Too much being made of their payout of 0.25/sh this quarter.
Look at their April investor presentation:
If VLCC rates are at the long-term mean (about $43K/day), their fully delivered fleet would earn about 0.96/sh,
implying a div payout of about 0.58/sh.
If VLCC rates are at $30K/day (their lower scenario...), DHT earns 0.08/sh, and would payout 0.05/share.
Given that the order book is 20% of fleet, it is quite likely that VLCC rates will be lower than in the past year, and might well drive spot market rates in to the 30K/day range.
That is what these shares seem to trade "weak" in the face of current strong earnings.
The future is what these share prices represent, and that is not as bright.
· FID deadline pushed back, but project still viable. The new 4Q16 deadline is due to Ophir needing additional time to find prospective partners for funding or operational participation, however they are close to completing LNG sales agreements with several offtake partners and both Ophir and Golar have reaffirmed their commitment to the project and believe 2016 is a firm deadline. Additionally, the capex requirement for conversion has fallen to between $450-$500 million and the project's break-even oil price is now about $40/barrel (current Brent crude price is about $48.14).
· FLNG backlog remains strong. Although the recent termination news does present an increased degree of operational risk along with a potential delayed schedule, we believe any delays would decrease Golar's liquidity concerns. Furthermore there remains a healthy and strong backlog of projects available that would suit the FLNG conversion projects nicely and market interest for these projects remains high given their lower cost, shorter time to market, and increased flexibility. We are not making any changes to our estimates as the project was estimated to start in 2019, still a few years away. We would also not expect any FLNG cancellations from Golar or Ophir given the significant progress made on the first two conversions and growing interest in this specific liquefaction solution.
* Ends equity, funding talks with Schlumberger over Fortuna
* Ophir in talks with other parties that could offer funding
* Now sees first investment decision in Q4 vs. mid-2016 earlier
* Stock falls as much as 25 pct, second biggest FTSE midcap loser
(Adds analyst comments, details, updates share movement)
April 29 (Reuters) - Ophir Energy Plc said it had ended talks to partner with Schlumberger on its Fortuna project in Equatorial Guinea, leaving the oil and gas explorer to hunt for alternatives to move the project forward.
Ophir said it had been unable to complete the deal for its Fortuna project on the terms agreed in January, when it signed a preliminary contract with the world's largest oilfield services provider.
Shares in Ophir, which had projects in Africa and East Asia, fell as much as 25 percent on Friday, eroding the company's market value by over 160 million pounds ($233 million).
Ophir CEO Nick Cooper said the company was in talks with a number of other "quality counterparties" that could offer funding. He did not disclose any names.
Stifel analysts said Schlumberger's exit had put a question mark on the read-through value of the project, especially as the deal had fallen through after the U.S. company had done its due diligence.
Fortuna, Africa's first deepwater independent floating liquefied natural gas (LNG) project, is one of a number of projects planned when prices were higher.
The field is expected to produce 2.2 million tons per annum and Ophir currently has an 80 percent working interest in the field, according to its website.
Under the head of terms agreement signed in January, Schlumberger had agreed to take a 40 percent economic interest in the project.
The company would have reimbursed Ophir for half of its previous costs in the project, which was expected to help cover Ophir's share of capital expenditure up until first gas sales.
"(Schlumberger's exit) raises obvious questions how Ophir can move the project forward," Liberum
Concerning Ophir, here is what GLNG stated in their Feb conference call:
"Ophir`s Fortuna FLNG project in Equatorial Guinea has made good progress over the past quarter. Negotiation of the Tolling Agreement and Umbrella Agreement is now at an advanced stage. Shortlisting of the LNG buyers is down to the last 3 contenders and Ophir continue to make good progress on this front. Ophir are also progressing rapidly with a synthetic farm-in which could see Schlumberger contribute to Ophir`s upstream development costs and strengthen the project`s upstream execution. Schlumberger`s participation in the project also has the potential to bring forward to 2019 a FID on a second Fortuna FLNG vessel.
Hamilton, Bermuda, April 29, 2016 (GLOBE NEWSWIRE) -- Golar LNG and Schlumberger want to inform the market that Schlumberger's withdrawal from the Fortuna/Ophir development will not in any way influence the framework agreement which has been signed between Golar and Schlumberger.
The target of this framework agreement is to develop integrated solutions for stranded gas assets. Significant efforts have been put into this over the last months and the results have confirmed to both parties the commercial attractiveness and the technical viability of the FLNG concept as a solution for rapid modernisation of stranded gas. The partnership is currently exploring several specific opportunities.
Although a commercial agreement between Ophir and Schlumberger was not reached, Golar will independently continue to work with Ophir with the target to reach an FID for the Fortuna development this year.
this is no overreaction.
The reason to own a MLP is yield, and growth in distribution.
The yield was cut by 65%.
The growth in distribution is to be zero thru 2018.
There is no guarantee that by 2018, prospects for their fleet will sustain the distribution.
The current yield of 11% is poor compensation, imo, given the risks and unpredictability of management.
The move appears sensible and prudent, after reading the context of today's market situation and financing challenges.
Yet, no covering brokerage house had alerted to such a major reduction in payout for the CLASS A shares.
It is unlikely, imo, that CPLP shares will trade much different from a 10% yield, at best,t over the next 12-24 months, until the financing and market issues clarify.
Share price target in the range $2.60-$3.00 seems now the most reasonable expectation.
Golar LNG Partners LP (GMLP) announced today that its board of directors has approved a quarterly cash distribution with respect to the quarter ended March 31, 2016 of $0.5775 per unit, which is unchanged from the prior quarter. This cash distribution will be paid on May 13, 2016 to all unitholders of record as of the close of business on May 6, 2016
Jefferies upgraded Golar LNG Ltd. (NASDAQ: GLNG) from Hold to Buy with a price target of $39.00 (from $19.00).
Analyst Douglas Mavrinac commented, "We are upgrading GLNG shares to Buy and are increasing our PT to $39 from $19 based on GLNG shares trading at 140% of estimated NAV, in line with the Company's historical multiple. Given the Company's significant spot market exposure and burgeoning FLNG business, we believe Golar is very well positioned for both an anticipated near-term increase in global LNG shipping volumes as well as potentially stronger crude oil/LNG prices in 2017."
For an analyst ratings summary and ratings history on Golar LNG Ltd. click here. For more ratings news on Golar LNG Ltd. click here.
Shares of Golar LNG Ltd. closed at $22.83 yesterday.
Just days before the mid-March PR that the NDA from YOSPRALA had been resubmitted, ARLZ shares traded above $6. Days after the NDA resubmitted, shares traded in the 3s.
This is unexpected. The news seemed positive, and constructive.
In fact, the introduction of yet another, new primary manufacturer increased uncertainty, and clearly fueled some (arguably justified ) fear that the approval would be much slower to happen, atleast if the lessons from the prior manufacturer experience were a useful guidepost.
Investors exited shares of ARLZ, and its price fell 40%.
Now, since then we learn that the new primary manufacturer has apparently cleared the hurdle of an FDA-related inspection. Had this occurred a yr ago with the original manufacturer, we would already have been fully approved.
Now there is no (known...) hurdle remaining, except the formal FDA approval stamp.
This is a game changer in the approval process.
It ensures, I believe, a fast recovery to $6 in the next month or so, and almost certainly a drug launch in late 2016.
That is what has changed, and the share price will soon reflect this new reality, imo.
As I wrote yesterday, the FDA inspection of the supplier, with no remaining issues, was a breakthrough.
It is now quite likely that YOUSPRALA will be fully approved before the PDUFA Data of late September.
But, the share price action failed to reflect this news....except today we seem to be finally catching up a bit.
YOUSPRALA approval will drive these shares to double from current, and then upwards from there as other actions begin to unfold from management.
LNG Carrier Implications:
Given the rabid growth in regas capacity, concerns over new LNG liquefaction capacity not finding a home are unfounded, although the LNG shipping trade may become increasingly regionalized. Thus, we expect a gradual but linear recovery in LNG shipping rates as more cargoes materialize and incremental carrier supply is partially offset by vessel conversions into FSRUs or storage units.
Investment Thesis: We believe the flurry of FSRU activity and gradually strengthening LNG carrier rates is likely to reinvigorate the equities of LNG focused companies or MLPs, causing a decoupling of equities from oil prices and driving a substantial upward re-rating of the group. We believe GasLog (GLOG; $11.82; Buy), Golar LNG Ltd (GLNG; $21.73; Buy), Golar LNG Partners (GMLP, $16.38, Buy), or Dynagas LNG Partners (DLNG; $14.60; Buy), are all well positioned and would be buyers of the names.
That was the key message today...that the only evident hurdle that required a resubmission has been overcome. I would look for approval well before the PDUFA date.
Surprising the shares are now responding today, since this news is major for ARLZ, imo.
It is unlikely that the charter rates were themselves reduced by more than 30%, if at all.
A 20% reduction in rates wouldn't materially affect the payout, given the coverage ratio of well over 1.2 at this time.
Historical precedence for charter amendments. It remains extremely rare for a counterparty to default on a containership charter, but several renegotiation have taken place in the past ten years. In 2013 Danaos Corporation had six Panamax vessels chartered through 2020-21 to Zim, an Israeli container liner company. However during the year the weak market forced Zim miss its charter payments to Danaos with the expectation that the deferred payments would be made up during the year as the market improved. There was no market improvement and Zim was forced into a restructuring effort. Zim received $200 million of equity injection from its parent and restructured several of its debt obligations, including its charter hire payments. This resulted in Danaos taking a 50% reduction in its charter hire payments from Zim in exchange for a nine year unsecured note along with an undisclosed amount of Zim shares. Danaos took a $19 million impairment charge as a result. Along with Zim, in late-2009, CSAV required a significant infusion of new capital after the financial crisis effectively halted global trade. The company had several containerships chartered from various German shipping companies including Rickmers Group, Peter Dohle Group, and Hammonia. Given their desperate financial status, CSAV's management team came to an agreement where the current shareholders contributed $413 million of new capital to the company. The shipowners also granted a 36% reduction in the charter rates to CSAV's contracts in exchange for equity.
In addition to containership charters, there have been occasions where contracts from other shipping segments have been amended. In late-2011, CPLP revised the terms of its time charter with COSCO for the Cape Agamemnon which was on a 10-year agreement for $53,100 a day through June 2015 then reduced to $31,445 for the final five years. The new agreement is for $40,090 a day through June 2020, effectively netting CPLP an additional $1.8 million.
Tradewinds headline today:
Hyundai Merchant plan wins support
Creditors back self-rescue package, rolling debt maturities forward, report says.
This is a major step for HMM, and those also for the 4 container vessels that remain chartered to HMM.
CPLP shares had traded down in the last many weeks thinking the worst (and then some...), that HMM would go bankrupt. This news appears to take that scenario off the table..
Indeed....and it is also worth noticing the sharp spike in the news. Imagine what the response will be when (not if, imo) the FDA approves YOUSPRALA by late summer?
The mixed shelf allows issuance of preferred shares, debt, and common units. It is very unlikely that, at this time, they will issue additional equity. IN fact, according to the filling, they state that among their uses of any proceeds to be raised, the PURCHASE of shares is possible:
Unless we specify otherwise in any prospectus supplement, we will use the net proceeds from our sale of securities covered by this prospectus for general partnership purposes, which may include, among other things:
• acquisitions, including vessel acquisitions;
• paying or refinancing all or a portion of our indebtedness outstanding at the time;
• funding working capital or capital expenditures; and
• acquisition of our common units.