Epic Gas Ltd. – Preliminary FY2013 earnings release – 07 Mar 2014

EPIC GAS LTD.
PRELIMINARY FINANCIAL STATEMENTS FOR THE PERIOD TO
31 December 2013

SINGAPORE, March 7, 2014 – Epic Gas Ltd. (“Epic Gas” or the “Company”) today announced its unaudited financial and operating results for the year 2013, the Company’s first full operational year.

Highlights

  • Total Revenues of US$ 78.3 million
  • Adjusted EBITDA of US$ 17.8 million
  • Average time charter equivalent revenues of US$ 8,617 per day, or US$ 262,100 per month.
  • Fleet utilisation of 97.5%
  • US$75 million private placement of common stock on NOTC completed February 2014
  • As of March 7, 2014, owned and operated fleet of 27 ships as compared to 22 ships as of January 1, 2013
  • As of March 7, 2014, newbuilding program of 13 ships (incl. 4 ships on bareboat-in contracts)

FY2013 Financials

Revenues for the full year 2013 amounted to US$ 78.3 million. The average time charter equivalent was US$ 8,617 per day.

Voyage expenses and vessels’ operating expenses were US$ 6.0 million and US$ 35.2 million respectively. Operating expenses include one-off expenses of US$ 1.6 million related to the transition of six ships into the Company’s in-house technical management.

Charter-in costs were US$ 8.4 million and are related to six bareboat chartered-in ships.

Depreciation and amortization, including depreciation of capitalised drydocking expenses, was US$ 13.8 million (US$ 3.7 million in 4Q2013).

General, administrative and management fees were US$ 11.8 million of which US$ 1.0 million are one-off expenses (legal and professional fees) related to the merger with Pantheon Inc.

Interest and finance costs were US$ 7.3 million.

Net Income / Loss – The Company recorded a net loss of US$ 7.3 million for the full year, including an impairment loss of US$ 1.4 million associated with the sale of the DP Azalea which closed January 2014.

EBITDA for the full year was US$ 15.2 million (US$ 4.1 million in 4Q2013). After adjustment for one-off items, Adjusted EBITDA amounted to US$ 17.8 million.

 

1)     Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.

2)     Total voyage days for fleet reflect the total days the vessels were in our possession for the relevant period net of off-hire days associated with major repairs, drydockings or special or intermediate surveys.

3)     Total charter days for fleet are the number of voyage days the vessels in our fleet operated on time charters for the relevant period.

4)     Total spot market charter days for fleet are the number of voyage days the vessels in our fleet operated on spot market charters for the relevant period.

5)     Total calendar days are the total days the vessels were in our possession for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys.

6)     Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.

7)     Fleet operational utilization is the percentage of time that our vessels generated revenue, and is determined by dividing voyage days (excluding commercially idle days) by fleet calendar days for the relevant period.

8)     Time Charter Equivalent (TCE) is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract. TCE revenues is a non-U.S. GAAP measure which provides additional meaningful information in conjunction with revenues from our vessels, the most directly comparable U.S. GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. It is also a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods. Please see below for a reconciliation of TCE rates to voyage revenues.


Fleet Development

In May 2013, Epic Gas ordered two 5,000cbm fully pressurised LPG carriers at Sasaki Shipyard Co., Ltd. with delivery in January 2014 and April 2014 respectively. A loan facility has been secured at 65% of the contract price. For the first newbuilding, which delivered on-schedule, the Company has secured a 1-year time charter in Europe.

In June 2013, the Company contracted to build two 3,500cbm fully pressurised LPG carriers at Kitanihon Shipbuilding Co., Ltd. with delivery in June 2014 and July 2014, respectively. A loan facility has been secured at 65% of the contract price. Both ships have been fixed on long-term time charters in the Caribbean.

In August 2013, Epic Gas concluded a bareboat hire purchase transaction of three 6,300-7,500 cbm fully pressurised gas carriers. The ships are employed on time charters in the Mediterranean and in the Caribbean.

In September 2013, Epic Gas exercised options with Kitanihon Shipbuilding Co., Ltd. to build two 5,000cbm fully pressurised LPG carriers to be delivered in January 2015 and March 2015, respectively. A loan facility has been secured at 65% of the contract price.

In December 2013, the Company ordered two 11,000cbm fully pressurised gas carriers at Kyokuyo Shipyard Corporation with delivery in 1Q2016 and 2Q2016, respectively.

In December 2013, the Company bareboat chartered in two 11,000cbm gas carriers. The first vessel will be built by Sasaki Shipyard Co., Ltd. for delivery in 1Q2015 and the second vessel by Kyokuyo Shipyard Corporation to be delivered in 3Q2016.

In December 2013, Epic Gas entered into MoAs to acquire the Gas Bali (5,000cbm, 2007 built) and Championship (7,200cbm, 2001 built) and to sell the oldest ship in its fleet, the DP Azalea (3,300cbm, 1991 built). The Company took delivery of Gas Bali and Championship and completed the sale of DP Azalea in January and February 2014. The purchase of the Gas Bali and Championship were financed with leverage of 60% of the acquisition price.

                                                                                                                               

Subsequent Events

In January 2014, Epic Gas exercised options with Kyokuyo Shipyard Corporation to build two 11,000cbm fully pressurised LPG carriers to be delivered in 4Q2016 and 1Q2017 respectively.

In February 2014, Epic Gas completed a private placement of 9,375,000 new shares at a subscription price of US$8.00 per share raising US$75 million. The shares are registered on the Norwegian OTC list in Oslo.

In February 2014, the Company extended inward bareboat charter contracts for four vessels and entered into new inward bareboat charter contracts for two 7,200cbm ships to be delivered from Kyokuyo Shipyard Corporation in Q22014.

About Epic Gas Ltd.

Epic Gas, headquartered in Singapore, owns and operates a fleet of fully pressurised gas carriers providing seaborne services for the transportation of liquefied petroleum gas and petrochemicals. Including newbuildings, the Company controls a fleet of 40 vessels which serve as a link in the international gas and petrochemical supply chains of leading oil majors and commodity trading houses throughout Asia, Europe, West Africa and the Americas.

Epic Gas also provides commercial and technical management for external owners.

For further information visit our website www.epic-gas.com

Company Contact

Uta Urbaniak
Chief Financial Officer
uurbaniak@epic-gas.com


Forward Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “feel,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements.

                                                                              EPIC GAS LTD.