Flex LNG (NYSE:FLNG) reported second-quarter results marked by higher spot-market earnings, full-quarter contributions from recently commenced contracts and the completion of its scheduled five-year special surveys across its 13-vessel fleet.
Chief Executive Officer Marius Foss said the company generated revenue of $106.8 million during the quarter, or approximately $102.7 million excluding EU Allowances. The result was the company’s second-best quarterly revenue performance since the fourth quarter of 2021, according to Foss.
Spot exposure and contract contributions lift results
Foss said Flex Artemis and Flex Volunteer benefited from a strong spot LNG shipping market during the second quarter. Meanwhile, Flex Constellation and Flex Aurora contributed a full quarter of earnings under contracts that began in March.
Chief Financial Officer Knut Traaholt said second-quarter revenue improved significantly from the first quarter, while vessel operating expenses rose because of higher crew-travel costs associated with disruptions in the Middle East. Average vessel operating expenses were $16,260 per day in the quarter, compared with approximately $16,100 per day for the first six months of 2026.
The company maintained its full-year vessel operating expense guidance of $16,000 per day. Traaholt also said interest expense continued to improve, reflecting lower loan margins and management of the company’s revolving credit facilities.
Flex LNG booked $4.7 million in gains on interest-rate derivatives, including $2.3 million of realized gains and $2.4 million of unrealized gains. Operating cash flow totaled $63 million during the quarter, compared with $37 million in the first quarter, excluding a $19 million positive working-capital change and $5 million of dry-docking capital expenditures.
- Cash at quarter-end was $397 million.
- The company paid $28 million in scheduled debt installments.
- It distributed $41 million to shareholders during the quarter.
- Its first debt maturity is due in the first quarter of 2029.
Traaholt said Flex LNG’s book equity ratio was 27.4%. Its interest-rate swap portfolio had a notional value of $775 million and was valued at $22 million at the end of the quarter, with an average fixed rate of 2.46%. The company expects to maintain an interest-rate hedge ratio of about 70% into the middle of next year.
Guidance maintained and dividend declared
Flex LNG maintained its full-year 2026 guidance, forecasting revenue between $345 million and $370 million, TCE earnings of $73,000 to $78,000 per day, and adjusted EBITDA of $255 million to $280 million.
The company said it had 51 years of minimum firm contract backlog, which could increase to 78 years if all charter options are exercised. It had contract coverage for nearly 89% of its remaining available days in 2026.
Flex Artemis and Flex Volunteer are expected to become available at the end of the third quarter. Foss said the company is marketing both vessels for spot employment and new term contracts.
The board declared a quarterly dividend of $0.75 per share, representing the company’s 20th consecutive quarterly dividend at that level. The payment is expected to be made around Sept. 17 to shareholders of record as of Sept. 3. Flex LNG said it has distributed about $850 million since 2021, including special dividends.
Management retained an “orange” assessment for its market outlook and other dividend considerations, citing a softer spot market, a heavy schedule of newbuild deliveries and elevated geopolitical risks. Foss said uncertainty remains regarding the duration of the Iran conflict and the timing of a normalization in Qatari LNG supply.
Fleet dry dockings completed
Flex Vigilant completed its dry docking in Denmark in June, marking the third and final dry docking scheduled for 2026. Foss said the company has now completed five-year special surveys for its entire 13-vessel fleet.
Average dry-docking costs were approximately $6 million per vessel, in line with guidance, and vessels spent an average of 17 days in dry dock. The company does not expect any dry dockings in 2027 and plans to begin its first 10-year docking cycle in 2028.
LNG market faces supply disruption and growing vessel availability
Management said global LNG trade volumes were broadly flat year to date, declining less than 1% from the prior-year period. Qatari exports were down by around 29 million tons, although higher U.S. exports, up 23% or nearly 40 million tons, offset much of that decline. Australia, Russia and other exporters, including LNG Canada and West African suppliers, also added volumes.
Foss said combined LNG exports from Qatar and the United Arab Emirates were down around 63% from normal levels. He added that U.S. liquefaction capacity was up about 14 million tons year over year, supported particularly by production ramp-ups at Plaquemines and gradually rising production from Golden Pass.
On demand, management said imports into Japan, South Korea and Taiwan remained resilient, while European and Chinese imports were lower than a year earlier. European gas inventories stood at 61% full, below 73% a year earlier and the lowest level in more than 15 years, according to the company.
Foss said the growth in Atlantic Basin supply could support LNG shipping demand if U.S. cargoes move to Asia. However, he noted that modern two-stroke vessel availability has increased both east and west of Suez, putting pressure on spot rates.
During the question-and-answer session, Foss said no Flex LNG vessels had traded inside the Strait of Hormuz since the end of February. He said charterers would pay the additional insurance required if they direct vessels into high-risk areas. Foss said the company believes the Strait of Hormuz will remain closed through 2026.
He described the third quarter as typically a seasonal shoulder period, noting that spot-market round-trip rates had fallen from roughly $120,000 during the prior third quarter to about $30,000. With two vessels becoming available at the end of the third quarter, management said it is positioning for what has historically been a stronger winter market.
About Flex LNG (NYSE:FLNG)
Flex LNG Ltd is a Bermuda-registered owner and operator of liquefied natural gas (LNG) carriers, offering shipping services to major energy producers and utilities worldwide. Since its establishment in 2006, the company has focused on building a versatile fleet of modern, eco-efficient LNG vessels designed to meet the growing global demand for lower-emission fuel transportation.
The company’s core activities encompass time-charter contracts, long-term transportation agreements and spot market voyages.
