Energia
Golar LNG Limited Interim results for the period ended March 31 2024
Highlights and subsequent events
FLNG Hilli : Maintained her market leading operational track record, generating $68 million of Q1 Distributable Adjusted EBITDA , of which Golar's share was $64 million, a $20 million decrease compared to Q4 2023. Most of the decrease is attributable to a reduction in realized TTF commodity swap gains and lower Brent oil prices.
FLNG Gimi : Moored at the GTA Hub offshore Mauritania and Senegal, ready to commence operations. During April, Golar received its first standby day rate cash payment from March 13, 2024 onwards, paid monthly in arrears. Pre-Commercial Operations Date contractual cash flows are expected to be deferred on the balance sheet and released over the contract term from the Commercial Operations Date (“COD”). The operators, BP and Kosmos, and Golar have reached an agreement in principle to resolve the disputed amounts for pre-COD cash flows from January 10, 2024, subject to final documentation and stakeholder approval. If made effective this agreement will provide Golar with progressive stage payments from January 10, 2024 until COD.
The client's FPSO has now arrived at the project site. Hookup and commissioning of the FPSO are on the critical path to first gas and are expected to complete in the third quarter of 2024. Commissioning of FLNG G imi can commence thereafter. FLNG Gimi's commissioning period is expected to be approximately six months, concluding with COD. Together with the client we are making positive progress in exploring options to bring forward parts of the commissioning process that could shorten this six-month commissioning period. COD triggers the start of the 20-year Lease and Operate Agreement that unlocks the equivalent of around $3 billion of Adjusted EBITDA Backlog to Golar and recognition of the contractual day rate comprised of capital and operating elements in both the balance sheet and income statement.
A potential refinancing facility with agreed indicative terms between prospective lenders and Golar is advancing to term sheet and syndication. Golar targets a facility with a higher debt amount, lower margin and improved amortization profile versus the current vessel debt facility.
FLNG business development : Focus on re-deployment of Hilli following the end of her current charter in July 2026, and thereafter ordering and securing commercial terms for a contemplated MKII FLNG.
The framework agreement for potential FLNG deployment (as announced in our Q4 2023 earnings release), has now progressed to detailed contract negotiations for an up to 20-year FLNG deployment. The next steps of the project development include (i) signing of definitive detailed agreements, (ii) obtaining necessary third-party approvals including governmental and environmental, amongst others, and (iii) a mutual Final Investment Decision (“FID”). The FLNG development has a planned start-up during 2027.
We continue to advance additional FLNG developments and see increased prospective client interaction for our FLNG offering. Geographically, most of the activity remains in West Africa and South America, however we are pleased to see other regions with proven stranded and associated gas reserves seek FLNG development. Based on the increased FLNG business development activity we have recruited Federico Petersen as Chief Commercial Officer, and a further two highly experienced maritime and upstream development team members will join later this year. Together they have a combined 70+ years of experience and a successful business development track record.
The MKII FLNG project development continues, with previously ordered long lead items now 58% complete and the LNGC conversion candidate Fuji LNG delivered to Golar on March 4, 2024. Fuji LNG will trade on a multi-month charter ahead of her expected transfer to the yard for FLNG conversion. Work between the topside manufacturer, shipyard and Golar continues to move the project towards a FID. Detailed negotiation for a debt financing facility to be available during the construction period of the contemplated MKII FLNG also continues with prospective lenders and made solid progress during the quarter.
Other/Shipping: Operating revenues and costs under corporate and other items is comprised of two FSRU operate and maintain agreements in respect of the LNG Croatia and Golar Tundra . The non-core shipping segment is comprised of the LNGC Golar Arctic , and Fuji LNG which is now trading on a multi-month charter. Per above, Fuji LNG is a MKII FLNG conversion candidate, whilst Golar Arctic remains a candidate for sale or long-term charter.
Share buyback and dividends: The company continues to see attractive value in its shares and purchased and cancelled 0.7 million shares during the quarter at an average cost of $20.87 per share. As of March 31, 2024, 104.0 million shares are issued and outstanding. Of the $150.0 million approved share buyback scheme, $74.1 million remains available.
Golar's Board of Directors approved a total Q1 2024 dividend of $0.25 per share to be paid on or around June 17, 2024. The record date will be June 10, 2024.
Financial Summary
Financial Review
Business Performance:
(2) The line item “Realized and unrealized gain/(loss) on oil and gas derivative instruments” in the Unaudited Consolidated Statements of Operations relates to income from the Hilli Liquefaction Tolling Agreement (“LTA”) and the natural gas derivative which is split into: “Realized gains on oil and gas derivative instruments” and “Unrealized gain/(loss) on oil and gas derivative instruments”.
Golar reports today Q1 net income of $55 million, before non-controlling interests, inclusive of $6 million of non-cash items , comprised of:
The Brent oil linked component of FLNG Hilli ' s fees generates additional annual cash of approximately $3.1 million (Golar share equivalent to $2.7 million) for every dollar increase in Brent Crude prices between $60 per barrel and the contractual ceiling. Billing of this component is based on a three-month look-back at average Brent Crude prices. During Q1, we recognized a total of $34 million of realized gains on FLNG Hilli's oil and gas derivative instruments comprised of:
Further, we recognized a total of $2 million of non-cash gains in relation to FLNG Hilli's oil and gas derivative assets, with corresponding movements in its constituent parts recognized on our unaudited consolidated statement of operations as follows:
Balance Sheet and Liquidity:
As of March 31, 2024, Total Golar Cash was $622 million, comprised of $548 million of cash and cash equivalents and $74 million of restricted cash.
Golar's share of Contractual Debt as of March 31, 2024 is $1,209 million. Deducting Total Golar Cash of $622 million from Golar's share of Contractual Debt of $1,209 million, leaves a debt position of $587 million.
A total of $45 million was invested in FLNG Gimi during the quarter, with the total FLNG Gimi asset under development balance as at March 31, 2024 amounting to $1.6 billion, including capitalized financing cost during the construction period. Of this, $630 million was drawn against the $700 million debt facility secured by FLNG Gimi . Both the investment and debt drawn to date are reported on a 100% basis.
Expenditure on long-lead items, engineering services and conversion candidate Fuji LNG for the MKII FLNG amounted to $270 million as of March 31, 2024. Of this, $192 million is included in other non-current assets and $78 million in respect of Fuji LNG is included in vessels and equipment, net. The final payment on the Fuji LNG of $62 million was made during Q1 2024. All MKII FLNG expenditure incurred to date, including the acquisition of Fuji LNG is currently fully equity financed.
Positive progress on a potential refinancing facility of Gimi as well as a potential debt facility for a MKII FLNG newbuilding can further add significant flexibility to Golar's cash position.
The board and management are pleased with the progress made across business development, new potential financing facilities and moving MKII FLNG closer to FID, whilst continuing to deliver market leading operational performance on Hilli and bringing Gimi closer to COD. We continue to focus on (i) commercial opportunities for FLNG deployment, (ii) optimizing the debt associated with Gimi , (iii) target FLNG growth through a MKII FLNG FID, and (iv) continue to deliver attractive shareholder returns.
Non-GAAP measures
In addition to disclosing financial results in accordance with U.S. generally accepted accounting principles (US GAAP), this earnings release and the associated investor presentation contains references to the non-GAAP financial measures which are included in the table below. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance.
This report also contains certain forward-looking non-GAAP measures for which we are unable to provide a reconciliation to the most comparable GAAP financial measures because certain information needed to reconcile those non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside of our control, such as oil and gas prices and exchange rates, as such items may be significant. Non-GAAP measures in respect of future events which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied to Golar's unaudited consolidated financial statements.
These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures and financial results calculated in accordance with GAAP. Non-GAAP measures are not uniformly defined by all companies and may not be comparable with similarly titled measures and disclosures used by other companies. The reconciliations as at March 31, 2024, from these results should be carefully evaluated.
(1) Please refer to reconciliation below for Golar's share of Contractual Debt
Adjusted EBITDA backlog: This is a non-U.S. GAAP financial measure and represents the share of contracted fee income for executed contracts less forecasted operating expenses for these contracts. Adjusted EBITDA backlog should not be considered as an alternative to net income/(loss) or any other measure of our financial performance calculated in accordance with U.S. GAAP.
Non-cash items: Non-cash items comprise of impairment of long-lived assets, release of prior year contract underutilization liability, mark-to-market (“MTM”) movements on our TTF and Brent oil linked derivatives, listed equity securities and interest rate swaps (“IRS”) which relate to the unrealized component of the gains/(losses) on oil and gas derivative instruments, unrealized MTM (losses)/gains on investment in listed equity securities and gains on derivative instruments, net, in our unaudited consolidated statement of operations.
Abbreviations used:
FLNG: Floating Liquefaction Natural Gas vessel
FSRU: Floating Storage Regasification Unit
MKII FLNG: Mark II FLNG
FPSO: Floating Production, Storage and Offloading unit
MMBtu: Million British Thermal Units
mtpa: Million Tons Per Annum
Reconciliations - Liquidity Measures
Contractual Debt
Please see Appendix A for a capital repayment profile for Golar's contractual debt.
Total Golar Cash
Forward Looking Statements
This press release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflects management's current expectations, estimates and projections about its operations. All statements, other than statements of historical facts, that address activities and events that will, should, could or may occur in the future are forward-looking statements. Words such as “if,” “subject to,” “believe,” “assuming,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “could,” “would,” “predict,” “propose,” “continue,” or the negative of these terms and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Golar undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Other important factors that could cause actual results to differ materially from those in the forward-looking statements include but are not limited to:
As a result, you are cautioned not to rely on any forward-looking statements. Actual results may differ materially from those expressed or implied by such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless required by law.
Responsibility Statement
We confirm that, to the best of our knowledge, the interim unaudited consolidated financial statements for the three months ended March 31, 2024, which have been prepared in accordance with accounting principles generally accepted in the United States give a true and fair view of Golar's unaudited consolidated assets, liabilities, financial position and results of operations. To the best of our knowledge, the interim report for the three months ended March 31, 2024, includes a fair review of important events that have occurred during the period and their impact on the unaudited consolidated financial statements, the principal risks and uncertainties and major related party transactions.
May 28, 2024
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda
Investor Questions: +44 207 063 7900
Karl Fredrik Staubo - CEO
Eduardo Maranhão - CFO
Stuart Buchanan - Head of Investor Relations
Tor Olav Trøim (Chairman of the Board)
Dan Rabun (Director)
Thorleif Egeli (Director)
Carl Steen (Director)
Niels Stolt-Nielsen (Director)
Lori Wheeler Naess (Director)
Georgina Sousa (Director)
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
Attachment
2321 Rosecrans Avenue. Suite 2200
90245 El Segundo Stati Uniti