Golar Partners in FSRU spat; profit spikes

New York-listed MLP spinoff sees better-than-expected pop in distributable cash flow but reveals legal action over Tundra.

Golar LNG Partners said launched legal proceedings over a charterer's refusal to accept a regasification ship as it reported a better than expected quarterly profit.

The company, a spinoff of Golar LNG Ltd, said it launched proceedings to collect amounts due from West Africa Gas Ltd (WAGL) for its charter of the 170,000-cbm Golar Tundra (built 2015).

The floating storage and regasification unit (FSRU) remains at anchor off Ghana as a result of port infrastructure delays, even though the charterer has received parliamentary approval to sell gas to the African country.

'Strong' case

"The legal case for recovery is strong," Golar Partners said. "Dialogue does, however, continue with WAGL to find a mutually agreeable way forward that bridges the original and later required start dates."

Golar Partners, a master limited partnership (MLP) led by Graham Robjohns, said it did receive payment from WAGL but warned that if the dispute continues until 23 May the company could give the ship back to its parent company.

Efforts to reach WAGL through its joint venture partners Nigeria National Petroleum Corp and Sahara Energy Resource were not immediately successful.

367187.jpg Wells Fargo Securities analyst Michael Webber

The outfit revealed the legal troubles as it reported net income of nearly $55.6m during the period, a 71.4% jump from the same quarter of 2015.

Golar Partners' distributable cash flow of $0.85 per share was higher than the consensus analyst estimate calling for $0.78 in DCF per share, according to Wells Fargo Securities.

Analyst Michael Webber (pictured) said the beat was a result of better-than-expected revenue.

Golar Partners reported $114m in operating revenue, essentially unchanged from the third quarter of 2015.

The company said that the LNG carrier market has improved but not enough to bring the 146,000-cbm regasification vessel Golar Grand (built 2006), which can carry cargoes, out of layup.

"Long-lead items have however been ordered so that the vessel is in a position to commence its required dry-docking at relatively short notice," Golar Partners said.

Earnings snapshot

 Q3 2016Q3 2015
Operating income$71.6m$71.7m
Net income$56m$32.7m
Net debt$1.31bn$1.26bn