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Introduction & Market Context
Awilco (OTC:AWLCF) LNG ASA ( Euronext (EPA:ENX) Expand:ALNG) presented its first quarter 2025 results on May 21, revealing a challenging period for the LNG shipping company. The Oslo-listed owner of two modern LNG carriers reported a net loss as spot rates in the LNG shipping market reached historically low levels. Despite these headwinds, the company emphasized its ability to weather the current market downturn, highlighting a stable cash position and one vessel secured on a fixed-rate contract until late 2025.
The company’s stock closed at 2.56 on May 20, down 3.4% and trading significantly below its 52-week high of 8.9, reflecting the difficult market conditions facing LNG shipping operators.
Quarterly Performance Highlights
Awilco LNG reported a net loss of USD 3.3 million (USD 0.02 per share) for Q1 2025, a substantial decline from the net profit of USD 1.5 million (USD 0.01 per share) recorded in Q4 2024. The deterioration in financial performance was evident across all key metrics, with net freight income falling to USD 8.3 million from USD 9.3 million in the previous quarter.
The company’s EBITDA dropped significantly to USD 3.8 million, less than half the USD 8.8 million achieved in Q4 2024. Vessel utilization declined to 72% from 89% in the previous quarter, while net Time Charter Equivalent (TCE) rates fell to USD 46,000 per day from USD 56,800 per day.
As shown in the following income statement, the company’s performance has weakened considerably compared to both the previous quarter and the same period last year:
The company’s balance sheet showed a slight decline in total assets to USD 329.6 million as of March 31, 2025, compared to USD 335.2 million at the end of 2024. Total (EPA:TTEF) equity decreased to USD 134.0 million from USD 137.2 million over the same period.
Despite reporting a loss, Awilco LNG maintained positive operating cash flow of USD 6.0 million for the quarter, though this represents a significant decrease from the USD 20.9 million generated in Q1 2024. The company’s cash position remained relatively stable at USD 22.9 million, down slightly from USD 23.5 million at the end of 2024.
Detailed Market Analysis
The LNG shipping market has experienced unprecedented weakness, with spot rates dropping to all-time lows at the end of 2024 and remaining at very low levels throughout early 2025. The presentation highlighted some recent increased activity on multi-month deals, but noted these were at "low and unsustainable levels."
The following chart illustrates the dramatic decline in spot rates for both Steam Turbine (ST) and Tri-Fuel Diesel Electric (TFDE) vessels, with current rates well below historical averages:
Regional trade flows showed significant shifts in the first quarter of 2025. European LNG imports increased substantially year-over-year, while Asian imports declined, primarily due to reduced demand from China. Meanwhile, US exports continued to grow as new liquefaction plants ramped up their operations.
Gas prices have moderated from winter peaks but remain elevated as the market anticipates restocking ahead of the next winter season. The presentation noted the absence of arbitrage opportunities between Europe and Asia, as well as the lack of contango in the market to support floating storage.
Industry Outlook
Despite the current market challenges, Awilco LNG presented a positive long-term outlook for the LNG shipping sector. The company highlighted substantial growth in LNG production capacity, with 355 MTPA of new capacity currently under construction or in advanced stages of development, of which approximately 200 MTPA have reached Final Investment Decision (FID).
The presentation noted that several new LNG projects in the US are advancing, encouraged by the new administration. Additionally, Shell expects more than a 50% rise in global LNG demand by 2040, suggesting more FIDs will be required to meet future demand.
On the supply side, the LNG carrier orderbook stands at 306 vessels, representing 41% of the current trading fleet. However, only 21 of these newbuildings remain unfixed, suggesting limited speculative ordering despite pressure on contract prices, interest rates, and charter rates.
Strategic Initiatives
Awilco LNG emphasized its strategic positioning to navigate the current market downturn. The company operates two 2013-built 156,000 cbm TFDE LNG carriers, with different commercial strategies for each vessel. The WilForce is trading in the spot market while actively pursuing longer contracts, while the WilPride is fixed until late 2025 with a two-year option.
The company highlighted its "comfortable cash position" and the security provided by having one vessel on a fixed-rate contract, stating it is "well prepared to endure the current challenging market." Management remains confident in the mid- and long-term demand for LNG transportation.
Awilco LNG described itself as a "fully integrated pure play LNG transportation provider," emphasizing its modern vessels, Tier 1 customers, solid ownership, experienced management team, and opportunistic strategy.
Forward-Looking Statements
While acknowledging the current market challenges, Awilco LNG maintained an optimistic outlook for the future of the LNG shipping market. The company emphasized the growing global demand for LNG, particularly as economies transition to cleaner energy sources, and the significant expansion of LNG production capacity currently underway.
However, investors should note the substantial gap between current market conditions and the company’s more positive long-term outlook. With spot rates at all-time lows and one of Awilco’s two vessels exposed to this challenging market, the company may continue to face financial pressure in the near term despite its relatively stable cash position.
The company’s ability to secure a longer-term contract for the WilForce in the current market environment will be crucial for improving its financial performance in the coming quarters.
Full presentation:
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