Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Golar LNG Ltd (GLNG, Financial) ordered its third FLNG, the MK II, which will increase its liquefaction capacity by 70% and is expected to deliver by 2027.
- The company has secured a 20-year charter for the FLNG Hilli in Argentina, ensuring long-term revenue generation.
- Golar LNG Ltd (GLNG) has a strong financial position with a cash reserve of over $800 million and a significant EBITDA backlog of approximately $11 billion.
- The company successfully resolved contractual disagreements with BP, unlocking potential refinancing opportunities for the FLNG Gimi.
- Golar LNG Ltd (GLNG) declared a dividend of $0.25 per share, reflecting its commitment to returning value to shareholders.
Negative Points
- The company reported a net loss of $35 million for the quarter, primarily due to noncash adjustments related to lower oil and gas prices.
- There are significant costs associated with the redeployment of the FLNG Hilli, estimated between $200 million to $300 million.
- The potential expansion in Argentina requires the construction of a dedicated pipeline, which presents logistical and financial challenges.
- The MK II FLNG project involves a substantial investment of approximately $2.2 billion, which could strain financial resources if not managed carefully.
- Golar LNG Ltd (GLNG) faces uncertainties in securing contracts for its new FLNG units, which could impact future revenue streams.
Q & A Highlights
Q: Can you clarify the situation with the Hilli in Argentina and the involvement of Pan American and YPF in the LNG development?
A: The Hilli is confirmed to be the first outlet for Argentinian LNG exports, utilizing gas from the Vaca Muerta field. The reservation notice has been given, locking Hilli into this project. There is potential for other Vaca Muerta gas resource owners to join the project, which could support further FLNG growth. (Karl Staubo, CEO)
Q: Could you elaborate on the refinancing of the Gimi and the potential financing for the MK II?
A: We are progressing with the Gimi refinancing, targeting $1.4 billion in total financing. For the MK II, we have indicative terms for $1.2 billion in asset-level financing, which could improve once a charter is secured. We plan to maintain and potentially increase our dividend policy as we derisk projects. (Eduardo Maranhao, CFO)
Q: What is the status of the option for a second MK II at the CIMC Raffles yard?
A: We have flexibility with the EPC contract, but need to commit to long-lead items by Q1 to secure a 2028 delivery. This cautious approach allows us to secure an attractive delivery slot without full EPC risk before securing a charter for the first MK II. (Karl Staubo, CEO)
Q: Are there discussions with the Tortue partners about using an FLNG asset for Phase 2 development?
A: While we don't comment on specific projects, FLNG has proven to be an economical solution for monetizing gas reserves, and it's likely considered among options for expansion. There are synergies in using the same operator for multiple units. (Karl Staubo, CEO)
Q: Can you provide details on the 10% stake in Southern Energy and the CapEx for Hilli's redeployment?
A: Our CapEx commitment for Southern Energy is estimated between $50 million to $100 million. For Hilli's redeployment, including upgrades and movement, we estimate costs between $200 million to $300 million. (Eduardo Maranhao, CFO)
Q: What are the plans for the MK III unit, and what would drive its selection over an MK II?
A: The MK III is a larger, more expensive new build with a longer construction time. We would only proceed with it against a firm contract. Currently, the MK II offers a better value proposition unless a back-to-back contract for the MK III is secured. (Karl Staubo, CEO)
Q: What is the status of Macaw and the potential for a separate listing?
A: We are fine-tuning operations to handle gas quality variability. Once stabilized, we will revisit the idea of a separate listing or business separation, likely in 2025. There is industrial interest in the technology. (Karl Staubo, CEO)
Q: What is the outlook for the second MK II and the potential for further FLNG rollouts?
A: There is significant interest in FLNG, with several projects potentially requiring more than one unit. The operational synergies and cost advantages make FLNG a competitive option, supporting our growth ambitions. (Karl Staubo, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
