Preliminary Fourth Quarter and Financial Year 2014 Results
(Thomson Reuters ONE) -
Highlights
* Delivery of new-build LNG carriers Golar Frost and Golar Glacier and FSRU
Golar Eskimo.
* Agreed the sale of Golar Eskimo to Golar LNG Partners LP for $390 million.
* Heads of agreement signed with Perenco and SNH for development of Cameroon
floating liquefaction project.
* Contract to convert a second LNG carrier, the Gimi, into a floating
liquefaction vessel made effective.
* Initiated a 5% share repurchase program and authorised issuance of up to
2.5 million new share options.
* Operating Loss in the quarter at $8.3 million is higher than 3Q at $5.4
million.
* Underlying EBITDA* in the quarter increased to $7.8 million compared to 3Q
of $5.9 million.
* Including $26.3 million non-cash losses on swaps 4Q reports a $38.0 million
net loss vs. a 3Q $7.8 million net profit.
* Board maintains dividend at $0.45 per share for the quarter.
* Underlying EBITDA is defined as earnings before interest, depreciation and
amortization, impairments and non-recurring items.
Financial Review
Underlying Business Performance
+--------------------------------------------+----------+----------+
| | 2014 | 2014 |
| | | |
| (in thousands of $) | Oct-Dec | Jul-Sep |
+--------------------------------------------+----------+----------+
| | | |
| | | |
| Time and voyage charter revenues | 32,563 | 26,009 |
| | | |
| Vessel and other management fees | 2,709 | 2,825 |
| | | |
| Vessel operating expenses | (12,812) | (11,206) |
| | | |
| Voyage and commission expenses | (11,850) | (6,135) |
| | | |
| Administrative expenses | (4,266) | (5,630) |
| | | |
| Depreciation and amortization | (14,124) | (11,220) |
| | | |
| Impairment of long-term assets | (500) | - |
| +----------+----------+
| Total Operating Losses | (8,280) | (5,357) |
| | | |
| | | |
| | | |
| Add back | | |
| | | |
| Non recurring items - Viking settlement | 4,000 | - |
| | | |
| Non recurring items - Keppel reimbursement | (2,500) | - |
| | | |
| Depreciation and amortization | 14,124 | 11,220 |
| | | |
| Impairment of long-term assets | 500 | - |
| +----------+----------+
| Underlying EBITDA | 7,844 | 5,863 |
+--------------------------------------------+----------+----------+
Overall, utilization of the spot fleet increased 1% over 3Q to 57%. Improved
utilisation of the Golar Celsius, Crystal and Penguin contributed an additional
$6.8 million of charterhire that helped increase revenues from $26.0 million in
3Q to $32.6 million in 4Q. Vessel and other management fees represent the
revenue Golar receives for managing the Golar LNG Partners LP fleet and these
remained relatively constant. A $4.0 million charge in respect of a 2012
charterer claim against the Viking and higher fuel consumption costs of $1.2
million incurred by the October delivered Golar Frost accounted for most of the
$5.7 million quarter on quarter increase in voyage and commission expenses.
Operating costs increased by $1.6 million over 3Q predominantly reflecting costs
incurred by the three October new-build deliveries, alongside a full-quarter's
operating costs incurred against the September deliveries, Golar Penguin and
Bear. Administration costs in 4Q of $4.3 million were $1.4 million lower than
3Q, mainly due to a reimbursement of $2.5 million in respect of previously
expensed FLNG FEED costs. This was partially offset by a $1.2 million increase
in the share option charge as a result of new options issued in October.
Depreciation and amortisation in 4Q amounted to $14.1 million, an increase of
$2.9 million over 3Q, mainly due to growth in the size of the fleet after new
building deliveries. An impairment charge of $0.5 million was also recorded in
the quarter against equipment ordered but not used during the Golar Spirit's
conversion from carrier to FSRU.
Collectively the above resulted in a $2.0 million increase in underlying EBITDA
from $5.9 million in 3Q to $7.8 million in 4Q.
Net Income Summary
+-------------------------------------------------------------+--------+-------+
| | 2,014| 2,014|
| | | |
|(in thousands of $) | Oct-Dec|Jul-Sep|
+-------------------------------------------------------------+--------+-------+
| | | |
| | | |
|Total Operating Loss | (8,280)|(5,357)|
| | | |
| | | |
| | | |
|Net gain on disposals to Golar Partners (includes | | |
|amortization of deferred gains) | 8,563| 184|
| | | |
|Other operating loss | (6,387)| -|
| | | |
|Dividend income | 7,174| 7,174|
| | | |
|Other | -| 313|
| | | |
|Net interest expense | (8,696)|(1,748)|
| | | |
|Other financial items |(35,015)| (410)|
| | | |
|Taxes | 349| (415)|
| | | |
|Equity in net earnings of affiliates | 4,296| 8,028|
| | | |
| | | |
| +--------+-------+
|Net (loss) income |(37,996)| 7,769|
+-------------------------------------------------------------+--------+-------+
In 4Q the Company generated a net loss of $38.0 million, driven predominantly by
significant non-cash financial and other non-recurring charges of items
amounting to $32.7 million.
Other operating gains and losses for 4Q include a release of the remaining
deferred gain on dropdown of the Golar Igloo. This amounts to $8.4 million and
brings the total gain on the Golar Igloo sale to $43.3 million, all of which was
recognised in 2014. Remaining damages in respect of the Viking claim (referred
to in the 2012 and 2013 Annual Report Form 20-F) amounted to $6.4 million and
were recorded against other operating losses.
The contribution to the Company's net income from operations includes dividend
income derived from the Company's share of common units, its general partner
stake and incentive distribution rights ("IDRs") in Golar Partners, which
collectively totalled $7.2 million for 4Q. This is in line with 3Q. The Company
also received a cash dividend of $8.7 million in respect of its ownership of the
Partnership's subordinated units and this is accounted for using the equity
accounting method. Golar has accounted for its share of the Partnership's 4Q
earnings (based on its ownership interest in the subordinated units only)
through the Equity in net earnings of affiliates line item in the income
statement. In 4Q this amounted to $4.3 million, a fall of $3.7 million from the
3Q results due primarily to a non-recurring tax credit recognised in the 3Q
accounts of Golar Partners. When all classes of ownership are taken into
account, the aggregate underlying cash dividend from the Partnership received in
4Q was in line with 3Q at $15.9 million.
Net interest expense increased from $1.7 million in 3Q to $8.7 million in 4Q as
the Company drew down on its debt facilities designed to fund the delivery of
new buildings. Included in the Other Financial Items loss of $35.0 million is a
$12.6 million non-cash mark-to-market valuation loss on interest rate swaps due
to decreases in long term interest rates in the period, a $13.7 million total
return swap loss on the Company's shares and $5.1 million of swap interest on
undesignated hedges. The remaining $3.6 million is comprised of amortisation of
debt related expenses, foreign exchange losses and bank charges.
As a result of all of the above, the Company generated a net loss of $38.0
million in 4Q, driven predominantly by non-cash financial and other non-
recurring items.
Investment Review
Hilli Conversion Contract
On November 13, 2014, the Company executed agreements with Black & Veatch
International, a subsidiary of Black & Veatch Corporation for a minority
interest in Golar Hilli Corporation. This investment together with Keppel's 10%
stake aligns interests of the key contracting parties and is aimed at ensuring
successful project execution and demonstrating the sponsors' confidence in
the feasibility, performance and cost competitiveness of the floating LNG
project.
As of end-January the overall Hilli FLNG project progress was 30.3% against
scheduled progress of 25.5% (4.8% ahead of schedule). Cumulative value of work
done, excluding the value of the original vessel, amounted to $305 million at
year end, $52 million of that being incurred in 4Q. The Golar Hilli LNG
liquefaction project thus remains comfortably within budget and on track for
commencement of operations by the targeted April 2017.
Gimi Conversion Contract
On December 31 the Company made effective agreements for the conversion of the
125,000m3 LNG carrier Gimi (a sister ship to the Hilli) to a Golar floating
liquefaction facility. As with the Hilli contract, this second suite of
conversion agreements is with Keppel Shipyard Limited. Keppel have
simultaneously entered into a sub-contract with Black & Veatch who will provide
their proven PRICO technology for the liquefaction units.
Coincident with the execution of these agreements, long-lead orders for gas
turbines and cold boxes were placed. To retain flexibility in the roll out of
the GoFLNG strategy, the Company has also secured certain beneficial
cancellation provisions, which if exercised prior to November 2015, will allow
termination of the Gimi contracts and the recovery of previous milestone
payments, less a set cancellation fee.
New-build Deliveries
During the fourth quarter two further TFDE LNG carriers were delivered. The
Samsung built Golar Frost, delivered in October, was financed using the existing
$1.125 billion facility with approximately 65% leverage equal to $131 million.
The Golar Glacier, also delivered in October, was the first vessel to be
financed under the ICBCL sale and leaseback facility. Upon delivery, $118
million was payable to the yard and $183 million net of fees was received from
ICBCL. On December 22 the second of three FSRU newbuilds, the Golar Eskimo was
also delivered. Eskimo was financed with a $162.8 million bank loan.
Subsequent to the quarter end, three further TFDE LNG carriers, Golar Snow,
Golar Kelvin and Golar Ice, were delivered. All have been financed by the four-
ship ICBCL sale and leaseback facility. The last of the thirteen vessel newbuild
program, the FSRU Golar Tundra remains on schedule for delivery in the fourth
quarter of 2015.
Sale of Golar Eskimo
On December 15 Golar announced that it had entered into an agreement to sell its
interests in the companies that own and operate the FSRU Golar Eskimo to Golar
Partners for $390 million. The sale was completed on January 20, 2015. Golar
Partners has financed the purchase using $7.2 million cash on hand, the proceeds
of a $220 million loan from the Company and the assumption of bank debt in
respect of the Golar Eskimo which at completion amounted to $162.8 million. The
loan from Golar has a two year term with interest chargeable at LIBOR plus a
blended margin of 2.84%.
Dry-dockings
The Golar Viking entered Keppel dry dock on November 6 and completed
approximately 1 month later. During drydock the Viking was also renamed "Salju"
and reflagged to Indonesia as a pre-cursor to the sale of the vessel.
Sale of Golar Viking ("Salju")
Under Indonesian cabotage regulations, LNG cargoes produced and sold within
Indonesia must be transported on an Indonesian flagged vessel. To take advantage
of the anticipated 2015 increase in domestic allocation for Indonesian produced
LNG cargoes, Golar sold the 2005 built LNG carrier Golar Viking (renamed Salju)
to Equinox who subsequently took steps to make the Salju Indonesian cabotage
compliant. The transaction was concluded on February 16, 2015 at a sale price
of $135 million which was close to the vessel's year-end book value. Shortly
before the sale Golar repaid the existing $82 million outstanding debt on the
vessel. In addition to the limited equity invested in the transaction by
Equinox, Golar have provided a bridging loan facility. Equinox intends to
refinance a majority of this loan with third party debt for which they already
have bank commitments. Post refinancing, approximately $53 million of the loan
from Golar, secured with a second priority security over the vessel, will remain
outstanding. This will have a tenor of 10 years and incur interest at LIBOR
plus a blended margin of 4% with a further benefit to Golar driven by the ship's
actual operational performance. Other than the repayment of this debt, the
Company does not expect this transaction to materially impact first quarter
2015 results.
Commercial Review
LNG Shipping and FSRU Performance
The average 4Q rate for steam LNG Carriers in the short-term market is estimated
to have been around $50,000-$55,000 per day and $65,000-$70,000 per day for TFDE
vessels. Not all short-term deals were concluded on a full round trip basis, but
rather included fuel only on ballast legs. Although chartering activity was
consistent with that in 3Q, the 4Q market became acutely sensitive to timing and
location. In many cases ships lay idle for significant periods with steam
vessels managing only to achieve rates in the $30,000 range with limited re-
positioning fees. In other cases, charterers experienced a lack of prompt
availability of cold and compatible vessels, where some TFDE vessels rates
reached $80-90,000 per day range on round trip voyages.
Sentiment again softened towards the end of the quarter when the forward gas
price curved flattened and moved into backwardation and the East West price
arbitrage narrowed. In addition, further newbuilds entered the pool of available
vessels. Rates and utilisation were in line with our previous estimates but are
expected to be under pressure until more LNG production capacity starts up in
the second half of 2015.
Against this challenging backdrop, Golar succeeded in securing new charter
business for two of its new buildings to replace, earlier than planned, older
vessels owned by Nigeria LNG. Employment of the carriers Golar Crystal and
Frost commenced in January 2015 and will continue for a duration of
approximately 12 months each. Significant reductions in boil-off and a material
improvement in fuel efficiency contributed to Nigeria LNG's decision to replace
the older vessels with Golar's new buildings.
During February 2015 both the Golar Arctic and Grand were redelivered by their
respective charterers. Since they were placed on their three-year charters in
2012, a number of larger newbuild TFDE carriers have been delivered. As smaller
steam turbine powered vessels, the future rates for the Grand and Arctic are
expected to be significantly lower than in recent years. Although the Grand is
part of the Golar Partners' fleet, the Partnership has a put option that
requires Golar to pay the Partnership $90,000 per day from redelivery in mid-
February through to October 2017. It should be assumed that the Grand will earn
substantially less than this in the near term. The Company has however made a
provision to mitigate some of the negative impact.
Golar's fleet of 5 operating FSRU's, all of which reside within the Partnership,
continue to operate reliably and in some instances well in excess of nameplate
capacity. Availability across the operating FSRU fleet remains at 100%. Golar
Eskimo visited Keppel shipyard in Singapore during February to conclude
modifications to the vessel in advance of her going into FSRU service in Jordan.
Business Development Review
FSRU activities
As noted above, the FSRU Golar Eskimo was delivered on schedule and has since
been sold to Golar Partners ahead of its commencement of service in Aqaba,
Jordan later this year. Preparations for the deployment of the vessel are on
schedule.
Ghana's FSRU project continues to advance towards a Final Investment Decision in
first half 2015. The project has continued to make good progress resolving
remaining technical, commercial, credit and other financial matters, and work
continues towards securing government support. The Board remains optimistic and
committed to the deployment of the Golar Tundra in Ghana with lead partner
Quantum Power. Golar has however also noted an improving FSRU opportunity set
and continues to market the Tundra outside of West Africa. Brazil, Egypt,
Indonesia, Lebanon and South Africa are once again in the market for new-build
FSRUs and this opportunity set will continue to be pursued.
GoFLNG - The Investment Proposition remains intact in a low oil price
environment
Golar's strategic intent to become a fully integrated LNG mid-stream services
provider covering floating LNG liquefaction, LNG shipping and floating LNG
regasification services remains unaltered notwithstanding the substantial drop
in oil and LNG prices. Project economics based on recently achieved LNG sales
prices show that development of a suitable stranded gas field with GoFLNG
technology is highly profitable to both upstream and midstream participants even
at current low gas prices. The Company believes more than ever that its GoFLNG
investment proposition is built around a sound technical and commercial
offering, derived from structurally lower unit capital costs, shorter lead times
and lower risk profiles. GoFLNG allows smaller resource holders, developers and
customers to enter the LNG business and occupy a legitimate space alongside the
largest resource holders, major oil companies and world-scale LNG buyers. For
the established LNG industry participants, the prospect of GoFLNG's lower unit
costs and risks provide an important and compelling alternative to the
traditional giant land based projects especially in this current energy price
environment, which we believe may well accelerate the pace of change.
Golar's business model throughout the supply chain is that of a service
provider, whose aim is to provide liquefaction (GoFLNG), transportation (LNGC)
and regasification (FSRU) on a fixed toll or daily-rate basis to a range of
resource holding, hydrocarbon producing and gas consuming customers. Despite the
intended tolling basis of the strategy, Golar is influenced by LNG prices since
this drives the overall economics of any specific LNG supply chain project.
Golar is also affected by the timing of LNG sales arrangements as well as the
creditworthiness of the ultimate LNG offtakers. Golar will evaluate each of
these parameters on a case by case basis for the purposes of managing the risk
exposures of the Company. Clearly Golar's low unit cost and low execution risk
solutions remain a clear source of competitive strength when assessed against
the traditional high capex, long lead-time and land based alternatives.
Golar Floating Liquefaction - Business Development Progress
On December 24(th) 2014 Societe Nationale de Hydrocarbures (SNH), Perenco
Cameroon and Golar LNG entered into a Heads of Agreement to develop a floating
liquefied natural gas export project to be located 20 km off the coast of
Cameroon and utilizing Golar's FLNG technology GoFLNG.
The HOA dedicated 500 BCF of natural gas reserves from offshore Kribi fields to
the FLNG project. It is anticipated that the allocated reserves will be produced
at a rate of 1.2 million tonnes of LNG per annum for a period of approximately
8 years. The field has additional reserves available that may present further
opportunities for the future.
Also included in the HOA are timelines for execution of definitive commercial
documents and securing all necessary licenses and approvals to complete the
project. Substantial progress has been made on the definitive commercial
documents and the Board and our counterparts expect additional milestones to be
reached by the end of 1Q. The Board and the partners have agreed a target of
June 2015 for the close-out of all technical and commercial matters pertinent to
the fully termed agreements. Work is actively on-going to reach this goal. The
target for first LNG production in Cameroon is now set to April 2017 and it is
the parties' intention that Golar will be compensated on a fixed tariff basis
for the FLNG unit.
On 28 January the takeover the Douglas Channel project by an Altagas-led
consortium was completed. This settlement removes all legacy issues associated
with the Haisla-led Cedar LNG project and has allowed Golar and Cedar LNG to
move forward to initiate permitting activities on the first phase of the 15mtpa
Cedar LNG Project. Phase 1 of the Cedar LNG project will be based on the
deployment of two GoFLNG vessels having a capacity of approximately 5.8mtpa. In
parallel, Cedar LNG aims to finalize terms on feed gas transportation capacity
to facilitate long-term supply to the project, which is contingent on a Shell
LNG project taking FID. Cedar LNG's initiative is focussed on achieving FID in
the latter part of 2016.
Work has also progressed and will continue on the development of a portfolio of
global GoFLNG business opportunities. Tangible progress with the Cameroon
project has stimulated other interest in the region for fast-track, lower cost
base, lower risk LNG solutions. Near-term effort is focussed on West African
opportunities for the deployment of the Golar Gimi from 2018. Attributes of
these projects are generally clean, relatively dry gas, located near shore or in
areas of relatively benign met-ocean conditions. Some of the projects have
potential capacity for more than one GoFLNG unit. The Board has identified
several interesting employment opportunities for Gimi, but much work remains to
be done before the vessel can be fully committed.
Investors are reminded that each of the Company's opportunities involve the
development and execution of a complex set of commercial and technical
agreements between Golar, our counterparties, and the relevant host nation.
Therefore, notwithstanding positive progress on many fronts, these projects
cannot be considered firm until parties have entered into binding contractual
commitments.
Financing and Liquidity Review
Newbuild financing
Since July 2013, Golar has raised approximately $1.9 billion with a mixture of
bank financing, ECA backed funding and sale and leaseback transactions to fund
its most recent newbuilding program. Of the total $2.74 billion new-building
capital expenditure, $2.6 billion has been paid to date and both the $1.125
billion eight vessel facility and the four vessel ICBCL sale and leaseback
facility collectively amounting to $1.9 billion have now been fully drawn down.
Discussions regarding financing in respect of the November 2015 delivering FSRU
Tundra are also at an advanced stage at attractive levels and terms.
FLNG financing
In June 2014, Golar initiated its first GoFLNG project through a registered
equity offering of 12,650,000 shares of its common stock generating total net
proceeds to the Company of $661 million. As at December 31, $305 million of the
Hilli conversion cost (excluding the value of the vessel itself) has been paid
by Golar. Keppel's 10% equity participation in Golar Hilli Corporation will
contribute up to $130 million. Acceptable written indications from potential
lenders willing to finance around 70% of the project cost upon execution of a
commercial contract have also been agreed. Documentation for these loans is
currently being negotiated. These proposals make provision for financing the
pre-delivery construction phase of the project and will, subject to employment
contract, finance the remaining construction cost.
Having made the Gimi conversion contract effective on December 31, the Company
announced on January 8 its intention to offer 7,170,000 of its common units,
representing limited partner interests in Golar Partners in an underwritten
secondary offering. On January 9 the offering priced at $29.90 per unit.
Following completion of the offering that generated net proceeds of
approximately $207 million, Golar's interest in the Partnership reduced from
40.4% to 30% and is comprised of the following: 1,668,096 common units,
15,949,831 subordinated units, the 2% general partner interest (through its
ownership of the general partner) and all of the incentive distribution rights.
An initial payment of $50 million in respect of the Gimi contract was made to
Keppel at the end of 4Q. In the event that Golar does not issue a notice to
proceed by November 2015, the Company has secured certain cancellation
provisions which allow termination of the contract and recovery of these
milestone payments, less a set cancellation fee.
The current schedule anticipates that the employment contract for Hilli will be
signed before June 30(th) closely followed by drawdown of the agreed financing.
This will create the necessary financial basis for advancing the Gimi project.
Liquidity
With its recent financing activities, the Company has built up a strong
liquidity position in a very challenging business environment to fund its
current operational and FLNG conversion commitments. In addition to the year-end
cash balance of $262 million (including $71 million of restricted cash, $25
million of which has since been released), the Company has now received the $207
million net proceeds from the January secondary offering of common units in the
Partnership. Furthermore, approximately $180 million in newbuild equity release
has materialised from the 1Q 2015 sale and leaseback financing of the Golar
Snow, Kelvin and Ice. The Company also has a $240 million receivable from Golar
Partners in respect of the Eskimo sale and the scheduled 2Q 2015 repayment of an
interest free $20 million revolver. Further ahead, Golar expects to receive
equity release in respect of the Tundra and repayment of its contribution in
extinguishing the Golar Viking's debt. Golar also continues to receive ongoing
annual dividends from the Partnership exceeding $50 million.
The Board is focussing on maintaining a solid liquidity buffer to minimise any
need for funding from equity and convertible markets, neither of which are
attractive sources of financing at current prices.
Corporate and other matters
CEO and Board Changes
On January 19 the Company announced the appointment of Gary Smith as the new
Golar CEO following Doug Arnell's decision to step down to return with his
family to his native Canada. Gary Smith's career spans 35 years including 25
years with Shell and Caltex Australia (a Chevron affiliate) in roles including
General Manager of LNG shipping for Shell and General Manager Refining, Supply
and Distribution for Caltex Australia. Gary was previously CEO of Golar in the
period March 2006 to August 2009. Mr. Arnell will continue to work closely
with the Company on an advisory basis, devoting his time to ensuring the
successful execution of GoFLNG opportunities in Cameroon, Canada and other key
locations and will also be appointed to the Board of Golar Partners. Mr. Smith
and Mr. Arnell both share the same ambitions for Golar and shareholders can
expect sound business continuity through this transition.
In order to deliver on its strategic ambitions and following a change in the
composition of the Company's major shareholders last year, Golar has decided to
add capacity and further strengthen the skillset of its Board of Directors. The
Company is pleased to announce the appointment of the following Directors:
Daniel Rabun
Mr. Rabun joined Ensco in March 2006 as President and as a member of the Board
of Directors. Mr. Rabun was appointed to serve as Ensco's Chief Executive
Officer from January 1, 2007 and elected Chairman of the Board of Directors in
2007. Mr. Rabun retired from Ensco in May 2014. Prior to joining Ensco, Mr.
Rabun was a partner at the international law firm of Baker & McKenzie LLP where
he had practiced law since 1986. He has been a Certified Public Accountant since
1976 and a member of the Texas Bar since 1983. Mr. Rabun holds a Bachelor of
Business Administration Degree in Accounting from the University of Houston and
a Juris Doctorate Degree from Southern Methodist University.
Fredrik Halvorsen
Mr. Halvorsen is a founder of Ubon Partners, a private investment company
focused on technology and growth companies and chairman of Acano one of its core
holdings. He was CEO and President of Seadrill Limited from October 2012 until
July 2013 and also worked for Frontline Corporate Services Ltd from October
2010 until July 2013. Prior to this, Mr. Halvorsen held various roles including
CEO of Tandberg ASA until the Company was sold to Cisco Systems, senior
positions at Cisco Systems Inc. as well as McKinsey & Company.
Carl Steen
Mr. Steen has served on Golar Partners' board of directors since his appointment
in August 2012. Mr. Steen initially graduated in 1975 from ETH Zurich
Switzerland with a M.Sc. in Industrial and Management Engineering. After working
for a number of high profile companies, Mr. Steen joined Nordea Bank from
January 2001 to February 2011 as head of the bank's Shipping, Oil Services &
International Division. Currently, Mr. Steen holds directorship positions in
various Norwegian companies including Wilhelm Wilhelmsen Holding ASA and RS
Platou ASA.
Andrew Whalley
Mr. Whalley is a Bermudian lawyer called to the Bar in 1995. He has experience
in aviation and shipping law, as well as general corporate matters. He is
currently of Counsel to Alexanders, a Bermuda law firm and is also an
independent consultant providing legal and corporate secretarial services. Mr.
Whalley is a Director and Co-Founder of Provenance Information Assurance
Limited, a company involved in the development of software for the legalisation
of documents.
Simultaneously, Mr. Hans Petter Aas and Mrs. Georgina Sousa have decided to
stand down from the Golar Board. The Board would like to take this opportunity
to thank Mr. Aas and Mrs. Sousa for their very significant contribution to the
growth and performance of Golar LNG Limited. The Board wishes them every success
for the future.
Share and Convertible Bond Buybacks
Prevailing negative sentiment towards oil and gas focussed companies has
resulted in a material reduction in the Company's share price. The Company is of
the view that its current project opportunities once executed will have
significant value. Accordingly, on November 28, the Board authorised a new
share repurchase programme. As at December 31, 2014, Golar had entered into
forward contracts to repurchase 3.5 million shares at an average price of $40.39
per share. As the share price has traded below the various repurchase prices
Golar has been required to make margin payments totalling $46 million by
December 31, 2014. No additional forward contracts to repurchase shares have
been entered into since year end.
The same negative sentiment has also resulted in the convertible bond
occasionally trading below par. This bond has a coupon of 3.75%. The Board
holds the view that when the Company has cash in excess of its near term
requirements and if the bond is trading below par, it is prudent to repurchase
some of these bonds to save the Company on interest payments at a time when
deposits earn less than 0.25%. With this in mind, on February 6 the Board
authorised the repurchase of up to $50 million in convertible bonds. As and
when the need for cash invested in the bonds arises, the bonds can be traded
out. To date no bonds have been repurchased.
Shares and options
On October 21 the Board of Golar LNG Limited authorized the issue of up to
2,500,000 share options to Directors and employees of the Company and its
subsidiaries under the Company's existing share option scheme. Of the 2,500,000
authorized options, 1,777,500 were issued and the remaining 722,500 will be
issued at the future discretion of the Board. The newly issued 1.75 million
options had a strike price of $58.50 per share which will be adjusted for each
time the Company pays dividends. Fifty percent of recipients' allotted options
will vest on October 21, 2017 and the remaining fifty percent a year later. The
option period is five years. As at December 31, 2014, the total number of shares
outstanding in Golar is 93.4 million with an additional 2.1 million outstanding
stock options.
Dividend
Coinciding with a chartering market that is expected to be weak for the next
9-12 months, Golar has embarked on a period of rapid growth linked to the new
investments in the floating LNG liquefaction business. The Board continues to
maintain the position that a regular and stable to growing dividend is a key
part of the return to shareholders. With respect to 4Q, the Board has decided to
maintain the dividend at $0.45 per share. The Company does not expect further
material growth in the dividend ahead of an upturn in the shipping market or
until the floating LNG liquefaction units become free cash generative.
The record date for the dividend will be March 12, ex-dividend date is March 10
and the dividend will be paid on or about March 24, 2015.
Outlook
The market for chartering of LNG shipping is expected to be weak for the first
half of 2015. The start-up of Queensland Curtis in December 2014, the continued
successful ramp up of the new Papua New Guinea project and increasing pressure
to retire additional less efficient first generation carriers may provide some
support. Golar's target is to maximize the utilisation of the fleet in this
period. In the second half of 2015 significant new LNG production capacity is
expected to start up. Together with the limited influence of new tonnage
entering the market and the seasonal strengthening, we expect the LNG carrier
market for the second half of the year to show clear improvements. The current
low oil price is also reducing substantially the bunker costs for idling and
positioning spot vessels.
Over 100 mtpa of new liquefaction capacity is scheduled to come online worldwide
by 2018 from projects that are under construction and have received Final
Investment Decision. When considering available uncommitted vessels, vessels
currently on order, expected vessel retirements and anticipated LNG trades from
the new projects it is clear that the market will tighten considerably in the
period out until 2018 (vessels ordered today will now not deliver before 2018).
Golar intends to leverage its advantaged modern fleet to secure a share of this
increasing trade. Meanwhile the Company will exercise care in the duration of
any new commitments to safeguard the capacity it will have available to fill any
future upturn in demand.
The combination of falling energy prices and severe power outages in several
major regional centres around the world (Brazil and South Africa to name two)
has resulted in a recent increase in interest for FSRU's. The recently
experienced lower absolute price for LNG has made the switch to gas more
attractive in many parts of the world and the ability of FSRU's to provide a
relatively fast and proven solution to what is in some locations a crisis
situation points to a continuing healthy demand in a market where Golar is a
clear leader.
It is predicted by most commentators that the recent fall in oil and LNG prices
will have a material impact on the viability of many new LNG projects currently
under development in almost all parts of the world. The lower commodity prices
are challenging the economics of most projects particularly those projects in
high cost countries such as Australia. The last few months have seen a steady
stream of announcements of projects being shelved or significantly scaled back.
The Board is firmly of the view that this new paradigm for the LNG industry
plays to Golar's strengths with its GoFLNG value proposition. GoFLNG provides an
economic route to monetise gas even in this most challenging environment for
project developers. Progressively industry participants are recognising the
merits of Golar's low cost and simplified approach to progressing LNG
liquefaction projects.
The underlying operating results for 1Q are expected to be weak driven by the
weak shipping market. Golar's results for 1Q however, will be positively
influenced by a gain of approximately USD 100 million from the sale of Golar
Eskimo to Golar Partners.
The Board are not satisfied with the current results, but note the 4Q 2014
improvement over 4Q 2013 on the shipping side as well as the solid progress
which is being made to secure tariff based long-term employment opportunities
for our emerging FLNG activities.
The dramatic fall in oil and gas prices is stimulating further interest in
solutions which are cheaper, quicker, lower risk and more flexible. Golar has,
with its USD 2.6 billion investment program into GoFLNG, positioned itself
strongly with respect to the market and its competitors. Golar's aim is to play
a leading role in the development of floating liquefaction and in so doing
create material value and long term earnings for its shareholders.
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 "may," "could," "should,"
"would," "expect," "plan," "anticipate," "intend," "forecast," "believe,"
"estimate," "predict," "propose," "potential," "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 subject to certain risks, uncertainties and other factors, some of which
are beyond our control and are difficult to predict. 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.
Among the important factors that could cause actual results to differ materially
from those in the forward-looking statements are: changes in LNG carriers, FSRU
and floating LNG vessel market trends, including charter rates, ship values and
technological advancements; changes in the supply and demand for LNG; changes in
trading patterns that affect the opportunities for the profitable operation of
LNG carriers, FSRUs; and floating LNG vessels; changes in Golar's ability to
retrofit vessels as FSRUs and floating LNG vessels, Golar's ability to obtain
financing for such retrofitting on acceptable terms or at all and the timing of
the delivery and acceptance of such retrofitted vessels; increases in costs;
changes in the availability of vessels to purchase, the time it takes to
construct new vessels, or the vessels' useful lives; changes in the ability of
Golar to obtain additional financing; changes in Golar's relationships with
major chartering parties; changes in Golar's ability to sell vessels to Golar
LNG Partners LP; Golar's ability to integrate and realize the benefits of
acquisitions; changes in rules and regulations applicable to LNG carriers, FSRUs
and floating LNG vessels; changes in domestic and international political
conditions, particularly where Golar operates; as well as other factors
discussed in Golar's most recent Form 20-F filed with the Securities and
Exchange Commission. Unpredictable or unknown factors also could have material
adverse effects on forward-looking statements.
February 25, 2015
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda.
Questions should be directed to:
Golar Management Limited - +44 207 063 7900
Gary Smith - Chief Executive Officer
Brian Tienzo - Chief Financial Officer
Stuart Buchanan - Investor Relations
Preliminary Fourth Quarter and Financial Year 2014 Results:
http://hugin.info/133076/R/1897012/673156.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#1897012]
Unternehmensinformation / Kurzprofil:
Datum: 25.02.2015 - 01:45 Uhr
Sprache: Deutsch
News-ID 373987
Anzahl Zeichen: 49502
contact information:
Town:
Hamilton
Kategorie:
Business News
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