Highlights
-
EBITDA* and Operating Loss in the
quarter reported a loss of $11.3 million and $28.3 million compared
to a 2Q loss of $17.5 million and $37.2 million,
respectively.
-
Golar LNG Limited ("Golar" or "the
Company") and Schlumberger formed OneLNG, a joint venture that will
offer an integrated upstream and midstream solution for the
development of low cost gas reserves to LNG.
-
Closed Golar Power transaction with
Stonepeak to capitalise on downstream opportunities.
-
Shipping market shows positive signs
with improving utilisation, rates and the re-appearance of
round-trip economics.
Subsequent Events
-
Ophir and OneLNG agreed to form a Joint
Operating Company to develop the 2.6Tcf Fortuna reserves in
Equatorial Guinea using FLNG technology.
-
Golar Power reached a Final Investment
Decision ("FID") on Sergipe power project, signed a 25-year FSRU
agreement and entered into a long-term sale and purchase agreement
for the supply of LNG.
-
The Incentive Distribution Rights
("IDRs") in Golar LNG Partners ("Golar Partners" or "the
Partnership") were reset. Golar LNG received 3.8 million new units
as consideration.
-
Raised $176 million in new equity
through issue of 7.5 million new shares.
Financial Review
Business Performance
|
2016 |
2016 |
(in thousands of $) |
Jul-Sep |
Apr-Jun |
Total operating revenues |
22,267 |
|
18,370 |
|
Vessel operating expenses |
(12,102 |
) |
(14,064 |
) |
Voyage, charterhire & commission expenses |
(8,031 |
) |
(9,826 |
) |
Voyage, charterhire & commission expenses -
collaborative arrangements |
(3,621 |
) |
(2,331 |
) |
Administrative expenses |
(9,808 |
) |
(9,689 |
) |
EBITDA* |
(11,295 |
) |
(17,540 |
) |
Depreciation and amortization |
(16,997 |
) |
(19,705 |
) |
Operating loss |
(28,292 |
) |
(37,245 |
) |
* EBITDA is defined as operating
loss before interest, tax, depreciation and amortization. EBITDA is
a non-GAAP financial measure. A non-GAAP financial measure is
generally defined by the Securities and Exchange Commission as one
that purports to measure historical or future financial
performance, financial position or cash flows, but excludes or
includes amounts that would not be so adjusted in the most
comparable U.S. GAAP measure. We have presented EBITDA as we
believe it provides useful information to investors because it is a
basis upon which we measure our operations and efficiency. EBITDA
is not a measure of our financial performance under U.S. GAAP and
should not be construed as an alternative to net income (loss) or
other financial measures presented in accordance with U.S.
GAAP.
The Golar Power transaction closed
on July 6. Effective from this date, the results of the LNG
carriers, Golar Penguin and Golar Celsius, together with the
Company's interest in the 2017 delivering FSRU new-build Nanook and
the Company's investment in the Sergipe power project have been
deconsolidated. The Company will use equity accounting for Golar
Power from July 6 and results of this business unit are included
within Equity in net earnings of affiliates in the Statement of
Income discussed below.
Golar reported today a 3Q
operating loss of $28.3 million as compared to a loss of $37.2
million in 2Q 2016. Both shipping rates and utilisation improved
during the quarter with utilisation increasing from 31% in 2Q to
37% in 3Q and rates for TFDE tonnage approaching and in cases
exceeding $40k/day. Total operating revenues increased from $18.4
million in 2Q to $22.3 million in 3Q. Voyage, charter-hire and
commission expenses including those from the Cool Pool
collaboration recorded a slight decrease from $12.2 million in 2Q
to $11.7 million this quarter reflecting the small increase in
utilisation. As in prior quarters, included in voyage, net
charter-hire and commission expenses is $5.8 million in respect of
the cost of chartering the Golar Grand.
Vessel operating expenses
decreased $2.0 million to $12.1 million. Deconsolidation of
post July 6 costs in respect of the Celsius and Penguin accounts
for most of the reduction however lower insurance costs across the
fleet also contributed positively in 3Q. Administration costs at
$9.8 million were in line with 2Q. Depreciation and
amortisation decreased $2.7 million to $17.0 million in 3Q, again
due to deconsolidation of Golar Penguin and Celsius.
Relative to 2Q the above resulted
in a $6.2 million decrease in EBITDA* losses from a loss of $17.5
million in 2Q to a loss of $11.3 million in 3Q and an $8.9 million
decrease in Operating losses from a loss of $37.2 million in 2Q to
a loss of $28.3 million in 3Q.
Net Income
Summary
|
2016 |
2016 |
(in thousands of $) |
Jul-Sep |
Apr-Jun |
Operating loss |
(28,292 |
) |
(37,245 |
) |
Interest
income |
436 |
|
196 |
|
Interest
expense |
(15,564 |
) |
(13,331 |
) |
Other
financial items |
22,772 |
|
(27,471 |
) |
Loss on
disposal |
(12,184 |
) |
- |
|
Taxes |
(246 |
) |
609 |
|
Equity in
net earnings of affiliates |
15,681 |
|
2,053 |
|
Net income
attributable to non-controlling interests |
(6,546 |
) |
(9,412 |
) |
Net loss attributable to Golar LNG Ltd |
(23,943 |
) |
(84,601 |
) |
In 3Q the Company generated a net
loss of $23.9 million. Notable contributors to this are summarised
as follows:
-
After stripping out Golar Power assets,
consolidated Variable Interest Entities in respect of the six sale
and leaseback financed vessels and non-cash capitalised interest
adjustments, underlying 3Q interest expense is consistent with
2Q.
-
Other Financial Items report a gain of
$22.8 million compared to a $27.5 million charge in 2Q. A 2Q
mark to market loss on the Company's Total Return Swap became a
$16.5 million gain in 3Q following an increase in Golar's share
price from $15.50 on June 30 to $21.20 on September 30. Increases
in long-term swap rates also converted a 2Q $5.9 million
mark-to-market loss on the valuation of interest rate swaps into a
3Q gain of $10.7 million.
-
A $12.2 million non-cash loss was
recognised on disposal of Golar Power, of which approximately half
is expected to be recovered upon finalisation of the purchase price
adjustment. This loss is based on estimates and is thus subject to
change.
-
Following a change in accounting
treatment of the Company's stake in Golar Partners, Golar now
accounts for its Common Units, General Partner Units and IDRs in
the same way it has previously accounted for its Subordinated Units
under the equity method of accounting. The Partnerships 3Q 2016
contribution to Golar's results is included together with the
Company's 50% share of Golar Power in equity in net earnings of
affiliates. The $15.7 million 3Q equity in net earnings of
affiliates is comprised of a $2.7 million loss in respect of
Golar's 50% share in Golar Power and net earnings of $18.3 million
from the Company's stake in Golar Partners. However, the change in
accounting treatment of the various units does not impact the
distributions receivable by the Company so that its receipt of
$13.2 million in cash distributions in respect of its investment in
Golar Partners is consistent with recent quarters.
Commercial
Review
LNG
Shipping
The third quarter began in much
the same way as the first half of the year with excess tonnage
weighing heavily on rates. This was followed by increased activity
in August that resulted in a step up in rates and utilisation,
particularly for owners with open tonnage in the Atlantic basin
where spot rates in excess of $40k/day were achieved. Both
chartering activity and rates have since eased but levels remain
well above the lows reached in the first half of 2016. The Pacific
market continued to be typified by higher liquidity with an
abundance of available shipping as well as spot demand from
projects, utilities and traders. Spot charters have typically been
for short durations, maintaining liquidity but limiting significant
rate increases. Atlantic activity on the other hand has been more
sporadic with thin tonnage availability and limited demand
occasionally interrupted by sudden waves of requirements that clear
out this available tonnage and result in improved rates.
New production continues to
deliver with T9 of Malaysia LNG, Petronas FLNG1 and train 2
operations of Gorgon and Sabine Pass set to start during 4Q.
Looking to 2017, significant additional production is expected from
Gorgon and Sabine Pass together with new production from Whetstone.
The FLNG Hilli is also set to start producing. All in,
approximately 135 million tonnes of new production equivalent to
52% of current LNG production is expected to deliver between now
and 1Q 2021. During recent months a number of market participants
have chosen to take shipping coverage for 2017. Up to 16 vessels in
the global spot fleet have been fixed for periods of 6-18 months
starting between September and February. Golar believes that this
tightens the outlook for structural availability into 2017. As new
LNG arrives and prompt availability of shipping tonnage declines,
charterer interest in period contracts is expected to grow bringing
the shipping business ever closer to its inflection point.
Discipline among ship owners
continues to be maintained with only 6 LNG carriers (approximately
1% of the global fleet) ordered this year to date.
FSRUs
Golar's existing fleet of six
operating FSRUs, all of which reside within Golar Partners but are
managed by the Company, have maintained operational excellence
achieving 99.3% availability during scheduled 3Q operations.
The FSRU Golar Tundra remains at
anchor off the coast of Ghana. On October 19, Charterer, West
Africa Gas Limited ("WAGL") received parliamentary approval for
their 10-year gas sales agreement with the government of Ghana.
Golar has commenced legal proceedings in order to collect amounts
due under the charter. The Company does however maintain dialogue
with WAGL to find a mutually agreeable way forward that bridges the
original and later start date required and on November 29 the
Company received its first payment from WAGL for amounts
outstanding under the charter. The Company has not recognised
any revenue from the WAGL charter in its 3Q Income
Statement.
Downstream -
Golar Power
On October 17, Golar Power reached
a FID on its first integrated FSRU-to-power project. Together
with joint venture partners Ebrasil, Golar Power have formed
a project company, CELSE, which has entered into a lump-sum
turn-key EPC agreement with General Electric who will build,
maintain and operate a 1.5GW combined cycle power station in
Sergipe, Brazil. The power station will provide power to 26
committed off-takers for 25 years commencing January 2020. All-in
capital expenditure for the power station and supporting
infrastructure is estimated to be BRL4.3 billion. After deducting
the cost of chartering in the FSRU and assuming no dispatch of
power, the Sergipe project is expected to generate a projected
annual EBITDA* of BRL1.1 billion. Additional returns can be earned
if the power station is called upon to dispatch and CELSE has
entered into a flexible long-term LNG Sale and Purchase Agreement
with an affiliate of Qatar Petroleum and ExxonMobil to support
this.
In connection with FID, Golar
Power has also elected to buy out project developer Genpower. This
will increase its ownership in the Sergipe Project from 25% to 50%.
Golar Power had previously committed to finance Genpower's equity
contribution to the project so acquisition of this stake should not
increase Golar Power's equity contribution beyond the previously
anticipated $165 million, a small portion of which has already been
invested.
Golar Power has nominated its 2017
delivering FSRU newbuild, Nanook, to service
the Sergipe project and has entered into a 25-year agreement to
charter the FSRU to CELSE. This agreement affords the flexibility
to switch to an FSRU conversion candidate ahead of start-up to
accommodate other Golar Power business opportunities as required.
Annual EBITDA* generated by the FSRU is projected to be $39.0
million (100% for the account of Golar Power) starting January 1,
2020. When called upon to dispatch, the Sergipe power station will
utilise approximately 35% of the FSRUs regas capacity. Golar Power
will therefore look to augment this $39 million EBITDA* by seeking
out other proximate users or integrate a project into the Brazilian
gas grid.
Other FSRU projects are currently
being actively pursued. These require a range of solutions from
large new-build FSRUs to small, modern and new-build carrier
conversions. Golar has recently agreed to participate in a Total
led consortium developing an integrated FSRU-to-power project in
the Ivory Coast.
Although LNG prices have increased
in recent months, they remain extremely competitive on a burn
parity basis and by historical standards. The Company believes that
this together with an expectation that LNG prices will remain low
is driving demand growth that is supporting FSRU opportunities.
China and India continue to report high double digit demand growth
with an estimated 40-50 mtpa of incremental demand being filled by
these two markets alone. Other emerging markets are currently
expected to fill a further 30-40mtpa of incremental demand, much of
it via FSRUs.
FLNG
The FLNG Hilli conversion project
continues apace and remains on schedule, within budget and on track
to deliver within its stipulated delivery window. Virtually all
heavy equipment is on-board and over 4,000 contractors are now
working on the vessel on a daily basis. The mooring system is on
schedule and limited testing of systems has started. The
Company is encouraged by two recent developments in the FLNG
business, namely:
-
Commencement of operations on the
worlds first FLNG vessel, the PFLNG Satu in Malaysia.
-
Black & Veatch successfully
commissioning, in a marine environment, an Exmar designed FLNG
barge with a small-scale version of the same liquefaction
technology used on FLNG Hilli.
There are significant other
stranded gas reserves in the area neighbouring the Kribi field in
Cameroon as well as additional reserves within the field itself.
Golar is currently having discussions with the Government and
Perenco and is soliciting interest from independent third parties
with the target of increasing utilisation of the FLNG Hilli. The
Company remains cautiously optimistic that further utilisation will
be achieved after start-up.
Upstream -
OneLNG
On July 25 Golar and Schlumberger
formalised their co-operation by announcing the creation of OneLNG,
a joint venture 51% owned by Golar and 49% by Schlumberger that
will combine the respective strengths of each shareholder to offer
gas resource holders a faster and lower cost LNG development
solution. OneLNG will have first right of refusal for all
gas-to-LNG projects that draw upon services provided by
Schlumberger and FLNG expertise provided by Golar. The joint
venture also contemplates an equitable contribution mechanism that
takes account of Golar's FLNG intellectual property. Any
credit that Golar receives for this intellectual property will be
agreed on a case-by-case basis. Jeff Goodrich, formerly Chief
Operating Officer at Perenco has been appointed CEO of OneLNG and
key resources from both Golar and Schlumberger have been seconded
to the venture which now operates out of a shared London
office.
On November 10, OneLNG signed a
binding Shareholders Agreement with Ophir Holdings and Ventures
Limited to establish a Joint Operating Company ("JOC") to develop
Ophir's 2.6Tcf Fortuna gas reserves, in Block R, offshore
Equatorial Guinea. The JOC, 66.2% and 33.8% owned by OneLNG and
Ophir respectively, will own Ophir's share of the Block R licence
and the FLNG vessel Gandria which are collectively expected to
produce between 2.2-2.5mtpa of LNG over 15-20 years. The
shareholders agreement and a Final Investment Decision are
contingent on 3 key milestones - namely, agreement of final terms
and execution of documentation for project debt financing, approval
by the shareholders of Ophir Energy plc, and, approval by the
government of Equatorial Guinea. OneLNG is responsible for
concluding the project debt financing and Ophir is responsible for
securing requisite government and shareholder approvals.
As well as aligning interests, the
JOC structure allows the project to offer both its FLNG unit and
its stake in the gas field as security to lenders. This additional
security together with shareholder support is expected to
facilitate the drawdown of up to $1.2 billion of debt from FID to
commencement of operations. Including both upstream and midstream
development the project is expected to cost $2.0 billion to develop
and is currently expected to generate an annual EBITDA* of $560
million assuming a $6.0mmbtu free on-board gas price.
After Ophir's injection of up to
$150 million and assuming debt of $1.2 billion, OneLNG will be
expected to contribute approximately $650 million. Golar has a
range of funding options available to meet its share of this OneLNG
equity in the 2017-2020 period. Credit can be expected for both the
intellectual property and the LNG carrier Gandria contributed by
Golar. The Company is also looking to agree payment profiles with
key contractors Keppel and Black & Veatch to help accommodate
the gap between release of up to $160 million of post operational
equity from the Hilli and milestone payments required for the
Gandria conversion. Other potential sources of funding during
this three-year period include cash generated from the operation of
FLNG Hilli, potential proceeds from a sale of a tranche of the FLNG
Hilli to Golar Partners for which discussions have commenced,
leveraging of further Common units in Golar Partners and the 2018
release of approximately $110 million of cash tied up in the FLNG
Hilli cash-collateralised letter of credit. Delay of the Fortuna
FID to 1H 2017 also reduces the gap between equity requirements for
the project and equity released from the FLNG Hilli.
In addition to the Fortuna
Project, OneLNG is reviewing a comprehensive list of other projects
that suit its offering. Whilst there remains a West African
bias to the current shortlist, OneLNG is also working on several
projects in other parts of the world. The Company believes
that there is additional demand for its FLNG solutions and is
encouraged by the way OneLNG has been received by the market.
Financing Review
Liquidity
Golar's total cash position as at
September 30 was $137.9 million.
FLNG Hilli
financing
As at September 30, 2016, $600
million has been spent on the FLNG Hilli conversion ($695 million
including the vessel and capitalised interest) and $200 million had
been drawn against the $960 million CSSCL FLNG Hilli facility. As
the project remains well within its $1.2 billion budget, all
remaining conversion and site specific costs for the FLNG Hilli are
expected to be satisfied by this facility. After a bank
syndication exercise and a reduction in mark-to-market swaps a
further $13.9 million of the $280 million cash backed Letter of
Credit ("LC") to Perenco was released to 3Q liquidity. As at
September 30, restricted cash tied up in this LC stood at $266.1
million. A further $34.8 million of this LC restricted cash has
been released to liquidity so far in 4Q.
In addition to the above the
following have been concluded:
-
Golar Power transaction closed -
released $103 million of cash.
-
IDR Reset - received 3.7 million new
Common units and 0.1 million General Partner units in Golar
Partners (including 0.8 million earn-out units).
-
Margin Loan - secured $150 million
commitment from Citibank to be secured by certain Golar Partners
units.
-
Equity Issue - raised $170 million net
of fees following the issue of 7.5 million new shares.
Corporate and
Other Matters
After the recent offering there
are 101 million shares outstanding including 3.0 million Total
Return Swap ("TRS") shares that have an average price of $41.10 per
share. There are also 3.9 million outstanding stock options in
issue with current strike prices ranging from $1.48 to $57.00 per
share.
The dividend will remain unchanged
at $0.05 per share for the quarter.
Outlook
A total of around 300 spot
fixtures are expected to be concluded in 2016, a significant step
up from around 190 voyages in 2015. New LNG supply trains are
delivering on an almost quarterly basis, gradually eroding the
overcapacity in the shipping market. There are clear signs of
tightening in the spot market and this improvement is encouraging
charterer interest in longer term contracts. Based on fixture
activity thus far, 4Q shipping results are expected to be
approximately in line with 3Q. The current market strengthening is
already pushing 1Q 2017 utilisation toward 3Q 2016 levels.
Shareholders can therefore expect a positive improvement in1Q
revenues.
Both Golar Power and OneLNG, have,
within 6-months of their formation, identified and taken
substantial steps to advance their first project opportunities. FID
has been taken on the Sergipe project. Key service companies have
been engaged for Golar Power's first 25-year integrated
FSRU-to-power project. The main ground-work permit was received on
November 28 and ground preparations are now underway. Similarly,
OneLNG has signed a shareholder agreement with Ophir that makes
both the financing and development of this world class gas resource
manifestly more digestible. Both of these projects are long-term
(20-25 years), show good profitability and are expected to add
material EBITDA* backlog to the Golar group, assuming successful
execution of the two projects. Golar's share in the currently
expected EBITDA* backlog will be in excess of $6.0 billion over the
life of the projects based on current forward prices. This
creates a solid long-term foundation for the Company.
From a financing perspective,
Golar is pleased to have delivered a solution to the March maturing
convertible bond and to have strengthened the Company's liquidity
position. Attention is now focused on concluding the financing of
the FLNG Gandria which is progressing well.
Based on Golar's experience with
the first converted FSRU, successful execution of the Hilli project
is likely to increase interest in the Company's FLNG solutions.
FLNG Hilli continues to progress on budget and is scheduled to
commence operations in Cameroon in ten months. A key objective of
the Company will be to monetise the equity investment in, and the
cashflow generated by, FLNG Hilli, in the best possible way and use
this to create profitable growth going forward. Formation of OneLNG
and Golar Power, recruitment of personnel and the deals already
concluded have strengthened the Company's ability to execute large
projects. When combined with the positive trend we now see in
the shipping market, the Company's strategic and financial position
today is considered to be considerably better relative to the same
time last year.
Forward Looking
Statements
This press release contains
certain forward-looking statements that reflect management's
current expectations, estimates and projections.
Forward-looking statements include any statement that may predict,
forecast, indicate or imply future results, performance or
achievements. Words such as "anticipate," "believe,"
"estimate," "expect, " "forecast," "intend," "may," "pending,"
"plan," "predict," "project," "potential," "should" and similar
expressions identify forward-looking statements. These
statements are not guarantees of future performance and are based
upon assumptions and estimates that are inherently subject to
significant known and unknown risks, uncertainties and other
factors, many of which are beyond the Company's 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.
Among the important factors that
could cause actual outcomes and results to differ materially from
those in the forward-looking statements are: changes in LNG
carriers, FSRU or FLNG market trends, including charter rates,
vessel values and technological advancements; changes in the
Company's ability to retrofit vessels as FSRUs or FLNGs and in the
Company's ability to obtain financing for such conversions or its
joint ventures on acceptable terms or at all; changes in the supply
of or demand for LNG carriers, FSRUs or FLNGs; a material decline
or prolonged weakness in rates for LNG carriers, FSRUs or FLNGs;
changes in the performance of the pool in which certain of the
Company's vessels operate and the performance of the Company's
joint ventures; changes in trading patterns that affect the
opportunities for the profitable operation of LNG carriers, FSRUs
or FLNGs; changes in the supply of or demand for LNG or LNG carried
by sea; changes in the supply of or demand for natural gas
generally or in particular regions; the failure of the Company's
contract counterparties, including its joint venture co-owners, to
comply with their agreements with the Company; changes in the
Company's relationships with its counterparties, including its
major chartering parties; changes in the availability of vessels to
purchase and in the time it takes to construct new vessels;
failure of shipyards to comply with delivery schedules or
performance specifications on a timely basis or at all; the
Company's ability to integrate and realize the benefits of
acquisitions; changes in the Company's ability to sell vessels to
Golar Partners or Golar Power Limited; changes in the Company's
relationship with Golar Partners, Golar Power Limited
OneLNG S.A.; the Company's inability to achieve successful
utilization of its expanded fleet or inability to expand beyond the
carriage of LNG and provision of FSRUs, particularly through its
innovative FLNG strategy and its joint ventures; changes in the
Company's ability to obtain additional financing on acceptable
terms or at all; as well as other factors discussed in the
Company'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.
As a result, you are cautioned not
to rely on any forward-looking statements. Actual results may
differ materially from those expressed or implied by such
forward-looking statements. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise unless
required by law.
November 30, 2016
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda
Questions should be directed
to:
Golar Management Limited - +44 207
063 7900
Oscar Spieler - Chief Executive
Officer
Brian Tienzo - Chief Financial
Officer
Stuart Buchanan - Head of Investor Relations
Interim Results for the Period
Ended 30 September 2016
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Golar LNG via Globenewswire
Gol Linhas Aereas Inteli... (NYSE:GOL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Gol Linhas Aereas Inteli... (NYSE:GOL)
Historical Stock Chart
From Apr 2023 to Apr 2024