Thank you for standing by, ladies and gentlemen, and welcome to Dynagas LNG Partners conference call on first quarter 2021 financial results. We have with us Mr. Tony Lauritzen, Chief Executive Officer, and Mr. Michael Gregos, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time if you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today. At this time, I would like to read the safe harbor statement. This conference call and slide presentation of the webcast contains certain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and uncertainties which may affect Dynagas LNG Partners' business prospects and results of operations. Such risks are more fully disclosed in Dynagas LNG Partners' filings with the Securities and Exchange Commission. I now pass the floor to Mr. Lauritzen. Please go ahead, sir.
Morning, everyone, and thank you for joining us in our three months ended 31st March 2021 earnings conference call. I'm joined today by our CFO, Michael Gregos. We have issued a press release announcing our results for the said period. Certain non-GAAP measures will be discussed on this call. We have provided a description of those measures as well as a discussion of why we believe this information to be useful in our press release. Moving on to slide three of the presentation. We are pleased to report the results for the three months ended 31st March 2021. All six LNG carriers in our fleet are operating under their respective long-term charters with international gas producers. Despite the ongoing operational challenges the industry is going through with respect to COVID-19, we are pleased to report 100% utilization for the fleet for the first quarter of 2021.
For the first quarter of 2021, we reported net income of $15.9 million, earnings per common unit of $0.36, adjusted net income of $10.6 million, adjusted earnings per common unit of $0.21, and adjusted EBITDA of $23.9 million. We paid in February 2021 a quarterly cash distribution of 56 cents and a quarter per Series A preferred unit for the period from November 12, 2020 to February 11, 2021. A quarterly cash distribution of 54 cents and 11/16th per Series B preferred unit for the period from November 22nd, 2020 to February 21st, 2021. Subsequent to the quarter, we paid in May 2021 a quarterly cash distribution of 56 cents and a quarter per Series A preferred unit for the period from February 12 to May 11, 2021.
A quarterly cash distribution of 54 cents and 11/16th per Series B Preferred Unit for the period from February 22nd to May 21st, 2021. Subsequent to the quarter, we issued about $2.15 million worth of common units at an average price per unit of about $2.87 under the amended and restated $30 million ATM sales agreement, which has about $26.5 million of remaining availability. We entered into a new time charter party agreement with Equinor for the employment of our LNG carrier, Arctic Aurora. Under the new time charter agreement, the Arctic Aurora is expected to be delivered to Equinor in September 2021, immediately upon expiration of the current charter party with Equinor. The new time charter party is about two years, the annual gross revenues from the time charter agreement are expected to be about $21.5 million.
Going forward, we intend to continue our strategy of using our cash flow generation to de-lever our balance sheet, reinforce our liquidity, and generate cash as to build equity value over time, which will enhance our ability to pursue future growth initiatives. I will now turn the presentation over to Michael, who will provide you with further comments to the financial results.
Thank you, Tony. Moving over to slide four, our quarter results continue to reflect our stable operating model as our fleet operates with 100% utilization. Adjusted net income for the quarter increased by 49% to $10.6 million compared to the first quarter of 2020. Our adjusted EBITDA was virtually unchanged at $23.9 million compared to the first quarter of 2020. The increase in adjusted net income compared to the same period last year is attributable to a reduction in our weighted average interest rate from 4.89% in the first quarter of 2020 to 3.13% in the first quarter of 2021. A reduction in our weighted average indebtedness from $662 million to $614 million.
Since our debt refinancing in 2019, our profitability has steadily increased and has now stabilized at current levels with adjusted earnings per common unit of $0.21 for the first quarter, reflecting our stable contract-based operating platform and financial profile.
Slide five. In line with our strategy of using our contracted cash flow to reduce leverage, for the quarter, we utilized 71% of our adjusted EBITDA to service debt and interest payments. For the quarter, we generated $22.9 million in operating cash flow, including a positive working capital adjustment of $4 million. Excluding working capital changes, operating cash flow for the quarter was $18.9 million, and after debt service payments and payments to preferred unit holders, we generated $4 million in line with our prior guidance. For the quarter, our cash balance increased by about $9 million to $84 million due to the aforementioned changes and proceeds of $1.3 million from issuance of common units under our ATM program. Slide six.
As of the end of March, we had $603 million debt outstanding under one credit facility, all of which have been hedged with an interest rate swap for the life of the loan until its maturity in September 2024. We have no scheduled capital expenditures until 2022, which is when three of our LNG carriers will undergo their third special surveys and installment of their ballast water treatment systems. Slide seven. We are continuing to execute our strategy of organically deleveraging our balance sheet with the cash flow from our contracts, which we believe is the only sustainable way of positioning the partnership for future growth.
Compared to the same period two years ago, before our refinancing in 2019, our weighted average interest has decreased by 53%, and our weighted average indebtedness has decreased by $108 million, which has resulted in a reduction in interest expense of $7 million per quarter. This natural de-leveraging process takes time, and we expect that as a result of the $48 million amortization requirement on our sole credit facility, our total projected net leverage will decrease from 5.4x to less than 3.5x in 2024 on a steady-state basis. Slide eight. In this slide, we show our fleet-wide cash flow breakeven per day per vessel versus our contracted time charter rates for the quarter. If you look at the breakdown, we have a competitive cash to EBITDA breakeven of $17,000 per day per vessel.
Cash interest expense represents $8,900 per day per vessel, and repayment of debt is around $22,000 per day. Our contracted fleet time charter equivalent of $60,680 per day per vessel is well above fleet cash breakeven levels of $48,000 per day per vessel, excluding preferred distributions. That wraps it up for my side. I will pass over the presentation to Tony.
Thank you, Michael. Let's move on to slide nine. Our fleet currently counts six LNG carriers with an average age of about 10.9 years. The charterers of our vessels are substantial gas producers, being Equinor, Gazprom, and Yamal LNG. The fleet's contract backlog is about $1.12 billion, equivalent to an average backlog of about $187 million per vessel, and the fleet's average remaining charter period per vessel is about 7.7 years. Moving on to slide 10. All the vessels in our fleet are employed on time charter contracts with asset-strong counterparties, under which the charterer pays all major voyage-related variable costs such as fuel, canal fees, and terminal costs. Two of the vessels, namely the Lena River and Yenisei River, are under dry dock and OpEx cost pass-through contracts that in general provides protection for reasonable inflation in operating expenses.
We are focused on building term charter coverage, and after concluding a new two-year charter contract with Equinor for the vessel Arctic Aurora, our earliest potential availability will be in the third quarter of 2023 for the same vessel. The next available vessel after the Arctic Aurora may be the Clean Energy, which contract expires in 2026. Barring any unforeseen events and vessel scheduled dry dockings, our fleet is 100% employed for the remainder of 2021, 100% for the year 2022, and 94% for the year 2023. Although our revenues have not been affected by the COVID-19 situation, as all of our vessels are employed on time contract, we are monitoring the situation and outlook. From an operational point of view, we are taking strict measures to protect our seafarers, office staff, and other stakeholders along the logistics chain. Let's move on to slide 11.
five out of our six LNG carriers have been designed, constructed in accordance with, and are assigned with Ice Class 1A FS notation. These LNG carriers are also winterized down to -30 degrees. While the Ice Class notation is in part concerned with the vessel's hull and machinery and icebreaking capability, winterization features are concerned with features that are installed to ensure trouble-free operation in subzero areas. Our partnership and our sponsor represent a total market share of about 82% of the global Ice Class 1A FS equivalent LNG carrier fleet. Our fleet is frequently calling ice-bound and subzero areas, indicating our charters are able to unlock the value of the Ice Class notation and winterization features.
The fleet's typical area of navigation with regards to icebound and/or sub-zero areas are the Northern Sea Routes where the vessels can operate during summer season, the Sakhalin Island and northern Norway. As our fleet can perform operations in icebound, sub-zero, and conventional areas without any significant difference in operating costs between the two areas, we believe our fleet has a broader market reach compared to the same type of vessels without ice class or winterization features. Let's move on to slide 12. We are an established and experienced LNG shipping company, known as a reliable service provider, able to operate in particularly harsh environments as well as conventional areas. Our fleet is unique and provides for trading versatility. Our focus continues to be on operational performance, which translates into high utilization and cost control.
Our vessels are employed on term contracts, which cash flow is largely utilized to organically reduce debt. At the current, we're amortizing our debt with $48 million per annum, and we expect that the reduction of debt will reduce our break-even cost over time. We expect that the solid contract revenue backlog of $1.12 billion and competitive cost of debt will allow us to de-lever our balance sheet, reinforce our liquidity, and generate cash as we build equity value and our cash position over time, which we believe will enhance our ability to pursue future growth initiatives. We have now reached the end of the presentation and I now open the floor for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Our first question for today is from Randy Giveans from Jefferies. Please go ahead.
Hi, good morning. How's it going? Good, thank you.
Hi. I guess first question, during the release and even just now in your closing comments, you talked about some future growth initiatives. Maybe what are some of those potential opportunities? Would it be some large-scale consolidation that we've seen in the space, or maybe even selling into that market? Are you just looking at drop-downs from these parents?
Well, I think right now all we can say is that we're focusing on organically de-leveraging the balance sheet. Each quarter that passes, the Partnership is stronger, and it's just better positioned for future growth opportunities. We're not alluding to anything specific, just we need to position the Partnership for whatever future growth opportunities come up.
Okay. No, fair. With that growth, we're continuing to see ongoing ATM, but it's just very small numbers, right? $2 million here, $2 million there. Is that the plan, just to continue to slowly trickle out shares and why do it here at under $3?
Yeah. No, you're right. I mean, we're just very small amounts under our ATM program. I think we were doing it primarily to test the waters and to see how much money can be raised and what the impact is on the share price. Going forward, if we are to raise further equity under our ATM program or otherwise, we believe we need to have a pretty good idea of what the money will be used for. I think we're going to be reluctant to issue meaningful amounts of equity without some form of identified use of proceeds.
Got it. Okay. I guess the last question on the preferred. Clearly your highest cost of debt are those preferreds. Any plan on those, just kind of continuing to keep both the Series out there, maybe growing to an additional preferred or doing the opposite and kind of paying those down?
Yeah. No, I mean, listen, we do have a lot of cash on our balance sheet, but to a certain extent, we are insulated given our contract-based operating model. We do want to retain some free liquidity as a protection in case there's an operational issue or something unexpected occurs. We're mindful of initiating a preferred buyback program or buying back or redeeming a portion of the preferreds.
Got it. Good deal. Well, pretty straight and simple. That's it for me. Thank you.
Thank you.
Thank you. Other lines, ladies and gentlemen, star one if you wish to ask a question. Our next question from Ben Nolan from Stifel, please go ahead.
Hey, Michael. Now that you have a new contract with Equinor and well, no near-term market exposure, the debt balance keeps coming down. The cash balance, as Michael, you just talked about, is rising. I know in the past you had indicated that there wasn't really any flexibility under your credit facility, do you think at some point that could be a conversation to be had that the credit profile is really better, can we get some flexibility that enables us to have conversations about growth or other things as opposed to sort of being limited on the terms of the credit agreement?
Well, we don't want to give false promises. I think that discussion can be had. We have said in the past that under the current credit facility, Right now, as you know, it's prohibited. In order to reinstate some form of a dividend, that will be a difficult discussion with the bank. At this particular stage, we feel that discussion, if we initiate it's not the right time, and we don't think we would be successful in that discussion. I think it's a discussion that we can have further down the line as the leverage comes down. If you look at our leverage, I think it's a bit too high in order to have this discussion at this particular stage. We have to be in a position of lower leverage in order to have that discussion.
Sure. Honestly, I wasn't even thinking about dividends. That seems like it's a little ways away. I was thinking more about, okay, well, you're talking about future growth and some of these other things. Again, I agree that the leverage probably would need to come down some, but I guess the idea is, we've been talking about the credit profile is better. Does it at some point open the window so that some capital can be recirculated into growth opportunities that maybe you're not allowed to do at the moment? That's sort of where I was thinking.
Ben, just to be clear, our credit facility does not prohibit us from growing the company. As long as we can comply with the financial, we have some leverage covenants.
There's definitely no restriction on growing the company.
If the opportunity presented itself, you could buy, let's say, a portion of one of the sponsor vessels today if you met the credit or the covenant restrictions, correct?
Yes, that is correct, Ben.
Okay. Cool. Well, actually, Tony, I am curious, or maybe another way to think about that is even on a drop-down, there's quite a few tenders being talked about in the market. Obviously, the sponsor might be able to participate in those. Any thoughts as to whether that might be something that the partnership, now that you're not really paying a dividend, you could sort of warehouse growth capital that doesn't necessarily immediately generate cash flows? Any thoughts about possibly participating in something like that?
Yeah, Ben, look, I don't think it's impossible that in the future that the company could undertake growth CapEx directly. It is something that is being discussed. It's something that we're looking at. Still, we would need to free up more capital and get the leverage down a bit. Yeah, that's not an impossibility.
Is the group looking at some of these opportunities that are in the market? I'm curious.
Yeah, sure. I think pretty much any of them. Yeah, for sure. There are many tenders at the moment for various projects. Yeah, the sponsor is looking at it, the wider group is looking at it. I think, to be honest, pretty much every other LNG ship owner is looking at it too. Definitely there is a lot of new projects on the LNG scene. I think we've seen the reemergence of a little bit longer charters tied up to this various projects. I think LNG is a pretty interesting space at the moment.
Yeah. One of the things we've heard is that the returns are kind of lackluster. How do you find sort of what's being bantered about with respect to return profile on new long-term contracts and assets or new projects?
Look, that's a really good question. Of course, most of the projects that we're talking about in general, commercial offers have not been sent in, so it's kind of early days. Some of them, commercial offers are in. Our general feeling is that returns are better, less competitive than what they used to be. Amortization period of vessels may be shorter. Owners want to protect themselves for inflation going forward. I think what we're seeing is, before having seen any conclusion of any project, it just looks like the market is offering a little bit higher numbers, more conservative, so longer periods, protection of inflation, and just more robust charter parties in general.
Interesting. All right. Tony, Michael, I appreciate it. Thank you.
Thank you, Ben.
Thank you. There are no further questions at this time. I will now hand back to Tony Lauritzen, CEO, for any closing comments.
We would like to thank you for your time and for listening in on our earnings call. We look forward to speak with you again on our next call. Thank you very much, and stay tuned.
Thank you, sir. Ladies and gentlemen, that does conclude the call. Thank you everyone for joining. You may now disconnect.