INTERIM RESULTS FOR THE PERIOD ENDED SEPTEMBER 30, 2013
(Thomson Reuters ONE) -
Highlights
* Golar LNG ("Golar" or the "Company") reports third quarter 2013 ("third
quarter") net loss of $13.1 million (including a non-cash loss of $8.2
million on interest rate swaps).
* EBITDA* generated in the quarter amounts to a loss of $3.3 million.
* Golar concludes $1.1 billion funding facility for eight of its thirteen
newbuilds.
* Ten year FSRU time charter for the Golar Eskimo concluded with the Hashemite
Kingdom of Jordan.
* Five year FSRU time charter for the Golar Igloo concluded with the Kuwait
National Petroleum Company.
* Golar Tundra shipbuilding contract amended to include FSRU capability with a
revised delivery date of November 2015.
* Spot charter rates hold firm however market remains volatile and inefficient
- Gimi and Golar Viking experience prolonged periods of offhire.
* Board maintains dividend at $0.45 for the quarter.
* EBITDA is defined as earnings before interest, depreciation and amortization
equal to operating income plus depreciation and amortization.
Subsequent events
* The Company takes delivery of the Golar Seal ("Seal") and Golar Celsius
("Celsius") in October.
* Golar Arctic commences scheduled drydock.
* Golar receives financing commitment in respect of four of its remaining five
unfinanced newbuildings.
Note on Accounting Treatment for Golar Partners
Effective December 13, 2012, the operating income of Golar LNG excludes the
operating results of Golar Partners. This means that the Company's share of the
Partnership's results are now split and recorded below operating income based on
the class of shares held.
Dividends pertaining to the Company's common unit holding in the Partnership,
General Partner stake and Incentive Distribution Rights (IDRs) will be treated
and reported as dividend income. Equity in Net Earnings of Affiliates will
include Golar's share of the Partnership's results in respect of the Company's
holding in the subordinated units only. Against these earnings will be a charge
in relation to amortization of a share of the basis difference representing the
fair value gain recognized upon deconsolidation. Where there has been an asset
sale to the Partnership, as was the case in the first quarter ("first quarter")
the asset concerned will be recorded at fair value and a gain or loss on sale
will be recognized within operating income. A portion of the gain or loss will
be deferred and amortized over the remaining useful life of the asset concerned.
Financial Review
Following the IPO of the Partnership by the Company (together "the Golar Group")
and subsequent dropdowns of a large portion of Golar's operating fleet, the
majority of the vessels in the Golar Group now reside in Golar Partners. Based
on third quarter operating results of both the Company and Golar Partners, 85%
of the aggregate net time charter revenue is sourced from vessels that are
operating within Golar Partners' corporate structure. Vessels remaining within
Golar's deconsolidated third quarter operating results are represented by the
five vessels which have not yet been dropped down to Golar LNG Partners,
including Golar Arctic and Viking (both modern operational vessels), Golar
Gandria and Hilli (both first generation vessels currently in layup pending
conversion projects) and Gimi (first generation vessel which concluded a short
term charter in June and is now being prepared for layup pending conversion).
Costs incurred by Golar in its deconsolidated operating results include,
primarily, direct operating costs of those five vessels, general and
administration costs, as well as expenses related to the build-up in officer
ranks for its newbuilding fleet and project related expenses for prospective
FLNG and FSRU projects. Although scheduled for delivery in late-September, the
Seal was not presented to the fleet until October 3(rd) and therefore made no
contribution to third quarter earnings. As the operating performance of Golar
Partners has such a material impact on the Company's over-all financial outcome,
the following review for the third quarter considers group wide results (i.e.
including Golar Partners) as well as the deconsolidated results.
Golar Group Results
Total revenue for the third quarter of 2013 at $103.1million is in line with the
second quarter. Despite a full quarter contribution to revenue from both the
Golar Winter and the Methane Princess which were in drydock during the second
quarter together with an uplift in the Golar Spirit and Winter hire rates,
offhire and associated voyage costs for Golar Viking and the Gimi which were
both idle for a greater portion of the third quarter entirely offset this. The
increase in unscheduled offhire of the Viking and Gimi also contributed to a
reduced third quarter Time Charter Equivalent ("TCE") of $96,220 per day
compared to $107,945 for the second quarter. Direct vessel operating expenses
at $16.9 million do however compare most favourably with the previous quarters
$20.0 million. Total operating costs declined to $20.8 million from $24.0
million in the second quarter despite $3.9 million of operating expenses related
to the build-up of our officer complement for the newbuilding programme.
Underlying administration expenses (i.e. non-project related) of $4.0 million
are slightly lower than the previous quarter at $4.2 million. Project related
expenses of $2.6 million, which represent the balance of third quarter total
administration costs of $6.6 million, are in line with the second quarter ($2.5
million) and consist primarily of costs related to the Keppel FEED study and
ongoing contract negotiations together with Douglas Channel and other FLNG
ventures currently being pursued.
Net financial expenses at $9.8 million are slightly higher than the second
quarters $9.3 million. Other financial items at $16.4 million consist mainly of
non-cash mark to market valuation of interest rate swap losses and financing
commitment fees.
To assist investors with prior quarter comparisons and assessments of underlying
operating performance of the Golar Group, the Company presents in the table
below some operating performance metrics including the impact of Golar Partners
on a consolidated or group wide basis.
+----------------------------------------------------------------------------+
| |
| |
| (Including Consolidation of Golar |
| Partners) |
| |
| Jul-Sep Apr - Jun |
| |
| (in thousands of $) 2013 2013 ((1)) |
| |
| (unaudited) (unaudited) |
| |
| Total revenues 103,122 103,817 |
| |
| Vessel operating expenses 20,796 23,974 |
| |
| Voyage and commission expenses 5,747 3,298 |
| |
| Administrative expenses 6,612 6,915 |
| |
| Depreciation and amortization 25,487 25,216 |
| |
| Operating income 44,480 44,414 |
| |
| Interest income 695 658 |
| |
| Interest expense (10,512 ) (9,987 ) |
| |
| Other financial items (16,398 ) 47,547 |
| |
| |
+----------------------------------------------------------------------------+
1. Please see Appendix A for reconciliation to the results as reported in the
condensed statements of income.
Golar Deconsolidated Results
The Company's deconsolidated results show an operating loss prior to
depreciation and amortization of $3.3 million with the main components being
total operating revenue at $17.0 million (down from second quarter 2013 at $27.9
million due to a substantial increase in commercial waiting time for Golar
Viking and no hire being earned by the Gimi which had been on hire until mid-
June), vessel operating expenses of $9.8 million, and administrative costs at
$5.6 million. The above resulted in a third quarter deconsolidated net
operating loss of $11.9 million.
The contribution to the Company's net income deriving from the operating results
of Golar Partners comes largely in the form of dividend income on common units,
its general partner stake and incentive distribution rights, which collectively
totalled $7.8 million for the third quarter. Dividend income shown in the
income statement does not include cash received in respect of the Company's
ownership of the Partnership's subordinated units. When all classes of ownership
are taken into account, the aggregate underlying cash dividend received during
the third quarter of 2013 is $16.0 million which is in line with that received
in the second quarter.
Golar reports net financial income of $1.3 million earned predominantly on its
holding of Golar Partners' high yield bond and enhanced further by deposit
interest from cash balances earmarked to meet the Company's newbuild pre-
delivery instalment obligations. Non-cash deemed interest in relation to the
newbuilding program is capped by the interest payable on Golar's secured debt
facilities and corporate borrowings. During the third quarter there were two
debt facilities, one secured against the Golar Arctic and one secured against
the Golar Viking. There were no corporate borrowings. Interest expense is
therefore $nil this quarter and will be close to $nil in the fourth quarter
despite the drawdown of secured facilities in respect of the recently delivered
Seal and Celsius and the part utilisation of a corporate facility. Other
financial items of $12.1 million relate primarily to non-cash losses on interest
rate swaps and commitment fees in respect of the newbuild facility.
Financing
USD 1.125 billion newbuilding facility
On July 25 the Company executed a USD $1.125 billion financing agreement ("the
Facility") to fund the first 8 of its 13 newbuild vessels and FSRUs. The
facility is divided into three tranches: A term loan of USD $450 million funded
by a consortium of lenders and guaranteed by a 95% Korea Trade Insurance
Corporation ("K-Sure") policy; A term loan of USD $450 million funded by The
Export Import Bank of Korea ("KEXIM"), and; A term loan of USD $225 million
funded by a syndicate of commercial banks (the "Commercial Tranche"). The
tranches have a 12 year repayment profile. In anticipation of entering into
this financing, the Company had previously entered into interest rate swaps to
hedge the majority of the loan such that the all-in interest cost for the
initial seven years of the facility will be approximately 3.74%.
Four-unit financing commitment
The Company is working with ICBC Financial Leasing Co. Ltd. ("ICBCL") in
relation to a sale and leaseback transaction for four of the remaining five
unfinanced newbuildings. ICBCL has obtained its internal credit approval for
the transaction, and has signed off on a general termsheet. Final documentation
is still being prepared.
The financing structure will fund up to approximately 90% of the purchase price
of each vessel. Vessels will successively be bareboat chartered by the Company
at a fixed rate for a firm period of 10 years. The lease is not reliant on long-
term charters being in place although the ultimate ambition of the Company is
that these and the majority of its existing and future fleet will eventually be
employed under long term charters and therefore reside in Golar Partners. Under
the leasing structure, the Company has options to purchase the vessels after the
fifth anniversary of the financing.
As with the eight-unit facility completed in July, the Company had entered into
interest rate swaps in 2012 in anticipation of financing being put into place.
This enabled the Company to secure very competitive hedging rates to limit its
interest exposure. This means that the cost of the lease agreement including an
exercise of the of purchase option remains competitive, with an all in financing
cost at a level lower than Libor + 300 bp.
To date $1.118 billion of the total $2.74 billion newbuilding capital
expenditure has been paid. Of this $256.4 million has been funded by drawdowns
against the $1.125 billion facility. Taking into account the $869 million
undrawn balance of the Facility and current free cash reserves, the company was
looking at an unfunded balance of $697 million to fully satisfy its newbuilding
programme. The commitment in respect of these four newbuildings will be
sufficient to cover this.
Corporate and other matters
FSRU activities
On July 31 the Company announced that it had entered into a firm Floating
Storage and Regasification (FSRU) time charter with the Government of the
Hashemite Kingdom of Jordan, represented by the Ministry of Energy and Mineral
Resources ("the Government").
The FSRU Golar Eskimo will be moored at a purpose built structure that is to be
constructed by the Aqaba Development Corporation off the Red Sea port of Aqaba.
To this end, certain modifications must be made to the vessel to ensure that it
is compatible with this structure, the costs of which are for Golar to bear and
are not expected to exceed 10% of the delivered FSRU price. Golar has
commissioned the builder, Samsung, to carry out these modification works. This
will postpone the expected delivery from May 2014 to its scheduled contract
commencement in the fourth quarter of 2014. Annual EBITDA contribution to Golar
for the first five years of the contract will be approximately $46 million and
approximately $43 million per year for the second five year term. The
Government has the option to terminate the time charter after year five, subject
to payment of a significant early termination fee.
On August 4 Golar executed a firm contract to provide the Kuwait National
Petroleum Company ("KNPC") with FSRU services to support their LNG import
operations at Mina Al Ahmadi. With an initial term of five years, the contract
contemplates the provision of portside FSRU services for an anticipated nine
months of the year together with a three month window where the vessel is free
to pursue spot carrier and other short term business opportunities. Winter
scheduling of the three month stand-down period together with favourable
positioning mean that the company is optimistic for the vessel's trading
prospects. The 170,000cbm newbuild FSRU Golar Igloo will service the contract
that is set to commence in March 2014. With a total contract value of
approximately $213 million covering both capital and operating elements over
five years, Golar expects to supplement these earnings with additional hire
payments during the winter months each year. Scheduled for delivery in December
of 2013, the company is pursuing short term winter voyage business and the Igloo
may also be in a position to collect a commissioning cargo in advance of
commencing FSRU operations in March.
As both this and the Jordanian contracts are for five years or more, both
vessels will be offered to Golar Partners to acquire. Assuming these
transactions proceed as planned, significant cash will be freed up for Golar
LNG. Furthermore, these transactions will significantly increase the
distribution capacity of Golar Partners leading to increased distributions for
Golar LNGs existing unit position as well as its ever more valuable incentive
distribution rights.
Although the Chilean project remains subject to indeterminate delays, Golar
continues to engage in discussions with Gas Atacama and remains the exclusive
FSRU provider. As the start-up for this project is now likely delayed beyond
2015, an additional newbuild FSRU will be considered and pricing under the
contract shall be reviewed at the point in time in which the project is ready to
go firm. Significant uncertainties are however linked to completion and possible
start-up of this project.
Several new FSRU projects have been launched in recent months. Active projects
include Egypt, Ghana, Columbia and India. These projects and additional new ones
may create interesting opportunities for our FSRU Golar Tundra which will be
delivered in 2015.
Newbuild Deliveries
On October 3(rd) the Company took delivery of its first Samsung built, TFDE LNG
carrier, the Golar Seal. Its second LNG carrier the Golar Celsius was delivered
on October 31(st) . Both vessels have been financed through the $1.125 billion
facility with approximately 65 % leverage equal to USD 128 million per ship. The
cash break even TC rate in order to cover operating cost, interest expense and
full amortisation of debt is estimated to be USD 57,000 per day. Both vessels
are currently waiting to commence their first cargo voyage. The current market
represents a generally difficult short term employment environment. Certain
additional challenges and commercial disadvantages are linked to chartering out
a warm vessel with no trading record coming directly from the yard.
Viking and Gimi
Despite spot charter rates holding relatively firm in the third quarter,
performance of the Viking was disappointing. With the vessel redelivered in the
East in mid-July, and seeing a low number of cargoes available in that region,
Viking was eventually repositioned to the Atlantic Basin where she subsequently
secured a voyage charter in November. The Company has also encountered problems
fixing the 1976 built 125k cbm Golar Gimi after completing its last time
charter. In view of this, the Board has decided to prepare Gimi for layup.
Gimi,, Gandria and Hilli will be kept in proper lay-up condition pending the
firming up of conversion opportunities for these vessels.
Drydockings
The second quarter drew to a close a particularly eventful nine-month program of
drydockings, the likes of which are not expected again prior to 2018. The
impact of these has been most heavily felt by Golar Partners where all of the
affected vessels reside. No vessels were docked during the third quarter. This
is set to change during the fourth quarter when the Golar Arctic will enter
Keppel drydock for her scheduled five year special survey. In light of sub-
optimal utilisation of the Viking, Gimi's transition to layup and initial
positioning costs of the Seal and Celsius, the drydocking of the Arctic is
expected to result in materially lower fourth quarter deconsolidated net revenue
to Golar.
Shares and options
During the quarter 17,368 options were exercised. As at 30 September, 2013 there
are 539,959 remaining options. The total number of shares outstanding in Golar
excluding options as at September 30, 2013 is 80,536,480.
Dividend
Although disaapointed with the third quarter operating performance, the Board
has decided to hold the dividend to $0.45 cents. The Board sees the dividend as
an important part of the compensation to shareholders. Stress tests on the
Company's operation and cash position based on the existing financing
arrangement and a very weak rate environment have concluded that the current
dividend payment can be kept without a requirement for new equity even in a
scenario when the LNG shipping market remains in over supply until big volumes
of new liquefaction deliver in 2016 and 2017.
The record date for the dividend will be December 6, ex-dividend date is
December 4 and the dividend will be paid on or about December 20, 2013.
Floating Liquefaction ("FLNG")
The recent insolvency filings in British Columbia by LNG Partners, may impact
the execution path for the Douglas Channel floating liquefaction project. Golar
is working diligently with HN LNG Limited Partnership and other relevant
stakeholders to resolve remaining commercial issues and enable a final
investment decision that will allow the project to move forward. The topography
of the coastline in this territory is extremely well-suited for floating
liquefaction solutions. Golar has the unique ability to deliver a financed,
complete technical solution within approximately 30 months of a full commitment
being made using our recently completed FEED, and as such we remain confident
that we are very well positioned to secure the firm pipeline capacity and site
access required for a successful project.
Golar completed its FEED study at the end of August, 2013. The FEED confirmed
that conversion of an existing LNG Carrier into a Floating Storage and
Liquefaction Vessel (FSLV) will take approximately 30 months from financial
commitment and will be competitive with the lowest cost liquefaction solutions
in the market. Golar is now negotiating conversion and liquefaction contracts
with Keppel Shipyard and topside partners with the goal of finalizing all
contracts by year end. Some additional time has been added to account for
operations currently contemplated at three specific sites with significant
differences in water temperature and sea conditions.
The Company is currently focusing on markets in the Americas and West Africa
that offer multiple opportunities to deploy FSLVs. In North America,
liquefaction tolling structures and Henry Hub-indexed transactions for brown-
field projects are well established with a toll fee in the region of $3.00
(covering capital and operating costs) plus fuel consumed in the liquefaction
process being a common benchmark for 20 year transactions with substantial
credit support, 20 year commitments and large volumes. In West Africa Golar is
currently in discussions with producers targeting stranded reserves ranging in
size from 400 BCF to 2.5 TCF. The Board believes that Golar's ability to offer
economic liquefaction solutions for smaller reserve sizes is unique in the
industry.
While a 20 year tenor is the base case for commercial discussions around Golar's
4-train (~2.5 MTPA) FSLV, many potential transactions have shorter terms or less
liquefaction capacity. Golar's Board is comfortable with the Company's pursuit
of transactions in the 7 to 15 year range with capacities as low as 0.6 MTPA for
deals that are priced at a premium to the benchmark toll.
Tolling fees, which will be somewhat dependent on factors such as location, port
infrastructure requirements, capacity and counterparty credit quality in this
range should generate approximately $125 million to $200 million of annual
EBITDA for each million tonnes of liquefaction capacity. Many of Golar's
current opportunities offer additional revenue potential through upside sharing
in commodity uplift, Golar being an off-taker of LNG, Golar providing shipping
or offering a full chain integrated floating solution.
The Board is enthusiastic about the progress being made on the Company's project
portfolio and is increasingly comfortable with the prospect of ordering long
lead items with a view to commencing the first FLSV conversion.
In anticipation of ordering these long lead items the Board is considering
certain measures to increase the Company's ability to fund a speculative FLNG
vessel conversion. Measures may include balance sheet restructure as well as the
formation of a separate entity for the FLNG business. Golar has received strong
interest from several investors/co-operations who are willing to participate in
such a speculative FLNG contracting unit. The economics in the preliminary
calculations indicate are very compelling.
Shipping
Overall charter rates during the third quarter remained more resilient than many
market observers expected. Despite uncertainty surrounding the Atlantic
shipping market at the beginning of the quarter, spot rates for a steam turbine
vessel averaged a little over $100,000 per day with a peak fixture being
concluded at just over $115,000 per day.
The blockade of the Bonny terminal in Nigeria by NIMASA, the local maritime
agency, which began in June and continued into July meant that while some
shipping demand was removed by a lack of cargoes, vessels were not easily re-
deployed due to a lack of clarity about when loadings would recommence. Numerous
vessels therefore waited for cargoes outside Bonny and this had a knock-on
effect on shipping logistics. A lack of appropriate well placed tonnage meant
that those vessels that were well positioned commanded strong charter rates in
the spot market. Conversely, vessels that were out of position, as was the case
with the Viking, or had restrictions on where they could trade had more
difficulty securing employment. Higher rates for modern vessels also made
vintage tonnage increasingly attractive to charterers. Several older vessels
were fixed at discounted rates during July. Market tightness in the summer was
further exacerbated by dry docking schedules. A record 52 new LNG carriers were
delivered during 2008, all of which are to be dry docked this year. Many of
these dockings were scheduled during the summer when shipping demand was
expected to be lower, crimping supply and thus preserving rates.
During August a series of cargoes were being marketed for FOB sale from Atlantic
projects such as Nigeria, Trinidad and Egypt. Finding appropriate available
tonnage for these cargoes was extremely difficult. Portfolio players with
possible length started to withdraw tonnage from the chartering market in order
to secure these cargoes. Meanwhile shipping demand was not so strong in the
Pacific and the inter basin spread in charter rates widened significantly.
Initial cargoes from Angola LNG raised the prospect of full production being
reached before year-end, the project's ships being withdrawn from the spot
market and possibly further vessels being required. Continuing problems however
mean that the Soyo plant is producing only a drip feed of cargoes and full
production is not now expected until well into 2014 at the earliest.
Whilst the spot market remained healthy, especially in the Atlantic, the medium
term market softened on the back of anticipated newbuildings being delivered. A
steam turbine vessel was fixed in July for one year at below $80,000 per day,
with delivery in October. A larger reheat steam turbine newbuilding was also
fixed for 6 months with a similar delivery window and a DFDE newbuilding was
committed to an energy major for 12-18 months at a rate rumoured to be just over
$80,000 per day.
Strong Atlantic demand during July and August encouraged some owners, including
Golar, to position vessels from the east in order to capture some of this
business. Despite healthy charterer interest, fixing activity was however
limited during early September with the easing of summer demand in Asia and
winter demand yet to materialise. After a tight few months, the Atlantic
tonnage list began to grow once again with limited feasible cargo opportunities
available. Rates softened from summer peaks of $110-115,000 per day reverting
to levels also seen in the Pacific. Towards the end of September requirements
from export projects and trading houses (largely picking up European reloads)
began to soak up tonnage in both basins. This is a trend that has continued
through October to the present date.
Looking ahead and as the table below shows, supply of LNG carriers will arrive
in the market before the ramp up of liquefaction projects is complete. This
excess supply is expected to exert downward pressure on day rates in 2014 and
2015. However, the oversupply of vessels is expected to trough in 2015 and then
tighten rapidly as liquefaction from Australian Projects and Sabine Pass ramps
up in 2016.
+----+----+----+-----+
All values scaled to 160,000 m(3 )equivalent LNGCs|2013|2014|2015|2016+|
+--------------------------------------------------+----+----+----+-----+
|Vessel Demand | 5 | 15 | 17 | 81 |
| | | | | |
|Vessel Supply |(9) |(28)|(30)|(40) |
| | | | | |
|Vessel Retirements | 5 | 7 | 6 | 12 |
+--------------------------------------------------+----+----+----+-----+
| | | | | |
| | | | | |
|(over)/under supply | 1 |(6) |(7) | 53 |
| | | | | |
|Cumulative (over)/under supply | 1 |(5) |(12)| 41 |
+--------------------------------------------------+----+----+----+-----+
As always in shipping markets, the rate and amount of retirements of older
tonnage will be a key driver of the overall supply and demand balance. The
Company is only assuming that ships over 30 years old (built in 1984) are
retired over a 4 year period.
A recent revival in demand for drybulk carriers, product tankers, crude carriers
and container vessels has significantly tightened yard capacity in the next two
- three years and may ultimately squeeze yard availability to supply sufficient
capacity to meet rapidly increasing LNG production arriving in 2016 - 2017. This
has the potential to recreate a similar situation to that experienced when the
big Qatari trains where ramped up in 2011.
LNG Market
As with the shipping market, the LNG cargo market experienced an uncertain start
to the third quarter due to the Bonny terminal blockade. Whilst buying demand in
Asia was subdued, interested buyers were deprived of a major source of spot
cargoes and were perhaps at risk of having previously acquired cargoes delayed
or cancelled. This contributed to a slight firming of the Far East market during
July, despite limited activity. Some activity could also be attributed to
utility companies opportunistically topping up storage tanks whilst prices were
a little softer. Several spot DES cargoes were sold by Angola LNG on a tender
basis, all of which was destined for Far Eastern buyers.
Nigerian cargoes began to flow fairly freely upon lifting of the blockade and
additional cargoes were also marketed from Norway and Trinidad during August.
Seasonal weakness as the end of summer approached meant that demand did not
however noticeably pick up in August, despite the nuclear induced power
shortages in Korea. Far East price markers for autumn delivery therefore fell
slightly, allowing a couple of buyers to take the opportunity to pick up some
spot cargoes.
Many of the interbasin cargoes continued to be sourced as reloads from European
import terminals. Where Zeebrugge and the Spanish terminals have led the way on
re-exports in recent years, Fos, Montoir and the relatively new GATE terminal
have stepped up activity recently. Numerous cargoes have moved east from these
terminals and other Atlantic projects during the last three months as prices and
Far Eastern demand pick up.
During October, ENARSA and YPF announced a tender to supply close to 100 cargoes
to Argentina's two terminals throughout 2014 and 2015. BP was awarded the
majority of deliveries into the southern Bahia Blanca terminal and Gas Natural
was awarded all of the volumes into the northern Escobar terminal. ENARSA issued
a further tender for volumes to be delivered in 2014 in late October and expects
to award these volumes by the end of this month.
Outlook
As advised in previous quarters and with the bulk of cash earnings being
generated from vessels owned by Golar LNG Partners, the deconsolidated financial
performance of the Company is at an unsatisfactory level. The opportunities for
the Golar fleet to create earnings is being constrained with 3 out of the 5
vessels either in layup or in preparation for such whilst the Company carries
the burden of costs related to support our investments in LNG carrier fleet
expansion and the floating LNG production initiative.
On a group-wide basis however, operating income remained relatively stable as
the up-time performance for vessels under charter remained high and highlights
the solid performance of our in-house technical manager, Golar Wilhelmsen
Management. The Golar fleet did not experience any technical downtime during Q3.
The delivery of Golar's newbuildings that began in October of this year and will
continue on through 2014 will result in the Company controlling approximately
one third of the available modern multi-fuel vessels. In the current market
charterers are holding back from adding long term structural capacity to their
portfolios, and are only willing to do such chartering at what Golar considers
to be unattractive rates The Board believes that given our dominant position
with the high efficiency multi-fuel vessels, a shorter term chartering strategy
will be viable until the new production facilities, which add up to 100 MMTPA
representing approximately 37of existing production, delivers.This should be
measured against an orderbook of around 30% The short term direction of the
market will, to a large extent, be decided by how much producers are able to
debottleneck existing production facilities. Of special importance is ramp up
and stabilizing existing production from facilities in Nigeria and Angola.
Investors are however reminded that the introduction of a relatively large
number of newbuildings to the market, trading in the spot market will mean the
Company is exposed to pressure both on charter rates and more so on commercial
utilization levels. As observed in the Company's Q3 results, there are
significant fuel, boiloff and operating costs linked to having vessels in idle
positions. This is particularly the case for old and new steam driven vessels
where negative operating cost for idling vessels can cost up to USD 30.000 per
day when the full boilers are on.
The floating LNG production project continues at pace and remains promising.
The results of the FEED study conducted in cooperation with Keppel shipyards has
confirmed very attractive pricing against all known alternatives and a delivery
schedule that facilitates a fast track approach to projects. The Company's long
term optimism in this arena is supported by the historical experience on FSRU
projects where, in approximately 6 years from the delivery of Golar's first
permanently moored storage and regasification facility, floating solutions have
become the norm for that segment of the value chain given the advantages related
to cost, schedule, permitting, and financing. It is apparent that floating LNG
production, which has the same inherent advantages over land based facilities,
will have a similar impact on the industry including an acceleration in the
number of new export outlets expected to come on-stream (as was the case with
FSRU's). Such a global development is likely to lead to a conversion of the
world's gas market into a more integrated market with lower global price
differentials.
The Company's current focus on the FSRU side is the implementation of its two
latest long term contracts for Kuwait (Golar Igloo) and Jordan (Golar Eskimo).
Both of these FSRUs are of course candidates for dropdown to Golar Partners.
The construction of both of these vessels continues on schedule at Samsung Heavy
Industries and as such both vessels will be delivered on time into these
contracts. With each of these assets dropped down to Golar Partners, the
dividend level to be distributed by the Partnership is expected to increase.
Golar owns 100 % of the incentive distribution rights of the Partnership and
with the current Partnership quarterly distribution level at $0.5225 per unit,
the IDR threshold is currently at 25% (including GP units). The anticipated
dropdowns of the Kuwaiti and Jordanian FSRUs are expected to bring the IDR level
closer to the 50% threshold which will be achieved when the Partnership's
quarterly distribution level reaches $0.5775. To date, the Company has received
$3.7m from IDR contributions, most of which stem from the 25% IDR threshold
being reached. The IDRs therefore represent material benefit to the Company.
The operating results from Q4 will continue to suffer from commercial waiting
time for the three vessels currently trading in the spot market, and will
continue to be unsatisfactory. There have in the recent weeks been signs of a
more active market partly driven by seasonal strengthening but also by very firm
Asian prices. However this strengthening is not likely to largely influence the
Q4 numbers which in all likelihood will be worse than Q3.
Any additional drop down of vessels prior to year end will however significantly
improve net income for the quarter.
In this waiting for more production to come on stream environment the Board is
however pleased that the Company has completed the financing of 12 of the 13
newbuildings and that, combined with the anticipated drop down of the two FSRUs,
we will have financial strength to sail through a potentially weak spot market
and still continue to pay a high dividend distribution to our shareholders. Any
positive development in this short term challenging market situation might
greatly increase our dividend distribution and growth prospects
APPENDIX A - RECONCILATION OF RESULTS INCLUDING CONSOLIDATION OF GOLAR PARTNERS
+------------------------------------------------------------------------------+
| |
| |
| (Including |
| Golar consolidation of |
| Partners Golar Partners) |
| |
| Jul - Sep Complete Consolidation Jul - Sep |
| |
| 2013 Basis (100%) Adjustments 2013 |
| |
| (unaudited) (unaudited) (unaudited) (unaudited) |
| |
| Total revenues 17,030 87,633 (1,541 ) 103,122 |
| |
| Vessel operating |
| expenses 9,763 12,575 (1,542 ) 20,796 |
| |
| Voyage and |
| commission |
| expenses 5,011 736 - 5,747 |
| |
| Administrative |
| expenses 5,592 1,020 - 6,612 |
| |
| Depreciation and |
| amortization 8,648 17,485 (646 ) 25,487 |
| |
| Amortization of |
| deferred gain |
| relating to Golar |
| Maria (127 ) - 127 - |
| |
| Operating (loss) |
| income (11,857 ) 55,817 520 44,480 |
| |
| Interest income 1,298 266 (869 ) 695 |
| |
| Interest expense - 11,381 (869 ) (10,512 ) |
| |
| Other financial |
| items (12,086 ) (4,097 ) (215 ) (16,398 ) |
| |
| |
+------------------------------------------------------------------------------+
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. Although Golar 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 FSRUs; actions taken by regulatory
authorities that may prohibit the access of LNG carriers or FSRUs to various
ports; our inability to achieve successful utilization 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.
November 27, 2013
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
Stuart Buchanan - Investor Relations
This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)
Golar LNG Limited Q3 2013 Results:
http://hugin.info/133076/R/1746193/587799.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire 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 GlobeNewswire
[HUG#1746193]
Unternehmensinformation / Kurzprofil:
Datum: 27.11.2013 - 15:31 Uhr
Sprache: Deutsch
News-ID 320820
Anzahl Zeichen: 51696
contact information:
Town:
Hamilton
Kategorie:
Business News
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"INTERIM RESULTS FOR THE PERIOD ENDED SEPTEMBER 30, 2013"
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