GasLog Ltd. through its ownership of the General Partner.
Key Financial Metrics (Year Ended Dec 31, 2015)
| Metric | Value (in thousands USD) |
|---|---|
| Revenues | $199,689 |
| Profit for the Year (IFRS) | $72,044 |
| Profit Attributable to Partnership | $65,040 |
| Earnings Per Unit (Common) | $2.38 |
| EBITDA | $143,473 |
| Adjusted EBITDA | $143,523 |
| Distributable Cash Flow | $72,310 |
| Cash Distributions Paid | $59,042 |
| Net Cash Provided by Operating Activities | $113,230 |
| Total Debt | $741,491 |
| Cash and Cash Equivalents | $60,402 |
| Total Assets | $1,347,170 |
Material Changes vs. Prior Period (2014)
- Revenue Growth: Revenues increased by $41.52 million (26.25%) to $199.69 million, driven primarily by the full-year operation of vessels acquired in 2014 and the addition of three new vessels in July 2015. This was partially offset by off-hire days due to drydocking.
- Profitability: Profit for the year increased by $28.40 million (65.04%) to $72.04 million. Profit attributable to the Partnership increased by $50.50 million to $65.04 million.
- Costs: Vessel operating costs rose by $12.04 million (39.15%) due to increased operating days and higher maintenance expenses during drydocking. General and administrative expenses increased by $4.61 million (72.26%) due to public company compliance costs and increased management fees.
- Financial Costs: Decreased by $6.19 million (18.54%) to $27.20 million, primarily due to the absence of a $9.02 million write-off of unamortized loan fees that occurred in 2014, despite a slight increase in interest expense.
- Interest Rate Swaps: The loss on interest rate swaps decreased by $8.08 million to zero, as all swaps were terminated in 2014.
Guidance, Outlook, Risks, and Contingencies
Outlook and Management Commentary
- Market Conditions: Management notes that declining oil prices have depressed natural gas prices and narrowed regional price differentials, adversely affecting spot rates and voyage lengths. However, new liquefaction capacity coming online in Australia and the U.S. in 2016 is expected to increase tonne-mile demand.
- Charter Portfolio: All eight vessels are under multi-year fixed-rate charters with MSL. The first charter expires in 2018. Management anticipates difficulty securing new charters at attractive rates if market conditions do not improve upon expiration.
- Growth Strategy: The Partnership holds options to acquire nine additional LNG carriers from GasLog. Future growth depends on the ability to secure financing and obtain necessary consents from lenders and charterers.
Key Risks and Contingencies
- Customer Concentration: 100% of revenues are derived from a single customer (MSL/BG Group). The acquisition of BG Group by Shell introduces uncertainty regarding the continuity of the business relationship.
- Debt Refinancing: Approximately $305.50 million of debt (related to three vessels acquired in 2015) is due in 2016. The Partnership has entered into an underwritten agreement to refinance this debt, but execution is pending.
- Asset Valuation: Management identified that the carrying value of five vessels exceeded their estimated charter-free market value by $86.52 million. However, no impairment was recorded because the "value in use" (discounted cash flows) exceeded the carrying amount.
- Regulatory and Environmental: Compliance with evolving environmental regulations (e.g., ballast water, emissions) may require significant capital expenditures.
Investor Verification Checklist
- Refinancing Status: Verify the successful execution of the definitive documentation for the $305.50 million debt maturing in 2016.
- Customer Relationship: Monitor the integration of BG Group into Shell and confirm the status of existing time charters with MSL.
- Asset Impairment: Review future impairment assessments, particularly given the gap between carrying value and charter-free market value for five vessels.
- Charter Renewals: Track the status of charter extensions for vessels expiring in 2018 and 2019 to assess revenue stability.
- Capital Expenditures: Monitor actual drydocking costs and timing against the estimated reserves deducted from distributable cash flow.