Executive Summary / Key Takeaways

• Capital Clean Energy Carriers Corp. ($CCEC) is undergoing a profound strategic transformation, pivoting from a diversified shipping entity to a specialized leader in clean energy transportation, primarily focusing on Liquefied Natural Gas (LNG), Liquid Petroleum Gas (LPG), ammonia, and liquid CO2.
• The company is building a technologically advanced, dual-fuel fleet, including the world's first liquid CO2 carriers, which offers superior operational efficiency, a reduced environmental footprint, and a significant competitive advantage in the evolving energy transition landscape.
• CCEC demonstrates robust financial performance, with 2024 annual revenue reaching $369.41 million and net income of $193.63 million. This growth is underpinned by a substantial firm charter backlog of $3.1 billion as of Q1 2025 and a solid cash position of $420 million.
• A significant structural deficit in modern LNG tonnage is projected from 2026-2028 onwards, positioning CCEC's expanding newbuilding fleet to capitalize on strong long-term charter rates, with management targeting two-digit equity returns for specialized assets.
• While navigating a capital-intensive growth phase and short-term market volatility, CCEC's strategic divestment of legacy container assets and disciplined financing approach are designed to enhance shareholder value, with a future shift towards a flexible, floating dividend policy.

A New Era in Clean Energy Shipping

Capital Clean Energy Carriers Corp. ($CCEC), formerly Capital Product Partners L.P., has undergone a transformative strategic pivot, reshaping its identity from a diversified shipping entity to a focused leader in clean energy transportation. Incorporated in 2007, the company initially operated a fleet that included container vessels. However, a pivotal announcement in November 2023 signaled a decisive shift towards becoming a premier LNG and energy transition-focused shipping corporation. This strategic reorientation, coupled with a planned conversion from a limited partnership to a corporation in August 2024, aims to enhance governance and broaden its investor appeal.

The company's core business now revolves around the marine transportation of Liquefied Natural Gas (LNG) and other critical gases such as LPG, ammonia, and liquid CO2. This strategic focus aligns with global energy transition trends, where LNG is increasingly recognized as a crucial bridging fuel and low-carbon gases are emerging as future energy vectors. The industry landscape is characterized by robust global LNG demand, with China's imports, for instance, increasing by approximately 24% year-on-year in Q2 2024 . Furthermore, LNG capacity additions are projected to accelerate significantly, averaging 48 million tonnes per annum (MTPA) yearly between 2025 and 2028, with the U.S. and Qatar driving roughly 60% of this expansion . This anticipated surge in supply is expected to create a substantial deficit of modern LNG tonnage, estimated to reach around 100 vessels by 2029 .

In this evolving environment, CCEC strategically positions itself with a foundational strength: a technologically advanced, young fleet. The company aims to control the largest U.S.-listed LNG and gas platform, operating vessels with the lowest unit rate cost and environmental footprint. This approach is a direct response to the commercial requirements of customers and the emerging regulatory landscape concerning carbon and methane emissions .

Technological Edge and Operational Prowess

CCEC's competitive moat is significantly bolstered by its commitment to cutting-edge technology. The company's fleet primarily comprises latest-generation 2-stroke LNG carriers, dual-fuel LPG medium gas carriers, and notably, the world's first purpose-built liquid CO2 handy gas carriers . These vessels are not merely transport units; they are sophisticated engineering marvels designed for efficiency and environmental responsibility.

The 2-stroke LNG carriers, for example, offer tangible benefits including a "lowest unit rate cost possible to date" and the "lowest environmental footprint" to customers . Their advanced design provides higher carrying capacity and lower boil-off rates compared to older DFD (Dual Fuel Diesel) and steam turbine vessels, contributing to immense trading flexibility and reduced carbon emissions . This technological superiority is reflected in increasing rate differentials for CCEC's modern tonnage compared to less efficient alternatives .

Furthermore, CCEC's dual-fuel capabilities across its LNG and medium gas carriers (LNG/fuel oil and LPG/fuel oil, respectively) ensure a reduced carbon footprint, aligning with global decarbonization efforts . The liquid CO2 carriers represent a significant innovation, being the "first vessels of this type and size in the world" . These specialized vessels feature unique steel alloy tanks and separate cargo systems, providing a "unique advantage" in discussions around carbon capture and storage (CCS) and e-fuel production . The order book for handysize semi-ref vessels, which these LCO2 carriers effectively are, is "extremely small," with CCEC controlling a "very big part of it," creating a substantial barrier to entry for competitors . This technological leadership translates into a competitive edge, enabling CCEC to command potentially higher charter rates and secure long-term contracts in nascent but high-growth markets.

Operational Excellence and Strategic Fleet Expansion

CCEC's strategic fleet expansion is well underway. As of December 31, 2024, the company operates a fleet of 15 vessels on the water, consisting of 12 LNG carriers and three Neo-Panamax container vessels . Upon the full delivery of its contracted newbuildings, CCEC's fleet will expand to 36 vessels, boasting an average age of just 2.3 years . This includes 11 latest-generation 2-stroke LNG carriers acquired between Q4 2023 and Q1 2027, and a strategic investment in 10 new gas carriers for $756 million, with deliveries scheduled from Q1 2026 to Q3 2027 . This latter order includes six dual-fuel LPG medium gas carriers and four liquid CO2 handy gas carriers, diversifying CCEC's exposure to emerging energy transition trades .

The company has demonstrated strong execution in securing employment for its expanding fleet. In Q4 2023, the LNG Carrier Amore Mio I was delivered and immediately commenced a three-year time charter with Qatar Energy & Trading, projected to generate approximately $162 million in EBITDA until November 2026 . The LNG Carrier Axios II, delivered in January 2024, secured an index-linked one-year time charter followed by a seven-year bareboat charter with Bonny Gas Transport Limited, expected to generate about $250 million in EBITDA over seven years . More recently, in Q1 2025, CCEC secured employment for two additional newbuilding LNG carriers for five and seven years, respectively, each with an additional five-year option . These strategic charters have boosted the firm charter backlog to an impressive $3.1 billion, or $4.5 billion if all options are exercised, providing significant revenue visibility and stability . The average charter duration across the fleet now stands at 7.3 years .

Concurrently, CCEC is systematically divesting its legacy container fleet to recycle capital into its gas transportation assets. Since December 2023, the company has generated $472.2 million in net proceeds from the sale of 12 container vessels, including a $46.2 million gain from two sales in Q1 2025 . Management remains opportunistic regarding the sale of the three remaining container vessels, noting their modern eco-design and long-term cash flow potential .

Financial Strength and Disciplined Capital Allocation

CCEC's financial performance reflects its strategic growth and operational effectiveness. For the full year 2024, the company reported total revenue of $369.41 million, a substantial increase from $241.77 million in 2023 . Net income for 2024 reached $193.63 million, up significantly from $47.21 million in 2023, while EBITDA grew to $296.46 million from $153.05 million in the prior year . These figures underscore the positive impact of new vessel deliveries and strategic chartering.

As of Q1 2025, the company maintained a solid cash position of $420 million, supported by recent container sales . This liquidity is crucial for funding its ambitious newbuilding program, which has a total value of $2.3 billion, with $467 million already paid in advances . CCEC plans to finance 70% of its LNG carrier acquisitions and 60% of other gas vessel acquisitions with debt, totaling approximately $1.56 billion, leaving an excess equity of $105 million before considering cash flow generation from its existing fleet .

The company's debt management has been disciplined. Debt optimization efforts in Q2 2024 resulted in longer amortization profiles, extended maturities, and a reduction in the weighted average margin on floating rate debt to 194 basis points from 236 basis points a year prior . Notably, CCEC faces no material debt refinancing until October 2026, when a €150 million bond matures . With 80% of its funding on floating rates, CCEC could also benefit from anticipated interest rate cuts by the Fed during 2025 .

CCEC has consistently returned capital to shareholders, marking Q1 2025 as its 72nd consecutive quarter of paying a cash dividend of $0.15 per common unit . While maintaining this conservative payout during its growth phase, management intends to transition to a more flexible, floating dividend policy tied to a percentage of free cash flow or net income once the new vessels deliver and generate significant earnings, allowing shareholders to participate in the potential upside .

Outlook: Capitalizing on a Structural Market Tightening

The outlook for CCEC is strongly positive, anchored by a projected structural tightening in the LNG shipping market. While 2024 and 2025 may see softer spot market fundamentals, the long-term picture from 2026 onwards is compelling. CCEC has no open LNG vessels until Q1 2026, with subsequent deliveries and potential renewals strategically timed to coincide with a significant wave of new liquefaction capacity . An estimated 170 MTPA of new liquefaction capacity is expected to come online between 2026 and 2028, requiring between 190 and 220 additional vessels, against an order book of only 156 vessels for that period . This imbalance is expected to create a deficit of approximately 100 modern LNG vessels by 2029, a figure that could widen further given pre-FID projects and limited shipyard capacity .

This anticipated deficit is expected to support strong long-term charter rates. Management believes there will be a "natural floor" for long-term rates in the mid-to-low $90,000 per day area, potentially rising "well above $100,000" if vessel demand expectations materialize . Newbuilding prices for LNG carriers remain firm, exceeding $250 million since February 2023, and are expected to increase further due to U.S. regulatory support for LNG projects and port fees on Chinese-built ships, which will drive demand towards Korean shipyards .

For its multi-gas and liquid CO2 carriers, deliveries commence early next year . While initial deployment may involve traditional LPG and ammonia trades, utilization for liquid CO2 transportation is expected to ramp up from mid-to-late 2027 or 2028 as infrastructure develops . CCEC aims for "two-digit equity returns" from its liquid CO2 transportation business, adjusted for charter tenure, highlighting the significant value potential of these specialized assets .

Risks and Competitive Dynamics

Despite a compelling outlook, CCEC faces inherent risks and operates within a dynamic competitive landscape. Geopolitical disruptions, such as those impacting the Red Sea, can lead to increased tonne-miles and demand for vessels, but also introduce volatility . The U.S. trade representatives' port fees and tariffs, while expected to have "minimum impact" on CCEC's LNG shipping until 2028 due to exemptions and its non-Chinese-built fleet, could pose a headwind by increasing costs and potentially delaying Final Investment Decisions (FIDs) for U.S. LNG projects if tariffs persist . The high cost of potentially U.S.-built LNG carriers, estimated at three to four times that of Korean or Chinese builds, also presents a challenge to future domestic fleet expansion .

In the competitive arena, CCEC distinguishes itself through its specialized focus and technological leadership. While larger, more diversified players like A.P. Moller-Maersk A/S (AMKBY) and COSCO Shipping Holdings Co., Ltd. (CICOY) possess greater scale and integrated logistics networks, CCEC's clean energy specialization and flexible fleet allow it to effectively target niche, high-growth segments. Compared to energy shipping specialists like Teekay Corporation (TK) and GasLog Ltd., CCEC's diversified gas fleet offers broader cargo options and adaptability. CCEC's advantage lies in its investment in the "latest gas technology vessels with fewer fuel capabilities," providing lower operating costs and environmental benefits that differentiate it from peers . The scarcity of specialized vessels, particularly its liquid CO2 carriers, creates a significant competitive barrier, as limited shipyard capacity makes it challenging for rivals to quickly replicate CCEC's fleet . This strategic positioning, coupled with a diverse base of high-credit-quality counterparties, provides a strong framework for sustained growth .

Conclusion

Capital Clean Energy Carriers Corp. is charting a clear course towards becoming a dominant force in clean energy shipping. Its strategic pivot, underpinned by a technologically advanced and rapidly expanding fleet of LNG, LPG, ammonia, and pioneering liquid CO2 carriers, positions the company to capitalize on the accelerating global energy transition. The robust financial performance, highlighted by strong revenue and net income growth in 2024, coupled with a substantial charter backlog and disciplined capital management, provides a solid foundation for future expansion.

As the LNG market anticipates a significant supply deficit from 2026 onwards, CCEC's strategic timing of newbuilding deliveries and its focus on high-value, long-term charters are poised to drive substantial shareholder value. While the capital-intensive nature of its growth and broader market risks warrant attention, the company's technological leadership, proactive capital recycling, and clear vision for a flexible dividend policy underscore a compelling investment thesis. CCEC is not merely transporting energy; it is actively shaping the future of global clean energy logistics.