Flex LNG - 20F 2022

Large accelerated filer

Accelerated filer

Non-accelerated filer

Emerging growth company

(Do not check if a smaller
reporting company)


HM08
Bermuda
Telephone:	+1	441	295 69 35
Facsimile:	+1	441	295 3494

(Name, Telephone, E-mail and/or Facsimile, and address of Company Contact Person)

Securities registered or to be registered pursuant to section 12(b) of the Act.


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Ordinary Shares, par value $0.10 per share	FLNG	New York Stock Exchange

Securities registered or to be registered pursuant to section 12(g) of the Act.

NONE

(Title of class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

NONE

(Title of class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of

the period covered by the Annual Report:

As of December 31, 2022, there were 53,682,140 ordinary shares, par value $0.10 per share, issued and outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


Yes	☐		No	x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports

pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.


Yes	☐		No	x

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the

Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to

file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes	x		No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be

submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such

shorter period that the registrant was required to submit such files).


Yes	x		No	☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer

or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" and "emerging growth

company" in Rule 12b-2 of the Exchange Act.:

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if

the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting

standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards

Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.

7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included

in this filing:


☒	U.S. GAAP
☐	International Financial Reporting Standards as issued by the international Accounting Standards Board
☐	Other

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement

item the registrant has elected to follow:


Item 17	☐		Item 18	☐

If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2

of the Exchange Act).


Yes	☐		No	☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE

YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or

15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under the plan confirmed by a court.


Yes	☐		No	☐

TABLE OF CONTENTS


		Page
PART I		1

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3.	KEY INFORMATION	1
ITEM 4.	INFORMATION ON THE COMPANY	31
ITEM 4A.	UNRESOLVED STAFF COMMENTS	52
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	52
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	64
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	69
ITEM 8.	FINANCIAL INFORMATION	70
ITEM 9.	THE OFFER AND LISTING	71
ITEM 10.	ADDITIONAL INFORMATION	72
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	79
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	80

PART II		80

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	80
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	80
ITEM 15.	CONTROLS AND PROCEDURES	80
ITEM 16.	[RESERVED]	81
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT.	81
ITEM 16B.	CODE OF ETHICS	81
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	82
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	82
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	83
ITEM 16F.	CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT	83
ITEM 16G.	CORPORATE GOVERNANCE	83
ITEM 16H.	MINE SAFETY DISCLOSURE	84

PART III		85

ITEM 17.	FINANCIAL STATEMENTS	85
ITEM 18.	FINANCIAL STATEMENTS	85
ITEM 19.	EXHIBITS	86

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTOR

SUMMARY

Our disclosure and analysis in this annual report (the "Annual Report") pertaining to our operations, cash flows and

financial position, including, in particular, the likelihood of our success in developing and expanding our business, include

forward-looking statements. The Private Securities Litigation Reform Act of 1995, or the PSLRA, 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.

We are taking advantage of the safe harbor provisions of the PSLRA and are including this cautionary statement in

connection therewith. This document and any other written or oral statements made by us or on our behalf may include

forward-looking statements, which reflect our current views with respect to future events and financial performance. This

Annual Report includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are

intended as "forward-looking statements." We caution that assumptions, expectations, projections, intentions and beliefs about

future events may and often do vary from actual results and the differences can be material. Statements that are predictive in

nature, that depend upon or refer to future events or conditions, or that include words such as "expects," "anticipates," "intends,"

"plans," "believes," "estimates," "seeks," "targets," "potential," "continue," "contemplate," "possible," "likely," "might," "will,"

"would," "could," "projects," "forecasts," "may," "should" and similar expressions are forward-looking statements.

All statements in this Annual Report that are not statements of either historical or current facts are forward-looking

statements. Forward-looking statements include, but are not limited to, such matters as:

•general liquified natural gas ("LNG") shipping market conditions, including fluctuations in charter rates and vessel

values;

•the volatility of prevailing spot market charter rates;

•our future operating or financial results;

•global and regional economic and political conditions and developments, armed conflicts, including the recent

conflicts between Russia and Ukraine, which remain ongoing as of the date of this report and terrorist activities,

trade wars, tariffs, embargoes and strikes;

•stability of Europe and the Euro;

•the central bank policies included to combat overall inflation and rising interest rates and foreign exchange rates;

•our business strategy and expected and unexpected capital spending and operating expenses, including dry-docking,

surveys, upgrades, insurance costs, crewing and bunker costs;

•our expectations of the availability of vessels to purchase, the time it may take to construct new vessels and risks

associated with vessel construction and vessels’ useful lives;

•LNG market trends, including charter rates and factors affecting supply and demand;

•the supply of and demand for vessels comparable to ours, including against the background of possibly accelerated

climate change transition worldwide which would have an accelerated negative effect on the demand for fossil fuels,

including LNG, and thus transportation of LNG;

•our financial condition and liquidity, including our ability to repay or refinance our indebtedness and obtain

financing in the future to fund capital expenditures, acquisitions and other general corporate activities;

•our ability to enter into and successfully deliver our vessels under time charters or other employment arrangements

after our current charters expire and our ability to earn income in the spot market (which includes vessel

employment under single voyage spot charters and time charters with an initial term of less than six months);

•our ability to compete successfully for future chartering opportunities and newbuilding opportunities (if any);

•estimated future maintenance and replacement capital expenditures;

•the expected cost of, and our ability to comply with, governmental regulations, including environmental regulations,

maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable

to our business;

•customers’ increasing emphasis on environmental and safety concerns;

•availability of and ability to maintain skilled labor, vessel crews and management;

•our anticipated incremental general and administrative expenses as a publicly traded company;

•business disruptions, including supply chain disruption and congestion, due to natural or other disasters or

otherwise;

•potential physical disruption of shipping routes due to accidents, climate-related incidents, and public health threats;

and

•our ability to maintain relationships with major LNG producers and traders.

Many of these statements are based on our assumptions about factors that are beyond our ability to control or predict

and are subject to risks and uncertainties that are described more fully in "Item 3. Key Information—D. Risk Factors." Any of

these factors or a combination of these factors could materially affect our future results of operations and the ultimate accuracy

of the forward-looking statements. Factors that might cause future results to differ include, but are not limited to, the following:

•changes in governmental rules and regulations or actions taken by regulatory authorities including the

implementation of new environmental regulations;

•fluctuations in currencies and interest rates and the impact of the discontinuance of the London Interbank Offered

Rate for US Dollars, or LIBOR, after June 30, 2023 on any of our debt or interest rate swaps that reference LIBOR;

•changes in economic and competitive conditions affecting our business, including market fluctuations in charter

rates and charterers’ abilities to perform under existing time charters;

•shareholders’ reliance on the Company to enforce the Company’s rights against contract counterparties;

•dependence on the ability of the Company’s subsidiaries to distribute funds to satisfy financial obligations and make

dividend payments;

•the length and severity of epidemics and pandemics, including the novel coronavirus (“COVID-19”) and its impact

on across our business on demand, operations in China and the Far East and knock-on impacts to our global

operations;

•potential liability from future litigation, related to claims raised by public-interest organizations or activism with

regard to failure to adapt or mitigate climate impact;

•the arresting or attachment of one or more of the Company’s vessels by maritime claimants;

•potential requisition of the Company’s vessels by a government during a period of war or emergency;

•treatment of the Company as a “passive foreign investment company” by U.S. tax authorities;

•being required to pay taxes on U.S. source income;

•the Company’s operations being subject to economic substance requirements;

•the potential for shareholders to not be able to bring a suit against the Company or enforce a judgement obtained

against the Company in the United States;

•the failure to protect the Company’s information systems against security breaches, or the failure or unavailability of

these systems for a significant period of time;

•the impact of adverse weather and natural disasters;

•potential liability from safety, environmental, governmental and other requirements and potential significant

additional expenditures related to complying with such regulations;

•any non-compliance with the amendments by the International Maritime Organization, the United Nations agency

for maritime safety and the prevention of pollution by vessels, or IMO, (the amendments hereinafter referred to as

IMO 2020) to Annex VI to the International Convention for the Prevention of Pollution from Ships 1973, as

modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as

MARPOL, which will reduce the maximum amount of sulfur that vessels may emit into the air has applied to us as

of January 1, 2020;

•damage to storage and receiving facilities;

•impacts of supply chain disruptions that began during the COVID-19 pandemic and the resulting inflationary

environment;

•technological innovation in the sector in which we operate and quality and efficiency requirements from customers;

•increasing scrutiny and changing expectations with respect to environmental, social and governance policies;

•the impact of public health threats and outbreaks of other highly communicable diseases;

•technology risk associated with energy transition and fleet/systems renewal including in respect of alternative

propulsion systems;

•the impact of port or canal congestion;

•the length and number of off-hire periods, including in connection with dry-dock periods; and

•other factors described in "Item 3. Key Information—D. Risk Factors" in this Annual Report.

You should not place undue reliance on forward-looking statements contained in this Annual Report because they are

statements about events that are not certain to occur as described or at all. All forward-looking statements in this Annual Report

are qualified in their entirety by the cautionary statements contained in this Annual Report. These forward-looking statements

are not guarantees of our future performance, and actual results and future developments may vary materially from those

projected in the forward-looking statements.

Except to the extent required by applicable law or regulation, we undertake no obligation to release publicly any

revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect

the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these

factors. Further, we cannot assess the effect of each such factor on our 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.

PART I

ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.KEY INFORMATION

Unless otherwise indicated, the terms "FLEX LNG," "we," "us," "our," the "Company" and the "Group" refer to FLEX

LNG Ltd. and its consolidated subsidiaries.

We use the term "LNG" to refer to liquefied natural gas, and we use the term "cbm" to refer to cubic meters in

describing the carrying capacity of the vessels in our fleet. Unless otherwise indicated, all references to "U.S. dollars," "USD,"

"dollars," "US$" and "$" in this Annual Report are to the lawful currency of the United States of America, references to

"Norwegian Kroner," and "NOK" are to the lawful currency of Norway, references to "Great British Pounds," and "GBP" are to

the lawful currency of the United Kingdom.

The consolidated financial statements included in this Annual Report have been prepared in accordance with Generally

Accepted Accounting Principles in the United States of America, or U.S. GAAP.

A.[Reserved]

B.Capitalization and Indebtedness

Not applicable.

C.Reasons for the offer and use of Proceeds

Not applicable.

D.Risk Factors

The following summarizes certain risks that may materially affect our business, financial condition or results of

operations. The occurrence of any of the events described in this section could significantly and negatively affect our business,

financial condition, operating results or the trading price of our securities.

Risks Related to Our Industry

Charter hire rates for LNG vessels are volatile and may decrease in the future, which may adversely affect our earnings,

revenue and profitability and our ability to comply with our loan covenants.

Substantially all of our revenues are derived from a single market, the LNG carrier segment, and therefore our

financial results depend on chartering activities and developments in this segment. The LNG shipping industry is cyclical with

attendant volatility in charter hire rates and profitability. The LNG charter market, from which we derive and plan to continue

to derive our revenues, experienced a demand increase of 5% in 2022 to about 403 million tons, which is expected to increase

by 5% to about 424 million tons in 2023. The degree of charter hire rate volatility among different types of LNG carriers has

varied widely, and spot market rates for LNG vessels have in the recent past declined below operating costs of vessels.

Fluctuations in charter rates result from changes in the supply and demand for vessel capacity and changes in the

supply and demand for the major commodities carried on water internationally. Because the factors affecting the supply and

demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in

charter rates are also unpredictable. As of March 10, 2023, we charter one of our vessels on a time charter that is linked to the

spot market and as such, we have exposure to the cyclical nature and volatility of the spot market. Spot market charter hire rates

may fluctuate significantly based upon available charters and the supply of and demand for seaborne shipping capacity, and we

may be unable to keep our vessels fully employed in these short-term markets. Alternatively, charter rates available in the spot

market may be insufficient to enable our vessels to operate profitably. A significant decrease in charter rates would also affect

asset values and adversely affect our profitability, cash flows and our ability to pay dividends, if any.

A worsening of current global economic conditions may cause the charter rates applicable to our vessels to decline and

thereby affect our ability to charter or re-charter our vessels and renewal or replacement charters that we enter into may not be

sufficient to allow us to operate our vessels profitability. In addition, the conflict in Ukraine is disrupting energy production and

trade patterns, including shipping in the Black Sea and elsewhere, and its impact on energy prices, which initially have

increased, is uncertain.

Furthermore, a significant decrease in charter rates would cause asset values to decline and we may have to record an

impairment charge in our consolidated financial statements which could adversely affect our financial results.

Factors that may influence demand for vessel capacity include:

•supply of and demand for LNG;

•the price of LNG;

•changes in the exploration or production of LNG;

•competition from, supply of and demand for alternative sources of energy;

•the location of regional and global exploration, production and manufacturing facilities;

•the location of consuming regions for LNG;

•the globalization of production and manufacturing;

•global and regional economic and political conditions and developments, armed conflicts, including the ongoing

conflict between Russia and Ukraine, and terrorist activities, trade wars, tariffs, embargoes and strikes;

•disruptions and developments in international trade;

•changes in seaborne and other transportation patterns, including the distance LNG is transported by sea;

•changes in governmental and maritime self-regulatory organizations’ rules and regulations or actions taken by

regulatory authorities;

•environmental concerns and uncertainty around new regulations in relation to, amongst others, new technologies

which may delay the ordering of new vessels;

•currency exchange rates, most importantly versus the U.S. Dollar; and

•pandemics, such as the COVID-19 outbreak, and other diseases and viruses.

Demand for our LNG vessels is dependent upon economic growth in the world's economies, seasonal and regional

changes in demand, changes in the capacity of the global LNG fleet and the sources and supply of LNG transported by sea. The

capacity of the global LNG vessels fleet seems likely to increase and economic growth may not resume in areas that have

experienced a recession or continue in other areas. As such, adverse economic, political, social or other developments,

including inflationary pressure and ongoing conflict between Russia and Ukraine, could have a material adverse effect on our

business, results of operations and ability to pay dividends.

Factors that influence the capacity of the global LNG fleet, which we reference herein as the "supply of vessel

capacity" include:

•supply and demand for energy resources;

•demand for alternative energy resources;

•number of newbuilding orders and deliveries, including slippage in deliveries; as may be impacted by the

availability of financing for shipping activity;

•the number of shipyards and ability of shipyards to deliver vessels;

•scrapping of older vessels;

•speed of vessel operation;

•vessel casualties, which may include but are not limited to serious injury, loss or material damage to, grounding or

disabling of a vessel;

•the degree of scrapping or recycling of older vessels, depending, among other things, on scrapping or recycling rates

and international scrapping or recycling regulations;

•product imbalances (affecting the level of trading activity) and developments in international trade;

•number of vessels that are out of service, namely those that are laid up, dry-docked, awaiting repairs or otherwise

not available for hire or blocked in port or canal congestions;

•availability of financing for new vessels and shipping activity;

•business disruptions, including supply chain disruption and congestion, due to natural or other disasters or

otherwise;

•the length and severity of epidemics and pandemics, including COVID-19 and its impact on across our business on

demand, operations in China and the Far East and knock-on impacts to our global operations;

•technological advances in vessel design and capacity;

•changes in national or international regulations that may effectively cause reductions in the carrying capacity of

vessels or early obsolescence of tonnage; and

•environmental concerns and uncertainty around new regulations in relation to, amongst others, new technologies

which may delay, amongst other things, the ordering of new vessels.

In addition to the prevailing and anticipated freight rates, factors that affect the rate of newbuilding, scrapping and

laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating

costs, costs associated with classification society surveys, normal maintenance costs, insurance coverage costs, the efficiency

and age profile of the existing LNG fleet in the market, and government and industry regulation of maritime transportation

practices, particularly environmental protection laws and regulations. These factors influencing the supply of and demand for

shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing and degree of

changes in industry conditions.

Further, the market may fluctuate widely based on a variety of factors including changes in overall market movements,

political and economic events, wars, acts of terrorism, natural disasters (including disease, epidemics and pandemics) and

changes in interest rates or inflation rates.

Our business is affected by macroeconomic conditions, including rising inflation, interest rates, market volatility, economic

uncertainty and supply chain constraints.

Various macroeconomic factors could adversely affect our business and the results of our operations and financial

condition, including changes in inflation, interest rates and overall economic conditions and uncertainties such as those

resulting from the current and future conditions in the global financial markets. For instance, inflation has negatively impacted

us by increasing our labor costs, through higher wages and higher interest rates, and operating costs. Supply chain constraints

have led to higher inflation, which if sustained could have a negative impact on our product development and operations. If

inflation or other factors were to significantly increase, our business operations may be negatively affected. Interest rates, the

liquidity of the credit markets and the volatility of the capital markets could also affect the operation of our business and our

ability to raise capital on favorable terms, or at all, in order to fund our operations.

Increased inflation, including rising prices for items, such as raw materials, fuel, parts and components, freight,

packaging, supplies, labor and energy increases the Company’s costs to provide services and manufacture and distribute the

Company’s products. The Company does not currently use financial derivatives to hedge against volatility in commodity prices.

The Company uses market prices for materials, fuel, parts and components. The Company may be unable to pass these rising

costs on to its customers. To mitigate this exposure, the Company attempts to include cost escalation clauses in its longer-term

marine transportation contracts whereby certain costs, including fuel, can largely be passed through to its customers. Results of

operations and margin performance can be negatively affected if the Company is unable to mitigate the impact of these cost

increases through contractual means and is unable to increase prices to sufficiently offset the effect of these cost increases.

Materials, components, and equipment essential to the Company’s operations are normally readily available, and

shortages as a result of supply chain disruptions can adversely impact the Company’s operations, particularly where the

Company has a limited number of suppliers. Many of the items essential to the Company’s business require the use of shipping

services to transport them to the Company’s facilities. Shipping delays or disruptions may result in operational slowdowns,

especially where materials, components, or equipment are necessary to complete an order for the Company’s customers,

particularly in the marine transportation segment. These constraints could have a material adverse effect on the Company and

contribute to increased buildup of inventories. In addition, price increases imposed by the Company’s vendors for materials and

shipping services used in its business, and the inability to pass these increases through to its customers, could have a material

adverse effect on the Company.

Throughout 2022, we experienced significant increases in the costs of certain materials, fuel and equipment, as a

result of availability constraints, supply chain disruption, increased demand, labor shortages associated with a fully employed

US labor force, inflation and other factors. Though we incorporated inflationary factors into our 2022 business plan, inflation

outpaced those original assumptions and, while we have incorporated inflationary factors into our 2023 business plan, inflation

may outpace those assumptions. These challenges are due in large measure to increased demand for oil and gas production

driven by the continued economic recovery from the COVID-19 pandemic and more broadly, systemic underinvestment in

global oil and gas development. These supply and demand fundamentals have been further aggravated by disruptions in global

energy supply caused by multiple geopolitical events, including the ongoing conflict between Russia and Ukraine. We continue

to undertake actions and implement plans to strengthen our supply chain to address these pressures and protect the requisite

access to commodities and services. Nevertheless, we expect for the foreseeable future to experience supply chain constraints

and may continue to experience inflationary pressure on our cost structure. These supply chain constraints and inflationary

pressures may continue to adversely impact our cost of operations and if we are unable to manage our global supply chain, it

may impact our ability to procure materials and equipment in a timely and cost-effective manner, if at all, which could result in

reduced margins and production delays and, as a result, have a material adverse effect on our business, results of operations,

cash flows, financial condition and ability to pay dividends, if any.

Global economic conditions may negatively impact the LNG shipping industry and we face risks attendant in economic and

regulatory conditions around the world.

As the shipping industry is capital intensive and highly dependent on the availability of financial markets, in particular

the credit market,to finance and expand operations, it can be negatively affected by decline in available credit facilities. Any

weakening in global economic conditions may have a number of adverse consequences for LNG and other shipping sectors,

including, among other things:

•low charter rates, particularly for vessels employed in the spot market (which includes vessel employment under

single voyage spot charters and time charters with an initial term of less than six months);

•decreases in the market value of LNG vessels and limited second-hand market for the sale of vessels;

•limited financing for vessels;

•widespread loan covenant defaults; and

•declaration of bankruptcy by certain vessel operators, vessel owners, shipyards and charterers.

The occurrence of one or more of these events could have a material adverse effect on our business, results of

operations, cash flows, financial condition and ability to pay dividends, if any.

We face risks attendant to changes in economic environments, changes in interest rates, instability in the banking and

securities markets and trade regulation around the world, and the development of the ongoing COVID-19 pandemic, among

other factors. Major market disruptions and adverse changes in market conditions and regulatory climate in China, the United

States, the European Union and worldwide may adversely affect our business or impair our ability to borrow amounts under

credit facilities or any future financial arrangements.

Chinese LNG imports have accounted for the majority of global LNG transportation growth annually over the last

years, with recent demand growth driven by stronger LNG imports to China. China has increased its LNG imports from 27

million tons in 2016 to 80 million tons in 2021. However in 2022, imported volumes to China fell by 15.5 million tons. Despite

this, our financial condition and results of operations, as well as our future prospects, would likely be hindered by an economic

downturn in China. While global economic activity levels, led by China, have improved, the outlook for China and the rest of

the world remains uncertain and is highly dependent on the path of COVID-19 and measures taken by governments around the

world in response to it. Global vaccination rates and effectiveness, together with the development of COVID-19 variants, could

impact the sustainability of this recovery. In addition, the International Monetary Fund has warned that continuing trade

tensions, including significant tariff increases, between the United States and China could derail recovery from the impacts of

COVID-19.

Our future prospects for recontracting our fleet and extending our current charters would likely be hindered by an

economic downturn in any of the major LNG import regions. Europe grew its imports by 46 million tons in 2022, an increase of

67% over imports in 2021, but could only partly offset the reduced flow from piped Russian gas. A prolonged economic

downturn in Europe is likely to have a detrimental effect on global LNG demand, which in turn could make it more challenging

for us to employ our vessels.

In recent years there have been continuing trade tensions, including significant tariff increases, between the United

States and China. Protectionist developments, or the perception that they may occur, may have a material adverse effect on

global economic conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an

increase in (a) the cost of goods exported from regions globally, (b) the length of time required to transport goods and (c) the

risks associated with exporting goods. Such increases may significantly affect the quantity of goods to be shipped, shipping

time schedules, voyage costs and other associated costs, which could have an adverse impact on our charterers' business,

operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to

renew and increase the number of their time charters with us. This could have a material adverse effect on our business, results

of operations, financial condition and our ability to pay any cash distributions to our stockholders.

Economic growth is expected to slow, including as a result of supply chain disruption, the recent surge in inflation

related actions by central banks and geopolitical conditions, with significant risk of recession in many parts of the world in the

near term. In particular, an adverse change in economic conditions affecting China, Japan, India or Southeast Asia generally

could have a negative effect on the LNG shipping industry.

Any decrease in spot charter rates in the future may provide an incentive for some charterers to default on their charters,

and the failure of our counterparties to meet their obligations could cause us to suffer losses or otherwise adversely affect

our business and ability to pay dividends, if any.

As of March 10, 2023, one of our 13 vessels, which are owned, leased or chartered-in by us, was exposed to

fluctuations in the spot market via a variable rate time charter linked to the market.

Although the number of vessels in our Fleet (as defined below) that participate in the spot market will vary from time

to time, we anticipate that a significant portion of our Fleet (as defined below) will not participate in this market. As a result,

our financial performance are not expected to be significantly affected by conditions in the LNG spot market and our vessels

that operate under fixed-rate time charters are expected to provide a fixed source of revenue to us.

Historically, the LNG spot freight market has been volatile as a result of the many conditions and factors that can

affect the price, supply of and demand for LNG capacity. Weak global economic trends may further reduce demand for

transportation of LNG cargoes over longer distances, which may materially affect our revenues, profitability and cash flows.

The spot charter market may fluctuate significantly based upon supply of and demand for vessels and cargoes. The successful

operation of our vessels in the competitive spot charter market depends upon, among other things, obtaining profitable spot

charters and minimizing, to the extent possible, time spent waiting for charters and time spent traveling unladen to pick up

cargo. The spot market is volatile and there have been periods when spot rates have declined below the operating cost of

vessels. If future spot charter rates decline, then we may be unable to operate our vessels trading in the spot market profitably,

or meet our obligations, including payments on indebtedness, or to pay dividends in the future. Furthermore, as charter rates for

spot charters are fixed for a single voyage, which may last up to several weeks during periods in which spot charter rates are

rising, we will generally experience delays in realizing the benefits from such increases.

Our ability to renew the charters on our vessels on the expiration or termination of our current charters, or on vessels

that we may acquire in the future, or the charter rates payable under any replacement charters and vessel values will depend

upon, among other things, economic conditions in the sectors in which our vessels operate at that time, changes in the supply

and demand for vessel capacity and changes in the supply and demand for the seaborne transportation of energy resources.

We have entered into various contracts, including charter parties with our customers, which subject us to counterparty

risks. The ability and willingness of each of the counterparties to perform its obligations under a contract with us or contracts

entered into on our behalf will depend on a number of factors that are beyond our control and may include, among other things,

general economic conditions, the condition of the shipping sector, the overall financial condition of the counterparty, charter

rates for LNG carriers and the supply and demand for LNG. Should a counterparty fail to honor its obligations under any such

contracts or attempt to renegotiate our agreements, we could sustain significant losses that could have a material adverse effect

on our business, financial condition, results of operations, cash flows, ability to pay dividends to holders of our ordinary shares

in the amounts anticipated or at all and compliance with covenants in our secured loan agreements. As of December 31, 2022,

12 of our vessels are currently on time charters with a fixed rate element. The time charters have a remaining duration of more

than one year.

Often, when we enter into a time charter, the rates under that charter are fixed for the term of the charter. If the spot

market rates or short-term time charter rates in the LNG industry become significantly lower than the time charter equivalent

rates that some of our charterers are obligated to pay us under our existing charters, the charterers may have incentive to default

under that charter or attempt to renegotiate the charter.

Risks involved with operating ocean-going vessels could result in the loss of life or harm to our seafarers, environmental

accidents or otherwise affect our business and reputation, which could have a material adverse effect on our results of

operations and financial condition.

The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of:

•loss of life or harm to seafarers;

•an accident involving a vessel resulting in damage to the asset or total loss of the same;

•a marine accident or disaster;

•terrorism;

•piracy or robbery;

•environmental accidents;

•pollution;

•cargo and property losses and damage; and

•business interruptions caused by mechanical failure, human error, war, political action in various countries, labor

strikes, or adverse weather conditions.

Any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels

in an environmental disaster may harm our reputation as a safe and reliable LNG operator.

Our operations inside and outside of the United States expose us to global risks, such as instability, terrorist or other attacks,

war, international hostilities and global public health concerns, which may affect the seaborne transportation industry, and

adversely affect our business.

We are an international company and primarily conduct our operations outside the United States, and our business,

results of operations, cash flows, financial condition and ability to pay dividends, if any, in the future may be adversely affected

by changing economic, political and government conditions in the countries and regions where our vessels are employed or

registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the effects of political

conflicts.

Currently, the world economy faces a number of challenges, including trade tensions between the United States and

China, stabilizing growth in China, geopolitical events, such as continuing threat of terrorist attacks around the world,

continuing instability and conflicts and other recent occurrences in the Middle East, Ukraine and in other geographic areas and

countries, and stabilizing growth in China.

In the past, political instability has also resulted in attacks on vessels, mining of waterways and other efforts to disrupt

international shipping, particularly in the Arabian Gulf region and most recently in the Black Sea in connection with the

ongoing conflicts between Russia and Ukraine. Acts of terrorism and piracy have also affected vessels trading in regions such

as the South China Sea and the Gulf of Aden off the coast of Somalia. Any of these occurrences could have a material adverse

impact on our future performance, results of operation, cash flows and financial position.

In February of 2022, President Biden and several European leaders announced various economic sanctions against

Russia in connection with the aforementioned conflicts in the Ukraine region, which may adversely impact our business. The

The United States has implemented the Russian Foreign Harmful Activities Sanctions program, which includes

prohibitions on the import of certain Russian energy products into the United States, including crude oil, petroleum, petroleum

fuels, oils, liquefied natural gas and coal, as well as prohibitions on all new investments in Russia by U.S. persons, among other

restrictions. Furthermore, the United States has also prohibited a variety of specified services related to the maritime transport

of Russian Federation origin crude oil and petroleum products, including trading/commodities brokering, financing, shipping,

insurance (including reinsurance and protection and indemnity), flagging, and customs brokering. These prohibitions took

effect on December 5, 2022 with respect to the maritime transport of crude oil and took effect on February 5, 2023 with respect

to the maritime transport of other petroleum products. An exception exists to permit such services when the price of the

seaborne Russian oil does not exceed the relevant price cap; however, the impact from price cap regulation has been muted

since the outbreak of the war and implementation of new sanctions, in addition to sanctions already in place and self-

sanctioning, had already redirected a significant share of Russian exports away from Europe. Violations of the price cap policy

or the risk that information, documentation, or attestations provided by parties in the supply chain are later determined to be

false may pose additional risks adversely affecting our business. Our business could also be adversely impacted by trade tariffs,

trade embargoes or other economic sanctions that limit trading activities by the United States or other countries against

countries in the Middle East, Asia or elsewhere as a result of terrorist attacks, hostilities or diplomatic or political pressures.

In addition, public health threats, such as COVID-19, influenza and other highly communicable diseases or viruses,

outbreaks of which have from time to time occurred in various parts of the world in which we operate, including China, Japan

and South Korea, which may even become pandemics, such as the COVID-19 virus, could lead to a significant decrease of

demand for the transportation of LNG. Such events may also adversely impact our operations, including timely rotation of our

crews, the timing of completion of any future newbuilding projects. Delayed rotation of crew may adversely affect the mental

and physical health of our crew and the safe operation of our vessels as a consequence.

The COVID-19 pandemic and the resulting disruptions to the international shipping industry may continue to adversely

affect our business, financial performance, and our results of operations, including the ability to obtain charters and

financings.

The COVID-19 pandemic has led a number of countries, ports and organizations to take measures against its spread

including travel bans, quarantines, and other emergency public health measures, and a number of countries implemented

lockdown measures, which resulted in a significant reduction in global economic activity and extreme volatility in the global

financial markets. These measures have and will likely continue to cause severe trade disruptions due to, among other things,

the unavailability of personnel, supply chain disruption, interruptions of production, delays in planned strategic projects and

closure of businesses and facilities. By 2021, however many of these measures were relaxed. Nonetheless, we cannot predict

whether and to what degree emergency public health and other measures will be reinstituted in the event of any resurgence in

the COVID-19 virus or any variants thereof. If the COVID-19 pandemic continues on a prolonged basis or becomes more

severe, the adverse impact on the global economy and the rate environment for LNG and other cargo vessels may deteriorate

further and our operations and cash flows may be negatively impacted. Relatively weak global economic conditions during

periods of volatility have and may continue to have a number of adverse consequences for LNG and other shipping sectors, as

we experienced in 2020 and we may experience in the future, including, among other things:

•low charter rates, particularly for vessels employed on short-term time charters or in the spot market;

•decreases in the market value of LNG vessels and limited second-hand market for the sale of vessels;

•limited financing for vessels;

•loan covenant defaults; and

•declaration of bankruptcy by certain vessel operators, vessel owners, shipyards and charterers.

Travel restrictions imposed on a global level also caused disruptions in scheduled crew changes on our vessels and

delays in carrying out of certain hull repairs and maintenance during 2022, which could also continue to affect our operations.

Our business and the shipping industry as a whole may continue to be impacted by a reduced workforce and delays of crew

changes as a result of quarantines applicable in several countries and ports, as well as delays in the construction of newbuild

vessels, scheduled drydockings, intermediate or special surveys of vessels and scheduled and unscheduled ship repairs and

upgrades. In addition, any case of COVID-19 amongst crew, could result in a quarantine period for that vessel, and in turn, loss

of charter hire and additional costs.

Measures against COVID-19 in a number of countries have restricted crew rotations on our vessels, which may

continue or become more severe. In 2022, delays in crew rotations have also caused us to incur additional costs related to crew

bonuses paid to retain the existing crew members on board and may continue to do so. In 2022, we incurred and may continue

to incur additional expenses associated with COVID-19 testing, personal protective equipment, quarantines, and travel expenses

such as airfare costs in order to perform crew rotations in the current environment. We may continue to experience disruptions

to our normal vessel operations caused by increased deviation time associated with positioning our vessels to countries in which

we can undertake a crew rotation in compliance with measures to mitigate the spread of COVID-19. As a result, we may have

increased expenses due to incremental fuel consumption and days in which our vessels are unable to earn revenue in order to

deviate to certain ports on which we would ordinarily not call during a typical voyage. In addition, any case of COVID-19

amongst crew, could result in quarantine periods for the vessel and, in turn, loss of charter hire and additional costs.

This and future epidemics may affect personnel operating payment systems through which we receive revenues from

the chartering of our vessels or pay for our expenses, resulting in delays in payments. We continue to focus on our employees'

well-being, whilst making sure that our operations continue undisrupted and at the same time, adapting to the new ways of

operating. As such employees are encouraged and in certain cases required to operate remotely which significantly increases the

risk of cyber security attacks.

The occurrence or continued occurrence of any of the foregoing events or other epidemics or an increase in the

severity or duration of the COVID-19 or other epidemics could have a material adverse effect on our business, results of

operations, cash flows, financial condition, value of our vessels and ability to pay dividends.

The price of our ordinary shares may be volatile.

The price of our ordinary shares may be volatile and may fluctuate due to factors including:

•our payment of dividends to our shareholders;

•actual or anticipated fluctuations in quarterly and annual results;

•fluctuations in the seaborne transportation industry, including fluctuations in the LNG carrier market;

•mergers and strategic alliances in the shipping industry;

•changes in governmental regulations or maritime self-regulatory organization standards;

•shortfalls in our operating results from levels forecasted by securities analysts;

•announcements concerning us or our competitors;

•the failure of securities analysts to publish research about us, or analysts making changes in their financial estimates;

•general economic conditions;

•terrorist acts;

•business interruptions caused by the COVID-19 pandemic;

•future sales of our shares or other securities;

•investors’ perception of us and the LNG shipping industry;

•the general state of the securities market; and

•other developments affecting us, our industry or our competitors.

In recent years securities markets worldwide experienced significant price and volume fluctuations, including due to

factors relating to the COVID-19 pandemic. The market price for our ordinary shares has experienced volatility during this time

and there is no guarantee that it will not experience similar volatility in the future. The trading price of our ordinary shares as of

December 30, 2022 was $32.69 per share and as of March 9, 2023, was $34.02 per share. This market and share price volatility,

as well as general economic, market or political conditions, has and could further reduce the market price of our ordinary shares

in spite of our operating performance and could also increase our cost of capital, which could prevent us from accessing debt

and equity capital on terms acceptable to us or at all.

We paid one special dividend in our fiscal year ended December 31, 2022 and as of the date of this Annual Report have paid

one special dividend in our fiscal year ending December 31, 2023, but we may be unable to pay special dividends in the

future.

On August 23, 2022, our Board of Directors declared a cash dividend for the second quarter of 2022 of $0.75 per

share. This dividend was paid on September 13, 2022, to shareholders on record as of September 8, 2022.

Also on August 23, 2022, our Board of Directors declared a cash dividend for the second quarter of 2022 of $0.50 per

share, in addition to the dividend referenced in the immediately preceding paragraph. This dividend was a special dividend and

was paid on September 13, 2022, to shareholders on record as of September 8, 2022.

On February 13, 2023, our Board of Directors declared a cash dividend for the fourth quarter of 2022 of $0.75 per

share. This dividend was paid on March 7, 2023, to shareholders on record as of February 23, 2023. The ex-dividend date was

February 22, 2023.

Also on February 13, 2023, our Board of Directors declared a cash dividend for the fourth quarter of 2022 of $0.25 per

share, in addition to the dividend referenced in the immediately preceding paragraph. This dividend is a special dividend and

was paid on March 7, 2023, to shareholders on record as of February 23, 2023. The ex-dividend date was February 22, 2023.

The special dividends described above may not be indicative of future dividend payments.

We will evaluate the potential level and timing of any future dividends as soon as profits and cash flows allow.

However, the timing and amount of any dividend payments will always be subject to the discretion of our board of directors and

will depend on, among other things, earnings, capital expenditure commitments, market prospects, current capital expenditure

programs, investment opportunities, the provisions of Bermuda law affecting the payment of distributions to shareholders, and

the terms and restrictions of our existing and future credit facilities. The LNG shipping industry is volatile, and we cannot

predict with certainty the amount of cash, if any, that will be available for distribution as dividends in any period. Also, there

may be a high degree of variability from period to period in the amount of cash that is available for the payment of dividends.

We may incur expenses or liabilities or be subject to other circumstances in the future that reduce or eliminate the

amount of cash that we have available for distribution as dividends, including as a result of the risks described herein. Our

growth strategy contemplates that we will primarily finance our acquisitions of additional vessels through debt financings or the

net proceeds of future equity issuances on terms acceptable to us. If financing is not available to us on acceptable terms, our

board of directors may determine to finance or refinance acquisitions with cash from operations, which would reduce the

amount of any cash available for the payment of dividends.

We have, and may conduct in the future, a substantial amount of business in China. The legal system in China has inherent

uncertainties that could have a material adverse effect on our business, financial condition and results of operations.

The Chinese legal system is based on written statutes and their legal interpretation by the Standing Committee of the

National People's Congress. Prior court decisions may be cited for reference but have limited precedential value. Since 1979,

the Chinese government has been developing a comprehensive system of commercial laws dealing with economic matters such

as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and

regulations are relatively new, there is a general lack of internal guidelines or authoritative interpretive guidance and because of

the limited number of published cases and their non-binding nature, interpretation and enforcement of these laws and

regulations involve uncertainties. Any administrative and court proceedings in China may be protracted, resulting in substantial

costs and diversion of resources and management attention. Since Chinese administrative and court authorities have significant

discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of

administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems.

To the extent our charters, shipbuilding contracts and financing agreements that are governed by English law, if we are

required to commence legal proceedings against a customer, a shipbuilder or a lender based in China, we may have difficulties

in enforcing any judgment rendered by an English court (or other non-Chinese court) in China.

Changes in laws and regulations, including with regards to tax matters, and their implementation by local authorities

could affect our vessels that are either chartered to Chinese customers or that call to Chinese ports and our vessels that undergo

dry-docking, or to which we install scrubbers, at Chinese shipyards, and the financial institutions with whom we have entered

into financing agreements, could have a material adverse effect on our business, results of operations and financial condition.

If our vessels call at ports located in countries or territories that are the subject of sanctions or embargoes imposed by the

U.S. government, the European Union, the United Nations or governmental authorities, it could lead to monetary fines or

other penalties and adversely affect our reputation and the market for our ordinary shares and its trading price.

None of our vessels called on ports located in countries or territories that are the subject of country-wide or territory-

wide sanctions or embargoes imposed by the U.S. government or other applicable governmental authorities (“Sanctioned

Jurisdictions”) in 2022 in violation of applicable sanctions or embargo laws. Although we intend to maintain compliance with

all sanctions and embargo laws, and we endeavor to take precautions reasonably designed to mitigate such risks, it is possible

that, in the future, our vessels may call on ports located in Sanctioned Jurisdictions on charterers’ instructions. If such activities

result in a violation of sanctions or embargo laws, we could be subject to monetary fines, penalties, or other sanctions, and our

reputation and the market for our ordinary shares could be adversely affected.

The applicable sanctions and embargo laws and regulations vary in their application, of these different jurisdictions,

and do not all apply to the same covered persons or proscribe the same activities. In addition, the sanctions and embargo laws

and regulations of each jurisdiction may be amended to increase or reduce the restrictions they impose over time. The lists of

persons and entities designated under these laws and regulations are amended frequently. Moreover, certain sanctions regimes

provide that entities owned or controlled by the persons or entities designated in such lists are also subject to sanctions. The

U.S., U.K. and EU have enacted new sanctions programs in recent years. Additional countries or territories, as well as

additional persons or entities within or affiliated with those countries or territories, have, and in the future will, become the

target of sanctions. These require us to be diligent in ensuring our compliance with sanctions laws. Further, the U.S. has

increased its focus on sanctions enforcement with respect to the shipping sector. Current or future counterparties of ours may be

affiliated with persons or entities that are or may be in the future become the subject of sanctions or embargoes imposed by the

United States, EU, and/or other international bodies. If we determine that such sanctions require us to terminate existing or

future contracts to which we, or our subsidiaries, are party or if we are found to be in violation of such applicable sanctions, our

results of operations may be adversely affected, or we may suffer reputational harm.

As a result of Russia’s actions in Ukraine, the U.S., EU and United Kingdom, together with numerous other countries,

have imposed significant sanctions on persons and entities associated with Russia and Belarus, as well as comprehensive

sanctions on certain areas within the Donbas region of Ukraine, and such sanctions apply to entities owned or controlled by

certain designated persons or entities. These sanctions adversely affect our ability to operate in the region and also restrict

parties whose cargo we may carry. Sanctions against Russia have also placed significant prohibitions on the maritime

transportation of seaborne Russian oil, the importation of certain Russian energy products and other goods, and new

investments in the Russian Federation. These sanctions further limit the scope of permissible operations and cargo we may

carry.

The United States has also issued several Executive Orders that prohibit certain transactions related to Russia,

including the importation of certain energy products of Russian Federation origin (including crude oil, petroleum, petroleum

fuels, oils, liquefied natural gas and coal), and all new investments in Russia by U.S. persons, among other prohibitions and

export controls. Furthermore, the United States has also prohibited a variety of specified services related to the maritime

transport of Russian Federation origin crude oil and petroleum products, including trading/commodities brokering, financing,

shipping, insurance (including reinsurance and protection and indemnity), flagging, and customs brokering. These prohibitions

took effect on December 5, 2022 with respect to the maritime transport of crude oil and February 5, 2023 with respect to the

maritime transport of other petroleum products. An exception exists to permit such services when the price of the seaborne

Russian oil does not exceed the relevant price cap; but implementation of this price exception relies on a recordkeeping and

attestation process that allows each party in the supply chain of seaborne Russian oil to demonstrate or confirm that oil has been

purchased at or below the price cap. Violations of the price cap policy or the risk that information, documentation, or

attestations provided by parties in the supply chain are later determined to be false may pose additional risks adversely affecting

our business.

Although, to the best of the our knowledge, we have been in compliance with all applicable sanctions and embargo

laws and regulations in 2022, and intend to maintain such compliance, the scope of certain laws may be unclear and may be

subject to changing interpretations. Any such violation could result in fines, penalties or other sanctions that could severely

impact our ability to access U.S. capital markets and conduct our business and could result in our reputation and the market for

our securities to be adversely affected and/or in some investors deciding, or being required, to divest their interest, or not to

invest, in us. In addition, certain institutional investors may have investment policies or restrictions that prevent them from

holding securities of companies that have contracts with countries or territories identified by the U.S. government as state

sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our ordinary shares may

adversely affect the price at which our ordinary shares trade. Moreover, our charterers may violate applicable sanctions and

embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn

negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we

engage in certain other activities, such as entering into charters with individuals or entities that are not controlled by the

governments of countries or territories that are the subject of certain U.S. sanctions or embargo laws, or engaging in operations

associated with those countries or territories pursuant to contracts with third parties that are unrelated to those countries or

territories or entities controlled by their governments. Investor perception of the value of our ordinary shares may be adversely

affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in countries or territories

that we operate in.

Compliance with safety regulations and other vessel requirements imposed by classification societies may be costly and

subject us to increased liability, which may adversely affect our insurance coverage and may result in a detail of access to,

or detention in, certain ports and could reduce our net cash flows and net income.

A classification society authorized by the country of registry of a commercial vessel must certify such vessel as being

"in class" and safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the

vessel. All of our vessels are certified as being “in class” by all the applicable Classification Societies (e.g., American Bureau of

Shipping., Lloyd's Register of Shipping or DNV GL).

Additionally a vessel must undergo annual surveys, intermediate surveys, dry-dockings or special surveys.

Alternatively, a vessel's machinery may be placed on a continuous survey cycle, under which the machinery would be surveyed

periodically over a five-year period. We expect our vessels to be on special survey cycles for hull inspection and continuous

survey cycles for machinery inspection.

Every vessel is also required to be dry-docked every five years for inspection of the underwater parts of the vessel. If

any vessel does not maintain its class and/or fails any annual survey, intermediate survey, dry-docking or special survey, the

vessel will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in

violation of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation

of covenants, could have a material adverse impact on our financial condition and results of operations.

The operation of our vessels is affected by the requirements set forth in the IMO's International Safety Management

Code, (the “ISM Code”). The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain

an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting

forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. If we fail to

comply with the ISM Code, we may be subject to increased liability, including the invalidation of existing insurance or a

decrease of available insurance coverage for our affected vessels and such failure may result in a denial of access to, or

detention in, certain ports. The U.S. Coast Guard and European Union authorities enforce compliance with the ISM and

International Ship and Port Facility Security Code, or the ISPS Code, and prohibit non-compliant vessels from trading in U.S.

and European Union ports. This could have a material adverse effect on our future performance, results of operations, cash

flows and financial position. Given that the IMO continues to review and introduce new regulations, it is impossible to predict

what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our

operations.

Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying

with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional

conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing

business and which may materially adversely affect our operations. We are required by various governmental and quasi-

governmental agencies to obtain certain permits, licenses, certificates, and financial assurances with respect to our operations.

Further, government regulation of vessels, particularly in the areas of safety and environmental requirements, can be

expected to become stricter in the future and require us to incur significant capital expenditures on our vessels to keep them in

compliance.

Please see “Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations in the

Shipping Industry” for a discussion of the environmental and other regulations applicable to us.

The LNG shipping industry is subject to substantial environmental and other regulations, which may significantly limit our

operations or increase our expenses.

Our operations are materially affected by extensive and changing international, national, state and local environmental

laws, regulations, treaties, conventions and standards which are in force in international waters, or in the jurisdictional waters of

the countries in which our ships operate and in the countries in which our ships are registered. These requirements include those

relating to equipping and operating ships, providing security and minimizing or addressing impacts on the environment from

ship operations. We may incur substantial costs in complying with these requirements, including costs for ship modifications

and changes in operating procedures. We also could incur substantial costs, including clean-up costs, civil and criminal

penalties and sanctions, the suspension or termination of operations and third-party claims as a result of violations of, or

liabilities under, such laws and regulations.

In addition, these requirements can affect the resale value or useful lives of our ships, require a reduction in cargo

capacity, necessitate ship modifications or operational changes or restrictions or lead to decreased availability of insurance

coverage for environmental matters. They could further result in the denial of access to certain jurisdictional waters or ports or

detention in certain ports. We are required to obtain governmental approvals and permits to operate our ships. Delays in

obtaining such governmental approvals may increase our expenses, and the terms and conditions of such approvals could

materially and adversely affect our operations.

Additional laws and regulations may be adopted that could limit our ability to do business or increase our operating

costs, which could materially and adversely affect our business. For example, new or amended legislation relating to ship

recycling, sewage systems, emission control (including emissions of greenhouse gases and other pollutants) as well as ballast

water treatment and ballast water handling may be adopted. The United States has recently enacted ballast water management

system legislation and regulations that require more stringent controls of air and water emissions from ocean-going ships. Such

legislation or regulations may require additional capital expenditures or operating expenses (such as increased costs for low-

sulfur fuel) in order for us to maintain our ships' compliance with international and/or national regulations. We also may

become subject to additional laws and regulations if we enter new markets or trades.

We also believe that the heightened environmental, quality and security concerns of insurance underwriters, regulators

and charterers will generally lead to additional regulatory requirements, including enhanced risk assessment and security

requirements, as well as greater inspection and safety requirements on all LNG carriers in the marine transportation market.

These requirements are likely to add incremental costs to our operations, and the failure to comply with these requirements may

affect the ability of our ships to obtain and, possibly, recover from, insurance policies or to obtain the required certificates for

entry into the different ports where we operate.

Some environmental laws and regulations, such as the U.S. Oil Pollution Act of 1990, or "OPA", provide for

potentially unlimited joint, several and strict liability for owners, operators and demise or bareboat charterers for oil pollution

and related damages. OPA applies to discharges of any oil from a ship in U.S. waters, including discharges of fuel and

lubricants from an LNG carrier, even if the ships do not carry oil as cargo. In addition, many states in the United States

bordering a navigable waterway have enacted legislation providing for potentially unlimited strict liability without regard to

fault for the discharge of pollutants within their waters. We also are subject to other laws and conventions outside the United

States that provide for an owner or operator of LNG carriers to bear strict liability for pollution, such as the International

Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocols in 1976, 1984, and 1992,

and amended in 2000, or the CLC.

Some of these laws and conventions, including OPA and the CLC, may include limitations on liability. However, the

limitations may not be applicable in certain circumstances, such as where a spill is caused by a ship owner's or operator's

intentional or reckless conduct. These limitations are also subject to periodic updates and may otherwise be amended in the

future.

Compliance with OPA and other environmental laws and regulations also may result in ship owners and operators

incurring increased costs for additional maintenance and inspection requirements, the development of contingency

arrangements for potential spills, obtaining mandated insurance coverage and meeting financial responsibility requirements.

Climate change and greenhouse gas restrictions may adversely impact our operations and markets.

Due to concern over the risk of climate change, a number of countries and the International Maritime Organization (the

"IMO"), have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions. These

regulatory measures may include, among others, adoption of cap and trade regimes, carbon taxes, increased efficiency standards

and incentives or mandates for renewable energy. More specifically, on October 27, 2016, the IMO’s Marine Environment

Protection Committee (the "MEPC"), announced its decision concerning the implementation of regulations mandating a

reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning of January 1, 2020. Additionally, in April 2018,

nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships. The initial strategy identifies

levels of ambition to reducing greenhouse gas emissions, including (i) decreasing the carbon intensity from ships through

implementation of further phases of the EEDI for new ships; (ii) reducing carbon dioxide emissions per transport work, as an

average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008

emission levels; and (iii) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while

pursuing efforts towards phasing them out entirely.

The European Commission has proposed adding shipping to the Emission Trading Scheme (the "ETS") as of 2023

with a phase-in period. It is expected that shipowners will need to purchase and surrender a number of emission allowances that

represent their recorded carbon emission exposure for a specific reporting period. The person or organization responsible for the

compliance with the EU ETS should be the shipping company, defined as the shipowner or any other organization or person,

such as the manager or the bareboat charterer, that has assumed the responsibility for the operation of the ship from the

shipowner. On December 18, 2022, the Environmental Council and European Parliament agreed to include maritime shipping

emissions within the scope of the EU ETS on a gradual introduction of obligations for shipping companies to surrender

allowances: 40% for verified emissions from 2024, 70% for 2025 and 100% for 2026. Compliance with the Maritime EU ETS

could result in additional compliance and administration costs to properly incorporate the provisions of the Directive into our

business routines. Additional EU regulations which are part of the EU’s Fit-for-55, could also affect our financial position in

terms of compliance and administration costs when they take effect.

Since January 1, 2020, ships must either remove sulfur from emissions or buy fuel with low sulfur content, which may

lead to increased costs and supplementary investments for ship owners. The interpretation of "fuel oil used on board" includes

use in main engine, auxiliary engines and boilers. Shipowners may comply with this regulation by (i) using 0.5% sulfur fuels on

board, which are available around the world but at a higher cost; (ii) installing scrubbers for cleaning of the exhaust gas; or (iii)

by retrofitting vessels to be powered by liquefied natural gas, which may not be a viable option due to the lack of supply

network and high costs involved in this process. Costs of compliance with these regulatory changes may be significant and may

have a material adverse effect on our future performance, results of operations, cash flows and financial position.

On November 13, 2021, the Glasgow Climate Pact was announced following discussions at the 2021 United Nations

Climate Change Conference (“COP26”). The Glasgow Climate Pact calls for signatory states to voluntarily phase out fossil

fuels subsidies. A shift away from these products could potentially affect the demand for our vessels and negatively impact our

future business, operating results, cash flows and financial position. COP26 also produced the Clydebank Declaration, in which

22 signatory states (including the United States and United Kingdom) announced their intention to voluntarily support the

establishment of zero-emission shipping routes. Governmental and investor pressure to voluntarily participate in these green

shipping routes could cause us to incur significant additional expenses to “green” our vessels.

Territorial taxonomy regulations in geographies where we are operating and are regulatorily liable, such as EU

Taxonomy, might jeopardize the level of access to capital. For example, EU has already introduced a set of criteria for

economic activities which should be framed as ‘green’, called EU Taxonomy. As long as we are an EU-based company meeting

the NFRD prerequisites, we will be eligible for reporting our Taxonomy eligibility and alignment. Based on the current version

of the Regulation, companies that own assets shipping fossil fuels are considered as not aligned with EU Taxonomy. The

outcome of such provision might be either an increase in the cost of capital and/or gradually reduced access to financing as a

result of financial institutions’ compliance with EU Taxonomy.

In addition, although the emissions of greenhouse gases from international shipping currently are not subject to the

Kyoto Protocol to the United Nations Framework Convention on Climate Change, which required adopting countries to

implement national programs to reduce emissions of certain gases, or the Paris Agreement (discussed further below), a new

treaty may be adopted in the future that includes restrictions on shipping emissions. Compliance with changes in laws,

regulations and obligations relating to climate change affects the propulsion options in subsequent vessel designs and could

increase our costs related to acquiring new vessels, operating and maintaining our existing vessels and require us to install new

emission controls, acquire allowances or pay taxes related to our greenhouse gas emissions or administer and manage a

greenhouse gas emissions program. Revenue generation and strategic growth opportunities may also be adversely affected.

Adverse effects upon the oil and gas industry relating to climate change, including growing public concern about the

environmental impact of climate change, may also adversely affect demand for our services. For example, increased regulation

of greenhouse gases or other concerns relating to climate change may reduce the demand for oil and gas in the future or create

greater incentives for use of alternative energy sources. In addition, the physical effects of climate change, including changes in

weather patterns, extreme weather events, rising sea levels, scarcity of water resources, may negatively impact our operations.

Any long-term material adverse effect on the oil and gas industry could have a significant financial and operational adverse

impact on our business that we cannot predict with certainty at this time.

Developments in safety and environmental requirements relating to the recycling of vessels may result in escalated and

unexpected costs.

The 2009 Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (the

“Hong Kong Convention”), aims to ensure ships, being recycled once they reach the end of their operational lives do not pose

any unnecessary risks to the environment, human health and safety. The Hong Kong Convention has yet to be ratified by the

required number of countries to enter into force. Upon the Hong Kong Convention's entry into force, each ship sent for

recycling will have to carry an inventory of its hazardous materials. The hazardous materials, whose use or installation are

prohibited in certain circumstances, are listed in an appendix to the Hong Kong Convention. Ships will be required to have

surveys to verify their inventory of hazardous materials initially, throughout their lives and prior to the ship being recycled.The

Hong Kong Convention, which is currently open for accession by IMO member states, will enter into force 24 months after the

date on which 15 IMO member states, representing at least 40% of world merchant shipping by gross tonnage, have ratified or

approve accession. As of the date of this Annual Report, 17 countries have ratified or approved accession of the Hong Kong

Convention, but the requirement of 40% of world merchant shipping by gross tonnage has not yet been satisfied.

On November 20, 2013, the European Parliament and the Council of the EU adopted the EU Ship Recycling

Regulation, or ESSR, which, among other things, retains the requirements of the Hong Kong Convention and requires that

certain commercial seagoing vessels flying the flag of an EU member state may be recycled only in facilities included on the

European list of permitted ship recycling facilities.

Apart from that, any vessel, including ours, is required to set up and maintain an Inventory of Hazardous Materials

from December 31, 2018 for EU flagged new ships and from December 31, 2020 for EU flagged existing ships and non-EU

flagged ships calling at a port or anchorage of an EU member state. Such a system includes information on the hazardous

materials with a quantity above the threshold values specified in the relevant EU Resolution and are identified in ship’s

structure and equipment. This inventory should be properly maintained and updated, especially after repairs, conversions or

unscheduled maintenance on board the ship.

Under the ESSR, commercial EU-flagged vessels of 500 gross tonnage and above may be recycled only at shipyards

included on the European List of Authorised Ship Recycling Facilities (the “European List”). The European List presently

includes eight facilities in Turkey but no facilities in the major ship recycling countries in Asia. The combined capacity of the

European List facilities may prove insufficient to absorb the total recycling volume of EU-flagged vessels. This circumstance,

taken in tandem with the possible decrease in cash sales, may result in longer wait times for divestment of recyclable vessels as

well as downward pressure on the purchase prices offered by European List shipyards. Furthermore, facilities located in the

major ship recycling countries generally offer significantly higher vessel purchase prices, and as such, the requirement that we

utilize only European List shipyards may negatively impact revenue from the residual values of our vessels.

In addition, on December 31, 2018, the European Waste Shipment Regulation, or EWSR, requires that non-EU

flagged ships departing from EU ports be recycled only in Organization for Economic Cooperation and Development (OECD)

member countries. In March 2018, the Rotterdam District Court ruled that the sale of four recyclable vessels by third-party

Dutch ship owner Seatrade to cash buyers, who then reflagged and resold the vessels to non-OECD country recycling yards,

were effectively indirect sales to non-OECD country yards, in violation of the EWSR. If European Union Member State courts

widely adopt this analysis, it may negatively impact revenue from the residual values of our vessels and we may be subject to

heightened risk of non-compliance, due diligence obligations and costs in instances where we sell older ships to cash buyers.

These regulatory requirements may lead to cost escalation by shipyards, repair yards and recycling yards. This may then result

in a decrease in the residual recycling value of a vessel, which could potentially not cover the cost to comply with the latest

requirements, which may have an adverse effect on our future performance, results of operation, cash flows and financial

position.

Safety, environmental and other governmental and other requirements expose us to liability, and compliance with current

and future regulations could require significant additional expenditures, which could have a material adverse effect on our

business and financial results.

Our operations are affected by extensive and changing international, national, state and local laws, regulations, treaties,

conventions and standards in force in international waters, the jurisdictions in which our LNG vessels operate, and the country

or countries in which such vessels are registered, including those governing the management and disposal of hazardous

substances and wastes, the cleanup of oil spills and other contamination, air emissions, and water discharges and ballast and

bilge water management. These regulations include, but are not limited to, the OPA, requirements of the U.S. Coast Guard, or

the USCG, and the U.S. Environmental Protection Agency, or EPA, the U.S. Comprehensive Environmental Response,

Compensation and Liability Act of 1980, or CERCLA, the U.S. Clean Water Act, the U.S. Maritime Transportation Security

Act of 2002, and regulations of the International Maritime Organization, or IMO, including SOLAS, the International

Convention for the Prevention of Pollution from Ships of 1973, or MARPOL, including the designation thereunder of Emission

Control Areas, or ECAs, the International Convention on Civil Liability for Oil Pollution Damage of 1969, or CLC, and the

International Convention on Load Lines of 1966. In particular, IMO’s MEPC 73, amendments to Annex VI prohibiting the

carriage of bunkers above 0.5% sulfur on ships took effect March 1, 2020 and may cause us to incur substantial costs.

Compliance with these regulations could have a material adverse effect our business and financial results.

In addition, vessel classification societies and the requirements set forth in the IMO’s International Management Code

for the Safe Operation of Ships and for Pollution Prevention, or the ISM Code, also impose significant safety and other

requirements on our vessels. In complying with current and future environmental requirements, vessel owners and operators

may also incur significant additional costs in meeting new maintenance and inspection requirements, in developing contingency

arrangements for potential spills and in obtaining insurance coverage. Government regulation of vessels, particularly in the

areas of safety and environmental requirements, can be expected to become stricter in the future and require us to incur

significant capital expenditures on our vessels to keep them in compliance, or even to recycle or sell certain vessels altogether.

Many of these requirements are designed to reduce the risk of oil spills and other pollution, and our compliance with

these requirements can be costly. These requirements can also affect the resale value or useful lives of our vessels, require

reductions in cargo capacity, ship modifications or operational changes or restrictions, lead to decreased availability of

insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or

detention in certain ports.

Under local, national and foreign laws, as well as international treaties and conventions, we could incur material

liabilities, including cleanup obligations, natural resource damages and third-party claims for personal injury or property

damages, in the event that there is a release of petroleum or other hazardous substances from our vessels or otherwise in

connection with our current or historic operations. We could also incur substantial penalties, fines and other civil or criminal

sanctions, including in certain instances seizure or detention of our vessels, as a result of violations of or liabilities under

environmental laws, regulations and other requirements. Environmental laws often impose strict liability for remediation of

spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were

negligent or at fault. For example, OPA affects all vessel owners shipping oil to, from or within the United States. Under OPA,

owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil in U.S. waters,

including the 200 nautical mile exclusive economic zone around the United States. Similarly, the CLC, which has been adopted

by most countries outside of the United States, imposes liability for oil pollution in international waters. OPA expressly permits

individual states to impose their own liability regimes with regard to hazardous materials and oil pollution incidents occurring

within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA. Coastal states in the

United States have enacted pollution prevention liability and response laws, many providing for unlimited liability.

Furthermore, the 2010 explosion of the drilling rig Deepwater Horizon, which is unrelated to the Company, and the subsequent

release of oil into the Gulf of Mexico, or other events, has resulted in increased, and may result in further, regulation of the

shipping and offshore industries and modifications to statutory liability schemes, which could have a material adverse effect on

our business, financial condition, results of operations and cash flows. An oil spill could also result in significant liability,

including fines, penalties, criminal liability and remediation costs for natural resource damages under other international and

U.S. federal, state and local laws, as well as third-party damages, and could harm our reputation with current or potential

charterers of our vessels. We are required to satisfy insurance and financial responsibility requirements for potential oil

(including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain

environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims

will not have a material adverse effect on our business, results of operations, cash flows and financial condition and available

cash.

Regulations relating to ballast water discharge may adversely affect our revenues and profitability.

The IMO has imposed updated guidelines for ballast water management systems specifying the maximum amount of

viable organisms allowed to be discharged from a vessel's ballast water. Depending on the date of the International Oil

Pollution Prevention, or IOPP renewal survey, existing vessels constructed before September 8, 2017 must comply with the

updated D-2 standard on or after September 8, 2019. For most vessels, compliance with the D-2 standard will involve installing

on-board systems to treat ballast water and eliminate unwanted organisms. Ships constructed on or after September 8, 2017 are

to comply with the D-2 standards upon delivery. All our vessels comply with the updated guideline.

Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit, or VGP,

program and U.S. National Invasive Species Act, or NISA, are currently in effect to regulate ballast discharge, exchange and

installation, the Vessel Incidental Discharge Act, or VIDA, which was signed into law on December 4, 2018, requires that the,

U.S. Environmental Protection Agency, or EPA develop national standards of performance for approximately 30 discharges,

similar to those found in the VGP within two years. On October 26, 2020, the EPA published a Notice of Proposed Rulemaking

for Vessel Incidental Discharge National Standards of Performance under VIDA. Within two years after the EPA publishes its

final Vessels Incidental Discharge National Standards of Performance, the U.S. Coast Guard, or USCG, must develop

corresponding implementation, compliance and enforcement regulations regarding ballast water. The new regulations could

require the installation of new equipment, which may cause us to incur substantial costs.

Maritime claimants could arrest or attach one or more of our vessels, which could interrupt our customers' or our cash

flows.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a

maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may

enforce its lien by "arresting" or "attaching" a vessel through judicial or foreclosure proceedings. The arrest or attachment of

one or more of our vessels could interrupt the cash flow of the charterer and/or our cash flow and require us to pay a significant

amount of money to have the arrest lifted, which would have an adverse effect on our financial condition and results of

operations.

In addition, in jurisdictions where the "sister ship" theory of liability applies, such as South Africa, a claimant may

arrest the vessel that is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or

controlled by the same owner. In countries with "sister ship" liability laws, claims may be asserted against us or any of our

vessels for liabilities of other vessels that we own. Under some of our present charters, if the vessel is arrested or detained as a

results of a claim against us, we may be in default of our charter and the charterer may terminate the charter, which will

negatively impact our revenues and cash flows.

Governments could requisition our vessels during a period of war or emergency resulting in a loss of earnings.

A government of a vessel's registry could requisition for title or seize one or more of our vessels. Requisition for title

occurs when a government takes control of a vessel and becomes the owner. Such government could also requisition one or

more of our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes

the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government

requisition of one or more of our vessels could have a material adverse effect on our business, results of operations, cash flows,

financial condition and ability to pay dividends.

Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our

Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks.

Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups,

certain institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG

practices and in recent years have placed increasing importance on the implications and social cost of their investments. The

increased focus and activism related to ESG and similar matters may hinder access to capital, as investors and lenders may

decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Companies

which do not adapt to or comply with investor, lender or other industry shareholder expectations and standards, which are

evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of

whether there is a legal requirement to do so, may suffer from reputational damage, costs related to litigation, and the business,

financial condition, and/or stock price of such a company could be materially and adversely affected.

In February 2021, the Acting Chair of the SEC issued a statement directing the Division of Corporation Finance to

enhance its focus on climate-related disclosure in public company filings and in March 2021 the SEC announced the creation of

a Climate and ESG Task Force in the Division of Enforcement (the “Task Force”). The Task Force’s goal is to develop

initiatives to proactively identify ESG-related misconduct consistent with increased investor reliance on climate and ESG-

related disclosure and investment. To implement the Task Force’s purpose, the SEC has taken several enforcement actions, with

the first enforcement action taking place in May 2022, and promulgated new rules. On March 21, 2022, the SEC proposed that

all public companies are to include extensive climate-related information in their SEC filings. On May 25, 2022, SEC proposed

a second set of rules aiming to curb the practice of "greenwashing" (i.e., making unfounded claims about one's ESG efforts) and

would add proposed amendments to rules and reporting forms that apply to registered investment companies and advisers,

advisers exempt from registration, and business development companies. As of the date of this Annual Report, these proposed

rules have not yet taken effect.

We may face increasing pressures from investors, lenders and other market participants, who are increasingly focused

on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result,

we may be required to implement more stringent ESG procedures or standards so that our existing and future investors and

lenders remain invested in us and make further investments in us, especially given the highly focused and specific trade of LNG

transportation in which we are engaged. Such ESG corporate transformation calls for an increased resource allocation to serve

the necessary changes in that sector, increasing costs and capital expenditure. If we do not meet these standards, our business

and/or our ability to access capital could be harmed.

Additionally, certain investors and lenders may exclude LNG shipping companies, such as us, from their investing

portfolios altogether due to environmental, social and governance factors. These limitations in both the debt and equity capital

markets may affect our ability to grow as our plans for growth may include accessing the equity and debt capital markets. If

those markets are unavailable, or if we are unable to access alternative means of financing on acceptable terms, or at all, we

may be unable to implement our business strategy, which would have a material adverse effect on our financial condition and

results of operations and impair our ability to service our indebtedness. Further, it is likely that we will incur additional costs

and require additional resources to monitor, report and comply with wide ranging ESG requirements. The occurrence of any of

the foregoing could have a material adverse effect on our business and financial condition.

Technological innovation and quality and efficiency requirements from our customers could reduce our charterhire income

and the value of our vessels.

Our customers, in particular those in the oil industry, have a high and increasing focus on quality and compliance

standards with their suppliers across the entire supply chain, including the shipping and transportation segment. Our continued

compliance with these standards and quality requirements is vital for our operations. The charterhire rates and the value and

operational life of a vessel are determined by a number of factors including the vessel’s efficiency, operational flexibility and

physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes

the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s

physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. More

technologically advanced vessels have been built since the vessels in our fleet, which have an average age of 3.1 years as of

December 31, 2022, were constructed and vessels with further advancements may be built that are even more efficient or more

flexible or have longer physical lives, including new vessels powered by alternative fuels or which are otherwise perceived as

more environmentally friendly by charterers. We face competition from companies with more modern vessels with more fuel

efficient designs than our vessels, and if new LNG carriers are built that are more efficient or more flexible or have longer

physical lives than the current eco vessels, competition from the current eco vessels and any more technologically advanced

vessels could adversely affect the amount of charterhire payments we receive for our vessels and the resale value of our vessels

could significantly decrease. In these circumstances, we may also be forced to charter our vessels to less creditworthy

charterers, because top tier charters will not charter older and less technologically advanced vessels or will only charter such

vessels at lower contracted charter rates than we are able to obtain from these less creditworthy, second tier charterers.

Similarly, technologically advanced vessels are needed to comply with environmental laws the investment in which along with

the foregoing could have a material adverse effect on our results of operations, charterhire payments and resale value of vessels.

This could have an adverse effect on our results of operations, cash flows, financial condition, and ability to pay dividends.

Risks Related to Our Business

The market values of our vessels may decline, which could limit the amount of funds that we can borrow, cause us to breach

certain financial covenants in our credit facilities, or result in an impairment charge, and cause us to incur a loss if we sell

vessels following a decline in their market value.

The fair market values of LNG vessels, including our vessels, have generally experienced high volatility and may

decline in the future. The fair market value of our vessels may increase and decrease depending on but not limited to the

following factors:

•general economic and market conditions affecting the shipping industry;

•the balance between the supply of and demand for ships of a certain type;

•competition from other shipping companies;

•the availability of ships of the required size and design;

•the availability and costs of other modes of transportations;

•the cost of newbuildings;

•shipyard capacity;

•governmental or other regulations, including those that may limit the useful life of vessels;

•changes in environmental, governmental or other regulations that may limit the useful lives of vessels, require costly

updates or limit their efficiency;

•distressed asset sales, including newbuilding contract sales below acquisition costs due to lack of financing;

•the types, sizes and ages of vessels, including as compared to other vessels in the market;

•the prevailing level of charter rates;

•the need to upgrade secondhand and previously owned vessels as a result of environmental, safety, regulatory or

charterer requirements; and

•technological advances in vessel design or equipment or otherwise.

During the period a vessel is subject to a charter, we might not be permitted to sell it to take advantage of increases in

vessel values without the charterer's consent. If we sell a vessel at a time when ship prices have fallen, the sale may be at less

than the vessel's carrying amount in our financial statements, with the result that we could incur a loss and a reduction in

earnings. The carrying values of our owned and leased vessels are reviewed quarterly or whenever events or changes in

circumstances indicate that the carrying amount of the vessel may no longer be recoverable. We assess recoverability of the

carrying value by estimating the future net cash flows expected to result from the vessel, including eventual disposal for owned

vessels. If the future net undiscounted cash flows and the estimated fair market value of the vessel are less than the carrying

value, an impairment loss is recorded equal to the difference between the vessel's carrying value and fair value. Any impairment

charges incurred as a result of declines in charter rates and other market deterioration could negatively affect our business,

financial condition or operating results or the trading price of our ordinary shares.

In addition, if we determine at any time that a vessel's future useful life and earnings require us to impair its value in

our financial statements, this would result in a charge against our earnings and a reduction of our shareholders' equity. If the fair

market values of our vessels decline, we may not be in compliance with certain covenants contained in our secured credit

facilities, which may result in an event of default. In such circumstances, we may not be able to refinance our debt or obtain

additional financing acceptable to us or at all. Further, if we are not able to comply with the covenants in our secured credit

facilities, and are unable to remedy the relevant breach, our lenders could accelerate our debt and foreclose on our Fleet (as

defined below).

If the fair market values of our vessels decline, we may not be in compliance with various covenants in our sale and

leasebacks, term loan facilities or credit facilities we enter into in the future, which requires and/or may require the maintenance

of certain percentage of the fair market values of the vessels security the facility to the principal outstanding amount to the

respective facility. Conversely, if vessel values are elevated at a time when we wish to acquire additional vessels, the cost of

acquisition may increase and this could adversely affect our business, results of operations, cash flow and financial condition.

We may require additional capital in the future, which may not be available on favorable terms, or at all.

Depending on many factors, including market developments, our future earnings, value of our assets and expenditures

for any new projects, we may need additional funds. We cannot guarantee that we will be able to obtain additional financing at

all or on terms acceptable to us. If adequate funds are not available, we may have to reduce expenditures for investments in new

and existing projects, which could hinder our growth, prevent us from realizing potential revenues from prior investments and

have a negative impact on our cash flows and results of operations.

We are highly leveraged, which could significantly limit our ability to execute our business strategy and has increase the risk

of default under our debt obligations.

As of December 31, 2022, we had approximately $1,714.7 million of net outstanding indebtedness under our credit

facilities and debt securities. We cannot assure you that we will be able to generate cash flow in amounts that is sufficient to

satisfy these obligations. If we are not able to satisfy these obligations, we may have to undertake alternative financing plans or

sell our assets. In addition, debt service payments under our credit facilities may limit funds otherwise available for working

capital, capital expenditures, payment of cash distributions and other purposes. If we are unable to meet our debt obligations, or

if we otherwise default under our credit facilities, our lenders could declare the debt, together with accrued interest and fees, to

be immediately due and payable and foreclose on our Fleet (as defined below), which could result in the acceleration of other

indebtedness that we may have at such time and the commencement of similar foreclosure proceedings by other lenders.

Our credit facilities impose operating and financial restrictions on us that limit our ability or the ability of our

subsidiaries party thereto, as applicable, to:

•pay dividends, if any, and make capital expenditures, if there is an event of default under our credit facilities;

•incur additional indebtedness, including the issuance of guarantees, or refinance or prepay any new indebtedness,

unless certain conditions exist;

•create liens on our assets, unless otherwise permitted under our credit facilities;

•change the flag, class or management of our vessels or terminate or materially amend the management agreement

relating to each vessel;

•acquire new or sell our vessels, unless certain conditions exist;

•merge or consolidate with, or transfer all or substantially all our assets to, another person; or

•enter into a new line of business.

In addition, our loan agreements, which are secured by liens on our vessels, contain various financial covenants.

Among those covenants are requirements that relate to our financial position, operating performance and liquidity. For example,

there are financial covenants that require us to maintain (i) an equity ratio fixing a minimum value of book equity, (ii) minimum

levels of free cash, (iii) positive working capital, and (iv) collateral maintenance test, ensuring that the aggregate value of the

vessels making up the facility in question exceeds the aggregate value of the debt commitment outstanding.

Our ability to comply with the covenants and restrictions contained in our current or future credit facilities may be

affected by events beyond our control, including prevailing economic, financial and industry conditions, interest rate

developments, changes in the funding costs of our banks and changes in vessel earnings and asset valuations. If market or other

economic conditions deteriorate, our ability to comply with these covenants may be impaired. For example, the market value of

LNG vessels is likewise sensitive to, among other things, changes in the LNG market, with vessel values deteriorating in times

when charter rates for LNG vessels are falling or anticipated to fall and improving when charter rates are rising or anticipated to

rise. Such conditions may result in us not being in compliance with our loan covenants. In such a situation, unless our lenders

are willing to provide further waivers of covenant compliance or modifications to our covenants, or would be willing to

refinance our indebtedness, we may have to sell vessels in our fleet and/or seek to raise additional capital in the equity markets

in order to comply with our loan covenants. Furthermore, if the value of our vessels deteriorates significantly, we may have to

record an impairment adjustment in our financial statements, which would adversely affect our financial results and further

hinder our ability to raise capital. The fair market values of our vessels may decline, which could limit the amount of funds that

we can borrow, cause us to breach certain financial covenants in our credit facilities, or result in an impairment charge, and

cause us to incur a loss if we sell vessels following a decline in their market value.

If we are not in compliance with our covenants and are not able to obtain covenant waivers or modifications, our

lenders could require us to post additional collateral, enhance our equity and liquidity, increase our interest payments, pay down

our indebtedness to a level where we are in compliance with our loan covenants, sell vessels in our fleet, or they could

accelerate our indebtedness, any of which would impair our ability to continue to conduct our business. If our indebtedness is

accelerated, we might not be able to refinance our debt or obtain additional financing and could lose our vessels if our lenders

foreclose on their liens. In addition, if we find it necessary to sell our vessels at a time when vessel prices are low, we will

recognize losses and a reduction in our earnings, which could affect our ability to raise additional capital necessary for us to

comply with our loan agreements.

Furthermore, certain of our credit facilities contain a cross-default provision that may be triggered by a default under

one of our other credit facilities. A cross-default provision means that a default on one loan would result in a default on certain

of our other loans. Because of the presence of cross-default provisions in certain of our credit facilities, the refusal of any one

lender under our credit facilities to grant or extend a waiver could result in certain of our indebtedness being accelerated, even if

our other lenders under our credit facilities have waived covenant defaults under the respective agreements. If our secured

indebtedness is accelerated in full or in part, it would be very difficult in the current financing environment for us to refinance

our debt or obtain additional financing and we could lose our vessels and other assets securing our credit facilities if our lenders

foreclose their liens, which would adversely affect our ability to conduct our business.

Our operating fleet consists of thirteen LNG vessels from which we derive all of our revenue and cash flow. Any limitation

in the availability or operation of these vessels could have a material adverse effect on our business, results of operations

and financial condition.

Our operating fleet consists of thirteen LNG carriers. Although most of our time charter agreements have fixed terms,

they may be terminated early due to certain events, such as a charterer's failure to make charter payments to us because of

financial inability, disagreements with us or otherwise. The ability of each of our counterparties to perform its obligations under

a charter with us will depend on a number of factors that are beyond our control and may include, among other things, general

economic conditions, the condition of the LNG shipping industry, prevailing prices for natural gas and the overall financial

condition of the counterparty. Should a counterparty fail to honor its obligations under an agreement with us, we may be unable

to realize revenue under that charter and could sustain losses, which could have a material adverse effect on our business,

financial condition, results of operations and ability to pay dividends to our shareholders, if any.

If any of our vessels are unable to generate revenues as a result of off-hire time, early termination of the applicable

time charter or otherwise, our business, and results of operations financial condition could be materially adversely affected.

We currently derive all our revenue and cash flow from a limited number of customers and the loss of any of these

customers could cause us to suffer losses or otherwise adversely affect our business.

We have derived, and believe we will continue to derive, all of our revenues from a limited number of customers. For

the year ended December 31, 2022, during which we derived our operating revenues from eight customers, with our top four

customers accounted for 28.8%, 20.8%, 20.0% and 18.3% of our consolidated revenues, equivalent to 87.9% of our

consolidated revenues. During this period, no other customer accounted for over 10% of our consolidated revenues. If these

customers cease doing business or do not fulfill their obligations under the charters of our vessels, due to the increasing

financial pressure on these customers or otherwise, our results of operations and cash flows could be adversely affected.

Further, if we encounter any difficulties in our relationships with these charterers, our results of operations, cash flows, and

financial condition could be adversely affected.

We employ our Fleet (defined in "Item 4. Information on the Company – A. History and Development of the

Company") in both the term and spot markets (which includes vessel employment under single voyage spot charters and time

charters with an initial term of less than six months). All of the charters for our Fleet have fixed terms but may be terminated

early due to certain events, including but not limited to the customer’s failure to make charter payments to us because of

financial inability, disagreements with us or otherwise. The ability of each of our counterparties to perform its respective

obligations under a charter with us will depend on a number of factors that are beyond our control and may include, among

other things, general economic conditions, the charter rates received for specific types of vessels, the condition of the LNG

shipping industry, prevailing prices for natural gas, the overall financial condition of the counterparty and work stoppages or

other labor disturbances, including as a result of the COVID-19 pandemic and various expenses. The combination of a

reduction of cash flow resulting from declines in world trade, a reduction in borrowing bases under reserve-based credit

facilities and the lack of availability of debt or equity financing may result in a significant reduction in the ability of charters to

make charter payments to us. Should a counterparty fail to honor its obligations under an agreement with us, we may be unable

to realize revenue under that charter and may sustain losses, which may have a material adverse effect on our business, financial

condition, cash flows, results of operations and ability to pay distributions to our shareholders (if any).

In addition, in general a customer may exercise its right to terminate its charter if, among other things:

•the vessel suffers a total loss or is damaged beyond repair;

•we default on our obligations under the charter;

•there are serious deficiencies in the vessels or prolonged periods of vessel off-hire;

•war or hostilities significantly disrupt the free trade of the vessel;

•the vessel is requisitioned by any governmental authority;

•we fail to comply with the safety and regulatory criteria of the charterer or the rules and regulations of various

maritime organizations and bodies; or

•a prolonged force majeure event occurs, such as war or political unrest, which prevents the chartering of the vessel.

In addition, the charter payments we receive may be reduced if the vessel does not perform according to certain

contractual specifications. For example, charter hire may be reduced if the average vessel speed falls below the speed we have

guaranteed or if the amount of fuel consumed to power the vessel exceeds the guaranteed amount.

Furthermore, in depressed market conditions, our customers may no longer need a vessel that is then under charter or

may be able to obtain a comparable vessel at lower rates. As a result, customers may seek to renegotiate the terms of their

existing charter agreements or avoid their obligations under those contracts. If our customers fail to meet their obligations to us

or attempt to renegotiate our charter agreements, it may be difficult to secure substitute employment for such vessel, and any

new charter arrangements we secure may be at lower rates. As a result, we could sustain significant losses, which could have

material adverse effects on our business, financial condition, results of operations and cash flows.

Many charterers are highly leveraged. A combination of factors including, among other things, unavailability of credit,

volatility in financial markets, overcapacity, competitive pressure, declines in world trade and depressed freight rates, may

severely affect the financial condition of charterers, and their ability to make charter payments, which could result in a material

increase in the credit and counterparty risks to which we are exposed to and our ability to re-charter our vessels at competitive

rates.

If any of our charters are terminated, we may be unable to re-deploy the related vessel on terms as favorable to us as

our current charters, or at all. If we are unable to re-deploy a vessel for which the charter has been terminated, we will not

receive any revenues from that vessel, and we may be required to pay ongoing expenses necessary to maintain the vessel in

proper operating condition. Any of these factors may decrease our revenue and cash flows. Further, the loss of any of our

customers, charters or vessels, or a decline in charter hire under any of our charters, could have a material adverse effect on our

business, results of operations, financial condition and ability to pay distributions to our shareholders (if any).

We may be unable to successfully compete with other vessel operators for charters, which could adversely affect our results

of operations and financial position.

The operation of LNG vessels and transportation of LNG cargoes is extremely competitive. Competition for the

transportation of LNG cargoes by sea is intense and depends on price, location, size, age, condition and the acceptability of the

vessel and its operators to the charterers. Through our operating subsidiaries, we compete with other vessel owners, and, to a

lesser extent, owners of other size vessels. The LNG market is highly fragmented. Due in part to the highly fragmented market,

competitors with greater resources could enter the LNG shipping industry and operate larger fleets through consolidations or

acquisitions and may be able to offer lower charter rates and higher vessel quality than we are able to offer. As a result, we

cannot assure you that we will be successful in finding continued timely employment of our existing vessels, which could

adversely affect our results of operations and financial position.

Our results of operations are subject to seasonal fluctuations, which may adversely affect our financial condition.

We operate our LNG vessels in markets that have historically exhibited seasonal variations in demand and, as a result,

in charter hire rates. As of March 10, 2023, one of our 13 vessels, which are owned, leased or chartered-in by us, was exposed

to seasonal fluctuations in the spot market via a variable rate time charter linked to the market. The LNG sector is typically

stronger in the fall and winter months in anticipation of increased consumption of LNG in the northern hemisphere. As a result,

our revenues may be weaker during the fiscal quarters ended March 31 and June 30, and, conversely our revenues may be

stronger in fiscal quarters ended September 30 and December 31. In addition, unpredictable weather patterns in these months

tend to disrupt vessel scheduling and supplies of certain commodities. This seasonality may result in quarter-to-quarter

volatility in our revenues and operating results, which could affect our ability to pay dividends, if any, in the future.

A drop in spot market charter rates may provide an incentive for some charterers to default on their charters and the failure

of our counterparties to meet their obligations could cause us to suffer losses or otherwise adversely affect our business.

We have entered into various contracts, including charter parties with our customers, which subject us to counterparty

risks. The ability of each of the counterparties to perform its obligations under a contract with us or contracts entered into on

our behalf will depend on a number of factors that are beyond our control and may include, among other things, general

economic conditions, the condition of the shipping sector, the overall financial condition of the counterparty, charter rates

received for LNG. Should a counterparty fail to honor its obligations under any such contracts, we could sustain significant

losses that could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability

to pay dividends, if any.

When we enter into a time charter, charter rates under that charter may be fixed for the term of the charter. If the spot

charter rates or short-term time charter rates in the LNG shipping industry become significantly lower than the time charter

equivalent rates that some of our charterers are obligated to pay us under our existing charters, the charterers may have

incentive to default under that charter or attempt to renegotiate the charter. If our charterers fail to pay their obligations, we

would have to attempt to re-charter our vessels at lower charter rates, which would affect our ability to comply with our loan

covenants and operate our vessels profitably. If we are not able to comply with our loan covenants and our lenders choose to

accelerate our indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue

to conduct our business would be impaired.

Our fixed rate time charters may limit our ability to benefit from any improvement in charter rates, and at the same time,

our revenues may be adversely affected if we do not successfully employ our vessels on the expiration of our charters.

As of March 10, 2023, 12 of our vessels, which are owned, or leased by us, are currently on fixed rate charters with

longer duration of more than twelve months from the date of this Annual Report. Although our fixed rate time charters

generally provide more reliable revenues, they also limit the portion of our fleet available for spot market voyages during an

upswing in the LNG industry cycle, when spot market voyages might be more profitable. By the same token, we cannot assure

you that we will be able to successfully employ our vessels in the future or renew our existing charters at rates sufficient to

allow us to operate our business profitably or meet our obligations. A decline in charter or spot rates or a failure to successfully

charter our vessels could have a material adverse effect on our business, financial condition, results of operations and ability to

pay dividends.

We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet

their obligations could cause us to suffer losses or otherwise adversely affect our business.

We have entered, and may enter in the future, into various contracts, that are material to the operation of our business,

including charter parties with our customers, financing agreements with our lenders, vessel management, newbuilding

contracts, and other agreements with other entities, which subject us to counterparty risks. The ability and willingness of each

of the counterparties to perform its obligations under a contract with us or contracts entered into on our behalf will depend on a

number of factors that are beyond our control and may include, among other things, general economic conditions, the condition

of the shipping sector, the overall financial condition of the counterparty, charter rates received for our vessels and the supply

and demand for commodities. Should a counterparty fail to honor its obligations under any such contract, or attempt to

renegotiate our agreements, we could sustain significant losses which could have a material adverse effect on our business,

financial condition, results of operations, cash flows, ability to pay dividends to holders of our common shares in the amounts

anticipated or at all and compliance with covenants in our secured loan agreements.

Charterers are sensitive to the commodity markets and may be impacted by market forces affecting commodities and/

or uncertain industry conditions. In addition, in depressed market conditions, charterers may have incentive to renegotiate their

charters or default on their obligations under charters. Should a charterer in the future fail to honor its obligations under

agreements with us, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we

secure on the spot market or on charters may be at lower rates, depending on the then existing charter rate levels, compared to

the rates currently being charged for our vessels. In addition, if the charterer of a vessel in our fleet that is used as collateral

under one or more of our financing agreements defaults on its charter obligations to us, such default may constitute an event of

default under the relevant financing agreement, which may allow the bank to exercise remedies under the financing agreement.

Volatility of interest rates and potential changes of the use of LIBOR as a benchmark could affect our profitability, earnings

and cash flow.

Movements in interest rates could negatively affect our financial performance given that certain of our current

financing agreements have, floating interest rates, typically in LIBOR and SOFR, movements in interest rates could negatively

affect our financial performance. The publication of U.S. Dollar LIBOR for the one-week and two-month U.S. Dollar LIBOR

tenors ceased on December 31, 2021, and the ICE Benchmark Administration (“IBA”), the administrator of LIBOR, with the

support of the United States Federal Reserve and the United Kingdom’s Financial Conduct Authority, announced the

publication of all other U.S. Dollar LIBOR tenors will cease on June 30, 2023. The United States Federal Reserve concurrently

issued a statement advising banks to cease issuing U.S. Dollar LIBOR instruments after 2021. As such, any new loan

agreements we enter into will not use LIBOR as an interest rate, and we will need to transition our existing loan agreements

from U.S. Dollar LIBOR to an alternative reference rate prior to June 2023.

In order to manage our exposure to interest rate fluctuations under LIBOR, SOFR or any other alternative rate, we

have and may from time to time use interest rate derivatives to effectively fix some of our floating rate debt obligations. No

assurance can however be given that the use of these derivative instruments, if any, may effectively protect us from adverse

interest rate movements. The use of interest rate derivatives may affect our results through mark to market valuation of these

derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact

our free cash position. Interest rate derivatives may also be impacted by the transition from LIBOR to SOFR or other alternative

rates.

Our financing agreements contain a provision requiring or permitting us to enter into negotiations with our lenders to

agree to an alternative interest rate or an alternative basis for determining the interest rate in anticipation of the cessation of

LIBOR. These clauses present significant uncertainties as to how alternative reference rates or alternative bases for

determination of rates would be agreed upon, as well as the potential for disputes or litigation with our lenders regarding the

appropriateness or comparability to LIBOR of any substitute indices, such as SOFR, and any credit adjustment spread between

the two benchmarks. In the absence of an agreement between us and our lenders, most of our financing agreements provide that

LIBOR would be replaced with some variation of the lenders’ cost-of-funds rate. The discontinuation of LIBOR presents a

number of risks to our business, including volatility in applicable interest rates among our financing agreements, potential

increased borrowing costs for future financing agreements or unavailability of or difficulty in attaining financing, which could

in turn have an adverse effect on our profitability, earnings and cash flow.

Variable rate indebtedness could subject us to interest rate risk, which could cause our debt service obligations to increase

significantly.

Our credit facilities use variable interest rates and expose us to interest rate risk. If interest rates increase and we are

unable to effectively hedge our interest rate risk, our debt service obligations on the variable rate indebtedness would increase

even if the amount borrowed remained the same, and our profitability and cash available for servicing our indebtedness would

decrease.

Geveran Trading Co. Ltd ("Geveran") may be able to exercise significant influence over us and may have conflicts of

interest with our other shareholders.

As of March 10, 2023, Geveran, a Cyprus-based company, whose shares are indirectly held by two trusts settled by

Mr. John Fredriksen for the benefit of his family, own approximately 44.8% of our issued and outstanding ordinary shares.

Please see "Item 7. Major Shareholders and Related Party Transactions - A. Major Shareholders." For so long as Geveran owns

a significant percentage of our issued and outstanding shares, it may be able to exercise significant influence over us and will be

able to strongly influence the outcome of shareholder votes on other matters, including the adoption or amendment of

provisions in our Memorandum of Continuance or Bye-Laws and approval of possible mergers, amalgamations, control

transactions and other significant corporate transactions. This concentration of ownership may have the effect of delaying,

deferring or preventing a change in control, merger, amalgamations, consolidation, takeover or other business combination.

This concentration of ownership could also discourage a potential acquirer from making a tender offer or otherwise attempting

to obtain control of us, which could in turn have an adverse effect on the market price of our ordinary shares. Geveran may not

necessarily act in accordance with the best interests of other shareholders. The interests of Geveran may not coincide with the

interests of other holders of our ordinary shares. To the extent that conflicts of interest may arise, Geveran may vote in a

manner adverse to us or to you or other holders of our securities.

Certain of our directors, executive officers and major shareholders may have interests that are different from the interests of

our other shareholders.

Certain of our directors, executive officers and major shareholders may have interests that are different from, or are in

addition to, the interests of our other shareholders.

These directors, including Mr. Lorentzon and Mr. Jakobsen, also serve on the boards of one or more entities in which

Geveran or entities related to Geveran are major shareholders, including but not limited to, Golden Ocean Group Limited

(NASDAQ:GOGL) and Frontline plc (formerly known as Frontline Ltd) (NYSE:FRO). There may be real or apparent conflicts

of interest with respect to matters affecting Geveran or entities related to Geveran that in certain circumstances may be adverse

to our interests.

Geveran, our largest shareholder, whose shares are indirectly held by two trusts settled by Mr. John Fredriksen for the

benefit of his family, own approximately 44.8% of our issued and outstanding ordinary shares. To the extent that we do

business with or compete with Geveran or entities related to Geveran for business opportunities, prospects or financial

resources, or participate in ventures in which Geveran or entities related to Geveran may participate, these directors and officers

may face actual or apparent conflicts of interest in connection with decisions that could have different implications for us.

These decisions may relate to corporate opportunities, corporate strategies, potential acquisitions of businesses, newbuilding

acquisitions, inter-company agreements, the issuance or disposition of securities, the election of new or additional directors and

other matters. Such potential conflicts may delay or limit the opportunities available to us, and it is possible that conflicts may

be resolved in a manner adverse to us or result in agreements that are less favorable to us than terms that would be obtained in

arm's-length negotiations with unaffiliated third-parties.

We may not be able to implement our strategy successfully.

Subject to the covenants in our financing agreements and other contractual restrictions, Our long-term intention is to

renew and grow our fleet through selective acquisitions and newbuilding of LNG tonnage. Our business plan will therefore

depend upon our ability to identify and acquire suitable vessels to grow our fleet in the future and successfully employ our

vessels.

Growing any business by acquisition presents numerous risks, including undisclosed liabilities and obligations,

difficulty obtaining additional qualified personnel and managing relationships with customers and suppliers. In addition,

competition from other companies, many of which may have significantly greater financial resources than us, may reduce our

acquisition opportunities or cause us to pay higher prices. We cannot assure you that we will be successful in executing our

plans to establish and grow our business or that we will not incur significant expenses and losses in connection with these plans.

Our failure to effectively identify, purchase, develop and integrate any vessels could impede our ability to establish our

operations or implement our growth successfully. Our acquisition growth strategy exposes us to risks that may harm our

business, financial condition and operating results, including risks that we may:

•fail to realize anticipated benefits, such as cost savings or cash flow enhancements;

•incur or assume unanticipated liabilities, losses or costs associated with any vessels or businesses acquired,

particularly if any vessel we acquire proves not to be in good condition;

•be unable to hire, train or retain qualified shore and seafaring personnel to manage and operate our growing business

and fleet;

•decrease our liquidity by using a significant portion of available cash or borrowing capacity to finance acquisitions;

•significantly increase our interest expense or financial leverage if we incur debt to finance acquisitions; or

•incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or

restructuring charges.

Operational risks and damage to our vessels could adversely impact our performance.

The operation of an ocean-going vessel carries inherent risks. Our vessels and their cargoes are at risk of being

damaged or lost because of events such as marine disasters, bad weather and other acts of God, business interruptions caused by

mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy, labor strikes, boycotts, and

other circumstances or events. Changing economic, regulatory and political conditions in some countries, including political

and military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor

strikes and boycotts. Damage to the environment could also result from our operations, particularly through spillage of fuel,

lubricants and other chemicals and substances used in operations, or extensive uncontrolled fires. These hazards may result in

death or injury to persons, loss of revenues or property, the payment of ransoms, environmental damage, higher insurance rates,

damage to our customer relationships and market disruptions, delay or rerouting any of which may subject us to litigation, As a

result, we could be exposed to substantial liabilities not recoverable under our insurances. Further, the involvement of our

vessels in serious accidents could harm our reputation as a safe and reliable vessel operator and lead to a loss of business.

Epidemics and other public health incidents may also lead to crew member illness, which can disrupt the operations of our

vessels, or to public health measures, which may prevent our vessels from calling on ports or discharging cargo in the affected

areas or in other locations after having visited the affected areas. Please also see "The COVID-19 pandemic and resulting

disruptions to the international shipping industry may continue to adversely affect our business, financial performance, and our

results of operations, including the ability to obtain charters and financing."

If our vessels suffer damage, they may need to be repaired at a dry-docking facility. The costs of dry-dock repairs are

unpredictable and may be substantial. We may have to pay dry-docking costs that our insurance does not cover at all or in full.

The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may

adversely affect our business and financial condition. In addition, space at dry-docking facilities is sometimes limited and not

all dry-docking facilities are conveniently located. We may be unable to find space at a suitable dry-docking facility or our

vessels may be forced to travel to a dry-docking facility that is not conveniently located relative to our vessels' positions. The

loss of earnings while these vessels are forced to wait for space or to travel to more distant dry-docking facilities may adversely

affect our business and financial condition.

We rely on our information systems to conduct our business, and failure to protect these systems against security breaches

could adversely affect our business and results of operations, including on our vessels. Additionally, if these systems fail or

become unavailable for any significant period of time, our business could be harmed.

The safety and security of our vessels and efficient operation of our business, including processing, transmitting and

storing electronic and financial information, depend on computer hardware and software systems, which are increasingly

vulnerable to security breaches and other disruptions. Any significant interruption or failure of our information systems or any

significant breach of security could adversely affect our business and results of operations.

Our vessels rely on information systems for a significant part of their operations, including navigation, provision of

services, propulsion, machinery management, power control, communications and cargo management. We have in place safety

and security measures on our vessels and onshore operations to secure our vessels against cyber-security attacks and any

disruption to their information systems. However, these measures and technology may not adequately prevent security breaches

despite our continuous efforts to upgrade and address the latest known threats, which are constantly evolving and have become

increasing sophisticated. If these threats are not recognized or detected until they have been launched, we may be unable to

anticipate these threats and may not become aware in a timely manner of such a security breach, which could exacerbate any

damage we experience. A disruption to the information system of any of our vessels could lead to, among other things,

incorrect routing, collision, grounding and propulsion failure.

Beyond our vessels, we rely on industry accepted security measures and technology to securely maintain confidential

and proprietary information maintained on our information systems. However, these measures and technology may not

adequately prevent security breaches. The technology and other controls and processes designed to secure our confidential and

proprietary information, detect and remedy any unauthorized access to that information were designed to obtain reasonable, but

not absolute, assurance that such information is secure and that any unauthorized access is identified and addressed

appropriately. Such controls may in the future fail to prevent or detect, unauthorized access to our confidential and proprietary

information. In addition, the foregoing events could result in violations of applicable privacy and other laws. If confidential

information is inappropriately accessed and used by a third party or an employee for illegal purposes, we may be responsible to

the affected individuals for any losses they may have incurred as a result of misappropriation. In such an instance, we may also

be subject to regulatory action, investigation or liable to a governmental authority for fines or penalties associated with a lapse

in the integrity and security of our information systems.

We may be required to expend significant capital and other resources to protect against and remedy any potential or

existing security breaches and their consequences. A cyber-attack could also lead to litigation, fines, other remedial action,

heightened regulatory scrutiny and diminished customer confidence. In addition, our remediation efforts may not be successful

and we may not have adequate insurance to cover these losses.

The unavailability of the information systems or the failure of these systems to perform as anticipated for any reason

could disrupt our business and could have a material adverse effect on our business, results of operations, cash flows and

financial condition.

Moreover, cyber-attacks against the Ukrainian government and other countries in the region have been reported in

connection with recent conflicts between Russia and Ukraine. To the extent such attacks have collateral effects on global

critical infrastructure or financial institutions, such developments could adversely affect our business, operating results, cash

flows and financial condition. At this time, it is difficult to assess the likelihood of such threat and any potential impact at this

time.

Further, in March 2022, the SEC proposed amendments to its rules on cybersecurity risk management, strategy,

governance, and incident disclosure. The proposed amendments, if adopted, would require us to report material cybersecurity

incidents involving our information systems and periodic reporting regarding our policies and procedures to identify and

manage cybersecurity risks, amongst other disclosures.

Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and

cause disruption of our business.

International shipping is subject to security and customs inspection and related procedures in countries of origin,

destination and trans-shipment points. Under the U.S. Maritime Transportation Security Act of 2002 (the "MTSA"), the USCG

issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to

the jurisdiction of the United States and at certain ports and facilities. These security procedures can result in delays in the

loading, offloading or trans-shipment and the levying of customs duties, fines or other penalties against exporters or importers

and, in some cases, carriers. Future changes to the existing security procedures may be implemented that could affect the LNG

sector. These changes have the potential to impose additional financial and legal obligations on carriers and, in certain cases, to

render the shipment of certain types of goods uneconomical or impractical. These additional costs could reduce the volume of

goods shipped, resulting in a decreased demand for vessels and have a negative effect on our business, revenues and customer

relations.

Failure to comply with the U.S. Foreign Corrupt Practices Act of 1977 ("U.S. Foreign Corrupt Practices Act") and other

anti-corruption laws could result in fines, criminal penalties and an adverse effect on our business.

We may operate in a number of countries throughout the world, including countries known to have a reputation for

corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of

business conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977,

(the "U.S. Foreign Corrupt Practices Act") and other anti-bribery legislation. We are subject, however, to the risk that we, our

affiliated entities or our or their respective officers, directors, employees and agents may take actions determined to be in

violation of such anti-corruption laws, including the U.S. Foreign Corrupt Practices Act. Any such violation could result in

substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might

adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage

our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is

expensive and can consume significant time and attention of our senior management. Though we have implemented monitoring

procedures and required policies, guidelines, contractual terms and audits, these measures may not prevent or detect failures by

our agents or intermediaries regarding compliance.

We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material

adverse effect on us.

We may be, from time to time, involved in various litigation matters. These matters may include, among other things,

contract disputes, shareholder litigation, personal injury claims, environmental claims or proceedings, asbestos and other toxic

tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course

of our business. Although we intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect

of any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may

have a material adverse effect on us. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain

solvent which may have a material adverse effect on our financial condition.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement at the end of a vessel's useful

life, our revenue will decline, which would adversely affect our business, results of operations, financial condition and

ability to pay dividends.

Our cash flows and income are dependent on the revenues earned by the chartering of our vessels. If we do not set

aside funds and are unable to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet

upon the expiration of their remaining useful lives, which would cause our business, results of operations, financial condition

and ability to pay dividends to be adversely affected. Any funds set aside for vessel replacement will not be available for cash

distributions and dividends.

We may not have adequate insurance to compensate us if our vessels are damaged or lost.

In the event of a casualty to a vessel or other catastrophic event, we rely on our insurance to pay the insured value of

the vessel or the damages incurred. We procure insurance for our fleet against those risks that we believe companies in the

shipping industry commonly insure. These insurances include hull and machinery insurance, protection and indemnity

insurance, including environmental damage and pollution insurance coverage, and war risk insurance. We can give no

assurance that we will be adequately insured against all risks and we cannot guarantee that any particular claim will be paid,

even if we have previously recorded a receivable or revenue in respect of such claim. Our insurance policies may contain

deductibles for which we will be responsible and limitations and exclusions, which may increase our costs or lower our

revenues.

We cannot assure you that we will be able to obtain adequate insurance coverage for our vessels in the future or renew

our existing policies on the same or commercially reasonable terms, or at all. For example, more stringent environmental

regulations have in the past led to increased costs for, and in the future may result in the lack of availability of, protection and

indemnity insurance against risks of environmental damage or pollution. Any uninsured or under insured loss could harm our

business, results of operations, cash flows, financial condition and ability to pay dividends. In addition, our insurance may be

voidable by the insurers as a result of certain of our actions, such as our vessels failing to maintain certification with applicable

maritime self-regulatory organizations. Further, we cannot assure you that our insurance policies will cover all losses that we

incur, or that disputes over insurance claims will not arise with our insurance carriers. Any claims covered by insurance would

be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these

deductibles could be material. In addition, our insurance policies may be subject to limitations and exclusions, which may

increase our costs or lower our revenues, thereby possibly having a material adverse effect on our business, results of

operations, cash flows, financial condition and ability to pay dividends.

We may be subject to calls because we obtain some of our insurance through protection and indemnity associations.

We may be subject to increased premium payments, or calls, if the value of our claim records, the claim records of our

fleet managers, and/or the claim records of other members of the protection and indemnity associations through which we

receive insurance coverage for tort liability (including pollution-related liability) significantly exceed projected claims. In

addition, our protection and indemnity associations may not have enough resources to cover claims made against them. Our

payment of these calls could result in significant expense to us, which could have a material adverse effect on our business,

results of operations, cash flows, financial condition and ability to pay dividends.

We are a holding company, and depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our

financial obligations.

We are a holding company and our subsidiaries conduct all of our operations and own all of our operating assets. We

have no significant assets other than the equity interests in our subsidiaries. Our ability to satisfy our financial obligations in the

future depends on our subsidiaries and their ability to distribute funds to us. If we are unable to obtain funds from our

subsidiaries, we may not be able to satisfy our financial obligations.

As of December 31, 2022, we were no longer an “emerging growth company” and the obligations associated with being a

public company requires significant resources and management attention.

As a public company in the United States, we are subject to the reporting requirements of the Securities Exchange Act

of 1934, as amended, or the “Exchange Act,” and the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act,” the listing

requirements of the NYSE and other applicable securities rules and regulations. The Exchange Act requires that we file annual

and current reports with respect to our business, financial condition and results of operations. The Sarbanes-Oxley Act requires,

among other things, that we establish and maintain effective internal controls and procedures for financial reporting. We have

made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems

to meet our reporting obligations as a public company. However, the measures we continue to take may not be sufficient to

satisfy our obligations as a public company.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are

creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more

time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of

specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and

governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by

ongoing revisions to disclosure and governance practices. We intend to continue to invest resources to comply with evolving

laws, regulations and standards, and this investment may result in increased general and administrative costs and a diversion of

management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new

laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related

to their application and practice, regulatory authorities may initiate legal proceedings against us and our business, financial

condition, results of operations and cash flow could be adversely affected.

Our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial

reporting pursuant to Section 404 of the Sarbanes-Oxley Act. Even if our management concludes that our internal controls over

financial reporting are effective, our independent registered public accounting firm may issue an adverse report on the

effectiveness of our internal control over financial reporting. Failure to comply with Section 404 could subject us to regulatory

scrutiny and sanctions, impair our ability to raise capital, cause investors to lose confidence in the accuracy and completeness of

our financial reports and negatively affect our share price. Under the Jumpstart Our Business Act, or the “JOBS Act,” there are

additional compliance and regulations that have increased our legal and financial compliance costs, made some activities more

difficult, time-consuming or costly and placed greater demand on our systems and resources. As of December 31, 2022, we

were no longer an “emerging growth company” as defined in the JOBS Act.

Because we are a Bermuda exempted company, our shareholders may have less recourse against us or our directors than

shareholders of a U.S. company have against the directors of that U.S. Company.

Because we are a Bermuda company, the rights of holders of our ordinary shares will be governed by Bermuda law

and our memorandum of continuance and bye-laws. The rights of shareholders under Bermuda law may differ from the rights

of shareholders in other jurisdictions, including with respect to, among other things, rights related to interested directors,

amalgamations, mergers and acquisitions, takeovers, the exculpation and indemnification of directors and shareholder lawsuits.

Among these differences is a Bermuda law provision that permits a company to exempt a director from liability for

any negligence, default, or breach of a fiduciary duty except for liability resulting directly from that director's fraud or

dishonesty. Our bye-laws provide that no director or officer shall be liable to us or our shareholders unless the director's or

officer's liability results from that person's fraud or dishonesty. Our bye-laws also require us to indemnify a director or officer

against any losses incurred by that director or officer resulting from their negligence or breach of duty, except where such

losses are the result of fraud or dishonesty. Accordingly, we carry directors' and officers' insurance to protect against such a

risk.

In addition, under Bermuda law, the directors of a Bermuda company owe their duties to that company and not to the

shareholders. Bermuda law does not, generally, permit shareholders of a Bermuda company to bring an action for a wrongdoing

against the company or its directors, but rather the company itself is generally the proper plaintiff in an action against the

directors for a breach of their fiduciary duties. Moreover, class actions and derivative actions are generally not available to

shareholders under Bermuda law. These provisions of Bermuda law and our bye-laws, as well as other provisions not discussed

here, may differ from the law of jurisdictions with which shareholders may be more familiar and may substantially limit or

prohibit a shareholder's ability to bring suit against our directors or in the name of the company. Bermuda courts, however,

would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to

the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result

in the violation of the company's memorandum of association or bye-laws. Furthermore, consideration would be given by a

Bermuda court to acts that are alleged to constitute a fraud against minority shareholders or, for instance, where an act requires

the approval of a greater percentage of the company's shareholders than that which actually approved it. However, generally a

derivative action will not be permitted where there is an alternative action available that would provide an adequate remedy.

Any property or damages recovered by derivative action go to the company, not to the plaintiff shareholders. When the affairs

of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some part of the

shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit,

including an order regulating the conduct of the company's affairs in the future or ordering the purchase of the shares of any

shareholders by other shareholders or by the company or that the company be wound up.

It is also worth noting that under Bermuda law, our directors and officers are required to disclose to our Board of

Directors any interests they have in any material contract entered into by our company or any of its subsidiaries. Our directors

and officers are also required to disclose their material interests in any corporation or other entity which is party to a material

contract with our company or any of its subsidiaries. A director who has disclosed his or her interests in accordance with

Bermuda law may participate in any meeting of our Board of Directors, and may vote on the approval of a material contract,

notwithstanding that he or she has an interest.

Future issuance of shares or other securities may dilute the holdings of shareholders and could materially affect the price of

our ordinary shares.

It is possible that we may in the future decide to offer additional shares or other securities in order to secure financing

for new projects, in connection with unanticipated liabilities or expenses or for any other purposes. Any such additional offering

could reduce the proportionate ownership and voting interests of holders of our ordinary shares, as well as our earnings per

share and our net asset value per share, and any offering by us could have a material adverse effect on the market price of our

ordinary shares.

Because our offices and most of our assets are outside the United States, you may not be able to bring suit against us, or

enforce a judgment obtained against us in the United States.

Our executive offices, administrative activities and the majority of our assets are located outside the United States. In

addition, most of our directors and officers are not United States residents. As a result, it may be more difficult for investors to

effect service of process within the United States upon us, or to enforce both in the United States and outside the United States

judgments against us in any action, including actions predicated upon the civil liability provisions of the United States federal

securities laws.

As an exempted company incorporated under Bermuda law with subsidiaries in a Crown dependency and other offshore

jurisdictions, our operations may be subject to economic substance requirements.

The Economic Substance Act 2018 and the Economic Substance Regulations 2018 of Bermuda (the "Economic

Substance Act" and the "Economic Substance Regulations", respectively) became operative on December 31, 2018. The

Economic Substance Act applies to every registered entity in Bermuda that engages in a relevant activity and requires that every

such entity shall maintain a substantial economic presence in Bermuda. A relevant activity for the purposes of the Economic

Substance Act is banking business, insurance business, fund management business, financing and leasing business,

headquarters business, shipping business, distribution and service center business, intellectual property holding business and

conducting business as a holding entity.

The Economic Substance Act provides that a registered entity that carries on a relevant activity complies with

economic substance requirements if (a) it is directed and managed in Bermuda, (b) its core income-generating activities (as may

be prescribed) are undertaken in Bermuda with respect to the relevant activity, (c) it maintains adequate physical presence in

Bermuda, (d) it has adequate full time employees in Bermuda with suitable qualifications and (e) it incurs adequate operating

expenditure in Bermuda in relation to the relevant activity.

A registered entity that carries on a relevant activity is obliged under the Economic Substance Act to file a declaration

in the prescribed form (the "Declaration") with the Registrar of Companies (the "Registrar") on an annual basis.

Certain of our subsidiaries may be organized in other jurisdictions identified by the Code of Conduct Group for

Business Taxation of the European Union based on global standards set by the Organization for Economic Co-operation and

Development with the objective of preventing low-tax jurisdictions from attracting profits from certain activities. These

jurisdictions may have also enacted economic substance laws and regulations which we may be obligated to comply with. If we

fail to comply with our obligations under the Economic Substance Act or any similar law applicable to us in any other

jurisdictions, we could be subject to financial penalties and spontaneous disclosure of information to foreign tax officials in

related jurisdictions and may be struck from the register of companies in Bermuda or such other jurisdiction. Any of these

actions could have a material adverse effect on our business, financial condition and results of operations.

Tax Risks

We may have to pay tax on United States source income, which would reduce our earnings.

Under the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as ourselves and

our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United

States, may be subject to a 4% United States federal income tax without allowance for deduction, unless that corporation

qualifies for exemption from tax under Section 883 of the Code and the applicable Treasury Regulations promulgated

thereunder.

We believe that we and each of our subsidiaries qualified for this statutory tax exemption for our taxable year ending

on December 31, 2022 and we will take this position for U.S. federal income tax return reporting purposes. However, there are

factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption for future taxable years

and thereby become subject to United States federal income tax on our United States source shipping income. For example, we

would no longer qualify for exemption under Section 883 of the Code for a particular taxable year if certain non-qualified

shareholders with a 5% or greater interest in our ordinary shares owned, in the aggregate, 50% or more of our outstanding

ordinary shares for more than half the days during the taxable year. It is possible that we could be subject to this rule for our

taxable year ending on or after December 31, 2023. Due to the factual nature of the issues involved, there can be no assurances

on our tax-exempt status or that of any of our subsidiaries.

If we or our subsidiaries are not entitled to exemption under Section 883 of the Code for any taxable year, we, or our

subsidiaries, could be subject during those years to an effective 2% U.S. federal income tax on the gross shipping income

derived during such a year that is attributable to the transport of cargoes to or from the United States. The imposition of this tax

would have a negative effect on our business. However, the amount of our shipping income that would be subject to this tax has

historically not been material.

United States tax authorities could treat us as a "passive foreign investment company", which could have adverse United

States federal income tax consequences to United States shareholders.

A foreign corporation will be treated as a "passive foreign investment company" ("PFIC"), for U.S. federal income tax

purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of "passive income" or (2) at

least 50% of the average value of the corporation's assets produce or are held for the production of those types of "passive

income". For purposes of these tests, "passive income" includes cash distributions, interest, and gains from the sale or exchange

of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in

connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of

services does not constitute "passive income." U.S. shareholders of a PFIC are subject to a disadvantageous United States

federal income tax regime with respect to the distributions they receive from the PFIC and the gain, if any, they derive from the

sale or other disposition of their shares in the PFIC.

Based on our current and proposed method of operation, we do not believe that we are or that we have been since our

incorporation, or that we will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we

derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly,

we believe that our income from these activities does not constitute "passive income", and the assets that we own and operate in

connection with the production of that income do not constitute assets that produce, or are held for the production of, "passive

income".

Although these is no direct legal authority under the PFIC rules addressing our method of operation, there is

substantial legal authority supporting our position consisting of case law and United States Internal Revenue Service (the

"IRS"), pronouncements concerning the characterization of income derived from time charters and voyage charters as services

income for other tax purposes. However, it should be noted that there is also authority that characterizes time charter income as

rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court

of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover,

no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the

nature and extent of our operations.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders will face

adverse United States federal income tax consequences. Under the PFIC rules, unless those shareholders make an election

available under United States Internal Revenue Code of 1986, as amended (the "Code") (which election could itself have

adverse consequences for such shareholders, as discussed below under "Taxation - U.S. Federal Income Tax Considerations"),

such shareholders would be liable to pay United States federal income tax at the then prevailing income tax rates on ordinary

income plus interest upon excess distributions and upon any gain from the disposition of our ordinary shares, as if the excess

distribution or gain had been recognized ratably over the shareholder's holding period of our ordinary shares.

ITEM 4.INFORMATION ON THE COMPANY

A.History and Development of the Company

FLEX LNG Ltd. is an exempted company incorporated under the laws of Bermuda. We are a growth-oriented owner

and commercial operator of fuel efficient, fifth generation LNG carriers. As of March 10, 2023, we own and operate i) nine M-

type, Electronically Controlled, Gas Injection ("MEGI") LNG carriers, of which four have partial re-liquefaction systems

installed and three have full re-liquefaction systems installed, and, ii) four Generation X Dual Fuel ("X-DF") LNG carriers,

which we collectively refer to as our "Operating Vessels" or our "Fleet". Our business is currently focused on the operation of

our long-term charters for our fleet, which is described in the table below, or exploring accretive opportunities to further grow

the Company.

Our registered office is at Par-La-Ville Place, 14 Par-La-Ville Road, Hamilton, Bermuda. Our telephone number at

that address is +1 441 295 69 35. Our website is www.flexlng.com. The SEC maintains an Internet site that contains reports,

proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of

the SEC’s internet site is www.sec.gov. None of the information contained on these websites is incorporated into or forms a

part of this Annual Report.

Company Background

FLEX LNG Ltd. was initially incorporated under the laws of the British Virgin Islands in September 2006 and re-

domiciled, by way of continuation, into Bermuda in 2017. In July 2017, as part of our strategy to position ourselves for growth,

we transferred the listing of our ordinary shares from Oslo Axess to the Oslo Stock Exchange in order to increase our visibility

to investors and to facilitate trading liquidity. We conducted no material operations until 2013, at which time we entered into

contracts for the construction of two newbuilding LNG carriers, which were delivered to us in 2018. We have since increased

our Fleet, which now consists of thirteen LNG carriers in operation, as described above.

In June 2019, we effected a cross listing of our ordinary shares on the NYSE. No new shares were offered and sold in

connection with the NYSE listing. Our ordinary shares commenced trading on the NYSE under the symbol “FLNG” on June

17, 2019. As a result of our listing on the NYSE, our ordinary shares may be traded on both the OSE and the NYSE. All of our

issued and outstanding ordinary shares are identified by CUSIP G35947 202 and ISIN BMG 359472021.

In connection with our fleet expansion, we conducted a series of vessel acquisitions, share issuances and financing

transactions, which are further discussed below under "Share Issuances, Share Repurchases and Financing Transactions" and

"— B. Business Overview — Our Fleet."

Share Issuances, Share Repurchases and Financing Transactions

In 2014, Geveran increased its ownership in our ordinary shares to 43.3% and became obliged to conduct a mandatory

offer for our ordinary shares, which resulted in Geveran owning 82% of our issued and outstanding ordinary shares at that time.

As of March 10, 2023, Geveran owns 44.8% of our issued and outstanding ordinary shares.

In February 2020, we entered into an agreement with a syndicate of banks and the Export-Import Bank of Korea, or

KEXIM, for the part financing of the vessels Flex Aurora, Flex Artemis, Flex Resolute, Flex Freedom and Flex Vigilant in an

amount up to $629 million (the "$629 Million Facility"). The facility is divided into a commercial bank loan of $250 million, or

the Commercial Loan, a KEXIM guaranteed loan of $189.1 million funded by commercial banks, or the KEXIM Guaranteed

Loan, and a KEXIM direct loan of $189.9 million, or the KEXIM Direct Loan. The facility includes an accordion option of up

to $10 million per vessel subject to acceptable long-term employment and credit approval by the lenders. The Commercial Loan

bears interest at LIBOR plus a margin of 2.35% per annum and has a final maturity date being the earlier of (i) 5 years from

delivery of the final vessel or (ii) November 30, 2025. The KEXIM Guaranteed Loan and the KEXIM Direct Loan bear interest

at LIBOR plus a margin of 1.20% per annum and 2.25% per annum, respectively. The KEXIM Guaranteed Loan has a term of

six years from the delivery of each vessel and the KEXIM Direct Loan has a term of 12 years from the delivery of each vessel,

provided that these loans will mature at the same time as the Commercial Loan if the Commercial Loan has not been refinanced

at terms acceptable to the lenders. In July 2020, we utilized the accordion option to increase the Commercial Loan relating to

the vessel Flex Artemis by $10 million. Between July 2020 and May 2021, we made drawdowns for the full amount under the

facility upon delivery of each vessels from the shipyards. Upon closing of the Flex Resolute $150 Million Facility in December

2022, further described and defined below, the full amount outstanding under the Flex Resolute tranche of the $629 Million

Facility was prepaid. As of December 31, 2022, the net outstanding balance under the facility was $460.5 million. Upon closing

of the $330 Million Sale and Leaseback in January 2023, further described and defined below, the full amount outstanding

under the Flex Artemis tranche of the $629 Million Facility was prepaid. In February 2023, we prepaid the full amount

outstanding under the Flex Aurora tranche of the $629 Million Facility.

In June 2020, we entered into a sale and leaseback transaction with an Asian-based leasing house for the vessel Flex

Amber (the "Flex Amber Sale and Leaseback"). Under the terms of the transaction, the vessel was sold for a gross consideration

of $206.5 million, with a net consideration to the Company of $156.4 million adjusted for an advance hire of $50.1 million. The

vessel has been chartered back on a bareboat basis for a period of ten years. The agreement includes fixed price purchase

options, whereby we have options to re-purchase the vessel at or after the first anniversary of the agreement, and on each

anniversary thereafter. At the end of the ten-year lease period, we have an obligation to purchase the vessel for a net purchase

price of $69.5 million. The bareboat rate payable under the lease has a fixed element, treated as principal repayment, and a

variable element based on LIBOR plus a margin of 3.20% per annum calculated on the principal outstanding under the lease.

The transaction was executed upon delivery of the vessel from the shipyard in October 2020. As of December 31, 2022, the net

outstanding balance was $137.6 million. Upon closing of the $330 Million Sale and Leaseback in January 2023, further

described and defined below, the full amount outstanding under the Flex Amber Sale and Leaseback was prepaid.

In November 2021, we signed a sale and leaseback agreement with an Asian-based lease provider for the vessel, Flex

Volunteer, for a period of ten years (the "Flex Volunteer Sale and Leaseback"). Under the terms of the memorandum of

agreement and bareboat charter, we sold the vessel for a gross consideration of $215 million, with a net consideration to us of

$160 million, adjusted the down payment of $55 million for the ten-year charter period. At the end of the ten-years, we have the

right to buy and the lessor has the right to sell the vessel for a consideration of $80 million. The vessel was chartered back to us

on a bareboat basis for a period of ten years with a fixed daily charter rate. The transaction completed in November 2021. As of

December 31, 2022, the net outstanding balance was $151.1 million.

In March 2022, we, through our vessel owning subsidiaries, signed a $375 million term and revolving loan facility (the

"$375 Million Facility") from a syndicate of banks to refinance existing facilities secured by Flex Endeavour, Flex Ranger and

Flex Rainbow. The facility is comprised of a $125 million term loan facility with a six-year repayment profile and a non-

amortizing $250 million revolving credit facility, resulting in an average age-adjusted repayment profile of 22 years. The

facility has an interest rate of SOFR plus 210 basis points. The facility was drawn between April and September 2022, upon re-

financing of the vessels' existing facilities. As of December 31, 2022, the net outstanding balance was $368.1 million. In

February 2023, we completed an asset swap under the facility, which replaced Flex Rainbow with Flex Aurora.

In April 2022, we, through our vessel owning subsidiaries, signed sale and leaseback agreements with an Asian based

lease provider for an aggregate of $320 million (the "$320 Million Sale and Leaseback") to refinance the existing facility

secured by Flex Constellation and Flex Courageous. Under the terms of the sale and leaseback agreements, the vessels will be

sold for gross consideration equivalent to the market value of each vessel and net consideration to us of $160 million per vessel,

adjusted for an advance hire per vessel. The term of each lease is ten years and we have options to repurchase the vessels after

three years. At the expiry of the ten-year charter period we have the option to repurchase the vessels for $66.5 million per vessel

reflecting an age adjusted repayment profile of 20 years. The agreement has an interest rate of Term SOFR plus 250 basis

points. The agreement was drawn in April 2022 and full amount under their existing facility was prepaid in full. As of

December 31, 2022, the net outstanding balance was $303.2 million.

In September 2022, we signed a $150 million term loan facility (the "Flex Enterprise $150 Million Facility") with a

syndicate of banks as part of the financing of the vessel Flex Enterprise. The amount under the facility is split into an

amortizing tranche of $66.3 million ("Tranche A") and a non-amortizing tranche of $83.7 million ("Tranche B") and has an

interest rate of SOFR plus a weighted average margin of approximately 171 basis points per annum. Tranche A will amortize in

full over a 6.75 year tenor of the facility. Tranche B will be repaid on the final maturity date, hence the average age adjusted

repayment profile is 20 years for the facility. As of December 31, 2022, the net outstanding balance was $145.8 million.

In December 2022, we signed a $150 million term loan facility (the "Flex Resolute $150 Million Facility") for the re-

financing of Flex Resolute. The facility has an interest of SOFR plus a margin of 175 basis points per annum and has a tenor of

six years, which will amortize reflecting an age adjusted repayment profile of 21 years. The facility was drawn in December

2022 and the full amount under the Flex Resolute tranche of the $629 Million Facility was prepaid in full. As of December 31,

2022, the net outstanding balance was $148.5 million.

In December 2022, we and an Asian-based lease provider signed term sheets for a sale and leaseback agreement for

the vessel, Flex Rainbow. Under the terms of the agreement, the vessel will be sold for a consideration of $180 million, with a

bareboat charter of approximately 9.9 years back-to-back with the time charter for Flex Rainbow with an international trading

house. The bareboat rate payable under the lease has a fixed element based on a fixed rate of interest and a variable element

based on SOFR plus a margin. We have the options to terminate the lease and repurchase the vessel at fixed price in the first

quarter of 2028, in the first quarter of 2030 and at the end of the charter in the first quarter of 2033. The re-financing is expected

to be completed in March 2023, subject to final documentation and customary closing conditions.

In January 2023, we signed sale and leaseback agreements with an Asian-based lease provider for the vessels, Flex

Amber and Flex Artemis (the "$330 Million Sale and Leaseback"), to re-finance their existing facilities; the Flex Amber Sale

and Leaseback and the Flex Artemis tranche of the $629 Million Facility, respectively. Under the terms of the agreements, the

vessels were sold for a gross consideration, equivalent to the market value of each vessel, and net consideration of $170 million

for Flex Amber and $160 million for Flex Artemis, adjusted for an advance hire per vessel. The agreements have a lease period

of ten years and we have the option to extend for an additional two years. The bareboat rate payable under the leases have a

fixed element, treated as principal repayment, and a variable element based on Term SOFR plus a margin of 215 basis points

per annum calculated on the outstanding under the lease. The agreements include fixed price purchase options, whereby we

have options to re-purchase the vessels at or after the third anniversary of the agreement, and on each anniversary thereafter,

until the end of the lease period. The transactions were completed in February 2023.

In February 2023, we received credit approved term sheets for a $290 million term and revolving credit facility (the

"$290 Million Facility"), for the vessels, Flex Freedom and Flex Vigilant, to re-finance their remaining tranches of the $629

Million Facility. The facility has an interest rate of SOFR plus a margin of 185 basis points per annum. The facility is split as a

term tranche of $140 million and a revolving tranche of $150 million. The facility has a duration of 6 years, with the revolving

tranche being non-amortizing and the term tranche amortizing reflecting an overall age adjusted profile of 22 years. The

agreement is expected to be signed in the March 2023 and is subject to final documentation and customary closing conditions.

As of December 31, 2022, we had 13 interest rate swap transactions to reduce the risks associated with fluctuations in

interest rates, whereby the floating rate has been swapped to a fixed rate. We had five swaps, where the benchmark for the

floating rate is SOFR, which have a total notional principal of $431.0 million with a weighted average fixed interest rate of

1.54%. We had eight swaps, where the benchmark for the floating rate is LIBOR, which have a total notional principal of

$260.0 million with a weighted average fixed interest rate of 1.11%.

For further information about our financing agreements, see "Item 5. Operating and Financial Review and Prospects -

B. Liquidity and Capital Resources - Our Borrowing Activities."

On November 19, 2020, our Board of Directors authorized a share buy-back program (our “buy-back program”) to

purchase up to an aggregate of 4,110,584 of our ordinary shares for the purpose of increasing shareholder value with a

maximum amount to be paid per share under our buy-back program (a “maximum price”) of $10.00 or the equivalent in NOK if

purchased on the OSE. Between February and August 2021, in a series of actions, our Board of Directors authorized the

increase in the maximum price that may be paid per ordinary share in our buy-back program from $10.00 to $15.00. Our buy-

back program commenced on November 19, 2020 and ended on November 19, 2021. Under the buy-back program, we had

repurchased an aggregate of 980,000 ordinary shares for an aggregate purchase price of NOK 81.5 million, or $9.4 million, at

an average purchase price of NOK 83.13, or $9.64, per share.

On August 16, 2021, we issued 585,000 share options to members of executive management. The share options have a

five-year term as from September 7, 2021, and a three-year vesting schedule, whereby: 25% will vest after one year; 35% will

vest after two years; and 40% will vest after three years. The options have an exercise price of: $14.00 for those vesting after

one year; $15.60 for those vesting after two years; and $17.20 for those vesting after three years. The weighted average strike

price of the options is $15.84 per share. The exercise price will be adjusted for any distribution of dividends made before the

relevant options expire. As part of the issuance, Øystein Kalleklev, CEO of Flex LNG Management AS and our principal

executive officer, and Knut Traaholt, CFO of Flex LNG Management AS and our principal financial officer, were allocated

250,000 and 120,000 stock options respectively.

On November 17, 2021, Mr. Kalleklev exercised 60,000 stock options vested in the period from September 7, 2018 to

September 7, 2021. The original strike price was $14.30 per share but were adjusted to $12.90 (the "Adjusted Exercise Price")

pursuant to the terms of the options due to the dividend payments of an aggregate of $1.40 dividend paid per share since the

options were granted. The stock options have been settled in cash based on the difference of the Adjusted Exercise Price and the

closing price at NYSE on November 17, 2021 which was $22.78.

On May 10, 2022, we issued 50,000 share options to members of management. The share options have a five-year

term and a three-year vesting schedule, whereby: 25% will vest after one year; 35% will vest after two years; and 40% will vest

after three years. The options have an exercise price of $25.00. The exercise price will be adjusted for any distribution of

dividends before the relevant options expire.

In September 2022, 146,250 share options, under the September 2021 Tranche, were exercised by holders and settled

by the Company through the distribution of 129,324 treasury shares. The number of shares transferred was calculated as the

difference between the Adjusted Exercise Price converted to NOK on the exercise date and the closing share price on OSE

multiplied by the number of shares exercised. Mr. Kalleklev exercised 62,500 share options and subsequently sold 62,500

ordinary shares. Following this exercise, Mr. Kalleklev holds 187,500 share options in the Company as well as 50,000 common

shares. Mr. Traaholt exercised 30,000 share options and subsequently sold 30,000 ordinary shares. Following the exercise, Mr.

Traaholt holds 90,000 share options in the Company.

On November 15, 2022, we filed a registration statement to register the sale of up to $100 million ordinary shares

pursuant to a dividend reinvestment plan ("DRIP"), which registration statement was declared effective on December 7, 2022,

to facilitate investments by individual and institutional shareholders who wish to invest dividend payments received on shares

owned or other cash amounts, in our ordinary shares on a regular basis, one time basis or otherwise. If certain waiver provisions

in the DRIP are requested and granted pursuant to the terms of the plan, we may grant additional share sales to investors from

time to time up to the amount registered under the plan.

On November 15, 2022, we entered into an Equity Distribution Agreement with Citigroup Global Markets Inc. and

Barclays Capital Inc. for the offer and sale of up to $100.0 million of our ordinary shares, through an at-the-market offering

("ATM"). Between commencement of the ATM program and December 31, 2022, 409,741 ordinary shares were issued

pursuant to the Equity Distribution Agreement, for aggregate gross proceeds of $14.8 million, with an average gross sales price

of $36.09 per share. Aggregate net proceeds, after commission, were $14.5 million, with an average net sales price of $35.36.

For further information about our financing agreements, see "Item 5. Operating and Financial Review and Prospects—

B. Liquidity and Capital Resources—Our Borrowing Activities."

B.Business Overview

Our Fleet

The following table sets forth additional information about our Fleet as of March 10, 2023:

Vessel Name

Cargo

Capacity

(cbm)

Propulsion

Year Built

Shipyard(1)

Charter

Expiration(2)

Charter expiration

if Option(s)

Declared

Flex Endeavour

173,400

MEGI

2018

DSME

Q3 2030

Q1 2033

Flex Enterprise

173,400

MEGI

2018

DSME

Q3 2029

Flex Ranger

174,000

MEGI

2018

SHI

Q1 2027

Flex Rainbow

174,000

MEGI

2018

SHI

Q1 2033

Flex Constellation

173,400

MEGI

2019

DSME

Q2 2024

Q2 2027

Flex Courageous

173,400

MEGI

2019

DSME

Q1 2025

Q1 2029

Flex Aurora

174,000

X-DF

2020

HSHI

Q2 2026

Q2 2028

Flex Amber

174,000

X-DF

2020

HSHI

Q3 2029

Flex Artemis

173,400

MEGI

2020

DSME

Q3 2025

Q3 2030

Flex Resolute

173,400

MEGI

2020

DSME

Q1 2025

Q1 2029

Flex Freedom

173,400

MEGI

2021

DSME

Q1 2027

Q1 2029

Flex Volunteer

174,000

X-DF

2021

HSHI

Q1 2026

Q1 2028

Flex Vigilant

174,000

X-DF

2021

HSHI

Q4 2030

Q2 2033

(1)As used in this Annual Report, "DSME" means Daewoo Ship building and Marine Engineering Co. Ltd., "SHI" means

Samsung Heavy Industries, and "HSHI" means Hyundai Samho Heavy Industries Co. Ltd.

(2)The expiration of our charters is considered the firm period known to the Company as of March 10, 2023, however

these are generally subject to re-delivery windows ranging from 15 to 45 days before or after the expiration date.

Fleet Development

In January 2021, we successfully took delivery of our eleventh newbuilding LNG carrier, Flex Freedom, which was

constructed at DSME. In connection with the delivery of the vessel, we made a final payment of $130.5 million to an entity

related to Geveran, our largest shareholder. The final payment was part financed with a drawdown of $125.8 million under the

$629 Million Facility, the remaining balance was paid with cash on hand.

In January 2021, we successfully took delivery of our twelfth newbuilding LNG carrier, Flex Volunteer, which was

constructed at HSHI. In connection with the delivery of the vessel, we made a final payment of $127.5 million to an entity

related to Geveran. The final payment was part financed with a drawdown of $100 million term tranche under the $125 Million

Facility the remaining balance was paid with cash on hand.

In May 2021, we successfully took delivery of our thirteenth newbuilding LNG carrier, Flex Vigilant, which was

constructed at HSHI. In connection with the delivery of the vessel, we made a final payment of $127.5 million to an entity

related to Geveran. The final payment was part financed with a drawdown of $123.3 million term tranche under the $629

Million Facility the remaining balance was paid with cash on hand.

For information about our financing agreements which we have entered into in connection with the expansion of our Fleet, see

"Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources— Our Borrowing Activities."

Employment of Our Fleet and Our Customers

We manage the employment of our fleet. We deploy our LNG carriers on period time charters which can last up to

several years, of which we have a twelve of our vessels on fixed rate time charters and one vessel on a variable rate contract

indexed to the spot market. Time and bareboat charters are for a fixed period of time. Whereas, a voyage charter is generally a

contract to carry a specific cargo from a loading port to a discharging port for an agreed-upon total charge. Under voyage

charters we pay for voyage expenses such as port, canal and fuel costs. Under a time charter the charterer pays for voyage

expenses while under a bareboat charter the charterer pays for voyage expenses and operating expenses such as crewing,

supplies, maintenance and repairs including special survey and dry-docking costs.

Vessels operating in the spot market generate revenues that are less predictable but may enable us to capture increased

profit margins during periods of improvements in LNG charter rates, although we are then exposed to the risk of declining LNG

carrier charter rates. Typically, spot market charters can last from a few days up to two months. If we commit vessels to period

charters, future spot market rates may be higher or lower than those rates at which we have period chartered out our vessels.

In formulating our chartering strategy, we evaluate past, present and future performance of the freight markets and

balance the mix of our chartering arrangements in order to achieve optimal results for the fleet. As of March 10, 2023, we have

eight vessels on time charters expiring from two to five years and five vessels on time charters expiring after 5 years. In terms

of charter coverage as of March 10, 2023, we had 100% of the available calendar days fixed under period charters for 2023, and

approximately 95% for 2024.

According to industry reports, the United States is currently expected to continue to increase its exports of LNG

products. In the event this creates more demand for vessels like ours, we would expect to deploy more vessels in the United

States and the Caribbean. As freight rates usually vary between these areas as well as voyage and operating expenses, we

evaluate such parameters when positioning our vessels for new employment.

Customers

Our assessment of a charterer’s financial condition and reliability is an important factor in negotiating employment for

our vessels. Principal charterers include producers of LNG products, such as national, major and other independent energy

companies and energy traders, and industrial users of those products. For the year ended December 31, 2022, we had four

customers accountable for more than 87.9% of our total revenues.

In March 2019, we entered into a time charter agreement with an supermajor for the employment of the vessel Flex

Enterprise. The time charter had an initial firm period of 12 months, commencing at the end of the first quarter of 2019. The

charterer has options to extend the charter period up to an additional four years, in 12-month periods. The first 12-month

extension option was declared by the charterer in January 2020, extending the firm period under the time charter to the end of

the first quarter of 2021. The second 12-month extension option was declared by the charterer in December 2020, extending the

firm period under the time charter to end of the first quarter of 2022. The time charter had elements of a variable rate of hire. In

June 2022, the Company signed a charter party with the supermajor which replaced this existing charter, as further described

below.

In November 2019, we entered into a long-term time charter with a subsidiary of Gunvor Group Ltd for the

employment of the Flex Artemis. The time charter has a firm period of five years, and the charterer has options to extend the

charter period for an additional five years, in 12-month periods. The vessel immediately commenced its long-term time charter

with Clearlake upon its delivery in August 2020 . The time charter has elements of a variable rate of hire.

In October 2020, the Flex Amber commenced a time charter with a supermajor. The charter has a firm period of 12

months. In August 2021, an option was declared extending the variable rate time charter by one additional year. The time

charter had elements of a variable rate of hire. In June 2022, the Company signed a charter party with the supermajor which

replaced this existing charter, as further described below.

In January 2020, the Flex Rainbow commenced a fixed rate time charter with an international trading house. The

charter had a firm period of 12 months and the charterer extended the period by an additional 12 months by declaring their

option. In February 2023, the charter, including the optional period, ended and the vessel commenced a new charter in direct

continuance with the same charterer.

In April 2021, and through a series of actions since, the Company has entered into fixed rate time charter agreements

with Cheniere Marketing International LLP ("Cheniere") for five LNG carriers. Under the agreements and subsequent actions:

•Flex Endeavour was delivered to Cheniere in April 2021 with a firm period ending in the third quarter of

2030 with an option to extend to the first quarter 2033;

•Flex Vigilant was delivered to Cheniere in May 2021 with a firm period ending in the fourth quarter of 2030

with an option to extend to the second quarter 2033;

•Flex Ranger was delivered to Cheniere in August 2021 with a firm period ending in the first quarter of 2027;

•Flex Volunteer was delivered to Cheniere in April 2022 with a firm period ending in the first quarter of 2026

with an option to extend to the first quarter 2028; and

•Flex Aurora was delivered to Cheniere in September 2022 with a firm period ending in the second quarter of

2026 with an option to extend to the second quarter 2028.

In May 2021, we entered into a fixed rate time charter agreement with an international trading house for the vessel,

Flex Constellation. The time charter commenced in May 2021 and has a firm period ending in the second quarter of 2024 with

options to extend the term of the charter by up to three years.

In May 2021, we entered into a fixed rate time charter agreement with an LNG portfolio player, for a firm period of a

minimum of five years for Flex Freedom. The charter commenced in the first quarter of 2022 immediately following the

expiration of her existing time charter. The charterer has the option to extend the period by an additional two years.

In November 2021, we entered into fixed rate time charter agreements with minimum firm periods of three years with

an international energy major for two LNG carriers, Flex Resolute and Flex Courageous. Under the agreements, the two vessels

were delivered during the first quarter of 2022 in direct continuation of their existing time charters. The agreements include the

options to extend each vessel by up to four additional years in two-year periods.

In June 2022, the Company announced fixed rate time charters for Flex Amber and Flex Enterprise with a supermajor,

to replace the existing variable rate time charters in respect of these vessels. The duration of both the time charters, referenced

in this paragraph, is seven years and commenced in the third quarter 2022, with an expiry in the third quarter of 2029.

In June 2022, the Company signed a ten-year fixed rate time charter for Flex Rainbow with a large global trading

company. This new time charter will commence in direct continuation of the existing charter that is expected to expire in the

first quarter of 2023.

Management Structure

General Management Agreements

In October 2021, we entered into a service level agreement with a Front Ocean Management AS and Front Ocean

Management Ltd (together referred to as "Front Ocean") where they provide us certain advisory and support services including

human resources, shared office costs, administrative support, IT systems and services, compliance, insurance and legal

assistance. In the year ended, December 31, 2022, we recorded an expense, within administrative expenses, of $0.5 million for

these services (2021: $0.1 million).

We have a general management agreement with Flex LNG Bermuda Management Limited, our wholly owned

subsidiary, for the provision of management services, which primarily include, among others, general administration, contract

management, corporate governance assistance, accounting service and operational support. Flex LNG Bermuda Management

Limited has, in turn, subcontracted these services from certain of our other wholly owned subsidiaries, including Flex LNG

Management AS and Flex LNG Management Limited. We reimburse Flex LNG Bermuda Management Limited for expenses

incurred in connection with providing these services to us, plus a mark-up, which fee is subject to annual review and

adjustment. Each of the Company and Flex LNG Bermuda Management Limited may terminate the general management

agreement upon twelve months’ prior written notice to the other party. In addition, we may terminate the general management

agreement with immediate effect upon a breach of the agreement by Flex LNG Bermuda Management Limited that continues

for a period of 14 days after the date on which we deliver written notice to Flex LNG Bermuda Management Limited of the

breach. The total compensation to Flex LNG Management AS for the year ended December 31, 2022 was $3.6 million (2021:

$4.6 million). The total compensation to Flex LNG Management Limited for the year end December 31, 2022 was $0.9 million

(2021: $1.3 million).

We have an administrative services agreement with Frontline Management AS ("Frontline Management"), a related

party, under which they provide us with certain administrative support, technical supervision, purchase of goods and services

within the ordinary course of business and other support services, for which we pay our allocation of the actual costs they incur

on our behalf, plus a mark-up. Frontline Management may subcontract these services to other associated companies, including

Frontline Management (Bermuda) Limited. In the year ended December 31, 2022, we recorded an expense, within

administrative expenses, of $0.3 million from Frontline Management and associated companies for these services (2021:

$0.5 million (2020: $0.3 million)).

We also have a services agreement with Seatankers Management Co. Ltd., or Seatankers, a related party, under which

they provide us with certain advisory and support services, for which we pay our allocation of the actual costs they incur on our

behalf, plus a mark-up. We may terminate the services agreement upon not less than 20 business days’ written notice. In the

year ended December 31, 2022, we recorded an expense, within administrative expenses, of $0.2 million from Seatankers for

these services (2021: $0.1 million (2020: $0.3 million)).

Technical Management and Support Services

The Company has a ship management agreements with Flex LNG Fleet Management AS, a related party owned by

Frontline plc, for which they are responsible for the technical ship management for all of our entire fleet. Under the agreements,

Flex LNG Fleet Management AS is paid a fixed fee per vessel per annum, which is subject to an annual review. In the year

ended December 31, 2022, we recorded an expense, within vessel operating expenses, of $3.5 million for these services (2021:

$3.2 million (2020: $1.8 million)). For a description of our technical management and support services, please see “Item 7.

Major Shareholders and Related Party Transactions-B. Related Party Transactions-Technical Management and Support

Services.”

The Liquefied Natural Gas Industry

This section discusses the industry and markets in which we operate. Certain of the information in this section relating

to market environment, market developments, growth rates, market trends, industry trends, competition and similar information

are estimates based on data compiled by professional organizations, consultants and analysts; in addition to market data from

other external and publicly available sources, and our knowledge of the markets. Any forecast information and other forward-

looking statements in this market summary are not guarantees of future outcomes and these future outcomes could differ

materially from current expectations. Numerous factors could cause or contribute to such differences, including those risks

described in "Item 3. Key Information—D. Risk Factors."

Introduction

The Company's business is marine transportation of LNG, referred to as LNG shipping. The marine transportation is

done by means of specialized ships, referred to as LNG carriers, which are vessels built to meet the specialized requirement of

the LNG products.

LNG is used as a term to describe the super cool liquid form of natural gases, being a mix of hydrocarbon gasses

(mainly methane, but also commonly including varying amounts of other higher alkanes and various other gases). The natural

gas can primarily be extracted from oil fields or natural gas fields, but in recent years an increasing amount of gas is being

extracted from more challenging and untraditional resource types such as sour gas, tight gas, shale gas and coal-bed methane.

An important source of energy, natural gas is non-toxic, clean-burning and relatively inexpensive. Although

predominantly used for electricity generation, heating and cooking, natural gas is also utilized as a chemical feedstock in the

industrial sector and, to a lesser extent, as fuel for vehicles. In producing regions with a high natural gas demand, pipelines are

constructed when it is economically feasible to transport natural gas in from a wellsite to an end consumer. In end-user regions

without access to pipelines, natural gas may be transported on tanker trucks or railway tankers (if by land) or by LNG carriers

(if by sea).

LNG is a product that requires processing both at the supplying and at the receiving end of the transportation chain.

This is because transportation is only economically feasible when the gas is in a liquid state. Liquefaction of natural gas reduces

the volume to 1/600 of the gaseous state and therefore makes it economical for transportation by sea.

At the supply source of the transportation chain, liquefaction is done at specialized liquefaction plants, referred to as

"liquefaction trains", where undesired heavy hydrocarbons and non-hydrocarbons are removed from the natural gas before

cooling the natural gas to approximately -163 °C (-260 °F) to become liquid at close to atmospheric pressure. Similarly, at the

receiving end of the transportation chain, the LNG is regasified to its gaseous state before being distributed to the end-user

through pipelines.

LNG shipping is closely related to the liquefaction and regasification processes that take place at either end of the

transportation chain. Liquefaction can be done onboard specialized ships (floating liquefaction plants), being a relatively new

trend in the LNG business. Regasification onboard Floating Storage Regasification Units ("FSRUs") have also become an

important part of the LNG business.

LNG supply and demand

The volume of LNG shipping amounted to approximately 403 million tonnes in 2022 in terms of export volumes. This

volume has been subject to large changes, having increased from approximately 103 million tonnes in 2000. Among the factors

that have contributed to this growth, are relatively low gas prices, a focus on reduction of air pollution and greenhouse gas

emissions, large new discoveries and developments of natural gas resources, large developments of liquefaction plants to

monetize these resources, as well as factors contributing to reducing the cost of importing LNG, such as FSRUs. During this

period, there have been large changes both in the supplying (exporting) and consuming (importing) regions for LNG, giving

rise to a more complex pattern of seaborne transportation.

Demand for natural gas and LNG is closely correlated with general energy demand, which in turn is closely related to

economic growth and development. Factors impacting the demand for natural gas also include environmental awareness

(particularly in comparison with coal) and relative price to other energy sources (particularly crude oil). The main rationale for

securing access to natural gas has been economics – as natural gas is more cost effective than running power plants on fuel oil.

In addition to the economic rationales for substituting other sources of energy with natural gas, the list of operational projects

reveal other reasons for wanting access to LNG, including lack of sufficient electricity generation from hydro power plants (e.g.

Brazil), large seasonal differences in demand (e.g. Dubai/Kuwait), security of supply and geopolitical considerations (e.g.

Lithuania), falling domestic natural gas production (e.g. Egypt), and increased demand for energy, or LNG volumes already

contracted on long-term deals (e.g. Indonesia). Also, factors such as the temporary shutdown of nuclear power plants in Japan

following the Fukushima disaster in 2011 have impacted LNG demand.

The LNG carrier Fleet

LNG carriers have been built since 1964. As at the end of 2022, the fleet was made up of approximately 658 LNG

carriers, which all vary in terms of cargo sizes and propulsion systems. The orderbook for LNG carriers as at the end of 2022

stands at approximately 285 vessels. Up to 2010, LNG carriers were generally constructed with steam turbines for propulsion.

While these vessels still make up a large part of the fleet, they have a cost disadvantage to modern vessels due to higher fuel

consumption. Starting around 2006, the first four stroke medium speed diesel electric LNG carriers were delivered. Starting

around 2016, the first LNG carriers with slow speed two stroke engines referred to as MEGI (high pressure) or X-DF (low

pressure) were delivered, which were specifically made for ships propelled by gas.

Rate developments

The majority of the LNG carrier fleet is contracted on long term contracts that link specific exporters to specific

importers. This contract structure means that a large part of the LNG shipping business is of a more industrial nature than many

other shipping businesses. However, there is also a part of the LNG carrier fleet that is constructed without contract coverage at

the time of ordering. These LNG carriers will typically either serve short-term spot trading or fixed on long term contracts.

The spot and short-term contract market is influenced by supply and demand imbalances, and may be volatile. The

market spiked in 2011/2012 following the Fukushima disaster in Japan, as all Japanese nuclear power plants were temporarily

shut down. This caused the demand for natural gas to increase significantly in Asia and LNG prices increased as well. As a

result there was a large price differential for LNG between Europe and Asia and the demand for LNG carriers increased with

the flow of LNG from Atlantic to the Pacific. In late 2014 and 2015 the price for crude oil dropped significantly along with a

slowdown in the global economy, resulting in the drop in LNG prices in Asia and the closing of the arbitrage between Atlantic

and Pacific basin prices. In the period that followed, the market was characterized by an oversupply of LNG tonnage, mainly

caused by delays in new LNG capacity coming on stream, particularly in Australia, and the reduced inter-basin trading. This

overhang of tonnage caused freight rates to be depressed. In the years from 2017 to 2019, the market witnessed strong growth

in LNG production and export capacity, particularly in the US. Global exports were approximately one-third higher in 2019

compared to 2016, which contributed to a more balanced market.

Although 20 million tonnes of liquefaction capacity came on stream in 2020, COVID-19 put pressure on energy

demand, as lockdown pushed gas prices to historical low levels. This diminished the spread between the major importing and

exporting regions, leading to approximately 189 cargo cancellations from the US, which lowered vessel utilization and

ultimately freight rates. As Asian gas prices recovered towards the end of 2020 and into 2021 on the back of record cold

weather and supply disruptions in the Asian region, freight rates started improving, eventually channeling through to higher

time charter rates as well. 2022 started with a significant drop in spot rates, as European buyers sought to refill inventories.

Cargoes that would otherwise have sailed the longer route to Asia instead utilized routes to Europe. The seasonal low-point in

LNG carrier spot rates coincided approximately with the Russian invasion of Ukraine February 24, 2022, but as rates started to

improve in the summer season. However, the Freeport outage in June 2022 led to a setback for LNG carrier freight rates. LNG

carrier freight rates started recovering from early July, to reach new all-time highs at around half a million per day in spot rates

during the fourth quarter. Long-term charter rates were significantly higher at the end of 2022 than at the end of 2021.

Additionally, high natural gas prices in Europe particularly, but also Asia have resulted in a substantial increase in the

alternative cost of not having shipping capacity available.

Environmental and Other Regulations in the Shipping Industry

Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to

international conventions and treaties, national, state and local laws and regulations in force in the countries in which our

vessels may operate or are registered relating to safety and health and environmental protection including the storage, handling,

emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and

liability for damage to natural resources. Compliance with such laws, regulations and other requirements entails significant

expense, including vessel modifications and implementation of certain operating procedures.

A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These

entities include the local port authorities (applicable national authorities such as the USCG, harbor master or equivalent),

classification societies, flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain

of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels.

Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in the temporary

suspension of the operation of one or more of our vessels.

Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards.

We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance,

continuous training of our officers and crews and compliance with United States and international regulations. We believe that

the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels

have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations. However,

because such laws and regulations frequently change and may impose increasingly stricter requirements, we cannot predict the

ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of

our vessels. In addition, a future serious marine incident that causes significant adverse environmental impact could result in

additional legislation or regulation that could negatively affect our profitability.

International Maritime Organisation

The IMO, has adopted the International Convention for the Prevention of Pollution from Ships, 1973, as modified by

the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as "MARPOL," the SOLAS

Convention, and the International Convention on Load Lines of 1966 (the "LL Convention"). MARPOL establishes

environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal

of noxious liquids and the handling of harmful substances in packaged forms. MARPOL is applicable to drybulk, tanker and

LNG carriers, among other vessels, and is broken into six Annexes, each of which regulates a different source of pollution.

Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged

form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, lastly, relates to

air emissions. Annex VI was separately adopted by the IMO in September of 1997; new emissions standards, titled IMO-2020,

took effect on January 1, 2020.

Vessels that transport gas, including LNG carriers and FSRUs, are also subject to regulation under the International

Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk, or the IGC Code, published by the IMO.

The IGC Code provides a standard for the safe carriage of LNG and certain other liquid gases by prescribing the design and

construction standards of vessels involved in such carriage. The completely revised and updated IGC Code entered into force in

2016, and the amendments were developed following a comprehensive five-year review and are intended to take into account

the latest advances in science and technology. Compliance with the IGC Code must be evidenced by a Certificate of Fitness for

the Carriage of Liquefied Gases in Bulk. Non-compliance with the IGC Code or other applicable IMO regulations may subject

a shipowner or a bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected

vessels and may result in the denial of access to, or detention in, some ports. We believe that each of our vessels is in

compliance with the IGC Code.

In June 2015 the IMO formally adopted the International Code of Safety for Ships using Gases or Low flashpoint

Fuels, or the IGF Code, which is designed to minimize the risks involved with ships using low flashpoint fuels- including LNG.

The IGF Code will be mandatory under SOLAS through the adopted amendments. The IGF Code and the amendments to

SOLAS became effective January 1, 2017. In June 2022, the IGF Code was amended to address cofferdams for fire protection,

safe fuel distribution outside machinery spaces, fire protection between spaces with fuel with fuel containment systems, and

fixed fire-extinguishing systems in LNG fuel preparation spaces. These amendments will enter into force on January 1, 2024.

Our LNG vessels may also become subject to the 2010 HNS Convention, if it is entered into force. The 2010 HNS

Convention creates a regime of liability and compensation for damage from hazardous and noxious substances, HNS, including

liquefied gases. The 2010 HNS Convention sets up a two-tier system of compensation composed of compulsory insurance taken

out by shipowners and an HNS Fund which comes into play when the insurance is insufficient to satisfy a claim or does not

cover the incident. Under the 2010 HNS Convention, if damage is caused by bulk HNS, claims for compensation will first be

sought from the shipowner up to a maximum of 100 million Special Drawing Rights, or SDR. If the damage is caused by

packaged HNS or by both bulk and packaged HNS, the maximum liability is 115 million SDR. Once the limit is reached,

compensation will be paid from the HNS Fund up to a maximum of 250 million SDR. The 2010 HNS Convention has not been

ratified by a sufficient number of countries to enter into force, and we cannot estimate the costs that may be needed to comply

with any such requirements that may be adopted with any certainty at this time.

The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if

any, may be passed by the IMO and what effect, if any, such regulation may have on our operations.

Air Emissions

In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May

2005, Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits

"deliberate emissions" of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile

compounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on the

sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions, as

explained below. Emissions of "volatile organic compounds" from certain vessels, and the shipboard incineration (from

incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or PCBs) are also

prohibited. We believe that all our vessels are currently compliant in all material respects with these regulations.

The MEPC adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate matter

and ozone depleting substances, which entered into force on July 1, 2010. The amended Annex VI seeks to further reduce air

pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any fuel oil used

on board ships. On October 27, 2016, at its 70th session, the MEPC agreed to implement a global 0.5% m/m sulfur oxide

emissions limit (reduced from 3.50%) starting from January 1, 2020. This limitation can be met by using low-sulfur compliant

fuel oil, alternative fuels, or certain exhaust gas cleaning systems. Ships are now required to obtain bunker delivery notes and

International Air Pollution Prevention, ("IAPP") Certificates from their flag states that specify sulfur content. Additionally, at

MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur on ships, with the exception of

vessels fitted with exhaust gas cleaning equipment (“scrubbers”) which can carry fuel of higher sulfur content, were adopted

and took effect from March 1, 2020. These regulations subject ocean-going vessels to stringent emissions controls, and may

cause us to incur substantial costs.

Sulfur content standards are even stricter within certain Emission Control Areas, or ECAs. As of January 1, 2015,

ships operating within an ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m. Amended Annex VI

establishes procedures for designating new ECAs. Currently, the IMO has designated four ECAs, including specified portions

of the Baltic Sea area, North Sea area, North American area and United States Caribbean area. Ocean-going vessels in these

areas will be subject to stringent emission controls and may cause us to incur additional costs. Other areas in China are subject

to local regulations that impose stricter emission controls. In December 2021, the member states of the Convention for the

Protection of the Mediterranean Sea Against Pollution (“Barcelona Convention”) agreed to support the designation of a new

ECA in the Mediterranean. On December 15, 2022, MEPC 79 adopted the designation of the new ECA in the Mediterranean,

with an effective date of May 1, 2025. If other ECAs are approved by the IMO, or other new or more stringent requirements

relating to emissions from marine diesel engines or port operations by vessels are adopted by the Environmental Protection

Agency ("EPA") or the states where we operate, compliance with these regulations could entail significant capital expenditures

or otherwise increase the costs of our operations.

Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel

engines, depending on their date of installation. At the MEPC meeting held from March to April 2014, amendments to Annex

VI were adopted which address the date on which Tier III Nitrogen Oxide (NOx) standards in ECAs will go into effect. Under

the amendments, Tier III NOx standards apply to ships that operate in the North American and U.S. Caribbean Sea ECAs

designed for the control of NOx produced by vessels with a marine diesel engine installed and constructed on or after January 1,

2016. Tier III requirements could apply to areas that will be designated for Tier III NOx in the future. At MEPC 70 and MEPC

71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021.

The EPA promulgated equivalent (and in some senses stricter) emissions standards in late 2010. As a result of these

designations or similar future designations, we may be required to incur additional operating or other costs.

As determined at the MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective as of March 1,

2018 and requires ships above 5,000 gross tonnage to collect and report annual data on fuel oil consumption to an IMO

database, with the first year of data collection having commenced on January 1, 2019. The IMO intends to use such data as the

first step in its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed

further below.

As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships

are now required to develop and implement SEEMPS, and new ships must be designed in compliance with minimum energy

efficiency levels per capacity mile as defined by the Energy Efficiency Design Index, or EEDI. Under these measures, by 2025,

all new ships built will be 30% more energy efficient than those built in 2014. MEPC 75 adopted amendments to MARPOL

Annex VI which brings forward the effective date of the EEDI’s “phase 3” requirements from January 1, 2025 to April 1, 2022

for several ship types, including gas carriers, general cargo ships, and LNG carriers.

Additionally, MEPC 75 introduced amendments to Annex VI which impose new regulations to reduce greenhouse gas

emissions from ships. These amendments introduce requirements to assess and measure the energy efficiency of all ships and

set the required attainment values, with the goal of reducing the carbon intensity of international shipping. The requirements

include (1) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index (“EEXI”),

and (2) operational carbon intensity reduction requirements, based on a new operational carbon intensity indicator (“CII”). The

attained EEXI is required to be calculated for ships of 400 gross tonnage and above, in accordance with different values set for

ship types and categories. With respect to the CII, the amendments require ships of 5,000 gross tonnage to document and verify

their actual annual operational CII achieved against a determined required annual operational CII. Additionally, MEPC 75

proposed amendments requiring that, on or before January 1, 2023, all ships above 400 gross tonnage must have an approved

SEEMP on board. For ships above 5,000 gross tonnage, the SEEMP would need to include certain mandatory content. MEPC

75 also approved draft amendments to MARPOL Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil

(“HFO”) by ships in Arctic waters on and after July 1, 2024.

The draft amendments introduced at MEPC 75 were adopted at the MEPC 76 session and entered into force on

November 1, 2022, with the requirements for EEXI and CII certification having come into effect on January 1, 2023. MEPC 77

adopted a non-binding resolution which urges Member States and ship operators to voluntarily use distillate or other cleaner

alternative fuels or methods of propulsion that are safe for ships and could contribute to the reduction of Black Carbon

emissions from ships when operating in or near the Arctic. MEPC 79 adopted amendments to MARPOL Annex VI, Appendix

IX to include the attained and required CII values, the CII rating and attained EEXI for existing ships in the required

information to be submitted to the IMO Ship Fuel Oil Consumption Database. These amendments will enter into force on May

1, 2024

We may incur costs to comply with these revised standards. Additional or new conventions, laws and regulations may

be adopted that could require the installation of expensive emission control systems and could adversely affect our business,

results of operations, cash flows and financial condition.

Safety Management System Requirements

The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills. The

Convention of Limitation of Liability for Maritime Claims, or LLMC, sets limitations of liability for a loss of life or personal

injury claim or a property claim against ship owners. We believe that our vessels are in substantial compliance with SOLAS

and LLMC standards.

Under Chapter IX of the SOLAS Convention, or the ISM Code, our operations are also subject to environmental

standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive safety

management system that includes, among other things, the adoption of a safety and environmental protection policy setting

forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We

rely upon the safety management system that our manager has developed for compliance with the ISM Code. The failure of a

vessel owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease

available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.

The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This

certificate evidences compliance by a vessel's management with the ISM Code requirements for a safety management system.

No vessel can obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by

each flag state, under the ISM Code. We have obtained applicable documents of compliance for our offices and safety

management certificates for all of our vessels for which the certificates are required by the IMO. The document of compliance

and safety management certificate are renewed as required.

Regulation II-1/3-10 of the SOLAS Convention governs ship construction and stipulates that ships over 150 meters in

length must have adequate strength, integrity and stability to minimize risk of loss or pollution. Goal-based standards

amendments in SOLAS regulation II-1/3-10 entered into force in 2012, with July 1, 2016 set for application to new oil tankers

and bulk carriers. The SOLAS Convention regulation II-1/3-10 on goal-based ship construction standards for bulk carriers and

oil tankers, which entered into force on January 1, 2012, requires that all oil tankers and bulk carriers of 150 meters in length

and above, for which the building contract is placed on or after July 1, 2016, satisfy applicable structural requirements

conforming to the functional requirements of the International Goal-based Ship Construction Standards for Bulk Carriers and

Oil Tankers (GBS Standards).

Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those

vessels be in compliance with the International Maritime Dangerous Goods Code, or IMDG Code. Effective January 1, 2018,

the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from the

International Atomic Energy Agency, (2) new marking, packing and classification requirements for dangerous goods, and (3)

new mandatory training requirements. Amendments which took effect on January 1, 2020 also reflect the latest material from

the UN Recommendations on the Transport of Dangerous Goods, including (1) new provisions regarding IMO type 9 tank, (2)

new abbreviations for segregation groups, and (3) special provisions for carriage of lithium batteries and of vehicles powered

by flammable liquid or gas. Additional amendments came into force on June 1, 2022, including (1) addition of a definition of

dosage rate, (2) additions to the list of high consequence dangerous goods, (3) new provisions for medical/clinical waste, (4)

addition of various ISO standards for gas cylinders, (5) a new handling code, and (6) changes to stowage and segregation

provisions.

The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for

Seafarers, or STCW. As of February 2017, all seafarers are required to meet the STCW standards and be in possession of a

valid STCW certificate. Flag states that have ratified SOLAS and STCW generally employ the classification societies, which

have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance.

The IMO's Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International Code

for Ships Operating in Polar Water (the “Polar Code”). The Polar Code, which entered into force on January 1, 2017, covers

design, construction, equipment, operational, training, search and rescue as well as environmental protection matters relevant to

ships operating in the waters surrounding the two poles. It also includes mandatory measures regarding safety and pollution

prevention as well as recommendatory provisions. The Polar Code applies to new ships constructed after January 1, 2017, and

after January 1, 2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of

their first intermediate or renewal survey.

Furthermore, recent action by the IMO's Maritime Safety Committee and United States agencies indicates that

cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat

cybersecurity threats. By IMO resolution, administrations are encouraged to ensure that cyber-risk management systems are

incorporated by ship-owners and managers by their first annual Document of Compliance audit after January 1, 2021. In

February 2021, the U.S. Coast Guard published guidance on addressing cyber risks in a vessel's safety management system.

This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional

expenses and/or capital expenditures. The impact of future regulations is hard to predict at this time.

In June 2022, SOLAS also set out new amendments that will take effect January 1, 2024, which include new

requirements for: (1) the design for safe mooring operations, (2) the Global Maritime Distress and Safety System (“GMDSS”),

(3) watertight integrity, (4) watertight doors on cargo ships, (5) fault-isolation of fire detection systems, (6) life-saving

appliances, and (7) safety of ships using LNG as fuel. These new requirements may impact the cost of our operations.

Pollution Control and Liability Requirements

The IMO has negotiated international conventions that impose liability for pollution in international waters and the

territorial waters of the signatories to such conventions. For example, the IMO adopted an International Convention for the

Control and Management of Ships' Ballast Water and Sediments, or BWM Convention, in 2004. The BWM Convention entered

into force on September 8, 2017. The BWM Convention requires ships to manage their ballast water to remove, render

harmless, or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and

sediments. The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water

exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water

record book and an international ballast water management certificate.

On December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention

so that the dates are triggered by the entry into force date and not the dates originally in the BWM Convention. This, in effect,

makes all vessels delivered before the entry into force date "existing vessels" and allows for the installation of ballast water

management systems on such vessels at the first IOPP renewal survey following entry into force of the convention. The MEPC

adopted updated guidelines for approval of ballast water management systems (G8) at MEPC 70. At MEPC 71, the schedule

regarding the BWM Convention's implementation dates was also discussed and amendments were introduced to extend the date

existing vessels are subject to certain ballast water standards. Those changes were adopted at MEPC 72. Ships over 400 gross

tons generally must comply with a "D-1 standard," requiring the exchange of ballast water only in open seas and away from

coastal waters. The "D-2 standard" specifies the maximum amount of viable organisms allowed to be discharged, and

compliance dates vary depending on the IOPP renewal dates. Depending on the date of the IOPP renewal survey, existing

vessels must comply with the D-2 standard on or after September 8, 2019. For most ships, compliance with the D-2 standard

will involve installing on-board systems to treat ballast water and eliminate unwanted organisms. Ballast water management

systems, which include systems that make use of chemical, biocides, organisms or biological mechanisms, or which alter the

chemical or physical characteristics of the ballast water, must be approved in accordance with IMO Guidelines (Regulation

D-3). As of October 13, 2019, MEPC 72’s amendments to the BWM Convention took effect, making the Code for Approval of

Ballast Water Management Systems, which governs assessment of ballast water management systems, mandatory rather than

permissive, and formalized an implementation schedule for the D-2 standard. Under these amendments, all ships must meet the

D-2 standard by September 8, 2024. Costs of compliance with these regulations may be substantial. Additionally, in November

2020, MEPC 75 adopted amendments to the BWM Convention which would require a commissioning test of the ballast water

management system for the initial survey or when performing an additional survey for retrofits. This analysis will not apply to

ships that already have an installed BWM system certified under the BWM Convention. These amendments were entered into

force on June 1, 2022. In December 2022, MEPC 79 agreed that it should be permitted to use ballast tanks for temporary

storage of treated sewage and grey water. MEPC 79 also established that ships are expected to return to D-2 compliance after

experiencing challenging uptake water and bypassing a BWM system should only be used as a last resort. Guidance will be

developed at MEPC 80 (in July 2023) to set out appropriate actions and uniform procedures to ensure compliance with the

BWM Convention.

Once mid-ocean ballast exchange or ballast water treatment requirements become mandatory under the BWM

Convention, the cost of compliance could increase for ocean carriers and may have a material effect on our operations.

However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent

the introduction of invasive and harmful species via such discharges. The U.S., for example, requires vessels entering its waters

from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain

reporting requirements.

The IMO adopted the CLC. Under the CLC and depending on whether the country in which the damage results is a

party to the 1992 Protocol to the CLC, a vessel's registered owner may be strictly liable for pollution damage caused in the

territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions. The 1992 Protocol changed

certain limits on liability expressed using the International Monetary Fund currency unit, the Special Drawing Rights. The

limits on liability have since been amended so that the compensation limits on liability were raised. The right to limit liability is

forfeited under the CLC where the spill is caused by the shipowner's actual fault and under the 1992 Protocol where the spill is

caused by the shipowner's intentional or reckless act or omission where the shipowner knew pollution damage would probably

result. The CLC requires ships over 2,000 tons covered by it to maintain insurance covering the liability of the owner in a sum

equivalent to an owner's liability for a single incident. We have protection and indemnity insurance for environmental incidents.

P&I Clubs in the International Group issue the required "Blue Cards" to enable signatory states to issue certificates. All of our

vessels are in possession of a CLC State issued certificate attesting that the required insurance coverage is in force.

The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the "Bunker

Convention") to impose strict liability on ship owners (including the registered owner, bareboat charterer, manager or operator)

for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention

requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the

limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in

accordance with the LLMC). With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship's

bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In

jurisdictions, such as the United States where the CLC or the Bunker Convention has not been adopted, various legislative

schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.

Anti‑Fouling Requirements

In 2001, the IMO adopted the International Convention on the Control of Harmful Anti‑fouling Systems on Ships, or

the "Anti‑fouling Convention." The Anti‑fouling Convention, which entered into force on September 17, 2008, prohibits the use

of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels. Vessels of over

400 gross tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into

service or before an International Anti‑fouling System Certificate is issued for the first time; and subsequent surveys when the

anti‑fouling systems are altered or replaced. Vessels of 24 meters in length or more but less than 400 gross tonnage engaged in

international voyages will have to carry a Declaration of Anti-fouling Systems signed by the owner or authorized agent. We

have obtained Anti‑fouling System Certificates for all of our vessels that are subject to the Anti‑fouling Convention.

In November 2020, MEPC 75 approved draft amendments to the Anti-fouling Convention to prohibit anti-fouling

systems containing cybutryne, which would apply to ships from January 1, 2023, or, for ships already bearing such an

antifouling system, at the next scheduled renewal of the system after that date, but no later than 60 months following the last

application to the ship of such a system. In addition, the IAFS Certificate has been updated to address compliance options for

anti-fouling systems to address cybutryne. Ships which are affected by this ban on cybutryne must receive an updated IAFS

Certificate no later than two years after the entry into force of these amendments. Ships which are not affected (i.e. with

antifouling systems which do not contain cybutryne) must receive an updated IAFS Certificate at the next Anti-fouling

application to the vessel.These amendments were formally adopted at MEPC 76 in June 2021.

Compliance Enforcement

Noncompliance with the ISM Code or other IMO regulations may subject the ship owner or bareboat charterer to

increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of

access to, or detention in, some ports. The USCG and European Union authorities have indicated that vessels not in compliance

with the ISM Code by applicable deadlines will be prohibited from trading in U.S. and European Union ports, respectively. As

of the date of this report, each of our vessels is ISM Code certified. However, there can be no assurance that such certificates

will be maintained in the future. The IMO continues to review and introduce new regulations. It is impossible to predict what

additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.

United States Regulations

The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act

The U.S. Oil Pollution Act of 1990 (the "OPA") established an extensive regulatory and liability regime for the

protection and cleanup of the environment from oil spills. OPA affects all "owners and operators" whose vessels trade or

operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.'s

territorial sea and its 200 nautical mile exclusive economic zone around the U.S. The U.S. has also enacted the Comprehensive

Environmental Response, Compensation and Liability Act, or CERCLA, which applies to the discharge of hazardous

substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both define "owner

and operator" in the case of a vessel as any person owning, operating or chartering by demise, the vessel. Both OPA and

CERCLA impact our operations.

Under OPA, vessel owners and operators are "responsible parties" and are jointly, severally and strictly liable (unless

the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up

costs and other damages arising from discharges or threatened discharges of oil from their vessels, including bunkers

(fuel). OPA defines these other damages broadly to include:

•injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;

•injury to, or economic losses resulting from, the destruction of real and personal property;

•loss of subsistence use of natural resources that are injured, destroyed or lost;

•net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or

personal property, or natural resources;

•lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural

resources; and

•net cost of increased or additional public services necessitated by removal activities following a discharge of oil,

such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. Effective

November 12, 2019, the USCG adjusted the limits of OPA liability for a tank vessel, other than a single-hull tank vessel, over

3,000 gross tons liability to the greater of $2,300 per gross ton or $19,943,400 (subject to periodic adjustment for inflation). On

December 23, 2022, the USCG issued a final rule to adjust the limitation of liability under the OPA. Effective March 23, 2022,

the new adjusted limits of OPA liability for a tank vessel, other than a single-hull tank vessel, over 3,000 gross tons liability to

the greater of $2,500 per gross ton or $21,521,300 (subject to periodic adjustment for inflation). Effective March 23, 2022, the

new adjusted limits of OPA liability for non-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the

greater of $1,300 per gross ton or $1,076,000 (subject to periodic adjustment for inflation). These limits of liability do not apply

if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation

by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship), or a responsible party's

gross negligence or willful misconduct. The limitation on liability similarly does not apply if the responsible party fails or

refuses to (i) report the incident as required by law where the responsible party knows or has reason to know of the incident; (ii)

reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply

with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.

CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal

and remedial costs, as well as damages for injury to, or destruction or loss of, natural resources, including the reasonable costs

associated with assessing the same, and health assessments or health effects studies. There is no liability if the discharge of a

hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under

CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and

the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person

liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from

willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or

operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refused to

provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject

to OPA.

OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. OPA

and CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of financial

responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject.

Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety

bond, qualification as a self-insurer or a guarantee. We comply and plan to comply going forward with the USCG's financial

responsibility regulations by providing applicable certificates of financial responsibility.

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or statutes,

including higher liability caps under OPA, new regulations regarding offshore oil and gas drilling and a pilot inspection

program for offshore facilities. However, several of these initiatives and regulations have been or may be revised. For example,

the U.S. Bureau of Safety and Environmental Enforcement’s (the "BSEE") revised Production Safety Systems Rule (the

"PSSR"), effective December 27, 2018, modified and relaxed certain environmental and safety protections under the 2016

PSSR. Additionally, the BSEE amended the Well Control Rule, effective July 15, 2019, which rolled back certain reforms

regarding the safety of drilling operations, and the former U.S. President Trump had proposed leasing new sections of U.S.

waters to oil and gas companies for offshore drilling. In January 2021, current U.S. President Biden signed an executive order

temporarily blocking new leases for oil and gas drilling in federal waters. However attorney generals from 13 states filed suit in

March 2021 to lift the executive order, and in June 2021, a federal judge in Louisiana granted a preliminary injunction against

the Biden administration, stating that the power to pause offshore oil and gas leases “lies solely with Congress.” In August

2022, a federal judge in Louisiana sided with Texas Attorney General Ken Paxton, along with the other 12 plaintiff states, by

issuing a permanent injunction against the Biden Administration’s moratorium on oil and gas leasing on federal public lands

and offshore waters. With these rapid changes, compliance with any new requirements of OPA and future legislation or

regulations applicable to the operation of our vessels could impact the cost of our operations and adversely affect our business.

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents

occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some

states have enacted legislation providing for unlimited liability for oil spills. Many U.S. states that border a navigable waterway

have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from

a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law. Moreover,

some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, although in

some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel

owners' responsibilities under these laws. The Company intends to comply with all applicable state regulations in the ports

where the Company's vessels call.

We currently maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of our

vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, it could have an adverse effect on our

business and results of operation.

Other United States Environmental Initiatives

The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) (the "CAA") requires the EPA to

promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject

to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning and conducting

other operations in regulated port areas. The CAA also requires states to draft State Implementation Plans, or SIPs, designed to

attain national health-based air quality standards in each state. Although state-specific, SIPs may include regulations concerning

emissions resulting from vessel loading and unloading operations by requiring the installation of vapor control equipment. Our

vessels operating in such regulated port areas with restricted cargoes are equipped with vapor recovery systems that satisfy

these existing requirements.

The U.S. Clean Water Act (the "CWA") prohibits the discharge of oil, hazardous substances and ballast water in U.S.

navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for

any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages

and complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of "waters of the

United States" (the "WOTUS"), thereby expanding federal authority under the CWA. Following litigation on the revised

WOTUS rule, in December 2018, the EPA and Department of the Army proposed a revised, limited definition of WOTUS. In

2019 and 2020, the agencies repealed the prior WOTUS Rule and promulgated the Navigable Waters Protection Rule

(“NWPR”) which significantly reduced the scope and oversight of EPA and the Department of the Army in traditionally non-

navigable waterways. On August 30, 2021, a federal district court in Arizona vacated the NWPR and directed the agencies to

replace the rule. On December 30, 2022, the EPA and the Department of Army announced the final WOTUS rule that largely

reinstated the pre-2015 definition.

The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires

the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port

facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels from entering

U.S. Waters. The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of

certain vessels within United States waters pursuant to VIDA, which was signed into law on December 4, 2018 and replaces the

2013 VGP program (which authorizes discharges incidental to operations of commercial vessels and contains numeric ballast

water discharge limits for most vessels to reduce the risk of invasive species in U.S. waters, stringent requirements for exhaust

gas scrubbers, and requirements for the use of environmentally acceptable lubricants) and current Coast Guard ballast water

management regulations adopted under NISA, such as mid-ocean ballast exchange programs and installation of approved

USCG technology for all vessels equipped with ballast water tanks bound for U.S. ports or entering U.S. waters. VIDA

establishes a new framework for the regulation of vessel incidental discharges under the CWA, requires the EPA to develop

performance standards for those discharges within two years of enactment, and requires the U.S. Coast Guard to develop

implementation, compliance, and enforcement regulations within two years of EPA's promulgation of standards. Under VIDA,

all provisions of the 2013 VGP and USCG regulations regarding ballast water treatment remain in force and effect until the

EPA and U.S. Coast Guard regulations are finalized. Non-military, non-recreational vessels greater than 79 feet in length must

continue to comply with the requirements of the VGP, including submission of a Notice of Intent (the "NOI") or retention of a

PARI form and submission of annual reports. We have submitted NOIs for our vessels where required. Compliance with the

EPA, U.S. Coast Guard and state regulations could require the installation of ballast water treatment equipment on our vessels

or the implementation of other port facility disposal procedures at potentially substantial cost, or may otherwise restrict our

vessels from entering U.S. waters.

European Union Regulations

In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source

discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence

and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the

discharge of a polluting substance may also lead to criminal penalties. The directive applies to all types of vessels, irrespective

of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in danger. Criminal liability

for pollution may result in substantial penalties or fines and increased civil liability claims. Regulation (EU) 2015/757 of the

European Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) governs the monitoring,

reporting and verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires

companies with ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may cause us

to incur additional expenses.

The European Union has adopted several regulations and directives requiring, among other things, more frequent

inspections of high-risk ships, as determined by type, age, and flag as well as the number of times the ship has been detained.

The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive

ban for repeated offenses. The regulation also provided the European Union with greater authority and control over

classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments

for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced

sulfur content fuel for their main and auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC)

introduced requirements parallel to those in Annex VI relating to the sulfur content of marine fuels. In addition, the EU imposed

a 0.1% maximum sulfur requirement for fuel used by ships at berth in the Baltic, the North Sea and the English Channel (the so

called “SOx-Emission Control Area”). As of January 2020, EU member states must also ensure that ships in all EU waters,

except the SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.

On September 15, 2020, the European Parliament voted to include greenhouse gas emissions from the maritime sector

in the European Union’s carbon market, the EU Emissions Trading System ("EU ETS"). On July 14, 2021, the European

Parliament formally proposed its plan, which would involve gradually including the maritime sector from 2023 and phasing the

sector in over a three-year period. This will require shipowners to buy permits to cover these emissions. Contingent on

negotiations and a formal approval vote, these proposed regulations may not enter into force for another year or two. The

Environment Council adopted a general approach on the proposal in June 2022. On December 18, 2022, the Environmental

Council and European Parliament agreed to include maritime shipping emissions within the scope of the EU ETS on a gradual

introduction of obligations for shipping companies to surrender allowances: 40% for verified emissions from 2024, 70% for

2025 and 100% for 2026.

International Labour Organization

The International Labour Organization (the "ILO"), is a specialized agency of the UN that has adopted the Maritime

Labor Convention 2006 ("MLC 2006"). A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance is

required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage or over and are either engaged in

international voyages or flying the flag of a Member and operating from a port, or between ports, in another country. We

believe that all our vessels are in substantial compliance with and are certified to meet MLC 2006.

Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the

United Nations Framework Convention on Climate Change, or the Kyoto Protocol, which entered into force in 2005 and

pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions

with targets extended through 2020. International negotiations are continuing with respect to a successor to the Kyoto Protocol,

and restrictions on shipping emissions may be included in any new treaty. In December 2009, more than 27 nations, including

the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas

emissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into

force on November 4, 2016 and does not directly limit greenhouse gas emissions from ships. The U.S. initially entered into the

agreement but on June 1, 2017, former U.S. President Trump announced that the United States intends to withdraw from the

Paris Agreement, and the withdrawal became effective on November 4, 2020. On January 20, 2021 U.S. President Biden signed

an executive order to rejoin the Paris Agreement, which the U.S. officially rejoined on February 19, 2021.

At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO

strategy on reduction of greenhouse gas emissions from ships was approved. In accordance with this roadmap, in April 2018,

nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships. The initial strategy identifies

"levels of ambition" to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships through

implementation of further phases of the EEDI for new ships; (2) reducing carbon dioxide emissions per transport work, as an

average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008

emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while

pursuing efforts towards phasing them out entirely. The initial strategy notes that technological innovation, alternative fuels

and/or energy sources for international shipping will be integral to achieve the overall ambition. These regulations could cause

us to incur additional substantial expenses. At MEPC 77, the Member States agreed to initiate the revision of the Initial IMO

Strategy on Reduction of GHG emissions from ships, recognizing the need to strengthen the ambition during the revision

process. MEPC 79 revised the EEDI calculation guidelines to include a CO2 conversion factor for ethane, a reference to the

updated ITCC guidelines, and a clarification that in case of a ship with multiple load line certificates, the maximum certified

summer draft should be used when determining the deadweight. A final draft Revised IMO GHG Strategy would be considered

by MEPC 80 (scheduled to meet in July 2023), with a view to adoption.

The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20%

of 1990 levels by 2020. The EU also committed to reduce its emissions by 20% under the Kyoto Protocol's second period from

2013 to 2020. Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports are required to collect and

publish data on carbon dioxide emissions and other information. As previously discussed, regulations relating to the inclusion

of greenhouse gas emissions from the maritime sector in the European Union’s carbon market, or EU ETS, are also

forthcoming.

In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety, adopted

regulations to limit greenhouse gas emissions from certain mobile sources, and proposed regulations to limit greenhouse gas

emissions from large stationary sources. However, in March 2017, former U.S. President Trump signed an executive order to

review and possibly eliminate the EPA's plan to cut greenhouse gas emissions, and in August 2019, the Administration

announced plans to weaken regulations for methane emissions. On August 13, 2020, the EPA released rules rolling back

standards to control methane and volatile organic compound emissions from new oil and gas facilities. However, U.S. President

Biden recently directed the EPA to publish a proposed rule suspending, revising, or rescinding certain of these rules. On

November 2, 2021, the EPA issued a proposed rule under the CAA designed to reduce methane emissions from oil and gas

sources. The proposed rule would reduce 41 million tons of methane emissions between 2023 and 2035 and cut methane

emissions in the oil and gas sector by approximately 74 percent compared to emissions from this sector in 2005. EPA also

issued a supplemental proposed rule in November 2022 to include additional methane reduction measures following public

input and anticipates issuing a final rule in 2023. If these new regulations are finalized, they could affect our operations.

Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other

countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement,

that restricts emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict

with certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the

extent that climate change may result in sea level changes or certain weather events.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives intended

to enhance vessel security such as the U.S. Maritime Transportation Security Act of 2002 (the "MTSA"). To implement certain

portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard

vessels operating in waters subject to the jurisdiction of the United States and at certain ports and facilities, some of which are

regulated by the EPA.

Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port

authorities and mandates compliance with the ISPS Code. The ISPS Code is designed to enhance the security of ports and ships

against terrorism. To trade internationally, a vessel must attain an International Ship Security Certificate (the "ISSC") from a

recognized security organization approved by the vessel's flag state. Ships operating without a valid certificate may be detained,

expelled from, or refused entry at port until they obtain an ISSC. The various requirements, some of which are found in the

SOLAS Convention, include, for example, on-board installation of automatic identification systems to provide a means for the

automatic transmission of safety-related information from among similarly equipped ships and shore stations, including

information on a ship's identity, position, course, speed and navigational status; on-board installation of ship security alert

systems, which do not sound on the vessel but only alert the authorities on shore; the development of vessel security plans; ship

identification number to be permanently marked on a vessel's hull; a continuous synopsis record kept onboard showing a

vessel's history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was

registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered

owner(s) and their registered address; and compliance with flag state security certification requirements.

The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from

MTSA vessel security measures, provided such vessels have on board a valid ISSC that attests to the vessel's compliance with

the SOLAS Convention security requirements and the ISPS Code. Future security measures could have a significant financial

impact on us. We intend to comply with the various security measures addressed by MTSA, the SOLAS Convention and the

ISPS Code.

The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against

ships, notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area. Substantial loss of revenue and other

costs may be incurred as a result of detention of a vessel or additional security measures, and the risk of uninsured losses could

significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best Management

Practices to Deter Piracy, notably those contained in the BMP5 industry standard.

Inspection by Classification Societies

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its

country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable

rules and regulations of the country of registry of the vessel and SOLAS.

A vessel must undergo annual surveys, intermediate surveys, dry-dockings and special surveys. In lieu of a special

survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically

over a five-year period. Every vessel also requires an underwater inspection every 30-36 months. If any vessel does not

maintain its class and/or fails any annual survey, intermediate survey, dry-docking or special survey, the vessel will be unable

to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain

covenants in our financing agreements. Any such inability to carry cargo or be employed, or any such violation of covenants,

could have a material adverse impact on our financial condition and results of operations.

Risk of Loss and Liability Insurance

General

The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss,

cargo loss or damage and business interruption due to political circumstances in foreign countries, piracy incidents, hostilities

and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other

environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which

imposes virtually unlimited liability upon shipowners, operators and bareboat charterers of any vessel trading in the exclusive

economic zone of the United States for certain oil pollution accidents in the United States, has made liability insurance more

expensive for shipowners and operators trading in the United States market. We carry insurance coverage as customary in the

shipping industry. However, not all risks can be insured, specific claims may be rejected, and we might not be always able to

obtain adequate insurance coverage at reasonable rates.

Marine and War Risks Insurance

We have in force marine hull and machinery and war risks insurance for all of our vessels. Our marine hull and

machinery insurance covers risks of particular and general average and actual or constructive total loss from collision, fire,

grounding, engine breakdown and other insured marine perils up to an agreed amount per vessel. Our war risks insurance

covers the risks of particular and general average and actual or constructive total loss from acts of war and civil war, terrorism,

piracy, confiscation, seizure, capture, vandalism, sabotage, and other war-related named perils. We have also arranged coverage

for increased value for each vessel. Under this increased value coverage, in the event of total loss of a vessel, we will be able to

recover amounts in excess of those recoverable under the hull and machinery policy in order to compensate for additional costs

associated with replacement of the loss of the vessel. Each vessel is covered up to at least its fair market value at the time of the

insurance attachment and subject to a fixed deductible per each single accident or occurrence.

Protection and Indemnity Insurance

Protection and indemnity insurance is provided by mutual protection and indemnity associations, or P&I Associations,

and covers our third-party liabilities in connection with our shipping activities. This includes third-party liability and other

related expenses of injury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from

collisions with other vessels, damage to third-party property, pollution arising from oil or other substances, salvage, towing and

other related costs, including wreck removal, and other named risks. Protection and indemnity insurance is a form of mutual

indemnity insurance, extended by protection and indemnity mutual associations, or "clubs."

Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. The 12 P&I

Associations that comprise the International Group insure approximately 90% of the world's commercial tonnage and have

entered into a pooling agreement to reinsure each association's liabilities. The International Group's website states that the Pool

provides a mechanism for sharing all claims in excess of US$ 10 million up to, currently, approximately US$ 3.1 billion. As a

member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations

based on our claim records as well as the claim records of all other members of the individual associations and their

participation in the pool of P&I Associations comprising the International Group.

Permits and Authorizations

We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and

certificates with respect to our vessels. The permits, licenses and certificates that are required depend upon several factors,

including the commodity transported, the waters in which the vessel operates, the nationality of the vessel's crew and the age of

the vessel. We have obtained all permits, licenses and certificates currently required to permit our vessels to operate. Additional

laws and regulations, environmental or otherwise, may be adopted which could limit our ability to do business or increase the

cost of us doing business.

LNG Safety

LNG shipping is generally safe relative to other forms of commercial marine transportation. In the past forty years,

there have been no significant accidents or cargo spillages involving an LNG carrier, even though over 40,000 LNG voyages

have been made during that time.

LNG is non-toxic and non-explosive in its liquid state. It only becomes explosive or inflammable when it is heated,

vaporized, and in a confined space within a narrow range of concentrations in the air (5% to 15%). The risks and hazards from

an LNG spillage vary depending on the size of the spillage, the environmental conditions, and the site at which the spillage

occurs.

Competition

We operate in markets that are highly competitive and based primarily on supply and demand. The process of

obtaining new time charters generally involves intensive screening and competitive bidding, and often extends for several

months. LNG carrier time charters are generally awarded based upon a variety of factors relating to the vessel operator,

including but not limited to price, customer relationships, operating expertise, professional reputation and size, age and

condition of the vessel. We believe that the LNG shipping industry is characterized by the significant time required to develop

the operating expertise and professional reputation necessary to obtain and retain charterers.

We expect substantial competition for providing marine transportation services for potential LNG projects from a

number of experienced companies, including state-sponsored entities and major energy companies. Many of these competitors

have significantly greater financial resources and larger and more versatile fleets than we do. We anticipate that an increasing

number of marine transportation companies, including many with strong reputations and extensive resources and experience,

will enter the LNG transportation market. This increased competition may cause greater price competition for time charters.

Seasonality

Historically, LNG trade, and therefore charter rates, increased in the winter months and eased in the summer months as

demand for LNG in the Northern Hemisphere rose in colder weather and fell in warmer weather. The LNG industry in general

has become less dependent on the seasonal transport of LNG than a decade ago as new uses for LNG have developed, spreading

consumption more evenly over the year. There is a higher seasonal demand during the summer months due to energy

requirements for air conditioning in some markets and a pronounced higher seasonal demand during the winter months for

heating in other markets.

C.Organizational Structure

FLEX LNG was initially incorporated under the laws of the British Virgin Islands in 2006 and re-domiciled, by way of

continuation, into Bermuda in 2017. We operate principally through our wholly-owned subsidiaries, which are incorporated in

Bermuda, the United Kingdom, Norway, the Isle of Man and the Marshall Islands. A list of our subsidiaries is filed herewith as

Exhibit 8.1.

D.Property, Plants and Equipment

We own no properties other than our vessels. For a description of our fleet, see "Item 4. Information on the Company

—B. Business Overview—Our Fleet."

We lease office space in Oslo, Norway from Seatankers Management Norway AS, a related party.

ITEM 4A.UNRESOLVED STAFF COMMENTS

None.

ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following presentation of management's discussion and analysis of results of operations and financial condition

should be read in conjunction with our audited consolidated financial statements, and related notes, and other financial

information appearing in "Item 18. Financial Statements." You should also carefully read the following discussion with the

sections of this Annual Report entitled "Item 3. Key Information—D. Risk Factors," "Item 4. Information on the Company—B.

Business Overview," and "Cautionary Statement Regarding Forward-Looking Statements." This discussion contains forward-

looking statements that reflect our current views with respect to future events and financial performance. Our actual results may

differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as those set forth

in "Item 3. Key Information—D. Risk Factors" and elsewhere in this Annual Report.

The audited consolidated financial statements as of and for the years ended December 31, 2022, 2021 and 2020 have

been prepared in accordance with U.S. GAAP. The financial statements are presented in U.S. dollars.

The Company’s business could be materially and adversely affected by the risks, or the public perception of the risks

related to the COVID-19 pandemic. The Company is unable to reasonably predict the estimated length or severity of the

COVID-19 pandemic on future operating results. Please see "Item 3. Key Information—D. Risk Factors—Our financial results

and operations may be adversely affected by the ongoing outbreak of COVID-19, and related governmental responses thereto”

for further information.

A.Operating Results

Important Financial and Operational Terms and Concepts

We use a variety of financial and operational terms and concepts when analyzing our performance. These include the

following:

Voyage Operating Revenues. Our time charter revenues are driven primarily by the number of vessels in our fleet, the

amount of daily charter hire that our LNG carriers earn under time charters and the number of revenue earning days during

which our vessels generate revenues. These factors are, in turn, affected by our decisions relating to vessel acquisitions, the

amount of time that our LNG carriers spend dry-docked undergoing repairs, maintenance and upgrade work, the age, condition

and specifications of our vessels and the levels of supply and demand in the LNG carrier charter market. Our revenues will also

be affected if any of our charterers cancel a time charter or if we agree to renegotiate charter terms during the term of a charter

resulting in aggregate revenue reduction. Our time charter arrangements have been contracted in varying rate environments and

expire at different times. The Company employs all of its vessels on time charter contracts, which the Company has established

to contain a lease since the vessel is a specified asset, the charterer has the right to direct the use of the vessel and there are no

substantive substitution rights. All revenue from time charter contracts are recognized as operating leases under ASC 842

Leases. We recognize revenues from time charters over the term of the charter as the applicable vessel operates under the

charter. Under time charters, revenue is not recognized during days a vessel is off-hire. Revenue is recognized from delivery of

the vessel to the charterer, until the end of the time charter period. Under time charters, we are responsible for providing the

crewing and other services related to the vessel's operations, the cost of which is included in the daily hire rate, except when

off-hire.

Refer to Note 2 in the Financial Statements for additional information related to ASC 842.

Off-hire (Including Commercial Waiting Time). When a vessel is "off-hire"—or not available for service—the

charterer generally is not required to pay the time charter hire rate and we are responsible for all costs. Prolonged off-hire may

lead to vessel substitution or termination of a time charter. Our vessels may be out of service, that is, off-hire, for several

reasons: scheduled dry-docking or special survey, vessel upgrades, maintenance or inspection, which we refer to as scheduled

off-hire; days spent waiting or positioning for a charter, which we refer to as commercial waiting time; and unscheduled repairs,

maintenance, operational efficiencies, equipment breakdown, accidents, crewing strikes, certain vessel detentions or similar

problems, or our failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the

required crew, which we refer to as unscheduled off-hire. We have obtained loss of hire insurance to protect us against loss of

income in the event one of our vessels cannot be employed due to damage caused by perils that are covered under the terms of

our hull and machinery insurance. Under our loss of hire policies, our insurers will generally pay us the hire rate agreed in the

policy in respect of each vessel for each day in excess of 14 days and with a maximum period of 180 days.

Voyage Expenses. Voyage expenses primarily include port and canal charges, bunker (fuel) expenses and broker fees

which are paid for by the charterer under our time charter arrangements or by us during periods of off-hire except for

commissions, which are always paid for by us. 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 a period

of dry-docking. Voyage expenses can be higher when vessels trade on shorter term charters or in the spot market due to fuel

consumption during idling, cool down requirements, commercial waiting time in between charters and positioning and

repositioning costs. From time to time, in accordance with industry practice, we pay commissions ranging up to 1.25% of the

total daily charter rate under the charters to unaffiliated ship brokers, depending on the number of brokers involved with

arranging the charter.

Vessel Operating Expenses. Vessel operating expenses include crew wages and related costs, performance claims, the

cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, lubricant costs, statutory and

classification expenses, forwarding and communications expenses and other miscellaneous expenses. Vessel operating expenses

are paid by the ship-owner under time charters and are recognized as expenses when incurred. We expect that insurance costs,

dry-docking and maintenance costs will increase as our vessels age. Factors beyond our control, some of which may affect the

shipping industry in general, for instance, developments relating to market premiums for insurance, industry and regulatory

requirements and changes in the market price of lubricants due to increases in oil prices, may also cause vessel operating

expenses to increase.

Dry-docking. We must periodically dry-dock each of our vessels for inspection, repairs and maintenance and any

modifications required to comply with industry certification or governmental requirements. In accordance with industry

certification requirements, we have a mandatory obligation to dry-dock our vessels every five years. Special survey and dry-

docking costs (consisting of direct costs, including shipyard costs, paints and class renewal expense, and peripheral costs,

including spare parts, service engineer attendance) are capitalized and depreciated over the period until the next dry-dock. The

number of dry-dockings undertaken in a given period and the nature of the work performed determine the level of dry-docking

expenditures.

Depreciation. We depreciate the cost of our vessels on the basis of two components: a vessel component and a dry-

docking component. We depreciate our LNG carriers on a straight-line basis over their remaining useful economic lives.

Depreciation is based on the cost of the vessel less its estimated salvage value. We estimate the useful life of the LNG carriers

in our Fleet to be 35 years from their initial delivery from the shipyard, consistent with LNG industry practice. The estimated

residual value is based on the steel value of the tonnage for each vessel. The assumptions made reflect our experience, market

conditions and the current practice in the LNG industry; however they required more discretion since there is a lack of historical

references in scrap prices of similar types of vessels. The dry-docking component of the vessel’s cost is depreciated over five

years (the period within which each vessel is required to be dry-docked). We capitalize the costs associated with the dry-

docking and amortize these costs on a straight-line basis over the period to the next expected dry-docking. We have adopted the

"built in overhaul" method for when a vessel is newly acquired, or constructed, whereby a proportion of the cost of the vessel is

allocated to the components expected to be replaced at the next dry-docking based on the expected costs relating to the next

dry-docking.

Interest expense. We incur interest expense on outstanding indebtedness under our existing debt agreements which we

include in interest expense. Interest expense depends on our overall level of borrowings and may significantly increase when

we take delivery of, acquire or refinance ships. Interest expense may also change with prevailing interest rates, although interest

rate swaps or other derivative instruments may reduce the effect of these changes. We also incur financing and legal costs in

connection with establishing debt agreements, which are deferred and amortized to interest and finance costs using the effective

interest method. We may incur additional interest expense in the future on our outstanding borrowings and under future

borrowings. For a description of our existing credit facilities, please see "Item 5. Operating and Financial Review and Prospects

—B. Liquidity and Capital Resources—Our Borrowing Activities."

Vessel Useful Lives and Impairment. Vessels are reviewed for impairment quarterly or whenever events or changes in

circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset

or asset group to be tested for possible impairment, we first compare the undiscounted cash flows expected to be generated by

that asset to its carrying value. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow

basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through

various valuation techniques including discounted cash flow models, quoted market values and third-party independent

appraisals as considered necessary. Since our inception, no impairment loss was recorded in any of our fleet vessels.

Gain/(Loss) on Derivatives. We are exposed to interest rate fluctuations primarily due to our floating rate interest-

bearing long-term debt. Certain of our current bank and lease financing agreements bear floating interest rates, based on LIBOR

and SOFR. Significant adverse fluctuations in floating interest rates could adversely affect our operating and financial

performance and subsequently, our ability to service our debt. As such, the Company has entered into interest rate swap

derivative instruments to reduce the Company's exposure to adverse fluctuations in interest rates. The Company has elected to

not apply hedge accounting for these derivatives. Any positive or negative changes in the fair market value, or mark-to-market

valuation, are recorded as an increase or decrease to the asset or liability position of such swap, with the corresponding entry

recorded as a gain/(loss) on derivatives in the consolidated statement of operations. Interest expense or income on the realized

settlement of interest rate swaps are recorded on an accrual basis, also as gain/(loss) on derivatives in the consolidated statement

of operations.

Results of Operations

Year ended December 31, 2022 compared with the year ended December 31, 2021

Vessel operating revenues


(in thousands of $)	2022	2021	Change
Vessel operating revenues	347,917	343,448	4,469

Vessel operating revenues increased to $347.9 million for the year ended December 31, 2022 compared to

$343.4 million for the year ended December 31, 2021. The increase of $4.5 million is due to Flex Vigilant being delivered in

May 2021, meaning our Fleet had more available days in the year ended December 31, 2022 compared to 2021. Additionally, a

higher proportion of our Fleet was on long-term fixed rate time charters in 2022 at improved rates when compared to 2021.

Furthermore, there was an offsetting effect due to the reduction in vessels exposed to the spot market in 2022 compared to

2021, which can significantly reduce revenue volatility in seasonal quarters.

Voyage expenses


(in thousands of $)	2022	2021	Change
Voyage expenses	(2,517)	(3,334)	817

Voyage expenses, which include voyage specific expenses, broker commissions and bunkers consumption, for the year

ended December 31, 2022 amounted to $2.5 million, compared to $3.3 million for the year ended December 31, 2021.

Vessel operating expenses


(in thousands of $)	2022	2021	Change
Vessel operating expenses	(63,414)	(61,237)	(2,177)

Vessel operating expenses, including claim expense and technical operating expenses, such as crewing, insurance,

lubes and repairs & maintenance, for the year ended December 31, 2022 amounted to $63.4 million compared to $61.2 million

for the year ended December 31, 2021. In the year ended December 31, 2022, we recorded an out-of-period adjustment of $2.9

million. With the exception of the aforementioned adjustment, there was an increase in operating expenses which is explained

by the increase in our Fleet from ten to thirteen LNG carriers between the period of January 2021 and May 2021, an increase in

the overhaul cost for some of our vessels as part of their regular maintenance schedules.

Administrative expenses


(in thousands of $)	2022	2021	Change
Administrative Expenses	(9,147)	(7,887)	(1,260)

Administrative expenses increased by $1.3 million to $9.1 million for the year ended December 31, 2022 (2021:

$7.9 million). The increase in administrative expenses is due to: the increase in audit fees due to increased scope, including

internal controls testing in 2022; increase in registrar fees due to compliance with new regulations; increase in legal costs in

relation to the ATM program; and an increase in amortization of share-based compensation due to share options issued to

management in August 2021 and May 2022. These were offset by a reduction in the cost of directors and officers insurance in

2022 compared to 2021.

Depreciation


(in thousands of $)	2022	2021	Change
Depreciation	(72,224)	(69,833)	(2,391)

Depreciation expense for the year ended December 31, 2022 was $72.2 million, compared to $69.8 million for the year

ended December 31, 2021. The increase in depreciation is due to the increase in our Fleet from ten to thirteen LNG carriers

between the period of January 2021 and May 2021.

Interest income


(in thousands of $)	2022	2021	Change
Interest income	2,005	41	1,964

Interest income was $2.0 million for the year ended December 31, 2022 compared to $0.0 million for the year ended

December 31, 2021. The increase is principally due to the increase in the deposit rates on cash and cash equivalents.

Interest expense


(in thousands of $)	2022	2021	Change
Interest expense	(76,596)	(56,221)	(20,375)

Interest expense was $76.6 million for the year ended December 31, 2022 compared to $56.2 million for the year

ended December 31, 2021. The increase in interest is due to the increase in the floating rate of interest and an increase in long-

term debt.

Extinguishment costs of long-term debt


(in thousands of $)	2022	2021	Change
Extinguishment costs of long-term debt	(16,102)	(1,209)	(14,893)

In the year ended December 31, 2022, we incurred extinguishment costs on long-term debt of $16.1 million, compared

to $1.2 million for the year ended December 31, 2021. In the year ended December 31, 2022, we recorded direct costs of $11.1

million in relation to the extinguishment of the Hyundai Glovis Sale and Charterback and the extinguishment of the Flex

Resolute tranche, under the $629 Million Facility, and recorded a write-off of unamortized debt issuance costs of $5.0 million.

In the year ended December 31, 2021, we recorded a write-off of unamortized debt issuance costs of $1.2 million.

Gain/(loss) on derivatives


(in thousands of $)	2022	2021	Change
Gain/(loss) on derivatives	79,682	18,399	61,283

Gain/(loss) on derivatives was $79.7 million for the year ended December 31, 2022 compared to $18.4 million for the

year ended December 31, 2021. The Company recorded a gain on derivatives of $79.7 million in the year ended December 31,

2022, which includes an unrealized gain of $78.2 million and a realized gain on derivatives of $1.5 million. The positive

development of interest rates in the year has resulted in an increase in the fair value of our interest rate swap derivatives. This

compares to a net gain on derivatives of $18.4 million in the year ended December 31, 2021, which includes an unrealized gain

of $24.4 million and a realized loss of $6.0 million.

Other financial items


(in thousands of $)	2022	2021	Change
Other financial items	(1,464)	137	(1,601)

Other financial items were a $1.5 million expense for the year ended December 31, 2022 compared to $0.1 million

income for the year ended December 31, 2021. This movement primarily relates to foreign exchange losses derived from

fluctuations in the value of NOK cash balances against their USD value.

For the discussion of our operating results in 2021 compared with 2020, we refer to "Item 5. Operating and Financial

Review and Prospects - A. Operating Results" included in our Annual Report on Form 20-F for the year ended December 31,

2021, which was filed with the U.S. Securities and Exchange Commission on March 17, 2022.

B.Liquidity and Capital Resources

Liquidity and Cash Needs

We operate in a capital-intensive industry and have financed the purchase of the vessels and newbuildings in our Fleet

through a combination of cash generated from operations, equity capital and borrowings under our financing agreements.

Payment of amounts outstanding under our debt agreements, and all other commitments that we have entered into are made

from the cash available to us.

Cash

As of December 31, 2022, we reported cash, cash equivalents and restricted cash of $332.4 million, which represented

an increase of $131.2 million, compared to $201.2 million as of December 31, 2021.

Working Capital Needs

Working capital is equal to current assets less current liabilities, including the current portion of long-term debt. As of

December 31, 2022, we had positive working capital of $200.9 million, as compared to $93.3 million as of December 31, 2021.

Our primary liquidity requirements include payment of operating costs, funding working capital requirements,

repayment of bank loans, payment of lease obligations and maintaining sufficient cash reserves against fluctuations in operating

cash flows and payment of cash distributions. Sources of short-term liquidity include cash balances, revolving credit facilities,

restricted cash balances and receipts from customers. We believe that our cash flows from operations, amounts available for

borrowing under our financing agreements and our cash balance will be sufficient to meet our existing liquidity requirements

for at least the next 12 months from the date of this Annual Report.

Our Borrowing Activities

Flex Rainbow Sale and Leaseback

In July 2018, we, through our wholly-owned subsidiary, Flex LNG Rainbow Ltd., which owned the vessel, Flex

Rainbow, entered into a sale leaseback transaction for the vessel with a Hong Kong-based lessor for a lease period of ten years.

The gross sales price under the lease was $210 million, of which $52.5 million represented advance hire for the ten-year lease

period. The agreement included fixed price purchase options, whereby we had options to re-purchase the vessel at or after the

second anniversary of the agreement, and on each anniversary thereafter, until the end of the lease period. The bareboat rate

payable under the lease had a fixed element, treated as principal repayment, and a variable element based on LIBOR plus a

margin of 3.50% per annum calculated on the outstanding under the lease. In May 2022, the outstanding balance of

$128.0 million under the agreement was prepaid in full following the refinancing of the vessel under the $375 Million Facility,

as further described below.

$250 Million Term Loan Facility

In April 2019, we, through two of our wholly-owned subsidiaries, entered into the $250 Million Term Loan Facility

with a syndicate of banks for the part financing of the two vessels, Flex Constellation and Flex Courageous, which serve as

collateral for the facility. The facility was drawn between June 2019 and August 2019 in connection with the delivery of the

respective vessels. The facility had a term of five years from delivery of the final vessel and bore interest at LIBOR plus a

margin of 2.35% per annum. In May 2022, the outstanding balance of $217.1 million under the agreement was prepaid in full

following the refinancing of the vessels Flex Constellation and Flex Courageous under the $320 Million Sale and Leaseback, as

further described below.

Hyundai Glovis Sale and Charterback

In April 2019, we, through two of our wholly owned subsidiaries, entered into sale and time charter agreements for the

vessels Flex Endeavour and Flex Enterprise. The transactions were executed in July 2019, whereby the vessels were sold to

Triple H No. 3 Ltd. and Triple H No. 4 Ltd., respectively, for a gross consideration of $210 million per vessel, with a net

consideration of $150 million per vessel adjusted for a non-amortizing and non-interest bearing seller’s credit of $60 million per

vessel. The vessels had been chartered back from Hyundai Glovis on a time-charter basis to us, through our subsidiaries, for a

period of ten years. The agreements included fixed price purchase options, whereby we had annual options to acquire the

vessels during the term of the time-charters. The first option was exercisable on the third anniversary of closing of the

transactions and the last option at expiry of the ten-year charter period. At the end of the ten-year charter period, Hyundai

Glovis held the right to sell the vessels back to us for a net consideration of $75 million per vessel, net of the $60 million

seller’s credit per vessel. In August and September 2022, in connection with our exercise of its call options in June 2022, the

vessels Flex Enterprise and Flex Endeavour were re-delivered to us. We paid an option price of $137.0 million per vessel on re-

delivery. At the date of settlement, the long-term debt for Flex Enterprise and Flex Endeavour had net carrying values of

$131.0 million and $130.4 million, respectively. As a result, we recorded extinguishment costs of $12.6 million, which included

$10.9 million of direct costs and $1.7 million write-off of unamortized debt issuance costs.

$100 Million Facility

In July 2019, we, through one of our vessel owning subsidiaries, entered into the $100 Million Facility with a

syndicate of banks for the refinancing of the vessel, Flex Ranger. The $100 Million Facility was split between a $50 million

term loan and a $50 million revolving facility. The facility was fully drawn in July 2019 and the proceeds were used to prepay

the outstanding balance of $99.8 million relating to the Flex Ranger under the existing $315 Million Term Loan Facility. The

facility had a term of five years and bore interest at LIBOR plus a margin of 2.25% per annum. In March 2021, we signed an

addendum to the facility, whereby the revolving tranche was increased by $20 million. The $20 million increase was non-

amortizing and bore interest at LIBOR plus a margin of 2.25% per annum for any drawn amounts. In April 2022, we prepaid

the full amount outstanding under the facility of $106.8 million following the refinancing of the vessel Flex Ranger under the

$375 Million Facility.

$629 Million Facility

In February 2020, we entered into an agreement with a syndicate of banks and the Export-Import Bank of Korea, or

KEXIM, for the part financing of the vessels Flex Aurora, Flex Artemis, Flex Resolute, Flex Freedom and Flex Vigilant in an

amount up to $629 million, or the $629 Million Facility. The facility is divided into a commercial bank loan of $250 million, or