Company: DLNG
Filing Date: 2025-04-10
Form Type: 20-F
Source: 0001104659-25-033744
Chunk: 259

Company: Dynagas LNG Partners LP
Filing Date: 2025-04-10
Form: 20-F
Item: Item 5
Chunk 259
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. The fair value at the date of the impairment becomes the new cost basis and will result in a lower depreciation expense than for periods before the recorded vessel impairment loss. Historically, there was no impairment loss recorded in any of the six vessels in our Fleet.
We determine the fair value of our vessels based on our estimates and assumptions and by making use of available market data and taking into consideration third-party valuations. We employ the majority of our LNG carriers on fixed-rate charters with major companies. These charters typically have original terms of two or more years in length. Consequently, while the market value of a vessel may decline below its carrying value, the carrying value of a vessel may still be recoverable based on the future undiscounted cash flows the vessel is expected to obtain from servicing its existing and future charters.
Considering that there were not any significant changes in circumstances that would indicate that the carrying value of our vessels may not be recoverable, we did not perform a review for impairment as of December 31, 2024. Using the framework for estimating future undiscounted net operating cash flows described above, we completed our impairment analysis for the year ended December 31, 2023, for those operating vessels that indications of impairment existed. Our impairment analysis as of December 31, 2023, indicated that the carrying amount of our vessels, was recoverable, and therefore concluded that no impairment charge was necessary.
Certain assumptions relating to our estimates of future cash flows are more predictable by their nature in our experience, including estimated revenue under existing charter terms, on-going operating costs and remaining vessel life. Certain assumptions relating to our estimates of future cash flows require more discretion and are inherently less predictable, such as future hire rates beyond the firm period of existing charters and vessel residual values, due to factors such as the volatility in vessel hire rates and the lack of historical references in scrap prices of similar type of vessels.
Although we believe that the assumptions used to evaluate potential asset impairment are based on historical trends and are reasonable and appropriate, at the time they are made, such assumptions are highly subjective and we can make no assurances, however, as to whether our estimates of future cash flows, particularly future vessel hire rates or vessel values, will be accurate. To minimize such subjectivity, our analysis for the year ended December 31, 2023, also involved sensitivity analysis to the model input we believe is most important, being the future hire rates. In particular, in terms of our estimates for the charter rates for the unfixed