Golar LNG Limited has reported 2022 annual net income of $788 mill, compared to $414 mill for 2021.
The fourth quarter net income was $71 mill and adjusted EBITDA was $87 mill, compared with $8 mill and $56 mill, respectively, for the previous year.
Last year, the company exited New Fortress Energy (NFE) investment, by selling 8.3 mill NFE shares for net proceeds of $418 mill, and by agreeing to acquire NFE's interest in ‘Golar Hilli’ for the remaining 4.1 mill shares and $100 mill in cash, increasing Golar’s run-rate adjusted EBITDA by about $70 mill.
Golar also exited Cool Company (CoolCo) investment, by selling 8 mill shares in 4Q22, raising net proceeds of $98 mill, and a further 4.5 mill shares on 28th February, 2023 that are expected to raise net proceeds of around $56 mill.
The company also secured an LNGC, which is intended for conversion to a 3.5 mill tonnes per annum Mark II FLNG.
Golar’s focus on FLNGs positions the company to take advantage of the most profitable segment of the LNG value chain, the company claimed. For example, the recently announced ‘Hilli’ transaction, the upcoming commencement of the 20-year ’Gimi’ contract, and cash flows locked in through the TTF hedges, secure strong growth in free cash flow from operations.
Distributable adjusted EBITDA from FLNG ’Hilli’ increased by $20 mill from $94 mill in 3Q22 to $114 mill in 4Q22, of which Golar's share was $86 mill, compared to $64 mill in 3Q22.
Technical issues resolved
Due to a combination of upstream technical issues and the FLNG’s maintenance, last year’s LNG production was 3.5% below the annual contracted 1.4 mill tonnes per year and a $36 mill accounting liability was recognised. These issues were resolved in 4Q22.
Subject to customary documentation, Golar and the customer agreed that the $36 mill 2022 production shortfall will be compensated through overproduction this year, where Golar expects to recognise an additional 2023 adjusted EBITDA of $36 mill, offsetting the 2022 under-utilisation liability with no expected net cash impact.
Golar's share of annual distributable adjusted EBITDA from ‘Hilli’ is expected to increase by about $70 mill through to the current liquefaction tolling agreement (LTA) conclusion in July, 2026.
Assuming the ‘Hilli’ transaction with NFE closes and TTF and Brent oil forward prices of $16.6 per MMBtu and $81.3 per barrel, respectively, 2023 distributable adjusted EBITDA is expected to be around $335 mill.
For 2024, assuming the Hilli transaction closes and TTF and Brent oil forward prices of $17.9 per MMBtu and $77.3 per barrel, respectively, distributable adjusted EBITDA is expected to be around $283 mill.
The conversion of FLNG ’Gimi’ for its 20-year contract with BP was 92% technically complete on 12th February, 2023, still on track for a 1H23 sail away.
FLNG ’Gimi’ is expected to unlock around $3 bill of earnings backlog to Golar, equivalent to around $151 mill in annual adjusted EBITDA.
Golar has been increasingly engaging with prospective clients for a potential redeployment of ‘Hilli’ once her current contract ends.
The company has also secured an option to acquire a 148,000 cu m moss design LNGC for a MKII FLNG conversion. A non-refundable payment of $5 mill was made last month, which, subject to the option being exercised in 2Q23, will be deducted from the agreed $78 mill purchase price.
Significant progress has been made with the conversion shipyard, procurement of long lead items and financing.
By sub-chartering the FSRU ’Tundra’ to a third party until November, 2022, net of operating costs and hire paid to Snam Group, amounted to $2 mill in 4Q22. Fees recognised in respect of the services agreement to assist Snam with her drydocking, site commissioning and hook-up, amounted to $9 mill in the quarter.
