Golar LNG Energy Limited - Third Quarter 2009 Results
(Thomson Reuters ONE) - Highlights* Golar LNG Energy reports net loss of $3.2 million and operating income before depreciation and amortisation of $5.0 million* Spot trading vessel earnings strengthening with improved utilisation and rates* Equity offering completed and 'greenshoe' option exercised raising $117 million* Golar LNG Energy lists on Oslo Axess on October 8, 2009* Gladstone LNG project makes good progress* FSRU discussions continue to progress with various parties and formal tenders beginning to emergeFinancial ReviewGolar LNG Energy Limited ("Golar Energy" or the "Company") reports anet loss of $3.2 million and operating income before depreciation andamortisation of $5.0 million from inception to September 30, 2009(the "third quarter"). These results represent trading from the dateof completion of the restructuring and equity offering on August 12,2009 to September 30, 2009 (the "third quarter").Revenues in the third quarter were $11.3 million. Earnings fromvessels operating in the spot market have started to improve from theposition in the first half of 2009, at which time these vessels wereowned by Golar LNG Limited. Golar Arctic went on hire from August 16,2009 and will continue on hire for the vast majority of the fourthquarter. Average utilisation for the period from August 12, 2009 toSeptember 30, 2009, the third quarter, was 93%, with average dailytime charter equivalent rates ("TCEs") in the period being $35,600per day.Voyage expenses, principally fuel costs whilst the vessels are not ontime charter, were $0.8 million for the third quarter, operatingexpenses were $3.8 million and administrative expenses $1.7 million,resulting in operating income of $0.3 million after depreciation of$4.7 million.Net financial expenses were $2.9 million for the third quarter.Average USD LIBOR has declined during the period to 0.3% by September30, 2009, which has had a beneficial effect on interest costs forfloating rate debt. Approximately 48% of the Company's debt is swapedto a fixed rate.Equity in net earnings of associates relates mainly to the company'sinvestment in LNG Limited.Financing, corporate and other mattersThe restructuring of Golar LNG Limited's activities by way of thetransfer of various assets and liabilities to its subsidiary, GolarEnergy completed on August 12, 2009. Immediately subsequent to therestructuring Golar Energy completed a private placement ofapproximately 60 million new shares, including the exercise of a'greenshoe' option, raising approximately $117 million. At the timeof the equity offering the Company also issued 12 million warrants tosubscribe for further shares on 15 December 2010 at a price of $2 pershare.The underlying rationale for the restructuring was to create anaggressive, well funded high growth mid-stream LNG company with afocus on LNG shipping and trading, floating regasification projectsand liquefaction projects.Golar Energy's shares were listed on Oslo Axess (GOLE) on October 8,2009 and the prospectus for this listing can be found on theCompany's website at www.golarenergy.com.Subsequent to the period end the Company issued share options todirectors and employees totalling 3,940,000 at a strike price $2.20.The grant date was October 23, 2009 and all options vest over aperiod of two years and eight months.In November 2009, Golar Energy sold a block of 9.6 million LNGLimited shares which reduces its shareholding to approximately 6.3%of LNG Limited's issued share capital. Golar Energy remains stronglycommitted to the Gladstone LNG Fisherman's Landing project andcontinues to invest directly in the project in terms of significanttechnical and commercial resources including the secondment ofpersonnel to the project. The Gladstone LNG Fisherman's Landingproject remains an important part of Golar Energy's strategy andportfolio. The sale will realise funds of approximately USD 11million and result in an accounting profit of approximately USD 8million.Operational ReviewShippingThe spot LNG shipping market will continue to face some challenges inthe short term due to a limited oversupply of vessels. The order bookas at the end of 2010 is limited to 3% of the total fleet. The vastmajority of new vessels will be delivered into specific projects.Trading performance of the Company's vessels operating in thespot/short term market improved over the quarter. Rates andutilisation are still unsatisfactory but improvement continues intothe fourth quarter. Available tonnage in the Atlantic has tightenedover the quarter with very few vessels available cold forthe recent tenders. Several majors have recently been in the marketchartering in medium term tonnageCharter arrangements are now becoming more balanced andexhibiting less multiple options and lower flexibility in charterer'sfavour than has been evident throughout the year.There are clear signs that an improved supply demand balance in theyears to come will lead to a much needed improvement in charterrates. However the current weak demand for natural gas is negativelyinfluencing the short to medium term demand for LNGRegasificationFloating storage and regasification market inquiry is firming. Asreported in the second quarter regasification developers arelaunching new LNG import projects based on the employment of afloating storage and regasification solution. Developers, inaddition to recognizing the numerous benefits of floating storage andregasification projects, recognize an excellent window of opportunityto launch new projects as near / mid term LNG supply is available.Various formal invitations (prequalification documents, solicitationsof interest, request for proposals) have recently been issued or areexpected from countries including Israel, Indonesia, Uruguay andJamaica.In addition to these formal invitations, Golar Energy is discussingnumerous other projects directly with interested parties. Whileinquiry is worldwide, Asia continues to represent areas of increasingactivity. This formal FSRU market inquiry is testament to theincreasing level of interest and Golar's track record, focus ondeveloping long term relationships and delivering tailored low costsolutions should provide a solid foundation for delivering furtherFSRU contracts.Golar Freeze entered Keppel Shipyard on September 5, 2009 to undergoits FSRU conversion prior to its delivery to Dubai Supply Authority(DUSUP) under a 10 year charter. The construction of the regas-skidsis completed and they are currently being transported to Singaporefor installation onboard Golar Freeze. A majority of the other maincomponents for the conversion are already at site, and the conversionis progressing according to schedule.LiquefactionThe Gladstone LNG Project continues to move forward positively withseveral milestones achieved during the period under review. In earlyOctober 2009, agreement was reached with Gladstone Port Corporation(GPC) for the project to commence its ground improvement and earlysite works programme. The current ground improvement and early siteworks will assist in reducing future capital costs and shorten theoverall construction schedule to allow for the Project's first LNGshipment in 2012. In September 2009, Golar Energy entered into a HOAwith Toyota Tsusho Corporation (part of the Toyota Group) as the endbuyer of the entire first LNG train production of 1.5 mtpa. Duringthe quarter the project appointed BNP Paribas as the Project'sfinancial advisor. BNP Paribas will participate in the review andstructuring of all key components of the Project, to ensure theProject conforms to accepted project debt financing principles andparameters. In addition CB&I have been appointed as "ProjectManagement Consultant". The depth of LNG project experience withinthe CB&I group will substantially augment the project team, which initself has been materially bolstered by the selective recruitment ofLNG industry experienced personnel.The PTTEP/Coogee project is progressing and will complete the conceptphase by the end of the year. The midstream (FLNG unit) study workis being done in Oslo with several project engineers from PTTEP onthe project team, while the upstream studies are being done in Perth.The Company has gained valuable knowledge and experience throughoutthe cooperation with PTTEP.MarketThe LNG industry is experiencing additional growth as moreliquefaction projects come on stream to meet long term global demandgrowth. Qatar expects to double annual capacity this year to 62million tonnes and be in a position to export 77 MTPA by 2011.This year has also seen further LNG production capacity additions inRussia (Sakhalin), Indonesia (Tangguh) and Yemen as well as moreimport capacity, added or about to be added, in Kuwait (Al Ahmadi),Italy, Brazil, Dubai and Argentina. The addition of new productioncapacity and LNG import facilities, some of which are located inpreviously inaccessible markets exhibiting a counter-cyclical demandrequirement, offers a greater interaction between, not only Atlanticand Pacific Basin locations, but also greater diversity betweennorthern and southern hemispheres. Gas price volatility and arbitragebetween regions will create additional trading opportunities whichwill require flexible shipping arrangements to cater for marketdevelopments.Additionally the market is being tested for more flexible LNG SPA'sin long term contracts in terms of destination flexibility and upwardand downward buyer volume flexibility. This additional flexibilitywill also require further flexible shipping arrangements (andoptimisation within shipping portfolios) which hitherto charterershave been reluctant to recognise in terms of pricing for shipping.The depressed spot gas and LNG prices during 2009 can be explained bya number of different factors:- The new LNG production projects finally starting up,particularly in Qatar, has significantly increased supply.- In the US, shale gas can be produced more cheaply than hadbeen anticipated, which has transformed the marginal cost of supplyin the US, driven prices down and means that LNG has to compete atlower prices than had been anticipated.- There has been a global economic downturn, depressing gasdemand, so that Asian LNG buyers have minimized volumes under theirterm contracts, forcing some producers to sell to the West or India.- There has been a glut of LNG shipping so that, despite lowprices, LNG producers have still been able to secure positivenetbacks, so the LNG has kept flowing.OutlookThe Company believes that in the medium to long term the gas/LNGmarket looks attractive. Gas/LNG is likely to increase its share ofthe energy market due to shortage of oil, the increased demand forenergy and the fact gas is a cleaner energy than oil and coal. Theprice attractiveness of gas which in the US today is selling at adiscount to oil of approximately 70 % measured on an energy contentbasis is further strengthening the case. In order to develop the LNGmarket further and increase its market share Golar Energy believesthere will be an increased demand for floating regas solutions andfloating LNG projects. With Golar Energy's fleet, expertise and thetrack record, the Board believes that the Company is in a very goodposition to take advantage of this opportunity. By utilizingexisting LNG vessels for conversions the Company believes that it isable to create the most cost effective solutions for customers andpartners.Golar LNG Energy has a platform for growth within the mid-stream ofthe LNG supply chain and plans to aggressively pursue the developmentof its regasification and liquefaction projects as well as shippingand trading opportunities.The results for the fourth quarter will be influenced by a steadilyimproving spot market for LNG vessels, with trading of the Company'sspot market vessels showing improvement in the fourth quarter. Thereis however a drydock of one vessel scheduled for the fourth quarterwhich will negatively impact earnings. The fourth quarter willbenefit from an approximate $8 million gain on the sale of part ofthe shareholding in LNG Limited.Forward Looking StatementsThis press release contains forward looking statements. Thesestatements are based upon various assumptions, many of which arebased, in turn, upon further assumptions, including examination ofhistorical operating trends made by the management of Golar LNGEnergy. Although Golar LNG Energy believes that these assumptionswere reasonable when made, because assumptions are inherently subjectto significant uncertainties and contingencies, which are difficultor impossible to predict and are beyond its control, Golar LNG Energycannot give assurance that it will achieve or accomplish theseexpectations, beliefs or intentions.Included among the factors that, in the Company's view, could causeactual results to differ materially from the forward lookingstatements contained in this press release are the following:inability of the Company to obtain financing for the new buildingvessels at all or on favourable terms; changes in demand; a materialdecline or prolonged weakness in rates for LNG carriers; politicalevents affecting production in areas in which natural gas is producedand 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; adoptionof new rules and regulations applicable to LNG carriers and FSRU's;actions taken by regulatory authorities that may prohibit the accessof LNG carriers or FSRU's to various ports; our inability to achievesuccessful utilisation of our expanded fleet and inability to expandbeyond the carriage of LNG; increases in costs including: crew wages,insurance, provisions, repairs and maintenance; changes in generaldomestic and international political conditions; the current turmoilin the global financial markets and deterioration thereof; changes inapplicable maintenance or regulatory standards that could affect ouranticipated dry-docking or maintenance and repair costs; our abilityto timely complete our FSRU conversions; failure of shipyards tocomply with delivery schedules on a timely basis and other factorslisted from time to time in subsequent announcements and reports.Nothing contained in this press release shall constitute an offer ofany securities for sale.November 26, 2009The Board of DirectorsGolar LNG Energy LimitedHamilton, BermudaQuestions should be directed to:Golar Energy Management LtdOscar Spieler: CEO - +65 6296 5518Golar Management Ltd - +44 207 063 7900:Graham Robjohns: CFOhttp://hugin.info/142200/R/1357585/330302.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 27.11.2009 - 08:37 Uhr
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