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Name | Symbol | Market | Type |
---|---|---|---|
Dynagas LNG Partners LP | NYSE:DLNG | NYSE | Trust |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.05 | -1.34% | 3.69 | 3.79 | 3.60 | 3.79 | 48,043 | 01:00:00 |
Dynagas LNG Partners LP
|
(Translation of registrant's name into English)
|
23, Rue Basse
98000 Monaco
|
(Address of principal executive office)
|
· | LNG market trends, including charter rates, factors affecting supply and demand, and opportunities for the profitable operations of LNG carriers; |
· | our anticipated growth strategies; |
· | the effect of a worldwide economic slowdown; |
· | potential turmoil in the global financial markets; |
· | fluctuations in currencies and interest rates; |
· | general market conditions, including fluctuations in charter hire rates and vessel values; |
· | changes in our operating expenses, including drydocking and insurance costs and bunker prices; |
· | forecasts of our ability to make cash distributions on the units or any increases in our cash distributions; |
· | our future financial condition or results of operations and our future revenues and expenses; |
· | the repayment of debt and settling of interest rate swaps (if any); |
· | our ability to make additional borrowings and to access debt and equity markets; |
· | planned capital expenditures and availability of capital resources to fund capital expenditures; |
· | our ability to maintain long-term relationships with major LNG traders; |
· | our ability to leverage our Sponsor's relationships and reputation in the shipping industry; |
· | our ability to realize the expected benefits from our vessel acquisitions; |
· | our ability to purchase vessels from our Sponsor and other parties in the future, including the Optional Vessels; |
· | our continued ability to enter into long-term time charters; |
· | our ability to maximize the use of our vessels, including the re-deployment or disposition of vessels no longer under long-term time charters; |
· | future purchase prices of newbuildings and secondhand vessels and timely deliveries of such vessels; |
· | our ability to compete successfully for future chartering opportunities and newbuilding opportunities (if any); |
· | acceptance of a vessel by its charterer; |
· | termination dates and extensions of charters; |
· | the expected cost of, and our ability to comply with, governmental regulations, maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business; |
· | availability of skilled labor, vessel crews and management; |
· | our anticipated incremental general and administrative expenses as a publicly traded limited partnership and our fees and expenses payable under the fleet management agreements and the administrative services agreement with our Manager; |
· | the anticipated taxation of our Partnership and distributions to our unitholders; |
· | estimated future maintenance and replacement capital expenditures; |
· | our ability to retain key employees; |
· | charterers' increasing emphasis on environmental and safety concerns; |
· | potential liability from any pending or future litigation; |
· | potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists; |
· | future sales of our common units in the public market; |
· | our business strategy and other plans and objectives for future operations; and |
· | other factors detailed in this Report on Form 6-K and from time to time in our periodic reports. |
DYNAGAS LNG PARTNERS LP
|
||||
By:
|
/s/
Tony Lauritzen
|
|||
Name:
|
Tony Lauritzen
|
|||
Title:
|
Chief Executive Officer
|
Vessel Name
|
Year
Built |
Capacity
(cbm) |
Ice
Class |
Propulsion
|
Charterer
|
Earliest Charter
Expiration Date |
Latest Charter
Expiration Including Non-Exercised Options |
Clean Energy
|
2007
|
149,700
|
No
|
Steam
|
Shell
|
April 2017
|
May 2017
|
Gazprom
|
March 2026
|
April 2026
(1)
|
|||||
Ob River
|
2007
|
149,700
|
Yes
|
Steam
|
Gazprom
|
March 2028
|
May 2028
(2)
|
Amur River
|
2008
|
149,700
|
Yes
|
Steam
|
Gazprom
|
June 2028
|
August 2028
|
Arctic Aurora
|
2013
|
155,000
|
Yes
|
Tri-fuel diesel engine (TFDE)
|
Statoil
|
July 2018
|
October 2018
|
Yenisei River
|
2013
|
155,000
|
Yes
|
Tri-fuel diesel engine (TFDE)
|
Gazprom
|
July 2018
|
August 2018
|
Yamal
|
2033/2034
|
2049
(3)
|
|||||
Lena River
|
2013
|
155,000
|
Yes
|
Tri-fuel diesel engine (TFDE)
|
Gazprom
|
September 2018
|
October 2018
|
Yamal
|
2034/2035
|
2049/2050
(3)
|
(1) |
On October 31, 2016, we entered into a time charter contract with Gazprom for the employment of the
Clean Energy
for a firm period of seven year and nine months. The charter is expected to commence in July 2018.
|
(2) |
On March 23, 2016, Gazprom extended the term of the existing time charter on substantially identical terms until May 2018. Upon the expiration of the time charter contract, the
Ob River
will commence employment under a new multi-year time charter contract with Gazprom for a firm period of ten years.
|
(3) |
The
Yenisei River
and the
Lena River
are each contracted to commence employment within one year delivery windows starting January 1, 2019 and June 30, 2019, respectively, under multi-year time charter contracts with Yamal in the Yamal LNG Project, each with an initial term of 15 years, which may each be extended by three consecutive periods of five years. Each of these time charter contracts is subject to important conditions, which, if not satisfied, or waived by the charterer, may result in their cancellation, early termination or amendment, before or after their charter term commences, in which case, we may not receive the contracted revenues thereunder.
|
2016
|
2017
|
2018
|
||||||||||
Contracted time charter revenues (in millions of U.S. Dollars)
(1)
|
$
|
21.2
|
$
|
142.6
|
$
|
105.7
|
||||||
Contracted days
|
276
|
1,889
|
1,577
|
|||||||||
Available Days
(2)
|
276
|
2,130
|
2,109
|
|||||||||
Contracted/Available Days
|
100
|
%
|
89
|
%
|
75
|
%
|
(1) |
Annual revenue calculations are based on: (a) the earliest redelivery dates possible under our charters, (b) no exercise of any option to extend the terms of those charters except for those that have already been exercised and (c) excluding planned periodical class survey repairs .
|
(2) |
Assumes 20 scheduled drydocking days for each of our steam turbine vessels (the
Clean Energy,
the
Amur River
and the
Ob River
) in 2017 and 27 scheduled drydocking days for each of the remaining vessels in our Fleet in 2018.
|
Selected Historical Financial Data and Other Operating Information
|
Nine Months Ended September 30,
|
|||||||
STATEMENTS OF INCOME DATA:
(In thousands of U.S. dollars, except for unit and per unit data)
|
2016
|
2015
|
||||||
Voyage revenues
|
$
|
128,466
|
$
|
108,186
|
||||
Voyage expenses- including related party
(1)
|
(2,221
|
)
|
(1,996
|
)
|
||||
Vessel operating expenses
|
(19,745
|
)
|
(17,080
|
)
|
||||
General and administrative expenses- including related party
(2)
|
(1,480
|
)
|
(1,362
|
)
|
||||
Management fees-related party
|
(4,491
|
)
|
(3,620
|
)
|
||||
Depreciation
|
(22,753
|
)
|
(18,104
|
)
|
||||
Operating income
|
$
|
77,776
|
$
|
66,024
|
||||
Interest income
|
—
|
34
|
||||||
Interest and finance costs
|
(26,108
|
)
|
(20,772
|
)
|
||||
Other, net
|
(289
|
)
|
(62
|
)
|
||||
Net Income
|
$
|
51,379
|
$
|
45,224
|
||||
Common unitholders' interest in Net Income
|
$
|
26,704
|
$
|
25,305
|
||||
Series A Preferred unitholders' interest in Net Income
|
$
|
5,063
|
$
|
1,331
|
||||
Subordinated unitholders' interest in Net Income
|
$
|
19,514
|
$
|
18,493
|
||||
General Partner's interest in Net Income
|
$
|
98
|
$
|
95
|
||||
Earnings per unit (basic and diluted):
|
||||||||
Common Unit
|
$
|
1.30
|
$
|
1.23
|
||||
Weighted average number of units outstanding (basic and diluted):
|
||||||||
Common units
|
20,505,000
|
20,505,000
|
Selected Historical Financial Data and Other Financial Information
|
Nine Months Ended September 30,
|
|||||||
CASH FLOW DATA: |
2016
|
2015
|
||||||
Net cash from operating activities
|
$
|
80,272
|
$
|
68,249
|
||||
Net cash used in investing activities
|
(37,472
|
)
|
—
|
|||||
Net cash (used in)/from financing activities
|
$
|
(8,005
|
)
|
$
|
12,430
|
|||
FLEET DATA:
|
||||||||
Number of vessels at the end of period
|
6
|
5
|
||||||
Average number of vessels in operation in period
(3)
|
6.0
|
5.0
|
||||||
Average age of vessels in operation at end of period (years)
|
6.1
|
5.8
|
||||||
Available days
(4)
|
1,644.0
|
1,365.0
|
||||||
Fleet utilization
(5)
|
100
|
%
|
99
|
%
|
||||
OTHER FINANCIAL DATA
:
|
||||||||
Cash distributions per common unit
(6)
|
$
|
1.27
|
$
|
1.27
|
||||
Cash distributions per Series A Preferred Unit
(7)
|
$
|
1.69
|
$
|
0.44
|
||||
Time Charter Equivalent (in U.S. dollars)
(8)
|
$
|
76,791
|
$
|
77,795
|
||||
Adjusted EBITDA
(9)
|
$
|
105,638
|
$
|
84,689
|
September 30, 2016
|
December 31, 2015
|
|||||||
BALANCE SHEET DATA at end of period/ year:
|
||||||||
Total current assets
|
$
|
61,969
|
$
|
25,814
|
||||
Vessels, net
|
1,015,259
|
1,036,157
|
||||||
Total assets
|
$
|
1,117,919
|
$
|
1,108,103
|
||||
Total current liabilities
|
55,398
|
51,353
|
||||||
Total long-term debt net of deferred financing fees, including current portion
|
724,066
|
680,285
|
||||||
Total partners' equity
|
$
|
369,075
|
$
|
367,838
|
(1) |
Voyage expenses include commissions of 1.25% of gross charter hire paid to our Manager and third party ship brokers.
|
(2) |
Includes the Administrative Services Agreement fees and Executive Service Agreement fees charged by our Manager and excludes the daily management fees and commercial management fees.
|
(3) |
Represents the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in the period.
|
(4) |
Available days are the total number of calendar days our vessels were in our possession during a period, less the total number of scheduled off-hire days during the period associated with major repairs, or drydockings.
|
(5) |
We calculate fleet utilization by dividing the number of our revenue earning days, which are the total number of Available days of our vessels net of unscheduled off-hire days, during a period, by the number of our Available days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled off-hires for vessel upgrades, dry-dockings or special or intermediate surveys.
|
(6) |
Corresponds to a cash distribution of $0.4225 per common and subordinated unit in respect of the first, second and third quarters of 2016 and 2015, respectively.
|
(7) |
Corresponds to a cash distribution of $0.5625 per Series A Preferred Unit in respect of the first, second and third quarters of 2016 and a prorated cash distribution in respect of the third quarter of 2015.
|
(8) |
Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of a vessel. For time charters, this is calculated by dividing total voyage revenues, less any voyage expenses, by the number of Available days during that period. Under a time charter, the charterer pays substantially all vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during dry-docking or due to other unforeseen circumstances. The TCE rate is not a measure of financial performance under U.S. GAAP (non-GAAP measure), and should not be considered as an alternative to voyage revenues, the most directly comparable GAAP measure, or any other measure of financial performance presented in accordance with U.S. GAAP. However, TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company's performance and assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rate may not be comparable to that reported by other companies. The following table reflects the calculation of our TCE rates for the nine month periods ended September 30, 2016 and 2015 (amounts in thousands of U.S. dollars, except for TCE rates, which are expressed in U.S. dollars, and Available days):
|
Nine months ended September 30,
|
||||||||
2016
|
2015
|
|||||||
(
In thousands of Dollars, except as otherwise stated
)
|
||||||||
Voyage revenues
|
$
|
128,466
|
$
|
108,186
|
||||
Voyage expenses
(1)
|
(2,221
|
)
|
(1,996
|
)
|
||||
Time charter equivalent revenues
|
126,245
|
106,190
|
||||||
Available days
(3)
|
1,644.0
|
1,365.0
|
||||||
Time charter equivalent (TCE) rate (in U.S Dollars)
|
$
|
76,791
|
$
|
77,795
|
(9) |
We define Adjusted EBITDA as earnings before interest and finance costs, net of interest income (if any), gains/losses on derivative financial instruments (if any), taxes (when incurred), depreciation and amortization (when incurred) and significant non-recurring items (if any). Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as our investors, to assess our operating performance.
|
Nine months ended September 30,
|
||||||||
Reconciliation to Net Income
|
2016
|
2015
|
||||||
Net Income
|
$
|
51,379
|
$
|
45,224
|
||||
Net interest and finance costs
(1)
|
26,108
|
20,738
|
||||||
Depreciation
|
22,753
|
18,104
|
||||||
Amortization of fair value of acquired time charter
|
5,441
|
—
|
||||||
Charter hire amortization
|
(43
|
)
|
623
|
|||||
Adjusted EBITDA
|
$
|
105,638
|
$
|
84,689
|
(1) |
Includes interest and finance costs and interest income, if any.
|
· |
Ownership days. The number of vessels in our Fleet is a key factor in determining the level of our revenues. Aggregate expenses also increase as the size of our Fleet increases;
|
· |
Charter rates. Our revenue is dependent on the charter rates we are able to obtain on our vessels. Charter rates on our vessels are based primarily on demand for and supply of LNG carrier capacity at the time we enter into the charters for our vessels, which is influenced by demand and supply for natural gas and in particular LNG as well as the supply of LNG carriers available for employment. The charter rates we obtain are also dependent on whether we employ our vessels under multi-year charters or charters with initial terms of less than two years. The vessels in our Fleet are currently employed under multi-year time charters with staggered maturities, which we believe makes us less susceptible to cyclical fluctuations in charter rates than vessels operated on charters of less than two years. However, we will be exposed to fluctuations in prevailing charter rates when we seek to re-charter our vessels upon the expiry of their respective current charters and when we seek to charter vessels that we may acquire in the future;
|
· |
Utilization of our Fleet. Historically, our Fleet has had a limited number of unscheduled off-hire days. However, an increase in annual off-hire days would reduce our utilization. The efficiency with which suitable employment is secured, the ability to minimize off-hire days and the amount of time spent positioning vessels also affects our results of operations. If the utilization pattern of our Fleet changes, our financial results would be affected;
|
· |
Daily operating expenses. The level of our vessel operating expenses, including crewing costs, insurance and maintenance costs. Our ability to control our vessel operating expenses also affects our financial results. These expenses include commission expenses, crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, lubricating oil costs, tonnage taxes and other miscellaneous expenses. In addition, factors beyond our control, such as developments relating to market premiums for insurance and the value of the U.S. dollar compared to currencies in which certain of our expenses, primarily crew wages, are paid, can cause our vessel operating expenses to increase;
|
· |
Our ability to exercise the options to purchase the Optional Vessels (discussed below);
|
· |
The timely delivery of the vessels we may acquire in the future;
|
· |
Our ability to maintain solid working relationships with our existing charterers and our ability to increase the number of our charterers through the development of new working relationships;
|
· |
The performance of our charterer's obligations under their charter agreements;
|
· |
The effective and efficient technical management of the vessels under our management agreements;
|
· |
Our ability to obtain acceptable equity and debt financing to fund our capital commitments;
|
· |
The ability of our Sponsor to fund its capital commitments and take delivery of the Optional Vessels currently under construction;
|
· |
Our ability to obtain and maintain regulatory approvals and to satisfy technical, health, safety and compliance standards that meet our charterer's requirements;
|
· |
Economic, regulatory, political and governmental conditions that affect shipping and the LNG industry, which includes changes in the number of new LNG importing countries and regions, as well as structural LNG market changes impacting LNG supply that may allow greater flexibility and competition of other energy sources with global LNG use;
|
· |
Our ability to successfully employ our vessels at economically attractive rates, as our charters expire or are otherwise terminated;
|
· |
Our access to capital required to acquire additional ships and/or to implement our business strategy;
|
· |
Our level of debt, the related interest expense and the timing of required payments of principal;
|
· |
The level of our general and administrative expenses, including salaries and costs of consultants;
|
· |
Our charterer's right for early termination of the charters under certain circumstances;
|
· |
Performance of our counterparties, which are limited in number, including our charterers ability to make charter payments to us; and
|
· |
The level of any distribution on all classes of our units.
|
Nine months ended September 30,
|
||||||||
2016
|
2015
|
|||||||
(in thousands of U.S. dollars)
|
||||||||
Net cash from operating activities
|
$
|
80,272
|
$
|
68,249
|
||||
Net cash used in investing activities
|
(37,472
|
)
|
—
|
|||||
Net cash (used in)/from financing activities
|
(8,005
|
)
|
12,430
|
|||||
Cash and cash equivalents at beginning of period
|
24,293
|
11,949
|
||||||
Cash and cash equivalents at end of period
|
$
|
59,088
|
$
|
92,628
|
Obligations
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
|||||||||||||||
(in thousands of U.S. Dollars)
|
||||||||||||||||||||
Long Term Debt
(1)
|
$
|
730,625
|
$
|
32,500
|
$
|
65,000
|
$
|
633,125
|
$
|
-
|
||||||||||
Interest on long term debt
(1)
|
114,775
|
32,797
|
62,011
|
19,967
|
-
|
|||||||||||||||
Management fees & commissions payable to the Manager
(2)
|
46,309
|
8,164
|
15,390
|
10,795
|
11,960
|
|||||||||||||||
Executive Services fee
(3)
|
1,285
|
603
|
682
|
-
|
-
|
|||||||||||||||
Administrative Services fee
(4)
|
40
|
40
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
893,034
|
$
|
74,104
|
143,083
|
$
|
663,887
|
$
|
11,960
|
(1) |
Our long-term bank debt outstanding as of September 30, 2016, bears variable interest at a margin over LIBOR. The calculation of interest payments on our variable interest bearing debt securities has been made assuming interest rates based on the 3-month period LIBOR, the LIBOR specific to our secured loan agreements as of September 30, 2016 and our applicable margin rate.
|
(2) |
Under the terms of the management agreements, we currently pay a management fee of $2,732 per day which is subject to an annual increase of 3% and to further annual increases, if any, by an amount to be agreed between us and our Manager, to reflect material unforeseen costs of providing the management services, which amount is required to be reviewed and approved by our conflicts committee. The Management Agreements also provide for commissions of 1.25% of charter-hire revenues arranged by the Manager. The agreements will terminate automatically after a change of control of the applicable shipping subsidiary and/or of the owner's ultimate parent, in which case an amount equal to fees of at the least 36 months and not more than 60 months, will become payable to the Manager.
|
(3) |
On March 21, 2014, we entered into the Executive Services Agreement with our Manager, with retroactive effect to the date of the closing of our IPO, pursuant to which our Manager provides us with the services of our executive officers, who report directly to our Board of Directors. Under the Executive Services Agreement, our Manager is entitled to an executive services fee of €538,000 per annum, for the initial five year term, payable in equal monthly installments. The agreement has an initial term of five years and will automatically be renewed for successive five year terms unless terminated earlier. The calculation of the contractual services fee set forth in the table above assumes an exchange rate of €1.0000 to $1.1212, the EURO/USD exchange rate as of September 30, 2016 and does not include any incentive compensation which our Board of Directors may agree to pay.
|
(4) |
On December 30, 2014 and with effect from the IPO closing date, we entered into an Administrative Services Agreement with our Manager, according to which we are provided with certain financial, accounting, reporting, secretarial and information technology services, for a monthly fee of $10,000, plus expenses, payable in quarterly installments. The agreement can be terminated upon 120 days' notice granted either by the Partnership's Board of Directors or by the Manager as per the provisions of the agreement.
|
Page
|
|
Consolidated Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015
|
F-3
|
Unaudited Interim Condensed Consolidated Statements of Income for the nine month periods ended September 30, 2016 and 2015
|
F-4
|
Unaudited Interim Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2016 and 2015
|
F-5
|
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
|
F-6
|
Nine months ended September 30,
|
||||||||||||
Note
|
2016
|
2015
|
||||||||||
REVENUES:
|
||||||||||||
Voyage revenues
|
$
|
128,466
|
$
|
108,186
|
||||||||
EXPENSES:
|
||||||||||||
Voyage expenses (including related party)
|
(2,221
|
)
|
(1,996
|
)
|
||||||||
Vessel operating expenses
|
(19,745
|
)
|
(17,080
|
)
|
||||||||
General and administrative expenses (including related party)
|
3
|
(1,480
|
)
|
(1,362
|
)
|
|||||||
Management fees-related party
|
3
|
(4,491
|
)
|
(3,620
|
)
|
|||||||
Depreciation
|
4
|
(22,753
|
)
|
(18,104
|
)
|
|||||||
Operating income
|
$
|
77,776
|
$
|
66,024
|
||||||||
OTHER INCOME/(EXPENSES):
|
||||||||||||
Interest and finance costs
|
5, 11
|
(26,108
|
)
|
(20,772
|
)
|
|||||||
Interest income
|
—
|
34
|
||||||||||
Other, net
|
(289
|
)
|
(62
|
)
|
||||||||
Total other expenses
|
(26,397
|
)
|
(20,800
|
)
|
||||||||
Partnership's Net Income
|
$
|
51,379
|
$
|
45,224
|
||||||||
Common unitholders' interest in Net Income
|
$
|
26,704
|
$
|
25,305
|
||||||||
Preferred unitholders' interest in Net Income
|
$
|
5,063
|
$
|
1,331
|
||||||||
Subordinated unitholders' interest in Net Income
|
$
|
19,514
|
$
|
18,493
|
||||||||
General Partner's interest in Net Income
|
$
|
98
|
$
|
95
|
||||||||
Earnings per unit, basic and diluted:
|
10
|
|||||||||||
Common unit (basic and diluted)
|
$
|
1.30
|
$
|
1.23
|
||||||||
Weighted average number of units outstanding, basic and diluted:
|
10
|
|||||||||||
Common units
|
20,505,000
|
20,505,000
|
Nine months ended September 30,
|
||||||||||||
Note
|
2016
|
2015
|
||||||||||
Cash flows from Operating Activities:
|
||||||||||||
Net income:
|
$
|
51,379
|
$
|
45,224
|
||||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation
|
4
|
22,753
|
18,104
|
|||||||||
Amortization of deferred financing fees
|
11
|
1,489
|
1,153
|
|||||||||
Deferred revenue amortization
|
(43
|
)
|
623
|
|||||||||
Amortization of fair value of acquired time charter
|
7
|
5,441
|
—
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Trade receivables
|
(39
|
)
|
(147
|
)
|
||||||||
Prepayments and other assets
|
(379
|
)
|
(232
|
)
|
||||||||
Inventories
|
(510
|
)
|
68
|
|||||||||
Due from/to related party
|
(414
|
)
|
733
|
|||||||||
Trade payables
|
513
|
202
|
||||||||||
Accrued liabilities
|
82
|
(251
|
)
|
|||||||||
Unearned revenue
|
—
|
2,772
|
||||||||||
Net cash provided by Operating Activities
|
80,272
|
68,249
|
||||||||||
Cash flows from Investing Activities:
|
||||||||||||
Vessel acquisitions and other additions to vessels' cost
|
3(c)
|
|
(37,472
|
)
|
—
|
|||||||
Net cash used in Investing Activities
|
(37,472
|
)
|
—
|
|||||||||
Cash flows from Financing Activities:
|
||||||||||||
Payment of preferred units issuance costs and other filing costs
|
(119
|
)
|
(65
|
)
|
||||||||
Proceeds from issuance of preferred units, net of issuance costs paid
|
9
|
—
|
72,587
|
|||||||||
Distributions declared and paid
|
(50,142
|
)
|
(45,081
|
)
|
||||||||
Proceeds from long-term debt
|
5
|
66,667
|
—
|
|||||||||
Repayment of long-term debt
|
(24,375
|
)
|
(15,000
|
)
|
||||||||
Payment of deferred finance fees
|
(36
|
)
|
(11
|
)
|
||||||||
Net cash used in Financing Activities
|
(8,005
|
)
|
(12,430
|
)
|
||||||||
Net increase in cash and cash equivalents
|
34,795
|
80,679
|
||||||||||
Cash and cash equivalents at beginning of the period
|
24,293
|
11,949
|
||||||||||
Cash and cash equivalents at end of the period
|
$
|
59,088
|
$
|
92,628
|
Company Name
|
Country of incorporation
|
Vessel Name
|
Delivery Date to Partnership
|
Year Built
|
Cbm Capacity
|
Pegasus Shipholding S.A. ("Pegasus")
|
Marshall Islands
|
Clean Energy
|
March 2007
|
2007
|
149,700
|
Lance Shipping S.A. ("Lance")
|
Marshall Islands
|
Ob River
|
July 2007
|
2007
|
149,700
|
Seacrown Maritime Ltd. ("Seacrown")
|
Marshall Islands
|
Amur River
|
January 2008
|
2008
|
149,700
|
Fareastern Shipping Limited ("Fareastern")
|
Malta
|
Arctic Aurora
|
June 2014
|
2013
|
155,000
|
Navajo Marine Limited ("Navajo")
|
Marshall Islands
|
Yenisei River
|
September 2014
|
2013
|
155,000
|
Solana Holding Ltd. ("Solana")
|
Marshall Islands
|
Lena River
|
December 2015
|
2013
|
155,000
|
Company Name
|
Country of incorporation
|
Purpose of incorporation
|
Quinta Group Corp. ("Quinta")
|
Nevis
|
Holding company that owns all of the outstanding capital stock of Pegasus.
|
Pelta Holdings S.A. ("Pelta")
|
Nevis
|
Holding company that owns all of the outstanding capital stock of Lance.
|
Dynagas Equity Holding Limited ("Dynagas Equity")
|
Liberia
|
Holding company that owns all of the outstanding capital stock of Quinta, Pelta, Seacrown, Fareastern, Navajo, Solana and Arctic LNG.
|
Dynagas Operating GP LLC. ("Dynagas Operating GP")
|
Marshall Islands
|
Limited Liability Company, in which the Partnership holds 100% membership interests and that has 100% of the Non-Economic General Partner Interest in Dynagas Operating LP.
|
Dynagas Operating LP. ("Dynagas Operating")
|
Marshall Islands
|
Limited partnership in which the Partnership holds 100% percentage interests.
|
Dynagas Finance Inc. ("Dynagas Finance")
|
Marshall Islands
|
Wholly owned subsidiary of the Partnership whose activities are limited to co-issuing the Notes discussed under Note 5 and engaging in other activities incidental thereto.
|
Arctic LNG Carriers Ltd. ("Arctic LNG")
|
Marshall Islands
|
Wholly owned subsidiary of Dynagas Equity that currently has no operations in place nor is it engaged in any other activities.
|
Charterer
|
2016
|
2015
|
||||||
A
|
67
|
%
|
49
|
%
|
||||
B
|
17
|
%
|
32
|
%
|
||||
C
|
16
|
%
|
19
|
%
|
||||
100
|
%
|
100
|
%
|
Nine months ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Included in voyage expenses
|
||||||||
Charter hire commissions (a)
|
$
|
1,672
|
$
|
1,356
|
||||
Included in general and administrative expenses
|
||||||||
Executive services fee (d)
|
$
|
449
|
$
|
452
|
||||
Administrative services fee (e)
|
$
|
90
|
$
|
90
|
||||
Management fees-related party
|
||||||||
Management fees (a)
|
$
|
4,491
|
$
|
3,620
|
Period/Year ended
|
||||||||
September 30, 2016
|
December 31, 2015
|
|||||||
Assets:
|
||||||||
Working capital advances granted to the Manager (a)
|
$
|
892
|
$
|
460
|
||||
Security deposits to Manager (a)
|
$
|
1,350
|
$
|
1,350
|
||||
Liabilities included in Due to related party:
|
||||||||
Executive service charges due to Manager (d)
|
$
|
150
|
$
|
—
|
||||
Administrative service charges due to Manager (e)
|
$
|
30
|
$
|
30
|
||||
Other Partnership expenses due to Manager
|
$
|
68
|
$
|
200
|
||||
Total liabilities due to related party, current
|
$
|
248
|
$
|
230
|
||||
Credit financing balance due to Sponsor (c)
|
$
|
—
|
$
|
35,000
|
||||
Total liabilities due to related party, non-current
|
$
|
—
|
$
|
35,000
|
(i) |
a commission of 1.25% over charter-hire agreements arranged by the Manager and,
|
(ii) |
a lump sum new-building supervision fee of $700 for the services rendered by the Manager in respect of the construction of the vessel plus out of pocket expenses.
|
Vessel
Cost
|
Accumulated
Depreciation
|
Net Book
Value
|
||||||||||
Balance December 31, 2015
|
$
|
1,165,645
|
$
|
(129,488
|
)
|
$
|
1,036,157
|
|||||
—Other additions to vessels' cost
|
1,855
|
—
|
1,855
|
|||||||||
—Depreciation
|
—
|
(22,753
|
)
|
(22,753
|
)
|
|||||||
Balance September 30, 2016
|
$
|
1,167,500
|
$
|
(152,241
|
)
|
$
|
1,015,259
|
|||||
Period/ Year Ended
|
|||||||||
Debt instruments
|
Borrowers-Issuers
|
September 30, 2016
|
December 31, 2015
|
||||||
$340 Million Credit Facility
|
Pegasus-Lance-Seacrown-Fareastern
|
290,000
|
305,000
|
||||||
$250 Million Senior Unsecured Notes
|
Dynagas Partners– Dynagas Finance
|
250,000
|
250,000
|
||||||
$200 Million Term Loan Facility
|
Navajo- Solana
|
190,625
|
133,333
|
||||||
Total debt
|
$
|
730,625
|
$
|
688,333
|
|||||
Less deferred financing fees
|
(6,559
|
)
|
(8,048
|
)
|
|||||
Total debt, net of deferred finance costs
|
$
|
724,066
|
$
|
680,285
|
|||||
Less current portion, net of deferred financing fees
|
$
|
(31,671
|
)
|
$
|
(27,467
|
)
|
|||
Long-term debt, net of current portion and deferred financing fees
|
$
|
692,395
|
$
|
652,818
|
· |
a maximum ratio of total consolidated liabilities to the Partnership's consolidated market value adjusted total assets;
|
· |
a minimum interest coverage ratio;
|
· |
certain levels of consolidated minimum liquidity;
|
· |
a maximum ratio expressed as a percentage of total borrowings to total book assets;
|
· |
a certain minimum net worth level; and
|
· |
a minimum asset coverage ratio, being the ratio of the aggregate of the vessels' market values and the net realizable value of any additional security over the outstanding amount of the facility.
|
Period/Year ending December 31,
|
Amount
|
|||
2016 (October to December 2016)
|
$
|
8,125
|
||
2017
|
32,500
|
|||
2018
|
32,500
|
|||
2019
|
282,500
|
|||
2020
|
170,000
|
|||
2021 and thereafter
|
205,000
|
|||
Total long-term debt
|
$
|
730,625
|
||
§ |
Cash and cash equivalents, trade accounts receivable, amounts due from/to related parties and trade accounts payable:
The carrying values reported in the accompanying consolidated balance sheets for those financial instruments (except for the fair value of non-current portion of amounts due from related party) are reasonable estimates of their fair values due to their short-term nature. The carrying value of these instruments is separately reflected in the accompanying consolidated balance sheets. The fair value of non-current portion of amounts due from related
party, determined through Level 3 inputs of the fair value hierarchy by discounting future cash flows using the Partnership's estimated cost of capital, is $999 as of September 30, 2016, compared to its carrying value of $1,350.
|
§ |
Long-term debt, restricted cash:
The fair value of the loan facilities and associated restricted cash discussed in Note 5 approximate their recorded value due to the variable interest rates payable. The Notes have a fixed rate and their estimated fair value, determined through Level 2 inputs of the fair value hierarchy (quoted price in over-the-counter market), is approximately $232.8 million as of September 30, 2016, compared to its carrying value of $250.0 million.
|
Period/Year ending December 31,
|
Amount
|
|||
2016
|
$
|
1,827
|
||
2017
|
7,247
|
|||
2018
|
5,267
|
|||
Total
|
$
|
14,341
|
Period/ Year ending December 31,
|
Amount
|
|||
2016 (period)
|
$
|
44,891
|
||
2017
|
155,934
|
|||
2018
|
103,558
|
|||
2019
|
85,545
|
|||
2020
|
99,417
|
|||
2021 and thereafter
|
1,030,861
|
|||
Total
|
$
|
1,520,206
|
Period/ Year ending December 31,
|
Amount
|
|||
2016 (period)
|
$
|
1,508
|
||
2017
|
6,162
|
|||
2018
|
6,347
|
|||
2019
|
6,537
|
|||
2020
|
6,752
|
|||
Total
|
$
|
27,306
|
||
(a) |
Initial Public Offering
: On November 18, 2013, the Partnership completed its initial public offering of 8,250,000 common units at a price of $18.00 per unit on the NASDAQ Global Market and raised net proceeds of $136.9 million. Concurrently with the sale of the Partnership's common units and at the same price per unit, the Sponsor sold 4,250,000 common units. The Partnership did not receive any proceeds from this sale. On December 5, 2013, the underwriters exercised their over-allotment option granted to them by Dynagas Holding, following which, the Sponsor offered 1,875,000 additional common units to the public on the same terms as in the initial offering. The Partnership did not receive any proceeds from the sale of these additional common units.
|
(b) |
Common Units Offering:
On June 18, 2014, the Partnership completed a follow on public offering of 5,520,000 common units, including the full exercise of the underwriters' over-allotment option to purchase up to 720,000 common units. The net proceeds from the offering amounted to $120.5 million, after deducting the underwriting discount of $4.7 million and offering expenses incurred of 0.6 million. No other common units offerings occurred since then.
|
(c) |
Preferred Units Offering:
On July 20, 2015, the Partnership concluded an underwritten public offering of the 3,000,000 Series A Preferred Units, representing limited partner interests in the Partnership, at a liquidation preference of $25.00 per unit. The Partnership received from this offering $72.3 million, net of underwriting discount of $2.4 million and offering expenses incurred of $0.3 million and used those proceeds to finance the
Lena River
acquisition (Note 3(c)).
|
· |
first
, 99.9% to the holders of common units and 0.1% to the General Partner, until each common unit has received a minimum quarterly distribution of a specified dollar amount plus any arrearages from prior quarters
|
· |
second
, 99.9% to the holders of subordinated units and 0.1% to the General Partner, until each subordinated unit has received a minimum quarterly distribution of a specified dollar amount; and
|
· |
third
, 99.9% to all unitholders, pro rata, and 0.1% to the General Partner, until each unit has received an aggregate distribution of a specified dollar amount
|
Total Quarterly
Distribution Target Amount |
Unitholders
|
General
Partner |
Holders
of IDRs |
|||||||||||||
Minimum Quarterly Distribution
|
|
$ 0.365
|
99.9
|
%
|
0.1
|
%
|
0.0
|
%
|
||||||||
First Target Distribution
|
up to $0.420
|
99.9
|
%
|
0.1
|
%
|
0.0
|
%
|
|||||||||
Second Target Distribution
|
above $0.420 up to $0.456
|
85.0
|
%
|
0.1
|
%
|
14.9
|
%
|
|||||||||
Third Target Distribution
|
Above $0.456 up to $0.548
|
75.0
|
%
|
0.1
|
%
|
24.9
|
%
|
|||||||||
Thereafter
|
above $0.548
|
50.0
|
%
|
0.1
|
%
|
49.9
|
%
|
Nine Months Ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Partnership's Net income
|
$
|
51,379
|
$
|
45,224
|
||||
Less:
|
||||||||
Net Income attributable to preferred unitholders
|
5,063
|
1,331
|
||||||
Net Income attributable to subordinated unitholders
|
19,514
|
18,493
|
||||||
General Partner's interest in Net Income
|
98
|
95
|
||||||
Net income attributable to common unitholders
|
$
|
26,704
|
$
|
25,305
|
||||
Weighted average number of common units outstanding, basic and diluted
|
20,505,000
|
20,505,000
|
||||||
Earnings per common unit, basic and diluted
|
$
|
1.30
|
$
|
1.23
|
Nine months ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Interest expense (Note 5)
|
$
|
24,531
|
$
|
19,391
|
||||
Amortization of deferred financing fees
|
1,489
|
1,153
|
||||||
Commitment fees (Note 5)
|
2
|
—
|
||||||
Other
|
86
|
228
|
||||||
Total
|
$
|
26,108
|
$
|
20,772
|
(a) |
Third quarter of 2016 common and subordinated units distribution:
On October 1, 2016, the Partnership's Board of Directors approved a quarterly cash distribution, for the third quarter of 2016 of $0.4225 per common and subordinated unit, or $15.0 million which, on October 18, 2016, was paid to all unitholders of record as of October 11, 2016.
|
(b) |
Quarterly Series A Preferred Units distribution:
On October 20, 2016, the Partnership's Board of Directors further declared a cash distribution of $0.5625 per unit on its Series A Preferred Units for the period from August 12, 2016 to November 11, 2016. The cash distribution will be paid on or about November 12, 2016, to all Series A preferred unitholders of record as of November 5, 2016.
|
(c) |
Clean Energy
new time charter:
On October 31, 2016, the Partnership, through one of its wholly owned subsidiaries, entered into a multi-year time-charter contract with an affiliate of the Gazprom Group for the
Clean Energy
for a firm period of seven years and nine months (the "New
Clean Energy
Charter"). The
Clean Energy
is expected to commence employment under the New
Clean Energy
Charter in July 2018.
|
(d) |
Amendment to
Lena River
and
Yenisei River
charters:
In connection with the new long-term charter contract for the employment of the
Clean Energy
, on October 31, 2016, the Partnership reached an agreement with Gazprom to reduce the charter hire rate on the existing time-charter contracts with its wholly owned subsidiaries that own the
Lena River
and the
Yenisei River
. The charter hire reductions shall be effective from November 1, 2016 until the termination of the respective charters. Apart from the charter hire reduction, all other terms and conditions of the respective time charter contracts remain in full force and effect.
In the case the New Clean Energy Charter is not initiated by any reason attributable to owners, the respective charter hire reductions shall not be considered effective.
|
1 Year Dynagas LNG Partners Chart |
1 Month Dynagas LNG Partners Chart |
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