Despite success with its FLNG programme, Golar LNG has reported a loss of $36 mill for the third quarter of this year.
However, the company also declared a net profit of $54 mill, which excluded $90 mill of market adjusted non-cash items, plus an adjusted EBITDA of $59 mill.
Golar also said it had an adjusted EBITDA backlog of around $11 bill, including existing and redeployment charters of the FLNGs ‘Hilli’ and ‘Gimi’, before commodity exposures.
During the period, Golar took the final investment decision (FID) on the MK II 3.5 mill tonnes per year FLNG earmarked for delivery in 2027.
The company also received a reservation notice for FLNG ‘Hilli’ under definitive agreements signed with Pan American Energy (PAE) for the unit’s 20-year deployment in Argentina and agreed the commercial reset of the pre-COD contract mechanisms with bp for FLNG ‘Gimi’.
In 3Q24, FLNG’Hilli’ generated $73 mill of distributable adjusted EBITDA, of which Golar’s share was $68 mill.
Following the commercial reset reached in August, 2024, Golar is now contractually entitled to receive daily payments from 10th January, 2024 for FLNG ‘Gimi’ until the commercial operations date (COD).
Under the new arrangements and based on the operator's latest timeline, Golar expects to receive about $220 mill across 2024 and 2025 in pre-COD compensation, inclusive of milestone bonuses, of which around $130 mill will be invoiced this year. Of this, $78 mill had been received in 2024 to date.
This pre-COD compensation, net of $110 mill of liquidated damages already paid to bp, will be deferred on the balance sheet.
Golar, bp and Kosmos Energy agreed to use an LNG cargo to accelerate the commissioning schedule and as a result, last month, the LNGC ‘British Sponsor’ started to introduce gas to the ‘Gimi’. Commissioning is now underway and will continue to utilise gas from the commissioning cargo until the bp FPSO is ready to send gas to the FLNG. Commissioning activity will then further ramp up.
Based on the latest project schedule, COD is expected within 1H25, which will trigger the start of the 20-year lease and operate agreement that unlocks the equivalent of around $3 bill of adjusted EBITDA backlog (Golar’s share) and recognition of contractual payments comprised of capital and operating elements in both the balance sheet and income statement.
The contemplated refinancing of the FLNG Gimi is progressing, targeting a new increased debt facility with a lower margin and improved amortisation profile, versus the current vessel debt facility and potentially releasing significant liquidity to Golar.
In July 2024, Golar and PAE entered into definitive agreements for a 20-year FLNG deployment project in Argentina.
Work on the conditions precedent is progressing with a FID expected within 1Q25. PAE issued a reservation notice reserving the FLNG ’Hilli’ to the project in October, 2024. This includes a reservation fee should the project not materialise, and ends Golar’s option to nominate an alternative FLNG to service the contract.
‘Hilli’ is expected to generate an annual adjusted EBITDA of around $300 mill, and a commodity-linked pricing element. Golar will also hold a 10% stake in recently established Southern Energy, a dedicated joint venture with PAE, responsible for the purchase of domestic natural gas, operations, and sale and marketing of LNG volumes from Argentina.
A secure charter for the MKII FLNG project is being targeted next year. Once a charter is secured for the FLNG, currently under conversion at CIMC Raffles, Golar will seek asset level debt financing for the unit, targeting ~4-6x contracted EBITDA.
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As part of the agreement with Raffles, Golar secured an option for a second MK II FLNG conversion slot at the yard for delivery within 2028.
As of 30th September, 2024, total Golar cash was $807 mill, comprised of $732 mill of cash and cash equivalents and $75 mill of restricted cash. Inclusive of a new bond issue, Golar’s share of contractual debt was $1,465 mill.
