Dynagas LNG Partners LP Annual Report - How They Did This Year

I’m putting together a guide to help you understand how Dynagas LNG Partners LP performed this past year. We will skip the dense financial filings and look at how the company makes money and what you should watch as an investor.

1. What does this company do?

Dynagas LNG Partners LP operates a fleet of six modern ships that carry Liquefied Natural Gas (LNG). These ships—the Clean Energy, Ob River, Amur River, Yenisei River, Lena River, and Arctic Aurora—have a combined capacity of 910,000 cubic meters.

The company does not own the gas. Instead, it rents its ships out through long-term contracts. These function like subscription plans, providing steady, predictable income. The company generated about $340 million in revenue last year and kept its ships busy nearly 100% of the time.

2. Financial structure and "The Big Move"

The company has 35,600,000 common units and three types of preferred units. These preferred units pay fixed yearly dividends of 9.0%, 8.75%, and 8.75%. Because these dividends are "cumulative," the company must pay any missed dividends to preferred holders before common unit holders receive a single cent.

A major highlight this year was the company’s effort to pay down debt. They paid off a $675 million credit line in June 2024, which protects them from rising interest rates. They also sold four ships to financial institutions and leased them back for 5 to 7 years. This move provided quick cash to pay off debt and improved their financial health, bringing their debt-to-profit ratio down to about 3.0x.

3. Key risks that could hurt the stock price

• Small Fleet: With only six ships, the company lacks the safety net of a larger fleet. If one ship needs repairs or breaks down, it can take 15–20% of the company's earning power offline.
• Customer Concentration: They rely on only three customers. SEFE provides 40% of revenue, Yamal Trade 35%, and Equinor 25%. If one of these companies faces financial trouble, Dynagas may struggle to pay its preferred dividends.
• The "Russian Connection": Two ships are chartered to the Russian Yamal LNG project. New EU sanctions starting in 2027 will block these ships from delivering Russian gas to EU ports. If the company cannot find new work for these ships, it could lose over $100 million in annual revenue.
• Management Ties: An outside company manages the fleet. This creates a conflict of interest because the manager gets paid based on the number of ships, not the company's profit. Dynagas pays them $15–$20 million in fees every year, regardless of how the business performs.
• Growth vs. Debt: Do not expect quick growth. The company stopped paying dividends to common unit holders to focus on paying off its remaining $450 million in debt. They are in "harvest mode," prioritizing survival over expansion.

4. The Bottom Line

Dynagas is focused on stability, not growth. As an investor, you aren't looking for a "moonshot." You are looking for a company that can manage its debt and navigate the complex politics of its Russian contracts.

Investor Checklist:

• Monitor the 2027 Deadline: Keep a close eye on any announcements regarding new charters for the ships currently tied to the Russian Yamal project.
• Track Debt Paydown: Watch the quarterly reports to see if the $450 million debt balance continues to shrink.
• Evaluate Cash Flow: Since common unit dividends are suspended, your primary interest is the company's ability to maintain its preferred dividend payments and keep the ships fully utilized.