Segment information

9 Months Ended

Sep. 30, 2017

Segment Reporting Disclosure [Text Block]

5. Segment information

There are two operating segments. The segment profit measure is Segment EBITDA, which is defined as earnings before interest, taxes, depreciation, amortization and other financial items (gains and losses on derivative instruments and other items, net) less the non-controlling interest in Segment EBITDA. Segment EBITDA is reconciled to operating income and net income in the segment presentation below. The two segments are “Majority held FSRUs” and “Joint venture FSRUs.” In addition, unallocated corporate costs that are considered to benefit the entire organization, interest income from advances to joint ventures and interest expense related to the seller’s credit note and the outstanding balance on the $85 million revolving credit facility are included in “Other.”

For the three and nine months ended September 30, 2017, Majority held FSRUs includes the direct financing lease related to the PGN FSRU Lampung and the operating leases related to the Höegh Gallant and Höegh Grace. For the three and nine months ended September 30, 2016, Majority held FSRUs includes the direct financing lease related to the PGN FSRU Lampung and the operating lease related to the Höegh Gallant.

As of September 30, 2017 and 2016, Joint venture FSRUs include two 50% owned FSRUs, the Neptune and the GDF Suez Cape Ann, that operate under long term time charters with one charterer.

The accounting policies applied to the segments are the same as those applied in the financial statements, except that i) Joint venture FSRUs are presented under the proportional consolidation method for the segment note and in the tables below, and under equity accounting for the consolidated financial statements and ii) non-controlling interest in Segment EBITDA is subtracted in the segment note to reflect the Partnership’s interest in Segment EBITDA as the Partnership’s segment profit measure, Segment EBITDA. Under the proportional consolidation method, 50% of the Joint Venture FSRUs’ revenues, expenses and assets are reflected in the segment note. Management monitors the results of operations of joint ventures under the proportional consolidation method and not the equity method of accounting. On January 1, 2017, the Partnership began consolidating its acquired 51% interest in the Höegh Grace entities. Since the Partnership obtained control of the Höegh Grace entities, it consolidates 100% of the revenues, expenses, assets and liabilities of the Höegh Grace entities and the interest not owned by the Partnership is reflected as non-controlling interest in net income and non-controlling interest in total equity under US GAAP. Management monitors the results of operations of the Höegh Grace entities based on the Partnership’s 51% interest in Segment EBITDA of such entities and, therefore, subtracts the non-controlling interest in Segment EBITDA to present Segment EBITDA. The adjustment to non-controlling interest in Segment EBITDA is reversed to reconcile to operating income and net income in the segment presentation below.

In time charters, the charterer, not the Partnership, controls the choice of locations or routes the FSRUs serve. Accordingly, the presentation of information by geographical region is not meaningful. The following tables include the results for the segments for the three and nine months ended September 30, 2017 and 2016.

	Three months ended September 30, 2017
			Joint venture
	Majority		FSRUs				Total
	held		(proportional				Segment		Elimin-			Consolidated
(in thousands of U.S. dollars)	FSRUs		consolidation)		Other		reporting		ations			Reporting
Time charter revenues	$	35,856		10,460		—		46,316		(10,460)	(1)	$	35,856
Accrual historical boil-off claim		—		(11,850)		—		(11,850)		11,850	(1)(2)		—
Total revenues		35,856		(1,390)		—		34,466					35,856
Operating expenses		(6,672)		(1,733)		(1,304)		(9,709)		1,733	(1)		(7,976)
Equity in earnings (losses) of joint ventures		—		—		—		—		(7,321)	(1)		(7,321)
Less: Non-controlling interest in Segment EBITDA		(5,354)		—		—		(5,354)		5,354	(3)		—
Segment EBITDA		23,830		(3,123)		(1,304)		19,403
Add: Non-controlling interest in Segment EBITDA		5,354		—		—		5,354		(5,354)	(3)		—
Depreciation and amortization		(5,264)		(2,462)		—		(7,726)		2,462	(1)		(5,264)
Operating income (loss)		23,920		(5,585)		(1,304)		17,031					15,295
Gain (loss) on derivative instruments		571		1,802		—		2,373		(1,802)	(1)		571
Other financial income (expense), net		(7,128)		(3,538)		(1,146)		(11,812)		3,538	(1)		(8,274)
Income (loss) before tax		17,363		(7,321)		(2,450)		7,592		—			7,592
Income tax expense		(2,183)		—		(2)		(2,185)		—			(2,185)
Net income (loss)	$	15,180		(7,321)		(2,452)		5,407		—		$	5,407
Non-controlling interest in net income		2,899		—		—		2,899					2,899
Partners’ interest in net income (loss)	$	12,281		(7,321)		(2,452)		2,508		—		$	2,508

(1)

Eliminations reverse each of the income statement line items of the proportional amounts for Joint venture FSRUs and record the Partnership’s share of the Joint venture FSRUs net income (loss) to Equity in earnings (loss) of joint ventures.

(2)

For additional information, refer to note 17 under “Joint ventures claims and accruals.”

(3)

Eliminations reverse the adjustment to Non-controlling interest in Segment EBITDA included for Segment EBITDA and the adjustment to reverse the Non-controlling interest in Segment EBITDA to reconcile to operating income and net income.

	Three months ended September 30, 2016
			Joint venture
	Majority		FSRUs				Total
	held		(proportional				Segment		Elimin-		Consolidated
(in thousands of U.S. dollars)	FSRUs		consolidation)		Other		reporting		ations (1)		reporting
Time charter revenues	$	23,345		10,937		—		34,282		(10,937)	$	23,345
Total revenues		23,345		10,937		—		34,282				23,345
Operating expenses		(5,338)		(2,379)		(1,672)		(9,389)		2,379		(7,010)
Equity in earnings (losses) of joint ventures		—		—		—		—		6,565		6,565
Segment EBITDA		18,007		8,558		(1,672)		24,893
Depreciation and amortization		(2,647)		(2,378)		—		(5,025)		2,378		(2,647)
Operating income (loss)		15,360		6,181		(1,672)		19,868				20,253
Gain (loss) on derivative instruments		517		4,139		—		4,656		(4,139)		517
Other financial income (expense), net		(5,748)		(3,755)		(1,121)		(10 624)		3,755		(6,869)
Income (loss) before tax		10,129		6,565		(2,793)		13,901		—		13,901
Income tax expense		(474)		—		(2)		(476)		—		(476)
Net income (loss)	$	9,655		6,565		(2,795)		13,425		—	$	13,425

(1)

Eliminations reverse each of the income statement line items of the proportional consolidation amounts for Joint venture FSRUs and record the Partnership’s share of the Joint venture FSRUs’ net income (loss) to Equity in earnings (loss) of joint ventures.

	Nine months ended September 30, 2017
			Joint venture
	Majority		FSRUs				Total
	held		(proportional				Segment		Elimin-			Consolidated
(in thousands of U.S. dollars)	FSRUs		consolidation)		Other		reporting		ations			reporting
Time charter revenues	$	105,957		31,608		—		137,565		(31,608)	(1)	$	105,957
Accrual historical boil-off claim		—		(11,850)		—		(11,850)		11,850	(1)(2)		—
Total revenues		105,957		19,758		—		125,715					105,957
Operating expenses		(20,627)		(6,336)		(4,376)		(31,339)		6,336	(1)		(25,003)
Construction contract expenses		(151)		—		—		(151)					(151)
Equity in earnings (losses) of joint ventures		—		—		—		—		(962)	(1)		(962)
Less: Non-controlling interest in Segment EBITDA		(15,772)		—		—		(15,772)		15,772	(3)		—
Segment EBITDA		69,407		13,422		(4,376)		78,453
Add: Non-controlling interest in Segment EBITDA		15,772		—		—		15,772		(15,772)	(3)		—
Depreciation and amortization		(15,789)		(7,379)		—		(23,168)		7,379	(1)		(15,789)
Operating income (loss)		69,390		6,043		(4,376)		71,057					64,052
Gain (loss) on derivative instruments		1,481		3,513		—		4,994		(3,513)	(1)		1,481
Other financial income (expense), net		(22,611)		(10,518)		(3,132)		(36,261)		10,518	(1)		(25,743)
Income (loss) before tax		48,260		(962)		(7,508)		39,790		—			39,790
Income tax expense		(5,980)		—		(2)		(5,982)		—			(5,982)
Net income (loss)	$	42,280		(962)		(7,510)		33,808		—		$	33,808
Non-controlling interest in net income		8,455		—		—		8,455					8,455
Partners’ interest in net income (loss)	$	33,825		(962)		(7,510)		25,353		—		$	25,353

(1)

(2)

For additional information, refer to note 17 under “Joint ventures claims and accruals.”

(3)

	As of September 30, 2017
			Joint venture
	Majority		FSRUs				Total
	held		(proportional				Segment		Elimin-			Consolidated
(in thousands of U.S. dollars)	FSRUs		consolidation)		Other		reporting		ations			Reporting
Vessels, net of accumulated depreciation	$	683,998		268,009		—		952,007		(268,009)	(1)	$	683,998
Net investment in direct financing lease		287,526		—		—		287,526		—			287,526
Goodwill		251		—		—		251		—			251
Advances to joint ventures		—		—		3,198		3,198		—			3,198
Total assets		1,055,939		288,120		10,452		1,354,511		(288,120)	(1)		1,066,391
Accumulated losses of joint ventures		—		—		50		50		(26,898)	(1)		(26,848)
Expenditures for vessels & equipment		—		455		—		455		(455)	(2)		—
Expenditures for drydocking		—		—		—		—		—	(2)		—
Principal repayment direct financing lease		2,585		—		—		2,585		—			2,585
Amortization of above market contract		2,716		—		—		2,716		—			2,716
Non-controlling interest: amortization of above market contract	$	(452)		—		—		(452)		—		$	—

(1)

Eliminates the proportional share of the Joint venture FSRUs’ Vessels, net of accumulated depreciation and Total assets and reflects the Partnership’s share of net assets (assets less liabilities) of the Joint venture FSRUs as Accumulated losses of joint ventures.

(2)

Eliminates the Joint venture FSRUs’ Expenditures for vessels & equipment and drydocking to reflect the consolidated expenditures of the Partnership.

	Nine months ended September 30, 2016
			Joint venture
	Majority		FSRUs				Total
	held		(proportional				Segment		Elimin-		Consolidated
(in thousands of U.S. dollars)	FSRUs		consolidation)		Other		reporting		ations (1)		Reporting
Time charter revenues	$	67,799		32,054		—		99,853		(32,054)	$	67,799
Total revenues		67,799		32,054		—		99,853				67,799
Operating expenses		(15,044)		(6,480)		(4,700)		(26,224)		6,480		(19,744)
Construction contract expenses		(315)		—		—		(315)				(315)
Equity in earnings (losses) of joint ventures		—		—		—		—		(2,010)		(2,010)
Segment EBITDA		52,440		25,574		(4,700)		73,314
Depreciation and amortization		(7,912)		(7,131)		—		(15,043)		7,131		(7,912)
Operating income (loss)		44,528		18,443		(4,700)		58,271				37,818
Gain (loss) on derivative instruments		1,178		(9,028)		—		(7,850)		9,028		1,178
Other financial income (expense), net		(17,969)		(11,425)		(3,156)		(32,550)		11,425		(21,125)
Income (loss) before tax		27,737		(2,010)		(7,856)		17,871		—		17,871
Income tax expense		(1,421)		—		(5)		(1,426)		—		(1,426)
Net income (loss)	$	26,316		(2,010)		(7,861)		16,445		—	$	16,445

(1)

	As of December 31, 2016
			Joint venture
	Majority		FSRUs				Total
	held		(proportional				Segment		Elimin-			Consolidated
(in thousands of U.S. dollars)	FSRUs		consolidation)		Other		reporting		ations			Reporting
Vessels, net of accumulated depreciation	$	342,591		274,932		—		617,523		(274,932)	(1)	$	342,591
Net investment in direct financing lease		290,111		—		—		290,111		—			290,111
Goodwill		251		—		—		251		—			251
Advances to joint ventures		—		—		7,218		7,218		—			7,218
Total assets		698,869		298,712		111,598		1,109,179		(298,712)	(1)		810,467
Accumulated losses of joint ventures		—		—		50		50		(25,936)	(1)		(25,886)
Expenditures for vessels & equipment		537		783		—		1,320		(783)	(2)		537
Expenditures for drydocking		—		135		—		135		(135)	(2)		—
Principal repayment direct financing lease		3,192		—		—		3,192		—			3,192
Amortization of above market contract	$	2,405		—		—		2,405		—		$	2,405

(1)

(2)

Eliminates the Joint venture FSRUs’ Expenditures for vessels & equipment and drydocking to reflect the consolidated expenditures of the Partnership.