Summary
The recent volatility in LNG (liquefied natural gas) shipping stocks reflects significant geopolitical tensions impacting energy markets. While global indices experienced mixed results, Asian LNG shipping companies led declines amidst heightened unrest in the Middle East, threatening vital routes like the Strait of Hormuz. However, many U.S. and European companies gained, with some, like New Fortress Energy, adopting strategic measures to improve liquidity. Despite these fluctuations, select firms achieved substantial gains, highlighting the LNG shipping sector’s resilience and risks.
UPI & SPX
Last week, UPI, which tracks listed LNG shipping companies, lost 7.53 points, or 4.28%, closing at 168.62 points. The S&P 500 index gained 0.22%. The chart below shows both indices with weekly data.
Broader view
Geopolitical events in the Middle East, which unsettled the oil and gas markets, mainly interfered with the calm course of the week. Despite the decline, UPI still holds a positive trend.
Constituents
The decline was mostly among Asian companies only, with Nakilat joining them. In contrast, US and European companies grew, some even significantly.
One interesting development was around New Fortress Energy (NASDAQ: NFE), which, as we wrote in our last report, announced on Monday that it would postpone its dividend payout. Tuesday saw the first bit of good news, with the debt maturity date being pushed back. Then, on Wednesday, another measure from Tuesday’s deal was announced: NFE issued roughly 46.4 million new shares at $8.63 each, raising roughly $400 million in cash.
The Seeking Alpha website reported the following: To provide additional liquidity, the company said it is looking to monetize below-market charters by subchartering vessels it does not use within its own portfolio; management believes this move offers a pathway for $150M-$200M of gross proceeds in 2024-25. NFE ended the volatile week at $10.09 per share, up 3.3% overall.
Belgium’s Exmar NV (BSE: EXM) showed the most significant gains, rising 6.4%. Two companies with 4.6% growth followed it: Excelerate Energy (NASDAQ: EE) and BP (NYSE: BP). While EE continues to trend higher, BP appears to be slowing down in the opposite direction.
The other two gas and oil producers added an identical 3.6%. Like BP, Shell (NYSE: SHEL) and Chevron (NYSE: CVX) are more likely to reverse or stall the decline at the moment. However, the geopolitical situation may favour them.
On the other hand, Golar LNG (NASDAQ: GLNG) is spoiling the upside, rising 3.4% and continuing to head toward the $40 level. The rise continues after speculation the previous week about GLNG’s takeover by Perenco, which had a 10% stake then.
Tsakos Energy Navigation (NYSE: TEN) also reached the 3% growth threshold. Other gains have been smaller: Awilco LNG (OSE: ALNG), Capital Clean Energy Carriers (NASDAQ: CCEC) and Dynagas LNG Partners (NYSE: DLNG) were up a similar 2.8%, 2.7% and 2.6%, respectively, while Flex LNG (NYSE/OSE: FLNG) added 1.9%.
Conversely, Japan’s Kawasaki Kisen Kaisha (TSE: 9107) saw the most significant drop, writing off 8.5%. Korea Line Corporation (KRX: 005880) lost 7.8%, and another Japanese company, NYK Line (TSE: 9101), fell 6.5%. Mitsui O.S.K. Lines (TSE: 9104) and Malaysia’s MISC Bhd (KLSE: 3816) then lost a matching 4.8%. With Qatar’s Nakilat (QSE: QGTS) down 3.5%, the declines are believed to be related to Iran’s threat to close the Strait of Hormuz.
About UPI
Established in 2020, the UP World LNG Shipping Index is a rules-based stock index family designed to measure the performance of worldwide publicly traded companies involved in the maritime transport of liquefied natural gas (LNG). This unique index covers 19 companies and partnerships worldwide, representing over 65% of the world’s LNG carrier fleet in 2020. The UP Index offers premium services with freemium and trial access to charts. With Freemium, users can access the basic UPI vs S&P 500 chart after email registration. The trial includes full access for fourteen days.
Source: UP-Indices.com