Golar LNG: Interim Results For The Period Ended June 30, 2012
(Thomson Reuters ONE) -
Highlights
* Golar LNG reports operating income of $58.0 million for the second quarter
of 2012, an increase of 108% from the first quarter.
* Golar LNG reports consolidated net income of $35.4 million for the second
quarter of 2012.
* Nusantara Regas Satu ("NR Satu" - formerly Khannur) delivered and started
its charter on May 4(th )and successfully completed acceptance tests.
* Hilli and Gandria have completed their reactivation and will be marketed for
future trading as well as for project work.
* Golar LNG increases quarterly dividend by 14% to $0.40 cents per share,
driven by improved cashflow and stronger market outlook.
Subsequent events
* Golar LNG completed the sale of interests in the companies that own and
operate the floating storage and regasification unit ("FSRU"), NR Satu to
Golar Partners L.P. ("Golar Partners" or the "Partnership"), a subsidiary of
Golar, shortly after quarter-end[1].
* Golar Partners successfully raised net proceeds from a public follow-on
equity offering of approximately $188 million.
* Golar has been awarded the Gas Atacama Mejillones Seaport's FSRU project for
a long term charter (subject to certain conditions) of one of the Company's
FSRU newbuilds.
Financial Review
Golar LNG Limited ("Golar" or the "Company") reports consolidated net income of
$35.4 million and consolidated operating income of $58.0 million for the three
months ended June 30, 2012 (the "second quarter").
Revenues in the second quarter were $107.0 million as compared to $83.1 million
for the first quarter of 2012 (the "first quarter"). The increase is primarily
as a result of increased rates for Golar Arctic and Golar Grand throughout the
quarter following the commencement of their new 3 year charters and, both NR
Satu and Golar Viking commencing new charters in May. This is reflected in an
improved average Time Charter Equivalent ("TCE") rate for the second quarter at
$97,118 per day compared to $90,464 for the first quarter.
Operating costs in the second quarter at $17.8 million are lower than the first
quarter at $27.9 million. This is mainly due to the majority of the expensed
reactivation costs for both Hilli and Gandria being incurred in the first
quarter of 2012 as both vessels completed their reactivation in April.
Net interest expense for the second quarter at $8.5 million is higher than the
$6.1 million incurred in the first quarter mainly due to a full quarter's
interest charge accruing on the Company's convertible bond issue in March 2012.
Other financial items increased to a loss of $4.4 million in the second quarter
compared to $2.6 million in the first quarter. This is mainly due to the
negative movement in the valuation of currency swaps and forward contracts.
Tax expense is higher this quarter at $0.4 million compared to a first quarter's
tax credit of $1.2 million. This is mainly due to tax provisions made in respect
of our Indonesian operations related to the ownership and management of the
Company's fourth FSRU, the NR Satu. However, the tax exposure in Indonesia is
mitigated by the recognition of revenue from the charterer such that the taxes
paid are fully recovered.
Financing, corporate and other matters
Dividends
With the delivery of the NR Satu and a full quarter's earnings at new charter
rates for both Grand and Arctic, the Board has proposed that the cash dividend
be increased by $0.05 cents to a total of $0.40 cents a quarter. The record date
for the dividend will be September 13, ex-dividend date is September 11 and the
dividend will be paid on or about September 27, 2012.
Chile FSRU
The Company announced on July 5, 2012 that it had been awarded the Gas Atacama
Mejillones Seaport's FSRU Project ("Gas Atacama"). The initial term of the
contract, which remains subject to certain Charterer conditions being met by the
end of 2012, is for 15 or 20 years and is expected to generate an average
annual EBITDA of approximately US$47-US$48 million. On top of the initial term,
Gas Atacama has three five-year contract extension options. Should the
conditions on the contract be met, the Company plans to exercise the option to
have its LNG carrier newbuild scheduled for completion in early 2015 constructed
as an FSRU. If the conditions are not met, the Company will take delivery of an
LNG carrier as originally envisioned.
Golar LNG Partners follow-on equity offering
Golar Partners successfully closed a public offering of 5,500,000 common units
on July 16 at a price of $30.95 per common unit. In addition, the Underwriters
exercised in full their option to purchase a further 825,000 common units
bringing the total number of units sold to 6,325,000. Golar GP LLC, the
Partnership's general partner, maintained its 2% general partner interest in the
Partnership and Golar subscribed to 969,305 common units in a private placement
at a price of $30.95 per unit. The net proceeds to the Partnership from the
public offering were approximately $188 million. Following the closing, the
Company owns 10,296,559 common units and 15,949,831 subordinated units
representing an approximate 55.5% interest in the Partnership. By virtue of its
ownership of the General Partner which owns 946,355 units, the Company's total
interest in the Partnership now stands at approximately 57.5%. The proceeds
were used to part finance the Partnership's purchase of the Nusantara Regas Satu
from the Company on July 19.
Nusantara Regas Satu
As previously announced, the conversion of NR Satu was completed in April and
the FSRU was delivered to the Charterer on May 4. The FSRU successfully
completed its acceptance procedures on July 13. The FSRU has been in operation
without any major technical issues since its delivery.
Subsequent to the successful acceptance by its Charterer, the Company completed
its sale of interests in the companies which own and operate the NR Satu to
Golar Partners on July 19, 2012. Golar sold the FSRU for $385 million. The
acquisition was financed by Golar Partners by raising gross proceeds of $230
million from its equity offering and $155 million of vendor financing provided
by the Company. The vendor financing is expected to be refinanced when Golar
Partners enters into bank financing in respect of the NR Satu. This is expected
to be completed in the near future. The proceeds received by the Company from
this sale will in part be used to meet some of its 2013 and 2014 newbuilding
commitments.
Golar Maria charter
The summer market is somewhat softer driven by approximately 6.5 million tonnes
of production capacity being temporarily closed down for regular maintenance
work. Nevertheless, Golar Maria, which was redelivered from the charterer in
August, is currently trading in the spot market at attractive rates.
The Board expects the shortage of ships to manifest itself in increasing short-
medium term charter rates later in the year as players re-enter the market to
build stocks for winter and ships ordered for the Angola LNG project are
deployed on their term charters. Angola LNG expects to launch in September.
When the Company feels that market rates better reflect the underlying reality
it will consider longer term charter options for the Maria.
De-listing from Oslo Bors
The Company announced on April 27, 2012 that it would seek to de-list from the
Oslo Bors. A Special General Meeting was held on June 18, 2012 to seek
shareholder support for this and an overwhelming majority voted in favour of the
proposal. An application to de-list was made to Oslo Bors in July and the
Company will now de-list from the Oslo Stock Exchange on August 30, 2012.
As previously announced by the Company in its Special General Meeting notice,
Golar will maintain a VPS register, and, subsequent to its de-listing, will
maintain an OTC listing in Norway. This will mean that Norwegian shareholders
will be able to continue holding and trading their shares in Norway but that the
Company will also be able to realize the financial savings it was seeking.
Shares and options
During the quarter a total of 25,000 options were exercised. In connection with
this, the Company issued 25,000 new shares. The total number of remaining
options is 760,029. As at June 30, 2012 the total number of shares outstanding
in Golar excluding options is 80,323,752.
Shipping
The market tightened during the second quarter as a result of stronger Far East
demand for LNG and increasing availability of cargoes both in the Atlantic and
Pacific basins. Charter rates experienced upward pressure due to a lack of
vessel availability.
Increasing LNG production and increasing tonne/mile ratios as well as fleet
renewals will continue to drive demand for medium and long-term charters.
Shorter-term tightness in the market is expected to remain through 2012-13.
With much of the overhang of tonnage restricted to First Generation vessels in
the East during the second quarter, chartering interest in both regions remained
unfulfilled. As such, with anticipated structural tightness expected and with
strong demand for tonnage, a bullish sentiment within the shipping market
continues.
The worldwide LNG fleet currently stands at 364 vessels including FSRUs, with a
further 83 on order including FSRU's/FPSO's. Seventy four vessels have been
ordered since January 1, 2011, including 17 vessels ordered in 2012. Today, half
the order book is committed. Delivery of most of this order book is not
scheduled to commence until Q3 2013 leaving demand unaddressed until the middle
of the decade.
FSRUs
The Board continues to look with confidence for further FSRU growth. The
Company's optimism in the last earnings report has in part been met following
its successful bid for the GasAtacama project. Demand continues to accelerate
for new FSRU projects worldwide, especially where a fast track start-up is a
high priority. Possessing the only uncommitted newbuild FSRU available for
2013 delivery and one of only two available for 2014 delivery, the Company
believes that it is well positioned to meet this need for a rapid solution.
Project development activities are particularly strong in the Middle East and
India while South America continues to lead the way with the largest number of
delivered, operating and awarded projects. Against this back drop of very
strong demand for new FSRU projects is a small supply pool of firm FSRU assets
for lease by experienced FSRU Owner/Operators. A strong operational track
record combined with robust underlying demand means Golar remains well placed to
win further contracts. The Company is one of two FSRU players shortlisted for
three separate projects. Five additional projects are expected to issue tender
invitations during the remainder of 2012.
LNG Market
Despite some production issues reported at several projects, and some scheduled
maintenance, incremental spot LNG supplies became available during the quarter
facilitating trading opportunities.
Far East demand, particularly in Japan, increased during the quarter which
created competition with the counter seasonal markets in the Middle East and
South America pushing up LNG prices. Considerable supply moved into Argentina,
much of it replacement cargoes following Repsol's cancelled supply contracts.
Brazil also appeared as a new entrant into the trading market, trading spot
cargoes that were originally intended for Brazil. While demand in Europe
remained weaker, LNG prices rose on the back of strong interest to re-export
cargo's to markets in the Atlantic and Pacific basins.
Towards the end of the quarter, with increasing supply ramping up from
Australian projects, decreasing oil prices and milder weather, demand and prices
softened. The summer lull could however be short-lived as Asian players are
likely to re-enter the market this fall to start building stocks for the winter
months.
New LNG supply is now entering the market. In Australia, Woodside's Pluto Train
1 production officially commenced commercial operations in late May. Following
its start-up, the project produced at a higher than expected rate. Angola LNG
delayed its launch which is now expected to export its first cargo by mid-
September, a set-back of about 5 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 80 million tonnes.
Both Australia Pacific LNG and Petronas' FLNG project have formally announced a
final investment decision ("FID") whilst Sabine LNG Export is expected to
announce a final FID in the third quarter. The sanctioning of these projects
adds additional capacity of approximately 23 million tonnes to projects under
construction. In addition to the new production in 2012 from Pluto and Angola
LNG and projects already under construction, large natural gas reserves in new
regions such as North America, East Africa and the Eastern Mediterranean are
expected to drive the need for LNG vessels higher.
Outlook
The Board is pleased with the performance of the Company during the quarter as
the underlying strength of the LNG shipping sector has led to greatly improved
earnings. The technical performance of both the LNG carrier and FSRU fleets has
been excellent with close to 100% up-time on the chartered vessels demonstrating
Golar's commitment to operational excellence.
The Board expects that earnings in the coming year will improve as a function of
increased charter revenues for Golar Maria and Golar Viking as well as potential
income from Gandria and Hilli. The first of the thirteen newbuildings is
scheduled to be delivered in September 2013. With all newbuildings being
delivered in the period between September 2013 and first quarter 2015. This
will create another steep ramp up in the Company's operating cash flow.
The present charter market indicates a strong backwardation for longer charter
durations. The Board is optimistic that long term rates will however improve as
a function of a solid vessel supply / demand situation and restricted amount of
newbuildings available. The Company has received several proposals for long term
charters but does not find the rate levels attractive. The Board sees the short
to medium term market as financially attractive while the Company waits for long
term rates to escalate.
Shareholders should be prepared for short term volatility in the market in the
next two to three years, however it is becoming increasingly clear that
significant amounts of new tonnage will have to be brought to the market to meet
the expected 90 mmtpa increase in LNG production in the period to 2017. With its
13 uncommitted newbuildings and 7 existing vessels Golar is in a very strong
position to help meet this demand.
The drop down of NR Satu has increased Golar's financial flexibility. The Board
expects that through operational cash flow, new bank debt and further drop downs
the Company can fully finance the newbuilding program and also maintain a high
dividend capacity without raising additional equity.
The large spread in global gas prices and relative cheapness of gas versus oil
is likely to spur strong growth and high activities in the years to come. Golar
is spending significant time in order to find investment opportunities which can
capitalize on this trend. The Company is currently working actively on
liquefaction projects, power projects as well as floating storage and
regasification projects.
The Company's success in the tender for the GasAtacama Mejillones LNG import
project has demonstrated Golar's market leading position in Floating Storage and
Regasification. Key to the success in this project was the Company's strong
influence with the key shipbuilding yards as well as its demonstrable
operational track record. With final investment decisions upcoming on new and
credible FSRU projects, and the limited pool of providers with a track record of
delivering and operating such assets, the Board is hopeful of more lucrative
FSRU contracts in the relatively near term.
Operating results are expected to grow further in the third quarter and further
positive development and high growth is expected to continue in the periods
that follow. The Board is excited about the company's current positioning and
the opportunity to deliver a solid return 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.
August 22, 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
--------------------------------------------------------------------------------
[1] Golar LNG Partners is a subsidiary of the Company. Accordingly, the effect
of the dropdown of the Nusantara Regas Satu to Golar LNG Partners, partly
financed by vendor financing for $155 million with the balance of $230 million
paid in cash, will be eliminated on consolidation for the purpose of the
consolidated financial statements.
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
Golar LNG Q2 Results 2012:
http://hugin.info/133076/R/1635757/525527.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#1635757]
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Datum: 23.08.2012 - 08:56 Uhr
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News-ID 177028
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