GOLAR LNG: PRELIMINARY FIRST QUARTER 2012 RESULTS
(Thomson Reuters ONE) -
PRELIMINARY FIRST QUARTER 2012 RESULTS
Highlights
* Golar LNG reports consolidated net income of $15.2 million and consolidated
operating income of $27.8 million for the first quarter of 2012
* Golar LNG increases quarterly cash dividend by $0.025 cents to $ 0.35 cents
per share
* Golar raises $250 million through a convertible bond transaction
* Golar expands its newbuilding fleet further with a firm order of four
additional carriers bringing its total order book to 13 vessels
* Golar Arctic and Golar Grand commence new charters with a combined
annualized EBITDA of $84 million
Subsequent events
* FSRU Conversion of Nusantara Regas Satu (formerly Khannur) completed and
vessel delivered to Charterer with start of operation May 4(th)
* Hilli and Gandria in final stages of reactivation and will be marketed for
future trading in June
* LNG shipping market to remain structurally tight through middle of the
decade
Financial Review
Golar LNG Limited ("Golar" or the "Company") reports consolidated net income of
$15.2 million and consolidated operating income of $27.8 million for the three
months ended March 31, 2012 (the "first quarter").
Revenues in the first quarter were $83.1 million as compared to $80.6 million
for the fourth quarter of 2011 (the "fourth quarter"). The increase is primarily
as a result of the additional revenue contribution from Gimi which was on
charter throughout the quarter and further enhanced by the commencement of the
new 3 year charters for Golar Grand and Golar Arctic. This is reflected in an
improved TCE for the first quarter at $90,464 compared to $86,521 for the fourth
quarter. As in the fourth quarter, vessel utilization in the first quarter is
effectively 100%.
As expected, operating costs in the first quarter at $27.9 million is higher
than the fourth quarter at $17.6 million. This is mainly due to the expensed
reactivation costs for both Hilli and Gandria and represents costs which cannot
be capitalized as they are deemed to be repairs in nature. Given that both
vessels' re-activation is nearing completion, it is not expected that operating
costs will continue at this high level into the second quarter of 2012.
The Company booked an accounting gain of $4.1 million during the quarter arising
from its purchase, in January 2012, of the remaining fifty percent (50%)
interest in the company that owns the Gandria. This has arisen as the Company is
required to re-measure the carrying value of it's existing 50% share in the
company and compare that to its fair value which is represented by the $19.5m
purchase price. This resulted in a gain of $2.4million. Furthermore, the Company
also recognized a gain on a bargain purchase of $1.7 million as the cost of the
acquisition is less than the fair value of the net assets acquired.
Net interest expense for the first quarter at $6.1 million is slightly higher
than the $5.6 million incurred in the fourth quarter mainly due to interest
accruing on the Company's March 2012 convertible bond issue.
Other financial items increased to a loss of $2.6 million in the first quarter
compared to a small loss of $0.05 million in the fourth quarter. This is mainly
due to the negative movement in the valuation of currency swaps and forward
contracts
Financing, corporate and other matters
Dividends
The Board has proposed to increase the cash dividend by $0.025 cents to a total
of $0.35 cents a quarter. This is supported by the commencement of the time
charters for both Golar Grand and Golar Arctic and a solid financial situation.
The record date for the dividend will be June 13, ex-dividend date is June 11
and the dividend will be paid on or about June 27, 2012.
Nusantara Regas Satu ("NR Satu") (formerly Khannur)
The Board is pleased to announce that the conversion of NR Satu into an FSRU was
technically completed towards the end of March. Following testing and mooring
of the vessel at site in Jakarta Bay, the FSRU was officially delivered to the
Charterer on May 4 and has been on hire since that date. Golar sees this as a
significant milestone in its history as it has once again proven its place as
the market leader in FSRU conversions and further expanded it business
operations in Indonesia.
In cooperation with the Charterer, PT Nusantara Regas, the FSRU is currently
being commissioned following which normal operations will commence. Golar
Partners has an option to purchase NR Satu from the Company at market value and
management is currently discussing the terms and timing of a possible
acquisition.
Golar Viking
The Golar Viking ended its charter arrangements and was delivered under a new
contract on May 1. The charter is for a period of approximately 11 months at a
rate significantly above its previous charter rate.
Newbuildings
Having previously announced 2 firm newbuild contracts with Hyundai Samho Heavy
Industries Co., Ltd., the Company announced on February 26, 2012 that it has
entered into firm contracts with Samsung Heavy Industries Co. Ltd. ("Samsung")
for two LNG carriers to be delivered in the second quarter of 2014 and early
2015. The aggregate price for the two ships is approximately $400 million. Each
contract also comes with an option for a further carrier for 2015 delivery.
Attached to both options is the right to select an FSRU alternative and the
vessel contracted for delivery in early 2015 also comes with the option for
construction as an FSRU. These orders take Golar's total newbuild order book to
13. All the vessels will be delivered with tri-fuel diesel electric engines and
with the lowest boil-off rate available.
Golar Grand and Golar Arctic charter
The Board is pleased to announce that the new charters for Golar Grand and Golar
Arctic commenced during March 2012.
The Golar Grand is now employed by an oil major for a duration of three (3)
years with an option to extend the charter period for an additional three (3)
years. During its employment, the Golar Grand will contribute approximately $39
million in annualised EBITDA.
The Golar Arctic is now employed by a major Japanaese trading house for three
(3) years. During its employment, the Golar Arctic will contribute approximately
$45 million in annualised EBITDA.
Reactivation of Hilli and Gandria
As announced previously, the Company secured the remaining fifty percent (50%)
interest in the company that owns the Gandria and immediately took steps to
prepare the vessel for re-activation. The reactivation process for both Gandria
and Hilli is nearing completion and the Company expects that both will be
available for service in June.
Convertible bond
The Company announced on February 28, 2012 that it had placed a convertible
bond (the "Bond") offering for $250 million. The Bonds have a term of five (5)
years, a coupon of 3.75% and a conversion price of $55 per share which
represented a premium of 25% over the reference price of $44 per share. The Bond
proceeds will primarily be used as a part financing for the newbuilding program.
The non amortizing structure and the 5 year maturity of the Bond increases the
Company's financial flexibility and creates an opportunity to be more market
opportunistic with respect to the chartering out of its new building capacity.
De-listing from Oslo Bors
The Company announced on April 27, 2012 that it would seek to de-list from the
Oslo Bors. The Company has observed its stock movements over the years and seen
trading volumes improve in the US while only limited volumes have traded in
Norway. The concentration in the US is further supported by the fact that less
than 18 % of the total shares, excluding World Shipholding, are currently held
in the Norwegian VPS system. With these facts, the Board has determined that
there is very limited benefit in having two separate listings. In accordance
with Oslo Stock Exchange rules, such a delisting will need support from two
thirds of the shareholders present at a special general meeting. Golar's major
shareholder, World Shipholding which owns 45.8% of the Company, will vote in
favour of the delisting. The Board has called for a special general meeting to
be held on June 18, 2012 to seek shareholder support to delist from the Oslo
Stock Exchange.
Shares and options
During the quarter a total of 62,500 options were exercised. In connection with
this, the Company issued 62,500 new shares. The total number of remaining
options is 786,404. As at the March 31, 2012 the total number of shares
outstanding in Golar excluding options is 80,298,752.
Shipping
During the quarter, strong demand continued for modern LNG carriers. However,
consistent with first quarter chartering activities in prior years, downward
pressure on rates was experienced as LNG buyers slowed their cargo purchases and
the pool of available vessels increased as ships came off their winter charters.
Demand was also weaker due to several production plants undergoing maintenance
work.
Demand for multi-year shipping requirements continued to be driven by high
demand for LNG liquefaction projects due to increased exports and fleet
renewals. While the short term market saw a decline in rates due to seasonal
trends and the challenges faced by the prevailing trading environment, with only
2 firm open positions basis modern tonnage with structural availability in
2012, (i.e. vessels that are not limited by the term they can be offered for),
owners with existing structural availability in both 2012 and 2013 continue to
command high charter rates but show preference to secure a minimum period of 3
years at historically high rates. Most recently, prompt existing tonnage with
structural availability has been fixed between $145,000 to $155,000 per day
levels.
Whilst the short-term shipping came under downward pressure during the quarter
the market started to pick-up momentum towards the end of the quarter.
Anticipated Far East LNG demand, strong interest from South America and the
restart of production at several plants, following scheduled maintenance, lead
to an increase in chartering interest. With anticipated structural tightness
during 2012 to 2014, 3 year charters at rate expectations remain close to short
term rates. As charters seek to fix vessels in advance of their forthcoming
winter requirements, the market is tightening. As a result, owners have the
ability to be selective in choosing the length of the charters they wish to
pursue.
The worldwide LNG fleet currently stands at 365 vessels including FSRUs, with a
further 80 on order including FSRU's; 71 vessels have been ordered since January
1, 2011, including 14 vessels ordered in 2012. Today, approximately half the
order book is committed to charterers.
In the period 2014 to 2015, substantial new LNG supply is anticipated in
particular from Australia, which will require significant and as yet unsecured
additional shipping capacity. Additional shipping capacity will also be needed
to support the development of new liquefaction capacity, as well as the growing
short term / spot LNG trading business (which accounts for, on average, between
18-22% of the overall LNG trade). The development of potential U.S. LNG export
capacity will further increase the demand for tonnage. The demand for LNG
shipping is also positively affected by the debottlenecking of existing
liquefaction facilities, which gives rise to additional LNG production.
Golar currently has three existing first generation vessels, four existing
modern vessels and eleven newbuilding LNG carriers, in addition to two
newbuilding FSRUs, available for employment over the next three years. With this
position Golar is uniquely positioned to serve its customers. With fundamental
evidence of a structural deficit in the supply of LNG carriers in this same time
period, the Board believes that the Company is advantageously positioned to lock
in solid long term returns. Golar's new vessels will be delivered with
historically low boil off rates and will have in all material respects superior
operating performance relative to the existing fleet.
FSRUs
The Board is optimistic with regards to further prospects for growth in Golar's
FSRU business. It remains one of the Company's cornerstones for delivering
further growth to its shareholders. With the delivery of the West Java Project,
Golar's fourth operational FSRU, Golar remains the only company in the world to
have delivered operational FSRU projects based on the conversion of an LNG
carrier. The Company is also encouraged by current market demands against a
small supply pool of FSRU owner/operators and FSRU assets in the 2013/2014 time
frame. While global interest is firm and demand rising, of particular note is
increasing activity among top tier oil and gas companies in China, East Coast
India, and the Middle East.
Since the last earnings report, Golar was shortlisted for two FSRU projects
while a third project, for which Golar had been previously shortlisted, is
nearing a decision point. The Company is exposed to the inherent uncertainties
of such projects clearing all necessary hurdles to reach a final investment
decision ("FID") however with the number of credible project developers at
present, the prospects for at least one new FSRU contract being awarded to Golar
within 2012 looks increasingly promising.
LNG Market
Incremental LNG supplies remained limited in both the Atlantic and Pacific basin
regions during the quarter on the back of planned maintenance from Snohvit,
Trinidad, Qatar and the unexpected shut-down of Yemen LNG in March due to damage
to its LNG supply pipeline.
During the early part of the first quarter of 2012, Far East demand was muted as
both Korea and Japan's inventory was well stocked for the winter period.
Consequently, buying interest became price sensitive and more opportunistic as a
direct result of shipping constraints. However, by the end of the quarter,
support for Far East price increases surfaced on the back of a further reduction
in Japan's nuclear capacity (by March 2012 only 2 of Japan's 54 reactors
remained operational with both units expected off-line by the second quarter of
2012) and the proliferation of the counter-seasonal markets in South America
(specifically Brazil and Argentina) and the Middle East. With other regions
competing for limited spot cargoes, and Japan's demand for prompt deliveries
increasing, LNG sellers price expectations strengthened. With the nuclear
utilization in Japan hitting zero in the second quarter of 2012 forward appetite
for incremental supply in the Far East is now expected to remain strong
throughout the summer period, as focus shifts to securing cargoes for the peak
summer demand.
While Europe remained quiet, South American markets were active with
considerable supply moving into both Argentina and specifically Brazil. Prompt
demand from Brazil during this period has been driving the short-term buying in
the spot market, with Brazil even paying above Asia, preventing Atlantic basin
cargoes from moving east. With muted domestic demand in Spain and Belgium there
has been a significant up-tick in the amount of re-exports with both Far East
and South America discharge intentions. During this quarter re-export
opportunities out of the United States had declined to only 3 cargoes on the
back of high sellers price expectations, limiting storage opportunities in the
Gulf. Europe however had up to 8 cargoes re-exported in the first quarter,
including 6 originating from Spain. The market is expected to see more European
re-exports throughout the summer as European gas demand is expected to remain
weak, while the global market continues to tighten.
New LNG supply projects slated to come on line in the coming quarters have
suffered minor start-up delays in the first quarter of 2012. Woodside's Pluto
Train 1 production has commenced, with the first commercial cargo delivered in
early May. Angola LNG, also experienced minor delays and is slated to export its
first cargo in June 2012, a set-back of about 2 months from its original target
date. In addition to these, supply projects under construction in both the
Atlantic and Pacific Basin have reached close to 73 million tonnes, with 54
million tonnes slated to come on line by 2016. Furthermore, two projects (Sabine
LNG Export / Australia Pacific LNG Train 2) are expected to announce a FID in
2012, adding additional capacity of 22.5 million tonnes to projects under
construction. As of today, Cheniere's Sabine Pass has received FERC approval,
with an FID expected very shortly.
The additional new production in 2012 from Pluto and Angola LNG, together with
debottlenecking projects and the ramp up of the significant number of new
projects that have recently started up could add up to approximately 14 million
tonnes of LNG (or approximately 5.2% of total current production) to the market
by the end of 2012. In the same timeframe only 2 conventional size vessels are
expected to be delivered, both dedicated to lift project volumes from Malaysia
and Angola.
Outlook
The Company remains fundamentally optimistic about its future prospects both
near and long term. Golar has a strong position of available vessel capacity
set against a market with undeniably strong fundamentals. The Company has
already capitalized on its dominant position of prompt tonnage availability
during 2012 with the commencement of term charters of Golar Grand and Arctic
which will result in a significant increase in revenues in the second quarter.
The new charter recently concluded on Golar Viking will continue this trend with
additional upcoming potential on the near term open positions on Golar Maria,
Hilli, and Gandria.
Turning to the longer term, the Company's newbuild program has absorbed 30 -
40% of the available open capacity fleet wide in the period from late 2013
onwards. Projects already under construction will add close to 73 million
tonnes of production annually in the same time frame with upside potential
coming from several areas including US exports and further growth in Australia.
The Board believes that up to the present time, rates for long term charters
have not yet fully matured to the point where it is reflecting the true value of
open tonnage in the middle part of the decade. The Company remains confident
that this situation will improve as more product comes to the market.
The weakness in the overall shipping market as well as the financing markets has
clearly limited the Company's potential competitors ability to capitalize on
this opportunity and created an interesting window. On the assumption that the
projected sale of the FSRU vessel N R Satu to Golar LNG Partners is concluded,
Golar expects to be able to take delivery of its entire newbuilding program,
maintain a high dividend payment and expand its activities without raising
further equity. The Board has further approved a stock repurchase program which
authorizes the buy back of up to 10 % of the Company's outstanding stock. The
program expires December 31, 2013, and has a maximum repurchase price of $45
per share. The objective of the share buy-back program is to distribute the
Company's equity capital to its shareholders in a manner more beneficial to
shareholders than through an ordinary dividend. The shares purchased under the
program will be kept as treasury shares and may ultimately be cancelled.
With the upcoming build up of fleet size, the Board is currently putting a large
focus on ensuring it has the organizational capacity to achieve and maintain a
first class operational service in technical management of the Company's
vessels. The Company has in the recent months significantly strengthened the
staff in its management company, Golar Wilhelmsen, in order to prepare for
increased activities. With its technical management organization combining the
best of both worlds of internal organization control combined with leveraging
the systems of Wilhelmsen Ship Management the Board believes it has the right
formula to provide its customers with industry leading shipping service.
The Company's FSRU franchise remains a cornerstone of the business with four
units now operational. Although only a portion of the multitude of new FSRU
projects being developed will likely reach FID in the near term, the Board
believes that the Company's unmatched project delivery and operations
credentials combined with its ability to provide prompt delivery of its two
committed newbuild FSRU's will create interesting contracting opportunities with
high value contracts and subsequent commitment to additional newbuild orders.
The Company's decision to design FSRU's that can operate as LNG trading vessels
with comparable performance characteristics creates a high degree of flexibility
in ensuring strong revenue contribution from these assets.
The Company is still considering opportunities in other LNG infrastructure plays
such as power ships and simple LNG producing plants. The economics in these
projects are very compelling but they are to a much larger extent based on a
close cooperation with end users and with significant higher completion,
technical and legislation risk.
Operating income (after depreciation) in the second quarter of 2012 is expected
to increase by more than 100 % compared to first quarter. The Company expects
reduction in operating cost and an increase in revenue as a function of new
charters. The results so far in the quarter confirms both these trends. The
Board is excited about the way the LNG industry is evolving where a one year
charter rate has now reached a point where the cost of a newbuilding is only
approximately four times annual EBITDA for a modern vessel. The Board remains
confident that the Company is well positioned to deliver strong growth and solid
returns to shareholders in the years to come.
Forward Looking Statements
This press release contains forward looking statements. These statements are
based upon various assumptions, many of which are based, in turn, upon further
assumptions, including examination of historical operating trends made by the
management of Golar LNG. Although Golar LNG believes that these assumptions were
reasonable when made, because assumptions are inherently subject to significant
uncertainties and contingencies, which are difficult or impossible to predict
and are beyond its control, Golar LNG cannot give assurance that it will achieve
or accomplish these expectations, beliefs or intentions.
Included among the factors that, in the Company's view, could cause actual
results to differ materially from the forward looking statements contained in
this press release are the following: inability of the Company to obtain
financing for the new building vessels at all or on favourable terms; changes in
demand; a material decline or prolonged weakness in rates for LNG carriers;
political events affecting production in areas in which natural gas is produced
and demand for natural gas in areas to which our vessels deliver; changes in
demand for natural gas generally or in particular regions; changes in the
financial stability of our major customers; adoption of new rules and
regulations applicable to LNG carriers and FSRU's; actions taken by regulatory
authorities that may prohibit the access of LNG carriers or FSRU's to various
ports; our inability to achieve successful utilisation of our expanded fleet and
inability to expand beyond the carriage of LNG; increases in costs including:
crew wages, insurance, provisions, repairs and maintenance; changes in general
domestic and international political conditions; the current turmoil in the
global financial markets and deterioration thereof; changes in applicable
maintenance or regulatory standards that could affect our anticipated dry-
docking or maintenance and repair costs; our ability to timely complete our FSRU
conversions; failure of shipyards to comply with delivery schedules on a timely
basis and other factors listed from time to time in registration statements and
reports that we have filed with or furnished to the Securities and Exchange
Commission, including our Annual Report on Form 20-F and subsequent
announcements and reports. Nothing contained in this press release shall
constitute an offer of any securities for sale.
May 30, 2012
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda.
Questions should be directed to:
Golar Management Limited - +44 207 063 7900
Doug Arnell - Chief Executive Officer
Brian Tienzo - Chief Financial Officer
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
Golar LNG Q1 Results 2012:
http://hugin.info/133076/R/1615859/515190.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Golar LNG via Thomson Reuters ONE
[HUG#1615859]
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Datum: 30.05.2012 - 08:57 Uhr
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News-ID 151074
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