Capital Link hosted a presentation by the senior management of
A replay of the full session of the presentation and the extensive Q&A can be accessed at:
https://www.youtube.com/watch?v=iAs1gwvGVtc
Highlights from Dorian LPG’s session at the Capital Link Presentation Series include the following:
LPG Demand Has Risen in Wake of Invasion of
LPG has risen in prominence as an alternative to gasoline, coal, and oil due to its low cost, abundant supply, and portability. While it is a fossil fuel, LPG is also cleaner than many other energy sources, as it produces less air pollution and carbon emissions.
The war in
“Global demand for LPG is about 330 million metric tons, about one third of that is traded over the water” on VLGCs,
The EIA forecasts that production of LPG will increase by 5 to 6% in the US in the next two years, while LPG exports are expected to increase by 16% in 2023, and by 8% percent in 2024.
Scrubbers, Green Technology Integral to Future of Sector
This early experience with scrubbers convinced the company to retrofit more of its vessels with scrubbers and has even pushed the company to seek out solutions towards the next generation of green technology. “We believe Carbon capture will be the next thing to look at,”
VLGC Vessel Supply Outlook- Large Orderbook, but Industry Growth Expected
Unlike many other shipping sectors, the VLGC orderbook is quite large, with 70 ships on order from now until 2025, 45 of which are expected to be delivered this year alone. While such a large orderbook could be a cause for concern, there are a number of factors at play that may mitigate some of the market risk. “No one likes to have this many ships come into his market…but, per the EIA, the US expects pretty explosive export growth this year,”
Additionally, a significant portion of VLGCs on the water are ageing out, with 17% of the global fleet aged over 20 years, meaning that a significant number of vessels will have to be significantly renovated or scrapped in order to remain economically viable, particularly in terms of IMO regulations. While only one ship was scrapped in 2022, there are 58 ships currently on the water that are candidates for scrapping.
Disciplined Capital Allocation
Since its initial public offering in 2014, Dorian has returned almost
The company has refinanced its remaining debt facility into a seven-year facility, as compared to the standard five-year facility in shipping.
Dorian has bought back a large amount of its stock—the company had around 56 million shares outstanding when it went public, and currently has around 40 million shares outstanding.
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