Golar reports Q2 Net income of $471.4 million, secured
increased capacity utilization for Hilli and added further shipping
earnings backlog1
Golar is pleased to announce the company's best
ever quarterly net income of $471.4 million, inclusive of a gain on
disposal of Hygo Energy Transition Limited and Golar LNG Partners
LP to New Fortress Energy Inc (“NFE"), where we have recorded our
NFE shareholding at $35.37/share. The gain on disposal proves that
Golar is building shareholder value in our asset portfolio
significantly in excess of book values. Golar will seek to continue
to simplify its group structure to crystalize value.
On July 20, 2021 we concluded an agreement to
increase capacity utilization for the FLNG Hilli Episeyo ("Hilli"),
unlocking embedded value by utilizing more of Hilli’s 2.4 million
tons of liquefaction capacity. Adding to our Brent oil exposure,
the innovative TTF1 linked tolling fee for the incremental volumes
delivers on our announced strategy to increase our upstream gas
exposure. Based on TTF1 forward prices at the time of announcement
and assuming Perenco exercise their option for an incremental 0.4
million tons/year from 2023-2026, the increase in capacity
utilization will add around $113 million of incremental earnings
backlog1 for Hilli on TTF1 forward curves, or $373 million if the
August 6, 2021 spot TTF1 price is assumed to prevail over the same
timeframe. The incremental capacity utilization will require no
capital expenditure from Golar and minimal adjustments to operating
costs, hence almost all cash generated from the increased
utilization will be free cash flow1, of which Golar has an 86.9%
economic interest. The increase in oil prices has also increased
Golar’s earnings from Hilli through the Brent oil related tariff.
Hilli is generating an incremental $3.0 million of Adjusted EBITDA
for every US dollar the Brent oil price is above $60/ barrel, of
which Golar has an 89.1% economic interest.
Further progress has been made on Golar’s
announced initiative to increase its gas price exposure by using
our FLNG technology to increase our presence upstream in the LNG
value chain. We have expanded our upstream team and are currently
exploring several fields already producing associated gas, as well
as stranded gas opportunities.
On the tolling side of our FLNG business we
continue to work with existing and prospective clients on
attractive growth projects. These are significant infrastructure
investments for our clients that require, amongst other
prerequisites, regulatory approvals and supporting infrastructure.
These, rather than construction of the FLNG itself, are often the
key drivers of a project timeline. The increasing focus on ESG,
where gas is seen as a cleaner energy source, together with current
and forward commodity prices are however helping speed up upstream
developments. Specific commercial and technical discussions have
taken place with an existing client for use of a five million ton
Golar Mark III new building design.
The shipping business also benefits from higher
gas prices and regional price differences. Longer-term employment
opportunities at attractive rates are now available. Golar recently
fixed one of its vessels for five years. Having completed the sale
of Hygo Energy Transition Limited ("Hygo") and Golar LNG Partners
LP ("Golar Partners"), separating the shipping and FLNG businesses
represents the final step in Golar’s group simplification process.
The announced $102 million reduction in debt in return for an
upfront payment of $60 million in respect of four ships, increasing
LNG asset values, stronger rates, few publicly listed LNG shipping
pure plays, increasing spot freight exposure, and longer-term
structural factors increasingly support the attractiveness of
shipping as a standalone business.
Golar expects a material improvement in cash
generation over the next two years based on the strong trend seen
in the LNG shipping market, the increased utilization of Hilli, the
higher oil and gas price environment and the commencement of the
Gimi contract in 2023. We see great opportunities to use Golar’s
unique FLNG technology and operational track record to create
significant shareholder value in the years to come. We believe that
this momentum, which is underpinned by higher LNG prices, is
fundamentally supported by LNGs role as a transition fuel, with its
substantial environmental benefits in reducing CO2, SOX and NOX
emissions versus coal and oil.
Financial Summary
(in thousands of $) |
Q2 2021 |
Q2 2020 |
% Change |
YTD 2021 |
YTD 2020 |
% Change |
|
|
|
|
|
|
|
Total
operating revenues |
104,287 |
102,242 |
2% |
230,114 |
224,801 |
2% |
Adjusted
EBITDA |
67,026 |
67,150 |
—% |
144,638 |
143,358 |
1% |
Net
income/(loss) attributable to Golar LNG Ltd |
471,433 |
(155,634) |
(403)% |
496,797 |
(259,881) |
(291)% |
Golar's share of contractual net debt1 |
1,979,240 |
2,088,371 |
(5)% |
1,979,240 |
2,088,371 |
(5)% |
Q2 highlights and recent
events
Financial and corporate:
- Net income of $471.4 million and adjusted EBITDA of $67.0
million for the quarter.
- $574.4 million net income from discontinued operations
recognized on sale of Hygo and Golar Partners to NFE.
- Carrying value of our NFE shares as of June 30 equivalent to
$35.37 per share.
- 2.0 million Golar shares repurchased to date at a cost of $24.5
million. The repurchased shares have since been repurposed, and the
total number of outstanding shares in the Company as of August 8,
2021 is 108.2 million.
- One-off debt payment of $60 million made in July resulting in
cash flow net savings of $42 million and a total reduction to
Golar's remaining LNG carrier related debt principal of $102
million.
- $65 million scheduled draw down against FLNG Gimi debt
facility. Total of $410 million per Q2 2021.
- Golar Tundra debt facility extended to June 2022.
- Received term sheets from key relationship lenders for new and
replacement debt facilities in excess of $500 million with an
average cost below 300bps that can release a minimum of $250
million of additional liquidity.
- Published ESG report including audited emissions data and
ambitious performance targets.
FLNG:
- FLNG Hilli offloaded 59th cargo, with 100% commercial uptime
maintained.
- Agreed increase in 2022 capacity utilization of Hilli together
with new option, pending results of drilling campaign, for further
increase of Train 3 utilization from 2023.
- FLNG Gimi conversion project 72% technically complete - on
track and on budget. 10.7 million man-hours have now been worked.
Fifth and final drydock completed on schedule.
- Mark III FEED study complete. Pricing and payment term
discussions for identified opportunity initiated.
- Initiated due diligence on multiple prospects for integrated
FLNG projects.
Shipping:
- Q2 2021 average daily Time Charter Equivalent (“TCE”)1 earnings
of $46,700 for the fleet inclusive of loss of hire insurance
proceeds receivable.
- The TFDE1 TCE1 inclusive of loss of hire insurance proceeds for
the quarter was $48,500.
- Utilization at 98%, in line with Q1 2021 and up on the 93%
realized in Q2 2020.
- Fixed an LNG carrier on a five-year charter commencing in
2022.
- Revenue backlog1 of $259 million as at June 30, 2021.
Outlook
FLNG:
The contractual Brent Oil linked component of
Hilli's first 1.2 million tons of annual production generates
incremental cashflows of approximately $3.0 million per annum for
every dollar the Brent oil price is above $60/barrel, up to an
agreed ceiling. This would generate an additional $34 million of
annual realized gain on oil derivative instruments assuming the
Brent oil price on August 6, 2021 is sustained. Together with the
last 12-months of Adjusted EBITDA from FLNG Hilli tolling services
and inclusive of the expected Adjusted EBITDA from the increased
capacity utilization in 2022, FLNG Hilli’s consolidated 2022
earnings would be around $225 million, assuming current oil and gas
prices and no changes to existing accounting treatment. Further
upside to Hilli's earnings from 2023 can be expected should
Perenco’s 2021 drilling campaign prove successful.
Golar's pro-rata earnings backlog1 from FLNG
remains unchanged at $3.4 billion despite quarterly amortization.
This does not include potential additional backlog associated with
Perenco/SNH exercising their option to increase Hilli production
from 2023.
We expect to make significant progress on new
tolling arrangement FLNG projects as well as integrated gas
projects over the next 6-12 months. The most promising integrated
gas projects currently under review are in West Africa and would
utilize a Mark I FLNG solution. For integrated projects we target a
combination of fixed price off-take and merchant sales. Fixed price
off-take will be used to secure attractive financing and reduce the
break-even of remaining open capacity. The open capacity will then
be sold on a merchant basis to take advantage of LNG commodity
price volatility.
LNG Shipping:
Based on fixtures to date Golar currently
expects a Q3 TFDE1 TCE1 of around $47,000 per day. Seasonally
strong LNG prices continue to be sustained by supply disruptions, a
demand recovery in Asia, and strong demand in Europe where
inventories remain historically low. As with LNG prices, vessel
spot rates also remain counter-seasonally strong and one-year time
charter rates remain above spot rates, signaling higher rates
ahead. The term market is also expected to remain active however
the lack of available ships in 2021 means that the focus has
shifted to 2022. Most of the order book is now committed and
charterers are increasingly focused on securing access to high
quality vessels already on the water. Both rates and tenor are
increasing. Golar expects to benefit as its exposure to this
improved market increases. Most of the current contracts were fixed
in 2020 when the market was softer than the current market and what
we expect for 2022.
Compliance with recently approved environmental
regulations from 2023 will mainly impact steam carriers that
account for 254 of the 607 LNG carriers on the water. The most
viable compliance option for those carriers is to slow down,
however some may not be viable to trade at all. The current order
book therefore looks increasingly inadequate. Shipyards are busy
with significant ordering activity in other shipping classes and
steel prices have also increased. Newbuild prices are rising as a
result. Shipyards are reported to be quoting above $210 million for
LNG newbuilds, up from $185-$190 million in recent years. Rising
asset values should benefit Golar's TFDE fleet. Of the limited
number of speculative carriers ordered in 2021, most originate from
owners exercising pre-existing options at attractive prices before
they expire. Shipping has in recent years contributed negatively to
Golar’s results. Supported by recent long-term fixtures and the
strong improvement in the underlying market, the Company now
expects materially positive contributions to the Groups results
from shipping over the years ahead.
Corporate:
With $1.0 billion of unrestricted cash and
public securities on hand, Golar is well positioned to refinance
its convertible bond, targeted during 2H 2021, and to fund FLNG
growth ambitions. We have received and are currently evaluating
attractive term sheets from key relationship banks totaling in
excess of $500 million that can release at least $250 million of
incremental liquidity. We will also remain sensitive to the
absolute and relative share prices of Golar and NFE when
considering refinancing alternatives and funding of growth
projects. The carrying value of our NFE investment as of June 30,
2021 is equivalent to $35.37 per NFE share. Quarterly changes in
the fair value of shares held will be recognized in net income
under Other non-operating income/(losses).
Golar is, following the Hygo transaction, a 8.9%
shareholder in NFE, and the lock-up on Golar’s shareholding in NFE
expired on July 15. We are disappointed with the share price
performance of NFE since we announced the Hygo and GMLP
transactions on January 13. However, we expect to see strong
earnings growth for NFE as their strategically important terminals
ramp up LNG volumes, and their jack-up FLNG technology delivers. We
continue to work constructively with NFE in our combined efforts to
industrialize the FLNG concept.
Favorable market fundamentals across our
business segments support the next step of the Golar group
simplification process and we have re-engaged initiatives to
separate our shipping and FLNG divisions.
Financial Review
Business Performance:
|
2021 |
2021 |
|
Apr-Jun |
Jan-Mar |
(in thousands of $) |
Shipping |
FLNG |
Corporate and other |
Total |
Shipping |
FLNG |
Corporate and other |
Total |
Total operating revenues |
41,833 |
|
55,737 |
|
6,717 |
|
104,287 |
|
62,866 |
|
54,397 |
|
8,564 |
|
125,827 |
|
Vessel operating expenses |
(15,001) |
|
(13,745) |
|
(2,682) |
|
(31,428) |
|
(15,901) |
|
(12,301) |
|
(2,499) |
|
(30,701) |
|
Voyage, charterhire & commission expenses |
(2,072) |
|
(150) |
|
(25) |
|
(2,247) |
|
(7,317) |
|
(150) |
|
(16) |
|
(7,483) |
|
Administrative expenses |
(117) |
|
(185) |
|
(9,768) |
|
(10,070) |
|
(136) |
|
(143) |
|
(8,119) |
|
(8,398) |
|
Project development (expenses)/income |
— |
|
(745) |
|
1,484 |
|
739 |
|
— |
|
— |
|
(1,633) |
|
(1,633) |
|
Other operating income |
2,770 |
|
— |
|
— |
|
2,770 |
|
— |
|
— |
|
— |
|
— |
|
Realized gains on oil derivative instrument (1) |
— |
|
2,975 |
|
— |
|
2,975 |
|
|
|
|
— |
|
Adjusted EBITDA |
27,413 |
|
43,887 |
|
(4,274) |
|
67,026 |
|
39,512 |
|
41,803 |
|
(3,703) |
|
77,612 |
|
(1) The line item "Realized and unrealized gain
/(loss) on oil derivative instrument" in the Condensed Consolidated
Statements of Operations relating to income from the Hilli
Liquefaction Tolling Agreement is split into, "Realized gains on
oil derivative instrument" and "Unrealized gain/(loss) on oil
derivative instrument". The unrealized component represents a
mark-to-market gain of $70.6 million (March 31, 2021: $10.6 million
gain and June 30, 2020: $11.8 million loss) on the embedded oil
derivative, which represents the estimate of expected receipts
under the remainder of the Brent oil linked clause of the Hilli
Liquefaction Tolling Agreement. The realized component amounts to
$3.0 million (March 31, 2021: $nil and June 30, 2020: $nil) and
represents the income in relation to the Hilli Liquefaction Tolling
Agreement receivable in cash.
|
2020 |
|
Apr-Jun |
(in thousands of $) |
Shipping |
FLNG |
Corporate and other |
Total |
Total operating revenues |
42,587 |
|
54,524 |
|
5,131 |
|
102,242 |
|
Vessel operating expenses |
(11,293) |
|
(13,077) |
|
127 |
|
(24,243) |
|
Voyage, charterhire & commission expenses |
(1,539) |
|
— |
|
— |
|
(1,539) |
|
Administrative expenses |
(520) |
|
(288) |
|
(7,786) |
|
(8,594) |
|
Project development expenses |
(53) |
|
(266) |
|
(929) |
|
(1,248) |
|
Other operating income |
532 |
|
— |
|
— |
|
532 |
|
Adjusted EBITDA |
29,714 |
|
40,893 |
|
(3,457) |
|
67,150 |
|
Golar reports today Q2 Adjusted EBITDA of $67.0
million compared to $77.6 million in Q1.
Total operating revenues decreased from $125.8
million in Q1 to $104.3 million in Q2, partially mitigated by a
decrease in voyage, charter hire and commission expenses, from $7.5
million in Q1 to $2.2 million in Q2. Of the $21.5 million decrease
in total operating revenues, $21.1 million was attributable to a
seasonally weaker shipping performance.
Revenue from shipping, net of voyage,
charterhire and commission expenses was $39.8 million and decreased
by $15.7 million from $55.5 million in Q1. The quarter began with
quoted TFDE1 carrier headline spot rates at around $33,000 per day
and ended with rates at around $68,000 per day. Although
commercial terms defied typical seasonal patterns by steadily
improving as the quarter progressed, average spot rates were still
lower than the seasonally stronger Q1 when they reached a record
high. As a result, revenue from Golar’s spot and index-linked
charters was lower than Q1. Full fleet TCE1 earnings excluding loss
of hire revenue receivable decreased from $61,700 in Q1 to $43,700
in Q2 2021, in line with Q2 2020.
As a result of overproduction during the
quarter, operating revenues from the Hilli, including base tolling
fees and amortization of pre-acceptance amounts recognized,
increased from $54.4 million in Q1 to $55.7 million in Q2.
Rising freight and logistics costs for supplies
and crew contributed to a $0.7 million increase in vessel operating
expenses from $30.7 million in Q1 to $31.4 million in Q2.
Administrative expenses increased by $1.7 million to $10.1 million
primarily as a result of one-off redundancy costs from an overhead
streamlining exercise. Netting off previously incurred project
costs associated with closing the Hygo and Golar Partners sales
against the gain on their disposal resulted in $0.7 million of
project development income in Q2.
The Brent Oil linked component of Hilli's fees
generates additional annual operating cash flows of approximately
$3.0 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. As a result of rising prices, a $3.0 million realized
gain on the oil derivative instrument was recorded in Q2.
An ongoing loss of hire claim in respect of a
previous mechanical failure on board one of the carriers accounts
for the $2.8 million of shipping related Other operating income in
Q2.
Net Income Summary:
|
2021 |
(in thousands of $) |
Apr-Jun |
Jan-Mar |
Adjusted EBITDA |
67,026 |
|
77,612 |
|
Depreciation and amortization |
(26,493) |
|
(26,506) |
|
Unrealized gain on oil derivative instrument |
70,590 |
|
10,600 |
|
Other
non-operating losses |
(158,125) |
|
— |
|
Interest
income |
27 |
|
34 |
|
Interest
expense |
(14,467) |
|
(14,546) |
|
(Loss)/gains on derivative instruments |
(6,869) |
|
23,351 |
|
Other
financial items, net |
607 |
|
(310) |
|
Income
taxes |
(156) |
|
(257) |
|
Equity
in net income/(losses) of affiliates |
839 |
|
(682) |
|
Net
income/(loss) from discontinued operations |
574,356 |
|
(6,192) |
|
Net income attributable to non-controlling interests |
(35,902) |
|
(37,740) |
|
Net income attributable to Golar LNG Limited |
471,433 |
|
25,364 |
|
In Q2 Golar generated $471.4 million of net
income, compared to Q1 net income of $25.4 million.
Depreciation and amortization, at $26.5 million
was in line with the prior quarter.
The mark-to-market fair value of the Hilli Brent
oil linked derivative asset increased by $70.6 million during the
quarter, with a corresponding unrealized gain of the same amount
recognized in the income statement. The fair value increase was
driven by an upward movement in the expected future market price
for Brent Oil. The spot price for Brent Oil increased from $63.54
per barrel on March 31, 2021 to $75.13 on June 30, 2021.
After netting off project costs associated with
closing the sales of Hygo and Golar Partners to NFE and discounting
for the effects of a six-month holding period restriction, net
income from discontinued operations of $574.4 million was
recognized on April 15. A decline in the NFE share price between
April 15 and June 30 resulted in the subsequent recognition of an
unrealized $86.7 million loss reflecting fair value adjustments,
included in Other non-operating losses.
Golar has booked a provision of $73.3 million in
Q2 through Other non-operating losses following progress in
continuing discussions with UK tax authorities (“HMRC”) to move
towards the settlement of a long-running tax dispute, as previously
reported.
Both interest income and interest expense were
in line with the prior quarter. A decrease in swap rates connected
with the Gimi facility contributed to a $6.9 million loss on
derivative instruments in Q2, compared to a $23.4 million gain in
Q1.
Equity in net income of affiliates of $0.8
million is derived from Golar's 23% investment in small-scale
services provider Avenir LNG, and 50% stake in Egyptian affiliate,
ECGS.
On May 7 NFE declared a dividend of $0.10 per
Class A Common Share with a record date of June 1. Dividend income
of $1.9 million was therefore recognized in Q2 (included within
Other non-operating losses), with the cash being received in early
Q3.
Net losses attributable to non-controlling
interests relate to the Hilli, the Gimi and the finance lease
lessor VIEs.
Financing and Liquidity:
Our cash position as at June 30, 2021 was $338.5
million. This was made up of $207.3 million of unrestricted cash
and $131.3 million of restricted cash. Restricted cash includes
$51.2 million relating to lessor-owned VIEs and $60.7 million
relating to the Hilli Letter of Credit ("LC"). Having operated with
100% commercial uptime since acceptance three years ago, Golar will
now seek to secure the release of more of the $60.7 million LC
ahead of schedule.
Prior to closing the NFE transactions Golar
agreed to make certain amendments to the sale and leaseback
arrangements for four of its LNG carriers, including a one off $60
million prepayment in July, evenly spread across those four
vessels. In return for the prepayment, an increased daily debt
service and a resulting accelerated lease profile on two of the
vessels, and an obligation to repurchase the other two a year
earlier in April 2023, the lease counterparty agreed a $42 million
net saving to Golar resulting in a total reduction to Golar's
remaining LNG carrier related debt principal of $102 million.
The $107.6 million Golar Tundra facility put
option has been extended to January 2022 if the convertible bonds
are not refinanced by that date, otherwise the put option matures
in June 2022. Golar has also received indicative terms for an
alternative refinancing of the Golar Tundra facility.
Inclusive of $9.8 million of capitalized
interest, $128.9 million was invested in FLNG Gimi during the
quarter, taking the total Gimi Asset under development balance as
at June 30, 2021 to $831.5 million. Of this, $410.0 million had
been drawn against the $700 million debt facility. Both the
investment and debt drawn to date are reported on a 100% basis.
Based on cash spent as at June 30, 2021, Golar's expected share of
contributions to remaining conversion costs up to the point that
commissioning hire becomes receivable in 2023 is approximately $125
million.
Included within the $1,323.1 million current
portion of long-term debt and short-term debt as at June 30, 2021,
is the December 2021 maturing $100.0 million credit facility,
$391.8 million in respect of the February 2022 maturing convertible
bond, and $815.1 million relating to lessor-owned VIE subsidiaries
that Golar is required to consolidate in connection with nine sale
and leaseback financed vessels, including the Hilli.
Corporate and Other Matters:
As at June 30, 2021, there were 110.2 million
shares outstanding inclusive of 1.9 million shares repurchased at a
cost of $23.9 million. There were also 2.4 million outstanding
stock options with an average price of $19.52 and 0.6 million
unvested restricted stock units awarded. Subsequent to the quarter
end, a further 0.1 million shares were repurchased at a cost of
$0.6 million. The 2.0 million repurchased shares have since been
repurposed, and the outstanding share count as of August 8, 2021 is
108.2 million. Of the initial $50 million approved share buyback
scheme, $25.5 million remains available for further repurchases,
which are considered particularly attractive at current price
levels.
Golar’s Annual General Meeting will be held on
August 10, 2021 in Bermuda. The record date for voting was June 16,
2021.
Non-GAAP measures
In addition to disclosing financial results in
accordance with U.S. generally accepted accounting principles (US
GAAP), this earnings release and the associated investor
presentation contains references to the non-GAAP financial measures
which are included in the table below. We believe these non-GAAP
financial measures provide investors with useful supplemental
information about the financial performance of our business, enable
comparison of financial results between periods where certain items
may vary independent of business performance, and allow for greater
transparency with respect to key metrics used by management in
operating our business and measuring our performance.
These non-GAAP financial measures should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP. Non-GAAP measures are not
uniformly defined by all companies, and may not be comparable with
similarly titled measures and disclosures used by other companies.
The reconciliations from these results should be carefully
evaluated.
Non-GAAP measure |
Closest equivalent US GAAP measure |
Adjustments to reconcile to primary financial statements
prepared under US GAAP |
Rationale for adjustments |
Performance measures |
Average daily TCE |
Total
Operating revenues |
-Liquefaction services revenue -Vessel and other management
fees -Voyage and commission expenses The above total is
then divided by calendar days less scheduled off-hire days, which
is also otherwise known as total operating days of the fleet. |
Measure of the average daily net revenue performance of a
vessel. Standard shipping industry performance measure used
primarily to compare period-to-period changes in the vessel’s net
revenue performance despite changes in the mix of charter types
(i.e. spot charters, time charters and bareboat charters) under
which the vessel may be employed between the periods. Assists
management in making decisions regarding the deployment and
utilization of its fleet and in evaluating financial performance.
|
Liquidity measures |
Contractual net debt |
Net debt based on GAAP measures: Total debt (current
and non-current), net of deferred finance charges - Cash and
cash equivalents - Restricted cash and short-term deposits
(current and non-current) |
Net debt based on GAAP measures+ Restricted cash and short-term
deposits (current and non-current)+ VIE consolidation adjustment+
Deferred finance charges |
We consolidate a number of lessor VIEs for our sale and leaseback
facilities. This means that on consolidation, our contractual debt
is eliminated and replaced with the lessor VIEs’ debt.
Contractual net debt represents our debt obligations under
our various financing arrangements before consolidating the lessor
VIEs net of free cash. Management believe that these
adjustments enable investors and users of our financial
statements to assess our liquidity based on our underlying
contractual obligations and aids comparability with our
competitors. |
Contractual debt |
Total debt (current and non-current), net of deferred finance
charges |
+ VIE Consolidation Adjustment + Deferred Finance Charges |
We consolidate a number of lessor VIEs for our sale and leaseback
facilities. This means that on consolidation, our contractual debt
is eliminated and replaced with the lessor VIEs’ debt.
Contractual debt represents our debt obligations under our
various financing arrangements before consolidating the lessor
VIEs. The measure enables investors and users of our
financial statements to assess our liquidity and the split of our
debt (current and non-current) based on our underlying contractual
obligations. Furthermore, it aids comparability with competitors.
|
Reconciliations - Performance Measures
(Average Daily TCE Rate)
|
2021 |
2021 |
2020 |
(in thousands of $) |
Apr-Jun(1) |
Jan-Mar |
Apr-Jun |
Total operating revenues |
104,287 |
|
125,827 |
|
102,242 |
|
Less: Liquefaction services revenue |
(55,737) |
|
(54,397) |
|
(54,524) |
|
Less: Vessel and other management fees |
(6,717) |
|
(8,564) |
|
(5,131) |
|
Time and voyage charter revenues |
41,833 |
|
62,866 |
|
42,587 |
|
Less: Voyage and commission expenses |
(2,072) |
|
(7,358) |
|
(1,539) |
|
|
39,761 |
|
55,508 |
|
41,048 |
|
Calendar days less scheduled off-hire days |
910 |
|
900 |
|
910 |
|
Average daily TCE rate (to the closest $100) |
43,700 |
|
61,700 |
|
45,100 |
|
|
|
|
|
Adjustment to operating revenue and voyage and commission
expenses: |
|
|
|
Less: Steam LNG carrier time and voyage charter revenues |
(2,849) |
|
(2,841) |
|
(3,821) |
|
Add: Steam LNG carrier voyage and commission expenses |
50 |
|
56 |
|
29 |
|
|
36,962 |
|
52,723 |
|
37,256 |
|
Adjustment to calendar days: |
|
|
|
Less: Steam LNG carrier calendar days less scheduled off-hire
days |
(91) |
|
(90) |
|
(91) |
|
Net calendar days less scheduled off-hire |
819 |
|
810 |
|
819 |
|
|
|
|
|
Average daily TCE rate for TFDE fleet (to the closest
$100) |
45,100 |
|
65,100 |
|
45,500 |
|
(1) The adjusted average daily TCE for our
entire fleet and our TFDE fleet for the period from April 1 to June
30, 2021, had we included the $2.7 million loss of hire insurance
claim from Golar Ice, which is presented within Other operating
income in the condensed consolidated statements of income/(loss),
would have been $46,700 and $48,500, respectively.
Reconciliations - Liquidity Measures
(Contractual Net Debt)
(in thousands of $) |
June 30, 2021 |
March 31, 2021 |
June 30, 2020 |
Net debt as calculated by GAAP |
|
|
|
Total debt (current and non-current) net of deferred finance
charges |
2,379,581 |
|
2,373,882 |
|
2,544,865 |
|
Less |
|
|
|
Cash and cash equivalents |
(207,272) |
|
(149,936) |
|
(128,661) |
|
Restricted cash and short-term deposits - current and non-current
portion |
(131,268) |
|
(148,959) |
|
(136,535) |
|
Net debt as calculated by GAAP |
2,041,041 |
|
2,074,987 |
|
2,279,669 |
|
VIE consolidation adjustment |
316,894 |
|
295,466 |
|
255,129 |
|
Restricted cash and short-term deposits - current and non-current
portion |
131,268 |
|
148,959 |
|
39,987 |
|
Deferred finance charges |
26,417 |
|
27,668 |
|
31,063 |
|
Total Contractual Net Debt |
2,515,620 |
|
2,547,080 |
|
2,605,848 |
|
Less: Golar Partners', Keppel's and B&V's share of the Hilli
contractual debt |
(413,380) |
|
(422,529) |
|
(449,977) |
|
Less: Keppel's share of the Gimi debt |
(123,000) |
|
(103,500) |
|
(67,500) |
|
GLNG's share of Contractual Net Debt |
1,979,240 |
|
2,021,051 |
|
2,088,371 |
|
Reconciliations - Liquidity Measures
(Contractual Debt)
(in thousands of $) |
June 30, 2021 |
March 31, 2021 |
June 30, 2020 |
Total debt (current and non-current) net of deferred finance
charges |
2,379,581 |
|
2,373,882 |
|
2,544,865 |
|
VIE consolidation adjustments |
316,894 |
|
295,466 |
|
255,129 |
|
Deferred finance charges |
26,417 |
|
27,668 |
|
31,063 |
|
Total Contractual Debt |
2,722,892 |
|
2,697,016 |
|
2,831,057 |
|
Less: Golar Partners', Keppel's and B&V's share of the Hilli
contractual debt |
(413,380) |
|
(422,529) |
|
(449,977) |
|
Less: Keppel's share of the Gimi debt |
(123,000) |
|
(103,500) |
|
(67,500) |
|
GLNG's share of Contractual Debt |
2,186,512 |
|
2,170,987 |
|
2,313,580 |
|
Please see Appendix A for a capital repayment
profile for Golar’s contractual debt.Segment
InformationIn our 2020 Annual Report, we changed the way
in which we report and measure our reportable segments. The main
driver of the change is the alignment of presentation and contents
of financial information provided to our chief operating decision
maker (our Board of Directors), required to allocate resources,
evaluate and manage both our standalone operating segments and our
overall business performance. The key impacts are our segments'
profit measure is based on Adjusted EBITDA and across our four
reportable segments; Shipping, FLNG, Power and Corporate and other.
Refer to note 6 to our consolidated financial statements filed with
our 2020 Annual Report, for additional details.
In January 2021, following the board of
directors' approvals of the GMLP and Hygo mergers with NFE, we
determined that our share of the net earnings/(losses) in Golar
Partners and Hygo and the respective carrying values of our
investments have to be presented as profit/(loss) from discontinued
operations and assets held for sale, respectively. Consequently,
for the six months ended June 30, 2021, we ceased to consider Power
as a reportable segment. Management has therefore concluded that we
provide and operate three distinct reportable segments as
follows:
- Shipping – This segment is based on the
business activities of the transportation of LNG carriers. We
operate and subsequently charter out LNG carriers on fixed terms to
customers.
- FLNG – This segment is based on the business
activities of FLNG vessels or projects. We convert LNG carriers
into FLNG vessels and subsequently charter them out to customers.
We currently have one operational FLNG, the Hilli, one undergoing
conversion into a FLNG, the Gimi and one LNG carrier earmarked for
conversion, the Gandria.
- Corporate and other – This segment is based on
the business activities of vessel management and administrative
services and our corporate overhead costs.
|
Q2 2021 |
(in thousands of $) |
Shipping |
FLNG |
Corporate and other |
Total |
Total operating revenues |
41,833 |
|
55,737 |
|
6,717 |
|
104,287 |
|
Vessel operating expenses |
(15,001) |
|
(13,745) |
|
(2,682) |
|
(31,428) |
|
Voyage, charterhire & commission expenses |
(2,072) |
|
(150) |
|
(25) |
|
(2,247) |
|
Administrative expenses |
(117) |
|
(185) |
|
(9,768) |
|
(10,070) |
|
Project development income/(expenses) |
— |
|
(745) |
|
1,484 |
|
739 |
|
Other operating income |
2,770 |
|
— |
|
— |
|
2,770 |
|
Realized gains on oil derivative instrument |
— |
|
2,975 |
|
— |
|
2,975 |
|
Adjusted EBITDA |
27,413 |
|
43,887 |
|
(4,274) |
|
67,026 |
|
|
Q1 2021 |
(in thousands of $) |
Shipping |
FLNG |
Corporate and other |
Total |
Total operating revenues |
62,866 |
|
54,397 |
|
8,564 |
|
125,827 |
|
Vessel operating expenses |
(15,901) |
|
(12,301) |
|
(2,499) |
|
(30,701) |
|
Voyage, charterhire & commission expenses |
(7,317) |
|
(150) |
|
(16) |
|
(7,483) |
|
Administrative expenses |
(136) |
|
(143) |
|
(8,119) |
|
(8,398) |
|
Project development expenses |
— |
|
— |
|
(1,633) |
|
(1,633) |
|
Adjusted EBITDA |
39,512 |
|
41,803 |
|
(3,703) |
|
77,612 |
|
|
Q2 2020 |
(in thousands of $) |
Shipping |
FLNG |
Corporate and other |
Total |
Total operating revenues |
42,587 |
|
54,524 |
|
5,131 |
|
102,242 |
|
Vessel operating expenses |
(11,293) |
|
(13,077) |
|
127 |
|
(24,243) |
|
Voyage, charterhire & commission expenses |
(1,539) |
|
— |
|
— |
|
(1,539) |
|
Administrative expenses |
(520) |
|
(288) |
|
(7,786) |
|
(8,594) |
|
Project development expenses |
(53) |
|
(266) |
|
(929) |
|
(1,248) |
|
Other operating income |
532 |
|
— |
|
— |
|
532 |
|
Adjusted EBITDA |
29,714 |
|
40,893 |
|
(3,457) |
|
67,150 |
|
Non-US GAAP Measures Used in
Forecasting Revenue Backlog: Revenue
backlog is defined as the minimum contracted daily charter rate for
each vessel multiplied by the number of scheduled hire days for the
remaining contract term. Revenue backlog is not intended to
represent EBITDA or future cashflows that will be generated from
these contracts. This measure should be seen as a supplement and
not a substitute for our US GAAP measures of performance.
Earnings Backlog: Earnings
backlog represents the 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, therefore revenue from operating
services agreements is excluded. 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
Earnings backlog where we assumed operating costs of approximately
$144kpd.
Free cash flow: Represents
operating cash outflows remaining after funding maintenance and
conversion of our vessels. In the case of Hilli T3, this is
forecast by deducting incremental costs from incremental revenues
as a result of producing an additional 200,000 tons of LNG in 2022
and 400,000 tons of LNG per annum between 2023 and the end of the
current contract in 2026. Incremental revenues and costs assume
that the charterer exercises their option to increase 2023-2026
production. The costs are primarily operating in nature whilst
revenues are calculated with reference to the TTF forward prices as
set out in the press release on July 20, 2021.
Definitions
TFDE: Tri-fuel Diesel Electric engine
FSRU: Floating Storage Regasification
UnitCAGR: Compound Annual Growth
RateTTF: Dutch Title Transfer Facility
Forward Looking Statements
This 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 “believe,”
“anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,”
“potential,” “will,” “may,” “should,” “expect,” “may,” “could,”
“would,” “predict,” “propose,” “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”);
- continuing uncertainty resulting from potential future claims
from our counterparties of purported force majeure under
contractual arrangements, including but not limited to our
construction projects (including the Gimi GTA Project) and other
contracts to which we are a party;
- our ability to formalize a settlement agreement with
authorities regarding tax benefits previously obtained under
certain of our leasing agreements;
- claims made or losses incurred in connection with our
continuing obligations with regard to Hygo Energy Transition Ltd
(“Hygo”) and Golar LNG Partners LP (“Golar Partners”);
- the ability of Hygo, Golar Partners and New Fortress Energy,
Inc. (“NFE”) to meet their respective obligations to us, including
indemnification obligations;
- changes in our ability to retrofit vessels as floating storage
and regasification units (“FSRUs”) or floating liquefaction natural
gas vessels (“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;
- the length and severity of outbreaks of pandemics, including
the worldwide outbreak of the novel coronavirus (“COVID-19”) and
its impact on demand for liquefied natural gas (“LNG”) and natural
gas, the timing of completion of our conversion projects, the
operations of our charterers, our global operations and our
business in general;
- failure of our contract counterparties to comply with their
agreements with us or other key project stakeholders;
- changes in LNG carrier, FSRU, or FLNG including charter rates,
vessel values or technological advancements;
- changes to rules and regulations applicable to LNG carriers,
FSRUs, FLNGs or other parts of the LNG supply chain;
- our vessel values and any future impairment charges we may
incur;
- our ability to close potential future sales of additional
equity interests in our vessels, including the Hilli (“Hilli”) and
FLNG Gimi on a timely basis or at all;
- our ability to contract the full utilization of the Hilli or
other vessels;
- changes in the supply of or demand for LNG carriers, FSRUs or
FLNGs;
- a material decline or prolonged weakness in rates for LNG
carriers, FSRUs or FLNGs;
- changes in the performance of the pool in which certain of our
vessels operate;
- changes in trading patterns that affect the opportunities for
the profitable operation of LNG carriers, FSRUs or FLNGs;
- changes in the supply of or demand for LNG or LNG carried by
sea;
- continuing volatility of 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;
- changes in our relationship with our affiliates;
- a decline or continuing volatility 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;
- failure of shipyards to comply with delivery schedules or
performance specifications on a timely basis or at all;
- our inability to achieve successful utilization of our fleet or
inability to expand beyond the carriage of LNG and provision of
FSRU and FLNGs, particularly through our innovative FLNG
strategy;
- actions taken by regulatory authorities that may prohibit the
access of LNG carriers, FSRUs and FLNGs 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 9, 2021The Board of DirectorsGolar LNG
LimitedHamilton, BermudaInvestor Questions: +44 207 063
7900Karl Fredrik Staubo - CEOEduardo Maranhão - CFO
Stuart Buchanan - Head of Investor Relations
- Interim results for the period ended 30 June 2021
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