Golar LNG has enjoyed its best quarterly net income amounting to $471.4 mill during the second quarter of this year.
The total was boosted by a gain on the disposal of Hygo Energy Transition and Golar LNG Partners to New Fortress Energy (NFE) during the period.
This disposal gain proves that Golar is building shareholder value in its asset portfolio significantly in excess of book values. The company will seek to continue to simplify its group structure to crystalise value, it said.
In addition, on 20th July, 2021, Golar signed an agreement to increase the capacity utilisation for the FLNG ’Hilli Episeyo’.
Based on TTF1 forward prices at the time of the announcement and assuming Perenco exercises its option for a rise of 0.4 mill tonne per year from 2023/2026, the increase in capacity utilisation will add around $113 mill of incremental earnings backlog for ’Hilli’ on TTF1 forward curves, or $373 mill if the 6th August, 2021 spot TTF1 price is assumed to prevail over the same timeframe.
The oil price increase has also increased Golar’s earnings from ’Hilli’ through the Brent oil related tariff. ’Hilli’ generates an increased $3 mill of Adjusted EBITDA for every US dollar the Brent oil price is above $60 per barrel, of which Golar has an 89.1% economic interest.
FLNG team expands
As for its FLNG technology, Golar has increased its upstream team and is currently exploring several fields already producing associated gas, as well as stranded gas opportunities.
On the tolling side of the FLNG business, Golar said that it continued to work with existing and prospective clients on attractive growth projects. These are significant infrastructure investments for clients that require, amongst other prerequisites, regulatory approvals and supporting infrastructure, which are often the key drivers of a project timeline, rather than the construction of the unit.
Golar revealed that specific commercial and technical discussions have taken place with an existing client for use of a 5 mill tonne Golar Mark III newbuilding design.
The shipping business also benefited from higher gas prices and regional price differences. Longer-term employment opportunities at attractive rates are now available. For example, Golar recently fixed one of its vessels for five years.
Golar said that it expected a material improvement in cash generation over the next two years, based on the strong trend seen in the LNG shipping market, ‘Hilli’s’ increased utilisation, the higher oil and gas price environment and the commencement of an FLNG ’Gimi’ contract in 2023.
