EXMAR Announces First Semester 2020 Results

(Image Courtesy: EXMAR)

The board of directors of EXMAR has approved the accounts for the period ending 30 June 2020. The condensed consolidated interim financial statements have not been subject to an audit or a review by our statutory auditors, the company stated.


  • The operating result (EBIT) in the first half of 2020 was USD 19.2 million (proportionate consolidation) including a provision for uncollected revenue from YPF on TANGO FLNG (USD 17.7mm);
  • Strong recovery for VLGCs benefiting as well the midsize segment giving one of the best semesters in recent years;
  • TANGO FLNG: EXMAR has received written notification of force majeure from YPF S.A. under the Charter Agreement and Services Agreement for the TANGO FLNG.

The operating result (EBIT) in the first half of 2020 was USD 19.2 million (as compared to USD 16.4 million for the same period in 2019, including a capital gain of USD 19.3 million). The EBIT in the first semester has been negatively affected by the recognition of a provision of USD 17.7 million for uncollected revenue from YPF on TANGO FLNG and by accelerated depreciation on the pressurized fleet (USD 2.6 million).


The operating result (EBIT) for the Business Unit Shipping in the first half of 2020 was USD 11.3 million (as compared to USD 6.9 million for the same period in 2019). This increase in EBIT is mainly explained by increased time charter rates for the midsize and VLGC fleet.

Despite the slowdown in oil and gas production due to the Pandemic with a subsequent drop in rates for the VLGCs during the second quarter the rates recovered strongly and also benefitted the midsize segment that resulted in one of the best semesters in recent years. The recovery in freight rates was inspired by strong US LPG production and long-haul LPG shipments. Also, a come-back of LPG demand in India and so more spot LPG imports were noteworthy.

VLGC: The two VLGCs of about 88,000 m³ under construction at Jiangnan Shipyard in China for account of Equinor ASA (Norway) will be delivered mid- 2021.

In addition to larger capacity than a conventional VLGC these vessels will also be dual fuelled with LPG to meet the highest possible emission standards going forward. EXMAR has reached an agreement in principle for post-delivery financing of the first vessel and is progressing well for the financing of the second vessel. Finalisation of these financings is expected in the fourth quarter 2020.

EXMAR controls only one vessel in this segment, BW TOKYO which has been secured on a time charter until year-end.

Under the current positive freight market conditions EXMAR is optimistic to extend the vessel at rewarding terms.

MGC: Together with the recovery for VLGCs, especially the LPG side of the market gave strong market momentum for medium-sized gas carriers which helped grow EXMAR’s midsize cover to 94% for the balance of year. For 2021 the midsize fleet already has a cover in excess of 50% affirming that the good contract portfolio in EXMAR maintained.

For the remainder of the year, it is expected that the strong LPG market will set the tone for freight market conditions while the ammonia recovery may be somewhat more sluggish and take more time.

EXMAR has received commitment for its core bankers on a refinancing of the midsize fleet at market conform conditions. It is expected to have this finalized in the fourth quarter of the year.

Pressurized: The pressurized freight market was hit the hardest across the entire LPG segment. EXMAR, while maintaining a strategically balanced fleet in each region, has decided to reposition a vessel East in order to take advantage of the better freight market conditions in this basin. It is expected that the pressurized freight market will remain under pressure during 2021.

The current market conditions have led management to reassess the useful life of this fleet and reduce it from 30 years to 20 years as of 2020 onwards. This change has an impact of USD 2.6 million extra depreciation for the six months included in the condensed consolidated interim financial statements.

LNG: EXMAR has currently only EXCALIBUR in its fleet, which is on charter to Excelerate until end 2021 / beginning 2022 at rewarding levels.


The operating result (EBIT) for the Business Unit Infrastructure in the first half of 2020 was USD 6.1 million (compared to USD – 9.2 million for the first half of 2019). The main explanation for this is increased revenue as a consequence of the YPF contract for TANGO FLNG which started operations in the last quarter of 2019.

TANGO FLNG has delivered five shipments or 624,000 m³ of LNG to its customer to date with an availability of 99%. Winter regime is in place now in Argentina and liquefaction activities have been stopped as from 11 May as per our customer’s instruction.

As announced in our press release dated 25 June 2020, EXMAR has received from YPF a notice of force majeure. EXMAR considers the notice to be unlawful, has reserved its rights and is considering its best option to defend its interests.

Since the last payment received in June 2020, in respect of the production in March 2020, further payments have been suspended on the ground of the alleged force majeure. Management has registered a provision for uncollected revenues for a total of USD 17.7 million.

FSRU S188 continues serving under the charter party with Gunvor. Arbitration with respect to a dispute under the contract is ongoing.

Accommodation barge NUNCE contributes as anticipated under its long term charter with Sonangol. For the accommodation barge WARIBOKO, EXMAR and TOTAL Exploration & Production Nigeria are currently discussing an amendment of the contract concluded earlier this year under current adverse market conditions.

Engineering and construction supervision of EOC’s (Houston) third semisubmersible floating production system, under construction for Murphy Oil, continues. Although exploration and production activities in the Gulf have taken a deep dip, the OPTI concept is seen as an attractive solution in the current market with its low breakeven cost and proven performance. Activity levels and operating result of EOC for 2020 are expected to be positive.

Activity level and expected operating result of DV Offshore remain in line with projection despite the current business environment.


The contribution of the Supporting Services to the operating result (EBIT) for the first half of 2020 was USD 1.8 million (compared to USD 18.7 million in 2019 for the same period including a capital gain of USD 19.3 million on the sale of RESLEA).

For EXMAR SHIPMANAGEMENT, from an O&M perspective, the year 2020 has been impacted by COVID-19 pandemic. The commitment, loyalty and dedication of our crew at sea, with the support from our shore-based teams and their close collaboration with our long-term partners have ensured all assets under management have been fully operational and available.


During the first months of the year EXMAR’s liquidity position evolved positively amongst other because of the release on 26 February 2020 by the Bank of China of USD 40 million from the debt service reserve account in respect of the financing of TANGO FLNG. The amount of USD 40 million has been partially allocated to the repayment of bridge loans and to cover EXMAR’s capital commitments.

However, on 25 June 2020 EXMAR announced having received written notification of force majeure from YPF S.A. under the Charter Agreement and Services Agreement for the TANGO FLNG between YPF and EXMAR. As of the date of this report the amounts outstanding amount to USD 30.3 million of which USD 24.1 million are overdue.

As a consequence of the YPF situation part of the Revolving Credit Facility of EUR 18 million granted by KBC, BNPP Fortis and Belfius (and guaranteed by GIGARANT for 50%) has been temporally suspended.

The condensed consolidated financial statements for the period ended 30 June 2020 have been prepared on a going concern basis. The main assumptions and uncertainties for EXMAR underpinning the going concern assessment are concentrated around following matters:

In September 2019, GUNVOR gave notice of a dispute under the Charter and has commenced arbitration. Meanwhile the hire continues to be paid by GUNVOR and management assumes that the charter remains in full force and effect and is of the opinion that the hire paid is effectively earned.

– EXMAR has received a committed offer from a Japanese Leasing company for post-delivery financing of the first VLGC under construction and is progressing well for a similar structure for the second vessel. These financings will cover the first payments in April and July 2021 of the last instalments due at delivery of the two Very Large Gas Carriers under construction at Jiangnan, amounting to USD 62 million per vessel, as well as the repayment of the USD 20 million predelivery financing at that date. Finalization of these financings is expected in the fourth quarter 2020.

– Positive outcome of the dispute with YPF leading to future income generation on the TANGO FLNG barge and successful collection of related receivable positions.

– Subject to a positive outcome of the YPF dispute the management expects that the EUR 18 million Revolving Credit Facility granted by KBC, BNPP Fortis and BELFIUS will be released and fully available.

– EXMAR LPG (the Joint Venture with Teekay LNG) has received commitment from a syndicate of banks led by NORDEA for a USD 280 to 310 million refinancing of the current facility expiring in June 2021. Finalization of this refinancing is expected in the fourth quarter 2020.

Considering the assumptions and uncertainties described above, the Board is confident that management will be able to maintain sufficient liquidities to meet its commitments and therefore it has an appropriate basis for the use of the going concern assumption. In the event the above assumptions are not timely met, there is a material uncertainty whether the Company will have sufficient liquidities to fulfil its obligations of at least 12 months from the date of authorizing these financial statements.


The Company has met all its financial covenants as at 30 June 2020 and believes that based on forecasts for the remaining of the year, and irrespective of the payments due by YPF on TFLNG, all covenants will be met as per December 2020.


The COVID-19 virus and the subsequent energy demand destruction together with the volatility of oil price add more uncertainty in the world. Several operational measures on-shore and on-board have been taken by EXMAR to ensure the safety and wellbeing of our personnel and the continuity of our business operations. The majority of our ships are currently operating under medium to long-term contracts. The effect of the COVID-19 pandemic on the interim financial statements is limited with the exception of the YPF notice of Force Majeure.

Outlook for 2020: The effect of the COVID-19 pandemic is foreseen to be limited for EXMAR’s results for the balance of the year but the situation is closely monitored.

Sea News, September 14

Baibhav Mishra
Author: Baibhav Mishra