Report of Foreign Issuer (6-k)

Date : 05/22/2019 @ 3:27PM
Source : Edgar (US Regulatory)
Stock : Golar LNG Limited (GLNG)
Quote : 13.195  0.56 (4.43%) @ 7:57PM

Report of Foreign Issuer (6-k)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934

For the month of May 2019

Commission File Number: 000-50113

GOLAR LNG LIMITED
(Translation of registrant's name into English)
 
2nd Floor
 S.E. Pearman Building
9 Par-la-Ville Road
Hamilton HM 11
Bermuda

(Address of principal executive office)


Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F [ X ]     Form 40-F [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ].

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ].

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.







INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Included is the Overview, Operating and Financial Review for the three months ended March 31, 2019 and the unaudited condensed consolidated interim financial statements of Golar LNG Limited (the "Company" or "Golar") as of and for the three months ended March 31, 2019 .

The information contained in this Report on Form 6-K is hereby incorporated by reference into the Company's registration statement on Form F-3 ASR (File no. 333-219095), which was filed with the U.S. Securities and Exchange Commission on June 30, 2017.







SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
GOLAR LNG LIMITED
 
(Registrant)
 
 
 
 
Date: May 22, 2019
By:
/s/ Graham Robjohns
 
Name:
Graham Robjohns
 
Title:
Principal Financial and Accounting Officer
 
 
 







UNAUDITED CONDENSED INTERIM FINANCIAL REPORT

Forward-Looking Statements

Matters discussed in this report may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are including this cautionary statement in connection with this safe harbor legislation. This report and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. When used in this report, the words "believe", "anticipate", "intend", "estimate", "forecast", "project", "plan", "potential", "may", "should", "expect" and similar expressions identify forward-looking statements.

The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned not to rely on any forward-looking statements.

In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include among other things:

our inability and that of our counterparty to meet our respective obligations under the Lease and Operate Agreement entered into in connection with the BP Greater Tortue Ahmeyim project;
changes in liquefied natural gas, or LNG, carrier, floating storage and regasification unit, or FSRU, or floating liquefaction natural gas vessel, or FLNG, or small-scale LNG market trends, including charter rates, vessel values or technological advancements;
Golar Power Limited's ("Golar Power") ability to successfully complete and start up the Sergipe power station project and related FSRU contract;
changes in our ability to retrofit vessels as FSRUs or FLNGs and in our ability to obtain financing for such conversions on acceptable terms or at all;
our ability to close potential future sales of additional equity interests in Golar Hilli LLC on a timely basis or at all;
changes in the supply of or demand for LNG carriers, FSRUs, FLNGs or small-scale LNG infrastructure;
a material decline or prolonged weakness in rates for LNG carriers, FSRUs, FLNGs or small-scale LNG infrastructure;
changes in the performance of the pool in which certain of our vessels operate and the performance of our joint ventures, including changes related to potential divestitures, spin-offs or new partnerships;
changes in trading patterns that affect the opportunities for the profitable operation of LNG carriers, FSRUs, FLNGs or small-scale LNG infrastructure;
changes in the supply of or demand for LNG or LNG carried by sea;
changes in commodity prices;
changes in the supply of or demand for natural gas generally or in particular regions;
failure of our contract counterparties, including our joint venture co-owners, to comply with their agreements with us;
changes in our relationships with our counterparties, including our major chartering parties;
challenges by authorities to the tax benefits we previously obtained under certain of our leasing agreements;
a decline or continuing weakness in the global financial markets;
changes in general domestic and international political conditions, particularly where we operate;
changes in the availability of vessels to purchase and in the time it takes to construct new vessels;
failures of shipyards to comply with delivery schedules or performance specifications on a timely basis or at all;
our ability to integrate and realize the benefits of our investments and acquisitions;
changes in our ability to sell vessels to Golar LNG Partners LP ("Golar Partners") or Golar Power;
changes in our relationship with Golar Partners, Golar Power or Avenir LNG Limited ("Avenir") and the sustainability of any distributions they may pay to us;
changes to rules and regulations, including without limitation, rules and regulations relating to fuel sulphur and ballast water, applicable to LNG carriers, FSRUs, FLNGs or other parts of the LNG supply chain;

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actions taken by regulatory authorities that may prohibit the access of LNG carriers, FSRUs, FLNGs or small-scale LNG vessels to various ports;
changes in our ability to obtain additional financing on acceptable terms or at all;
increases in costs, including, among other things, crew wages, insurance, provisions, repairs and maintenance; and
other factors listed from time to time in registration statements, reports or other materials that we have filed with or furnished to the Securities and Exchange Commission, or the Commission, including our most recent annual report on Form 20-F.

We caution readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are not guarantees of our future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements.

All forward-looking statements included in this report are made only as of the date of this report and, except as required by law, we assume no obligation to update any written or oral forward-looking statements made by us or on our behalf as a result of new information, future events or other factors. If one or more forward-looking statements are updated, no inference should be drawn that additional updates will be made.


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The following is a discussion of our financial condition and results of operations for the three months ended March 31, 2019 and 2018 . Unless otherwise specified herein, references to "the Company", "Golar", "we", "us", and "our" refer to Golar LNG Limited and any one or more of its consolidated subsidiaries, or to all such entities. References to “Golar Partners” or the “Partnership” refer to Golar LNG Partners LP and to any one or more of its direct and indirect subsidiaries. References to “Golar Power” refer to Golar Power Limited and to any one or more of its direct and indirect subsidiaries. References to “OneLNG” refer to OneLNG S.A. You should read the following discussion and analysis together with the financial statements and related notes included elsewhere in this report. For additional information relating to our operating and financial review and prospects, including definitions of certain terms defined herein, please see our annual report on Form 20-F for the year ended December 31, 2018 , which was filed with the Commission on March 29, 2019.

Overview

We are a midstream LNG company engaged primarily in the transportation and regasification of LNG and the liquefaction of natural gas. We are engaged in the acquisition, ownership, operation and chartering of LNG carriers, FSRUs and FLNGs and the development of LNG projects through our subsidiaries, affiliates and joint venture.

As of May 22, 2019 , we, together with our affiliates Golar Partners and Golar Power, have a combined fleet of twenty-seven vessels, comprised of eighteen LNG carriers, eight FSRUs and one FLNG. Of these vessels, six of the FSRUs and four of the LNG carriers are owned by Golar Partners and one of the FSRUs and two of the LNG carriers are owned by Golar Power. Most of the Golar Partners owned vessels are on long-term time charters. Seven of our LNG carriers, one of our FSRUs and two of Golar Power’s LNG carriers are participating in an LNG carrier pool, referred to as the Cool Pool. Of our remaining vessels, our FLNG is operating under a long-term tolling agreement, two of our LNG carriers are on shorter-term time charters, the Gandria is being contemplated for conversion into a FLNG, the Gimi entered Keppel Shipyard Limited’s (“Keppel”) shipyard in early 2019 to commence initial work for her conversion into a FLNG to service the Greater Tortue Ahmeyim project, and one of our LNG carriers is currently unemployed. Golar Power’s FSRU is contracted under a long-term charter.

We intend to leverage our relationships with existing customers and continue to develop relationships with other industry participants. Our goal is to earn higher margins through maintaining strong service-based relationships combined with flexible and innovative LNG shipping, FSRU and FLNG solutions. We believe customers place their confidence in our shipping, storage, regasification and liquefaction services based on the reliable and safe way we conduct our, our affiliates’ and our joint venture's LNG operations.


Recent Developments

Since March 31, 2019 , the significant developments that have occurred are as follows:

Golar Viking FSRU project
We entered into agreements with LNG Hrvatska d.o.o ("LNG Hrvatska"), to convert the 2005 built Golar Viking into a FSRU, sell the converted vessel, and then operate and maintain the FSRU for a minimum of 10 years. Conversion capital expenditures will largely be funded by stage payments from LNG Hrvatska under the agreements. On April 5, 2019, all conditions precedent were met and LNG Hrvatska provided us with a notice to proceed with the conversion and subsequent purchase of the Golar Viking . The Golar Viking is currently employed on a charter and will continue to be employed until the end of 2019. She is expected to enter Hudong-Zhonghua Shipbuilding (Group) Co., Ltd’s shipyard in China to commence conversion work in the first quarter of 2020. CSSC Leasing, an affiliate company of the shipyard, is expected to provide both bridge financing and conversion financing. Bridge financing is expected to cover the period from the fourth quarter of 2019 until the sale of the vessel, while conversion financing is expected to cover the period from the vessel’s entry into the shipyard until the sale of the vessel. The vessel will be sold to LNG Hrvatska for €159.6 million upon completion of the conversion. We will also receive an annual fee to operate the Golar Viking upon its conversion into an FSRU for 10 years.
BP Greater Tortue Ahmeyim project
As previously disclosed, we entered into a Lease and Operate Agreement, or LOA, with BP for the charter of a FLNG unit, the Gimi , to service the Greater Tortue Ahmeyim project for a 20-year period expected to commence in 2022. The FLNG  Gimi  will liquefy gas as part of the first phase of the Greater Tortue Ahmeyim project and will be located at an innovative nearshore hub located on the Mauritania and Senegal maritime border. The FLNG  Gimi  is designed to produce an average of approximately 2.5 million tonnes of LNG per annum, using the Black & Veatch “Prico” liquefaction process, with the total gas resources in the field estimated to be around 15 trillion cubic feet.

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On April 16, 2019, we received a firm commitment from a consortium of lenders for $700 million for the FLNG Gimi . This financing is available during construction and has a tenor of seven years following the vessel’s commercial operations date and a 12-year amortization profile. Concurrently with receipt of this financing commitment, First FLNG Holdings Pte. Ltd., an indirect wholly-owned subsidiary of Keppel Capital Holdings Pte Ltd ("Keppel Capital"), subscribed to 30% of the total issued ordinary share capital of one of our subsidiaries, Golar MS Corporation. Golar MS Corporation also issued Keppel Shipyard with a final notice to proceed for the conversion works for FLNG Gimi that had been initiated under the limited notice to proceed in December 2018.
Spin-off of our TFDE LNG carriers

In May 2019, our board resolved to proceed with the spin-off of our TFDE LNG carrier business, subject to satisfactory market conditions, and to focus our future activities primarily around FLNG and downstream assets. This will allow LNG shipping investors more direct exposure to the LNG shipping market and reposition our core business toward LNG infrastructure on long-term contracts. We are currently in discussion with other owners of similar tonnage to join the new shipping company and have discussed with Golar Power exchanging one of their LNG carriers for the FSRU Golar Tundra . The management of our vessels will remain with Golar Management Norway AS.

Dividends

On May 21, 2019, we declared a dividend of $0.15 per share in respect of the quarter ended March 31, 2019 to holders of record on June 13, 2019, which will be paid on or about July 3, 2019.



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Operating and Financial Review

Three month period ended March 31, 2019 compared with the three month period ended March 31, 2018

Vessel operations segment

 
Three Months Ended 
 March 31,
 
 
(in thousands of $, except average daily TCE) (1)
2019

2018

Change

% Change

 
 
 
 


Total operating revenues
59,763

66,190

(6,427
)
(10
)%
Vessel operating expenses
(18,176
)
(18,415
)
239

(1
)%
Voyage, charterhire and commission expenses (including expenses from collaborative arrangements)
(16,140
)
(24,521
)
8,381

(34
)%
Administrative expenses (2)
(12,893
)
(9,980
)
(2,913
)
29
 %
Project development expenses (2)
(668
)
(2,084
)
1,416

(68
)%
Depreciation and amortization
(16,112
)
(16,409
)
297

(2
)%
Impairment of long-lived assets
(34,250
)

(34,250
)
100
 %
Other operating gains
9,260


9,260

100
 %
Operating loss
(29,216
)
(5,219
)
(23,997
)
460
 %
 
 
 


Equity in net earnings (losses) of affiliates
(8,939
)
4,826

(13,765
)
(285
)%
 
 
 
 
 
Other financial data:
 
 
 
 
 
 
 
 
 
Average daily TCE (1)  (to the closest $100)
39,300

36,000

3,300

9
 %
(1) Average Time Charter Equivalent, or TCE, is a non-GAAP financial measure. See the section of this report entitled "Non-GAAP Measures" for a discussion of TCE.
(2) With effect from quarter ended June 30, 2018, we presented new line item, "Project development expenses", which includes costs associated with pursuing future contracts and developing our pipeline of activities that have not met our internal threshold for capitalization. Previously, these costs were presented within "Administrative expenses" along with our general overhead costs. This presentation change has been retrospectively adjusted in prior periods. See note 2 "Accounting Policies" of our consolidated financial statements included herein.

Total operating revenues: Total operating revenues decreased by $6.4 million to $59.8 million for the three months ended March 31, 2019 compared to $66.2 million for the same period in 2018 . This was principally due to the $13.3 million decrease as a result of a reduction in utilization and daily hire rates, including repositioning fees, from our vessels participating in the Cool Pool for the three months ended March 31, 2019 compared to the same period in 2018 . This was partially offset by the:

$5.5 million increase in Golar Viking as she was mostly on-hire this quarter compared to being in cold lay-up during the same period in 2018 ; and
$1.7 million increase as a result of the Golar Glacier's higher hire rate under current charter compared to the same period in 2018 .

Average daily TCE: As a result of Golar Viking being on-hire for the entire quarter, compared to being in cold lay-up during the same period in 2018 , we had a higher average daily TCE for the three months ended March 31, 2019 of $39,300 compared to $36,000 for the same period in 2018 . However, there was an overall decrease in charter rates and utilization of most of our vessels within the period.

Vessel operating expenses: Vessel operating expenses decreased by $0.2 million to $18.2 million for the three months ended March 31, 2019 , compared to $18.4 million for the same period in 2018 , primarily due to the $1.1 million decrease in expenses incurred in relation to the Gandria. This is due to the vessel being delivered to the shipyard to commence generic work in readiness for her anticipated conversion into a FLNG during the three months ended March 31, 2018 . Subsequently she was released from the shipyard in the second half of 2018 and was in lay up for the three months ended March 31, 2019 . This was partially offset by $0.9 million increase of routine maintenance costs of our fleet during the three months ended March 31, 2019 .


5


Voyage, charterhire and commission expenses: Voyage, charterhire and commission expenses largely relate to charterhire expenses, fuel costs associated with commercial waiting time and vessel positioning costs. While a vessel is on-hire, fuel costs are typically paid by the charterer, whereas during periods of commercial waiting time, fuel costs are paid by us. The decrease in voyage, charterhire and commission expenses of $8.4 million to $16.1 million for the three months ended March 31, 2019 compared to $24.5 million for the same period in 2018 , is principally due to:

$9.9 million of voyage expenses that arose from the decreased utilization of our vessels participating within the Cool Pool, for which we receive credit under the Cool Pool arrangement (further described in note 17(d) "Related Parties" of our consolidated financial statements included herein); and
partially offset by a $1.5 million increase in costs in relation to the Golar Arctic. This vessel was mostly on commercial waiting time for the three months ended March 31, 2019 , compared to full utilization during the same period in 2018.

Impairment of long-lived assets: The impairment loss of $34.3 million is associated with our LNG carrier, the Golar Viking . In March 2019, we signed an agreement with LNG Hrvatska for the future sale of the Golar Viking once converted into an FSRU, following the completion of its current charter lease term. Although the sale is not expected to close until the last quarter in 2020, the transaction triggered an immediate impairment test. As the current carrying value of the vessel exceeds the price a market participant would pay for the vessel at measurement date, a non-cash impairment charge of $34.3 million was recognized. The fair value was based on average broker valuations at measurement date and represents the exit price in the principal LNG carrier sales market.  

Other operating gains: This represents the amounts recovered in connection with the ongoing arbitration proceedings arising from the delays and the termination of the Golar Tundra time charter with a former charterer.

Equity in net earnings (losses) of affiliates:

 
Three Months Ended 
 March 31,
 
 
(in thousands of $)
2019

2018

Change

% Change

Equity in net (losses) earnings in Golar Partners
(7,690
)
4,816

(12,506
)
(260
)%
Share of net (losses) earnings in other affiliates
(1,249
)
10

(1,259
)
(12,590
)%
Equity in net earnings (losses) of affiliates
(8,939
)
4,826

(13,765
)
(285
)%

The share of net earnings in Golar Partners represents our share of equity in Golar Partners. As of March 31, 2019 , we held a 32.0% (2018: 32.0%) ownership interest in Golar Partners (including our 2% general partner interest) and 100% of the incentive distribution rights ("IDRs").

The share of net earnings in other affiliates represents our share of equity in Egyptian Company for Gas Services S.A.E and Avenir LNG Limited.

FLNG segment

 
Three Months Ended 
 March 31,
 
 
(in thousands of $)
2019

2018

Change

% Change

 
 
 




Total operating revenues
54,524


54,524

100
 %
Vessel operating expenses
(13,072
)

(13,072
)
(100
)%
Voyage, charter-hire and commission expenses
(360
)

(360
)
(100
)%
Administrative expenses (1)
(652
)

(652
)
 %
Project development expenses (1)
(922
)
(1,196
)
274

(23
)%
Depreciation and amortization
(12,051
)

(12,051
)
(100
)%
Other operating gains
30,613

13,600

17,013

125
 %
Operating income
58,080

12,404

45,676

368
 %
 
 
 
 
 
Equity in net losses of affiliates

(1,531
)
1,531

(100
)%

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(1) With effect from quarter ended June 30, 2018, we presented new line item, "Project development expenses", which includes costs associated with pursuing future contracts and developing our pipeline of activities that have not met our internal threshold for capitalization. Previously, these costs were presented within "Administrative expenses" along with our general overhead costs. This presentation change has been retrospectively adjusted in prior periods. See note 2 "Accounting Policies" of our consolidated financial statements included herein.

Total operating revenues: On May 31, 2018, the Hilli was accepted by the customer and, accordingly, commenced operations. As a result, she generated $54.5 million total operating revenues in relation to her liquefaction services for the three months ended March 31, 2019 .

Vessel operating expenses: This represents the running costs incurred in operating the Hilli.

Project development expenses: This relates to non-capitalized project related expenses comprising of legal, professional and consultancy costs. The decrease for the three months ended March 31, 2019 was primarily as a result of decreased engineering consultation fees in relation to the Greater Tortue / Ahmeyim Project.

Other operating gains: Includes the realized and unrealized gain on the oil derivative instrument. During the three months ended March 31, 2019 , we recognized a realized gain of $2.2 million and an unrealized fair value gain of $28.4 million a result of the increased price of Brent Crude during the quarter. During the three months ended March 31, 2018 we recognized an unrealized fair value gain of $13.6 million.

Equity in net losses of affiliates: Pursuant to the formation of OneLNG in July 2016, we equity account for our share of net losses in OneLNG. Given the difficulties in finalizing an attractive debt financing package along with other capital and resource priorities, in April 2018, Golar and Schlumberger decided to wind down OneLNG and work on FLNG projects as required on a case-by-case basis.


Power segment

 
Three Months Ended 
 March 31,
 
 
(in thousands of $)
2019

2018

Change

% Change

 
 
 


 
Equity in net losses of affiliates
(3,960
)
(4,836
)
876

(18
)%

The equity in net losses of Golar Power principally relates to trading activity of the Golar Celsius and the Golar Penguin operating as LNG carriers within the Cool Pool arrangement (further described in note 17 "Related Parties" of our consolidated financial statements included herein) and the administrative cost of business development activities from Golar Power's Brazilian subsidiaries. The main Brazilian activity relates to the CELSE project, which is not yet operational as the power plant is still under construction.

Other non-operating results

The following details our other consolidated results for the three months ended March 31, 2019 and 2018:
 
Three Months Ended 
 March 31,
 
 
(in thousands of $)
2019

2018

Change

% Change

 
 
 
 
 
Interest income
3,214

1,944

1,270

65
 %
Interest expense
(29,352
)
(13,998
)
(15,354
)
110
 %
Losses on derivative instruments
(5,699
)
(874
)
(4,825
)
552
 %
Other financial items, net
(1,407
)
(363
)
(1,044
)
288
 %
Income taxes
(205
)
6

(211
)
(3,517
)%
Net loss attributable to non-controlling interests
(24,257
)
(12,605
)
(11,652
)
92
 %


7


Interest income: Interest income increased by $1.3 million to $3.2 million for the three months ended March 31, 2019 compared to $1.9 million for the same period in 2018 . The increase was primarily due to the returns on our fixed deposits that had been made during the three months ended March 31, 2019 , and income derived from the lending capital of our lessor VIEs, that we are required to consolidate under U.S. GAAP.

Interest expense: Interest expense increased by $15.4 million to $29.4 million for the three months ended March 31, 2019 compared to $14.0 million for the same period in 2018 . In addition to an increase in LIBOR rates, this was principally due to:

$14.6 million lower capitalized interest on borrowing costs in relation to our investment in the Hilli FLNG conversion prior to acceptance of the vessel in May 2018; and
$3.9 million increase in interest expense arising on the loan facilities of our consolidated lessor VIEs.

These are partially offset by a:

$2.2 million decrease in interest expense incurred on the deposits received from Golar Partners in relation to the Hilli disposal. These deposits were applied to the purchase price for the Hilli acquisition in July 2018; and
$0.7 million decrease in interest expense due to the conversion of the Hilli shareholder loans following the Hilli disposal.

Losses on derivative instruments: Losses on derivative instruments increased by $4.8 million to a loss of $5.7 million for the three months ended March 31, 2019 compared to a loss of $0.9 million for the same period in 2018 . The movement was primarily due to:

Net realized and unrealized gains/(losses) on interest rate swap agreements : As of March 31, 2019 , we have an interest rate swap portfolio with a notional amount of $1.0 billion, none of which are designated as hedges for accounting purposes. Net unrealized gains/(losses) on the interest rate swaps decreased to a loss of $5.3 million for the three months ended March 31, 2019 compared to a gain of $7.3 million for the same period in 2018 . The increase was due to the decline in the long-term swap rates for the three months ended March 31, 2019 . Realized gains on our interest rate swaps increased to a gain of $2.1 million for the three months ended March 31, 2019, compared to a gain of $0.6 million for the same period in 2018. The increase was primarily due to higher LIBOR rates for the three months ended March 31, 2019.

Unrealized losses on total return swap (or equity swap): In December 2014, we established a three month facility for a Stock Indexed Total Return Swap Programme or Equity Swap Line with DNB Bank ASA in connection with a share buyback scheme. The facility has been extended to June 2019. The equity swap derivatives mark-to-market adjustment resulted in a net loss of $3.2 million recognized in the three months ended March 31, 2019 compared to a net loss of $9.2 million for the same period in 2018 .

Other financial items, net: Other financial items, net decreased by $1.0 million to a loss of $1.4 million for the three months ended March 31, 2019 compared to a loss of $0.4 million for the same period in 2018 primarily as a result of consolidating our VIEs.

Net income attributable to non-controlling interests: The net income attributable to non-controlling interests comprises of (i) $12.2 million and $1.4 million in relation to the non-controlling shareholders who hold interests in Hilli LLC and Hilli Corp (prior to the incorporation of Hilli LLC) for the three months ended March 31, 2019 and 2018, respectively, and (ii) $12.1 million and $11.2 million in relation to the equity interests in our lessor VIEs for the three months ended March 31, 2019 and 2018, respectively. We are party to sale and leaseback arrangements for eight vessels with these lessor VIEs. While we do not hold any equity investments in these lessor VIEs, we are the primary beneficiary. Accordingly, these lessor VIEs are consolidated into our financial results and thus the equity attributable to the financial institutions in their respective variable interest entities are included in non-controlling interests in our consolidated results.
 
Liquidity and Capital Resources

Our short-term liquidity requirements are primarily for the servicing of debt, working capital requirements, potential investments in our joint venture and conversion project related commitments due within the next 12 months. We may require additional working capital for the continued operation of our vessels in the spot market (via the Cool Pool), which is dependent upon vessel employment and fuel costs incurred during idle time. We remain responsible for manning and technical management of our vessels within the Cool Pool. We estimate that total forecast vessel operating expenses relating to our eight vessels within the Cool Pool (excluding the two vessels that form part of the Golar Power fleet) for the next 12 months will be $50.3 million, based on our historical average operating costs.


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As of March 31, 2019 , we had cash and cash equivalents (including restricted cash and short-term deposits) of $690.3 million , of which $477.6 million is restricted cash. Included within restricted cash is $175.0 million in respect of the issuance of the letter of credit by a financial institution to our project partner involved in the Hilli FLNG project, an aggregate of $86.1 million cash collateral relating to requirements under our total return equity swap, and the balance which mainly relates to the cash belonging to our lessor VIEs that we are required to consolidate under U.S. GAAP.

Since March 31, 2019 , significant transactions impacting our cash flows include:

Receipts:

receipt of $71.8 million from Keppel Capital following its subscription of 30% of the total issued ordinary share capital of Golar MS Corporation and proceeds from cash calls; and

receipt of $9.2 million in May 2019, in respect of cash distributions for the quarter ended December 31, 2018, from Golar Partners in relation to our interests in its common and general partner units held at the relevant record date; albeit $1.6 million was used to satisfy interest repayments on the margin loan facility as a result of 21,226,586 of Golar Partners common units held by us being pledged as security for the obligations under the facility.

Payments:

payment of $86.7 million in relation to capital expenditure commitments on the Gimi conversion;

payment of a $15.1 million cash distribution to our shareholders in April 2019, in respect of the quarter ended December 31, 2019;

payment of $9.4 million scheduled loan and interest repayments; and

payment of $3.4 million, in respect of cash distributions from Hilli LLC for the quarter ended March 31, 2019.

As previously disclosed in our annual financial statements for the year ended December 31, 2018, note 5, a pre-condition of the Golar Tundra lease financing with CMBL, is for the vessel to be employed under an effective charter.  Under the terms of our sale and lease back facility for the Golar Tundra, by virtue of our prior termination of the WAGL charter, we are required to find a replacement charter by June 30, 2019 or we could be required to refinance the FSRU. We have now received agreement from the lenders, to extend the June 2019 call option date to June 2021. 

In February 2019, Golar entered into an agreement with BP for the charter of a FLNG unit, the Gimi after conversion, for a 20-year period expected to commence in the second half of 2022. Golar also entered into a Shareholders Agreement with Keppel Capital in respect of their participation in a 30% share of the project. Total conversion works, which incorporate lessons learned from FLNG Hilli, including some improvements and modifications, are expected to cost approximately $1.3 billion. We anticipate annual contracted revenues less forecasted operating costs of approximately $215.0 million. Golar has received a firm $700 million underwritten financing commitment for a long-term financing facility. The facility will be available during the Gimi conversion and has a tenor of 7 years post commissioning and a 12-year amortization profile.

To address our anticipated capital expenditure (in particular those associated with our initial commitments related to the Gimi conversion) and working capital requirements over the next 12 months, we are in ongoing discussions with various financial institutions for funding sources which we could utilize for the funding of our capital commitments, investments, working capital and the scheduled repayments of long and short-term debt balances. While we believe we will be able to obtain the necessary funds and have a track record of successfully financing our conversion projects, we cannot be certain that the proposed new credit facilities will be executed in time or at all. In addition, if market and economic conditions are favorable, we may also consider further issuances of corporate debt or equity to increase liquidity. Sources of funding for our medium and long-term liquidity requirements include new loans, refinancing of existing financing arrangements, public and private debt or equity offerings, and potential sales of our interests in our vessel owning subsidiaries operating under long-term charters.

Accordingly, we believe that, based on our plans as outlined above, we will have sufficient facilities to meet our anticipated liquidity requirements for our business for at least the next 12 months from May 22, 2019 and that our working capital is sufficient for our present requirements. While we cannot be certain of execution or timing of all or any of the above financings, we are confident of our ability to do so. We have performed stress testing of our forecast cash reserves under various theoretical scenarios, which include assumptions such as extremely prudent revenue contributions from our fleet, full operating costs and maintaining

9


our dividend payments based on our most recent pay out, and accordingly are confident of our ability to manage through the near term cash requirements.

Borrowing activities

During the three months ended March 31, 2019 , we did not enter into any new debt facilities.

During April 2019, the pre-condition of the Golar Tundra lease financing with CMBL for the FSRU to be employed under an effective charter by June 30, 2019 was extended to June 30, 2021.

Security, debt and lease restrictions
Certain of our borrowings are secured by, among other things and to the extent applicable, ship liens, pledges of the equity interests of the borrowers and/or the guarantors, a parent company guarantee, general assignments (including the assignment of all earnings), insurance assignments, account charges, managers’ undertakings and the subordination of shareholder loans. The existing financing agreements impose operating and financing restrictions which may significantly limit or prohibit, among other things, our ability to incur additional indebtedness, create liens, sell capital shares of subsidiaries, make certain investments, engage in mergers and acquisitions, purchase and sell vessels, enter into time or consecutive voyage charters or pay dividends without the consent of the relevant lenders. In addition, lenders may accelerate the maturity of indebtedness under financing agreements and foreclose upon the collateral securing the indebtedness upon the occurrence of certain events of default, including a failure to comply with any of the covenants contained in the financing agreements. Many of our debt agreements contain certain covenants, which require compliance with certain financial ratios. Such ratios include maintaining positive working capital ratio, tangible net worth covenant and minimum free cash restrictions. With regards to cash restrictions, Golar has covenanted to retain at least $50 million of cash and cash equivalents on a consolidated group basis. In addition, as of March 31, 2019 , there are cross default provisions in certain of our and Golar Partners' and Golar Power's loan and lease agreements.

Cash Flow

 
Three Months Ended 
 March 31,
 
 
(in thousands of $)
2019

2018

Change

% Change

Net cash provided by operating activities
52,479

31,236

21,243

68
 %
Net cash provided by (used in) investing activities
10,833

(124,566
)
135,399

(109
)%
Net cash (used in) provided by financing activities
(77,302
)
44,227

(121,529
)
(275
)%
Net decrease in cash, cash equivalents and restricted cash
(13,990
)
(49,103
)
35,113

(72
)%
Cash, cash equivalents and restricted cash at beginning of period
704,261

612,677

91,584

15
 %
Cash, cash equivalents and restricted cash at end of period
690,271

563,574

126,697

22
 %

Net cash provided by operating activities was $52.5 million for the three months ended March 31, 2019 , compared to $31.2 million for the same period in 2018 , representing an improvement of $21.2 million largely due to general timing of working capital.


10



Net cash provided investing activities of $10.8 million for the three months ended March 31, 2019 arose mainly due to:

$9.7 million of cash consideration received from Golar Partners in respect of the remaining net purchase price less working capital adjustments in connection with the Hilli acquisition; and
$9.2 million of dividends received from Golar Partners.

This was partially offset by:

the addition of $3.6 million to asset under development relating to payments made in respect of the conversion of the Gimi into a FLNG; and
additions of $4.2 million to investments in affiliates in relation to our investments in Golar Power and Avenir.

Net cash used in investing activities of $124.6 million for the three months ended March 31, 2018 arose mainly due to:
 
the addition of $89.8 million to asset under development relating to payments made in respect of the conversion of the Hilli into a FLNG; and
additions of $43.4 million to investments in affiliates, which relates principally to capital contributions made to Golar Power.

Net cash used in financing activities was $77.3 million for the three months ended March 31, 2019 and arose primarily due to:

scheduled debt repayments of $57.4 million ; and
payment of dividends of $19.9 million .

Net cash provided by financing activities for the three months ended March 31, 2018 of $44.2 million arose primarily due to total proceeds of $115.0 million from further drawdowns on the FLNG Hilli facility in relation to the conversion of the Hilli into a FLNG.

This was partially offset by:

loan repayments of $66.0 million, which includes a payment of $38.9 million in relation to the modification of the Golar Tundra lease financing; and
payment of dividends of $5.0 million.

Critical Accounting Policies
 
The preparation of our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") requires that management make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

For a description of our other material accounting policies that involve a higher degree of judgment, please refer to note 2 "Basis of Preparation and Significant Accounting Policies" of our consolidated financial statements filed with our annual report on Form 20-F for the year ended December 31, 2018 , for additional details.

Non-GAAP Measures

Average Daily Time Charter Equivalent

The average TCE rate of our fleet is a measure of the average daily revenue performance of a vessel. TCE is calculated only in relation to our vessel operations. For time charters, TCE is calculated by dividing total operating revenues (including revenue from the Cool Pool, but excluding vessel and other management fees and liquefaction services revenue), less any voyage expenses, by the number of calendar days minus days for scheduled off-hire. Under a time charter, the charterer pays substantially all of the vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during drydocking. TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in an entity's performance despite changes in the mix of charter types (i.e. spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods. We include average daily TCE, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with total operating revenues, the most directly comparable GAAP measure, because it assists our management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. Our calculation of TCE may not be comparable to that reported by other entities. Refer to our most recent quarterly earnings release on our investor relations section on our website (www.golar.com) for a reconciliation to the most directly comparable financial measure under U.S. GAAP. Our calculation of TCE may not be comparable to that reported by other entities. The following table reconciles our total operating revenues to average daily TCE:

11



 
Three Months Ended 
 March 31,
(in thousands of $ except number of days and average daily TCE)
2019
 
2018
Total operating revenues
114,287

 
66,190

Less: Liquefaction services revenue
(54,524
)
 

Less: Vessel and other management fees
(5,453
)
 
(6,075
)
Time and voyage charter revenues (1)
54,310

 
60,115

Voyage and commission expenses (1)(3)
(16,140
)
 
(24,521
)
 
38,170

 
35,594

Calendar days less scheduled off-hire days (2)
971

 
990

Average daily TCE (to the closest $100)
39,300

 
36,000

(1) This includes revenue and voyage expenses from the collaborative arrangement in respect of the Cool Pool amounting to $17.1 million and $14.5 million and $10.4 million and $19.7 million, respectively, for the three months ended March 31, 2019 and 2018 .
(2) This excludes days when vessels are in cold lay-up, undergoing dry dock or undergoing conversion.
(3) "Voyage and commission expenses" is derived from the caption "Voyage, charterhire and commission expenses" and "Voyage, charterhire and commission expenses - collaborative arrangement" less voyage and commission expenses in relation to the Hilli of $0.4 million and $nil for the three months ended March 31, 2019 and 2018, respectively.

Risk Factors

You should carefully consider the risk factors discussed in Part I, Item 3. Key Information - Risk Factors in our annual report for the year ended December 31, 2018 filed with the Securities and Exchange Commission ("SEC") on March 29, 2019 as well as other factors listed from time to time in registration statements, reports or other materials that we have filed with or furnished to the SEC, which could materially affect our business, financial condition or results of operations.


12


GOLAR LNG LIMITED
INDEX TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PAGE



Unaudited Consolidated Statements of Income for the three months ended March 31, 2019 and 2018
 
 
Unaudited Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018
 
 
Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018
 
 
Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018
 
 
Unaudited Consolidated Statements of Changes in Equity for the three months ended March 31, 2019 and 2018
 
 
Notes to the Unaudited Condensed Consolidated Financial Statements




 





  




GOLAR LNG LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands of $, except per share data)
 
Three Months Ended 
 March 31,
Notes
2019

2018

Time and voyage charter revenues
 
37,166

45,633

Time charter revenues - collaborative arrangement
17
17,144

14,482

Liquefaction services revenue
5
54,524


Vessel and other management fees
5
5,453

6,075

Total operating revenues
4, 17
114,287

66,190

 
 

 
Vessel operating expenses
 
(31,248
)
(18,415
)
Voyage, charterhire and commission expenses
 
(6,079
)
(4,791
)
Voyage, charterhire and commission expenses - collaborative arrangement
17
(10,421
)
(19,730
)
Administrative expenses
2
(13,545
)
(10,736
)
Project development expenses
2
(1,590
)
(3,280
)
Depreciation and amortization
 
(28,163
)
(16,409
)
Impairment of long-lived assets
 
(34,250
)

Total operating expenses
 
(125,296
)
(73,361
)
 
 
 
 
Other operating income
 
 
 
Realized and unrealized gain on oil derivative instrument
2
30,613

13,600

Other operating gains
18
9,260


Total other operating income
 
39,873

13,600

 
 

 
Operating income
 
28,864

6,429

 
 
 
 
Financial income/(expense)
 
 
 
Interest income
 
3,214

1,944

Interest expense
17
(29,352
)
(13,998
)
Losses on derivative instruments
2, 7
(5,699
)
(874
)
Other financial items, net
2, 7
(1,407
)
(363
)
Net financial expense
 
(33,244
)
(13,291
)
 
 
 
 
Loss before income taxes, equity in net losses of affiliates and non-controlling interests
 
(4,380
)
(6,862
)
Income taxes
 
(205
)
6

Equity in net losses of affiliates
12
(12,899
)
(1,541
)
 
 
 
 
Net loss
 
(17,484
)
(8,397
)
Net income attributable to non-controlling interests
 
(24,257
)
(12,605
)
Net loss attributable to Golar LNG Limited
 
(41,741
)
(21,002
)
Basic and dilutive loss per share ($)
6
(0.41
)
(0.21
)
 
 
 
 
Cash dividends declared and paid per share ($)
 
$
0.15

$
0.05


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


13


GOLAR LNG LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of $)
 
Three Months Ended 
 March 31,
Notes
2019

2018

 
 
 
 
Net loss
 
(41,741
)
(8,397
)
 
 
 
 
Other comprehensive loss:
 
 
 
Net loss on qualifying cash flow hedging instruments
 

(5,038
)
Net loss on foreign currency translation
 
(1,017
)

Other comprehensive loss
15
(1,017
)
(5,038
)
Comprehensive loss
 
(42,758
)
(13,435
)
 
 
 
 
Comprehensive income/(loss) attributable to:
 
 
 
 
 
 
 
Stockholders of Golar LNG Limited
 
(67,015
)
(26,040
)
Non-controlling interests
 
24,257

12,605

Comprehensive loss
 
(42,758
)
(13,435
)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


14


GOLAR LNG LIMITED
CONSOLIDATED BALANCE SHEETS
 
 
2019

2018

(in thousands of $)
Notes
Mar-31

Dec-31

 
 
Unaudited

Audited

ASSETS
 
 
 
Current
 
 
 
Cash and cash equivalents
 
212,673

217,835

Restricted cash and short-term deposits  
10
322,767

332,033

Trade accounts receivable (1)
 
27,309

64,918

Inventories
 
8,565

7,006

Other current assets
 
27,333

18,720

Amounts due from related parties
17
8,169

9,425

Total current assets
 
606,816

649,937

Non-current
 
 
 
Restricted cash
10
154,831

154,393

Investments in affiliates
12
552,885

571,782

Asset under development
11
56,990

20,000

Vessels and equipment, net
11
3,207,441

3,271,379

Other non-current assets
13
143,326

139,104

Total assets
 
4,722,289

4,806,595

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current
 
 
 
Current portion of long-term debt and short-term debt
14
924,468

730,257

Trade accounts payable
 
11,418

9,701

Accrued expenses
 
131,012

133,234

Other current liabilities
 
116,733

121,529

Amounts due to related parties
17
7,587

5,417

Total current liabilities
 
1,191,218

1,000,138

Non-current
 
 
 
Long-term debt
14
1,588,722

1,835,102

Other non-current liabilities
 
150,560

145,564

Total liabilities
 
2,930,500

2,980,804

 
 
 
 
Equity
 
 
 
Stockholders' equity
 
1,690,306

1,745,125

Non-controlling interests
 
101,483

80,666

 
 
 
 
Total liabilities and stockholders' equity
 
4,722,289

4,806,595

(1) This includes amounts arising from transactions with related parties (see note 17).


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


15


GOLAR LNG LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
2019

2018

(in thousands of $)
Notes
Jan-Mar

Jan-Mar

 
 
 
 
OPERATING ACTIVITIES
 
 
 
Net loss
 
(17,484
)
(8,397
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
 
28,163

16,409

Amortization of deferred charges and debt guarantees
 
992

1,835

Dry docking expenditure
 
(2,369
)

Equity in net losses of affiliates
 
12,899

1,541

Dividends received
 

4,305

Compensation cost related to share options
 
2,582

1,952

Net foreign exchange loss
 
357

572

Change in fair value of derivative instruments
2
9,125

1,443

Change in fair value of oil derivative instrument
2
(28,380
)
(13,600
)
Impairment of long-lived asset

 
34,250


Change in assets and liabilities:
 
 
 
Trade accounts receivable
 
37,609

(4,502
)
Inventories
 
(1,559
)
(1,796
)
Other current and non-current assets
2
(20,482
)
(2,294
)
Amounts due to related parties
 
(5,271
)
6,580

Trade accounts payable
 
(838
)
(5,029
)
Accrued expenses
 
2,676

(2,296
)
Other current and non-current liabilities
2
209

34,513

Net cash provided by operating activities
 
52,479

31,236

 
 
 
 
INVESTING ACTIVITIES
 
 
 
Additions to vessels and equipment
 
(189
)
(323
)
Additions to asset under development
 
(3,612
)
(89,849
)
Additions to investments in affiliates
 
(4,222
)
(43,399
)
Dividends received
 
9,204

9,005

Proceeds from disposals to Golar Partners
 
9,652


Net cash provided by (used in) investing activities
 
10,833

(124,566
)
 
 
 
 
FINANCING ACTIVITIES
 
 
 
Proceeds from short-term and long-term debt
 

115,000

Repayments of short-term and long-term debt
 
(57,385
)
(66,012
)
Cash dividends paid
 
(19,917
)
(5,033
)
Proceeds from exercise of share options
 

436

Financing costs paid
 

(164
)
Net cash (used in) provided by financing activities
 
(77,302
)
44,227

Net decrease in cash, cash equivalents and restricted cash
 
(13,990
)
(49,103
)
Cash, cash equivalents and restricted cash at beginning of period
10
704,261

612,677

Cash, cash equivalents and restricted cash at end of period
10
690,271

563,574




16


Supplemental note to the consolidated statements of cash flows

The following table identifies the balance sheet line-items included in cash, cash equivalents and restricted cash presented in the consolidated statements of cash flows:

(in thousands of $)
March 31, 2019

December 31, 2018

March 31, 2018

December 31, 2017

Cash and cash equivalents
212,673

217,835

172,380

214,862

Restricted cash and short-term deposits (current portion)
322,767

332,033

215,412

222,265

Restricted cash (non-current portion)
154,831

154,393

175,782

175,550

 
690,271

704,261

563,574

612,677



The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


17


GOLAR LNG LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of $)
Share Capital
Treasury Shares
Additional Paid-in Capital
Contributed Surplus (1)
Accumulated Other Comprehensive (Loss) Income
Accumulated Retained Earnings (Losses)
Total before Non- controlling Interest
Non-controlling Interest
Total Equity
Balance at December 31, 2017
101,119

(20,483
)
1,538,191

200,000

(7,769
)
(95,742
)
1,715,316

80,988

1,796,304

 
 
 
 
 
 
 
 
 
 
Net (loss) income





(21,002
)
(21,002
)
12,605

(8,397
)
Dividends





(5,033
)
(5,033
)

(5,033
)
Exercise of share options
19


417




436


436

Employee stock compensation


3,016




3,016


3,016

Forfeiture of share options


(700
)



(700
)

(700
)
Other comprehensive income (see note 15)




(5,038
)

(5,038
)

(5,038
)
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2018
101,138

(20,483
)
1,540,924

200,000

(12,807
)
(121,777
)
1,686,995

93,593

1,780,588


(in thousands of $)
Share Capital
Treasury Shares
Additional Paid-in Capital
Contributed Surplus (1)
Accumulated Other Comprehensive Loss
Accumulated Retained Losses
Total before Non- controlling Interest
Non-Controlling Interest
Total Equity
Balance at December 31, 2018
101,303

(20,483
)
1,857,196

200,000

(28,512
)
(364,379
)
1,745,125

80,666

1,825,791

 
 
 
 
 
 
 
 
 
 
Net (loss) income





(41,741
)
(41,741
)
24,257

(17,484
)
Dividends





(14,643
)
(14,643
)
(3,440
)
(18,083
)
Employee stock compensation


2,582




2,582


2,582

Other comprehensive loss (see note 15)




(1,017
)

(1,017
)

(1,017
)
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2019
101,303

(20,483
)
1,859,778

200,000

(29,529
)
(420,763
)
1,690,306

101,483

1,791,789

(1) Contributed Surplus is capital that can be returned to stockholders without the need to reduce share capital, thereby giving Golar greater flexibility when it comes to declaring dividends.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


18


GOLAR LNG LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.      GENERAL

Golar LNG Limited (the "Company" or "Golar") was incorporated in Hamilton, Bermuda on May 10, 2001 for the purpose of acquiring the liquefied natural gas ("LNG") shipping interests of Osprey Maritime Limited, which was owned by World Shipholding Limited.

As of March 31, 2019 , our fleet comprises of 12 LNG carriers, one Floating Storage Regasification Unit (''FSRU'') and one Floating Liquefaction Natural Gas vessel ("FLNG"). We also operate, under management agreements, Golar LNG Partners LP's ("Golar Partners" or the "Partnership") fleet of 10 vessels and Golar Power Limited's ("Golar Power") fleet of three vessels. Collectively with Golar Partners and Golar Power, our combined fleet is comprised of 18 LNG carriers, eight FSRUs and one FLNG.

We are listed on the Nasdaq under the symbol: GLNG.

As used herein and unless otherwise required by the context, the terms "Golar", the "Company", "we", "our" and words of similar import refer to Golar or anyone or more of its consolidated subsidiaries, or to all such entities.

Going concern

The condensed consolidated financial statements have been prepared on a going concern basis.

As previously disclosed in our annual financial statements for the year ended December 31, 2018, note 5, a pre-condition of the Golar Tundra lease financing with CMBL, is for the vessel to be employed under an effective charter.  Under the terms of our sale and lease back facility for the Golar Tundra, by virtue of our prior termination of the WAGL charter, we are required to find a replacement charter by June 30, 2019 or we could be required to refinance the FSRU. We have now received agreement from the lenders, to extend the June 2019 call option date to June 2021. 

In February 2019, Golar entered into an agreement with BP for the charter of a FLNG unit, the Gimi after conversion, for a 20-year period expected to commence in the second half of 2022. Golar also entered into a Shareholders Agreement with Keppel Capital in respect of their participation in a 30% share of the project. Total conversion works, which incorporate lessons learned from FLNG Hilli, including some improvements and modifications, are expected to cost approximately $1.3 billion. We anticipate annual contracted revenues less forecasted operating costs of approximately $215.0 million. Golar has received a firm $700 million underwritten financing commitment for a long-term financing facility. The facility will be available during the Gimi conversion and has a tenor of 7 years post commissioning and a 12-year amortization profile.

To address our anticipated capital expenditure (in particular those associated with our initial commitments related to the Gimi conversion) and working capital requirements over the next 12 months, we are in ongoing discussions with various financial institutions for funding sources which we could utilize for the funding of our capital commitments, investments, working capital and the scheduled repayments of long and short-term debt balances. While we believe we will be able to obtain the necessary funds and have a track record of successfully financing our conversion projects, we cannot be certain that the proposed new credit facilities will be executed in time or at all. In addition, if market and economic conditions are favorable, we may also consider further issuances of corporate debt or equity to increase liquidity. Sources of funding for our medium and long-term liquidity requirements include new loans, refinancing of existing financing arrangements, public and private debt or equity offerings, and potential sales of our interests in our vessel owning subsidiaries operating under long-term charters.

Accordingly, we believe that, based on our plans as outlined above, we will have sufficient facilities to meet our anticipated liquidity requirements for our business for at least the next 12 months from May 22, 2019 and that our working capital is sufficient for our present requirements. While we cannot be certain of execution or timing of all or any of the above financings, we are confident of our ability to do so. We have performed stress testing of our forecast cash reserves under various theoretical scenarios, which include assumptions such as extremely prudent revenue contributions from our fleet, full operating costs and maintaining our dividend payments based on our most recent pay out, and accordingly are confident of our ability to manage through the near term cash requirements.




19





2.      ACCOUNTING POLICIES

Basis of accounting

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The condensed consolidated financial statements do not include all of the disclosures required in the annual consolidated financial statements, and should be read in conjunction with our annual financial statements for the year ended December 31, 2018 .

Significant accounting policies

The accounting policies adopted in the preparation of the condensed consolidated financial statements for the three months ended March 31, 2019 are consistent with those followed in the preparation of our audited consolidated financial statements for the year ended December 31, 2018 , except for “Leases” as a result of adopting the requirements of ASU 2016-02 “Leases (Topic 842)”(hereafter, ASC 842). The impact of this change in accounting policy on the unaudited condensed consolidated financial statements is disclosed in note 3 and note 8.

Our revenue contracts and related expense recognition

Contracts relating to our LNG carriers, FSRUs and FLNG asset can take the form of operating leases, finance leases, tolling agreements and management agreements. In addition, we contract a portion of our vessels in the spot market through our collaborative arrangement “Cool Pool”. Although the substance of these contracts are similar, (they allow our customers to hire our assets and to avail of Golar’s management services for a specified day rate) the accounting treatment varies. We outline our policies for determining the appropriate GAAP treatment below.

Lease accounting versus revenue accounting

To determine whether a contract conveys a lease agreement for a period of time, the Group has assessed whether, throughout the period of use, the customer has both of the following:

The right to obtain substantially all of the economic benefits from the use of the identified asset; and
The right to direct the use of that identified asset.

If a contract relating to an asset fails to give the customer both of the above rights, we account for the agreement as a revenue contract. A contract relating to an asset will generally be accounted for as a revenue contract if the customer does not contract for substantially all of the capacity of the asset (i.e. another third party could contract for a meaningful amount of the asset capacity).

In situations where we provide management services unrelated to an asset contract, we account for the contract as a revenue contract.

Lease accounting

When a contract is designated as a lease, we make an assessment on whether the contract is an operating or a finance lease. An agreement will be a finance lease if any of the following conditions are met;

Ownership of the asset is transferred at the end of the lease term;
The contract contains an option to purchase the asset which is reasonably certain to be exercised;
The lease term is for a major part of the remaining useful life of the contract, although contracts entered into the last 25% of the asset’s useful life are not subject to this criterion;
The discounted value of the fixed payments under the lease represent substantially all of the fair value of the asset; or
The asset is heavily customized such that it could not be used for another charter at the end of the term.

Lessor accounting


20


In making the classification assessment, we estimate the residual value of the underlying asset at the end of the lease term with reference to broker valuations. None of our lease contracts contain residual value guarantees. Agreements which include renewal and termination options are included in the lease term if we believe that they are "reasonably certain" of being exercised. The determination of whether lessee extension clauses are reasonably certain depends on matters such as economic incentives.

Generally, lease accounting commences when the asset is made available to the customer, however, where the contract contains specific customer acceptance testing conditions, lease accounting will not commence until the asset has successfully passed the acceptance test. We assess a lease under the modification guidance when there is change to the terms and conditions of the contract that results in a change in the scope or the consideration of the lease.

Costs directly associated with the execution of the lease or costs incurred after lease inception (the execution of the contract) but prior to the commencement of the lease that directly relate to preparing the asset for the contract (for example bunker costs), are capitalized and amortized to the Income Statement over the lease term. We also defer upfront revenue payments (for example positioning fees) to the Balance Sheet and amortize to the Income Statement over the lease term.

Fixed revenue from operating leases is accounted for on a straight line basis over the life of the lease; while variable revenue is accounted for as incurred in the relevant period. Fixed revenue includes fixed payments and variable payments based on a rate or index. For our operating leases, we have elected the practical expedient to combine our service revenue and operating lease income as the timing and pattern of transfer of the components are the same.

On inception of a finance lease, we derecognize the related asset and record a “net investment in finance lease” on our Balance Sheet. The net investment represents the fixed payments due from the lessee, discounted at the rate implicit in the lease. We allocate finance lease income to the Income Statement (“interest income”) to reflect a constant periodic rate of return on our finance lease investment.

Revenue accounting

Contracts within the scope of revenue accounting include our liquefaction services contract relating to the Hilli asset and our management fee services provided to our affiliates (Golar Partners and Golar Power) and customers who lease our assets under finance lease arrangements.

For liquefaction services revenue, the provision of liquefaction services capacity is considered a single performance obligation recognised evenly over time. We consider our services (the receipt of customer’s gas, treatment and temporary storage on board our FLNG and delivery of LNG to waiting carriers) to be a series of distinct services that are substantially the same and have the same pattern of transfer to our customer. We recognize revenue when obligations under the terms of our contract are satisfied. We have applied the practical expedient to recognize liquefaction services revenue in proportion to the amount we have the right to invoice.

Contractual payment terms for liquefaction services is monthly in arrears. Contract liabilities arise when the customer makes payments in advance of receiving services. The period between when invoicing and when payment is due is not significant.

Management fees are generated from commercial and technical vessel-related services and corporate and administrative services.
Our management services provided are considered a single performance obligation recognized evenly over time as our services are rendered. We consider our services a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. We recognize revenue when obligations under the terms of our contracts with our customers are satisfied. We have applied the practical expedient to recognize management fee revenue in proportion to the amount we have the right to invoice.

Our contracts generally have an initial contract term of one year or less, after which the arrangement continues with a short notice period to end the contract, ranging from 30 days to 180 days. Contract assets arise when we render management services in advance of receiving payment from our customers.


21


Derivatives

Changes in presentation of fair value of derivative instruments and oil derivative instrument

With effect from the quarter ended September 30, 2018, we presented two new line items in operating activities on the face of the statements of cash flows. Given the significance of the oil derivative instrument in the current year, we believe that the introduction of this new line item in the statements of cash flows provides users of our financial statements greater transparency over a key element of our business. This presentation change has been retrospectively restated in prior periods. The change in presentation for the period ended March 31, 2018 is as follows:

 
Three months ended March 31, 2018
(in thousands of $)
As previously reported
Adjustments (decrease) increase
As adjusted
Change in fair value of derivative instruments

1,443

1,443

Change in fair value of oil derivative instrument


(13,600
)
(13,600
)
Change in assets and liabilities:
 
 
 
    Other current and non-current assets
(23,430
)
21,136

(2,294
)
    Other current and non-current liabilities
43,492

(8,979
)
34,513


Gains/(losses) on derivative instruments

With effect from the quarter ended September 30, 2018, we presented a new line item under financial income (expense) on the face of the statements of income. The new line item, "Losses on derivative instruments", includes the movement of our derivative instruments. Previously, these items were presented within "Other financial items, net" along with our general finance costs. We believe that the introduction of these new line items will provide users of our financial statements greater transparency over our derivative instruments. This presentation change has been retrospectively applied for all prior periods. The change in presentation for the three months ended March 31, 2018 is as follows:
 
Three Months Ended March 31, 2018
(in thousands of $)
As previously reported
Adjustments Increase/
(Decrease)
As adjusted
Losses on derivative instruments

(874
)
(874
)
Other financial items, net
(1,237
)
874

(363
)

Project development expenses

With effect from the quarter ended June 30, 2018, we presented a new line item in operating expenses on the face of the statements of income. The new line item, "Project development expenses", includes the costs associated with pursuing future contracts and developing our pipeline of activities that have not met our internal threshold for capitalization. Previously, these costs were presented within "Administrative expenses" along with our general overhead costs. We believe that the introduction of this new line item in the statements of income provides users of our financial statements greater transparency over a key element of our business. This presentation change has been retrospectively restated in prior periods. The change in presentation for the three months ended March 31, 2018 is as follows:

 
Three months ended March 31, 2018
(in thousands of $)
As previously reported
Adjustments increase (decrease)
As adjusted
Project development expenses

3,280

3,280

Administrative expenses
14,016

(3,280
)
10,736


Oil Derivative Instrument

22



In relation to the oil derivative instrument, the fair value was determined using the estimated discounted cash flows of the additional payments due to us as a result of oil prices moving above a contractual oil price floor over the term of the LTA. Significant inputs used in the valuation of the oil derivative instrument include management’s estimate of an appropriate discount rate and the length of time to blend the long-term and the short-term oil prices obtained from quoted prices in active markets. The changes in fair value of our oil derivative instrument is recognized in each period in current earnings in "Realized and unrealized gain on oil derivative instrument".

The realized and unrealized gain on oil derivative instrument is as follows:

(in thousands of $)
Three Months Ended 
 March 31,
 
2019

2018

Realized gain on oil derivative instrument
2,233


Unrealized gain on oil derivative instrument
28,380

13,600

 
30,613

13,600


For further information on the nature of this derivative, refer to note 16. The unrealized gain results from movement in oil prices above a contractual floor price over term of the LTA; the realized gain results from monthly billings above the base tolling fee under the LTA.

Impairment of non-current assets

In March 2019, we entered into a number of contracts relating to the conversion and subsequent disposal of the Golar Viking. As of March 31, 2019, although we were still awaiting on LNG Hrvatska to issue Golar a final notice to proceed, we determined that there was sufficient probability of the sale being finalized to trigger an impairment test on the vessel.  The impairment test resulted in a charge of $34.3 million . The fair value of the LNG carrier Golar Viking is categorized within level 2 of the fair value hierarchy, and is based on the average of third party broker valuations. The fair value does not factor in any cash flows associated with the conversion project. The value represents the price that a market participant would pay for a LNG carrier as this is the principal market for the vessel. This is consistent with the fair value methodology that we use for all of our LNG carriers.  

Use of estimates

The preparation of financial statements in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP") requires that management make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

As of March 31, 2019 , we leased eight vessels under finance leases from wholly-owned special purpose vehicles ("Lessor SPVs") of financial institutions in connection with our sale and leaseback transactions. While we do not hold any equity investments in these Lessor SPVs, we have determined that we are the primary beneficiary of these entities and, accordingly, we are required to consolidate these VIEs into our financial results. The key line items impacted by our consolidation of these VIEs are short-term and long-term debt, restricted cash and short-term deposits, non-controlling interests, interest income and interest expense. In consolidating these lessor VIEs, on a quarterly basis, we must make assumptions regarding (i) the debt amortization profile; (ii) the interest rate to be applied against the VIEs’ debt principal; and (iii) the VIE's application of cash receipts. Our estimates are therefore dependent upon the timeliness of receipt and accuracy of financial information provided by these lessor VIE entities. Upon receipt of the audited annual financial statements of the lessor VIEs, we will make a true-up adjustment for any material differences.


3.    RECENTLY ISSUED ACCOUNTING STANDARDS

Adoption of new accounting standards

In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842) along with subsequent amendments ASU 2019-20 Leases (Topic 842): Narrow scope improvements for lessors in December 2018 and ASU 2019-01 Leases (Topic 842): Codification improvements in March 2019. Topic 842 modifies the definition of a lease, requires reassessment of the lease term upon the occurrence of certain triggers and introduces new disclosures. Lessors are required to classify leases as sales-type, direct financing

23


or operating, with classification affecting the pattern of income recognition and provides guidance for sale and leaseback transactions. Topic 842 requires a lessee to recognize leases on its balance sheet by recording a lease liability (representing the obligation to make future lease payments) and a right of use asset (representing the right to use the asset for the lease term). Leases for lessees will be classified as either financing or operating with classification affecting the pattern of expense recognition in the income statement.

We adopted this Topic 842 on January 1, 2019 under a modified retrospective transition approach. In contracts where we act as either the lessor or lessee we have elected to use the ‘package’ of practical expedients available, which means no reassessment on transition of whether an agreement contains a lease, lease classification, and initial direct costs under ASC 842. As part of this package the lease term has been determined using hindsight up to date of transition when considering lessee options to extend or terminate the agreement or to purchase the underlying asset. Furthermore, where available we have elected not to separate the components in our lease arrangements, instead accounting for them on a combined component under ASC 842. Our election of the practical expedient providing transition relief will result in our prior periods not being restated and will continue to be represented in accordance with Topic 840.

The impact on the Company of applying ASU 842 as a lessee, based on contractual arrangements in place at December 31, 2018 , will be the recognition of lease liabilities of $15.8 million , along with right-of-use assets with a similar aggregate value, which mainly relates to our office leases. This liability corresponds to our lessee related liability for future lease payments presented on the face of the consolidated balance sheet as other current liabilities of $5.5 million and other non-current liabilities of $10.3 million , while the carrying value of the lessee right-of-use assets is disclosed in note 13 to these consolidated financial statements.

For contracts where we are the lessor, the practical expedients we have elected has resulted in no change to our Balance Sheet on adoption. Our legacy leases will continue to be classified in accordance with Topic 840, while modifications and subsequent accounting will follow the accounting under Topic 842. Leases entered into on or after January 1, 2019 have been assessed under the requirements of Topic 842. New lessor presentation and disclosure requirements have been applied to our new and existing lease agreements. The carrying value of the assets subject to lessor operating leases, and the maturity analysis of operating lease payments under arrangements where we are the lessor, are disclosed in note 8 to the consolidated financial statements.

In July 2018, the FASB issued ASU 2018-09 Codification improvements . The amendments in this ASU cover a wide range of topics including primarily minor corrections, clarifications and codification improvements. We adopted the codification improvements that were not effective on issuance on January 1, 2019 under the specified transition approach connected with each of the codification improvements. The impact of this amendment has not had a material impact on our consolidated financial statements or related disclosures, including retained earnings as January 1, 2019.

Accounting pronouncements that have been issued but not adopted

The following table provides a brief description of recent accounting standards that have been issued but not yet adopted:


24


Standard
Description
Date of Adoption
Effect on our Consolidated Financial Statements or Other Significant Matters
ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendment ASU 2018-19 Codification Improvements to Topic 326 ‘‘Financial Instruments-Credit Losses”
Replaces the incurred loss impairment methodology with an expected loss methodology that requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
January 1, 2020
Under evaluation
ASU 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement
Removes some disclosure requirements relating to transfers between Level 1 and Level 2 of the FV hierarchy. Introduces new disclosure requirements for Level 3 measurements
January 1, 2020
No material impact on our disclosure requirements as we have no Level 3 measurements.
ASU 2018-14 Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans .
Removes some disclosure requirements that are not expected to materially change Golar’s existing note. Introduces new disclosure requirements including an explanation of the reasons for significant gains and losses relating to changes in the benefit obligation.
January 1, 2021
No material impact on disclosure requirements.
ASU 2018-15 Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract .
Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software.
January 1, 2020
No material impact on disclosure requirements.
ASU 2018-17 Consolidation (Topic 810) - Targeted Improvements to Related Party Guidance for Variable Interest Entities
For the purposes of determining whether a decision making fee is a variable interest, a company is now required to consider indirect interests held through related parties under common control on a proportionate basis as opposed to as a direct investment in the entity.
January 1, 2020
No impact on historical consolidation assessments.
ASU 2018-18 Collaborative Arrangements (Topic 808) - Clarifying the Interaction between
Topic 808 and Topic 606 .
Provides guidance on determining when transactions between collaborative arrangement participants should be accounted for as revenue under 606.
January 1, 2020
Under evaluation


4.    SEGMENT INFORMATION

We are a marine LNG infrastructure provider and a project development company. We own and operate LNG carriers, a FLNG and FSRUs and provide these services under time charters under varying periods. As of March 31, 2019 , we have completed the commissioning of our first FLNG vessel and have entered the power market in an effort to become a midstream LNG solution provider. Our reportable segments consist of the primary services each provides. Although our segments are generally influenced by the same economic factors, each represents a distinct product in the LNG industry. Segment results are evaluated based on net income. The accounting principles for the segments are the same as for our consolidated financial statements. "Project development expenses" are allocated to each segment based on the nature of the project. Indirect general and administrative expenses are allocated to each segment based on estimated use.

The split of the organization of the business into three reportable segments is based on differences in management structure and reporting, economic characteristics, customer base, asset class and contract structure. As of March 31, 2019 , we operate in the following three reportable segments:

25



Vessel operations – We operate and subsequently charter out vessels on fixed terms to customers. We also provide technical vessel management services for our fleet as well as the fleets of Golar Partners and Golar Power.
FLNG – In 2014, we ordered our first FLNG based on the conversion of our existing LNG carrier, the Hilli. The Hilli FLNG conversion was completed and the vessel was accepted by the customer under the LTA. In February 2019, Golar entered into an agreement with BP for the charter of a FLNG, which will be converted from our existing LNG carrier, the Gimi , for a 20-year period expected to commence in 2022. The Gimi was relocated from layup to Keppel Shipyard in early 2019 to proceed with the conversion.
In July 2016, we entered into an agreement with Schlumberger B.V. ("Schlumberger") to form OneLNG, a joint venture, with the intention to offer an integrated upstream and midstream solution for the development of low cost gas reserves to LNG. As a result, we report the equity in net losses of OneLNG in the FLNG segment. In May 2018, it was decided that Golar and Schlumberger will wind down OneLNG and work on FLNG projects as required on a case-by-case basis.
Power – In July 2016, we entered into certain agreements forming a 50/50 joint venture, Golar Power, with private equity firm Stonepeak. Golar Power offers integrated LNG based downstream solutions, through the ownership and operation of FSRUs and associated terminal and power generation infrastructure.
 
Statement of Operations:
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
(in thousands of $)
 
Vessel operations
FLNG
Power
Other (1)
Total
 
Vessel operations
FLNG
Power
Other (1)
Total
Total operating revenues
 
59,763

54,524



114,287

 
66,190




66,190

Depreciation and amortization
 
(16,112
)
(12,051
)


(28,163
)
 
(16,409
)



(16,409
)
Other operating expenses
 
(47,877
)
(15,006
)


(62,883
)
 
(55,756
)
(1,196
)


(56,952
)
Impairment of long-lived assets (2)
 
(34,250
)



(34,250
)
 





Other operating gains (note 18)
 
9,260

30,613



39,873

 

13,600



13,600

Operating income (loss)
 
(29,216
)
58,080



28,864

 
(5,975
)
12,404



6,429

 
 
 
 
 
 
 
 
 
 
 
 
 
Inter segment operating income   (loss) (3)
 
197



(197
)

 
101



(101
)

Segment operating (loss) income
 
(29,019
)
58,080


(197
)
28,864

 
(5,874
)
12,404


(101
)
6,429

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net (losses) earnings of affiliates
 
(8,939
)

(3,960
)

(12,899
)
 
4,826

(1,531
)
(4,836
)

(1,541
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet:
 
March 31, 2019
 
December 31, 2018
(in thousands of $)
 
Vessel operations
FLNG
Power
Other (1)
Total
 
Vessel operations
FLNG
Power
Other (1)
Total
Total assets
 
2,882,880

1,580,006

265,051

(5,648
)
4,722,289

 
2,990,506

1,555,389

266,151

(5,451
)
4,806,595

Investments in affiliates
 
287,834


265,051


552,885

 
305,631


266,151


571,782

(1) Eliminations required for consolidation purposes.
(2) On March 29, 2019 we signed an agreement with LNG Hrvatska for the future sale of the Golar Viking once converted into an FSRU, following the completion of its current charter lease term, which triggered an impairment indicator. The impairment loss of $34.3 million is recognized in operating costs for the write down of the Golar Viking asset to its fair value. Fair value is based on average broker valuation at date of measurement and represents the exit price in the principal LNG carrier sales market.  
(3) Inter segment operating income (loss) relates to management fee revenues and charter revenues between the segments.


26


Revenues from external customers

During the three months ended March 31, 2019 , our vessels operated predominately under charters within the Cool Pool and under our LTA with Perenco and SNH.

For the three months ended March 31, 2019 and 2018 , revenues from the following customers accounted for over 10% of our total operating revenues, excluding vessel and other management fees:
 
Three Months Ended 
 March 31,
(in thousands of $)
2019
2018
Cool Pool (note 17)
41,670

38
%
54,958

91
%
Perenco and SNH (note 5)
54,524

50
%

%

5.    REVENUE

Contract assets arise when we render services in advance of receiving payment from our customers. Contract liabilities arise when the customer makes payments in advance of receiving the services. Changes in our contract balances during the period are as follows:
(in thousands of $)
Contract assets (1)
Contract liabilities (2)
Opening balance on January 1, 2019
24,376

31,296

Payments received for services billed
(19,937
)

Services provided and billed in current period
56,578


Payments received for services billed in current period
(37,921
)

Deferred commissioning period billing

(1,055
)
Closing balance on March 31, 2019
23,096

30,241

(1) Relates to management fee revenue and liquefaction services revenue, see a) and b) below.
(2) Relates to liquefaction services revenue, see b) below.

a) Management fee revenue:

By virtue of an agreement to offset intercompany balances entered into between us and Golar Partners and Golar Power, of our total contract asset balances above:

$3.1 million is included in balance sheet line item "Amounts due from related parties" under current assets ( $3.1 million at December 31, 2018), and
$3.0 million is included in "Amounts due to related parties" under current liabilities ( $4.3 million at December 31, 2018).

Refer to note 17 for further details of our management fee revenue and contract terms.

b) Liquefaction services revenue:

The Hilli is moored in close proximity to the Customer’s gasfields, providing liquefaction service capacity over the term of the LTA. Liquefaction services revenue recognized comprises the following amounts:
 
Three Months Ended 
 March 31,
(in thousands of $)
2019

2018

Base tolling fee (1)
51,125


Amortization of deferred commissioning period billing (2)
1,055


Amortization of Day 1 gain (3)
2,488


Other
(144
)

Total
54,524


(1) The LTA bills at a base rate in periods when the oil price is $60 or less per barrel (included in "Liquefaction services revenue" in the consolidated statements of income), and at an increased rate when the oil price is greater than $60 per barrel (recognized as a derivative and included in "Realized and unrealized gain on oil derivative instrument" in the consolidated statements of income, excluded from revenue and from the transaction price).

27


(2) Customer billing during the commissioning period, prior to vessel acceptance and commencement of the contract term, of $33.8 million is considered an upfront payment for services. These amounts billed are deferred (included in "Other current liabilities" and "Other non-current liabilities" in the consolidated balance sheets) and recognized as part of "Liquefaction services revenue" in the consolidated statements of income evenly over the contract term.
(3) The Day 1 gain was established when the oil derivative asset was initially recognized in December 2017 for $79.6 million (recognized in "Other current liabilities" and "Other non-current liabilities" in the consolidated balance sheets). This amount is amortized and recognized as part of "Liquefaction services revenue" in the consolidated statements of income evenly over the contract term.

6.      EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share ("EPS") is calculated with reference to the weighted average number of common shares outstanding during the period.

The components of the numerator for the calculation of basic and diluted EPS are as follows:
(in thousands of $)
Three Months Ended 
 March 31,
 
2019

2018

Net loss attributable to Golar LNG Ltd stockholders - basic and diluted
(41,741
)
(21,002
)

The components of the denominator for the calculation of basic and diluted EPS are as follows:
(in thousands)
Three Months Ended 
 March 31,
 
2019

2018

Weighted average number of common shares outstanding
101,303

100,618


Earnings (loss) per share are as follows:
 
Three Months Ended 
 March 31,
 
2019

2018

Basic and diluted
$
(0.41
)
$
(0.21
)

For the three months ended March 31, 2019 and 2018 , stock options and convertible bonds have been excluded from the calculation of diluted EPS because the effect was anti-dilutive.


28


7.     (LOSSES) GAINS ON DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL ITEMS, NET

(Losses) gains on derivative instruments comprise of the following:
(in thousands of $)
Three Months Ended 
 March 31,
 
2019

2018

Mark-to-market adjustment for interest rate swap derivatives
(5,250
)
7,314

Interest income on undesignated interest rate swaps
2,118

569

Mark-to-market adjustment for equity derivatives
(3,221
)
(9,200
)
Mark-to-market adjustment for foreign exchange swap derivatives
654

443

 
(5,699
)
(874
)

Other financial items, net comprise of the following:
(in thousands of $)
Three Months Ended 
 March 31,
 
2019

2018

Foreign exchange loss on operations
(357
)
(572
)
Amortization of debt guarantee
317

178

Financing arrangement fees and other costs
(1,318
)
(20
)
Others
(49
)
51

 
(1,407
)
(363
)

8.
OPERATING LEASES

Rental income

The minimum contractual future revenues to be received on time charters in respect of our vessels as of March 31, 2019 , were as follows:

Nine months ending December 31, 2019
 
(in thousands of $)
 
2019
19,619

Total
19,619


With the exception of the Hilli which has a carrying value of $1,253.6 million as of March 31, 2019 and depreciation for the 3 months ending March 31, 2019 of $12.1 million , management's intention is that all owned vessels are available to be used by customers under operating lease arrangements.

The components of operating lease income were as follows:
 
Three months ended March 31, 2019


(in thousands of $)
 
Operating lease income
10,177

Variable lease income (1)
2,463

Total operating lease income
12,640

(1) "Variable lease income" is excluded from lease payments that comprise the minimum contractual future revenues.

Rental expense


29


We lease certain office premises, equipment on-board our fleet of vessels and service boats supporting the Hilli under operating leases. Many lease agreements include one or more options to renew. We will include these renewal options when we are reasonably certain that we will exercise the option. The exercise of these lease renewal options is at our discretion.

Variable lease cost relates to certain of our lease agreements which include payments that vary. These are primarily generated from service charges related to our usage of office premises, usage charges for equipment on-board our fleet of vessels, adjustments for inflation, and fuel consumption for the rental of service boats supporting the Hilli .

The components of operating lease cost were as follows:
(in thousands of $)
Three months ended March 31, 2019

Operating lease cost (1)
1,966

Variable lease cost (2)
162

Total operating lease cost
2,128


(1) "Operating lease cost" includes short-term lease cost.
(2) "Variable lease cost" is excluded from lease payments that comprise the operating lease liability.

Total operating lease cost is included in income statement line-items "Vessel operating expenses" and "Administrative expenses".

Right-of-use assets obtained in exchange for new operating lease liabilities during the three months ended March 31, 2019 amounted to $13.6 million .

Our weighted average remaining lease term for our operating leases is 5.7 years. Our weighted-average discount rate applied for the majority of our operating leases is 5.5%.

The maturity of our lease liabilities is as follows:
(in thousands of $)
 
Year ending December 31,
Operating leases

2019 (1)
3,938

2020
3,465

2021
2,302

2022
1,244

2023
504

Thereafter
2,528

Total operating lease liabilities on March 31, 2019
13,981

(1) For the nine months ending December 31, 2019.


9.      VARIABLE INTEREST ENTITIES ("VIE")

As of March 31, 2019 , we leased eight ( December 31, 2018 : eight ) vessels from VIEs as part of sale and leaseback agreements,
of which four were with ICBCL entities, one with a CMBL entity, one with a CCBFL entity, one with a COSCO Shipping entity and one with a CSSC entity. Each of the ICBCL, CMBL, CCBFL, COSCO Shipping and CSSC entities are wholly-owned, newly formed special purpose vehicles ("Lessor SPVs"). In each of these transactions, we sold our vessel and then subsequently leased back the vessel on a bareboat charter for a term of ten years. We have options to repurchase each vessel at fixed predetermined amounts during their respective charter periods and an obligation to repurchase each vessel at the end of the ten year lease period. Refer to note 5 to our consolidated financial statements filed with our annual report on Form 20-F for the year ended December 31, 2018 , for additional details.  
 
While we do not hold any equity investments in the above Lessor SPVs, we have determined that we have a variable interest in these SPVs and that these lessor entities, that own the vessels, are VIEs. Based on our evaluation of the agreements, we have concluded that we are the primary beneficiary of these VIEs and, accordingly, these lessor VIEs are consolidated into our financial results. We did not record any gains or losses from the sale of these vessels as they continued to be reported as vessels at their

30


original costs in our consolidated financial statements at the time of each transaction. Similarly, the effect of the bareboat charter arrangement is eliminated upon consolidation of the Lessor SPV. The equity attributable to the respective lessor VIEs are included in non-controlling interests in our consolidated results. As of March 31, 2019 and December 31, 2018 , the respective vessels are reported under "Vessels and equipment, net" in our consolidated balance sheets.
 
A summary of our payment obligations (excluding repurchase options and obligations) under the bareboat charters with the lessor VIEs as of March 31, 2019 , are shown below:

(in thousands of $)
2019 (1)
2020
2021
2022
2023
2024+
Golar Glacier
12,884
17,147
17,100
17,100
17,100
12,884
Golar Kelvin
12,931
17,147
17,100
17,100
17,100
15,695
Golar Snow
12,931
17,147
17,100
17,100
17,100
15,695
Golar Ice
12,884
17,147
17,100
17,100
17,100
18,600
Golar Tundra (2)
16,011
20,618
19,782
18,968
18,154
31,179
Golar Seal
10,297
13,717
13,717
13,717
13,754
27,433
Golar Crystal (2)
8,801
11,635
11,520
11,439
11,343
36,120
Hilli   (2)
91,154
117,773
113,520
109,267
105,116
398,899
(1) For the nine months ending December 31, 2019.
(2) The payment obligations relating to the Golar Tundra , Golar Crystal and Hilli above includes variable rental payments due under the lease based on an assumed LIBOR plus margin.


The assets and liabilities of these lessor VIEs that most significantly impact our consolidated balance sheet as of March 31, 2019 and December 31, 2018 , are as follows:
(in thousands of $)
Golar Glacier
Golar Kelvin
Golar Snow
Golar Ice
Golar Tundra
Golar Seal
Golar Crystal
Hilli
March 31, 2019
 
December 31, 2018
Assets
 
 
 
 
 
 
 
 
Total
 
Total
Restricted cash and short-term deposits
9,265

76,093

8,720

3


19,862

3,603

57,270

174,816

 
176,428

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Debt:
 
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt and short-term debt (1)
140,033

182,541

142,829

113,668

11,204


5,744

149,296

745,315

 
646,513

Long-term interest bearing debt - non-current portion (1)




106,332

123,524

89,410

733,950

1,053,216

 
1,200,774

 
140,033

182,541

142,829

113,668

117,536

123,524

95,154

883,246

1,798,531

 
1,847,287

(1) Where applicable, these balances are net of deferred finance charges.

The most significant impact of lessor VIE's operations on our unaudited consolidated statements of income is interest expense of $20.6 million and $6.5 million for the three months ended March 31, 2019 and 2018 , respectively. The most significant impact of lessor VIE's cash flows on our unaudited consolidated statements of cash flows is net cash paid of $48.9 million and $47.1 million in financing activities for the three months ended March 31, 2019 and 2018 , respectively.

Subsequent to the sale of common units in Golar Hilli LLC, we have retained sole control over the most significant activities and the greatest exposure to variability in residual returns and expected losses from the Hilli . Accordingly, management have concluded Hilli LLC is a VIE and that we are the primary beneficiary.


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Summarized financial information of Hilli LLC

The assets and liabilities of Hilli LLC that most significantly impact our consolidated balance sheet are as follows:
 
Hilli LLC (1)
(in thousands of $)
March 31, 2019

December 31, 2018

Assets
 
 
Cash and short-term deposits
31,906

85,238

Restricted cash and short-term deposits
57,270

57,441

Vessels and equipment, net
1,286,069

1,301,279

Other non-current assets
121,188

91,431

 
1,496,433

1,535,389

 
 
 
Liabilities
 
 
Current portion of long-term debt and short-term debt
149,296

148,880

Long-term interest bearing debt - non-current portion
733,950

749,100

 
883,246

897,980

(1) As Hilli LLC is the primary beneficiary of the Hilli Lessor VIE (see above) the Hilli LLC balances include the Hilli Lessor VIE.

The most significant impact of Hilli LLC VIE's operations on our unaudited consolidated statements of income, and unaudited consolidated statements of cash flows, are as follows:
(in thousands of $)
 
Three Months Ended March 31, 2019
 
Three Months Ended March 31, 2018
Statement of operations
 
 
 
 
Liquefaction services revenue
 
54,524

 

Realized and unrealized gains on the oil derivative instrument
 
30,613

 
13,600

 
 
 
 
 
Statement of cash flows
 
 
 
 
Net debt repayments
 
14,734

 



10.      RESTRICTED CASH AND SHORT-TERM DEPOSITS

Our restricted cash and short-term deposits balances are as follows:
(in thousands of $)
March 31, 2019

December 31, 2018

Restricted cash relating to the total return equity swap
86,050

82,863

Restricted cash in relation to the Hilli
175,034

174,597

Restricted cash and short-term deposits held by lessor VIEs
174,816

176,428

Restricted cash relating to the $1.125 billion debt facility
7,466

17,657

Collateral on the Margin Loan Facility
33,413

33,413

Restricted cash relating to office lease
778

777

Bank guarantee
41

691

Total restricted cash and short-term deposits
477,598

486,426

Less: Amounts included in current restricted cash and short-term deposits
(322,767
)
(332,033
)
Long-term restricted cash
154,831

154,393




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11.     ASSET UNDER DEVELOPMENT

(in thousands of $)
March 31, 2019

December 31, 2018

Purchase price installments
12,330


Interest costs capitalized
500


Other costs capitalized (note 13)
44,160

20,000

 
56,990

20,000


In October 2014, we entered into agreements for the conversion of the Gimi to a FLNG. The primary vessel conversion contract was entered into with Keppel in December 2018. In February 2019, Golar entered into an agreement with BP for the charter of a FLNG unit, the Gimi , to service the Greater Tortue Ahmeyim project for a 20 -year period expected to commence in 2022. The Gimi