Interim Results for the Period Ended September 30, 2015
(Thomson Reuters ONE) -
Highlights
· EBITDA* in the quarter reported a loss of $5.9 million compared to 2Q
loss of $25.3 million.
· Board maintains dividend at $0.45 per share for the quarter.
· Golar, Perenco and SNH sign and execute all contracts for the GoFLNG
Hilli Project - vessel to commence operations in Q2 2017 with a minimum annual
expected EBITDA(**) of $170m for 50% capacity utilisation for its initial 8-year
contract.
· Placed order for an additional FSRU newbuild with Samsung.
· Golar Partners reported a record 3Q EBITDA of $94.9 million. Golar owns
30.4% (plus IDRs) of Golar LNG Partners. We only recognise $6.8 million
contribution from Golar Partners in 3Q results.
Subsequent events
· Gazprom, Perenco and SNH sign a firm 8-year Sale and Purchase contract
for LNG from GoFLNG Hilli.
· Golar Hilli Corporation received a $500 million guarantee from Perenco
and SNH for their performance under the GoFLNG Hilli contract and has in return
issued a $400 million guarantee to Perenco and SNH.
· The LNG carrier pool "The Cool Pool" successfully commenced operations.
· Executed a firm 5-year contract with West Africa Gas Limited and received
financing for FSRU Golar Tundra.
Financial Review
Business Performance
+------------------------------------+----------+----------+
| | 2015 | 2015 |
| | | |
| (in thousands of $) | Jul-Sep | Apr-Jun |
+------------------------------------+----------+----------+
| | 24,252 | |
| | | |
| Time and voyage charter revenues | | 16,922 |
| | | |
| | 3,126 | |
| | | |
| Vessel and other management fees | | 3,222 |
| | | |
| Vessel operating expenses | (13,519) | (14,801) |
| | | |
| Voyage and commission expenses | (12,384) | (21,424) |
| | | |
| Administrative expenses | (7,339) | (9,214) |
| | | |
| Depreciation and amortization | (18,376) | (18,118) |
| | | |
| | | |
| +----------+----------+
| Total Adjusted Operating Losses*** | (24,240) | (43,413) |
| | | |
| | | |
| | | |
| Add back | | |
| | | |
| | | |
| | | |
| Depreciation and amortization | 18,376 | 18,118 |
| | | |
| EBITDA* | (5,864) | (25,295) |
+------------------------------------+----------+----------+
Golar LNG Limited ("Golar" or "the Company") reported today a 3Q operating loss
of $24.2 million as compared to $43.4 million in 2Q. In line with expectations,
3Q reported an improvement in vessel utilisation, albeit from a very low level
in 2Q. Although headline charter rates remained relatively constant across the
quarters, the increase in utilisation from 33% in 2Q to 43% in 3Q together with
improved round trip economics resulted in an increase in time charter revenues
from $16.9 million in 2Q to $24.3 million in 3Q. With the exception of the
Golar Penguin, all of the carriers recorded utilisation at or above prior
quarter levels.
3Q voyage costs decreased $9.0 million from $21.4 million in 2Q to $12.4
million. The obligation to charter back the Golar Eskimo from Golar Partners in
the period prior to delivery in Jordan finished at the end of 2Q. Savings in
payments to Golar Partners net of revenues received for the Eskimo account for
$6.5 million of this $9.0 million reduction. Reduced bunkers as a result of
improved vessel utilisation accounted for most of the remaining $2.5 million
decrease. Of the $12.4 million 3Q voyage and commission expenses, $6.7 million
represents the cost of chartering in the Golar Grand from Golar Partners. The
remaining $5.7 million is predominantly bunker and positioning costs.
Vessel operating expenses decreased $1.3 million to $13.5 million in 3Q.
Administration costs decreased $1.9 million over 2Q to $7.3 million in 3Q with
reductions in legal and non-cash share option related expenses accounting for
most of the decrease.
Collectively the above resulted in a $19.4 million increase in EBITDA from a
loss of $25.3 million in 2Q to a loss of $5.9 million in 3Q.
Net Income Summary
+-----------------------------------------------------------+---------+--------+
| (in thousands of $) | 2015| 2015|
| | | |
| | Jul-Sep| Apr-Jun|
| +---------+--------+
|Total Adjusted Operating Loss*** | (24,240)|(43,413)|
| | | |
|Net gain on disposals (includes amortization of deferred | | |
|gains) | 127| 126|
| | | |
|Impairment on asset held for sale | -| (1,032)|
| | | |
|Dividend income | 3,914| 3,914|
| | | |
|Net interest expense | (16,077)|(15,722)|
| | | |
|Other financial items |(110,412)| 50,802|
| | | |
|Taxes | 760| 742|
| | | |
|Equity in net earnings of affiliates | 2,908| 4,406|
| | | |
|Net (loss) / income |(143,020)| (177)|
+-----------------------------------------------------------+---------+--------+
In 3Q the Company generated a substantial net loss of $143.0 million. A material
portion of this loss is the result of non-cash items including:
* Total return equity swap loss of $67.2 million on 3.5 million underlying
Golar shares.
* Interest rate swap loss of $22.3 million.
In addition, a loan impairment has been recognised in 3Q for a transaction
expected to take place during 4Q:
* Impairment of $15.0 million on a loan receivable from PT Equinox in
connection with the repossession of the vessel Salju (formerly Golar
Viking).
The Company has received $13.1 million in cash in respect of its common units,
subordinated units, GP and IDRs in Golar Partners. The Partnership contributed
a positive $6.8 million to the Company's 3Q result (represented by $3.9 million
in dividend income and $2.9 million in equity in net earnings of affiliates).
The difference has been booked against the balance sheet under Investment in
Affiliates.
Net interest expense increased from $15.7 million in 2Q to $16.1 million in 3Q.
Included in the other financial items of $110.4 million is a non-cash loss of
$89.5 million, mainly related to derivative movements as noted above. The
equity TRS loss as at September 30 was marked-to-market using a share price of
$27.88.
Anticipated short-haul cabotage trade opportunities in Indonesia, ideally suited
to the Salju, have failed to materialise as expected. Golar, acting as the main
lender to this vessel, has therefore agreed to the repossession of Salju from
P.T. Equinox based on a vessel valuation of $125 million which is in line with
current market valuations. This will be satisfied by extinguishing a loan to the
vessel owning company and therefore no cash will actually be paid. As the
vessel valuation is lower than the $138.6 million loan and working capital
advances receivable by Golar from P.T. Equinox and the equity injected by P.T.
Equinox has been exhausted, a non-cash impairment of $15.0 million (net of
associated repossession costs) has been recognised. The vessel has no mortgage
debt other than what is due to Golar LNG.
Commercial Review
LNG Shipping and FSRU Performance
Overall 3Q LNG Carrier activity levels were a little higher than 2Q with
utilisation of our spot fleet increasing from 33% in 2Q to 43% 3Q. Average 3Q
charter rates for the spot fleet were in the range of $35,000 per day. Spot
charters have typically been for much shorter voyages than seen in recent years
as intra-basin trade has become the norm. This has increased both activity
levels and vessel availability.
To date, Middle East demand has been the main driver of LNG carrier spot
fixtures. Fixing activity in the Middle East and Atlantic regions has been
higher than in the Pacific. Both Egypt and Jordan have recently concluded
tenders to buy 56 and 19 cargoes respectively through to the end of 2016.
Activity levels in 4Q have continued to improve, particularly for European
reloads heading into the new terminals in the Middle East, and in the Atlantic
in general.
The "Cool Pool" formation comprising Golar (8 carriers contributed), Gaslog (3
carriers) and Dynagas (3 carriers) was completed and commenced operations on
October 1. The Pool has been very well received by the market. Of the 17 spot
voyage charters concluded globally during October, 10 were with the Cool Pool.
Improved scheduling ability including the ability to fix forward and reduced
positioning costs and cost efficiencies as a result of the common marketing of
vessels are expected to result in continuing improvements in vessel utilisation
and further reductions to voyage costs in 4Q.
Gladstone LNG initiated operations during October and Australia Pacific LNG is
expected to commence operations before year-end. Indonesia's Senora-Donggi
project and the second train of BG's Queensland Curtis project also continue to
ramp up LNG production rates. Cheniere have indicated that Sabine Pass will
load its first cargo in early 2016. Demand for shipping, particularly in the
over-provided for Pacific basin is therefore expected to gradually improve over
the coming quarters.
Golar's existing fleet of 6 operating FSRUs, all of which reside within Golar
Partners, continue to operate reliably with 100% availability (excluding 3 days
scheduled drydocking).
Investment Review
Conversion Contracts
GoFLNG Hilli conversion progress remains on schedule with the project's
contingency budget remaining substantially untapped. During the quarter the
vessel re-entered Keppel drydock and prefabricated sponsons are now in the
process of being attached to the hull. This work will continue for the remainder
of this year. Pre fabrication of the process top side modules and pipe racks has
now commenced with most major equipment items for the conversion now delivered
to the shipyard.
Golar continues to work constructively with Keppel Corp with respect to the
scheduling of the conversion of Gandria and Gimi. The total commitment to these
two ships remains at $50 million. Both contracts allow for their termination
after deduction of a set cancellation fee. In view of the prevailing uncertainty
in the energy markets, Golar does not intend to accelerate these conversions
before satisfactory financing and firm client contracts are in place. The
ordering of long-lead items for these two vessels does however preserve Golar's
ability to meet clients 2018 and 2019 production schedules.
FSRU Newbuild
On July 17 Golar placed an order with Samsung Heavy Industries for an additional
FSRU newbuild. Delivering in November 2017, this FSRU is timed to meet the
requirements of a number of specific FSRU opportunities that Golar is currently
pursuing. Buoyed by attractively priced and available LNG supply, current
demand for FSRUs is strong. On November 25 the Company took delivery of its
7(th) FSRU, the newbuild Golar Tundra. Golar Tundra will shortly proceed to
Keppel where the vessel will undergo some minor modifications required to make
the FSRU compatible with receiving facilities currently being constructed in the
port of Tema, Ghana.
Business Development Review
FSRU activities
On November 4, Golar and West African Gas Limited ("WAGL") executed a firm
contract for the provision of the FSRU Golar Tundra to support their LNG import
operations in Ghana. A strong counterparty, WAGL is jointly owned by
subsidiaries of the Nigerian National Petroleum Corporation (60%) and Sahara
Energy Resource Limited (40%). The FSRU Tundra will be moored inside the port
of Tema at a jetty currently being modified by WAGL who have also now sourced
the required LNG supply. The FSRU contract will be for an initial period of
five years with the option to extend for a further five years on the same terms.
Annual EBITDA** from this project is expected to be $44 million. As this is a
five year charter, the FSRU will be offered for purchase to Golar Partners.
Before 2018 approximately 115 million tonnes of new LNG production capacity is
expected to come on stream, equivalent to a 45% increase on the world's current
LNG production capacity. This will not only result in an increase in the
utilisation of existing regasification capacity, but also create a need for
additional capacity with the opening of new markets for LNG. Based upon current
customer inquiries the Company is very confident that the available uncontracted
FSRU capacity will be absorbed shortly.
GoFLNG - Business Development Progress
All contracts for the GoFLNG Hilli project have now been signed and the project
has taken FID. A Sale and Purchase Agreement for the LNG off-take has also been
executed by Perenco, SNH and Gazprom.
The GoFLNG Hilli is expected to deliver an EBITDA for Golar in the first full
year of operation, based on the utilisation of 2 of the available 4 liquefaction
trains, in the range of a minimum of $170 million to maximum of $300 million.
The vessel tariff is floored and capped indexed to Brent in the range of $60/bbl
to $102/bbl. GoFLNG Hilli will commence operations in Cameroon in Q2 2017 and
the contract has a duration of 8 years. The field has reserves to support more
than the current two train commitment and Golar will work to increase
utilisation of the vessel. Increasing production to 3 trains is expected to
increase EBITDA to between $240 million and $430 million without increasing
capital costs.
Ophir's Fortuna project in Equatorial Guinea where GoFLNG Gandria will be
deployed from 1H-2019 has taken credible steps forward including substantial
progress on LNG HoA's with buyer interest oversubscribed. Additionally,
material progress has been made by Ophir on full field development. Golar
expects to make the conversion agreement effective and issue the notice to
proceed to Keppel for the Gandria conversion by mid-2016, coincident with the
project taking FID. Project economics recently presented by Ophir demonstrate
very healthy project economics and robust options for financing.
New GoFLNG business development activity remains focused on maturing projects
that have the potential to commence operations in 2018 with good progress
recorded against a number of potential projects. It is however acknowledged that
the window for securing a 2018 start-up GoFLNG project is now narrowing.
Golar is pleased to report that good progress has been made with the Brazilian
"Sergipe" greenfield power project, with solid steps made by the joint venture
on EPC contracts for the power station and associated infrastructure and
progression of SPA discussions with potential suppliers of LNG to the project.
The project remains on track to sign binding PPA agreements within the first
half 2016. Total committed capital as of today is $5 million in cash and $24
million in guarantees. It remains Golar's intention to spin off the on shore
investment in Sergipe.
Financing and Liquidity Review
FSRU financing
On October 23 Golar received an underwritten financing commitment for the FSRU
newbuild, Golar Tundra. On delivery of the Tundra on November 25, $205 million
was drawn down. On November 25, Golar Partners repaid the $100 million Golar
Eskimo vendor financing facility provided by Golar.
FLNG financing
As at September 30, including the value of the original vessel, Golar has
invested $436 million in the Hilli conversion project. Today this investment
sits at $452 million. Having executed the Tolling Agreement and the Midstream
Gas Convention with Perenco, the GoFLNG Hilli financing facility is now
available. All remaining conversion and site specific costs for the GoFLNG
Hilli are expected to be satisfied by this facility.
The Company is progressing with the financing for FLNG number 2. Several banks
have given indications and the Company expects to have a committed facility in
place before the end of Q1.
Liquidity
The cash balance at the end of 3Q was $222.8 million. Financing of the Golar
Tundra and repayment by Golar Partners of the $100 million Eskimo vendor loan
have added $150 million to liquidity since September 30. The Board has focused
on efforts to further improve the Company's liquidity position and reduce risk
levels. On the back of this, the Company has decided and agreed to delay the
effective dates for the Gandria and Gimi conversion projects until employment
contracts for these assets are further advanced. The ordering of long lead items
has already secured Golar's ability to deliver according to the clients'
production schedules for 2018 and 2019. This strategic adjustment substantially
reduces the company's risk while retaining full upside.
In connection with the final signatures on the GoFLNG Hilli project approval,
the contracting parties agreed to exchange mutual Letters of Credit. Golar Hilli
Corporation received a $500 million guarantee from Perenco and SNH and has, as
of November 27, posted a $400 million guarantee to the upstream partners. Golar
Hilli Corporation had, as of execution date, initially posted $305 million to
support this guarantee, but expects part of this to be returned to the Company
as the guarantee bank progresses with its syndication process.
The Company has received agreeable terms for financing facilities in relation to
existing vessels which could increase the liquidity position and provide growth
capital for the FLNG business of approximately $190 million over and above the
aforementioned $150 million from Tundra and Eskimo and drawdown against the
GoFLNG Hilli financing facility that is expected to amount to approximately $50
million by year end.
Corporate and other matters
Changes to the Board
On August 27, Dan Rabun assumed the role of Chairman of the Board. Formerly
Chairman of Ensco plc until May 2015, Mr Rabun has a strong energy background
from Ensco and as managing partner in Baker McKenzie's Dallas office. He is
also currently a Board member of Apache Corporation.
Niels Stolt-Nielsen was appointed to the Board at the Annual General Meeting on
September 23. Mr Stolt-Nielsen is a major owner and Chairman of the world's
leading chemical carrier company, Stolt Nielsen. He is also the Chairman and
founding investor of the LPG Company, Avance Gas.
Share and Convertible Bond Buybacks
As at September 30, 2015, Golar had forward contracts to repurchase 3.5 million
of its own shares at an average price of $27.88 per share. On August 4, Golar
also announced that it had approved a unit purchase program under which the
Company may purchase up to $25 million worth of publicly held Golar Partners
common units. To date 240,000 shares have been purchased outright at a cost of
$5.0 million.
Shares and options
As at September 30, 2015, the total number of shares outstanding in Golar
including the 3.5 million shares repurchased by the Company is 93.5 million.
Additionally, there are currently 1.8 million outstanding stock options in issue
with an average strike price of approximately $56.70 per share.
Dividend
The Board has maintained the dividend at $0.45 per share for 3Q. The record
date for the dividend will be December 10, the ex-dividend date is December 8
and the dividend will be paid on or about January 6, 2016.
In order to support the company's growth prospects the Board has evaluated the
Company's dividend policy. The dividend was maintained in 3Q however the Board
may consider reducing the dividend level in the coming six quarters until the
GoFLNG Hilli project commences. The target will be to free up additional capital
to fund growth within the FLNG segment. The Board continues to see a regular
dividend as a key part of the investment return for shareholders and expects
that the long term cashflow generated by the FLNG contracts can provide a good
basis for stable dividends when these contracts commence.
Outlook
The company has passed a very significant milestone in the roll out of its FLNG
strategy. The recent FID of the Cameroon GoFLNG Hilli project fully validates
both the technical and commercial aspects of the Company's approach to FLNG
projects. That the project has reached FID and signing of the final LNG SPA in
accordance with the original schedule proves the strong economics for all
parties and confirms the robustness of the GoFLNG business model. The
materialisation of the GoFLNG Hilli project is expected to secure the Company a
solid base cash flow with significant upside potential related to higher
utilisation and commodity prices. Good progress by Ophir and Golar on the GoFLNG
Gandria project and a maturing and growing portfolio of FLNG opportunities, with
counterparties ranging from junior explorers to the larger IOC's, is also
encouraging.
The LNG carrier spot market is now showing the first real signs of recovery on
the back of new production capacity starting up and the very welcome acceptance
by the market of the Cool Pool. The speed of this recovery will in part be a
function of how trade patterns evolve over the coming months.
The market for FSRU's has clearly entered into a new phase. Whereas, previously,
potential new FSRU projects were frustrated by the inability to secure LNG
supply, we now find holders of uncontracted LNG supply motivated to accelerate
FSRU projects in an effort to reduce their exposure. Based upon current
customer inquiries the Company is very confident that the available uncontracted
FSRU capacity will be absorbed shortly.
The Board's main target is to strengthen Golar's ability to execute further FLNG
projects within the framework of the Company's current balance sheet. In order
to do so the Board is considering the release of some of the equity currently
tied up in shipping activities and using this to grow the Company's FLNG
activities. This can include leveraging unencumbered assets, re-leveraging
existing debt facilities as well as being open to strategic transactions within
the shipping segment.
The Board is disappointed in the Golar Partners unit price performance in 2015,
which has mainly been driven by the negative sentiment in the MLP market.
However, the Board is pleased to see that the underlying business in Golar
Partners is performing well and continues to be supported by long term
contracts. Annual Golar Partners EBITDA* now exceeds $350 million. Golar's
30.4% ownership of Golar Partners, was, as of September 30, valued at $280
million and currently generates an expected annual dividend income of $43.7
million. Additionally, Golar is the owner of 100 % of the general partner
interest which owns all of the Incentive Distribution Rights. These currently
produce dividends of $8.7 million per annum at a distribution of $2.31 per unit.
This distribution level is at the beginning of the 50% threshold and further
growth in dividends will augment disproportionately, Golar's share of dividends
from Golar Partners.
The company expects operating earnings to improve in the coming quarters, driven
by an improved shipping market and Golar Tundra commencing operations in
2Q 2016. The Board also expects positive outcomes from the ongoing contract
discussions in the FLNG business within the next six months and see significant
opportunities to build a solid long term contract backlog and cashflow from this
business.
The Board is further encouraged to see that the GoFLNG concept, confirmed by the
Perenco transaction and progress with Ophir, provides strong economics to our
customers even at oil prices around $40 per barrel, and gas prices around $5-6
mmbtu. If energy prices stay at these levels there may be material Coal to Gas
switching and strong growth in LNG demand over the years to come. At the same
time these price levels do not support Greenfield LNG developments. Such a high
growth scenario driven by low energy prices may lead to improved market balances
in the LNG shipping and FSRU markets and create good opportunities for low cost
FLNG production.
Non-Gaap Measures:
* EBITDA is defined as earnings before interest, depreciation and amortization,
impairments and non-recurring items.
** Expected annual EBITDA is based on certain assumptions that management
believes are accurate but because of factors described under the heading
"Forward Looking Statements" actual results may differ materially.
*** Adjusted Operating Losses exclude gains and losses on disposals and
impairments of assets.
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.
November 30, 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
Interim Results for the Period Ended September 30 2015:
http://hugin.info/133076/R/1970192/720239.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#1970192]
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Datum: 30.11.2015 - 14:28 Uhr
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