DLNG 6-K
Dynagas LNG Partners LP (DLNG)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2026
Commission File Number:
(Translation of registrant’s name into English)
Poseidonos Avenue and 2 Foivis Street
166 - 74 Glyfada, Athens, Greece
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K
Attached as Exhibit 99.1 to this Report on Form 6-K (this “Report”) is management’s discussion and analysis of financial condition and results of operations and interim unaudited consolidated financial statements for the six months ended June 30, 2026 of Dynagas LNG Partners LP (the “Partnership”).
The information contained in this Report and the exhibit hereto are hereby incorporated by reference into the Partnership’s registration statement on Form F-3 (File No. 333-281195) that has an effective date of November 13, 2024.
FORWARD-LOOKING STATEMENTS
Matters discussed in this Report on Form 6-K may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The Partnership desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “plan,” “potential,” “project,” “will,” “may,” “should,” “expect,” “expected,” “pending” and similar expressions identify forward-looking statements. These forward-looking statements are not intended to give any assurance as to future results and should not be relied upon.
The forward-looking statements in this Report on Form 6-K are based upon various assumptions and estimates, many of which are based, in turn, upon further assumptions, including without limitation, examination by the Partnership’s management of historical operating trends, data contained in its records and other data available from third parties. Although the Partnership believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Partnership’s control, the Partnership cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors that, in the Partnership’s view, could cause actual results to differ materially from those discussed, expressed or implied, in the forward-looking statements include, but are not limited to, the strength of world economies and currency fluctuations, general market conditions, including fluctuations in charter rates, ownership days, and vessel values, changes in supply of and demand for liquefied natural gas (LNG) shipping capacity, changes in the Partnership’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Partnership’s vessels, the early termination of Partnership’s charters and the Partnership’s inability to replace assets and/or long-term contracts, the availability of financing and refinancing, changes in governmental laws, rules and regulations or actions taken by regulatory authorities, economic, regulatory, political and governmental conditions that affect the shipping and the LNG industry, potential liability from pending or future litigation, and potential costs due to environmental damage and vessel collisions, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events, or international hostilities, geopolitical events including ongoing conflicts and hostilities in the Middle East, including the military conflict in Iran, and other regions throughout the world and the global response to such conflicts and hostilities, changes in tariffs, trade barriers, and embargos, including uncertainty regarding the scope, legitimacy, and durability of existing and future tariff measures by the U.S. and the effects of retaliatory tariffs and countermeasures from affected countries, vessel breakdowns, instances of off-hires, the length and severity of epidemics and pandemics, the impact of public health threats and outbreaks of other highly communicable diseases, the amount of cash available for distribution, and other important factors, including those the Partnership describes from time to time in the reports it files with the U.S. Securities and Exchange Commission (the “SEC”). Due to the ongoing war between Russia and Ukraine, the United States, the United Kingdom, the European Union, and other countries and organizations have announced and enacted numerous sanctions against Russia to impose severe economic pressure on the Russian economy and government. The full impact of the commercial and economic consequences of the Russian war with Ukraine are uncertain at this time. The Partnership cannot provide any assurance that current applicable sanctions, any
further development in sanctions, or escalation of the Ukraine war and other geopolitical events and conflicts more generally, will not have a significant impact on its business, financial condition, results of operations, or ability to make distributions to unitholders.
Please see the Partnership’s filings with the SEC for a more complete discussion of these and other risks and uncertainties. The information set forth herein speaks only as of the date hereof.
The Partnership undertakes no obligation, and specifically declines any obligation, to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable laws. New factors emerge from time to time, and it is not possible for the Partnership to predict all of these factors which may adversely affect its results. Further, the Partnership cannot assess the effect of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. If one of more forward-looking statements are updated, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DYNAGAS LNG PARTNERS LP | ||
Dated: September 10, 2026 | ||
By: | /s/ Michael Gregos | |
Michael Gregos | ||
Chief Financial Officer | ||
Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of operations of Dynagas LNG Partners LP for the six-month periods ended June 30, 2026 and 2025. Unless the context otherwise requires, references to the “Partnership,” “we,” “our,” and “us” or similar terms are to Dynagas LNG Partners LP and its wholly-owned subsidiaries; references to Dynagas LNG Partners LP are to Dynagas LNG Partners LP and not its subsidiaries; and references to our “Sponsor” are to Dynagas Holding Ltd. and its subsidiaries. Our Sponsor is beneficially owned by the chairman of our Board of Directors, Mr. Georgios Prokopiou, and members of his family. References to our “General Partner” are to Dynagas GP LLC, an entity owned and controlled by our Sponsor, and references to our “Manager” are to Dynagas Ltd., which is wholly owned by Mr. Georgios Prokopiou.
All references in this report to “SEFE,” “Equinor,” “Yamal,” and “Rio Grande” refer to SEFE Marketing and Trading Singapore Pte Ltd (formerly known as Gazprom Marketing & Trading Singapore Pte Ltd), Equinor ASA (formerly named Statoil ASA), Yamal Trade Pte. Ltd., and Rio Grande LNG, LLC, respectively, and certain of their respective subsidiaries or affiliates, which are our current or prospective charterers. The “Yamal LNG Project” refers to the LNG production terminal on the Yamal Peninsula in Northern Russia. The terminal consists of three LNG trains with a total capacity of 16.5 million metric tons of LNG per year that require ice-class designated vessels to transport LNG from this facility, for which two of the vessels in our Fleet have been contracted. The Yamal LNG Project is a joint venture between NOVATEK (50.1%), TOTAL E&P Yamal (20%), China National Oil & Gas Exploration and Development Corporation (CNODC) (20%), and Yaym Limited (9.9%).
The “estimated contracted revenue backlog” and “average remaining charter duration” presented herein are based on commitments represented by signed charters. We calculate estimated contracted revenue backlog by multiplying the contractual daily hire rate by the expected number of days committed under the contracts (assuming earliest delivery and redelivery and excluding options to extend), assuming full utilization for the full term of the charter. The actual amount of revenues earned and the actual periods during which revenues are earned may differ from the amounts and periods described above due to, for example, off-hire for maintenance projects, downtime, scheduled or unscheduled dry-docking, cancellation or early termination of vessel employment agreements, variable hire rate adjustments, and other factors that may result in lower revenues than our average contracted revenue backlog per day.
You should read the following discussion and analysis together with the unaudited interim condensed consolidated financial statements and related notes included elsewhere in this report. Amounts relating to percentage variations in period-on-period comparisons shown in this section are derived from such unaudited interim condensed consolidated financial statements. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs, and expected performance. The forward-looking statements are dependent upon events, risks, and uncertainties that may be outside our control, which could cause actual events or conditions to differ materially from those currently anticipated, expressed, or implied by such forward-looking statements. Please see our Annual Report on Form 20-F for the year ended December 31, 2025, which was filed with the U.S. Securities and Exchange Commission, or the SEC, on April 8, 2026, and our other filings with the SEC, which contain additional information relating to our management’s discussion and analysis of financial condition and results of operation and a more complete discussion of the risks and uncertainties referenced in the preceding sentence.
Business Overview and Development of the Partnership
We are a limited partnership focused on the ownership of liquefied natural gas (“LNG”) carriers. Our fleet currently consists of six vessels (our “Fleet”), five of which are assigned Ice Class notation 1A FS and are fully winterized (Arc-4 LNG carriers). Arc-4 LNG carriers are capable of operating both in conventional open water LNG trade routes and in ice-bound or harsh environment regions, withstanding temperatures as low as -30ºC. As such, in addition to serving standard LNG transportation needs, these vessels are also capable of supporting remote LNG production projects in regions with ice-bound or other harsh climatic conditions.
All of the vessels in our Fleet are currently employed or are contracted to be employed on time charters with international energy companies, including SEFE, Equinor, Yamal, and Rio Grande, which we expect will provide us with the benefits of fixed-fee contracts, predictable cash flows, and high utilization rates.
We are currently focused on a disciplined capital allocation strategy that prioritizes maintaining balance sheet strength through the repayment of debt. Subject to the financial condition of the Partnership, we may also return capital to our common unitholders through
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cash distributions to our common unitholders, common unit repurchases and other initiatives that we believe support the long-term financial health of the Partnership. Our objective is to continue deleveraging, returning capital to our common unitholders in a sustainable manner and positioning the Partnership for potential future growth opportunities, while navigating an uncertain geopolitical landscape and an evolving environmental regulatory framework. We intend to pursue growth opportunities that are expected to be accretive to the Partnership and can be financed on terms acceptable to us or are otherwise aligned with the long-term financial health of the Partnership. There can be no assurance, however, that any such opportunities will be available, completed, or result in favorable returns or enhanced unitholder value.
We may acquire additional vessels from our Sponsor, from entities associated with the shareholders of our Sponsor or from third-parties. We may also engage in investment opportunities in the general shipping industry or incidental to the LNG or energy industry. In connection with such plans for growth, we may enter into additional financing arrangements, refinance existing arrangements or arrangements that our Sponsor, its affiliates, or such third-party sellers may have in place for vessels and businesses that we may acquire, and, subject to favorable market conditions, we may raise capital in the public or private markets, including through incurring additional debt, debt or equity offerings of our securities, or other transactions. However, we cannot assure you that we will grow or maintain the size of our Fleet or that we will continue to pay the per unit distributions in the amounts that we have paid in the past or at all, or that we will be able to execute our plans for growth.
As of the date of this report, we have outstanding 36,382,011 common units, 35,526 general partner units, and 3,000,000 9.00% Series A Cumulative Redeemable Preferred Units, or the “Series A Preferred Units.” Our Sponsor currently beneficially owns approximately 42.9% of the equity interests in the Partnership (excluding the Series A Preferred Units) and 100% of our General Partner, which owns a 0.1% General Partner interest in the Partnership and 100% of our incentive distribution rights. Our Sponsor does not own any Series A Preferred Units.
Recent Events
Series A Preferred Units Cash Distribution
On August 12, 2026, we paid a cash distribution of $0.5625 per unit on our Series A Preferred Units for the period from May 12, 2026 to August 11, 2026, to all Series A Preferred unitholders of record as of August 5, 2026.
Common Units Cash Distribution
On August 28, 2026, we paid a cash distribution of $0.050 per unit on our common units for the quarter ended June 30, 2026, to all common unitholders of record as of August 24, 2026.
Our Fleet and our Charters
As of September 10, 2026, our Fleet consisted of six LNG carriers with an average age of approximately 16.1 years. All six vessels in our Fleet are currently employed or are contracted to be employed on time charters with international energy companies, including SEFE, Equinor, Yamal and Rio Grande. As of September 10, 2026, the estimated contracted revenue backlog of our Fleet was approximately $0.7 billion with average remaining charter duration of approximately 4.4 years.
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The following table sets forth summary information about our Fleet and the existing time charters relating to the vessels in our Fleet as of September 10, 2026:
| | | | | | | | Latest Charter | ||||||||
|
| Cargo |
|
|
|
| Expiration | |||||||||
Year |
| Capacity | Ice | Earliest Charter | Latest Charter |
| including options to | |||||||||
Vessel Name | Built | (cbm) | Class | Propulsion | Charterer | Expiration | Expiration |
| extend | |||||||
Clean Energy |
| 2007 |
| 149,700 |
| No |
| Steam |
| Rio Grande |
| April 2028 |
| May 2028 |
| n/a |
Ob River |
| 2007 |
| 149,700 |
| Yes |
| Steam |
| SEFE |
| March 2028 |
| May 2028 |
| n/a |
Amur River |
| 2008 |
| 149,700 |
| Yes |
| Steam |
| SEFE |
| June 2028 |
| July 2028 |
| n/a |
Arctic Aurora |
| 2013 |
| 155,000 |
| Yes |
| TFDE* |
| Equinor |
| August 2026 |
| October 2026 |
|
|
Yenisei River |
| 2013 |
| 155,000 |
| Yes |
| TFDE* |
| Yamal |
| Q4 2033 |
| Q2 2034 |
| Q2 2049(1) |
Lena River |
| 2013 |
| 155,000 |
| Yes |
| TFDE* |
| Yamal |
| Q2 2034 |
| Q3 2034 |
| Q4 2049(2) |
* As used in this report, “TFDE” refers to tri-fuel diesel electric propulsion system.
| (1) | On August 14, 2018, the Yenisei River was delivered early to Yamal immediately upon completion of its mandatory statutory class five-year special survey and dry-docking, pursuant to an addendum to the charter party with Yamal under which we agreed to extend the firm charter period from 15 years to 15 years plus 180 days. The charter contract for the Yenisei River with Yamal in the Yamal LNG Project has an initial term of 15.5 years, which may be extended at Yamal’s option by three consecutive periods of five years. |
| (2) | On July 1, 2019, the Lena River commenced employment under its long-term charter with Yamal. The charter contract for the Lena River with Yamal in the Yamal LNG Project has an initial term of 15 years, which may be extended at Yamal’s option by three consecutive periods of five years. |
The following table summarizes our estimated contracted revenue backlog and contracted days for the vessels in our Fleet for the remaining period of 2026 (September 10, 2026 through December 31, 2026) and for each of the years ending December 31, 2027 and 2028:
September 10, |
| ||||||
| 2026 through | | For the years ending | ||||
| December 31, | December 31, | |||||
Estimated contracted revenue backlog |
| 2026 | 2027 | | 2028 | ||
Contracted time charter revenues (in millions of U.S. dollars) (1)(2) |
| 48.0 |
| 156.3 |
| 107.6 | |
Contracted days |
| 672 |
| 2,190 |
| 1,438 | |
Available Days |
| 672 |
| 2,190 |
| 2,196 | |
Contracted/Available Days |
| 100 | % | 100 | % | 65 | % |
| (1) | Annual revenue calculations are based on: (a) the earliest redelivery dates possible under our charters, (b) no exercise of any option to extend the terms of those charters except for those that have already been exercised, if any, and (c) excluding planned periodical class survey repair days. |
| (2) | Estimated contracted time charter revenues for each of the period / years 2026, 2027, and 2028 include the amount of $3.7 million, $12.0 million, and $12.1 million, respectively, which relate to the estimated portion of the variable hire contained in the above-mentioned time charter contracts with Yamal, which represent the operating expenses of the respective vessels and are subject to annual adjustments on the basis of the actual operating costs incurred within each year. The actual amount of revenues earned in respect of such variable hire rate may therefore differ from the amounts included in the estimated contracted revenue backlog due to the annual variations in the respective vessel’s operating costs. |
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We may not be able to perform under these contracts due to events within or beyond our control, and our counterparties may seek to cancel or renegotiate our contracts for various reasons. As of June 30, 2026, we derived our revenues from four charterers, SEFE, Yamal, Equinor, and Rio Grande, who accounted for 35%, 36%, 23% and 6% of our cash revenues (excluding revenues relating to the value of the E.U. Emissions Trading System emission allowances (“EUAs”) due to us from our charterers), respectively. Our inability or the inability of any of our counterparties to perform the respective contractual obligations may affect our ability to realize the estimated contracted revenue backlog discussed above and may have a material adverse effect on our business, financial condition, results of operations, cash flows, our ability to realize the contracted revenues under these agreements and our ability to make distributions to our unitholders, and could result in an event of default under our debt agreements. Furthermore, we closely monitor the applicability of sanctions regulations on us and our counterparties, and the potential impact of economic sanctions on our existing commercial arrangements. Due to the ongoing Russian war with Ukraine, the United States (U.S.), the European Union (E.U.), the United Kingdom (the “U.K.”) and other western countries and organizations announced and enacted numerous sanctions against Russia. One of our charterers, Yamal, employs two of our vessels, the Yenisei River and Lena River, in the transportation of LNG produced in Russia for discharge at destinations worldwide, which as of June 30, 2026, accounted for 36% of our cash revenues as mentioned above, in compliance with applicable sanctions. However, sanctions may be extended, amended or interpreted in ways that could restrict the transportation of Russian-origin LNG under the Yamal Charters. Please see “Russian Sanctions Developments” herein for further information on the current status of applicable sanctions and the potential impact on us. Additionally, our estimated contracted revenue backlog may be adversely affected if the Yamal LNG Project, in which certain of our vessels are contracted to be employed, is abandoned or underutilized for any reason, including, but not limited to, changes in the demand for LNG. Readers are cautioned not to place undue reliance on this information. Neither our independent auditors nor any other independent accountants have compiled, examined, or performed any procedures with respect to the information presented in the table above, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the information in the table.
Operating results
Selected Financial Information
The following tables present selected unaudited consolidated financial and other data of the Partnership, at the dates and for the periods presented. All amounts are expressed in thousands of United States Dollars, except for Fleet Performance Data, unit and per unit data and Other Financial Data.
Six Months Ended | ||||||
| June 30, | |||||
Selected Historical Financial Data and Other Operating Information | | 2026 | | 2025 | ||
STATEMENT OF COMPREHENSIVE INCOME (In thousands of U.S. dollars, except for units and per unit data) | ||||||
Voyage revenues | $ | 81,126 | $ | 77,720 | ||
Other operating revenues from related party | 573 | — | ||||
Voyage expenses-including related party (1) |
| (5,980) |
| (3,289) | ||
Vessel operating expenses |
| (19,089) |
| (16,478) | ||
General and administrative expenses-including related party (2) |
| (939) |
| (971) | ||
Management fees-related party |
| (3,462) |
| (3,361) | ||
Depreciation |
| (15,900) |
| (15,900) | ||
Operating income | $ | 36,329 | $ | 37,721 | ||
Interest and finance costs, net |
| (7,811) |
| (10,096) | ||
Other income | 4,893 | — | ||||
Other, net |
| (28) |
| (346) | ||
Net Income | $ | 33,383 | $ | 27,279 | ||
Common unitholders’ interest in Net Income | $ | 29,978 | $ | 18,918 | ||
Series A Preferred unitholders’ interest in Net Income | $ | 3,375 | $ | 3,375 | ||
Series B Preferred unitholders’ interest in Net Income | $ | — | $ | 2,936 | ||
Deemed dividend on Series B Preferred Units | $ | — | $ | 2,031 | ||
General Partner’s interest in Net Income | $ | 30 | $ | 19 | ||
EARNINGS PER UNIT (basic and diluted): | ||||||
Common units | $ | 0.82 | $ | 0.52 | ||
Weighted average number of units outstanding (basic and diluted): |
|
|
| |||
Common units |
| 36,382,011 |
| 36,644,628 | ||
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June | December | |||||
| 30, 2026 | | 31, 2025 | |||
BALANCE SHEET DATA, at end of period / year: | ||||||
Total current assets | $ | 67,029 | $ | 49,428 | ||
Vessels, net |
| 717,248 |
| 733,148 | ||
Total assets | $ | 791,802 | $ | 786,244 | ||
Total current liabilities |
| 76,353 |
| 78,932 | ||
Total other financial liabilities, gross of deferred financing fees, including current portion |
| 256,640 |
| 278,724 | ||
Total partners’ equity | $ | 499,596 | $ | 473,230 | ||
Six Months Ended |
| ||||||
June 30, |
| ||||||
Selected Historical Financial Data and Other Financial Information | | 2026 | | 2025 |
| ||
CASH FLOW DATA | | |
| ||||
Net cash provided by operating activities | $ | 47,549 | $ | 42,384 | |||
Net cash used in financing activities | $ | (29,102) | $ | (32,684) | |||
FLEET PERFORMANCE DATA: |
|
| |||||
Number of vessels at the end of period |
| 6 |
| 6 | |||
Average number of vessels in operation in period (3) |
| 6 |
| 6 | |||
Average age of vessels in operation at end of period |
| 15.9 |
| 14.9 | |||
Available Days (4) |
| 1,086 |
| 1,086 | |||
Fleet utilization (5) |
| 95.7 | % |
| 99.7 | % | |
OTHER FINANCIAL DATA |
|
| |||||
Cash distributions per Series A Preferred Unit (6) | $ | 1.13 | $ | 1.13 | |||
Cash distributions per Series B Preferred Unit (7) | $ | — | $ | 1.29 | |||
Time Charter Equivalent Rate (in U.S. dollars) (8) | $ | 69,195 | $ | 68,537 | |||
Adjusted EBITDA (8) | $ | 51,901 | $ | 54,775 | |||
| (1) | Voyage expenses include commissions of 1.25% of gross charter hire paid to our Manager and third-party ship brokers. |
| (2) | Includes the Administrative Services Agreement fees and Executive Service Agreement fees charged by our Manager and excludes the daily management fees and commercial management fees, which are included in Management fees—related party. |
| (3) | Represents the number of vessels that constituted our Fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our Fleet during the period divided by the number of calendar days in the period. |
| (4) | Available Days are the total number of calendar days our vessels were in our possession during a period less the total number of scheduled off-hire days during the period associated with major repairs or dry-dockings. |
| (5) | We calculate fleet utilization by dividing the number of our revenue earning days, which are the total number of Available Days of our vessels net of unscheduled off-hire days during a period, by the number of our Available Days during that period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled off-hires for vessel upgrades, dry-dockings, or special or intermediate surveys. |
| (6) | Corresponds to a cash distribution of $0.5625 per Series A Preferred Unit in respect of the first and second quarter of 2026 and 2025, respectively, which were paid in the second and third quarter of 2026 and 2025, respectively. |
| (7) | Corresponds to a cash distribution of $0.677286319 in respect of the first quarter of 2025, $0.614808 in respect of the second quarter of 2025, which were paid in the second and third quarter of 2025, respectively. |
(8) | Time Charter Equivalent Rate and Adjusted EBITDA are not recognized measures under Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). |
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TCE. Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of a vessel. For time charters, we calculate the TCE rate by dividing total voyage revenues, less any voyage expenses, by the number of Available Days during the relevant time period. Under a time charter, the charterer pays substantially all vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during dry-docking or due to other unforeseen circumstances. The TCE rate is not a measure of financial performance under U.S. GAAP (non-GAAP measure), and should not be considered as an alternative to voyage revenues, the most directly comparable U.S. GAAP measure, or any other measure of financial performance presented in accordance with U.S. GAAP. However, the TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance and to assist our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rates may not be comparable to that reported by other companies. The following table reflects the calculation of our TCE rates for the periods presented (amounts in thousands of U.S. dollars, except for TCE rates, which are expressed in U.S. dollars, and Available Days):
Six Months Ended | ||||||
June 30, | ||||||
(In thousands of U.S. dollars, except as otherwise stated) | | 2026 | | 2025 | ||
Voyage revenues | $ | 81,126 | $ | 77,720 | ||
Voyage expenses |
| (5,980) |
| (3,289) | ||
Time charter equivalent revenues |
| 75,146 |
| 74,431 | ||
Available Days |
| 1,086 |
| 1,086 | ||
Time charter equivalent (TCE) rate (in U.S dollars) | $ | 69,195 | $ | 68,537 | ||
ADJUSTED EBITDA. We define Adjusted EBITDA as earnings before interest and finance costs, net of interest income (if any), taxes (when incurred), depreciation and amortization (when incurred), and non-recurring items (if any). Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess our operating performance.
We believe that Adjusted EBITDA assists our management and investors by providing useful information that increases the ability to compare our operating performance from period-to-period and against that of other companies in our industry that provide Adjusted EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or against companies of interest, other financial items, depreciation and amortization and taxes, which items are affected by various and possible changes in financing methods, capital structure and historical cost basis and which items may significantly affect Net Income between periods. We believe that including Adjusted EBITDA as a measure of operating performance benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing financial and operational strength.
Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and does not represent and should not be considered as an alternative to Net Income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with U.S. GAAP. Adjusted EBITDA excludes some, but not all, items that affect Net Income and these measures may vary among other companies. Therefore, Adjusted EBITDA, as presented above, may not be comparable to similarly titled measures of other companies because they may be defined or calculated differently by those other companies.
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The following table reconciles Adjusted EBITDA to net income, the most directly comparable U.S. GAAP financial measure, for the periods presented:
Reconciliation of Net Income to Adjusted EBITDA | Six months ended June 30, | |||||
(In thousands of U.S. dollars) | | 2026 | | 2025 | ||
Net Income | $ | 33,383 | $ | 27,279 | ||
Net interest and finance costs (1) |
| 7,811 |
| 10,096 | ||
Depreciation |
| 15,900 |
| 15,900 | ||
Deferred revenue and accrued charter revenue amortization |
| (371) |
| 1,393 | ||
Amortization of deferred charges |
| 71 |
| 107 | ||
Other income (2) | (4,893) | — | ||||
Adjusted EBITDA | $ | 51,901 | $ | 54,775 | ||
| (1) | Includes interest and finance costs (inclusive of amortization of deferred financing fees), net of interest income, if any. |
| (2) | Includes other income from insurance claims for damages incurred in prior years. |
Principal Factors Affecting Our Results of Operations
The principal factors which have affected our results and are expected to affect our future results of operations and financial position, include:
| ● | Ownership days. The number of vessels in our Fleet is a key factor in determining the level of our revenues. Aggregate expenses also increase as the size of our Fleet increases; |
| ● | Charter rates. Our revenue is dependent on the charter rates we are able to obtain on our vessels. Charter rates on our vessels are based primarily on demand for and supply of LNG carrier capacity at the time we enter into the charters for our vessels, which is influenced by LNG market trends, such as the demand and supply for natural gas and in particular LNG as well as the supply of LNG carriers available for profitable employment. The charter rates we obtain are also dependent on whether we employ our vessels under multi-year charters or charters with initial terms of less than two years. However, we expect to be exposed to fluctuations in prevailing charter rates when we seek to re-charter our vessels upon the expiry of their respective current charters and when we seek to charter vessels that we may acquire in the future. |
| ● | Utilization of our Fleet. Historically, our Fleet has had a limited number of unscheduled off-hire days. However, an increase in annual off-hire days would reduce our utilization. The efficiency with which suitable employment is secured, the ability to minimize off-hire days, and the amount of time spent positioning vessels also affects our results of operations. If the utilization of our Fleet is reduced, our financial results would be affected; |
| ● | Daily operating expenses. The level of our vessel operating expenses, including crewing costs, insurance, and maintenance costs. Our ability to control our vessel operating expenses also affects our financial results. These expenses include commission expenses, crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, lubricating oil costs, tonnage taxes, and other miscellaneous expenses. In addition, factors beyond our control, such as developments relating to market premiums for insurance and the value of the U.S. dollar compared to currencies in which certain of our expenses, primarily vessels’ drydocking and maintenance costs, are paid, can cause our vessel operating expenses to increase; |
| ● | The number of off-hire days and dry-docking requirements, including our ability to complete scheduled dry-dockings on time and within budget; |
| ● | The timely delivery of any vessels we may acquire in the future; |
| ● | Our ability to maintain solid working relationships with our existing charterers and our ability to increase the number of our charterers through the development of new working relationships; |
| ● | The performance of our charterers’ obligations under their charter agreements; |
7
| ● | The effective and efficient technical management of the vessels under our management agreements; |
| ● | Our ability to obtain acceptable equity and debt financing to fund our capital commitments; |
| ● | The supply and demand relationship for LNG shipping services; |
| ● | Our ability to obtain and maintain regulatory approvals and to satisfy technical, health, safety, environmental, and compliance standards that meet our charterers’ requirements; |
| ● | Our ability to successfully defend against any claims, suits, and complaints, including, but not limited to, those involving government laws and regulations; |
| ● | Economic, regulatory, political, and governmental conditions that affect shipping and the LNG industry, which include changes in the number of new LNG importing countries and regions, as well as structural LNG market changes impacting LNG supply that may allow greater flexibility and competition of other energy sources with global LNG use; |
| ● | Our ability to successfully employ our vessels at economically attractive rates, as our charters expire or are otherwise terminated; |
| ● | Our access to capital required to acquire additional ships and/or implement our business strategy; |
| ● | Our level of debt, the related interest expense, our debt amortization levels, and the timing of required principal installments; |
| ● | The level of our general and administrative expenses, including salaries and costs of consultants; |
| ● | Our charterers’ right for early termination of the charters under certain circumstances; |
| ● | Performance of our counterparties, which are limited in number, including our charterers’ ability to make charter payments to us; |
| ● | The level of any distribution on all classes of our units; and |
| ● | Other factors detailed in our Annual Report on Form 20-F for the year ended December 31, 2025, which was filed with the SEC on April 8, 2025, and reported from time to time in our periodic reports. |
Significant Accounting Policies and Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our financial statements requires us to make estimates and judgments in the application of our accounting policies that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosure at the date of our consolidated financial statements. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Actual results may differ from these estimates under different assumptions and conditions.
For a description of all our Significant Accounting Policies, see Note 2 to our unaudited interim consolidated financial statements included elsewhere in this report.
Recent Accounting Pronouncements
For a discussion on Recent Accounting Pronouncements, see Note 2 to our unaudited interim consolidated financial statements included elsewhere in this report.
8
Results of Operations
Six months ended June 30, 2026 compared to the six months ended June 30, 2025
Voyage revenues
Voyage revenues increased by $3.4 million, or 4.4%, to $81.1 million in the six months ended June 30, 2026, compared to $77.7 million for the six months ended June 30, 2025. This increase was mainly attributable to (i) the higher time charter rate earned by the Clean Energy under its new charter party with Rio Grande, which commenced in April 2026 and (ii) the value of the EUAs due to us from our charterers as a result of the increase in the E.U. requirement for surrendering allowances for 100% of their verified emissions in 2026 against 70% in 2025, increased market prices and increased voyages to E.U. ports (the corresponding value of the abovementioned EUAs, which the Partnership is obliged to surrender to the E.U. authorities, is included within Voyage expenses, therefore the net effect of the EUAs to the Operating income and Net income is zero). The above increase in voyage revenues was partially offset by a period of 20.5 days off-hire of the Clean Energy which underwent unscheduled maintenance in the period between the re-delivery by SEFE and its delivery to Rio Grande.
Voyage expenses- including voyage expenses to related party
In the six months ended June 30, 2026, voyage expenses (including the commercial management fee equal to 1.25% of the gross charter hire we pay our Manager as compensation for the commercial services it provides to us) were $6.0 million, compared to $3.3 million for the six months ended June 30, 2025, representing an increase of $2.7 million or 81.8%. The increase was primarily associated with the value of the EUAs accrued during the period as a result of the increase in E.U. prices and increased voyages to E.U. ports and which as mentioned above, we are obliged to surrender to the E.U. authorities.
Other operating revenues from related party
Other operating revenues from related party refer to the monetization of a FuelEU compliance surplus of $0.6 million realized in April 2026 pursuant to the transfer of the FuelEU compliance surplus generated by the Arctic Aurora through a pooling agreement entered into through our Manager with other vessel-owning companies who share common ultimate beneficial ownership with our Sponsor.
Vessel operating expenses
Vessel operating expenses were $19.1 million, which corresponds to a daily rate of $17,577 per LNG carrier in the six-month period ended June 30, 2026, as compared to $16.5 million, or a daily rate of $15,173 per LNG carrier in the six-month period ended June 30, 2025. This increase was mainly attributable to: (i) increased crew expenses, (ii) increased scheduled engine overhauling costs, and (iii) increased technical costs due to unscheduled repairs on two of the Partnership’s vessels in the six-month period ended June 30, 2026.
General and Administrative Expenses- including related party costs
During the six-month periods ended June 30, 2026, and 2025, we incurred general and administrative expenses of $0.9 million and $1.0 million, respectively. The $0.1 million, or 10.0%, decrease in the six-month period ended June 30, 2026, as compared to the same period in 2025, was mainly associated with decreased D&O insurance and audit fees, as part of our recurring business. General and administrative expenses are comprised of legal, consultancy, audit, executive services, administrative services and Board of Directors remuneration fees, as well as other miscellaneous expenditures, essential to conduct our business.
Management fees- related party
During the six-month periods ended June 30, 2026 and 2025, we incurred management fees of $3.5 million and $3.4 million, respectively, or a daily fee of $3,188 and $3,095 per vessel per day, respectively. The 3.0% increase in the management fees in the six-month period ended June 30, 2026, as compared to the same period in 2025, is consistent with the annual daily rate increase prescribed in our management agreement.
Depreciation
Depreciation expense was $15.9 million in the six-month periods ended June 30, 2026 and 2025.
9
Interest and finance costs
For the six-month periods ended June 30, 2026 and 2025, interest and finance costs were $8.3 million and $11.2 million, respectively. The decrease in the interest and finance costs of $2.9 million, or 25.9%, in the six-month period ended June 30, 2026, as compared to the same period in 2025 was mainly due to (i) the reduction in interest-bearing debt, (ii) the decrease in the weighted average interest rate from 6.51% in the six months ended June 30, 2025, to 5.89% in the six months ended June 30, 2026 and (iii) the dividends attributable to the Series B Preferred Units, accrued from May 27, 2025, and up to June 30, 2025.
Interest Income
Interest income decreased by 54.5%, or $0.6 million, to $0.5 million during six months ended June 30, 2026, from $1.1 million during the six months ended June 30, 2025. The decrease was attributable to the decrease in interest rates during the six months ended June 30, 2026, as compared to the corresponding period of 2025.
Other Income
Other Income increased to $4.9 million during the six months ended June 30, 2026, from nil during the corresponding period in 2025. Other Income includes income from claims from hull and machinery and loss of hire insurance for damages incurred by our vessels in previous years.
Other, net
Other, net decreased to nil million during the six months ended June 30, 2026, from $0.3 million during the corresponding period in 2025. Other, net includes expenses due to exchange differences.
Liquidity and Capital Resources
We operate in a capital-intensive industry and we expect to finance the purchase of additional vessels and other capital expenditures through a combination of borrowings from debt transactions, cash generated from operations and equity financings. Our liquidity requirements relate to servicing the principal and interest on our debt, paying distributions, when, as and if declared by our Board of Directors and funding capital expenditures and working capital. Our funding and treasury activities are intended to maximize investment returns while maintaining appropriate liquidity.
For the six-month period ended June 30, 2026, our principal sources of funds were our operating cash. We frequently monitor our capital needs by projecting our fixed income, expenses, and debt obligations and seek to maintain adequate cash reserves to compensate for any budget overruns.
Our short-term liquidity requirements relate to servicing the principal and interest on our debt, making at least the required distribution on our Series A Preferred Units in accordance with our Partnership Agreement, and funding of our normal working capital requirements, including vessel operating expenses and payments under our vessel management agreement with our Manager.
As of September 10, 2026, we believe our sources of funds (assuming the current contracted rates are earned from our existing charters) are sufficient to meet our normal working capital and other cash requirements for our current business for at least the next twelve months.
We reserve cash from operations for future maintenance capital expenditures, normal working capital requirements and other matters. Our future capital expenditure requirements principally relate to vessel drydocks including costs related to voyages to and from the drydocking yard that will depend on the distance from the vessel’s ordinary trading area to the drydocking yard. The Clean Energy is scheduled to be dry-docked in the second half of 2026 and the Amur River and the OB River are scheduled to be dry-docked in 2027. As of June 30, 2026, we have no other material capital expenditure commitments for the next twelve months.
10
On November 24, 2025, our Board of Directors authorized a new Common Unit Repurchase Program (the “2025 Common Unit Repurchase Program”), which authorizes the repurchase of up to an aggregate of $10.0 million of our outstanding common units over 12 months. Repurchases of common units under the 2025 Common Unit Repurchase Program may be made, from time to time, in privately negotiated transactions, in open market transactions, or by other means, including through trading plans intended to qualify under Rule 10b-18 and/or Rule 10b5-1 of the Exchange Act. The amount and timing of any repurchases made under the 2025 Common Unit Repurchase Program will be in our management team’s sole discretion, and will depend on a variety of factors, including legal requirements, market conditions, other investment opportunities, available liquidity, and the prevailing market price of the common units. The 2025 Common Unit Repurchase Program does not obligate us to repurchase any dollar amount or number of common units, and the 2025 Common Unit Repurchase Program may be suspended or discontinued at any time at our discretion. During the six-month period ended June 30, 2026, we did not repurchase any units as part of the 2025 Common Unit Repurchase Program.
Our long-term liquidity requirements relate primarily to funding capital expenditures, including the potential acquisition of additional vessels, and repaying our other financial liabilities.
In accordance with our business strategy, other liquidity needs may relate to funding potential investments and maintaining cash reserves against fluctuations in operating cash flows. We expect that we will rely upon external financing sources, including bank borrowings, other financing arrangements and the issuance of debt and equity securities, to fund acquisitions and other expansion capital expenditures.
Working capital position
Working capital is equal to current assets minus current liabilities, including the current portion of long-term debt. As of June 30, 2026, we had a working capital deficit of $9.3 million, as compared to the working capital deficit of $50.9 million as of June 30, 2025. Our working capital deficit was mainly due to the current portion of our other financial liabilities.
We believe that our anticipated sources of funds, as mentioned above and those that we anticipate to internally generate for a period of at least the next twelve months, will be sufficient to fund the operations of our Fleet, and to meet our normal working capital requirements, service our principal and interest debt, and make at least the required distribution on our Series A Preferred Units in accordance with our Partnership Agreement.
Russian Sanctions Developments
Due to the ongoing Russian war with Ukraine, the U.S., the E.U., the U.K. and other countries and organizations have publicly announced and enacted extensive sanctions against Russia to impose severe economic pressure on the Russian economy and government.
On October 23, 2025, the E.U. adopted the 19th package of sanctions (the “19th Package”), which prohibits the purchase, import or transfer, directly or indirectly, by E.U. persons and non-E.U. persons with an E.U.-nexus, of LNG that originates in Russia or is exported from Russia (the “LNG Prohibition”). The LNG Prohibition applies from January 1, 2027 with respect to supply contracts with a duration exceeding one year (“Long Term Contracts”) that were executed before June 17, 2025 and that have not since been amended, other than by amendments falling within specified categories.
On July 23, 2026, the E.U. amended the 19th Package with the adoption of the 21st package of sanctions (the “21st Package”). The 21st Package introduced an exemption to the LNG Prohibition, initially until July 25, 2027, and thereafter for successive periods of one year, unless the Council of the E.U. (the “E.U. Council”), following an annual review, decides otherwise. The exemption applies to transfers of LNG destined for third countries, pursuant to Long Term Contracts that were executed before February 24, 2022 and that have not since been amended, other than by amendments falling within specified categories, provided that, the volume of LNG transferred each year under the relevant contract does not exceed the yearly volume of LNG transferred in 2025 under such contract (the “Legacy Contract Derogation”).
Separately, on May 20, 2026, the U.K. enacted the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2026, which prohibit U.K. persons from providing or facilitating maritime transportation services for Russian-origin LNG, including carriage to third countries, subject to limited exceptions and licensing arrangements. The U.K. prohibition will apply beginning January 1, 2027 with respect to certain Long Term Contracts that were executed before June 17, 2025 and that have not since been amended, other than by amendments falling within specified categories.
11
Yamal, employs two of our vessels, the Yenisei River and Lena River, on existing Long Term Contracts that extend to 2033 and 2034, respectively (the “Yamal Charters”). These vessels, since commencement of the Yamal Charters, have been engaged in the transportation of LNG produced in Russia for discharge at destinations worldwide in compliance with applicable sanctions regulations.
We believe that the transportation of LNG under the Yamal Charters to destinations outside the E.U. currently falls within the Legacy Contract Derogation and, accordingly, are outside the scope of the LNG Prohibition. However, there can be no assurance that our interpretation of the Legacy Contract Derogation is correct, or that regulatory authorities or our counterparties will agree with our interpretation. Furthermore, there can be no assurance that the transportation of LNG under the Yamal Charters will continue to meet the requirements of the Legacy Contract Derogation, including with respect to the yearly volume limitation, or that the E.U. Council will not decide, following an annual review, to shorten or terminate the Legacy Contract Derogation, or that sanctions regulations will not be further implemented, amended, or expanded to restrict the transportation of Russian-origin LNG. These risks are outside of our control, and if one or more of these events were to occur, our vessels would be restricted from transporting LNG originating in or exported from Russia, which would affect Yamal’s ability to continue employing the vessels in the manner currently conducted. Notwithstanding the foregoing, we believe the Yamal Charters would remain enforceable, however, Yamal may not agree with our interpretation, which could result in disputes, non-performance, litigation or early termination of the Yamal Charters, among other things. In addition, sanctions may be extended, amended or interpreted in ways that require the early termination of the Yamal Charters, or give rise to rights of Yamal, including the purchase option exercisable on a sanctions event described in our unaudited interim consolidated financial statements included elsewhere in this report.
Furthermore, as a result of the U.K. regulations described above, we expect that we will be required to replace certain key service providers currently based in the U.K. with providers established outside the U.K. There can be no assurance that replacement services will be available on comparable terms, or at all. Any inability to obtain such services, or delay in obtaining them, could disrupt the operation of the affected vessels, result in additional costs or periods of off-hire or affect our ability to perform our obligations under the Yamal Charters or to comply with covenants in our debt agreements.
Our fleet consists of only six LNG carriers and we derive all of our revenues from a limited number of charterers. For the six-month period ended June 30, 2026, revenues from Yamal accounted for 36% of our cash revenues (excluding revenues relating to the value of the EUAs due to us from our charterers). The loss of revenue under either or both of the Yamal Charters would have a material adverse effect on our business, results of operations, financial condition and cash flows, and our ability to make distributions to our unitholders, and could result in an event of default under our debt agreements.
Other than as described above in relation to the U.K. regulations, applicable U.S., U.K. and E.U. sanctions regimes that are in effect as of today’s date do not materially affect our business, operations or financial condition and, to our knowledge, our counterparties are currently performing their obligations under their respective time charters in compliance with such sanctions regulations. We closely monitor the applicability of sanctions regulations on us and our counterparties, and the potential impact of economic sanctions on our existing commercial arrangements, including the Yamal Charters. The full impact of the commercial and economic consequences of the Russian war with Ukraine is uncertain at this time. The E.U. and U.K. sanctions regulations described above or any further development in sanctions, or escalation of the Ukraine war and other geopolitical events and conflicts more generally may have a material adverse impact on our business, financial condition, results of operations, our ability to make distributions to unitholders or our ability to comply with the covenants in our debt agreements. Sanctions have been expanded over time and may continue to evolve and could ultimately restrict or prevent the performance of certain contractual obligations under our charters.
Please see the section of this report entitled “Forward Looking Statements.” Please also see the risk factors we describe in our Annual Report on Form 20-F for the year ended December 31, 2025.
Capital Expenditures
We reserve cash from operations for future maintenance capital expenditures, normal working capital requirements and other matters.
Our future capital expenditure requirements principally relate to vessel drydocks including costs related to voyages to and from the drydocking yard that will depend on the distance from the vessel’s ordinary trading area to the drydocking yard. The Clean Energy is scheduled to be dry-docked in the second half of 2026 and the Amur River and the OB River are scheduled to be dry-docked in 2027. As at June 30, 2026, we have no other material capital expenditure commitments for the next twelve months.
12
Our Borrowing Activities
CDBL Lease Financing
On June 19, 2024, we entered into sale and leaseback agreements with China Development Bank Financial Leasing Co. Ltd. (“CDBL”) for four of our vessels, the Ob River, the Clean Energy, the Amur River, and the Arctic Aurora for the amounts of $71.2 million, $53.6 million, $73.1 million and $147.0 million, respectively (together, the “Lease Financing”). The Lease Financing closed on June 27, 2024.
Under the terms of the Lease Financing, we sold and simultaneously chartered back on a bareboat basis the OB River, the Clean Energy and the Amur River for a five-year period and the Arctic Aurora for a ten- year period, commencing on June 27, 2024. The charterhire principal is scheduled to be repaid in 20 consecutive quarterly installments paid in arrears for the OB River, the Clean Energy and the Amur River and 40 consecutive quarterly installments paid in arrears for the Arctic Aurora. The financing’s applicable interest rate is three-month Term SOFR plus a margin. Following the first anniversary of each bareboat charter, we will have the option at any time to repurchase the respective vessel at a predetermined price, as set forth in each respective agreement. At the end of the applicable bareboat charter period, we will have the obligation to repurchase such vessel at a price equal to 20% of the financing amount with respect to the OB River, the Clean Energy and the Amur River and 15% of the financing amount with respect to the Arctic Aurora. We will be required to maintain a minimum market value of each vessel of at least 120% of the respective outstanding principal balance throughout the charter period.
As of June 30, 2026, our outstanding borrowings relate to the Lease Financing from CBDL. For further information relating to our long- term debt and other financial liabilities, please see Note 5 to our unaudited interim condensed consolidated financial statement included elsewhere in this report.
Distributions
Distributions on Common Units
On February 27, 2026, we paid a cash distribution for the fourth quarter of 2025 of $0.050 per common unit, to all common unitholders of record as of February 23, 2026.
On May 22, 2026, we paid a cash distribution for the first quarter of 2026 of $0.050 per common unit, to all common unitholders of record as of May 18, 2026.
On August 28, 2026, we paid a cash distribution for the second quarter of 2026 of $0.050 per common unit, to all common unitholders of record as of August 24, 2026.
Distributions on Series A Preferred Units
On February 12, 2026, we paid a cash distribution of $0.5625 per unit on our Series A Preferred Units for the period from November 12, 2025 to February 11, 2026, to all Series A Preferred Unitholders of record as of February 5, 2026.
On May 12, 2026, we paid a cash distribution of $0.5625 per unit on our Series A Preferred Units for the period from February 12, 2026 to May 11, 2026, to all Series A Preferred Unitholders of record as of May 5, 2026.
On August 12, 2026, we paid a cash distribution of $0.5625 per unit on our Series A Preferred Units for the period from May 12, 2026 to August 11, 2026, to all Series A Preferred Unitholders of record as of August 5, 2026.
Distributions on General Partner Units
During the six-month periods ended June 30, 2026, and 2025, our Board of Directors approved two quarterly cash distributions to our General Partner and holder of the incentive distribution rights in the Partnership, in the amount of $2,000 each.
Cash Flows
The following table summarizes our net cash flows provided by/ (used in) operating, investing and financing activities and our cash and cash equivalents for the six-month periods ended June 30, 2026 and 2025:
13
Six months ended June 30, | ||||||
(in thousands of U.S. Dollars) | | 2026 | | 2025 | ||
Net cash provided by operating activities | $ | 47,549 | $ | 42,384 | ||
Net cash used in financing activities |
| (29,102) |
| (32,684) | ||
Cash and cash equivalents at beginning of period |
| 41,039 |
| 68,156 | ||
Cash and cash equivalents at end of period | $ | 59,486 | $ | 77,856 | ||
Operating Activities
Net cash provided by operating activities amounted to $47.5 million for the six-month period ended June 30, 2026, as compared to $42.4 million for the same period in 2025. This increase in net cash provided by operating activities was mainly attributable to working capital changes and the increase in net income.
Financing Activities
Net cash used in financing activities was $29.1 million during the six-month period ended June 30, 2026, as compared to $32.7 million for the same period in 2025, and consisted of: (i) $22.1 million of regular principal payments under the CDBL Lease Financing and (ii) distributions of $7.0 million paid to our common and preferred unitholders during the period (see “Distributions” above).
14
F-1
DYNAGAS LNG PARTNERS LP
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page | |
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 | F-3 |
F-4 | |
F-5 | |
F-6 | |
Notes to the Unaudited Interim Condensed Consolidated Financial Statements | F-7 |
F-2
DYNAGAS LNG PARTNERS LP
Unaudited Condensed Consolidated Balance Sheets
As of June 30, 2026 and December 31, 2025
(Expressed in thousands of U.S. Dollars — except for unit data)
| Note | | June 30, | | December 31, | |||
ASSETS |
| |
| |
| | ||
CURRENT ASSETS: |
| |
| |
| | ||
Cash and cash equivalents |
| | $ | | $ | | ||
Trade accounts receivable |
| |
| |
| | ||
Prepayments and other assets |
|
| |
| | |||
Inventories |
| |
| |
| | ||
Deferred charges, current portion | | | ||||||
| 3 |
| — |
| | |||
Total current assets |
| |
| |
| | ||
FIXED ASSETS, NET: |
| |
| |
| | ||
Vessels, net |
| 2,4 |
| |
| | ||
Total fixed assets, net |
| |
| |
| | ||
OTHER NON-CURRENT ASSETS: |
| |
| |
| | ||
| 3 |
| |
| | |||
Deferred charges |
|
| |
| | |||
Other receivables | 6 | | | |||||
Total non-current assets | | | ||||||
Total assets |
| | $ | | $ | | ||
LIABILITIES AND PARTNERS’ EQUITY |
| |
| |
| | ||
CURRENT LIABILITIES: |
| |
| |
| | ||
Current portion of other financial liabilities, net of unamortized deferred financing fees of $ |
| 5 | $ | | $ | | ||
Trade payables |
|
| |
| | |||
| 3 |
| |
| — | |||
Accrued liabilities |
| |
| |
| | ||
Deferred revenue - Current | | | ||||||
Unearned revenue |
| |
| |
| | ||
Total current liabilities |
| |
| |
| | ||
NON-CURRENT LIABILITIES: |
| |
|
|
| | ||
Deferred revenue |
| |
| |
| | ||
Other financial liabilities, net of current portion and unamortized deferred financing fees of $ |
| 5 |
| |
| | ||
Other payables | 6 | | — | |||||
Total non-current liabilities |
| |
| |
| | ||
Commitments and contingencies |
| 8 |
|
| ||||
PARTNERS’ EQUITY: |
| |
|
| | |||
Common unitholders (unlimited authorized; |
| 9 |
| |
| | ||
Series A Preferred unitholders ( |
| 9 |
| |
| | ||
General Partner ( |
| 9 |
| |
| | ||
Total partners’ equity |
| |
| |
| | ||
Total liabilities and partners’ equity |
| | $ | | $ | | ||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
F-3
DYNAGAS LNG PARTNERS LP
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income
For the six month periods ended June 30, 2026 and 2025
(Expressed in thousands of U.S. Dollars—except for unit and per unit data)
| | Six months ended June 30, | ||||||
Note | 2026 | 2025 | ||||||
REVENUES: | | | | | | | ||
Voyage revenues |
| $ | | $ | | |||
| — | |||||||
EXPENSES: |
| |
|
| ||||
Voyage expenses (including related party) |
| 3 |
| ( |
| ( | ||
Vessel operating expenses |
| |
| ( |
| ( | ||
General and administrative expenses (including related party) |
| 3 |
| ( |
| ( | ||
Management fees-related party |
| 3 |
| ( |
| ( | ||
Depreciation |
| 4 |
| ( |
| ( | ||
Operating income |
| | $ | | $ | | ||
OTHER INCOME/(EXPENSES): |
| |
| |
| | ||
Interest and finance costs |
| 5,11 |
| ( |
| ( | ||
Interest income |
| |
| |
| | ||
Other income | | — | ||||||
Other, net |
| |
| ( |
| ( | ||
Total other expenses |
| |
| ( |
| ( | ||
Partnership’s Net Income |
| | $ | | $ | | ||
Common unitholders’ interest in Net Income |
| | $ | | $ | | ||
Series A Preferred unitholders’ interest in Net Income |
| | $ | | $ | | ||
Series B Preferred unitholders’ interest in Net Income |
| | $ | — | $ | | ||
Deemed dividend on Series B Preferred Units | 10 | $ | — | | ||||
General Partner’s interest in Net Income |
| | $ | | $ | | ||
Earnings per unit, basic and diluted: |
| 10 |
|
| | |||
Common unit (basic and diluted) |
| | $ | | $ | | ||
Weighted average number of units outstanding, basic and diluted: |
| 10 |
|
| | |||
Common units |
| |
| |
| | ||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
F-4
DYNAGAS LNG PARTNERS LP
Unaudited Interim Consolidated Statements of Partners’ Equity
For the six month periods ended June 30, 2026 and 2025
(Expressed in thousands of U.S. Dollars—except for unit data)
Number of units | Partners’ Capital | ||||||||||||||||||||||
Series A | Series B | General | Series A | Series B | General |
| |||||||||||||||||
| Preferred | | Preferred | | Common | | Partner | | Preferred | | Preferred | | Common | | Partner | | Total | ||||||
BALANCE, December 31, 2024 | $ | | $ | | $ | | $ | | $ | | |||||||||||||
—Net income |
| — |
| — |
| — |
| — |
| |
| |
| |
| |
| | |||||
—Repurchase of common units (Note 9) | — | — | ( | — | — | — | ( | — | ( | ||||||||||||||
—Distributions declared and paid (preferred units) (Note 9) | — | — | — | — | ( | ( | — | — | ( | ||||||||||||||
—Distributions declared and not paid (preferred units) (Note 9) | — | — | — | — | — | ( | — | — | ( | ||||||||||||||
—Distributions declared and paid (common units) (Note 9) | — | — | — | — | — | — | ( | — | ( | ||||||||||||||
— Distributions declared and paid (General Partner units) (Note 9) | — | — | — | — | — | — | — | ( | ( | ||||||||||||||
— Redemption of Series B Preferred Units (Note 9) | — | ( | — | — | — | ( | — | — | ( | ||||||||||||||
Deemed dividend on Redemption of Series B Preferred Units (Note 9) | — | — | — | — | — | — | ( | — | ( | ||||||||||||||
BALANCE, June 30, 2025 |
| |
| — |
| |
| | $ | | $ | — | $ | | $ | | $ | | |||||
Number of units | Partners’ Capital | |||||||||||||||||
Series A | General | Series A | General |
| ||||||||||||||
| Preferred | | Common | | Partner | | Preferred | | Common | | Partner | | Total | |||||
BALANCE, December 31, 2025 | $ | | $ | | $ | | $ | | ||||||||||
—Net income |
| — |
| — |
| — |
| |
| |
| |
| | ||||
—Distributions declared and paid (preferred units) (Note 9) | — | — | — | ( | — | — | ( | |||||||||||
—Distributions declared and paid (common units) (Note 9) | — | — | — | — | ( | — | ( | |||||||||||
— Distributions declared and paid (General Partner units) (Note 9) | — | — | — | — | — | ( | ( | |||||||||||
BALANCE, June 30, 2026 |
| |
| |
| | $ | | $ | | $ | | $ | | ||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-5
DYNAGAS LNG PARTNERS LP
Unaudited Interim Consolidated Statements of Cash Flows
For the six month periods ended June 30, 2026 and 2025
(Expressed in thousands of U.S. Dollars)
| | June 30, | | June 30, | ||||
Note | 2026 | 2025 | ||||||
Cash flows from Operating Activities: |
| |
| |
| | ||
Net income: |
| | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities: |
| |
|
|
| |||
Depreciation |
| 4 |
| |
| | ||
Amortization of deferred financing fees |
| 5,11 |
| |
| | ||
Deferred revenue amortization |
| |
| ( |
| | ||
Amortization of deferred charges |
| |
| |
| | ||
Changes in operating assets and liabilities: |
| |
| |
| | ||
Trade accounts receivable |
| |
| ( |
| | ||
Prepayments and other assets |
| |
| ( |
| ( | ||
Inventories |
| |
| |
| ( | ||
Due from/to related parties |
| |
| |
| | ||
Deferred expenses |
| |
| ( |
| | ||
Trade accounts payable |
| |
| ( |
| ( | ||
Accrued liabilities |
| |
| |
| ( | ||
Accrued dividends on Series B Preferred Units | 11 | — | | |||||
Unearned revenue |
| |
| ( |
| ( | ||
Net cash provided by Operating Activities |
| | $ | | $ | | ||
Cash flows from Financing Activities: |
| |
| |
| | ||
Repurchase of common units, purchase costs | 9 | — | ( | |||||
Repurchase of common units | 9 | — | ( | |||||
Distributions declared and paid |
| 9 |
| ( |
| ( | ||
Repayment of long-term debt and other financial liabilities |
| 5 |
| ( |
| ( | ||
Net cash used in Financing Activities |
| | $ | ( | $ | ( | ||
Net increase in cash and cash equivalents |
| |
| |
| | ||
Cash and cash equivalents at beginning of the period |
| |
| |
| | ||
Cash and cash equivalents at end of the period |
| | $ | | $ | | ||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-6
Notes to Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in thousands of U.S. dollars, except for unit and per unit data, unless otherwise stated)
1. Basis of Presentation and General Information:
Dynagas LNG Partners LP (“Dynagas Partners” or the “Partnership”) was incorporated as a limited partnership on
Due to the ongoing Russian war with Ukraine, the United States (“U.S.”), the European Union (“E.U.”), the United Kingdom (“U.K.”), and other countries and organizations have publicly announced and enacted extensive sanctions against Russia to impose severe economic pressure on the Russian economy and government.
On October 23, 2025, the E.U. adopted the 19th package of sanctions (the “19th Package”), which prohibits the purchase, import or transfer, directly or indirectly, by E.U. persons and non-E.U. persons with an E.U.-nexus, of LNG that originates in Russia or is exported from Russia (the “LNG Prohibition”). The LNG Prohibition applies from January 1, 2027 with respect to supply contracts with a duration exceeding one year (“Long Term Contracts”) that were executed before June 17, 2025 and that have not since been amended, other than by amendments falling within specified categories.
On July 23, 2026, the E.U. amended the 19th Package with the adoption of the 21st package of sanctions (the “21st Package”). The 21st Package introduced an exemption to the LNG Prohibition, initially until July 25, 2027, and thereafter for successive periods of one year, unless the Council of the E.U. (the “E.U. Council”), following an annual review, decides otherwise. The exemption applies to transfers of LNG destined for third countries, pursuant to Long Term Contracts that were executed before February 24, 2022 and that have not since been amended, other than by amendments falling within specified categories, provided that, the volume of LNG transferred each year under the relevant contract does not exceed the yearly volume of LNG transferred in 2025 under such contract (the “Legacy Contract Derogation”).
Separately, on May 20, 2026, the U.K. enacted the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2026, which prohibit U.K. persons from providing or facilitating maritime transportation services for Russian-origin LNG, including carriage to third countries, subject to limited exceptions and licensing arrangements. The U.K. prohibition will apply beginning January 1, 2027 with respect to certain Long Term Contracts that were executed before June 17, 2025 and that have not since been amended, other than by amendments falling within specified categories.
One of the Partnership’s charterers, Yamal Trade Pte. Ltd. (“Yamal”), employs two of its vessels, the Yenisei River and Lena River, on existing Long Term Contracts that extend to 2033 and 2034, respectively (the “Yamal Charters”). These vessels, since commencement of the Yamal Charters, have been engaged in the transportation of LNG produced in Russia for discharge at destinations worldwide in compliance with applicable sanctions regulations.
F-7
1. Basis of Presentation and General Information (continued):
The Partnership believes that the transportation of LNG under the Yamal Charters to destinations outside the E.U. currently falls within the Legacy Contract Derogation and, accordingly, are outside the scope of the LNG Prohibition. However, there can be no assurance that the Partnership’s interpretation of the Legacy Contract Derogation is correct, or that regulatory authorities or the Partnership’s counterparties will agree with the Partnership’s interpretation. Furthermore, there can be no assurance that the transportation of LNG under the Yamal Charters will continue to meet the requirements of the Legacy Contract Derogation, including with respect to the yearly volume limitation, or that the E.U. Council will not decide, following an annual review, to shorten or terminate the Legacy Contract Derogation, or that sanctions regulations will not be further implemented, amended, or expanded to restrict the transportation of Russian-origin LNG. These risks are outside of the Partnership’s control, and if one or more of these events were to occur, the Partnership’s vessels would be restricted from transporting LNG originating in or exported from Russia, which would affect Yamal’s ability to continue employing the vessels in the manner currently conducted. Notwithstanding the foregoing, the Partnership believes the Yamal Charters would remain enforceable, however, Yamal may not agree with the Partnership’s interpretation, which could result in disputes, non-performance, litigation or early termination of the Yamal Charters, among other things. In addition, sanctions may be extended, amended or interpreted in ways that require the early termination of the Yamal Charters, or give rise to rights of Yamal, including the purchase option exercisable on a sanctions event described herein.
Furthermore as a result of the U.K. regulations described above, the Partnership expects that it will be required to replace certain key service providers currently based in the U.K., with providers established outside the U.K. There can be no assurance that replacement services will be available on comparable terms, or at all. Any inability to obtain such services, or delay in obtaining them, could disrupt the operation of the affected vessels, result in additional costs or periods of off-hire, or affect the Partnership’s ability to perform its obligations under the Yamal Charters or to comply with covenants in its debt agreements.
As there is currently uncertainty regarding the global impact of the conflict, which is ongoing, it is possible that further developments in sanctions or escalation of the conflict will affect the Partnership’s ability to continue to employ two out of its six vessels to the current charterers and the suspension, termination, or cancellation of such charter parties, could thus adversely affect the Partnership’s results of operation, cash flows and financial condition. The Partnership believes that despite the continuing uncertainty, in the event of suspension, termination, cancellation of any of these charters, it will be able to enter into replacement time charters acceptable to the lessors.
As of June 30, 2026, the Partnership reported cash and cash equivalents of and had a working capital deficit of $
The Partnership is engaged in the seaborne transportation industry through the ownership of high specification LNG vessels and is the sole owner (directly or indirectly) of all outstanding shares or units of the following subsidiaries as of June 30, 2026:
Vessel Owning Subsidiaries:
| Country of | | | Delivery | | |
| |||
incorporation/ | date from | Delivery date to | ||||||||
Company Name | formation | Vessel Name | shipyard | Partnership | Cbm Capacity | |||||
Pegasus Shipholding S.A. (“Pegasus”) |
|
|
|
|
| |||||
Lance Shipping S.A. (“Lance”) |
|
|
|
|
| |||||
Seacrown Maritime Ltd. (“Seacrown”) |
|
|
|
|
| |||||
Noteworthy Shipping Limited (“Noteworthy”), (formerly known as Fareastern Shipping Limited) |
|
|
|
|
| |||||
Navajo Marine Limited (“Navajo”) |
|
|
|
|
| |||||
Solana Holding Ltd. (“Solana”) |
|
|
|
|
|
F-8
1. Basis of Presentation and General Information (continued):
Non-Vessel Owning Subsidiaries:
Company Name | | Country of | | Purpose of incorporation |
Dynagas Equity Holding Limited | Marshall Islands | Holding company that owns all of the outstanding share capital of Dynagas LNG Carriers Ltd. (“Dynagas LNG”). | ||
Dynagas Operating GP LLC | Marshall Islands | Limited Liability Company in which the Partnership holds a | ||
Dynagas Operating LP | Marshall Islands | Limited partnership in which the Partnership holds a | ||
Dynagas Finance Inc. | Marshall Islands | Wholly owned subsidiary of the Partnership whose activities were limited to the co-issuance of the 2019 Notes, discussed under the Partnership’s Annual Report on Form 20-F for the year ended December 31, 2022, which was filed with the SEC, on April 21, 2023 and engaging in other activities incidental thereto. | ||
Dynagas LNG Carriers Ltd. (“Dynagas LNG”) (formerly known as Arctic LNG Carriers Ltd.) | Marshall Islands | Wholly owned subsidiary of the Partnership which is directly wholly owned by Dynagas Equity and which owns all of the issued and outstanding share capital of Pegasus, Lance, Seacrown, Noteworthy, Navajo, Solana and Dynagas Finance LLC. | ||
Dynagas Finance LLC | Delaware | Wholly owned subsidiary of Arctic LNG |
Since the Partnership’s inception, the technical, administrative, and commercial management of the Partnership’s fleet is performed by Dynagas Ltd. (“Dynagas” or the “Manager”), a related company, wholly owned by the Partnership’s Chairman (Note 3(a)).
As of June 30, 2026, the Partnership’s Sponsor owned
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S Securities and Exchange Commission (the “SEC”) for interim financial reporting. The unaudited interim condensed consolidated financial statements include the accounts of Dynagas Partners and its wholly owned subsidiaries, referred to above. All intercompany balances and transactions have been eliminated upon consolidation.
These unaudited interim condensed consolidated financial statements and accompanying notes should be read in conjunction with the Partnership’s audited consolidated financial statements for the year ended December 31, 2025 and notes thereto included in its Annual Report on Form 20-F, filed with the SEC on April 8, 2026. In the opinion of the Partnership’s management, all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the financial position, operating results, and cash flows have been included in the financial statements for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
F-9
1. Basis of Presentation and General Information (continued):
Segment Reporting
The Partnership’s vessel operations segment derives revenues from charterers under time charter agreements of its LNG vessels. The accounting policies of the vessel operations segment are the same as the Partnership’s accounting policies. The Partnership’s chief operating decision maker, or CODM, is the Chief Executive Officer. Although separate vessel financial information is available, the CODM internally evaluates the performance of the Partnership as a whole and not on the basis of each vessel or charters. In addition, Partnership’s vessels regularly move between countries in international waters over many trade routes, it is neither practical nor meaningful to assign revenues or earnings from the transportation of international LNG by geographic area. As a result, the Partnership has determined that it has a single reportable segment. The CODM measures performance based on the Partnership’s overall return to the unitholders based on consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM uses net income to evaluate segment assets in deciding whether to reinvest profits into the vessel operations segment or into other strategic activities, such as for acquisitions or to pay dividends. Consolidated expense information presented within the Consolidated Statements of Income are considered to be significant expenses as they are important to the Partnership’s segment and regularly reported to the CODM.
Concentration of Credit Risk
During the six-month periods ended June 30, 2026 and 2025, charterers that individually accounted for more than 10% of the Partnership’s cash revenues (excluding revenues from charterers relating to the value of the E.U. emission allowances) were as follows:
Charterer | | 2026 | | 2025 |
|
A |
| | % | | % |
B |
| | % | | % |
C |
| | % | | % |
Total |
| | % | | % |
The maximum aggregate amount of loss due to credit risk, net of related allowances, that the Partnership would have incurred if the aforementioned charterers failed completely to perform according to the terms of their respective charter parties, amounted to $
Provision for Credit Losses
The amount shown as trade accounts receivable at each balance sheet date, mainly includes receivables from charterers for hire from lease agreements, net of any provision for doubtful accounts, if any. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts primarily based on the aging of such balances and any amounts in dispute. Operating lease receivables under ASC 842 are not in scope of ASC 326 for assessment of credit loss. ASC 842 requires lessors to evaluate the collectability of all lease payments. If collection of all operating lease payments, plus any amount necessary to satisfy a residual value guarantee, is not probable (either at lease commencement or after the commencement date), lease income is constrained to the lesser of cash collected or lease income reflected on a straight-line or another systematic basis, plus variable rent when it becomes accruable. Provision for doubtful accounts as of June 30, 2026 and December 31, 2025, was
F-10
2. Significant Accounting Policies and Recent Accounting Pronouncements:
A summary of the Partnership’s significant accounting policies can be found in the Partnership’s consolidated financial statements included in the Annual Report on Form 20-F for the year ended December 31, 2025, filed with the SEC on April 8, 2026. There have been no material changes to these policies during the six-month period ended June 30, 2026.
Recent Accounting Pronouncements - not yet adopted
In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations” (Topic 818). This guidance establishes recognition, measurement, presentation and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. This guidance is required to be adopted by the Company in the first quarter of 2028 on a retrospective basis. The Company is evaluating the impact this guidance may have on the consolidated financial statements.
3. Transactions with related parties
During the six-month periods ended June 30, 2026 and 2025, the Partnership incurred the following charges in connection with related party transactions, which are included in the accompanying unaudited interim condensed consolidated statements of comprehensive income:
| Six months ended | |||||
June 30 | ||||||
| 2026 | | 2025 | |||
Included in other operating revenues from related party | ||||||
$ | | $ | — | |||
Included in voyage expenses (including related party) | | | ||||
Charter hire commissions (a) | $ | |
| $ | | |
Included in general and administrative expenses (including related party) |
|
|
| |||
Executive services fee (b) | $ | |
| $ | | |
Administrative services fee (c) | $ | |
| $ | | |
Management fees-related party |
|
|
| |||
Management fees (a) | $ | |
| $ | | |
As of June 30, 2026 and December 31, 2025, balances with related parties consisted of the following:
| June 30, | | December 31, | |||
2026 | 2025 | |||||
Assets: | | | ||||
Working capital advances granted to the Manager (a) | $ | — | $ | | ||
Other Partnership expenses due from Manager | — | | ||||
Total assets due from related party, current | $ | — |
| $ | | |
Security deposits to Manager (a) | $ | | $ | | ||
Total assets due from related party, non-current | $ | | $ | | ||
Liabilities included in Due to related party: |
| |
|
| | |
Working capital advances due to the Manager (a) | $ | |
| $ | — | |
Administrative service charges due to Manager (c) | $ | |
| $ | — | |
Total liabilities due to related party, current | $ | |
| $ | — | |
F-11
3. Transactions with related parties (continued):
(a) Master Management Agreement
The Partnership has entered into a master management agreement (the “Master Agreement”) with Dynagas Ltd. (the “Manager”) for the provision of commercial, technical, crew, accounting and vessel administrative services to the Partnership’s owned or controlled vessels for a technical management fee of an absolute amount of $
Under the terms of the Master Agreement, the Manager charges the Partnership for any additional capital expenditures, financial costs, operating expenses, and general and administrative expenses that are not covered by the management fees. The Master Agreement initially terminates on December 31, 2030, and upon expiration, automatically extends in additional five-year increments if notice of termination is not previously provided by the Partnership’s vessel-owning subsidiaries. In the event the Master Agreement is terminated for any reason other than default by the Manager, the applicable management fee under the Master Agreement shall continue to be payable for a further period of
During the six-month periods ended June 30, 2026 and 2025, each vessel was charged a daily management fee of $
The Master Agreement also provides for a commission of
The Master Agreement also provides for an advance equal to three months daily management fee, which shall continue to be maintained during its’ term by the Manager. Such advances as of June 30, 2026 and December 31, 2025, amounted to $
In addition, the Manager makes payments for operating expenses with funds provided by the Partnership. As of June 30, 2026 the amount of $
The Manager also makes payments for other expenses (e.g. extra war risk insurances) on behalf of the Partnership. As of December 31, 2025 the amount of $
F-12
3. Transactions with related parties (continued):
(b) Executive Services Agreement
On March 21, 2014, the Partnership entered into an executive services agreement (the “Executive Services Agreement”) with its Manager with retroactive effect from the IPO closing date, pursuant to which the Manager provides the Partnership the certain services of its executive officers, who report directly to the Board of Directors. Under the Executive Services Agreement, the Manager is entitled to an executive services fee of €
(c) Administrative Services Agreement
On December 30, 2014, and with effect from the IPO closing date, the Partnership entered into an administrative services agreement (the “Administrative Services Agreement”) with its Manager, according to which the Partnership is provided with certain financial, accounting, reporting, secretarial and information technology services for a monthly fee of $
(d) FuelEU compliance surplus pooling agreement
On April 20, 2026, the Partnership entered into an agreement with its Manager, pursuant to which the Manager was authorized to participate in a FuelEU compliance pool on behalf of the Partnership, with other vessel-owning companies who share common ultimate beneficial ownership with the Partnership’s Sponsor, in order to facilitate the pooling of the FuelEU compliance surplus generated by the Arctic Aurora for the 2025 reporting period with the FuelEU compliance deficit generated by other pool members for the same period. The FuelEU compliance surplus generated by the Arctic Aurora was transferred through the pooling arrangement on April 20, 2026, and settled for consideration of $
4. Vessels, net:
The amounts in the unaudited condensed consolidated balance sheets are analyzed as follows:
| Vessel | | Accumulated | | Net Book | ||||
Cost | Depreciation | Value | |||||||
Balance December 31, 2025 | $ | | $ | ( | $ | | |||
Depreciation |
| — |
| ( |
| ( | |||
Balance June 30, 2026 | $ | | $ | ( | $ | | |||
F-13
5. Other financial liabilities:
The amounts shown in the unaudited condensed consolidated balance sheets are analyzed as follows:
June 30, | December 31, | |||||
Debt instruments | | 2026 | | 2025 | ||
Other financial liabilities | | | ||||
Total | $ | |
| $ | | |
Less deferred financing fees |
| ( |
|
| ( | |
Total other financial liabilities, net of deferred financing fees | $ | |
| $ | | |
Less current portion, net of deferred financing fees | $ | ( | $ | ( | ||
Other financial liabilities, net of current portion and deferred financing fees | $ | |
| $ | | |
CDBL Sale and Leaseback
On June 19, 2024, the Partnership entered into sale and leaseback agreements with China Development Bank Financial Leasing Co. Ltd. (“CDBL”) for
Under ASC 842-40, the transaction was accounted for as a financial liability, as control remains with the Partnership and the Four Vessels will continue to be recorded as assets on the Partnership’s balance sheet. The Partnership is required to maintain at all times a value maintenance ratio of at least
As of June 30, 2026, the Partnership was in compliance with all financial covenants and non-financial covenants prescribed in CDBL Sale and Leaseback agreements.
The annual principal payments for the Partnership’s outstanding CDBL Sale and Leaseback as of June 30, 2026, required to be made after the balance sheet date were as follows:
12-month period ending June 30, | | Amount | |
2027 | $ | | |
2028 | | ||
2029 | | ||
2030 | | ||
2031 | | ||
2032 and thereafter | | ||
Total long-term other financial liabilities | $ | | |
The weighted average interest rate on the Partnership’s other financial liabilities for the six-month periods ended June 30, 2026 and 2025 was
F-14
6. Other payables:
The balance of Other payables in the amount of $
7. Fair Value Measurements:
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
| ● | Cash and cash equivalents, trade accounts receivable, amounts due from/to related parties and trade accounts payable: The carrying values reported in the accompanying unaudited condensed consolidated balance sheets for those financial instruments (except for the fair value of non-current portion of amounts due from related party) are considered Level 1 items as they represent liquid assets and liabilities with short-term maturities and are reasonable estimates of their fair values. The carrying value of these instruments is separately reflected in the accompanying unaudited condensed consolidated balance sheets. The fair value of the non-current portion of the amounts due from related parties, determined through Level 3 inputs of the fair value hierarchy by discounting future cash flows using the Partnership’s estimated cost of capital, is $ |
| ● | Other financial liabilities: The CDBL Sale and Leaseback discussed in Note 5 has an approximate recorded value due to the variable interest rate payable and is thus considered a Level 2 item in accordance with the fair value hierarchy as SOFR rates are observable at commonly quoted intervals for the full terms of the debt. |
A fair value hierarchy that prioritizes the inputs used to measure fair value has been established by Generally Accepted Accounting Principles. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
| ● | Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data; and |
| ● | Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the determination of the fair value of the assets or liabilities. |
8. Commitments and Contingencies:
(a) Long-term leases:
The Partnership employs its vessels under time charter contracts. Certain of its time charters provide for variable lease payments, escalating lease payments, charterers’ options to extend the lease terms, termination clauses, and charterers’ options to purchase the underlying assets. The Partnership, in order to calculate future minimum contracted lease payments, has assessed all the relevant factors that create an economic incentive for the lessee to be reasonably certain to exercise lease renewal, termination, or purchase options.
As at June 30, 2026, two of the Partnership’s time charters contain
F-15
8. Commitments and Contingencies (continued):
Specifically, as at June 30, 2026 under two of the Partnership’s time charters, the charterer has the option to extend the original lease term by
The Partnership assessed the respective termination clauses and concluded that the lease term is not affected. In addition, under certain time charters and, upon certain circumstances triggering a sanctions event, as defined therein, the charterers have the option to purchase the vessels unless the Partnership can remediate such event.
The Partnership’s future minimum contracted lease payments to be collected (excluding variable lease payments) under its non-cancelable long-term time charter contracts, as of June 30, 2026, gross of brokerage commissions, without taking into consideration any assumed off-hire days (including those arising out of periodical class survey requirements), is as analyzed below:
Period/Year ending December 31, | | Amount | |
2026 (period) |
| | |
2027 |
| | |
2028 | | ||
2029 |
| | |
2030 | | ||
2031 and thereafter | | ||
Total | $ | | |
(b) Legal Proceedings:
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Partnership’s vessels. The Partnership is covered in the event of any liabilities associated with an individual vessel’s actions up to the maximum limits as provided for by the Protection and Indemnity (P&I) Clubs, members of the International Group of P&I Clubs.
Currently, management is not aware of any such claims not covered by insurance or contingent liabilities which should be disclosed or for which a provision should be established in the accompanying unaudited condensed consolidated financial statements. The Partnership accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is then able to reasonably estimate the probable exposure.
(c) Technical and Commercial Management Agreement:
As further disclosed in Note 3, the Partnership has contracted with Dynagas Ltd. for the provision of commercial, administrative, and technical management of its vessels pursuant to certain Management Agreement.
| a) | For the commercial services provided under the Master Agreement, the Partnership pays a commission of |
| b) | Management fees for the period from July 1, 2026 to the date of the expiration of the agreements on December 31, 2030, adjusted for the |
F-16
9. Partners’ Equity:
Series A Preferred Units:
On July 20, 2015, the Partnership concluded an underwritten public offering of
Series B Preferred Units:
On October 23, 2018, the Partnership concluded the underwritten public offering of
Concurrently with the conclusion of the Series B Preferred Units Public Offering, the Partnership entered into the Limited Partnership Agreement in order to, among others, conform its provisions to the terms and provisions related to the issuance of the Series B Preferred Units and to remove references to subordinated units and subordinated period that are no longer in effect.
As of June 30, 2026, the Partnership had
Common and General Partner unit distribution provisions:
The Partnership pays distributions in the following manner:
| ● | first, 100% to the holders of common units and to the General Partner in accordance with their relative percentage interests, until the distributed amount in respect of each common unit equals the minimum quarterly distribution; and |
| ● | second, 100% to the holders of common units and to the General Partner in accordance with their relative percentage interests, until each unit has received an aggregate distribution of a specified dollar amount. |
The percentage allocations of available cash from operating surplus among the common unitholders, the General Partner, and the holders of the incentive distribution rights (“IDRs”) up to the various target distribution levels are illustrated below. The percentage interests shown for the common unitholders, the General Partner, and the holders of the incentive distribution rights for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution.
The percentage interests shown for the General Partner include its
| Total Quarterly | | | |
| ||||
Distribution Target | General | Holders |
| ||||||
Amount (in U.S. dollars) | Unitholders | Partner | of IDRs |
| |||||
Minimum Quarterly Distribution | $ |
| % | % | % | ||||
First Target Distribution | up to $ |
| % | % | % | ||||
Second Target Distribution | above $ |
| % | % | % | ||||
Third Target Distribution | Above $ |
| % | % | % | ||||
Thereafter | above $ |
| % | % | % |
F-17
9. Partners’ Equity (continued):
Preferred Units distribution and redemption provisions:
Distributions on the Series A Preferred Units are cumulative from the date of original issue and are payable quarterly on February 12, May 12, August 12 and November 12, of each year, when, as and if declared by the Partnership’s Board of Directors out of amounts legally available for such purpose. Distributions are payable at a distribution rate of
Any time on or after August 12, 2020, the Series A Preferred Units may be redeemed, in whole or in part, at the Partnership’s option, out of amounts legally available for such purpose, at a redemption price of $
Distributions on the Series B Preferred Units were cumulative from the date of original issue and were payable quarterly on February 22, May 22, August 22 and November 22, of each year, when, as and if declared by the Partnership’s Board of Directors out of amounts legally available for such purpose. Furthermore, distributions on the Series B Preferred Units were payable (i) from and including the original issue date to, but excluding, November 22, 2023 at a fixed rate equal to
The Series B Preferred Units were redeemable, in whole or in part, at any time on or after November 22, 2023, at the Partnership’s option, out of amounts available for such purpose, at a redemption price of $
The Series A Preferred Units represent perpetual equity interests in the Partnership and, unlike the Partnership’s indebtedness, do not give rise to a claim for payment of a principal amount at a particular date. The Series A Preferred Units rank pari passu with the Series B Preferred Units (of which none are outstanding as of the date of issuance of the financial statements to which these notes relate). Both the Series A Preferred Units and the Series B Preferred Units (of which none are outstanding as of the date of issuance of the financial statements to which these notes relate) rank senior to the Partnership’s common units and to each other class or series of limited partner interests or other equity established after the original issue date of the Series A Preferred Units and the Series B Preferred Units that is not expressly made senior to or on a parity with the Series A Preferred Units and the Series B Preferred Units as to payment of distributions. The Series A Preferred Units and the Series B Preferred Units are rank junior to all of the Partnership’s existing and future indebtedness. The interests of the holders of Series A Preferred Units or Series B Preferred Units could be diluted by the issuance of additional preferred units, including additional Series A Preferred units or Series B Preferred Units, and by other transactions.
Common units repurchase program:
On November 21, 2024, the Partnership’s Board of Directors authorized a Common Unit Repurchase Program (the “2024 Common Unit Repurchase Program”), which authorized the repurchase of up to an aggregate of $
F-18
9. Partners’ Equity (continued):
On November 24, 2025, the Partnership’s Board of Directors authorized a new Common Unit Repurchase Program (the “2025 Common Unit Repurchase Program”), which authorizes the repurchase of up to an aggregate of $
Full Redemption of Series B Preferred Units
On May 27, 2025, the Partnership issued, a notice of full redemption to the holders of its
On July 25, 2025 the Partnership redeemed all of the issued and outstanding Series B Preferred Units. The redemption price was equal to $
According to the terms of issuance, this redemption option became effective on May 27, 2025, and upon exercise, the redemption became legally enforceable and non-cancellable. Under ASC 480, the Series B Preferred Units meet the definition of a mandatorily redeemable financial instrument, as of May 27, 2025, and as such the Partnership reclassified an amount equal to the fair value of the Series B Preferred Units, which was $
Distributions accrued from May 22, 2025 to May 27, 2025 amounting to $
Common unit distributions:
On February 10, 2026, the Board of Directors approved a quarterly cash distribution, for the quarter ended December 31, 2025, of $
On May 7, 2026, the Board of Directors approved a quarterly cash distribution, for the quarter ended March 31, 2026, of $
F-19
9. Partners’ Equity (continued):
Series A Preferred unit distributions:
On
On
General Partner Distributions:
During the six-month periods ended June 30, 2026 and 2025, the Board of Directors approved two quarterly cash distributions to its General Partner and holder of the incentive distribution rights in the Partnership, of an amount of $
10. Earnings per Unit:
The Partnership calculates earnings per unit by allocating distributed and undistributed net income for each period to common and general partner units, after adjusting for the effect of preferred distributions, only to the extent that they are earned.
Any undistributed earnings for the period are allocated to the various unitholders based on the distribution waterfall for cash available for distribution specified in the Limited Partnership Agreement, as generally described in Note 9 above. Where distributions relating to the period are in excess of earnings, the deficit is also allocated according to the cash distribution model. The sum of the distributed amounts and the allocation of the undistributed earnings or deficit to each class of unitholders is divided by the weighted average number of units outstanding during the period. Diluted earnings per unit, if applicable, reflects the potential dilution that could occur if potentially dilutive instruments were exercised, resulting in the issuance of additional units that would then share in the Partnership’s net earnings. The Partnership had
Following the issuance of the notice of the Redemption of the Series B Preferred Units, on May 27, 2025, the Partnership reclassified its Series B Preferred Units from equity to liabilities. The carrying value of the Series B Preferred Units on the date of reclassification was $
The calculations of the basic and diluted earnings per common unit are presented below:
| Six months ended | |||||
June 30, | ||||||
| 2026 | | 2025 | |||
Partnership’s Net income | | $ | | | $ | |
Less: |
|
| ||||
Net Income attributable to preferred unitholders | | | ||||
General Partner’s interest in Net Income |
| |
| | ||
Deemed dividend on redeemable Series B Preferred Units (Note 9) |
| — |
| | ||
Net income attributable to common unitholders | $ | | $ | | ||
Weighted average number of common units outstanding, basic and diluted |
| |
| | ||
Earnings per common unit, basic and diluted | $ | | $ | | ||
F-20
11. Interest and Finance Costs:
The amounts in the unaudited interim condensed consolidated statements of comprehensive income are analyzed as follows:
| Six months ended | |||||
June 30, | ||||||
| 2026 | | 2025 | |||
Interest expense (Note 5) | | $ | | | $ | |
Amortization of deferred financing fees |
| |
| | ||
Series B Preferred Units Interest (Note 9) | — | | ||||
Total | $ | | $ | | ||
Following reclassification to liability status on May 27, 2025 (Note 9), distributions accrued on the Series B Preferred Units are no longer presented as dividends but are recognized as interest expense in accordance with ASC 835-30.
For the period May 27, 2025 through June 30, 2025, the Partnership recognized $
12. Subsequent Events:
(a) | Quarterly Series A Preferred unit cash distribution: On |
(b) | Quarterly Common unit cash distribution: On |
F-21