FLEX LNG (NYSE:FLNG) is an emerging leader in the sea-borne transport of liquified natural gas. Liquified natural gas is an economically feasible manner to ship natural gas, but it requires processing at both ends of the shipping process. The company’s objective is to outperform industry peers by focusing on the newest, most efficient vessel types that are available. In regard to reducing global emissions, LNG is the most efficient use of hydrocarbons available, and it is coming under increasingly heavy demand.
Flex LNG was formally launched in 2006 with a British Virgin Islands registration. The company IPOd with a listing in Norway in 2009, and it has been in operation ever since. In 2017 the company redomiciled itself to Bermuda which led to listing on the Oslo stock exchange and then the New York Stock Exchange in 2019.
In 2019 the company also shifted away from rented vessels to in-house management. The company now operates and maintains 13 of its own fuel-efficient LNG carriers including 9 M-type and 4 X-DF-type vessels. The management company’s home port is Oslo, Norway.
Up until 2010, the bulk of LNG carriers were using steam-powered turbines to drive the propulsion systems. That began to change in the early 2000s and then in 2010, a major advancement was made. Engineers began designing slow-speed two-stroke dual-fuel engines that burn a blend of natural gas and marine diesel (or other fuels) highly efficiently.
The two types are M and X-DF which are based on high and low-pressure systems. M-type or MEGI LNG vessels are designed to be significantly more fuel-efficient than the then-current standard and offer appreciable savings to operators. X-DF vessels are another type of fuel-efficient LNG vessel that capitalize on low-pressure technology used by other engine types. The engines also provide greater flexibility because they can burn different types of fuels depending on operating costs.
Today Flex LNG and its network of subsidiaries provide seaborne transportation of liquified natural gas globally. The company also offers chartering and management services to other natural gas carriers. The company does not have an official dividend policy but it aims to distribute free cash to investors as it becomes available. There is a dividend reinvestment plan for shareholders of record. The stock only has 1 class of shares, ordinary, that come with a par of $0.10 following a reverse stock split that was enacted in 2019.
Business is supported by the growing global demand for natural gas and LNG. The company's shipping schedule tends to stay booked out 2 to 3 years from the present with many ships booked on charters/routes for 5 or more years. One deal, with Cheniere Energy, allows for up to 19 years of use and the charter can be extended if needed. This provides a stable and steady revenue stream for the company and dividends for investors. Institutional ownership in this stock tends to run high as well. Total revenue in 2022 was $26 billion and expected to grow at a near10% CAGR.
