Höegh LNG Partners LP Reports Financial Results for the Quarter Ended September 30, 2021

PR Newswire

HAMILTON, Bermuda, Nov. 18, 2021

HAMILTON, Bermuda, Nov. 18, 2021 /PRNewswire/ -- Höegh LNG Partners LP (NYSE: HMLP) (the "Partnership") today reported its financial results for the quarter ended September 30, 2021.

Highlights

   -- Continued measures to mitigate the risks from the COVID--19 pandemic and 
      ensure health and safety of crews and staff, whose wellbeing is the 
      Partnership's highest priority 
   -- No reported cases of COVID--19; 100% availability of FSRUs for the third 
      quarter of 2021 
   -- Reported total time charter revenues of $35.6 million for the third 
      quarter of 2021, compared to $35.9 million of time charter revenues for 
      the third quarter of 2020 
   -- Generated operating income of $27.1 million, net income of $17.4 million 
      and limited partners' interest in net income of $13.5 million for the 
      third quarter of 2021, compared to operating income of $28.1 million, net 
      income of $19.5 million and limited partners' interest in net income of 
      $15.8 million for the third quarter of 2020 
   -- Operating income, net income and limited partners' interest in net income 
      were impacted by unrealized gains on derivative instruments for the third 
      quarter of 2021 and 2020, mainly on the Partnership's share of equity in 
      earnings of joint ventures 
   -- On November 15, 2021, paid a cash distribution of $0.01 per common unit 
      with respect to the third quarter of 2021, which was the same as in the 
      second quarter of 2021 
   -- On November 15, 2021, paid a cash distribution of $0.546875 per 8.75% 
      Series A cumulative redeemable preferred unit ("Series A preferred unit"), 
      for the period commencing on August 15, 2021 to November 14, 2021 
   -- On September 23, 2021, entered into agreements with subsidiaries of New 
      Fortress Energy Inc ("NFE") to charter the Höegh Gallant primarily 
      for FSRU operations for a period of ten years, with an expected 
      commencement during December 2021 (the "New Charter"). The Partnership 
      has also entered into an agreement to suspend the existing charter for 
      the Höegh Gallant with a subsidiary of Höegh LNG, with effect 
      from the commencement of the New Charter (the "Suspension Agreement"). 
      The charter rate under the New Charter, in line with the current market, 
      will be lower than under the existing charter for the Höegh Gallant. 
      However, under the Suspension Agreement, Höegh LNG's subsidiary will 
      compensate the Partnership monthly for the difference between the charter 
      rate earned under the New Charter and the charter rate earned under the 
      existing charter with the addition of a modest increase until July 31, 
      2025, the original expiration date of the existing charter. Afterwards, 
      the Partnership will continue to receive the charter rate agreed with NFE 
      for the remaining term of the New Charter. In addition, pursuant to the 
      Suspension Agreement, certain capital expenditures incurred to prepare 
      and relocate the Höegh Gallant for performance under the New Charter 
      will be shared 50/50 between Höegh LNG and the Partnership, subject 
      to a cap on the obligations of the Partnership. 
   -- On September 29, 2021, the Partnership entered into an agreement with its 
      lenders to defer the maturity date of the commercial tranche of its 
      Lampung facility to allow for more time to conclude a refinancing of this 
      tranche. The lenders agreed to defer the maturity date of the commercial 
      tranche from September 29, 2021 until January 14, 2022. Subject to 
      commitment letters and a term sheet for a refinancing of the commercial 
      tranche being in place by December 29, 2021, the maturity date will 
      automatically be further deferred to March 29, 2022. 
   -- The charterer under the lease and maintenance agreement for the PGN FSRU 
      Lampung ("LOM") served a notice of arbitration ("NOA") on August 2, 2021 
      to declare the LOM null and void, and/or to terminate the LOM, and/or 
      seek damages. PT Hoegh LNG Lampung ("PT HLNG") has served a reply 
      refuting the claims as baseless and without legal merit and has also 
      served a counterclaim against the charterer for multiple breaches of the 
      LOM. PT HLNG will take all necessary steps and will vigorously defend 
      against the charterer's claims in the legal process. Notwithstanding the 
      NOA, both parties have continued to perform their respective obligations 
      under the LOM. 
(1) Segment EBITDA is a non-GAAP financial measure used by investors to 
measure financial and operating performance. Please see Appendix A for a 
reconciliation of Segment EBITDA to net income, the most directly comparable 
GAAP financial measure. 

Financial Results Overview

For the three months ended September 30, 2021, each of the Partnership's FSRUs have had 100% availability due to the diligent efforts of the crew and staff to ensure all aspects of operations continued to function smoothly in spite of challenges as a result of the COVID--19 pandemic. The Partnership has mitigated the risk of an outbreak of COVID--19 on board its vessels by extending time between crew rotations on the vessels and developing mitigating actions for crew rotations. Management and administrative staffs have largely transitioned to working remotely from home to address the specific COVID--19 situation in the applicable geographic location. The Partnership has fulfilled its obligations under the time charter contracts and not experienced any off-hire for its FSRUs for the three months ended September 30, 2021.

The Partnership reported net income of $17.4 million for the three months ended September 30, 2021, a decrease of $2.1 million from net income of $19.5 million for the three months ended September 30, 2020. Net income was impacted by unrealized gains on derivative instruments for the third quarter of 2021 and 2020, mainly included in the Partnership's share of equity in earnings of joint ventures.

Excluding all of the unrealized gains (losses) on derivative instruments, net income for the three months ended September 30, 2021 would have been $15.1 million, a decrease of $2.2 million from $17.3 million for the three months ended September 30, 2020. Excluding the impact of the unrealized gains (losses) on derivatives, the decrease is primarily due to higher administrative expenses and a higher income tax expense for the three months ended September 30, 2021, compared to the corresponding period in 2020.

Preferred unitholders' interest in net income was $3.9 million for the three months ended September 30, 2021, an increase of $0.2 million from $3.7 million due to additional preferred units issued as part of the at-the-market offering program ("ATM program"). Limited partners' interest in net income for the three months ended September 30, 2021 was $13.5 million, a decrease of $2.3 million from limited partners' interest in net income of $15.8 million for the three months ended September 30, 2020. Excluding all of the unrealized gains (losses) on derivative instruments, limited partners' interest in net income for the three months ended September 30, 2021 would have been $11.3 million, a decrease of $2.3 million from limited partners' interest in net income of $13.6 million for the three months ended September 30, 2020.

Equity in earnings of joint ventures for the three months ended September 30, 2021 was $6.1 million, an increase of $0.3 million from equity in earnings of joint ventures of $5.8 million for the three months ended September 30, 2020. Unrealized gains on derivative instruments in the Partnership's joint ventures impacted the equity in earnings of joint ventures for the three months ended September 30, 2021 and 2020, respectively. Excluding the unrealized gain on derivative instruments for the three months ended September 30, 2021 and 2020, the equity in earnings of joint ventures would have been $3.8 million for the three months ended September 30, 2021, an increase of $0.3 million from $3.5 million for the three months ended September 30, 2020. Excluding the unrealized gain on derivative instruments for the three months ended September 30, 2021 and 2020, the increase was mainly due to lower interest expenses for the three months ended September 30, 2021, compared to those for the three months ended September 30, 2020. The Partnership's share of its joint ventures' operating income was $6.4 million for the three months ended September 30, 2021 and 2020, respectively.

Operating income for the three months ended September 30, 2021 was $27.1 million, a decrease of $1.0 million from operating income of $28.1 million for the three months ended September 30, 2020. Excluding the impact of the unrealized gains on derivatives impacting the equity in earnings of joint ventures for the three months ended September 30, 2021 and 2020, operating income for the three months ended September 30, 2021 would have been $24.9 million, a decrease of $0.9 million from $25.8 million for the three months ended September 30, 2020.

Segment EBITDA(1) for the three months ended September 30, 2021 was $35.1 million, a decrease of $1.3 million from $36.4 million for the three months ended September 30, 2020.

Total operating expenses for the three months ended September 30, 2021 were $14.5 million, an increase of $0.9 million from $13.6 million for the three months ended September 30, 2020. The increase is principally due to higher administrative expenses for the three months ended September 30, 2021, compared with the three months ended September 30, 2020.