PRELIMINARY FOURTH QUARTER AND FINANCIAL YEAR 2010 RESULTS
(Thomson Reuters ONE) -
PRELIMINARY FOURTH QUARTER AND FINANCIAL YEAR 2010 RESULTS
Highlights
· Golar LNG reports consolidated net income of $4.7 million and consolidated
operating income
of $15.0 million for the fourth quarter of 2010
· Golar LNG announces a cash dividend of $0.25 cents per share together with
an extraordinary dividend of $0.05 cents per share
· West Java FSRU project progressing well
· FSRU market activity remains strong with Golar short listed for a number of
projects.
· Golar Energy charters out 4 vessels at attractive rates for periods between
12 and 18 months
Financial Review
Golar LNG Limited ("Golar" or the "Company") reports consolidated net income of
$4.7 million and consolidated operating income of $15.0 million for the three
months ended December 31, 2010 (the "fourth quarter").
Revenues in the fourth quarter decreased to $64.6 million as compared to $70.4
million for the third quarter of 2010 (the "third quarter"). The reduction was
primarily due to no revenue in the fourth quarter for the Gimi and Khannur the
charters for which ended in the third quarter. However, this was partly offset
by an improved performance from the vessels operating in the sport market.
Overall utilisation for the fourth quarter has significantly improved up at 95%
as compared to 83% for the third quarter. Fourth quarter average daily time
charter equivalents ("TCEs") also increased to $74,206 compared to third quarter
TCE of $63,110.
Voyage expenses were $5.4 million lower than the third quarter due to the
redelivery of the Ebisu to owners at the end of the third quarter thereby
reducing charter-in costs. Operating expenses were increased by $2.6 million
from the third quarter partly as a result of costs associated with the one-off
cost of changeover to new crewing managers, Golar Wilhelmsen, on some vessels.
The other operating expense of $2.9 million represents realised losses on
physical cargo trades, financial derivative contracts and proprietary trades
transacted by Golar Commodities that primarily relate to cargo transactions
entered into in the third quarter.
The impairment of $4.5 million of long term investments and assets represents a
write down of the Company's cost of investment in TORP LNG AS and a write down
in respect of certain FSRU equipment originally acquired in 2007 and prior.
Net interest expense for the fourth quarter at $7.1 million was down slightly
from $7.7 million in the third quarter.
Other financial items have decreased to a loss of $8.3 million for the fourth
quarter from a loss of $10.8 million in the third quarter. A non-cash gain of
$6.5 million on revaluation of interest rate swaps has been partly offset by
interest paid in respect of interest rate swaps of $3.3 million not designated
as hedging instruments. Other financial items also include expenses, termination
costs and the write-off of deferred charges of approximately $13 million
associated with restructuring of certain lease arrangements as noted below.
The Company has entered into arrangements during the quarter to end the leasing
arrangements in respect of the Freeze, Spirit, Hilli, Gimi and Khannur via the
acquisition of the companies that lease the vessels to Golar. The lease
obligation and the related restricted cash have therefore been removed from the
Company's balance sheet. The arrangement gave rise to a tax benefit for the
group. This benefit has been deferred and will be amortised over the remaining
life of the vessels. Fees and expenses associated with the various arrangements
together with termination costs have been charged to the income statement and
the cost of acquiring the non-controlling interests in the various companies has
been charged to stockholders equity as a purchase of non-controlling interests.
The overall cash effect is positive to the Company and is expected to result in
a net cash benefit of approximately $15 million.
The net gain on sale of investee of $2.4 million represents the sale of Golar
Energy's remaining 7.1 million LNG Limited shares for a total consideration of
$4.2 million.
For the twelve months ended December 31, 2010 Golar reports net income of $0.4
million, operating income of $60.2 million and operating revenues of $244
million as compared to, a net income of $23 million, operating income of $31
million and operating revenues of $216 million for the year ended December
31, 2009. The improved operating income is mainly accounted for by increased
revenues from the Golar Freeze and Golar Winter offset in part by lower revenues
from spot trading vessels.
Financing, corporate and other matters
In line with the Company's target dividend level the Board has proposed a cash
dividend of $0.25 per share in respect of the fourth quarter of 2010. In
addition the Board has, based on the Company's strong financial position,
decided to pay an extraordinary dividend in this quarter of $0.05 per share. The
record date for the dividend is March 11, 2011, ex-dividend date is March
9, 2011 and the dividend will be paid on or about March 25, 2011.
In the period from November 2010 to January 2011 a total of 546,834 shares have
been issued by the Company in respect of share option exercises. After this
issuance the Company's total number of shares outstanding is 68.1 million. The
Company currently owns 145.3 million (61.1%) shares in Golar LNG Energy.
The Company's long-term contracted vessels, two LNG carriers (Golar Mazo and
Methane Princess) and 3 FSRU's (Golar Spirit, Golar Winter and Golar Freeze) all
operated without major issue during the quarter.
Golar Freeze has been operating well and has progressed through the
commissioning process. Final testing is expected to take place in early April.
The Company's investment in Golar Energy has developed favourably in the fourth
quarter. The share price moved from NOK 8.77 to NOK 12.50, taking the value of
the investment up to $310 million as at December 31, 2010. The positive
development has continued in 2011 and the value of the investment is as of
February 25, 2011 was $462 million. It is Golar LNG's aim to maximise the value
of the controlling stake in Golar Energy over time.
Golar LNG Energy
Shipping
Over the last quarter of 2010, the LNG shipping market tightened dramatically.
Surplus tonnage was reduced as new production projects started-up. Charterers
have therefore opted to declare any available options, due to option period rate
advantage and a need to cover forward positions in a tightening market.
Vessel availability has now reached a level of tightness not seen in the market
for several years. In the spot market, charterers have had to secure tonnage on
a round trip cost basis and are currently chartering on a rate nearly three
times more than that which existed for summer spot fixtures.
The bullish shipping sentiment is also apparent in mid-term shipping with rates
having improved further and a number of vessels, including some of Golar
Energy's vessels, having been fixed on charters of between 12 and 18 months at
attractive rates. For Golar Energy this has been an opportunity to lock in cash
flow at good rates whilst maintaining exposure to a further improving market in
2012.
Currently available shipping does not necessarily provide the flexibility
required to meet charterers needs. Those parties used to fixing short term
shipping deals will struggle, particularly during periods of peak demand and
instead have to focus on DES deals.
At the quarter-end the fleet stood at 366 vessels including FSRUs and regas
vessels with a further 27 on order. The limited order book and the increased
production coming on stream in the next few years supports a tight supply /
demand balance with interesting opportunities for open shipping capacity.
Regasification
Negotiations are progressing smoothly between Company and Nusantara Regas to
finalize the FSRU time charter party for the West Java FSRU project. The project
represents Golar's fourth FSRU project and is for a period of approximately 11
years with an approximate contract value of $500 million. The project scope
involves the conversion of Golar Energy's 1977 built LNG carrier Khannur into an
FSRU with 500 MCFD (million cubic feet per day) regasification capacity
(approximately 3.8 MTPA) and the provision of associated mooring infrastructure.
Since being selected for the project in October 2010, the Company has entered
into a Letter of Intent and Project Continuation Agreement which provide the
Company the financial security from Nusantara Regas to proceed with detailed
engineering and procurement activities of long lead items in order to maintain
the scheduled delivery date while finalizing charter party negotiations.
FSRU and mooring detailed engineering, procurement and construction related
activities are well underway. Detailed engineering is progressing according to
schedule. The majority of critical long lead items have been ordered.
In general, activity within the FSRU market is becoming more firm. Over the last
quarter Golar Energy has been pre-qualified for the both the Medan LNG FSRU
project in Indonesia and the Bahrain Petroleum Company (BAPCO) LNG project.
Additionally, a number of discussions are underway with credible project
developers with the possibility of new tenders in the coming quarter. Based on
the current market the Company believes that it should be in a good position to
secure at least one further FSRU contract over the next 12 months.
Golar Commodities
Golar Commodities spot activity during the fourth quarter was limited to
residual transactions from its third quarter cargoes as well as building on
existing customer relationships and establishing new ones. Golar Commodities
continued to actively pursue spot market trades but poor risk and reward
characteristics of opportunities during the period hampered further trades. A
number of potential transactions involving short and mid-term LNG supply, short
and mid-term off-take as well as asset optimization opportunities are currently
being advanced. These opportunities would be under non-standard structures for
the industry that create value and/or significantly reduce physical and
financial risk for Commodities' prospective customers.
Given the risks, uncertainties and illiquidity associated with LNG trading,
Golar Commodities will take a measured approach to its trading activities;
especially during its ramp-up phase. A prudent approach to selecting its
initial positions in a highly deliberate manner should ensure more certain
success and avoid large risks.
Tremendous expected growth of LNG, though still with significant structural
inefficiencies, coupled with the industry achieving a certain critical mass and
fungability is providing numerous opportunities to create value and reduce risk
for Golar Commodities' customers. Expected growth of over 60% in LNG volumes
over the next decade affords a patient, methodical approach to increasing
activity within a highly disciplined framework.
The earnings and prospects of Golar Commodities have been negatively influenced
by the tightening of the LNG shipping market. However, the Board still sees good
opportunities for solid economics for longer term cargo deals.
Golar Commodities has recently added shipping exposure with the target of using
this capacity to secure cargo trades. Results from this activity should be
recognisable in the second quarter of 2011.
Market
Qatar completed two additional liquefaction trains during the quarter and now
has a total production capacity of 77 million tonnes per annum (MTPA). Qatar is
now the world's largest LNG supplier but by 2015 increasing coal-bed methane
(CBM) projects in Australia should lead incremental supply as Qatari volumes
stabilise. In late October, approval was given for two CBM projects led by BG
and Santos providing for an additional 16 MTPA to be commissioned by 2015.
In 2011 and 2012 the new Qatari trains will continue to ramp up as will new
additions in Angola, Australia (Pluto), Peru, Yemen and Tangguh - which are
envisaged to reach full production in 2012. Whilst Nigerian volumes will
continue their recovery it is anticipated that Algeria, Egypt, and Indonesia
will continue to face production difficulties.
Many of the new LNG projects had contracts to supply the U.S., however the
rising importance of shale gas in the U.S. has forced these projects to find new
markets for their LNG. This is positive for floating regasification as new
markets will need regasification solutions. Shale gas is now also driving
potential production projects in the U.S. with existing import facilities now
being developed as projects offering bi-directional flow using increased
domestic reserves to target more lucrative international LNG markets.
Extreme cold weather in both Northwest Europe and Northeast United States and
outages at Bonny, Nigeria, and Hammerfest, Norway, have ensured that demand
reached high levels during the fourth quarter in the Atlantic Basin. However,
Asian buyers continued to resist increasing bids to compete with Atlantic
buyers.
Prices at UK NBP rose past $10 per MMBtu in December on the back of a cold spell
that broke records for gas demand. UK LNG terminals reached an all time high,
but with temperatures easing, prices softened and demand switched to the Far
East. Nonetheless, in the first 15 days of January, an unprecedented 15 cargoes
arrived in the UK.
Despite the influence of shale gas production in the U.S. going forward North
American markets will continue to be the swing destination for LNG due to the
size, liquidity and storage capability that allow it to absorb cargoes on short
notice. As new LNG projects come on-stream, U.S. markets will be needed to
absorb some of the excess production.
However, there are also strong emerging markets (in Asia and South America for
example) that continue to underpin future demand growth. Petrobras imported 36
cargoes last year and in Argentina 11 cargoes will be taken over their off-peak
period. With the second Argentinean LNG import terminal, Escobar, starting in
mid 2011 it is envisaged that ENARSA will need upwards of 50 cargoes for their
2011/12 contract year.
Outlook
The time charter rates achieved for Golar Energy's four modern LNG vessels will
result in a combined annualized EBITDA contribution of all four vessels derived
from these time charters of approximately $80 million per annum based on assumed
levels of operating cost per year. All four charters have terms which will
result in the vessels coming off hire during 2012 when the Company is optimistic
that LNG shipping rates will have shown further improvement.
The Company does not foresee any let up in the growth trajectory of potential
FSRU projects. Active developments are on-going in literally every corner of
the globe. Golar Energy's FSRU execution model which offers competitive price
certainty and fast-track conversions should encourage successful investment
decisions for project developers. The strong development in oil prices and the
de-linking of oil and gas prices makes gas projects financially very attractive.
In view of the improved market situation Golar has started an evaluation of
different growth strategies. This evaluation includes organic growth as well as
acquisition of additional capacity. Golar is currently actively looking at
several ways to increase the size of the Company. A decision and implementation
of this strategy is targeted for the first half of 2011.
The Board is continuously monitoring ways to optimise the financing arrangements
of the vessels on long-term charters with the aim of reducing the cost of
capital and increasing the return on equity.
One of Golar Energy's vessels is due to be drydocked in the first quarter of
2011 however earnings from its four modern vessels are expected to be increased
from the fourth quarter as they are delivered under their new time charters.
Operating revenues for the five long-term contracted vessels in the first
quarter are expected to be in line with the fourth quarter and the Board expects
the current dividend rate of $0.25 cents per share per quarter to be sustainable
with a potential for possible growth.
Forward Looking Statements
This press release contains forward looking statements. These statements are
based upon various assumptions, many of which are based, in turn, upon further
assumptions, including examination of historical operating trends made by the
management of Golar LNG. Although Golar LNG believes that these assumptions were
reasonable when made, because assumptions are inherently subject to significant
uncertainties and contingencies, which are difficult or impossible to predict
and are beyond its control, Golar LNG cannot give assurance that it will achieve
or accomplish these expectations, beliefs or intentions.
Included among the factors that, in the Company's view, could cause actual
results to differ materially from the forward looking statements contained in
this press release are the following: inability of the Company to obtain
financing for the new building vessels at all or on favourable terms; changes in
demand; a material decline or prolonged weakness in rates for LNG carriers;
political events affecting production in areas in which natural gas is produced
and demand for natural gas in areas to which our vessels deliver; changes in
demand for natural gas generally or in particular regions; changes in the
financial stability of our major customers; adoption of new rules and
regulations applicable to LNG carriers and FSRU's; actions taken by regulatory
authorities that may prohibit the access of LNG carriers or FSRU's to various
ports; our inability to achieve successful utilisation of our expanded fleet and
inability to expand beyond the carriage of LNG; increases in costs including:
crew wages, insurance, provisions, repairs and maintenance; changes in general
domestic and international political conditions; the current turmoil in the
global financial markets and deterioration thereof; changes in applicable
maintenance or regulatory standards that could affect our anticipated dry-
docking or maintenance and repair costs; our ability to timely complete our FSRU
conversions; failure of shipyards to comply with delivery schedules on a timely
basis and other factors listed from time to time in registration statements and
reports that we have filed with or furnished to the Securities and Exchange
Commission, including our Registration Statement on Form 20-F and subsequent
announcements and reports. Nothing contained in this press release shall
constitute an offer of any securities for sale.
February 28, 2011
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda.
Questions should be directed to:
Golar LNG Management Limited - +44 207 063 7900
Graham Robjohns - Chief Executive Officer
Brian Tienzo - Group Financial Controller / Investor Relations
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
Golar LNG Q4 Results 2010:
http://hugin.info/133076/R/1493270/429040.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Golar LNG via Thomson Reuters ONE
[HUG#1493270]
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Datum: 01.03.2011 - 08:53 Uhr
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