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GasLog Partners LP  (NYSE:GLOP)
Q4 2018 Earnings Conference Call
Jan. 30, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Joelle and I'll be your conference operator today. At this time I would like to welcome everyone to GasLog Partners Fourth Quarter 2018 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. As a reminder, this conference call is being recorded.

Today's speakers are Andy Orekar, Chief Executive Officer; Alastair Maxwell Chief Financial Officer; and to commence the call, Joseph Nelson, Deputy Head of Investor Relations.

Mr. Nelson you may begin your conference.

Joseph Nelson -- Deputy Head of Investor Relations

Good morning and thank you for joining GasLog Partners Fourth Quarter 2018 Earnings Conference Call. For your convenience this call webcast and presentation are available on the Investor Relations section of our website www.gaslogmlp.com where a replay will also be available.

Please now turn to Slide 2 of the presentation. Many of our remarks contain forward looking statements. For factors that could cause actual results to differ materially from these forward looking statements, please refer to our fourth quarter earnings press release.

In addition, some of our remarks contain non-GAAP financial measures as defined by the SEC. A reconciliation of these is included in the appendix of this presentation.

I will now hand over to Andy Orekar, CEO of GasLog Partners.

Andrew J. Orekar -- Chief Executive Officer

Thank you, Joe. Good morning and thanks to everyone for joining GasLog Partners fourth quarter earnings call. I'll begin today's call with our highlights for the quarter and 2018. Our CFO, Alastair Maxwell will follow with a review of our financial performance and drop-down pipeline. After which, I'll conclude with an update on the LNG and LNG shipping markets as well as our distribution growth outlook. Following our presentation, we'd be very happy to take any questions you may have.

Turning to Slide 3, you can see our highlights of the fourth quarter. Following the strong operating performance and continued fleet growth, today I'm delighted to report our highest ever quarterly and annual Partnership performance results for revenues, EBITDA and distributable cash flow.

We declared a distribution of $0.55 per unit for the fourth quarter or $2.20 on an annualized basis, an increase of 3.8% over the third quarter of 2018 and an increase of 5.1% over the fourth quarter if '17, meeting our guidance of 5% to 7% growth that we established for the year.

Our coverage ratio for the quarter was 1.17 times or 1.22 times when adjusting for the drydocking of the GasLog Seattle. During the quarter, GasLog Partners and GasLog Limited agreed to modify the Partnership agreement with respect to GasLog's IDRs, permanently reducing our expected cost of equity capital of the Partnership.

In addition, we completed the drop-down acquisition of the Methane Becki Anne, with an attached charter to Shell through March 2024. In November, we raised a $100 million of growth proceeds through the issuance of 8.5% Series C preferred equity, which positions the Partnership to announce a further drop-down acquisition in the first quarter of 2019.

And lastly, we are reiterating our distribution growth guidance of 2% to 4% for 2019. And today, our Board has further authorized a $25 million common unit repurchase program over a period of three years. This buyback authority diversifies our means of returning capital to our unitholders, particularly during periods of market volatility, as we've seen in the last few months, and repurchases of our common units offer the added benefit of improving our coverage ratio.

Turning now to Slide 4 for a look at our track record of growth during the last year and since our IPO in 2014; 2018 was an active and transformative year for GasLog Partners. We completed two vessel acquisitions, increasing our wholly owned fleet to 14 carriers. We were awarded three charters with new customers, one with Cheniere for the GasLog Sydney and two with a major commodity trader for the GasLog Santiago and one of our steam ships. These recent announcements have contributed positively to revenues, EBITDA and distributable cash flow, all of which have now grown at over 40% per annum since IPO.

The charts on the bottom of this slide display the increases in our distributable cash flow and our cast distribution on a per unit basis. The lower left chart shows the growth in our distributable cash flow per unit which equates to approximately 9% compounded annually. The chart on the lower right displays our cash distribution paid per unit, which has also grown at a 9% compound annual rate; in line with our stated guidance and in line with the growth we've achieved in distributable cash flows, which we believe is an important discipline as we think about setting our distribution.

Please turn to Slide 5, where I will discuss the recent modification to our IDRs. Last November, the Partnership and our General Partner GasLog Limited agreed to amend the Partnership agreement with respect to the IDRs, reducing GasLog's IDR take from 48% to 23% for quarterly distributions above $0.5625 per unit.

In addition, GasLog has agreed to waive IDR payments resulting from any asset or business acquired by the Partnership from third parties. The agreement delivers on a commitment we made at our Investor Day last April and permanently reduces our expected cost of capital. Furthermore, we expect this modification to be immediately accretive to distributable cash flow per unit in 2019 and beyond.

With that as an introduction, I'd now like to turn it over to Alastair to take you through our financials.

Alastair Maxwell -- Chief Financial Officer

Thanks Andy, and good morning to everyone. I'm delighted to report a record year and quarter in terms of the operational and financial performance of the Partnership.

Please turn to Slide 6 for our financial and operational highlights. I'd like to start by saying that at the outset 2018 presented a number of potential hurdles to our financial performance during the year. First, the GasLog Santiago, GasLog Sydney and the GasLog Shanghai all ended their long term charters with Shell.

Second, we had three vessels undertake drydockings during the year, two of which were longer than normal as a result of the installation of reliquefaction facility. And third, equity markets were volatiles for much of the year, presenting challenges in accessing growth capital. Despite all of this, we achieved record quarterly and annual Partnership performance results for revenues, EBITDA and distributable cash flows.

Operationally, our fleet continued to perform exceptionally well with uptime of 100% during the quarter and we rechartered three vessels with new customers during the year.

Financially, our EBITDA grew by 19% on a quarterly and annual basis as a result of our fleet growth and strict control of our operating expenses, which benefited from lower crewing, technical maintenance and insurance costs. Also contributing to our EBITDA growth was the performance of the GasLog Shanghai in the spot market, which improved significantly in the fourth quarter in comparison with the third quarter, primarily as a result of higher spot rates and high utilization achieved during the quarter.

Our distributable cash flow also grew strongly by 8% on an annual basis and by almost 17% on a quarterly basis. As a result we were able to maintain our distribution coverage of healthy levels in the quarter, at the same time, meeting our distribution growth guidance for the year. Looking forward, we have two scheduled drydockings this year; one in the second quarter and one in the fourth quarter, both of which are anticipated to take 30 days to complete.

Turning to Slide 7, on the financial position of the Partnership; our financial position continues to improve as we amortized our debt on schedule. In 2018 as a whole, we repaid $185 million, leaving us with net debt-to-total cap of 44% at the end of the year, and net debt-to-4Q annualized EBITDA of 4.2 times. We believe that this balance sheet strengthening will provide us with more options to fund future growth.

On the bottom chart, you can see that the Partnership has continued to diversify its sources of equity capital, raising over $320 million during 2018 from a variety of sources, including $215 million in preferred equity, $45 million in common unit issued to our parent, and approximately $62 million from our ATM Program, including $53 million in new common units placed with Tortoise, a leading energy investor.

As you will also note, our next debt maturity is in November of this year. We are in active discussions with a number of banks for its refinancing and currently expect this to be completed in the first half of 2019.

Please turn to Slide 8 where I'll discuss our fleet developments over the last year. The chart on this slide shows the 14 vessels comprising the Partnership's fleet. Over the course of the last year, we have successfully rechartered the GasLog Santiago, one of the Methane Jane Elizabeth or the Methane Alison Victoria and the GasLog Sydney all with new customers. In addition, the Partnership has acquired two ships from our parent, the GasLog Gibraltar and the Methane Becki Anne. Taken together, these actions have increased the Partnership's average charge of duration to approximately three years.

On Slide 9, we discuss how our acquisitions and new multi-year charters this year have contributed positively to the de-risking of future financial performance. On the left chart, you can see that our contracted backlog has increased over $1 billion from $886 million at the start of the year, as a result of our two acquisitions in 2018 as well as the rechartering of the GasLog Santiago, the GasLog Sydney and one of the steam vessels. On the right-hand chart, you can see that our charter coverage for 2019 have increased to 91% from 72% while our coverage for 2020 has risen to 72% from 47%.

Then turning to Slide 10, where I'll discuss our future growth opportunities. The top panel shows the 13 vessels with multi-year charters owned by our parents and includes the new 180,000 cubic meter carriers with XDF propulsion ordered at Samsung in December 2018 and secured by seven year charters with Cheniere. The order follows up on the three newbuild charter awards announced last summer, two with Cheniere and one with Centrica. Collectively, the new vessels with multi-year charters further extend the drop-down pipeline for GasLog Partners.

Together, the charter periods range from 2020 to 2029 and represent over $2.3 billion in contracted backlog and over $250 million in total annual EBITDA. These vessels provide visible future growth opportunities for GasLog Partners and would contribute positively to the average charter length of our fleet as well as to our distributable cash flows.

With that, I'll turn it back to Andy to discuss the outlook for the LNG commodity and LNG shipping market.

Andrew J. Orekar -- Chief Executive Officer

Thank you, Alastair. Turning to Slide 11 and trends in LNG demands; this slide shows the increase in LNG imports by country on an annual basis. LNG demand grew by 25 million tonnes year-over-year in 2018, an increase of 9%. China posted the largest increase in absolute volume importing over 15 million tonnes more LNG, or an increase of approximately 40% year-on-year, as the country continues to increase consumption of natural gas.

While Chinese demands has been strong, LNG growth has been broad based, particularly in Asia as demand from South Korea, Pakistan and India has grown by a combined 16% year-over-year or approximately 10 million tonnes.

On Slide 12, we placed China's LNG demand and future growth in a historical context. The left panel shows China's monthly LNG imports during the period of 2013 through 2017, represented by the grey shaded area as well as imports during the years 2017 in blue and 2018 in green. The clear tread is higher LNG imports over the last several years. However, it is worth noting that China's imports have a seasonal pattern, often bottoming in spring and peaking in early winter, in line with heating and cooling demand.

On the right panel, you'll note that China's LNG demand is forecasted to be approximately 20 million tonnes per annum greater than its contracted supply, implying that it must import the difference from the spot market or secure new long term supply contracts. This combination of strong seasonal demand and under contracted supply has simulated shipping inefficiencies such as floating storage and interbasin trading, both of which contribute positively to shipping demand.

Turning to Slide 13, and the future outlook for LNG demand by geographic region. In total Wood Mackenzie expects net LNG demand to grow by a 150 million tonnes between 2018 and 2025. Although China's imports have been leading the pack in the last several years, it is important to note that Southeast Asia and Europe together account for nearly 70% of the projected LNG demand growth through 2025.

Turning to Slide 14, which shows the new LNG supply coming online. This year, approximately 32 million tonnes of new LNG capacity is planned to being production, including the second train at Cheniere's Corpus Christi project and initial trains at large projects such as Cameron and Freeport, which are expected to have a significant impact on tonne miles as more gas is exported from the US.

Further ahead, there is approximately 41 million tonnes of new capacity scheduled to start production in 2020 through 2023, including the first two trains of Shell LNG Canada project which took FID late last year. During 2018, a number of large projects across the globe took significant steps toward FID, prompting Wood Mackenzie to predict that 2019 would see record amounts of new liquefaction sanctions.

On Slide 15, we discuss how US exports have positively impacted shipping demand. According to Poten, 318 cargoes were exported from the US in 2018, 141 of these cargoes delivered into North Asia, a destination that requires more than two ships for each million tonnes of LNG exported per annum. The average shipping multiplier implied by US LNG exports was over 1.9 times during 2018, significantly above the historical global average of 1.3 times. Since exports out of the US began in 2016, 1.8 ships have been required for each million tonnes per annum, a positive development for shipping demand, particularly in light of the significant amount of new liquefaction capacity, scheduled to come online in the US over the next 24 months.

On Slide 16, we discuss how the demand for LNG and the current order book impacts the supply and demand balance for LNG carrier. This slide illustrates our view of shipping, supply and demand through the end of 2020, using Wood Mackenzie and Poten data. The shaded area represents low and high vessel demand scenarios based on a range of 1.6 to 1.9 ships required per million tonnes of LNG for US volume, an increase from our previous range of 1.5 to 1.7 ships, to more accurately reflect the last three years of export data.

For the rest of the world, a multiplier of 1.3 to 1.4 ships is utilized. The solid dark blue line shows vessel supply, based on ships in the water today and the current order book with no assumptions made for scrapping or FSRU conversion. The dotted dark blue line represents a scenario where all older vessels built before 2000 and without charters are either laid up or scrapped. As you could see, the market is expected to be tight through least 2021 based on Wood Mackenzie's latest demand growth estimates in the on the water fleet plus order book.

As we've said previously, an absolute shortage of ships is not required for the spot market to be strong. When fleet utilization rises above 80% to 85%, freight rates and cash flows improve considerably, as we observed in the spot market during the second half of 2018.

Turning to Slide 17, where we discuss the supply of LNG carriers. 53 ships were delivered last year while 62 were ordered. Many of the vessels delivered in 2018 are intended for projects that have yet to begin production. There are approximately a 107 LNG carriers on order today. However, nearly two-thirds of the ships have attached multi-year charters. When taken into consideration delivery scheduled for 2019 and '20 and before any further ordering, the order book will decline as a percentage of the fleet to approximately 5% by the end of next year.

It takes between 2.5 and 3 years to construct an LNG carrier, meaning a vessel ordered today will have an earliest possible delivery date of mid-to-late 2021. With this visible supply outlook, we expect demand for LNG shipping to strengthen as we move through 2019 and into 2020.

Turning to Slide 18, where we look at recent spot market developments; this slide shows the monthly average headline spot rate for TFDE carriers from the period beginning in 2011 through 2018 on the right panel, as well as the monthly average headline spot rates during 2018 on the left panel.

Well the absolute values in 2018 differ from the historical monthly averages, the trend closely followed previously observed seasonal patterns. Last year, there were a number of factors that exacerbated the usual seasonality, including frontloading of China's LNG buying, shipping capacity being used as floating storage and an increasing number of multi-month charters being fixed for the winter season. Taken together, these dynamics led to record high rates in the spot market in Q4 of 2018.

As we now exit the winter heating season in the Northern Hemisphere, spot rates have moderated with Clarksons reporting headlines TFDE rates of $69,000 per day. However, as the historical data on this chart suggests, we anticipate a return to higher LNG shipping activity levels and stronger spot rates in 2019 as we move into the cooling season in the Northern Hemisphere, and new large LNG projects, particularly in the US, enter production.

GasLog Partners' exposure to spot market is limited to one vessel, the GasLog Shanghai. In light of the expected seasonal decline in headline spot rates, we anticipate the GasLog Shanghai's contribution to our results to be at TCA -- TCE rates clearly below mid-cycle in the first quarter. However, our strategy remains to find multi-year employment for the vessel and we anticipate a structurally improving LNG shipping market to create those opportunities for us in the months ahead.

Turning to Slide 19 and a recap of our growth history and distribution guidance, you can see on the far left panel, we've now grown our cast distribution by a 9% compound annual rate since IPO. Today, we are increasing our quarterly distribution to $0.55 per unit or $2.20 annualized, which represents an approximately 5.1% increase on a year-on-year basis, meeting the guidance we established for 2018, while delivering strong coverage in the fourth quarter.

As shown on the far right of this slide, we are reiterating our guidance of 2% to 4% year-on-year distribution growth for 2019. This guidance is supported by our two vessel acquisitions in 2018, our current liquidity and balance sheet capacity to fund fleet growth, while also reflecting our drydocking schedules for the year and one vessel coming off charter in the fourth quarter. In addition, today's announced $25 million buyback program diversifies our means of distributing capital to unit holders and underscores our focus on total unitholder return.

Now, turning to Slide 20, in summary, in the fourth quarter GasLog Partners continued to execute its strategy, increasing our quarterly distribution and hitting our guidance for 2018, raising a $100 million in growth capital, capping our IDR tiers at 23%, and closing our 11th acquisition since IPO.

These quarterly highlights, in addition to our other achievements in 2018, including rechartering three of our vessels, acquiring the GasLog Gibraltar and raising additional $220 million of common and preferred equity have considerably strengthened the GasLog Partners' platform.

We continue to believe 2% to 4% distribution growth remains an achievable target for 2019 given our pipelines of visible growth opportunities and continued access to capital. Finally, looking longer term, steady progresses of new liquefaction and increasing LNG demand should result in strong fundamentals for LNG shipping and create additional opportunities to recharter our vessels.

With that, I'd like to open it up for Q&A. Joelle, could you please now open the call for any questions?

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Greg Lewis with BTIG. Your line is now open.

Greg Lewis -- BTIG, LLC -- Analyst

Yes, thank you. Thank you, and good morning.

Andrew J. Orekar -- Chief Executive Officer

Good morning Greg.

Alastair Maxwell -- Chief Financial Officer

Good morning Greg.

Greg Lewis -- BTIG, LLC -- Analyst

Hey guys. I guess, what I would say is, clearly we've seen a pullback in the spot market. Just as it pertains more to you, as you think about positioning your fleet; yes, you have the one vessel on spot, you have a couple of vessels coming off contracts at the end of the year. How should we think about you positioning the fleet in terms of chartering? What's the depth of the time charter market right now and just sort of any kind of color that you could give around maybe where we could see the ability to fix forward vessels on three-plus-year charters?

Andrew J. Orekar -- Chief Executive Officer

Sure. So Greg, it's Andy I think a couple of comments on that. As I mentioned the remarks, the activity levels for both spot and term-chartering activity right now have moderated since the fourth quarter. So I think we'd expect the GasLog Shanghai to continue to trade in the spot market here for the next little while. We have a great degree of confidence in the market becoming structurally tighter as we move through the year and as people begin to take cover for next winter.

Our strong hope is that there will be more multi-year chartering opportunities for the Shanghai, just like we saw last year for two of our TFDEs and ultimately one of our steam ships. So I think our strategy down at the MLP it to continue to have as much cash flow visibility as possible, so will be seeking those term chartering opportunities whether that's a year plus or three or three and a half years, as one of our deal last year, I think remains to be seen. But I think for the next quarter or so, I think we would expect the Shanghai to remain in the spot market.

Greg Lewis -- BTIG, LLC -- Analyst

Okay, great. And then just -- as I think about your dividend or distribution growth guidance and realizing that it's a fluid situation. You know right now -- I mean, the Company has done everything that it said it was going to do; it's grown its distribution, it's grown its asset base, it's really executed tremendously, yet as we look at the implied distribution yield of the stock, it's 10%.

How does the Company balance the willingness to sort of just drive forward and push the distribution higher even though you'd say, hey, you know we're yielding 10% that's definitely -- I would argue that too high of a yield in the first place. But just trying to understand how the Company is thinking about balancing the distribution yield with its willingness and want to increase the distribution.

Andrew J. Orekar -- Chief Executive Officer

So, it's an excellent question and clearly a topic we spend a lot of time thinking about. I think there's probably not an MLP in the market today who feels that they're fairly valued and I think we certainly believe we're significantly undervalued. But I think we also believe it's important to demonstrate growth in both our assets and then ultimately, in our distribution.

What you've seen from us over time is, after going public with a 10% to 15% growth guidance, we moderated that to 5% to 7% and now 2% to 4%, with continued strong coverage and today's buyback programs being an addition to that 2% to 4%.

So I think we'll continue to believe in growing the distribution as an important part of our story, but certainly hope that the actions we've taken and the execution that we've shown will result in a more appropriate value for the unit price. And in the meantime, if we can buy back some units and further improve the coverage ratio, that's what we're intending to do.

Greg Lewis -- BTIG, LLC -- Analyst

Okay. Hey guys, thank you very much for the time, keep up the good work.

Andrew J. Orekar -- Chief Executive Officer

Thanks Greg.

Operator

Thank you. And our next question comes from Jon Chappell with Evercore. Your line is now open.

Jonathan Chappell -- Evercore ISI -- Analyst

Hi, good morning guys.

Andrew J. Orekar -- Chief Executive Officer

Hi Jon.

Jonathan Chappell -- Evercore ISI -- Analyst

Good morning, Alastair. First question on the buyback, obviously makes a lot of sense in regards to kind of what you just spoke about with the yield and all the MLPs feeling the same way. Just -- I think the ATM though, trying to put the two of them together, I noticed the average spend on the ATM was $23-and-change and there's some in the fourth quarter that were over $24, so maybe there's some of the ATM that was even in the low $23's or even $22's and now buybacks announced at over $21.5.

So has something changed in your mind from a value perspective that $21 plus even in the $22s is an interesting time to be repurchasing units as opposed to issuing them, just a little bit higher in the not too distant past.

Alastair Maxwell -- Chief Financial Officer

Jon, hi, it's Alastair. I think the reason -- the primary reasons for putting the buyback program in place was the volatility that we experienced in the fourth quarter of last year and we saw the unit price go down well below -- well below $20 let alone well below $22. And I think in some ways, we wish we'd had that -- the opportunity to be buying back units in the fourth quarter of last year, but of course we didn't have the program in place.

And I think really it's an additional tool in the armory in order to be able to deploy capital opportunistically in terms of returning capital to shareholders and to benefit from the impact that a buyback, particularly at those kind of unit price levels, has on coverage ratios and breakevens and so on.

You know, in terms of having an ATM and a buyback program running at the same time, I think the way that we -- the way that we think about, first of all use of capital, the priority use of capital is to continue to grow the business, continue to grow the fleet and continue to growth the distribution. And as Andy said, that's what, if you like, the mission of the Company and we continue to believe we have a strong drop-down pipeline in terms of ability to grow the fleets and we continue to have access to capitals and more diversified access to capital.

We don't have any hardened thoughts in numbers in terms of how we think about it. I think you mentioned $22, I think that the further -- the further above $22 we get, then the more attractive It is to be issuing equity and the further below $20 or even further above a 10% yield we get more attractive and the more impactful it is to be buying back units. So I've kind of put it in that framework, did that answered the question?

Jonathan Chappell -- Evercore ISI -- Analyst

Yeah. No, absolutely, I think that last point was exactly what I was looking for, kind of like a target yield or inflection point if you will. So that's very helpful, Alastair, thanks.

Second question, I thought one of the most interesting parts of the IDR reset was the opportunity to acquire third-party assets and not have that accrue to the IDRs. But just wondering, with such a rich pipeline at the GP owner, are there really third-party opportunities out there today? I know there's some speculative newbuilds that are -- that have been done with non-traditional players in the market, but for the most part, those probably don't have long-term contracts that fit with your structure. So are there third-party opportunities with long-term contracts with good counterparties that would realistically be put, kind of at or even above some of the drop-down opportunities from the parent?

Andrew J. Orekar -- Chief Executive Officer

Sure Hi Jon, it's Andy. Well, overtime we've looked quite hard at several third-party opportunities along the lines of what you described and just haven't found the right asset at the value to reach agreement. And so I think that's something we have a very active effort on and we'll continue to do so.

Having said that, I think clearly the first priority on our capital is drop-down for all the reasons you mentioned in addition to the benefits that it offers to our GP for recycling capital, for additional growth.

So I think they're both very much in the frame for the Partnership, and I think it was a very thoughtful measure taken by our GP as part of the IDR restructuring to waive the IDR payments on those third-party transactions, so we could be as competitive as possible. But I would expect -- I would expect to be a, all of the above strategy rather than one taking precedent over the other.

Jonathan Chappell -- Evercore ISI -- Analyst

Okay. Thanks a lot Andy.

Andrew J. Orekar -- Chief Executive Officer

Thanks Jon.

Operator

Thank you. Our next question comes from Michael Webber with Wells Fargo. Your line is now open.

Andrew J. Orekar -- Chief Executive Officer

Mike?

Michael Webber -- Wells Fargo Securities -- Analyst

(multiple speakers) yes, good morning guys, how are you?

Andrew J. Orekar -- Chief Executive Officer

Good morning, Mike.

Alastair Maxwell -- Chief Financial Officer

Good morning, Mike.

Michael Webber -- Wells Fargo Securities -- Analyst

Andy, just to follow-up on Jon's question around the buyback, we've had their -- comps maybe elsewhere in the shipping space that are very active I guess and kind of our being around capital structure and often that kind of comes at a detriment to shareholders. It seems -- obviously, that's kind of the polar opposite of the way you guys tend to operate.

And when I think about the kind of the buyback and the ATM authorization kind of coexisting, is the right way to think about that kind of effectively, like a collar, kind of just more of a stability mechanism as opposed to maybe more active investment policy or kind of sign that you guys are going to be just more active in terms of moving around your capital structure?

Andrew J. Orekar -- Chief Executive Officer

Yeah, it's a good question and I think maybe to answer it per context-wise, I think in a six-week period there in the fourth quarter, our unit price hit both a new 52 week high and then a new 52 week low. And so I think the collar, to use your terminology, was with 31%. So I'm sure that in that range there is places where, as Alastair mentioned, we would have loved to then buy units and maybe at a future date, there would have been an opportunity to raise some capital at a higher end of it.

So, as you say, I think it's really just having that functionality in place where if we're going to continue to see this volatility which we've all lived through from 2015 and '16 now we have the ability to really take advantage of it and at some of those high-teens prices low 20s, it really is on a dollar-per-dollar basis, quite accretive to DCF per unit, probably more accretive than any acquisition we could come up with. So it's just likely because now that we have available to us to use.

Michael Webber -- Wells Fargo Securities -- Analyst

Okay. Yeah, so a stability mechanism inside (ph) to some sort of swashbuckling shipping policy.

Andrew J. Orekar -- Chief Executive Officer

Yes, good summary.

Michael Webber -- Wells Fargo Securities -- Analyst

Okay. Fair enough. Yeah, also, just to follow up on an earlier question around third party growth. Obviously, again, with the resetting of the IDRs and the -- I guess it's somewhat of an incentive to kind of eventually look at the third-party assets, maybe kind of coming at that a different way, is there -- do you think you're -- in terms of what you see in the market are you closer or are you more likely to something now than maybe you were a year ago and that maybe has less to do with your approach and more to do with where some of your competitor stand and where some of the different pools of assets kind of might be at the moment in terms of inbound inquiry maybe. Has that changed over the last six to nine months?

Andrew J. Orekar -- Chief Executive Officer

Well, I think, generally speaking, that there are -- for all the reasons you're well aware, we've got a growing market, an increasing number of contracted ships and for a variety of idiosyncratic reasons, probably fewer entities with the same or equal or better using access to capital that GasLog limited and GasLog Partners have. But I do think the overall universe of opportunities is probably greater now than it's been in years past.

You know, I think having said that, each third-party deal of course has a life of its own and requires a willing seller in a manner that is harder for us as a buyer to control the timeline and process around versus the drop-down. So I do think there's more opportunities, but would want to manage expectations that we can only buy what's truly for sale and that pool is probably larger today.

But again, I think drop-downs will be very much a part of our story for a long time to come.

Michael Webber -- Wells Fargo Securities -- Analyst

And I guess, maybe when we think about those opportunities, and this is probably just a question for the GasLog Family as a whole. The idea of vertical integration has come up from time to time in the past few years, and I guess technically with the Alexandria project, you guys are working toward that organically.

But either up or down stream are there -- would you say there's any shifts in the ability to maybe look at passive, either passive investments or passive participation in some degree of vertical integration where there just aren't that many well capitalized players in the space that have expertise kind of up and down the supply chain.

So as FIDs lag and as people look for other investors or buyers into projects, I would imagine that the phone starts ringing for you guys. I'm just curious, on a vertical integration basis, do you think it's any more likely today than six to nine months ago that you guys would seriously look at something like that?

Andrew J. Orekar -- Chief Executive Officer

Well, I think, I'd say we're pleased with the progress with the FSRU in Northern Greece, and I think we're big believers generally in the need for not just ships, but LNG infrastructure of all kinds, given the demand profile that, that we continue to see for the commodity. So I think not necessarily so much described as an integration strategy, but one just using this larger and reasonably successful platform to acquire similar assets with good counter parties, visible cash flow, multi-year contracts.

I think we're certainly open minded to that and there does seem to be more of those to evaluate. So I think, we're obviously a shipping company first and foremost and will be, I think, for a very long time to come. But there are additional assets around the build out of LNG that we think could be quite attractive fit.

Michael Webber -- Wells Fargo Securities -- Analyst

Got you. Okay, I'll turn it over and get back in the queue. Thanks guys.

Andrew J. Orekar -- Chief Executive Officer

Thanks, Mike.

Operator

Thank you. And our next question will be from Chris Wetherbee with Citi. Your line is now open.

Christian Wetherbee -- Citi -- Analyst

Yes. Hey, thanks, good morning guys.

Andrew J. Orekar -- Chief Executive Officer

Good morning Chris.

Christian Wetherbee -- Citi -- Analyst

Wanted to ask you about the 2% to 4% distribution growth and understanding that there's essentially $0.01 between those ranges, right? But how do you think about sort of the low end versus the high end? You'd think -- I think you announced that range and then after that, did the IDR restructuring. I don't know if that gives you a higher degree of confidence toward the higher end of the range or how you sort of just generally think about it? I know you have a lot of things going on, there's a couple of drydocks there. But any color you could get us sort of how you think about that range? And maybe broadly, sort of growth beyond '19 would be helpful.

Andrew J. Orekar -- Chief Executive Officer

Sure. Chris, it's Andy. Yes, I think as I mentioned to an earlier question, we consciously moderated the growth range from previous years and despite the pipeline that Alastair took you through, which is probably in terms of dollar values of both contracted revenue backlog and EBITDA is probably bigger than it's ever been. So we don't lack for growth opportunities. We, as I mentioned earlier, you know trading at a roundabout 10% yield, additional growth in the distribution by a large factor to us doesn't necessarily seem like it's being rewarded. But again, a greater than zero growth to us is extremely important.

So I guess the answer to your question, I think we have the ability to grow the distribution in that range you mentioned but it will probably come down to the dynamic in the marketplace where the units are trading and that balance between growth and coverage. If we feel we can get some incremental value for another percent or two of growth. I think we feel quite capable of achieving that, but we wanted to give the markets some confidence that there will be at least 2% growth.

Christian Wetherbee -- Citi -- Analyst

Okay. And in that context, do you think it makes -- or can you give us some color on how you would sort of perceive the cadence of increases. As the year progresses, you have drop-down earlier in the year, not sure if that's sort of the catalyst potentially for a distribution increase or it's something that you want to just continue to wait and maybe weigh market factors more than an actual drop-down to fundamentals.

Andrew J. Orekar -- Chief Executive Officer

I think, it can't be a combination of both. We do expect to do at least one drop down in 2019 as we mentioned on our remarks. And as you mentioned that's clearly more contracted cash flow that we can use to grow the distribution. And then depending on the nature of the one ship in the spot market and as you say there's the timing of final cost of the drydockings we have planned. Those are probably the largest factors at play.

Christian Wetherbee -- Citi -- Analyst

Okay. Okay, that's helpful. Then I just wanted to go back to the buyback for a second and I appreciate also the ranges, it's extremely helpful. It seems you're kind of right on the cusp right now, and I know it's difficult to commit to anything. But generally speaking, do you think you can put capital to work relatively quickly. You're below $22 a share right now, seems like there's an opportunity to do that in the context of everything you're saying, it's still seems like it would fit to be active in the market kind of very near term, but just want to get your rough sense there or should we really be reading this as it's going to be that collar that was talked about when you answered the previous question?

Alastair Maxwell -- Chief Financial Officer

Chris, I think the answer is, it's more the latter. And as I said earlier and as Andy it reiterated, I do think that we feel that the priority use of capital for the business is going to be to continue to grow the fleet and to grow the base of the distributable cash flow. And therefore, just because we're trading at below $22, I don't see us rushing into the market. As I said, I think it gets more and more attractive the further above a 10% yield we get and then particularly when we see market dislocations and volatility like we saw in Q4. I think that's when we would really like to have the ability to be flexible and to be opportunistic.

Christian Wetherbee -- Citi -- Analyst

Okay, alright, that's helpful. Thanks for the time this morning, appreciate it.

Operator

Thank you. And our next question comes from Randy Giveans with Jefferies. Your line is now open.

Randy Giveans -- Jefferies -- Analyst

Hey, thanks, operator. Good morning guys.

Andrew J. Orekar -- Chief Executive Officer

Good morning, Randy.

Alastair Maxwell -- Chief Financial Officer

Good morning.

Randy Giveans -- Jefferies -- Analyst

Hey. So, for the next drop-down, how long do you expect the current -- the contract duration to be? It looks like the earliest expiration would be 2025 and maybe the latest 2029. And then, looking at future drop-downs from GasLog parent, is an asset exchange a possibility for (inaudible) giving back the Shanghai plus some cash, maybe in exchange for a vessel on a long term contract?

Alastair Maxwell -- Chief Financial Officer

Sure. Hey Randy, it's Andy here. I'll take the first part of that. So we -- over our history, we've typically drop-down assets with charter length of at least five years or more. And as you mentioned, we have several of those to choose from. So I think that will be the goal for the next drop-down, have a contract length of five years or more.

And then, on the second question, we of course have that optionality given the tremendous pipeline as a parent and contracted cash flows, something that you mentioned could be possible. I think at this point, we wouldn't really see it as necessary. We've got one ship out of 14 that's in the spot market and that 14 is, it's hopefully soon to be 15.

So, given the structurally improving markets move through the year, we think that ship will continue to have good earnings and good prospect for rechartering. So I wouldn't rule out your concepts but I don't really see as being necessary for us in the near-term.

Randy Giveans -- Jefferies -- Analyst

Okay, perfect. And then I guess one more questions for me. Following the IDR modification in November, should we expect any additional modification this year or is the current 25% split likely to remain intact for the foreseeable future?

Andrew J. Orekar -- Chief Executive Officer

Yeah, So, I think as we mentioned at the time of the announcement, Paul Wogan in his statement mentioned that we saw this as a very meaningful first step in the modification of the IDRs. I think it was quite substantial in terms of the impact that it has on GasLog Partners. We're now a $0.01 or so away from where the 48% tier would have begun, and so it's a quite significant impact for our next series of growth action.

I wouldn't expect anything additionally on the IDRs in the near term. I think we're excited to put this new structure to work and grow within it in a way that is at a lower cost of capital, and as I mentioned earlier, more competitive potentially for third-party opportunity. So we're eager to put more assets through the existing structure, I think, before there's any further modifications.

Randy Giveans -- Jefferies -- Analyst

Perfect. That's it for me. Thanks again.

Andrew J. Orekar -- Chief Executive Officer

Thanks Randy.

Alastair Maxwell -- Chief Financial Officer

Thank you.

Operator

Thank you. And our next question comes from Fotis Giannakoulis with Morgan Stanley. Your line is now open.

Fotis Giannakoulis -- Morgan Stanley -- Analyst

Yes, hi and thank you. Andy, I would like to follow up on Chris' question about the post 2019 ability to grow your dividend. Especially, we see some -- a number of vessels that are coming off contracts in 2020 to 2023 which is a period that the liquefaction capacity growth start slowing down. There is a gap until LNG Canada coming online.

Where do you see the ability of growing the dividend coming from and is the dividend -- the model changed a little bit from long term contracts to operating more in the sport market, and if you can also comment about the earning capabilities of the steam turbine vessels versus the current vessels?

Andrew J. Orekar -- Chief Executive Officer

Sure. Hi, Fortis. So we'll take those in order. On the first, well I wouldn't want to give any guidance on 2020 or beyond, but we'd just say that we clearly based on our supply and demand picture for carriers, see the market being a very attractive place from here through 2021. And so during that time, again particularly at the MLP level, our objective is to use that spot market strength as a way to fix more of our ships on multi-year charters; those that are ending their charters during that period, as you mentioned.

So, I think our view is, of course, our first priority on cash flow, stability of the NLP. We have, I think quite consciously, moderated our growth rate and I think that that trend has generally been well received. So I think it's something we expect to continue. As our fleet gets larger, having a ship or two in the spot market is less impactful in the good times and it's less detrimental in the weaker periods of the market.

So we feel that fleet growth is important to continue to inflate potential future volatility in the out years as we look at our -- as our fleets grow. And then, over time, our breakeven rates, of course, fall as we pay down more of our debt. I think last year we paid almost $200 million of debt down and expect that to continue and so the ships that we own, sort of the steam ships you mentioned can be more competitive as they have lower levels of debt on them.

Fotis Giannakoulis -- Morgan Stanley -- Analyst

And, on your demand outlook, you have a quite large range demonstrating on Slide 14, what are the elements that they can go well, that they can lead us to your upside -- your bull scenario and what are the elements that they can disappoint and bring us to the loss case scenario. And also, you have a scenario on the supply side excluding the post -- the pre-2000 vessels, around 20 years old, why you have that. Do you see that the vessels beyond 20 years, they cannot achieve long term contracts or they will be in a disadvantage or they have to be scrapped. How do you see the useful life of LNG carriers?

Andrew J. Orekar -- Chief Executive Officer

Sure. So maybe starting with your last question first, if I may. The chart -- the line on the chart you're mentioning references vessels who are built before 2000 and without charters ultimately being laid off or scrapped and you probably know Fotis, but for the benefit of others, that LNG carrier market has seen very little capacity taken out of the market due the scrapping. It's one, two, three ships a year at most; some years it's not at all. And so, we haven't had that yet, given the relative use of our industry relative to other lines of shipping, but that's something we expect could be helpful for the supply picture.

For the upside case you mentioned, just looking at the US export data, we had periods -- the average then to being started up is in 1.8 times in terms of the multiplier of million tonnes of LNG exported. We've had periods where that number has been over 2 and we were really just at the beginning of a significant wave of US LNG coming online. In fact, if you just think about this year between Cameron and Freeport, additional train to the Cheniere project, Elba; by this time next year, we might have doubled the amount of US gas being exported.

And so we're really just learning what those trade groups in the call on shipping is going to be. So our chart shows a low and high vessel demand scenario but I think there's certainly data that would support the high case fairly clearly and again we think our low case is fairly conservative phase than what we've seen today.

Fotis Giannakoulis -- Morgan Stanley -- Analyst

Thank you, Andy. One last question about your cost of capital and the cost of capital differential between the GasLog and the Parent and the MLP, first of all, do you see that there is any differential here one of the -- or the other having a lower cost of equity or lower cost of debt. And you have been financing your drop-downs, your recent drop-downs with preferred equity. Is the preferred equity market open and are you planning to continue to issue preferred equity or there are other ways that you can fund drop-downs in an accretive way?

Alastair Maxwell -- Chief Financial Officer

Yes. Hey Fotis, it's Alastair. In terms of cost of capital, what we've been -- I think we've been saying for a while, particularly given how the MLP market has traded over the course of last year or so, there is not a very significant cost of capital arbitrage between one business and the other business. And that goes up and down depending largely on what each company has done and share prices is at.

It's still the priority for the GasLog Group I think to use GasLog Partners as the principal source of equity to fund the continued growth of the business. And I think that will continue to be the case. But we don't see significant arbitrage, if you like, between one and the other today. As GasLog Partners grows and matures and the fleet grows, what we are seeing is that the creditworthiness and the way the banks and the capital markets price the GasLog Partners credit which I think might have been at a discount to GasLog, a year or two years ago, I think that's definitely not the case today.

I think that GasLog Partners is much more mature, has much greater scale. And again, I don't see a significant difference in cost of capital on the debt front between one business or the other business. You asked about the pref market. I think that where we stand today is we already talked about, there is a natural ceiling to how much prefs you would want to have in your capital structure. And we always talked of that being roughly 15%. I think we're at about 14% today. And so I wouldn't see that as being a priority in terms of accepting new equity capital going forward.

Fotis Giannakoulis -- Morgan Stanley -- Analyst

Thank you very much, Alastair. That's very helpful.

Alastair Maxwell -- Chief Financial Officer

Thanks Fotis.

Operator

Thank you. Our next question comes from Donald McLee with Berenberg. Your line is now open.

Donald McLee -- Berenberg -- Analyst

Hey guys. So there's been a lot of questions around growth opportunities and in the prepared remarks, you mentioned that a drop down could happen in Q1 '19. But I was just curious about how we should think about the sequencing of your capital allocation for 2019 with the loan payment coming due in Q4?

Alastair Maxwell -- Chief Financial Officer

Yeah. Hi Don. So as I mentioned in my prepared remarks and as we also mentioned in the 6-K, we do have a maturity in November of this year. We've been working on that actually since late last year and we're in very active discussions with a number of banks about that. And again, as I said, I would expect that to be completed during the first half of this year at the very latest and as and when the time is right, we'll make further announcements on that front. But I think that we won't -- we won't believe in that until the last minute.

Donald McLee -- Berenberg -- Analyst

Okay. And then, I'm just going to supply demand model on Slide 16. In Q4, there was a big pickup in LNG carrier orders. And then most recently, in some of the trade press headlines there has been a more significant order for (inaudible) carriers. So just wondering how that may be impacted your intermediate to longer term view of supply dynamics of the LNG market.

Andrew J. Orekar -- Chief Executive Officer

Sure. It looks like you -- we've of course been watching the order book very carefully and just would point out that two-thirds of the order book today even with the new orders we saw last year does have long-term contracts. Most of that third are ships that are delivering at the back-end of the book and so there is being a second time for owners like our parent and others to put those ships on long-term contract which I think most of them will.

And even if you look at last year and place the data more fine, roughly 50% of the ships last year in fact do have contracts already, and particularly those at the end of the year, as you mentioned. So, it's clearly something that we're very focused on. I think I can speak for the GasLog Group in saying that I don't expect us to be ordering any more ships without contracts attached.

But all the signs are that demand and supply of LNG are going to increase and that will also be true for shipping intensity. So, we think that these ships are going to be needed to serve the marketplace for demand and the supply that's going to follow.

Donald McLee -- Berenberg -- Analyst

Alright, I appreciate you taking the questions. Thank you.

Andrew J. Orekar -- Chief Executive Officer

Thanks Donald.

Operator

Thank you (Operator Instructions). Our next question comes from Chris Snyder with Deutsche Bank. Your line is open.

Chris Snyder -- Deutsche Bank -- Analyst

Hey good morning. My questions are on the drop-down opportunities. So when you're pricing these drop downs, how do you value or even just more broadly think about residual value, just given the significant volatility in rates and the limited visibility five-plus-years out, when the drop-down candidates come available?

Andrew J. Orekar -- Chief Executive Officer

Sure. Hi Chris, it's Andy. I think we have obviously take into account several factors when value in drop-down, including what's the amount of cash flows, the asset is going to generate during the firm period and our view of the market and the marketability of the assets thereafter. Clearly, the longer the contract the more of the acquisition value is to derisk, and so that's our preference.

Generally speaking you know based on our own rechartering experience, we have a sense of where vessels of a certain age can recharter although of course some markets, five, seven years from now, it's difficult to predict. But in our view, it's really based on what the asset is generating in the firm period and then a reasonable estimate of rate thereafter and taken together with the asset itself and its flexibility is how we arrive at evaluation.

Chris Snyder -- Deutsche Bank -- Analyst

Okay, fair enough. And how have these pricing conversations changed over the last year? And I ask because you know obviously the spot market is heated up but we're thinking about assets with five year contracts you know this 2018, 2019 spot market doesn't matter. And in a lot of cases, it leads to the higher supply growth in the out years when you're kind of trying to value that residual value. And so have these -- have the prices changed over the last year kind of on these drop down opportunities or just other acquisitions?

Andrew J. Orekar -- Chief Executive Officer

I would say the prices have changed. Every asset is different, has a different age when we buy it. Some are assets that are a year or two out of the yard, some are a little bit older than that and has depreciated more. So you're certainly right in that the spot rate on this day or week shouldn't really change that. Long term rates for carriers that we envision in our model have not really changed much from that $75,000 a day, plus or minus.

So when we're living in a weak spot market or a strong spot market, it doesn't really change what the dynamic is for multi-year rechartering. Obviously, in a strong spot market, you have more customers who tend to -- love to take cover for rechartering of all the water ships and we always welcome that.

But the overall long-term rates for LNG carriers are really more of a return on capital discussion. And so with yard prices at $200 million plus or minus 10%; long-term mid-cycle rate $75,000 plus or minus; in and around those parameters, those haven't really changed in recent years.

Chris Snyder -- Deutsche Bank -- Analyst

Okay, fair enough. And then kind of thinking, just kind of staying on the growth topic. So, obviously momentum around pre-FID projects and you know, contracting out these liquefaction terminal has been building in recent months, you know, it feels like this is going to start driving new tenders and we've heard reports of at least one very large such tender potentially on our horizon. Would Partners be interested in ordering a newbuild on the back of one of these projects, or do you guys expect that growth will always just come from drop-downs?

Andrew J. Orekar -- Chief Executive Officer

I wouldn't -- I wouldn't rule it out over time. I think today our model has worked quite well with the parent company contracting the ship, building the ships in the yard, taking delivery and then dropping it down overtime to GasLog Partners. Could there be an opportunity where we do a new building directly at the Partners level? I guess so. If we have the right economics around it, I certainly consider it.

But the benefit of our model is you're always -- you're always putting capital against the cash flowing assets at the MLP and that seems to be a good fit with the high distribution payout model that's MLP holders expect. So I think for now, that's what we continue with, but I guess never say never.

Chris Snyder -- Deutsche Bank -- Analyst

Okay, fair enough. And then just one real quick one on the balance sheet, you know, obviously you guys are bringing -- have brought down debt metrics pretty considerably over the past couple years. Do you expect further deleveraging in 2019, 2020 or do you kind of think where you're right now is a good place to be going forward?

Alastair Maxwell -- Chief Financial Officer

Chris, hi, it's Alastair. I think that where we are today, we feel more than comfortable. As I said in my remarks, I think that we've been building that capacity as we'd amortize the debt on the ships. And rough rule of thumb is that the debt amortizes twice as fast as the ships depreciate. And I think we have got ourselves to a position where we do have some incremental say capacity over and beyond where we are today.

Having said that, we're certainly not going to be relevering this business to any material extend from where we are today. But do we -- do we think that we have access to debt capital as well as the equity capital to fund growth given where we are today? I think we definitely do.

Chris Snyder -- Deutsche Bank -- Analyst

Alright, that does it for me. Thanks for the time guys.

Alastair Maxwell -- Chief Financial Officer

Thank you.

Operator

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Andy Orekar, for any closing remarks.

Andrew J. Orekar -- Chief Executive Officer

Thank Joelle. Thank you to everyone today for listening and your continued interest in GasLog Partners. We certainly appreciate it and we look forward to speaking to you next quarter. Thanks very much.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a great day.

Duration: 62 minutes

Call participants:

Joseph Nelson -- Deputy Head of Investor Relations

Andrew J. Orekar -- Chief Executive Officer

Alastair Maxwell -- Chief Financial Officer

Greg Lewis -- BTIG, LLC -- Analyst

Jonathan Chappell -- Evercore ISI -- Analyst

Michael Webber -- Wells Fargo Securities -- Analyst

Christian Wetherbee -- Citi -- Analyst

Randy Giveans -- Jefferies -- Analyst

Fotis Giannakoulis -- Morgan Stanley -- Analyst

Donald McLee -- Berenberg -- Analyst

Chris Snyder -- Deutsche Bank -- Analyst

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