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The third quarter of the fiscal year broug[ds_preview]ht a decrease of 66.6 mill. $ in adjusted net income/(loss) for US-based VLGC owner and operator, Dorian LPG. The company now bets on new activity in energy exploration and increased scrapping activity.

Dorian LPG’s net income amounted to 5.0 mill. $, or 0.09 $ per share, for the three months ended December 31, 2016, compared to net income of 54.7 mill. $, or 0.97 $ per share, for the same period in the previous year. The adjusted net loss amounted to (19.3) mill. $, or (0.36) $ per share, compared to adjusted net income of 47.3 mill. $, or 0.84 $ per share for the three months ended December 31, 2015. Dorian LPG has adjusted its net loss for the three months ended December 31, 2016 for unrealized gains on derivative instruments of 24.4 mill. $.

According to the company the decrease of 66.6 mill. $ in adjusted net income/(loss) for the three months ended December 31, 2016 compared to Q3, 2015 is primarily attributable to reduced revenues of 57.6 mill. $, a 2.9 mill. $ increase in depreciation and amortization, a 2.8 mill. $ increase in vessel operating expenses, a 2.7 mill. $ increase in interest and finance costs, and a 6.4 mill. $ increase in realized loss on derivatives, partially offset by a 3.1 mill. $ decrease in voyage expenses and a 2.3 mill. $ decrease in general and administrative expenses.

The TCE rate for the company’s fleet was 17,796 $ for the three months ended December 31, 2016, a 68.4% decrease from the 56,253 $ TCE rate from the same period in the prior year, reflecting more subdued market conditions. Total fleet utilization (including the utilization of vessels deployed in the Helios Pool) increased from 92.8% in the quarter ended December 31, 2015 to 98.4% in the quarter ended December 31, 2016.

Revenues, which represent net pool revenues—related party, voyage charters, time charters and other revenues earned by our vessels, were 35.7 mill. $ for the three months ended December 31, 2016, a decrease of 57.6 mill. $, or 61.7%, from 93.3 mill. $ for the three months ended December 31, 2015.

Dorian LPG bets on scrapping activity

The rig count in the U.S. has continued strengthening, to 659 currently, which when coupled with the strong draws on propane inventories in the U.S., down to 72 mill. $ bbls from 100 mill. $ bbls in late October, Dorian LPG believe signals gas market supply shortages and renewed activity in energy exploration and production. VLGC fleet utilization steadily increased over the quarter to well over 90%, notwithstanding the significant number of newbuilding VLGCs added to the fleet.

The order book stands at about 15% of the VLGC fleet while the percentage of the global VLGC fleet over 20 years of age stands at 15% of the fleet. In view of stronger prices in the demolition markets, the company believes the possibility increases that older VLGCs may become attractive candidates for demolition and removed from the fleet in the coming months.