FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 20 July 2016

Hoegh Sweet It Is

by Robert Rapier, Investing Daily

Investing Daily Article of the Week

In this week's monthly web chat for subscribers of The Energy Strategist and MLP Profits, someone asked a question about the master limited partnership Hoegh LNG Partners (NYSE: HMLP). It's been a while since I took a close look at HMLP, so I said I would report back. Here is the question, followed by an overview and update of HMLP.

Q: Do you have HMLP on your radar? I´m residing in a country where I don't have to pay tax on foreign investment income, so the fact that there is no withholding tax for HMLP´s distributions is quite a plus for me (compared to US-based companies). Should this additional benefit of HMLP make me want to own it?

Hoegh LNG Partners (NYSE: HMLP) made its public trading debut in 2014. The Marshall Islands-registered partnership was formed by the Norwegian company Hoegh LNG Holdings, a fully integrated liquefied natural gas (LNG) service provider offering long-term floating production, transportation, regasification and terminal solutions for LNG.

HMLP operates four floating storage and regasification units ("FSRUs"), is one of only three operators of FSRUs in the world, and is the only publicly listed FSRU pure play. In addition to transporting LNG, the regasification vessels function as floating LNG import terminals.

The business opportunity for HMLP is clear. Natural gas is projected to be the fastest growing fossil fuel for the foreseeable future, and LNG production capacity is projected to increase by nearly 40% by the end of 2020. Seaborne LNG exports are projected to grow more than twice as fast as overall natural gas consumption through 2035.

The number of countries importing LNG has more than doubled from 12 in 2000 to 29 in 2014. Because LNG can be shipped to a wide variety of destinations, as long as regional price differences in gas persist more countries will pursue LNG imports. Three of four new markets commencing LNG imports in 2015 chose to employ FSRUs, which are approximately half the cost and construction time of a land-based LNG terminal.

HMLP has grown its distribution by 22% since its IPO. Its current fleet has an average age of 3.4 years, and an average remaining contract term of 14 years plus options. The company has no direct commodity exposure. It also has a pipeline of up to 4 more FSRUs dropdown candidates to drive earnings growth and distribution expansion.

The revenue stream looks secure. For Q1 2016 HMLP generated Adjusted EBITDA of $25.2 million versus $15.9 million for Q1 2015. Distributable cash flow was $11.0 million with coverage of 1.0x. The partnership currently yields 9.2%.

Like many other partnerships with significant foreign or marine operations, Hoegh LNG Partners has chosen to pay taxes as a corporation, which means distributions will treated as qualifying dividends and reported on form 1099. (To better understand why a partnership would elect to be taxed as a corporation, see Marshalling the Marines.)

In contrast with U.S.-based partnerships, Hoegh LNG does not, in fact, deduct backup withholdings from distributions made to foreign owners, eliminating the need to file a U.S. tax return in order to obtain a refund. That's certainly a point in its favor, but the only one for U.S. residents to consider this promising LNG venture.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Investing Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Investing


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
Comments on Feyerabend’s ‘Against Method’, Part III
Taking a Wrench to Healthcare
News Blog
Russia Falls Into Old Habits
Infographic Of The Day: Commodity Update, Is The Summer Slump Over
Early Headlines: Asia Stocks Mixed, Oil Mixed, Voting Fraud, Pres. Forecast Little Changed, CETA Not Dead, Generous Iraqis, Terrorists In Pakistan, Duterte Wants Divorce From US And More
October 24, 2016 Weather and Climate Report - La Nina / El Nino?
Most Read Articles Last Week Ending 22 October
Londoners Most Uneasy About Chatting To Strangers
Average Gasoline Prices for Week Ending 24 October 2016 Now Higher Than One Year Ago
Earnings And Economic Reports: Week Starting 24 October 2016
New Findings: Anxiety Is Linked To Death From Cancer In Men
Nearly 1 In 6 European Adults Is Considered Obese
Acupuncture Is Useless
September 2016 CFNAI Super Index Moving Average Declines
Consequences Of Rising Income Inequality
Investing Blog
Slow Motion Torture
The Week Ahead: How Long For This Trading Range?
Opinion Blog
What Triggers Collapse?
The Beer Goggles Stock Market
Precious Metals Blog
Preparing For Post-Election Social Unrest
Live Markets
24Oct2016 Market Close: Wall Street Closes Higher, Quietly On Low Volume, Crude Back Up, US Dollar Trading At Resistance, Investors Remain Skeptical On Continuing Bullish Market
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

Crowdfunding ....



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved