FLEX LNG Profile
FLEX LNG Ltd. operates as a growth-oriented owner and commercial operator of fuel efficient, fifth generation LNG carriers.
As of March 10, 2023, the company owned and operated nine M-type, Electronically Controlled, Gas Injection (‘MEGI’) LNG carriers, of which four have partial re-liquefaction systems installed and three have full re-liquefaction systems installed, and, ii) four Generation X Dual Fuel (‘X-DF’) LNG carriers, which the company collectively refers to as its ‘Operating Vessels’ or the company’s ‘Fleet’. The company’s business is focused on the operation of its long-term charters for the company’s fleet.
Fleet Development
In January 2021, the company successfully took delivery of the company’s eleventh newbuilding LNG carrier, Flex Freedom, which was constructed at DSME.
In January 2021, the company successfully took delivery of the company’s twelfth newbuilding LNG carrier, Flex Volunteer, which was constructed at HSHI.
In May 2021, the company successfully took delivery of the company’s thirteenth newbuilding LNG carrier, Flex Vigilant, which was constructed at HSHI.
Employment of Fleet and Customers
The company manages the employment of its fleet. The company deploys its LNG carriers on period time charters, which can last up to several years, of which the company has a twelve of the company’s vessels on fixed rate time charters and one vessel on a variable rate contract indexed to the spot market. Time and bareboat charters are for a fixed period of time. Whereas, a voyage charter is generally a contract to carry a specific cargo from a loading port to a discharging port for an agreed-upon total charge.
Vessels operating in the spot market generate revenues that are less predictable but may enable the company to capture increased profit margins during periods of improvements in LNG charter rates, although the company is then exposed to the risk of declining LNG carrier charter rates. Typically, spot market charters can last from a few days up to two months. If the company commits vessels to period charters, future spot market rates may be higher or lower than those rates at which the company has period chartered out its vessels.
As of March 10, 2023, the company had eight vessels on time charters expiring from two to five years and five vessels on time charters expiring after 5 years.
The company would expect to deploy more vessels in the United States and the Caribbean. As freight rates usually vary between these areas, as well as voyage and operating expenses, the company evaluates such parameters when positioning the company’s vessels for new employment.
Customers
The company’s assessment of a charterer’s financial condition and reliability is an important factor in negotiating employment for the company’s vessels. Principal charterers include producers of LNG products, such as national, major and other independent energy companies and energy traders, and industrial users of those products. For the year ended December 31, 2022, the company had four customers accountable for more than 87.9% of the company’s total revenues.
In March 2019, the company entered into a time charter agreement with an supermajor for the employment of the vessel Flex Enterprise. The time charter had an initial firm period of 12 months, commencing at the end of the first quarter of 2019. The charterer has options to extend the charter period up to an additional four years, in 12-month periods. The first 12-month extension option was declared by the charterer in January 2020, extending the firm period under the time charter to the end of the first quarter of 2021. The second 12-month extension option was declared by the charterer in December 2020, extending the firm period under the time charter to end of the first quarter of 2022. The time charter had elements of a variable rate of hire. In June 2022, the company signed a charter party with the supermajor which replaced this existing charter, as further described below.
In November 2019, the company entered into a long-term time charter with a subsidiary of Gunvor Group Ltd for the employment of the Flex Artemis. The time charter has a firm period of five years, and the charterer has options to extend the charter period for an additional five years, in 12-month periods. The vessel immediately commenced its long-term time charter with Clearlake upon its delivery in August 2020. The time charter has elements of a variable rate of hire.
In October 2020, the Flex Amber commenced a time charter with a supermajor. The charter has a firm period of 12 months. In August 2021, an option was declared extending the variable rate time charter by one additional year. The time charter had elements of a variable rate of hire. In June 2022, the company signed a charter party with the supermajor which replaced this existing charter, as further described below.
In January 2020, the Flex Rainbow commenced a fixed rate time charter with an international trading house. The charter had a firm period of 12 months and the charterer extended the period by an additional 12 months by declaring their option. In February 2023, the charter, including the optional period, ended and the vessel commenced a new charter in direct continuance with the same charterer.
In April 2021, and through a series of actions since, the company has entered into fixed rate time charter agreements with Cheniere Marketing International LLP (‘Cheniere’) for five LNG carriers. Under the agreements and subsequent actions:
Flex Endeavour was delivered to Cheniere in April 2021 with a firm period ending in the third quarter of 2030 with an option to extend to the first quarter 2033;
Flex Vigilant was delivered to Cheniere in May 2021 with a firm period ending in the fourth quarter of 2030 with an option to extend to the second quarter 2033;
Flex Ranger was delivered to Cheniere in August 2021 with a firm period ending in the first quarter of 2027;
Flex Volunteer was delivered to Cheniere in April 2022 with a firm period ending in the first quarter of 2026 with an option to extend to the first quarter 2028; and
Flex Aurora was delivered to Cheniere in September 2022 with a firm period ending in the second quarter of 2026 with an option to extend to the second quarter 2028.
In May 2021, the company entered into a fixed rate time charter agreement with an international trading house for the vessel, Flex Constellation. The time charter commenced in May 2021 and has a firm period ending in the second quarter of 2024 with options to extend the term of the charter by up to three years.
In May 2021, the company entered into a fixed rate time charter agreement with an LNG portfolio player, for a firm period of a minimum of five years for Flex Freedom. The charter commenced in the first quarter of 2022 immediately following the expiration of her existing time charter. The charterer has the option to extend the period by an additional two years.
In November 2021, the company entered into fixed rate time charter agreements with minimum firm periods of three years with an international energy major for two LNG carriers, Flex Resolute and Flex Courageous. Under the agreements, the two vessels were delivered during the first quarter of 2022 in direct continuation of their existing time charters. The agreements include the options to extend each vessel by up to four additional years in two-year periods.
In June 2022, the company announced fixed rate time charters for Flex Amber and Flex Enterprise with a supermajor, to replace the existing variable rate time charters in respect of these vessels. The duration of both the time charters, referenced in this paragraph, is seven years and commenced in the third quarter 2022, with an expiry in the third quarter of 2029.
In June 2022, the company signed a ten-year fixed rate time charter for Flex Rainbow with a large global trading company. This new time charter will commence in direct continuation of the existing charter that is expected to expire in the first quarter of 2023.
In October 2021, the company entered into a service level agreement with a Front Ocean Management AS and Front Ocean Management Ltd (together referred to as ‘Front Ocean’) where they provide the company certain advisory and support services, including human resources, shared office costs, administrative support, IT systems and services, compliance, insurance and legal assistance.
The company's business is marine transportation of LNG, referred to as LNG shipping.
Environmental and Other Regulations in the Shipping Industry
A variety of government and private entities subject the company’s vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national authorities, such as the USCG, harbor master or equivalent), classification societies, flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these entities require the company to obtain permits, licenses, certificates and other authorizations for the operation of the company’s vessels.
The company is required to maintain operating standards for all of the company’s vessels that emphasize operational safety, quality maintenance, continuous training of the company’s officers and crews and compliance with United States and international regulations.
The company’s vessels are in substantial compliance with SOLAS and LLMC standards.
Under Chapter IX of the SOLAS Convention, or the ISM Code, the company’s operations are also subject to environmental standards and requirements. The company relies upon the safety management system that the company’s manager has developed for compliance with the ISM Code.
The company has obtained applicable documents of compliance for the company’s offices and safety management certificates for all of its vessels for which the certificates are required by the IMO.
The company has obtained Anti-fouling System Certificates for all of the company’s vessels that are subject to the Anti-fouling Convention.
Both the U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act impact the company’s operations.
All of the company’s vessels are in possession of a CLC State issued certificate attesting that the required insurance coverage is in force. The company comply and plan to comply going forward with the USCG's financial responsibility regulations by providing applicable certificates of financial responsibility.
All the company’s vessels are in substantial compliance with and are certified to meet MLC 2006.
History
FLEX LNG Ltd. was founded in 2006. The company was incorporated under the laws of the British Virgin Islands in 2006.
