Avance Gas is set to bank a huge profit from offloading its last two VLGC newbuildings.

An unnamed buyer will pay $240m for the Oslo-listed company’s last two 91,000-cbm dual-fuel ships, scheduled for delivery next year, giving Avance Gas a $73m profit.

The buyer has agreed to pay $240m en bloc for the two newbuilding’s when they are delivered from the yard i.e., ex-yard delivery.

The newbuildings, with intended name Avance Castor and Avance Pollux, were originally scheduled for delivery in the third and fourth quarter of 2023 but has been delayed with expected delivery now scheduled for March and May 2024.

Øystein Kalleklev-led Avance Gas said the newbuildings were contracted in April 2021 at price of approximately $78m each.

They have since been upgraded with capex of about $3m each for the ships to be able to load ammonia cargoes as well as being ready to run on ammonia as fuel.

Furthermore, since these two ships have been financed with a $135m sale-and-leaseback agreed in August 2022, Avance Gas has agreed with the financier to swap the lease from the two newbuildings to the sister ships 2022-built Avance Polaris and Avance Capella, which are currently financed under a bank loan maturing in 2027.

Such refinancing of Avance Polaris and Avance Capella is expected to be carried out during first quarter of 2024 and, as it claimed by the company, this will further increase its cash by approximately $41m.

Øystein Kalleklev, CEO of Avance Gas, commented: “We are pleased to announce the $240 million sale of our two remaining VLGC newbuilds which will generate both a very attractive book profit of about $73 million and a cash release of approximately $160 million.”

Kalleklev said his focus was on maximising shareholder value.

“While maximizing shareholder value might seem less in vogue these days than in the past, it remains our number one priority and is our license to operate as prudent stewards of our shareholders’ capital.”

“The transaction announced today highlights the sharp positive shift in outlook for the VLGC market and this has enabled us to pocket a sizeable profit and thus take some money of the table in an improved market,” he added.

The company currently owns twenty LPG ships consisting of fourteen modern VLGCs including the two dual fuel LPG VLGCs for delivery and resale in 2024, and four dual fuel MGCs for delivery in 2025 and 2026.