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Hoegh LNG Holdings Ltd exits FLNG activities, takes Q4 $37 mln impairment

Tuesday, 16 Feb 2016

Hoegh LNG Holdings Ltd:Putting FLNG (floating liquefaction terminals) activities on hold and allocating all resources to FSRUs (floating storage and regasification units).This is where company sees highest return on invested capital and promising market prospects.Decision is a consequence of oversupplied LNG market and deteriorating energy and financial markets, which mean that investment decisions for new LNG production facilities, including the FLNG segment, will continue to be challenging for foreseeable future.However, market conditions for FSRUs continue to be favourable driven by growth in new LNG supplies at competitive prices.Sees high level of project activity for new FSRU projects, promoted by both LNG producers as well as LNG importers and downstream gas consumers.Says will not engage in further new FLNG developments, however, will complete its obligations towards existing FLNG customers.All FLNG employees will be transferred to FSRU business.Says has consequently decided to impair book value of its FLNG assets for an amount of $37 million in Q4 2015.These intangible assets are substantially all related to offshore FLNG FPSO FEED study that company completed in 2009, prior to IPO in 2011.Strategic change is expected to lead to reduction in annual net SG&A expenses of about $3 million going forward.

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