Golar LNG Partners Can Revive Its Dividend

Seeking AlphaDividend Ideas | Services  | BermudaGolar LNG Partners Can Revive Its DividendDec. 3, 2020 5:50 PM ET|| About: Golar LNG Partners LP (GMLP), Includes: GLNGby: Alex BehrensAlex Behrens Value, Research Analyst, GrowthSummaryGolar LNG Partners has been through a rough few quarters, struggling to refinance bonds due just as COVID was emerging around the world and massively slashing the dividend in Q2.
However, utilization of vessels is high and growing, and demand for value-added LNG shipping isn't going anywhere.
With additional revenue from the advanced seaborne natural gas extraction vessel Hilli and more ships to bring online, Golar LNG Partners could be back to cash machine status by H2 2021.
Golar LNG Partners
Golar LNG Partners (GMLP) is the limited partner in the larger Golar LNG Limited (GLNG) relationship. Golar LNG Partners operates older ships as profitably as possible, typically acquired through purchases from the larger Golar MP. Golar LNG Partners operates LNG carrying tankers and floating storage and regasification unit (FSRU) vessels that are well suited to emerging economies. Lack of more advanced power generation infrastructure makes these vessels particularly well suited to Southeast Asia, South America, and parts of Africa and the Middle East.

Golar Q3 Presentation
Golar LNG Partners funds capacity and revenue expansion by purchasing older vessels from Golar LNG Limited with debt financing. This model allows Golar LNG Partners to fund dividends and pay interest expenses through earnings, but also requires the debt be refinanced every few years, as will be required with $500 million in balloon payments callable in May 2021. Management statements on the Q3 earnings call indicated confidence that Golar will be able to refinance this debt at a favorable rate sometime early in 2021. Thereafter, another $400 million in bonds maturing in 2021 and 2022 will also need to be addressed before the focus can return to... Read more

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