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 or decreases 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 |
Cargo Capacity
(cbm) |
Ice
Class |
Propulsion
|
Charterer
|
Earliest Charter
Expiration |
Latest Charter
Expiration |
Latest Charter
Expiration including options to extend |
Clean Energy
|
2007
|
149,700
|
No
|
Steam
|
Gazprom
|
March 2026
|
April 2026
|
n/a
|
Ob River
|
2007
|
149,700
|
Yes
|
Steam
|
Gazprom
|
March 2028
|
May 2028
|
n/a
|
Amur River
|
2008
|
149,700
|
Yes
|
Steam
|
Gazprom
|
June 2028
|
August 2028
|
n/a
|
Arctic Aurora
|
2013
|
155,000
|
Yes
|
TFDE*
|
Equinor
|
July 2021
|
September 2021
|
September 2023
|
Yenisei River
|
2013
|
155,000
|
Yes
|
TFDE*
|
Yamal
|
Q4 2033
|
Q2 2034
|
Q2 2049 (1)
|
Lena River
|
2013
|
155,000
|
Yes
|
TFDE*
|
Yamal
|
Q2 2034
|
Q3 2034
|
Q4 2049 (1)
|
(1)
|
The Lena
River is expected to commence employment with Yamal on or about July 1, 2019. The charter contracts for the Yenisei River
and the Lena River with Yamal in the Yamal LNG Project each have an initial term of 15.5 years and 15 years, respectively, which
may each be extended by three consecutive periods of five years.
|
Estimated contract backlog, at end of year
|
2019
|
2020
|
2021
|
|||||||||
Contracted time charter revenues (in millions of U.S. Dollars) (1)(2)
|
$
|
72.7
|
$
|
137.9
|
$
|
126.9
|
||||||
Contracted days
|
1,163
|
2,196
|
2,008
|
|||||||||
Available Days
|
1,176
|
2,196
|
2,190
|
|||||||||
Contracted/Available Days
|
99
|
%
|
100
|
%
|
92
|
%
|
(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, if any, and (c) excluding planned periodical class survey repair days.
|
(2) |
Estimated contracted revenues for each of the years 2019, 2020, 2021 include the amount of $6.3 million, $12.1 million and $12.1 million respectively, which
relate to the estimated portion of the variable hire contained in the above mentioned time charter contracts with Yamal, which represent the operating expenses of the respective vessels and are subject to yearly adjustments on the
basis of the actual operating costs incurred within each year. The actual amount of revenues earned in respect of such variable hire rate may therefore differ from the amounts included in the revenue backlog estimate due to the yearly
variations in the respective vessels’ operating costs.
|
Selected Historical Financial Data and Other Operating Information
|
Three Months Ended March 31,
|
|||||||
2019
|
2018
|
|||||||
STATEMENT OF INCOME
(In thousands of U.S. Dollars, except for units and per unit data)
|
||||||||
Voyage revenues
|
$
|
31,403
|
$
|
33,904
|
||||
Voyage expenses- including related party (1)
|
(562
|
)
|
(621
|
)
|
||||
Vessel operating expenses
|
(6,921
|
)
|
(6,340
|
)
|
||||
Dry-docking and special survey costs
|
—
|
(467
|
)
|
|||||
General and administrative expenses- including related party (2)
|
(447
|
)
|
(629
|
)
|
||||
Management fees-related party
|
(1,612
|
)
|
(1,565
|
)
|
||||
Depreciation
|
(7,480
|
)
|
(7,476
|
)
|
||||
Operating income
|
$
|
14,381
|
$
|
16,806
|
||||
Interest and finance costs, net
|
(12,505
|
)
|
(11,882
|
)
|
||||
Other, net
|
16
|
(84
|
)
|
|||||
Net Income
|
$
|
1,892
|
$
|
4,840
|
||||
Common unitholders’ interest in Net Income
|
$
|
(998
|
)
|
$
|
3,149
|
|||
Series A Preferred unitholders’ interest in Net Income
|
$
|
1,688
|
$
|
1,688
|
||||
Series B Preferred unitholders’ interest in Net Income
|
$
|
1,203
|
$
|
—
|
||||
General Partner’s interest in Net Income
|
$
|
(1
|
)
|
$
|
3
|
|||
(LOSS)/EARNINGS PER UNIT (basic and diluted):
|
||||||||
Common Unit
|
$
|
(0.03
|
)
|
$
|
0.09
|
|||
Weighted average number of units outstanding (basic and diluted):
|
||||||||
Common units
|
35,490,000
|
35,490,000
|
March
31, 2019
|
December 31, 2018
|
|||||||
BALANCE SHEET DATA, at end of period/ year:
|
||||||||
Total current assets
|
$
|
114,793
|
$
|
112,963
|
||||
Vessels, net
|
939,897
|
947,377
|
||||||
Total assets
|
$
|
1,057,953
|
$
|
1,063,436
|
||||
Total current liabilities
|
271,537
|
272,742
|
||||||
Total long-term debt, gross of deferred financing fees, including current portion
|
721,600
|
722,800
|
||||||
Total partners’ equity
|
$
|
322,878
|
$
|
326,485
|
||||
Selected Historical Financial Data and Other Financial Information
|
Three Months Ended
March 31,
|
|||||||
2019
|
2018
|
|||||||
CASH FLOW DATA
|
||||||||
Net cash provided by operating activities
|
$
|
9,186
|
$
|
11,853
|
||||
Net cash used in investing activities
|
—
|
—
|
||||||
Net cash used in financing activities
|
$
|
(6,832
|
)
|
$
|
(17,916
|
)
|
||
FLEET PERFORMANCE DATA:
|
||||||||
Number of vessels at the end of period
|
6
|
6
|
||||||
Average number of vessels in operation in period (3)
|
6
|
6
|
||||||
Average age of vessels in operation at end of period/ (years)
|
8.6
|
7.6
|
||||||
Available Days (4)
|
540.0
|
540.0
|
||||||
Fleet utilization (5)
|
100
|
%
|
100
|
%
|
||||
OTHER FINANCIAL DATA
|
||||||||
Cash distributions per common unit for the period (6)
|
$
|
0.0625
|
$
|
0.25
|
||||
Cash distributions per Series A Preferred Unit (7)
|
$
|
0.5625
|
$
|
0.5625
|
||||
Cash distributions per Series B Preferred Unit (8)
|
$
|
0.546875
|
—
|
|||||
Time Charter Equivalent (in U.S. Dollars) (9)
|
$
|
57,113
|
$
|
61,635
|
||||
Adjusted EBITDA (9)
|
$
|
21,716
|
$
|
26,590
|
(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 dry-dockings.
|
(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 $0.0625 and $0.25 per common unit in respect of the first quarters of 2019 and 2018, respectively which were paid in
the second quarter of 2019 and 2018, respectively.
|
(7) |
Corresponds to a cash distribution of $0.5625 per Series A Preferred Unit in respect of the first quarters of 2019 and 2018, respectively which were paid
in the second quarter of 2019 and 2018, respectively.
|
(8) |
Corresponds to a cash distribution of $0.546875 in respect of the first quarter of 2019, which was paid in the second quarter of 2019.
|
(9) |
Non-GAAP Financial Information
|
Three Months Ended
March 31,
|
||||||||
(In thousands of U.S. Dollars, except
as otherwise stated)
|
2019
|
2018
|
||||||
Voyage revenues
|
$
|
31,403
|
$
|
33,904
|
||||
Voyage expenses
|
(562
|
)
|
(621
|
)
|
||||
Time charter equivalent revenues
|
30,841
|
33,283
|
||||||
Available Days
|
540
|
540
|
||||||
Time charter equivalent (TCE) rate (in U.S Dollars)
|
$
|
57,113
|
$
|
61,635
|
Reconciliation of Net Income to Adjusted EBITDA
|
Three months ended March 31,
|
|||||||
(In thousands of U.S. Dollars)
|
2019
|
2018
|
||||||
Net Income
|
$
|
1,892
|
$
|
4,840
|
||||
Net interest and finance costs (1)
|
12,505
|
11,882
|
||||||
Depreciation
|
7,480
|
7,476
|
||||||
Class survey costs
|
—
|
467
|
||||||
Amortization of fair value of acquired time charter
|
—
|
1,787
|
||||||
Amortization of deferred revenue
|
(197
|
)
|
138
|
|||||
Amortization of deferred charges
|
36
|
—
|
||||||
Adjusted EBITDA
|
$
|
21,716
|
$
|
26,590
|
(1) |
Includes interest and finance costs (inclusive of amortization
of deferred financing costs), net of 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 LNG
market trends, such as the demand and supply for natural gas and in particular LNG as well as the supply of LNG carriers available for profitable 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. As of the date of this report, apart from the Lena
River, (which is expected to commence its employment with Yamal on or about July 1, 2019), all the vessels in our Fleet
are employed under multi-year time charters with staggered maturities, which will make 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 of our Fleet is reduced, 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;
|
· |
The timely delivery of any 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 charterers’ 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 Additional 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;
|
· |
Our ability to successfully defend against any claims, suits, and complaints, including but not limited to those involving government laws and regulations
and product liability;
|
· |
Economic, regulatory, political and governmental conditions that affect shipping and the LNG industry, which include 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, our debt amortization levels and the timing of required principal installments;
|
· |
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.
|
(i) |
lower revenues earned on the Arctic Aurora,
which, in August 2018 rolled-over into its new charter with Equinor ASA ("Equinor") at a lower charter rate;
|
(ii) |
lower revenues earned on the Ob River, which
completed employment under its multi-year charter contract with Gazprom Global LNG Limited ("Gazprom") in April 2018 and subsequently, began employment under a ten-year charter party with an entity that is part of the wider Gazprom
group of companies at a lower charter rate; and
|
(iii) |
lower revenues earned on the Lena River, which
completed its employment under its multi-year charter contract with Gazprom in October 2018 and in the same month, was delivered into its multi-month charter with a major energy company at a lower charter rate.
|
Three months ended March 31,
|
||||||||
(in thousands of U.S. Dollars)
|
2019
|
2018
|
||||||
Net cash provided by operating activities
|
$
|
9,186
|
$
|
11,853
|
||||
Net cash used in investing activities
|
—
|
—
|
||||||
Net cash used in financing activities
|
(6,832
|
)
|
(17,916
|
)
|
||||
Cash and cash equivalents and restricted cash at beginning of period
|
109,917
|
67,464
|
||||||
Cash and cash equivalents and restricted cash at end of period
|
$
|
112,271
|
$
|
61,401
|
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
|
$
|
721,600
|
$
|
254,800
|
$
|
9,600
|
$
|
457,200
|
$
|
-
|
||||||||||
Interest on long term debt (1)
|
144,642
|
42,542
|
65,651
|
36,449
|
-
|
|||||||||||||||
Management fees & commissions payable to the Manager (2)(3)
|
26,607
|
6,462
|
9,689
|
2,599
|
7,857
|
|||||||||||||||
Executive Services fee (4)
|
2,795
|
604
|
1,207
|
984
|
-
|
|||||||||||||||
Administrative Services fee (5)
|
40
|
40
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
895,684
|
$
|
304,448
|
$
|
86,147
|
$
|
497,232
|
$
|
7,857
|
(1) |
Our variable rate long-term debt outstanding as of March 31, 2019 bears variable interest at a margin over LIBOR. The calculation of interest payments has
been made assuming interest rates based on the one-month period LIBOR, the LIBOR specific to our Term Loan B as of March 31, 2019 and our applicable margin rate.
|
(2) |
Under the terms of the management agreements, we currently pay our Manager a management fee of $2,985 per day per vessel, 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) |
Not including $2.2 million of the "Management fees & commissions payable to the Manager" related to the commissions on variable hire contained in
certain time charter contracts with Yamal, which represents the operating expenses of the vessel and is subject to annual adjustments on the basis of the actual operating costs incurred within each year. The actual amount of
"Management fees & commissions payable to the Manager" payable to the Manager in respect of such variable hire rate may therefore differ from the amounts included in the contractual obligations, due to the annual variations
in each vessel's respective operating cost.
|
(4) |
On March 21, 2014, we entered into an executive services agreement with our Manager, or the Executive Services Agreement, 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 Executive Services Agreement had an initial term of five years and, on November 18, 2018,
has been automatically 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 $1.1221, the EURO/USD
exchange rate as of March 31, 2019 and does not include any incentive compensation which our Board of Directors may agree to pay.
|
(5) |
On December 30, 2014 and with effect from the IPO closing date, we entered into an administrative services agreement with our Manager (the
"Administrative Services Agreement"), 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.
|
March 31,
|
December 31,
|
|||||||
(expressed in thousands of United states dollars)
|
2019
|
2018
|
||||||
Balance sheet data:
|
||||||||
Total assets
|
$
|
961,675
|
$
|
970,989
|
||||
Total cash
|
17,479
|
18,961
|
||||||
Total debt, net of deferred loan fees
|
$
|
463,072
|
$
|
463,747
|
Three months ended March 31,
|
||||||||
(expressed in thousands of United states dollars)
|
2019
|
2018
|
||||||
Income statement and other operational data:
|
||||||||
Net income
|
$
|
6,038
|
$
|
9,521
|
||||
Revenues
|
31,403
|
33,904
|
||||||
Adjusted EBITDA
|
$
|
22,151
|
$
|
27,218
|
Three months ended March 31,
|
||||||||
(In thousands of U.S. dollars)
|
2019
|
2018
|
||||||
Net income
|
$
|
6,038
|
$
|
9,521
|
||||
Net interest and finance costs (1)
|
8,793
|
7,829
|
||||||
Depreciation
|
7,480
|
7,476
|
||||||
Class survey costs
|
—
|
467
|
||||||
Amortization of fair value of acquired time charter
|
—
|
1,787
|
||||||
Amortization of deferred revenue
|
(196
|
)
|
138
|
|||||
Amortization of deferred charges
|
36
|
—
|
||||||
Adjusted EBITDA
|
$
|
22,151
|
$
|
27,218
|
Page
|
|
Consolidated Condensed Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018
|
F-3
|
Unaudited Interim Condensed Consolidated Statements of Income for the three month periods ended March 31, 2019 and 2018
|
F-4
|
Unaudited Interim Consolidated Statements of Partners’ Equity for the three month periods ended March 31, 2019 and 2018
|
F-5
|
Unaudited Interim Consolidated Statements of Cash Flows for the three month periods ended March 31, 2019 and 2018
|
F-6
|
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
|
F-7
|
Note
|
March 31, 2019
|
December 31, 2018
|
||||||||||
ASSETS
|
||||||||||||
CURRENT ASSETS:
|
||||||||||||
Cash and cash equivalents
|
$
|
112,271
|
$
|
109,917
|
||||||||
Trade receivables
|
39
|
48
|
||||||||||
Prepayments and other assets
|
789
|
692
|
||||||||||
Inventories
|
743
|
1,220
|
||||||||||
Due from related party
|
4
|
951
|
1,086
|
|||||||||
Total current assets
|
114,793
|
112,963
|
||||||||||
FIXED ASSETS, NET:
|
||||||||||||
Vessels, net
|
5
|
939,897
|
947,377
|
|||||||||
Total fixed assets, net
|
939,897
|
947,377
|
||||||||||
OTHER NON CURRENT ASSETS:
|
||||||||||||
Due from related party
|
4
|
1,350
|
1,350
|
|||||||||
Accrued charter revenue
|
545
|
342
|
||||||||||
Deferred charges
|
1,368
|
1,404
|
||||||||||
Total assets
|
$
|
1,057,953
|
$
|
1,063,436
|
||||||||
LIABILITIES AND PARTNERS’ EQUITY
|
||||||||||||
CURRENT LIABILITIES:
|
||||||||||||
Current portion of long-term debt, net of unamortized deferred financing fees of $2,765 and $3,046, respectively
|
6
|
$
|
252,035
|
$
|
251,754
|
|||||||
Trade payables
|
5,011
|
5,736
|
||||||||||
Due to related party
|
4
|
173
|
306
|
|||||||||
Accrued liabilities
|
3,939
|
4,206
|
||||||||||
Unearned revenue
|
10,379
|
10,740
|
||||||||||
Total current liabilities
|
271,537
|
272,742
|
||||||||||
NON-CURRENT LIABILITIES:
|
||||||||||||
Deferred revenue
|
3,153
|
3,147
|
||||||||||
Long-term debt, net of current portion and unamortized deferred financing fees of $6,415 and $6,938, respectively
|
6
|
460,385
|
461,062
|
|||||||||
Total non-current liabilities
|
463,538
|
464,209
|
||||||||||
Commitments and contingencies
|
9
|
—
|
—
|
|||||||||
PARTNERS’ EQUITY:
|
||||||||||||
Common unitholders (unlimited authorized; 35,490,000 units issued and outstanding as at
March 31, 2019 and December 31, 2018)
|
10
|
196,184
|
199,400
|
|||||||||
Series A Preferred unitholders (3,450,000 authorized; 3,000,000 Series A Preferred Units
issued and outstanding as at March 31, 2019 and December 31, 2018)
|
10
|
73,216
|
73,216
|
|||||||||
Series B Preferred unitholders: (2,530,000 authorized; 2,200,000 Series B Preferred Units
issued and outstanding as at March 31, 2019 and December 31, 2018)
|
10
|
53,497
|
53,885
|
|||||||||
General Partner (35,526 units issued and outstanding as at March 31, 2019 and December 31,
2018)
|
10
|
(19
|
)
|
(16
|
)
|
|||||||
Total partners’ equity
|
322,878
|
326,485
|
||||||||||
Total liabilities and partners’ equity
|
$
|
1,057,953
|
$
|
1,063,436
|
Three
months ended March 31, |
||||||||||||
Note
|
2019
|
2018
|
||||||||||
REVENUES:
|
||||||||||||
Voyage revenues
|
$
|
31,403
|
$
|
33,904
|
||||||||
EXPENSES:
|
||||||||||||
Voyage expenses (including related party)
|
(562
|
)
|
(621
|
)
|
||||||||
Vessel operating expenses
|
(6,921
|
)
|
(6,340
|
)
|
||||||||
Dry-docking and special survey costs
|
—
|
(467
|
)
|
|||||||||
General and administrative expenses (including related party)
|
4
|
(447
|
)
|
(629
|
)
|
|||||||
Management fees-related party
|
4
|
(1,612
|
)
|
(1,565
|
)
|
|||||||
Depreciation
|
5
|
(7,480
|
)
|
(7,476
|
)
|
|||||||
Operating income
|
$
|
14,381
|
$
|
16,806
|
||||||||
OTHER INCOME/(EXPENSES):
|
||||||||||||
Interest and finance costs
|
6, 12
|
(13,077
|
)
|
(12,045
|
)
|
|||||||
Interest income
|
572
|
163
|
||||||||||
Other, net
|
16
|
(84
|
)
|
|||||||||
Total other expenses
|
(12,489
|
)
|
(11,966
|
)
|
||||||||
Partnership’s Net Income
|
$
|
1,892
|
$
|
4,840
|
||||||||
Common unitholders’ interest in Net Income
|
$
|
(998
|
)
|
$
|
3,149
|
|||||||
Series A Preferred unitholders’ interest in Net Income
|
$
|
1,688
|
$
|
1,688
|
||||||||
Series B Preferred unitholders’ interest in Net Income
|
$
|
1,203
|
$
|
—
|
||||||||
General Partner’s interest in Net Income
|
$
|
(1
|
)
|
$
|
3
|
|||||||
(Loss)/Earnings per unit, basic and diluted:
|
11
|
|||||||||||
Common unit (basic and diluted)
|
$
|
(0.03
|
)
|
$
|
0.09
|
|||||||
Weighted average number of units outstanding, basic and diluted:
|
11
|
|||||||||||
Common units
|
35,490,000
|
35,490,000
|
Partners’ Capital
|
||||||||||||||||||||||||||||||||||||
Series A Preferred
|
Series B Preferred
|
Common
|
General Partner
|
Series A Preferred
|
Series B Preferred
|
Common
|
General Partner
|
Total
|
||||||||||||||||||||||||||||
BALANCE, December 31, 2017
|
3,000,000
|
—
|
35,490,000
|
35,526
|
$
|
73,216
|
$
|
—
|
$
|
245,055
|
$
|
47
|
$
|
318,318
|
||||||||||||||||||||||
—Net income
|
—
|
—
|
—
|
—
|
1,688
|
—
|
3,149
|
3
|
4,840
|
|||||||||||||||||||||||||||
—Distributions declared and paid (common and preferred units) (Note 10)
|
—
|
—
|
—
|
—
|
(1,687
|
)
|
—
|
(14,995
|
)
|
(32
|
)
|
(16,714
|
)
|
|||||||||||||||||||||||
BALANCE, March 31, 2018
|
3,000,000
|
—
|
35,490,000
|
35,526
|
$
|
73,217
|
$
|
—
|
$
|
233,209
|
$
|
18
|
$
|
306,444
|
Partners’ Capital
|
||||||||||||||||||||||||||||||||||||
Series A Preferred
|
Series B Preferred
|
Common
|
General Partner
|
Series A Preferred
|
Series B Preferred
|
Common
|
General Partner
|
Total
|
||||||||||||||||||||||||||||
BALANCE, December 31, 2018
|
3,000,000
|
2,200,000
|
35,490,000
|
35,526
|
$
|
73,216
|
$
|
53,885
|
$
|
199,400
|
$
|
(16
|
)
|
$
|
326,485
|
|||||||||||||||||||||
—Net income
|
—
|
—
|
—
|
—
|
1,688
|
1,203
|
(998
|
)
|
(1
|
)
|
1,892
|
|||||||||||||||||||||||||
—Distributions declared and paid (common and preferred units) (Note 10)
|
—
|
—
|
—
|
—
|
(1,688
|
)
|
(1,591
|
)
|
(2,218
|
)
|
(2
|
)
|
(5,499
|
)
|
||||||||||||||||||||||
BALANCE, March 31, 2019
|
3,000,000
|
2,200,000
|
35,490,000
|
35,526
|
$
|
73,216
|
$
|
53,497
|
$
|
196,184
|
$
|
(19
|
)
|
$
|
322,878
|
Note
|
March 31, 2019
|
March 31, 2018
|
||||||||||
Cash flows from Operating Activities:
|
||||||||||||
Net income:
|
$
|
1,892
|
$
|
4,840
|
||||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation
|
5
|
7,480
|
7,476
|
|||||||||
Amortization and write-off of deferred financing fees
|
12
|
804
|
811
|
|||||||||
Deferred revenue amortization
|
(197
|
)
|
138
|
|||||||||
Amortization of deferred charges
|
36
|
—
|
||||||||||
Amortization of fair value of acquired time charter
|
8
|
—
|
1,787
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Trade accounts receivable
|
9
|
42
|
||||||||||
Prepayments and other assets
|
(97
|
)
|
(49
|
)
|
||||||||
Inventories
|
477
|
(1,028
|
)
|
|||||||||
Due from/to related parties
|
2
|
(583
|
)
|
|||||||||
Trade accounts payable
|
(592
|
)
|
1,863
|
|||||||||
Accrued liabilities
|
(267
|
)
|
(229
|
)
|
||||||||
Unearned revenue
|
(361
|
)
|
(3,215
|
)
|
||||||||
Net cash provided by Operating Activities
|
$
|
9,186
|
$
|
11,853
|
||||||||
Cash flows from Investing Activities:
|
||||||||||||
Other additions to vessels’ equipment
|
5
|
—
|
—
|
|||||||||
Net cash used in Investing Activities
|
$
|
—
|
$
|
—
|
||||||||
Cash flows from Financing Activities:
|
||||||||||||
Payment of securities registration and other filing costs
|
(133
|
)
|
(2
|
)
|
||||||||
Distributions declared and paid
|
(5,499
|
)
|
(16,714
|
)
|
||||||||
Repayment of long-term debt
|
6
|
(1,200
|
)
|
(1,200
|
)
|
|||||||
Net cash used in Financing Activities
|
$
|
(6,832
|
)
|
$
|
(17,916
|
)
|
||||||
Net increase in cash and cash equivalents and restricted cash
|
2,354
|
(6,063
|
)
|
|||||||||
Cash and cash equivalents and restricted cash at beginning of the period
|
109,917
|
67,464
|
||||||||||
Cash and cash equivalents and restricted cash at end of the period
|
$
|
112,271
|
$
|
61,401
|
||||||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
||||||||||||
Cash and cash equivalents
|
112,271
|
61,401
|
||||||||||
Restricted cash
|
—
|
—
|
||||||||||
Cash and cash equivalents and restricted cash
|
$
|
112,271
|
$
|
61,401
|
Company Name
|
Country of incorporation/ formation
|
Vessel Name
|
Delivery Date from shipyard
|
Delivery date to Partnership
|
Cbm Capacity
|
Pegasus Shipholding S.A. (“Pegasus”)
|
Marshall Islands
|
Clean Energy
|
March 2007
|
May 2013
|
149,700
|
Lance Shipping S.A.
(“Lance”)
|
Marshall Islands
|
Ob River
|
July 2007
|
May 2013
|
149,700
|
Seacrown Maritime Ltd.
(“Seacrown”)
|
Marshall Islands
|
Amur River
|
January 2008
|
May 2013
|
149,700
|
Fareastern Shipping Limited
(“Fareastern”)
|
Malta
|
Arctic Aurora
|
July 2013
|
June 2014
|
155,000
|
Navajo Marine Limited
(“Navajo”)
|
Marshall Islands
|
Yenisei River
|
July 2013
|
September 2014
|
155,000
|
Solana Holding Ltd.
(“Solana”)
|
Marshall Islands
|
Lena River
|
October 2013
|
December 2015
|
155,000
|
Company Name
|
Country of incorporation/formation
|
Purpose of incorporation
|
Dynagas Equity Holding Limited (“Dynagas Equity”) (1)
|
Marshall Islands
|
Holding company that owns all of the outstanding share capital of Arctic LNG Carriers Ltd. (“Arctic LNG”).
|
Dynagas Operating GP LLC
(“Dynagas Operating GP”)
|
Marshall Islands
|
Limited Liability Company in which the Partnership holds a 100% membership interest and which 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 a 100% limited partnership interest and which owns 100% of the issued and
outstanding share capital of Dynagas Equity.
|
Dynagas Finance Inc.
|
Marshall Islands
|
Wholly owned subsidiary of the Partnership whose activities are limited to co-issuing the 2019 Notes discussed under Note 6 and
engaging in other activities incidental thereto.
|
Arctic LNG
|
Marshall Islands
|
Wholly owned subsidiary of the Partnership which is directly wholly owned by Dynagas Equity and which owns all of the issued and
outstanding share capital of Pegasus, Lance, Seacrown, Fareastern, Navajo, Solana and Dynagas Finance LLC.
|
Dynagas Finance LLC
|
Delaware
|
Wholly owned subsidiary of Arctic LNG and co-borrower of the Partnership’s $480 million senior secured term loan (“Term Loan B”)
discussed under Note 6.
|
Charterer
|
2019
|
2018
|
||||||
A
|
49
|
%
|
75
|
%
|
||||
B
|
21
|
%
|
—
|
|||||
C
|
16
|
%
|
20
|
%
|
||||
D
|
14
|
%
|
—
|
|||||
Total
|
100
|
%
|
95
|
%
|
i) |
ASU 2016-13: In June 2016, the FASB issued ASU 2016-13-
Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended. ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available for
sale debt securities. For public entities, the amendments of this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application is permitted.
Management is in the process of assessing the impact of the amendment of this Update on the Partnership's consolidated financial position and performance.
|
ii) | ASU No. 2018-13: In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement”, which changes the disclosure requirements for fair value measurements by removing, adding, and modifying certain disclosures. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that year. Early adoption is permitted for any eliminated or modified disclosures upon issuance of this ASU. Management is currently evaluating the impact of this adoption on its consolidated financial statements and related disclosures. |
Three months ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Included in voyage expenses
|
||||||||
Charter hire commissions (a)
|
$
|
390
|
$
|
448
|
||||
Included in general and administrative expenses – related party
|
||||||||
Executive services fee (d)
|
$
|
154
|
$
|
164
|
||||
Administrative services fee (e)
|
$
|
30
|
$
|
30
|
||||
Management fees-related party
|
||||||||
Management fees (a)
|
$
|
1,612
|
$
|
1,565
|
Period/Year ended
|
||||||||
March 31, 2019
|
December 31, 2018
|
|||||||
Assets:
|
||||||||
Working capital advances granted to the Manager (a)
|
$
|
951
|
$
|
1,086
|
||||
Security deposits to Manager (a)
|
$
|
1,350
|
$
|
1,350
|
||||
Liabilities included in Due to related party:
|
||||||||
Executive service charges due to Manager (d)
|
$
|
—
|
$
|
154
|
||||
Administrative service charges due to Manager (e)
|
$
|
30
|
$
|
30
|
||||
Other Partnership expenses due to Manager
|
$
|
143
|
$
|
122
|
||||
Total liabilities due to related party, current
|
$
|
173
|
$
|
306
|
(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, if applicable, plus
out of pocket expenses.
|
Vessel
Cost |
Accumulated
Depreciation |
Net Book Value |
||||||||||
Balance December 31, 2018
|
$
|
1,167,909
|
$
|
(220,532
|
)
|
$
|
947,377
|
|||||
Period depreciation
|
—
|
(7,480
|
)
|
(7,480
|
)
|
|||||||
Balance March 31, 2019
|
$
|
1,167,909
|
$
|
(228,012
|
)
|
$
|
939,897
|
|||||
Period / Year Ended
|
|||||||||
Debt instruments
|
Borrowers-Issuers
|
March 31, 2019
|
December 31, 2018
|
||||||
$480 Million Term Loan Facility
|
Arctic LNG and Dynagas Finance LLC
|
471,600
|
472,800
|
||||||
$250 Million Senior Unsecured Notes
|
Dynagas Partners and Dynagas Finance
|
250,000
|
250,000
|
||||||
Total debt
|
$
|
721,600
|
$
|
722,800
|
|||||
Less deferred financing fees
|
(9,180
|
)
|
(9,984
|
)
|
|||||
Total debt, net of deferred finance costs
|
$
|
712,420
|
$
|
712,816
|
|||||
Less current portion, net of deferred financing fees
|
$
|
(252,035
|
)
|
$
|
(251,754
|
)
|
|||
Long-term debt, net of current portion and deferred financing fees
|
$
|
460,385
|
$
|
461,062
|
· |
meet a specified maximum loan to value ratio, which is the ratio of the aggregate principal amounts due under the Term Loan B to the aggregate fair value
of the collateral vessels under the Term Loan B;
|
· |
meet a specified minimum debt service coverage ratio, the ratio of the twelve month rolling operating cash flow of Arctic LNG to the twelve month rolling
debt service payments under the Term Loan B;
|
· |
maintain aggregate free liquidity of at least $20.0 million;
|
· |
meet a maximum leverage ratio expressed as a percentage of total borrowings to total book assets; and
|
· |
maintain a certain minimum net worth level.
|
Year ending December 31,
|
Amount
|
|||
2019
|
$
|
253,600
|
||
2020
|
4,800
|
|||
2021
|
4,800
|
|||
2022
|
4,800
|
|||
2023
|
453,600
|
|||
Total long-term debt
|
$
|
721,600
|
||
◾ |
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 condensed balance sheets for those financial instruments (except for the fair value of non-current
portion of amounts due from related party) are considered Level 1 items as they represent liquid assets and liabilities with short-term maturities and are reasonable
estimates of their fair values. The carrying value of these instruments is separately reflected in the accompanying consolidated condensed balance sheets. The fair value of non-current portion of the amounts due from related parties,
determined through Level 3 inputs of the fair value hierarchy by discounting future cash flows using the Partnership’s estimated cost of capital, is $1,187 as of March 31, 2019, compared to its carrying value of $1,350 as of the same
date.
|
◾ |
Long-term debt: The Term Loan, B discussed in Note 6,
has an approximate recorded value due to the variable interest rate payable and is thus considered a Level 2 item in accordance with the fair value hierarchy as LIBOR rates are observable at commonly quoted intervals for the full
terms of the loans. The 2019 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 $239.4 million as of March
31, 2019, compared to its carrying value of $250.0 million.
|
◾ |
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
◾ |
Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted
prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data; and
|
◾ |
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the determination of the fair value of the
assets or liabilities.
|
Year ending December 31,
|
Amount
|
|||
2019
|
$
|
91,642
|
||
2020
|
125,783
|
|||
2021
|
114,794
|
|||
2022
|
103,824
|
|||
2023
|
103,824
|
|||
2024 and thereafter
|
654,475
|
|||
Total
|
$
|
1,194,342
|
Period/ Year ending December 31,
|
Amount
|
|||
2019
|
$
|
4,925
|
||
2020
|
6,752
|
|||
Total
|
$
|
11,677
|
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
|
%
|
Three months ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Partnership’s Net income
|
$
|
1,892
|
$
|
4,840
|
||||
Less:
|
||||||||
Net Income attributable to Series A preferred unitholders
|
1,688
|
1,688
|
||||||
Net Income attributable to Series B preferred unitholders
|
1,203
|
—
|
||||||
General Partner’s interest in Net Income
|
(1
|
)
|
3
|
|||||
Net income/(loss) attributable to common unitholders
|
$
|
(998
|
)
|
$
|
3,149
|
|||
Weighted average number of common units outstanding, basic and diluted
|
35,490,000
|
35,490,000
|
||||||
Earnings per common unit, basic and diluted
|
$
|
(0.03
|
)
|
$
|
0.09
|
Three months ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Interest expense (Note 6)
|
$
|
12,185
|
$
|
11,196
|
||||
Amortization and write-off of deferred financing fees
|
804
|
811
|
||||||
Other
|
88
|
38
|
||||||
Total
|
$
|
13,077
|
$
|
12,045
|
(a) |
First quarter of 2019 common unit cash distribution: On
April 22, 2019, the Partnership’s Board of Directors unanimously approved a cash distribution on the Partnership’s common units in respect of the first quarter of 2019 of $0.0625 per common unit. The first quarter common unit cash
distribution amounted to $2.2 million and was paid on May 10, 2019, to all common unitholders of record as of May 3, 2019.
|
(b) |
Quarterly Series A Preferred unit cash distribution: On
April 25, 2019, the Partnership’s Board of Directors declared a cash distribution of $0.5625 per unit on its Series A Preferred Units for the period from February 12, 2019 to May 11, 2019. The cash distribution was paid on May 13,
2019, to all Series A preferred unitholders of record as of May 6, 2019.
|
(c) |
Quarterly Series B Preferred unit cash distribution: On
April 30, 2019, the Partnership’s Board of Directors declared a cash distribution of $0.546875 per unit on its Series B Preferred Units for the period from February 22, 2019 to May 21, 2019. The cash distribution was paid on May 22,
2019, to all Series B preferred unitholders of record as of May 15, 2019.
|
(d) |
Class action filed against the Partnership: A
class action litigation titled Mario Epelbaum v. Dynagas LNG Partners LP, Dynagas GP, LLC, Dynagas Holding Ltd, Tony Lauritzen, Michael Gregos and George J. Prokopiou, No. 19-cv-04512 was filed by an investor on May 16, 2019 in the
United States District Court for the Southern District of New York. Plaintiff alleges violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 20(a) of the Exchange Act, in relation to certain
statements regarding two charter party contracts and the revenue derived from those contracts. Although the litigation is still in its very early phases, the Partnership and its management believe that the allegations in the lawsuit
are without merit and intend to vigorously defend their position.
|