Focus on Group clarity, liquidity and
near-term value growth
Iain Ross, CEO, Golar LNG,
said:
“Golar is bringing simplicity to its business,
improving Group liquidity, reducing earnings volatility and taking
steps to bring forward shareholder returns.
To maximize shareholder value we intend to
suspend the dividend for two quarters in order to buy back the
three million shares underlying the Total Return Swap, simplifying
our capital structure and reducing the share count from 101 million
to 98 million.
Within the Group, we have fixed four LNG
carriers on floating rate contracts and two more on fixed rate
charters. We have secured new financing facilities that will
immediately release $180 million to Golar which, together with the
$700m underwritten funding for the Gimi, de-risks the Group’s
balance sheet and enhances liquidity. Finally, in Golar Power, we
are securing customers and transport capacity to accelerate
downstream LNG distribution projects capable of delivering swift
returns.
Operationally, Golar made steady progress.
In Shipping, we have taken advantage of seasonally low rates to dry
dock vessels ahead of the second half market upturn. In FLNG,
Hilli Episeyo maintained 100% commercial uptime, while the Gimi
conversion project continues to budget and schedule. In Golar
Power, Sergipe has reached its commissioning phase.”
Financial Summary
|
(in thousands of $) |
2Q 2019 |
2Q 2018 |
1Q 2019 |
1H 2019 |
1H 2018 |
|
|
|
|
|
|
Total
operating revenues |
96,745 |
59,374 |
114,287 |
211,032 |
125,564 |
Net (loss)/income attributable to Golar LNG Limited |
(112,682) |
36,319 |
(41,741) |
(154,423) |
15,317 |
Adjusted
EBITDA1 |
39,663 |
4,162 |
62,897 |
102,560 |
13,400 |
Operating (loss)/income |
(23,435) |
78,405 |
28,864 |
5,429 |
84,834 |
Dividend
per share |
— |
0.125 |
0.150 |
0.150 |
0.175 |
Adjusted net debt1 |
2,258,824 |
2,193,451 |
2,197,384 |
2,258,824 |
2,193,451 |
Financial Highlights
- Contract Earnings Backlog1 (Golar LNG Limited share) of $6.5
billion.
- Agreed to phased buyback of the 3 million shares underlying the
Total Return Swap (“TRS”) at an incremental cash cost of
approximately $31 million.
- Dividend suspended for two quarters to finance intended TRS
buyback.
- Adjusted net debt1 of $2.3 billion, $1.0 billion of which
relates to Golar LNG Limited’s (“Golar” or “the Company’s”) 8 TFDE
ships.
- Post period, executed new financing facilities that add an
immediate $180 million of liquidity.
Operational Highlights
Shipping:
- Improved fleet utilization of 66%, versus 51% in 1Q 2019
(“1Q”); three of Golar’s 11 carriers now employed on 1-5 year
index linked contracts and two vessels on multi-month fixed rate
charters.
- Four of these five charters commence in 3Q 2019 providing
greater visibility on future vessel utilization.
- 2Q fleet TCE at $24,400 reflects a seasonally softer market as
well as idle time associated with four dry-dockings in the period
and a further three dry-dockings in 3Q.
FLNG:
- FLNG Gimi - $700 million underwritten financing commitment.
Conversion on budget and schedule.
- FLNG Hilli Episeyo - 100% commercial uptime maintained: 25
cargoes exported to date. Negotiation with charterers regarding
additional utilization continues; initiated discussions with
charterers on a reduction in the Letter of Credit ("LC") that would
allow the release of up to $75 million of restricted cash.
Golar Power:
- Sergipe power station remains on track for year-end
completion.
- Downstream LNG distribution business securing customers.
Initial commitments made to secure isotainers and access to
trucking; in advanced discussions with Avenir for small-scale
shipping capacity.
Outlook 2H 2019 and 2020
LNG ShippingEarnings are expected to improve;
supported by new term contracts, a tighter supply demand balance,
seasonally stronger rates and additional trading days for the
fleet. All TFDE carrier drydockings are expected to have been
concluded by year-end. Subject to market conditions, we intend to
complete the previously announced spin-off of our TFDE fleet by the
end of 2019.
The market faces an impending structural
shortage of shipping: in 2019, vessel demand growth of 15% is
expected against supply growth of 8%. Further vessel demand
growth of 14% is expected in 2020, with supply growth lagging at
9%. This is partly offset by current low LNG prices that eliminate
arbitrage opportunities and reduce transportation to the Far
East.
FLNG Interest in new FLNG developments remains
strong, with several projects under consideration for oil
majors. Golar is working with Asian yards to find ways to
standardize its FLNG production and design model to achieve lower
costs and more efficient financing.
Golar Power Commercial operations at Sergipe
remain on track to begin in January 2020. Part of the contracted
cash flows will be used to accelerate development of the downstream
LNG distribution business in Brazil. Golar Power is on schedule to
deliver its first small-scale LNG shipment from the spare capacity
of the FSRU Nanook in 2Q 2020.
Low LNG prices are improving the economics of
these low-capex, fast payback opportunities, where a key merit is
switching demand for expensive diesel, heavy fuel oil and coal into
demand for low-cost, clean LNG.
Financial Review
Business Performance
|
2019 |
2019 |
|
Apr-Jun |
Jan-Mar |
(in thousands of $) |
Vessel and other operations |
FLNG |
Total |
Vessel and other operations |
FLNG |
Total |
Total operating revenues |
42,221 |
|
54,524 |
|
96,745 |
|
59,763 |
|
54,524 |
|
114,287 |
|
Vessel operating expenses |
(16,996 |
) |
(13,822 |
) |
(30,818 |
) |
(18,176 |
) |
(13,072 |
) |
(31,248 |
) |
Voyage, charterhire & commission expenses (including expenses
from collaborative arrangement) |
(14,327 |
) |
(100 |
) |
(14,427 |
) |
(16,140 |
) |
(360 |
) |
(16,500 |
) |
Administrative expenses |
(14,676 |
) |
516 |
|
(14,160 |
) |
(12,893 |
) |
(652 |
) |
(13,545 |
) |
Project development expenses |
571 |
|
(448 |
) |
123 |
|
(668 |
) |
(922 |
) |
(1,590 |
) |
Realized gain on oil derivative instrument(2) |
— |
|
5,162 |
|
5,162 |
|
— |
|
2,233 |
|
2,233 |
|
Other operating (losses)/gains |
— |
|
(2,962 |
) |
(2,962 |
) |
9,260 |
|
— |
|
9,260 |
|
Adjusted EBITDA(1) |
(3,207 |
) |
42,870 |
|
39,663 |
|
21,146 |
|
41,751 |
|
62,897 |
|
|
|
|
|
|
|
|
Reconciliation to operating income (loss) |
|
|
|
|
|
|
Unrealized (loss)/gain on oil derivative instrument(2) |
— |
|
(27,630 |
) |
(27,630 |
) |
— |
|
28,380 |
|
28,380 |
|
Depreciation and amortization |
(16,070 |
) |
(12,051 |
) |
(28,121 |
) |
(16,112 |
) |
(12,051 |
) |
(28,163 |
) |
Impairment of long-lived assets |
(7,347 |
) |
— |
|
(7,347 |
) |
(34,250 |
) |
— |
|
(34,250 |
) |
Operating (loss)/income |
(26,624 |
) |
3,189 |
|
(23,435 |
) |
(29,216 |
) |
58,080 |
|
28,864 |
|
(2) With effect from the quarter ended September
30, 2018, we have split the line item "Realized and unrealized gain
on oil derivative instrument" relating to income from the FLNG
Hilli Episeyo Liquefaction Tolling Agreement into two line items,
"Realized gain on oil derivative instrument" and "Unrealized (loss)
gain on oil derivative instrument". The unrealized component
represents a mark-to-market loss of $27.6 million (March 31, 2019:
gain of $28.4 million) on the oil embedded derivative, which
represents the estimate of expected receipts under the remainder of
the Brent oil linked clause of the Hilli Episeyo Liquefaction
Tolling Agreement. The realized component amounts to $5.2 million
(March 31, 2019: $2.2 million) and represents the income in
relation to the Hilli Episeyo Liquefaction Tolling Agreement
receivable in cash. This presentation change has been
retrospectively adjusted in prior periods.
Golar reports today 2Q operating losses of $23.4
million compared to income of $28.9 million in 1Q.
Total operating revenues decreased from $114.3
million in 1Q to $96.7 million in 2Q. The reduction was driven by
lower revenues from vessels and other operations as a result of a
seasonally weak shipping market and drydockings.
Revenues from vessel and other operations,
including management fee income, was $42.2 million and, net of
voyage, charterhire and commission expenses, decreased by $15.7
million to $27.9 million in 2Q. Weaker Asian demand that pushed US
volumes into Europe and lowered ton-miles, softer prices that
capped the ability to pay for freight and elevated vessel
deliveries combined to ensure that demand for spot tonnage was
matched by sufficient vessel availability throughout the
quarter. Although fleet utilization increased from 51% in 1Q
to 66% in 2Q, full fleet TCE1 earnings decreased from $39,300 in 1Q
to $24,400 in 2Q. Also negatively impacting revenue was the
scheduled dry-docking of 4 vessels that each spent a portion of 2Q
in a shipyard and positioning for this operation.
In line with prior quarters, FLNG Hilli Episeyo
generated operating revenues of $54.5 million including base
tolling fees and amortization of pre-acceptance amounts
recognized.
Vessel operating expenses at $30.8 million in 2Q
were $0.4 million lower than 1Q with the decrease predominantly
attributable to the Golar Viking which saw costs normalize during
the quarter.
At $14.2 million for the quarter, total
administrative expenses were $0.6 million higher than 1Q due to
additional legal and professional fees. Project development
expenses are reduced by $1.7 million relative to 1Q, partly due to
an over accrual of expenses in the prior quarter.
The Brent oil linked component of Hilli
Episeyo's fees generates additional annual operating cash flows of
approximately $3 million for every dollar increase in Brent Crude
prices between $60.00 per barrel and the contractual ceiling.
Billing of this component is based on a three-month look-back at
average Brent Crude prices. Higher oil prices resulted in a $2.9
million increase in the realized gain on the oil derivative
instrument, up from $2.2 million in 1Q to $5.2 million in 2Q.
The mark-to-market fair value of the derivative
asset decreased by $27.6 million during the quarter, with a
corresponding unrealized loss of the same amount recognized in the
income statement. The fair value decrease was driven by a downward
movement in the expected future market price for Brent Oil. The
spot price for Brent Oil decreased from $68.39 per barrel on March
31 to $66.55 on June 30.
Other operating gains and losses within FLNG
reported a 2Q loss of $3.0 million, representing unrecoverable
receivables from Schlumberger following the dissolution of
OneLNG.
Depreciation and amortization at $28.1 million
in 2Q was in line with the prior quarter.
On May 23 a major shareholder in OLT Offshore
LNG Toscana concluded the sale of their interest. Of the
consideration paid by the buyer, €1 was allocated to equity with
the balance applied to the acquisition of the seller's shareholder
loans. Golar’s 2.7% equity interest in the project has therefore
been written down to $nil resulting in a non-cash 2Q impairment
charge of $7.3 million.
Net Income Summary
|
2019 |
2019 |
(in thousands of $) |
Apr-Jun |
Jan-Mar |
Operating income (loss) |
(23,435 |
) |
28,864 |
|
Interest income |
3,223 |
|
3,214 |
|
Interest expense |
(24,376 |
) |
(29,352 |
) |
Losses on derivative instruments |
(14,719 |
) |
(5,699 |
) |
Other financial items, net |
(1,932 |
) |
(1,407 |
) |
Income taxes |
(176 |
) |
(205 |
) |
Equity in net losses of affiliates |
(26,970 |
) |
(12,899 |
) |
Net income attributable to non-controlling interests |
(24,297 |
) |
(24,257 |
) |
Net loss attributable to Golar LNG Limited |
(112,682 |
) |
(41,741 |
) |
In 2Q, the Company generated a net loss of
$112.7 million. Key items contributing to this are summarized as
follows:
- A small reduction in LIBOR and a $0.9m increase in capitalized
interest in respect of FLNG Gimi resulted in a $5.0 million
reduction in 2Q interest expense.
- 2Q recorded a $14.7 million loss on derivative instruments
compared to a 1Q loss of $5.7 million. Most of the $9.0
million increase in 2Q relative to 1Q is attributable to losses on
the three million Golar share TRS.
- The $27.0 million 2Q equity in net losses of affiliates is
primarily comprised of the following:
- a $20.0 million loss in respect of Golar's 32% share in Golar
Partners; and
- a $7.0 million loss in respect of Golar's 50% stake in Golar
Power.
Golar's share of Golar Partner's 2Q loss amounts
to 32% of $5.5 million. Additional to this Golar recognized
the regular amortization of fair value assets and liabilities
(principally arising in connection with its deconsolidation) plus a
one-off $15.0 million write off the fair value asset in relation to
the Golar Freeze which was deemed to have been disposed by the
Partnership during the quarter following its classification as a
finance lease.
Net income attributable to non-controlling
interests represents external interests in the Hilli Episeyo and
the finance lease variable interest entities ("VIEs").
Financing and Liquidity
Golar’s total cash position as at June 30 was
$545.4 million (including long-term restricted cash), of which
$139.8 million was unrestricted. Included within restricted cash is
$115.0 million relating to lessor-owned VIEs, $152.0 million
relating to the Hilli Episeyo LC and $96.8 million of collateral in
respect of the TRS.
During August, Golar executed a new margin loan
to replace the March 2020 maturing $100 million facility. The
new $110 million facility is revolving and continues to be secured
by Golar’s common unit investment in the Partnership. In addition
to the increased amount the new facility also provides for the
release of restricted cash. New liquidity from this facility
including restricted cash released amounts to $30 million.
Also in August Golar executed a new $150 million
term loan facility providing further liquidity.
Golar is currently in discussions with Perenco
about a reduction in the Hilli Episeyo LC requirement (with a
proportionate decrease in the Perenco and SNH security). This
is expected to result in the release of approximately $75 million
of restricted cash to free cash.
The success of Hilli Episeyo, the signing of the
contract with BP for the Gimi and Golar’s general FLNG business
development has attracted a great deal of interest from
infrastructure funds. The Company has received multiple
expressions of interest and offers to invest in the current and
future Contract Earnings Backlog1 which it continues to
evaluate.
Golar's contractual debt1 including 100% of
Hilli Episeyo as at June 30 was $2.6 billion. Golar's adjusted net
debt1 was $2.3 billion. Upon closing of the ship spin-off
transaction contractual debt1 and adjusted net debt1 are expected
to reduce by approximately $1.0 billion.
Included within the $802.3 million current
portion of long-term debt and short-term debt on the Balance Sheet
as at 30 June is $724.0 million relating to lessor-owned VIE
subsidiaries that Golar is required to consolidate in connection
with 8 sale and leaseback financed vessels, including the Hilli
Episeyo.
Corporate and Other Matters
To simplify Golar’s capital structure, remove
the cash collateral requirement and reduce earnings volatility the
Company intends to buy back the 3 million shares underlying the
TRS. In order to finance this buyback the Board has approved
the suspension of the dividend for two quarters which amounts to a
cash saving of approximately $30 million. The cash cost of
eliminating the 3 million TRS shares less the current (restricted)
cash collateral posted is a net cash amount of approximately $31
million, as of August 27, 2019. As at June 30, 2019, there
were 101.3 million shares outstanding, including the 3 million
shares underlying the TRS.
Interest from third party industrial and
institutional investors confirms that there is significant value
over and above book values for both FLNG projects and Golar Power.
The third party valuations purely reflect exposure to the $6.5
billion of contracted earnings backlog1 from existing assets.
Further value exists in the strategic positions created and the
project portfolio Golar is currently developing within the FLNG and
LNG downstream business.
During the quarter 0.2 million Restricted Stock
Units (“RSUs”) were granted to employees. An RSU represents
the right to receive a share of Golar LNG Limited common stock
after a vesting period has been satisfied. The RSU’s will
vest over a three-year period in one-third increments. There
were also 3.7 million outstanding stock options in issue with an
average price of $35.85.
Golar’s Annual General Meeting is scheduled for
September 27, 2019 in Bermuda. The record date for voting was
August 1, 2019.
Commercial Review
LNG Shipping
A mild spring together with the anticipated
start up and ramp up of significant new LNG supply meant that Far
East LNG continued to trade at around $4-5/mmbtu throughout this
traditionally weak shipping quarter, eliminating inter-basin
trading opportunities. Lower LNG prices that left limited scope to
pay for freight meant that US volumes were pushed into Europe.
Increased Chinese demand offset weaker demand from Japan and Korea
however the ongoing trade war between the US and China meant that
China continued to source its spot LNG requirements from more
proximate markets. Although average sailing distances increased as
US volumes continued to find markets in South Korea and Japan,
ton-mile growth remained subdued. A steady supply of newbuild
deliveries together with shorter than anticipated voyages that
increased the number of available sublet vessels originally
destined to service certain projects meant that demand was matched
by vessel availability throughout the quarter. As a result, owners
keen to position themselves for the H2 upturn aggressively bid for
single voyages to secure near-term utilization. This contributed to
an unusual decrease in TCE1 despite an increase in utilization and
a disconnect between firming term rates and muted spot rates.
During June, commissioning cargoes were exported
from both Cameron T1 and Prelude. Both have since commenced
commercial operations. Cheniere’s Corpus Christi T2 also commenced
LNG production, recently followed by Freeport LNG. The imminent
arrival of substantial new, predominantly US, volumes also
coincides with a reduction in newbuild vessel deliveries. This
together with a contango in the gas market with forward prices of
$6.4mmbtu being quoted for December sets the stage for a strong
shipping market over the next two years. A number of charterers
have approached the market to cover their requirements for this
period leaving a handful of owners including Golar with flexible
tonnage going forward. The level of interest in longer-term
charters continues to increase.
GasLog has now withdrawn its 6 vessels from, and
Golar assumed 100% ownership of, the Cool Pool, which continues to
commercially manage Golar’s TFDE vessels together with the Golar
Tundra and one of Golar Power’s vessels. Ownership of the Cool Pool
will be transferred from Golar to the separate shipping entity upon
formation. Those vessels not already contracted for 12-months or
more together with the Golar Tundra and the Golar Power vessel will
then be commercially managed by the Cool Pool.
The proposed spin-off of the 8 TFDE carriers in
the Golar fleet is anticipated to happen before the end of 2019,
subject to market conditions.
Golar Partners (a non-consolidated affiliate of
Golar LNG)
Full utilization of the FSRU Golar Igloo, an
improved daily rate in respect of the Golar Grand, recognition of a
day one gain on the FSRU Golar Freeze contract and hire at its full
daily rate, offset by interest rate swap losses, collectively
resulted in the Partnership reporting a 2Q net loss of $5.5
million.
The FSRU Golar Freeze completed its first full
quarter of operations under its new 15-year contract in Jamaica. As
the contract term is for the major part of the vessels remaining
economic life, US GAAP requires that it be accounted for as a
finance lease. This triggered the recognition of a 2Q $4.2 million
day one gain.
With respect to the Partnership's ships, Golar
Mazo remained idle throughout the quarter whilst the Golar Maria
achieved close to full utilization but at a substantially
discounted rate relative to 1Q. Despite an increase in the rate
receivable by the Golar Grand between May 2019 and May 2020,
revenue earned from the Partnerships ships was $3.7 million down on
1Q.
By virtue of its 50% interest in Hilli Episeyo's
common units, the Partnership is entitled to 50% of the net
earnings of Hilli Episeyo attributable to common unit holders.
Golar Partners received a $3.9 million dividend in 2Q as a
result.
A full quarter's contribution from both FSRU
Golar Igloo and FSRU Golar Freeze partly offset by reduced earnings
in respect of its carriers resulted in a solid improvement in a
distribution coverage ratio1 which increased from 1.01 in 1Q to
1.12 in 2Q. Based on current forecasts a further improved
distribution coverage ratio1 is expected for 3Q.
FLNG
FLNG Hilli Episeyo continues to achieve 100%
commercial uptime. The vessel recently exported its 25th cargo.
Discussions continue with field operator Perenco with respect to
increasing the vessel's utilization and potentially increasing the
overall duration of the contract term. The initial focus of
these discussions remains on utilization of train 3 and the
contract adjustments necessary to ensure that the export of
additional LNG at current prices is an attractive proposition for
all parties. We expect resolution of this by year-end.
The FLNG Gimi Conversion project continues on
target in Singapore. Seventy percent owned FLNG Gimi,
expected to cost $1.3 billion excluding financing costs, will
service the 20-year contract with BP offshore Mauritania and
Senegal, commencing 4Q 2022. Procurement of long lead items, vessel
life extension, removal of redundant equipment and fabrication of
the sponsors are being progressed.
On July 30, Golar together with Leviathan Joint
Venture Partners Noble Energy, Delek Drilling and Ratio Oil entered
into an Interim Project Development Agreement to assess the
viability of a Golar FLNG solution to support future development
phases of the Eastern Mediterranean Leviathan project. The initial
development phase of this world-class 620bcm field will supply
Middle East markets via existing pipeline infrastructure. The
Interim Project Development Agreement contemplates the potential
use of an FLNG solution to monetize subsequent expansion phases via
the export of LNG to global markets. Using design basis input from
the Leviathan Partners, Golar will assess the compatibility of its
existing FLNG Front End Engineering and Design study for an FLNG
vessel of up to 5mtpa. The Company believes that its generic mark
III newbuild solution will be suitable for this and other potential
projects under active discussion.
In addition, the Company has recently entered
into agreements and negotiations with a number of major oil and gas
companies to assess various opportunities globally for deploying
its generic FLNG vessels, which if concluded have the potential for
the counterparties to reach a final investment decision in 2020.
The Company has however decided against jointly developing the FLNG
vessel for the US Gulf Coast Delfin LNG project.
Golar Power (50/50 Golar/Stonepeak
Infrastructure Partners non-consolidated downstream joint
venture)
Pre-commissioning of the Sergipe power plant
continues. FSRU Golar Nanook is being hooked-up to its mooring and
first fire of the power station’s gas turbines is due in October.
Commissioning of the plant and gas supply systems is underway and
will progress over the coming 4-months. Although the overall
timetable is challenging, commercial acceptance in January, 2020
remains achievable.
License approvals for other projects in Brazil
are also making good progress. In Babitonga Bay, Santa Catarina,
Golar Power has received key government licences for an FSRU
terminal. An oil major is expected to use most of the FSRU
capacity to supply a power plant that Golar Power has the option to
invest in. A small amount of spare FSRU capacity would also
allow Golar Power to pursue other local downstream
opportunities. Similarly, in Barcarena, Para, the first major
licenses have been received that allow Golar Power to build both an
FSRU terminal and a power station. A major industrial user
would be the anchor tenant for this facility however significant
spare capacity would remain. Opportunities to utilize this
spare capacity include a potential power plant as well as
small-scale LNG distribution.
In respect of downstream LNG/diesel switching
opportunities, conversion of non-binding expressions of interest
into Gas Sales Agreements with customers in Brazil is progressing
well. The intention is to use both the storage, for breaking bulk,
and up to potentially 200 million mmbtu p.a. spare regas capacity
of the FSRU Golar Nanook. Golar Power is in advanced
discussions with Avenir Ltd for the provision of a 7,500 M3 LNG
carrier to provide downstream distribution of LNG around the coast
of Brazil. Access to trucking capacity has been secured and LNG
isotainers have been acquired. Successful development of these
opportunities can generate a material contribution to Golar Power's
earnings. The base case scenario now assumes that this will
take effect from mid-2020.
Golar has prompt FSRUs available to support both
projects. Once fully permitted the Babitonga and Bacarena terminals
together with spare capacity on the FSRU Nanook collectively puts
Golar Power in a strong position to win future power auctions, and
to distribute significant quantities of LNG locally.
Non-GAAP measures
Adjusted EBITDA: Adjusted
EBITDA is calculated by taking net income before interest, tax,
unrealized mark-to-market movements on the oil derivative
instrument, depreciation and amortization. We believe that the
exclusion of these items enables investors and other users of our
financial information to assess our sequential and year over year
performance and operating trends on a more comparable basis and is
consistent with management’s own evaluation of business
performance. Adjusted EBITDA is a non-GAAP financial measure and
should not be considered as an alternative to net (loss)/income or
any other indicator of Golar's performance calculated in accordance
with US GAAP. The table below reconciles net (loss) income, the
most directly comparable US GAAP measure, to Adjusted EBITDA.
Last Twelve Months Further Adjusted
EBITDA: Last Twelve Months Further Adjusted EBITDA
is calculated as Adjusted EBITDA for the last twelve months, less
one-off gains/(losses) for the last twelve months, less Golar
Partners’ share of Hilli Adjusted EBITDA (as defined below) for the
last twelve months. Management uses a trailing 12 month
approach to remove the impact of seasonality on our results.
In Last Twelve Months Further Adjusted EBITDA management has
removed a one-off gain relating to Golar Tundra claim monies as
this would not be expected to occur on a regular basis ($50
million), offset by an impairment for OneLNG and an impairment
associated with the Gandria. Management believes that the
definition of Last Twelve Months Further Adjusted EBITDA provides
relevant and useful information to investors. Last Twelve
Months Further Adjusted EBITDA is not intended to represent future
cash flows from operations or net income/ (loss) as defined by US
GAAP. Last Twelve Months Adjusted EBITDA is a non-GAAP financial
measure and should be seen as a supplement to and not a substitute
for our US GAAP measures of performance and the financial results
calculated in accordance with US GAAP and reconciliations from
these results should be carefully evaluated. The table below
reconciles Last Twelve Months Adjusted EBITDA to Last Twelve Months
Further Adjusted EBITDA.
Golar Partners’ share of Hilli Adjusted
EBITDA: Golar Partners’ share of Hilli Adjusted
EBITDA is defined as Golar Partners’ share of Golar Hilli LLC’s
(“Hilli LLC”) revenue and operating expenses before interest, tax,
depreciation and amortization. As we have retained control of
Hilli LLC we continue to consolidate its results on a line by line
basis. In order to calculate our proportionate share of Last Twelve
Months Further Adjusted EBITDA, management has removed the amount
attributable to Golar Partners. From a US GAAP perspective, we
recognize Golar Partners’ share of Hilli LLC within “net income
attributable to non-controlling interests”. This is a
non-GAAP financial measure and is not intended to represent future
cash flows attributable to Golar Partners. This measure should be
seen as a supplement to and not a substitute for our US GAAP
measures of performance. Refer to Golar Partners' earnings releases
for a reconciliation to the most comparable US GAAP measure:
http://www.golarlngpartners.com/investors/quarterly-reports.
|
2019 |
2019 |
2018 |
2018 |
2018 |
2018 |
2017 |
2017 |
(in thousands of $) |
Apr-Jun |
Jan-Mar |
Oct-Dec |
Jul-Sep |
Apr-Jun |
Jan-Mar |
Oct-Dec |
Jul-Sep |
Net (loss)/income attributable to Golar LNG
Limited |
(112,682 |
) |
(41,741 |
) |
(312,957 |
) |
66,212 |
|
36,319 |
|
(21,002 |
) |
3,823 |
|
(43,875 |
) |
Adjusted for: |
|
|
|
|
|
|
|
|
Net
financial expense |
37,804 |
|
33,244 |
|
52,653 |
|
37,770 |
|
20,083 |
|
13,291 |
|
(19,088 |
) |
7,150 |
|
Other
non-operating expenses |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
189 |
|
98 |
|
Income taxes |
176 |
|
205 |
|
627 |
|
156 |
|
490 |
|
(6 |
) |
435 |
|
423 |
|
Equity in net losses of affiliates |
26,970 |
|
12,899 |
|
154,089 |
|
(2,668 |
) |
4,674 |
|
1,541 |
|
6,348 |
|
5,907 |
|
Net income attributable to non-controlling interests |
24,297 |
|
24,257 |
|
2,770 |
|
31,000 |
|
16,839 |
|
12,605 |
|
11,092 |
|
7,401 |
|
Operating (loss)/income |
(23,435 |
) |
28,864 |
|
(102,818 |
) |
132,470 |
|
78,405 |
|
6,429 |
|
2,799 |
|
(22,896 |
) |
Adjusted
for: |
|
|
|
|
|
|
|
|
Unrealized loss/(gain) on oil derivative instrument |
27,630 |
|
(28,380 |
) |
195,740 |
|
(77,470 |
) |
(94,700 |
) |
(13,600 |
) |
(15,100 |
) |
— |
|
Depreciation and amortization |
28,121 |
|
28,163 |
|
28,295 |
|
28,528 |
|
20,457 |
|
16,409 |
|
16,585 |
|
17,385 |
|
Impairment of long-term assets |
7,347 |
|
34,250 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
Adjusted EBITDA |
39,663 |
|
62,897 |
|
121,217 |
|
83,528 |
|
4,162 |
|
9,238 |
|
4,284 |
|
(5,511 |
) |
|
|
|
|
|
|
|
|
|
Q1 and Q2 adjusted EBITDA |
102,560 |
|
— |
|
— |
|
— |
|
13,400 |
|
— |
|
— |
|
— |
|
Last
Twelve Months Adjusted EBITDA |
307,305 |
|
— |
|
— |
|
— |
|
12,173 |
|
— |
|
— |
|
— |
|
Last Twelve Months One-Off Gains/(Losses) |
(43,002 |
) |
— |
|
— |
|
— |
|
(18 |
) |
— |
|
— |
|
— |
|
Last
Twelve Months Golar Partners' share of Hilli Adjusted EBITDA |
(77,364 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
Last Twelve Months Further Adjusted EBITDA |
186,939 |
|
— |
|
— |
|
— |
|
12,155 |
|
— |
|
— |
|
— |
|
Contractual debt: Contractual debt
represents the Company’s actual debt obligations under our various
financing arrangements, including sale and leaseback debt. We
consolidate a number of lessor VIEs, which means that on
consolidation, Golar’s contractual debt under various sale and
leaseback facilities are eliminated and replaced with the lessor
VIE's debt. This is a non-GAAP financial measure and is not
intended to represent total debt in accordance with GAAP.
Refer to Appendix A for the detailed composition of our contractual
debt. Refer to the table below for a reconciliation from
total debt net of deferred finance charges, the most comparable US
GAAP measure, to contractual debt.
Adjusted net debt: The Company
consolidates a number of lessor VIEs, which means that on
consolidation, Golar’s contractual debt under various sale and
leaseback facilities are eliminated and replaced with the lessor
VIE's debt. Adjusted net debt is calculated by taking net debt
defined by GAAP line items and reversing out the lessor VIE debt
and restricted cash balances and replacing it with Golar’s
contractual debt. We believe this measure enables investors and
users of our financial information to assess our liquidity based on
our underlying debt obligations and aids comparability with our
competitors. This presentation is consistent with management’s view
of the business. Adjusted net debt is a non-GAAP financial measure
and should not be considered as an alternative to net debt or any
other indicator of Golar's performance calculated in accordance
with US GAAP. The table below reconciles net debt based to adjusted
net debt:
(in thousands of $) |
June 30, 2019 |
June 30, 2018 |
March 31, 2019 |
Net debt as calculated by GAAP |
|
|
|
Total debt (current and non-current) net of deferred finance
charges |
2,467,508 |
|
2,724,685 |
|
2,513,190 |
|
Less |
|
|
|
Cash and cash equivalents |
(139,834 |
) |
(375,067 |
) |
(212,673 |
) |
Restricted cash and short-term deposits - current and non-current
portion |
(405,586 |
) |
(452,318 |
) |
(477,598 |
) |
Net debt as calculated by GAAP |
1,922,088 |
|
1,897,300 |
|
1,822,919 |
|
VIE consolidation adjustment |
111,977 |
|
29,447 |
|
98,543 |
|
VIE restricted cash |
114,976 |
|
185,673 |
|
174,816 |
|
Deferred finance charges |
13,020 |
|
18,484 |
|
15,056 |
|
TRS restricted cash (1) |
96,763 |
|
62,547 |
|
86,050 |
|
Adjusted Net Debt |
2,258,824 |
|
2,193,451 |
|
2,197,384 |
|
(1) Restricted cash relating to the share
repurchase forward swap refers to the collateral required by the
bank with whom we entered into a total return equity swap.
(in thousands of $) |
June 30, 2019 |
June 30, 2018 |
March 31, 2019 |
Total debt (current and non-current) net of deferred finance
charges |
2,467,508 |
|
2,724,685 |
|
2,513,190 |
|
VIE consolidation adjustments |
111,977 |
|
29,447 |
|
98,543 |
|
Deferred finance charges |
13,020 |
|
18,484 |
|
15,056 |
|
Golar’s Contractual Debt |
2,592,505 |
|
2,772,616 |
|
2,626,789 |
|
Please see Appendix A for a capital repayment
profile for Golar’s contractual debt.
TCE: The average daily 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 dry-docking. 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 US 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
average daily TCE may not be comparable to that reported by other
entities. The following table reconciles our total operating
revenues, the most directly comparable US GAAP measure, to the
average daily TCE rate.
|
2019 |
2019 |
(in thousands of $) |
Apr-Jun |
Jan-Mar |
Total operating revenues |
96,745 |
|
114,287 |
|
Less: Liquefaction services revenue |
(54,524 |
) |
(54,524 |
) |
Less: Vessel and other management fees |
(5,141 |
) |
(5,453 |
) |
Time and voyage charter revenues |
37,080 |
|
54,310 |
|
Less: Voyage and commission expenses |
(14,327 |
) |
(16,140 |
) |
|
22,753 |
|
38,170 |
|
Calendar days less scheduled off-hire days |
933 |
|
971 |
|
Average daily TCE rate (to the closest $100) |
24,400 |
|
39,300 |
|
Contract Earnings Backlog:
Contract earnings backlog represents Golar's share of contracted
fee income for executed contracts less forecasted operating
expenses for these contracts. In calculating forecasted operating
expenditure, management has assumed that where there is an
Operating Services Agreement the amount receivable under the
services agreement will cover the associated operating costs. For
contracts which do not have a separate Operating Services
Agreement, management has made an assumption about operating costs
based on the current run rate. The only material application of
this methodology was to the Hilli Episeyo Earnings backlog where we
assumed operating costs of approximately $120,000 per day.
For consolidated subsidiaries where we do not
own 100% of the share capital, management has only included our
proportionate share of contract earnings. The material
application of this assumption was to Gimi (70% ownership) and
Hilli Episeyo (44.5% of the Common Unit entitlement). No contracted
fee income was included for Hilli T3 or the oil derivative.
For equity accounted investments (the
Partnership and Golar Power) we have included our proportionate
share of their contract earnings backlog under the same assumptions
that we have applied to our consolidated subsidiaries. In the
future when our contract earnings backlog actualizes, we will show
our share of their earnings net of interest and tax in one line in
the Income Statement "Equity in net earnings/(losses) of
affiliates". The Golar Power numbers are calculated based on an
exchange rate of 3.7BRL:1USD.
Management has not forecasted net income for
these initiatives as information to provide such a forward-looking
estimate is not available without unreasonable effort. Contract
earnings backlog is not intended to represent EBITDA or future
cashflows that will be generated from these projects nor is it
intended to represent the dividend income that will be payable to
Golar from our equity investments. This measure should be seen as a
supplement and not a substitute for our US GAAP measures of
performance.
Gross Contract Earnings
Backlog: Gross contract earnings backlog represents each
Golar entity's share of contracted fee income for executed
contracts less forecasted operating expenses for these contracts.
In calculating the forecasted operating expenditure, management has
applied the same methodology in preparing the "Contract Earnings
Backlog" measure above. Management has not forecasted net income
for these initiatives as information to provide such a
forward-looking estimate is not available without unreasonable
effort. Contract earnings backlog is not intended to
represent EBITDA or future cash flows that will be generated from
these projects nor is it intended to represent the dividend income
that will be payable to Golar from our equity investments. This
measure should be seen as a supplement and not a substitute for our
US GAAP measures of performance.
Distribution coverage ratio: As
defined in Golar LNG Partners LP form 6-K, section "Appendix A -
Non-GAAP Financial Measures and Definitions".
Forward Looking StatementsThis
press release contains forward-looking statements (as defined in
Section 21E of the Securities Exchange Act of 1934, as amended)
which reflects management’s current expectations, estimates and
projections about its operations. All statements, other than
statements of historical facts, that address activities and events
that will, should, could or may occur in the future are
forward-looking statements. Words such as “may,” “could,” “should,”
“would,” "will," “expect,” “plan,” “anticipate,” “intend,”
“forecast,” “believe,” “estimate,” “predict,” “propose,”
“potential,” “continue,” or the negative of these terms and similar
expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
other factors, some of which are beyond our control and are
difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such
forward-looking statements. You should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this press release. Unless legally required, Golar undertakes no
obligation to update publicly any forward-looking statements
whether as a result of new information, future events or otherwise.
Among the important factors that could cause actual results to
differ materially from those in the forward-looking statements
are:
- 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 (“Gimi GTA Project”);
- our inability to consummate the financing of the Gimi GTA
Project;
- 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;
- changes in our ability to obtain additional financing on
acceptable terms or at all;
- our inability to complete the TFDE shipping spin off;
- Golar Power's ability to successfully commission the Sergipe
power station project and related FSRU contract and to execute its
downstream LNG distribution plans;
- changes in our relationship with Golar Partners, Golar Power or
Avenir and the sustainability of any distributions they pay to
us;
- failure of our contract counterparties, including our joint
venture co-owners, to comply with their agreements with us or other
key project stakeholders;
- challenges by authorities to the tax benefits we previously
obtained under certain of our leasing agreements;
- 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;
- our ability to close potential future sales of additional
equity interests in our vessels, including the Hilli Episeyo, on a
timely basis or at all and our ability to contract the full
utilization of the Hilli Episeyo or other vessels and the benefits
that may to accrue to us as the result of any such
modifications;
- 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;
- 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;
- changes in our relationships with our counterparties, including
our major chartering parties;
- 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
acquisitions;
- changes in our ability to sell vessels to Golar Partners or
Golar Power;
- changes to rules and regulations applicable to LNG carriers,
FSRUs, FLNGs or other parts of the LNG supply chain;
- our inability to achieve successful utilization of our expanded
fleet or inability to expand beyond the carriage of LNG and
provision of FSRUs, FLNGs, and small-scale LNG infrastructure
particularly through our innovative FLNG strategy and our joint
ventures;
- actions taken by regulatory authorities that may prohibit the
access of LNG carriers, FSRUs, FLNGs or small-scale LNG vessels to
various ports;
- increases in costs, including, among other things, 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.
As a result, you are cautioned not to rely on
any forward-looking statements. Actual results may differ
materially from those expressed or implied by such forward-looking
statements. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise unless required by
law.
August 29, 2019The Board of DirectorsGolar LNG
LimitedHamilton, BermudaInvestor questions:Iain
Ross - Chief Executive Officer +44 207 063 7900Graham Robjohns -
Chief Financial Officer and Deputy Chief Executive Officer +44 207
063 7900Stuart Buchanan - Head of Investor Relations +44 207 063
7900
Golar LNG (NASDAQ:GLNG)
Historical Stock Chart
From Aug 2024 to Sep 2024
Golar LNG (NASDAQ:GLNG)
Historical Stock Chart
From Sep 2023 to Sep 2024