Golar LNG Partners LP: Market Fears Create Capital Gains And High Yield Opportunity

Investment Thesis Golar LNG Partners LP (GMLP) has seen rapidly declining revenue and distributable cash flow. Investors are fleeing GMLP causing its yield to hit new highs, but is it worth the risk?
Business Overview GMLP operates in the realm of liquid natural gas, LNG:
Source: GMLP Presentation
GMLP operates vessels under long-term contracts with liquefying natural gas, shipping it, converting it back to gas form and is in the works to operate land-based natural gas power plants. Essentially, GMLP's end game is to offer end-to-end services in regards to natural gas. Originally, GMLP focused primarily on shipping LNG, but now owns multiple regasification vessels and 50% ownership of a liquefaction vessel. The remainder of the vessels, etc. is currently owned and operated by GMLP's sponsor, Golar LNG Limited (GLNG).
Source: GMLP Presentation
GMLP's financial strength is suffering due to contracting issues for the Golar Spirit. Currently, Golar Spirit is on cold layup - essentially it is being unused and management is seeking to contract it out moving forward.
Looking forward, there is an expected undersupply in the LNG shipping market, meaning that GMLP is hoping to secure long-term contracts for Golar Mazo. These vessels are being used on the spot market while waiting for a long-term contract has hurt GMLP's overall financial strength.
Following the DCF History GMLP is seeing rapidly shrinking distribution coverage due to declining... Read more

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