Golar LNG Limited: Interim results for the period ended June 30 2020
Golar LNG reported Q2 operating revenues of $102.2 million, a 6% increase from Q2 2019, driven by strong performance in FLNG, particularly from Hilli Episeyo, which maintained 100% commercial uptime. Adjusted EBITDA rose 69% to $67.2 million. However, a net loss attributable to Golar LNG was $155.6 million, worsening by 38% compared to Q1. The company benefited from high LNG prices for upstream offerings while addressing challenges in financing new liquefaction due to low LNG prices. Cash as of June 30 stood at $265.2 million.
- Operating revenues increased by 6% YoY to $102.2 million.
- Adjusted EBITDA rose by 69% to $67.2 million.
- 100% commercial uptime on Hilli Episeyo, with over 2.5 million tons of LNG exported.
- Cash position of $265.2 million as of June 30, 2020.
- Net loss increased to $155.6 million, a 38% decline from Q1.
- Total operating revenues decreased by 17% from Q1 to Q2.
- Challenges in financing new liquefaction capacity due to low LNG prices.
- Reduction in daily rate achieved in spot and index linked charters.
Solid performance from all business divisions
Iain Ross, CEO, Golar LNG, said:
"Golar is pleased to report Q2 operating revenues of
By virtue of its integrated business model, Golar has, to a large extent, insulated itself against LNG price volatility. High LNG prices support the company's upstream FLNG offering, while low LNG prices create strong growth opportunities for Golar Power's downstream business. The latter is clearly evidenced by a surge in business and investor inquiries currently being fielded by Golar Power.
The weak LNG prices recorded throughout Q2, often below
Golar is focused on sustainability through the delivery of innovative, flexible, reliable, cost effective and implementable solutions to the world’s energy problems. It is therefore uniquely placed to benefit from the accelerated post pandemic shift to a cleaner energy mix."
Financial Summary
| (in thousands of $) | Q2 2020 | Q2 2019 | % Change | YTD 2020 | YTD 2019 | % Change |
| Total operating revenues | 102,242 | 96,745 | 224,801 | 211,032 | ||
| Net loss attributable to Golar LNG Ltd | (155,634) | (112,682) | (259,881) | (154,423) | ||
| Adjusted EBITDA1 | 67,150 | 39,663 | 143,358 | 102,560 | ||
| Operating income | 28,358 | (23,435) | (221)% | 49,516 | 5,429 | |
| Dividend per share | — | — | —% | — | 0.150 | (100)% |
| Adjusted net debt1 | 2,605,848 | 2,258,824 | 2,605,848 | 2,258,824 |
Q2 2020 Highlights
Financial:
- Cash of
$265.2 million as at June 30, 2020. - Golar Bear refinanced, releasing
$37.7 million of liquidity, ahead of schedule. A further$10 million of liquidity will be released in Q4. - Good progress made on a revolving credit facility with a syndicate of banks to replace the November maturing
$150 million term loan and September maturing$30 million margin loan. Expected closing is Q3 2020, in line with schedule. - Term-sheets agreed for the refinancing of the Golar Frost and Golar Seal, completion remains subject to market conditions.
Golar Power:
- First full quarter of operations of Sergipe power plant and FSRU Nanook generated revenue less operating costs of
$51.0 million , of which$19.0 million is attributable to Golar LNG. - Partnered with Galileo Technologies to supply initial small-scale customers in Brazil with up to 45 tons per day of locally produced Bio-LNG, allowing supply and demand requirements to be matched.
- Signed a Memorandum of Understanding (“MoU”) with Norsk Hydro to provide LNG and regasification capacity for their Alunorte alumina refinery at Barcarena, Para.
- Delivered first batch of ISO containers to Suape.
FLNG:
- FLNG Hilli Episeyo: Vessel off-loaded 42nd cargo, with
100% commercial uptime maintained. In excess of 2.5 million tons of LNG exported over the 9 quarters since start-up. - Previously disclosed FLNG Gimi force majeure claim from BP Mauritania Investments Ltd (“BP”) in relation to a delay in the order of 12-months to the target connection date remained in place. A force majeure delay claim from the conversion shipyard has also been received. Discussions are progressing well to agree a revised plan to delivery.
Shipping:
- Q2 2020 Average Daily Time Charter Equivalent (“TCE”)1 earnings of
$45,100 for the fleet, above guidance and substantially higher than the$24,400 achieved in Q2 2019. - Golar Tundra entered dry-dock.
- Utilization at
93% in line with Q1, up on66% achieved in Q2 2019. - Revenue backlog1 from shipping as at June 30, 2020 stands at
$105 million .
Outlook
Golar Power:
We intend to convert the announced Memorandum of Understanding with Norsk Hydro into an agreement for LNG and regasification capacity in Barcarena and take a Final Investment Decision ("FID") on the terminal within 4 – 6 months. Six months later we expect to take FID on the associated 605MW power station. Following the Norsk Hydro announcement, Golar Power has been approached by a number of other mining companies seeking a similar solution. These opportunities will be pursued. Based on the deal announced with Galileo we will also seek to expand the use of Bio-LNG to meet small scale customer requirements.
Arrangements for locating a Floating Storage Unit ("FSU") at Suape remain on track to be finalized later this year. Before the end of 2020 we also expect to formalize our partnership agreement with BR Distribuidora S.A. and progress our LNG distribution facilities into BR Distribuidora’s Brazilian fuel stations to optimize the roll-out of infrastructure and allow consumers to convert from diesel, heavy fuel oil and coal to cleaner, cheaper LNG.
Replicating the success of the Brazil gas to power business internationally remains a focus for the remainder of 2020 and into 2021.
FLNG:
Although most parts of the FLNG Gimi supply chain have quickly recovered from delays as a result of lockdowns, progress in the yard was impacted during Q2 by the “Circuit Breaker” in Singapore. While the situation is now stabilizing as construction manning ramps up, recovering the lost yard time within the original schedule is no longer possible. The contemplated delay to Golar's ability to deliver the vessel is anticipated to be less than that currently claimed by BP, and constructive discussions with BP to agree these two schedules are continuing.
We continue to engage positively with charterers Perenco and SNH on increasing utilization of Hilli Episeyo.
Golar will also continue to develop and market its Mark III new build FLNG. The Company is increasingly comfortable that this solution can be delivered at a cost per ton of LNG that is comparable with Hilli Episeyo and significantly cheaper than most greenfield land-based LNG facilities.
LNG Shipping:
We expect the Q3 2020 TCE1 to be around
Corporate:
The strategic review has concluded and the Board has approved a range of specific options to re-organize the company into separate, attractive and investible businesses to enhance financial flexibility and transparency by ensuring each business line is financed on a standalone basis. We intend to implement a selection of these options in the near future subject to further Board approval.
Financial Review
Business Performance:
| 2020 | ||||||||||||
| Apr-Jun | Jan-Mar | |||||||||||
| (in thousands of $) | Vessel and other operations | FLNG | Total | Vessel and other operations | FLNG | Total | ||||||
| Total operating revenues | 47,718 | 54,524 | 102,242 | 68,035 | 54,524 | 122,559 | ||||||
| Vessel operating expenses | (11,336) | (12,907) | (24,243) | (16,565) | (13,668) | (30,233) | ||||||
| Voyage, charterhire & commission expenses (including expenses from collaborative arrangement) | (1,539) | — | (1,539) | (4,827) | — | (4,827) | ||||||
| Administrative expenses | (8,348) | (246) | (8,594) | (9,869) | (272) | (10,141) | ||||||
| Project development expenses | (982) | (266) | (1,248) | (2,557) | (1,132) | (3,689) | ||||||
| Realized gain on oil derivative instrument(2) | — | — | — | — | 2,539 | 2,539 | ||||||
| Other operating gains | 532 | — | 532 | — | — | — | ||||||
| Adjusted EBITDA(1) | 26,045 | 41,105 | 67,150 | 34,217 | 41,991 | 76,208 | ||||||
| Reconciliation to operating income | ||||||||||||
| Unrealized loss on oil derivative instrument(2) | — | (11,810) | (11,810) | — | (27,810) | (27,810) | ||||||
| Depreciation and amortization | (14,997) | (11,985) | (26,982) | (15,255) | (11,985) | (27,240) | ||||||
| Operating income | 11,048 | 17,310 | 28,358 | 18,962 | 2,196 | 21,158 | ||||||
(2) The line item "Realized and unrealized gain on oil derivative instrument" relating to income from the FLNG Hilli Episeyo Liquefaction Tolling Agreement is split into, "Realized gain on oil derivative instrument" and "Unrealized loss on oil derivative instrument". The unrealized component represents a mark-to-market loss of
Golar reports today Q2 operating income of
Total operating revenues decreased
Revenues from vessel and other operations, including management fee income, were
Operating revenues from FLNG Hilli Episeyo remained stable at
Although vessel operating expenses at
Administrative expenses reduced by
The Brent Oil-linked component of Hilli Episeyo's fees generates additional annual cash flows of approximately
The mark-to-market fair value of the related derivative asset decreased by
Depreciation and amortization, at
Net Income Summary:
| 2020 | ||||
| (in thousands of $) | Apr-Jun | Jan-Mar | ||
| Operating income | 28,358 | 21,158 | ||
| Interest income | 243 | 1,160 | ||
| Interest expense | (17,003) | (21,041) | ||
| Gains(losses) on derivative instruments | 4,864 | (54,721) | ||
| Other financial items, net | (337) | 326 | ||
| Income taxes | (185) | (197) | ||
| Equity in net losses of affiliates | (139,365) | (37,936) | ||
| Net income attributable to non-controlling interests | (32,209) | (12,996) | ||
| Net loss attributable to Golar LNG Limited | (155,634) | (104,247) | ||
In Q2, the group generated a
- A reduction in Variable Interest Entities ("VIEs") interest expense due to lower loan balances and interest rates driving a
$4.8 million decrease in interest expense. - The more stable interest rate environment in Q2 caused a small
$4.9 million gain on derivative instruments to be recorded during the quarter, compared to a Q1 loss of$54.7 million . - The
$139.4 million loss in Q2 for equity in net losses of affiliates primarily comprises the following:- A
$133.8 million net loss in respect of Golar's32% share in Golar Partners. Of this,$135.9 million is due to an impairment of our investment in the Partnership. US GAAP requires an assessment as to whether a unit price decrease is "other than temporary" and to write down the value of the investment if that assessment is unable to demonstrate that the unit price reduction is temporary; and - A
$5.4 million loss in respect of Golar's50% stake in Golar Power. Golar’s share of Q2 revenue less operating costs for the Sergipe Power Plant and FSRU Nanook, amounted to$19.0 million , based on a BRL/USD FX rate of 5.47. After accounting for financing costs, development expenses in respect of Golar Power’s portfolio of other projects and administration costs, Golar Power generated a net loss during the quarter.
- A
Net losses attributable to non-controlling interests relate to the Hilli Episeyo and the finance lease VIEs.
Financing and Liquidity:
Our cash position as at June 30, 2020 was
At the corporate level, good progress has been made with a syndicate of banks on a revolving credit facility. Secured by our
At the vessel level, Golar successfully refinanced the Golar Bear during the quarter. The new Golar Bear financing is a
At the FLNG level, construction progress during Q2 was curtailed by the yard closure required as a result of Singapore's "circuit breaker". Payments to most contractors are driven by milestones achieved and were therefore limited. Inclusive of
Included within the
Corporate and Other Matters:
As at June 30, 2020, there were 97.8 million shares outstanding. There were also 2.3 million outstanding stock options with an average price of
Golar’s Annual General Meeting is scheduled for September 24, 2020 in Bermuda. The record date for voting was July 29, 2020.
Commercial Review
Golar Power (50/50 Golar/Stonepeak Infrastructure Partners non-consolidated downstream JV):
Operational assets
Golar’s
1) Power sales
2) Pipeline gas sales to large industrial and commercial customers
3) Small-scale LNG distribution using smaller vessels and LNG isotainers
1) Power sales: As Latin America's most efficient thermal power plant, the Sergipe Power Plant is the lowest-cost producer in Brazil's thermal merit order. Whenever it is economic to dispatch thermal power, it is likely to do so. Power can be produced and sold in two ways:
- Contracted power is produced when the facility is called upon to dispatch under the PPA. This power is sold on a cost pass-through basis and makes up the revenue from capacity payments described above.
- Merchant power can also be sold when the power station has not been called upon to dispatch, when the prevailing market price is above the plant’s marginal cost and when the system operator allows the plant to dispatch electricity into the grid. This electricity is marketed through CELSE,
50% owned by Golar Power. Based on pre-pandemic seasonal demand patterns and at current LNG prices, it would have been profitable to sell merchant power through much of Q2. Having been hit hard by COVID, power demand in Brazil is weak, and, as a result, hydro power has been sufficient to meet the country’s needs.
The operational status of the Sergipe Power plant for the first half of 2020 is summarized in the table below:
| Q1 2020 | Q2 2020 | |
| Total contracted capacity (MW) | 1,551.0 | 1,551.0 |
| Total power plant utilization factor | ||
| Gross power generated on a contracted basis (MWh) | 384,581 | 512,376 |
| Total net variable revenues (BRL millions) | 51.6 | 30.8 |
| Total net fixed and variable revenues (BRL millions) | 486.0 | 427.0 |
| Average price received (BRL/MWh) | 134.1 | 60.2 |
Using North East Brazil historical PLD spot electricity price and commodity price data for the last 3 pre-COVID years, and assuming that the 26 power off-takers would have chosen to dispatch power whenever it was economic for them to do so based on their contracted cost of LNG, the Sergipe Power Plant, had it been operational, would have generated an estimated profit of BRL 1.5 billion, with Golar LNG's share amounting to BRL 375 million. The ability for the Sergipe Power Plant to generate this additional profit in future will depend on two factors. Firstly, that the 26 power off-takers will not always be in a position to correctly forecast electricity prices 60 days ahead and so do not call the power station to dispatch even when, with the benefit of hindsight, it would have been economic for them to do so. Secondly, CELSE must have sufficient LNG on board the FSRU Nanook to regasify and use to generate power every time the opportunity presents itself. As a result, future merchant power generation profits will be below this number and historical prices and patterns cannot be relied upon to predict the future.
2) Pipeline gas sales to large industrial and commercial customers: CELSE has commenced permitting work for the construction of a 30 kilometer pipeline that will connect the Golar Nanook to the regional natural gas main pipeline network and other downstream customers. Permitting has been held back in recent months due to COVID-related closures of government offices. A team of downstream gas marketers have been engaged and have initiated work to build a downstream gas sales channel to large industrial and commercial customers on a cost plus margin contracted basis.
3) Small-scale LNG distribution using smaller vessels and LNG isotainers: the small-scale LNG distribution business is currently implementing this strategy through three routes:
- The Golar Nanook, together with other FSRU and FSU terminals being developed, can be used as a transshipment location for LNG for onward downstream distribution. Small-scale vessels can carry offloaded LNG along coasts/up rivers and connect to onshore truck loading facilities where LNG can be transferred to ISO containers. These would then be distributed to industrial, commercial and residential off-takers which are underserved by traditional pipeline networks.
- Golar Power has entered into an agreement with Galileo Technologies for the provision of mini LNG liquefaction solutions. This agreement includes the introduction of the renewable fuel source, Biomethane Liquefied Natural Gas (Bio-LNG). The initial order involves the provision of two LNG production clusters. The first cluster will involve two LNG production units capable of producing 30 tons of LNG per day from a mature gas field in the Brazilian state of Bahia. The second cluster will be installed in the state of Sao Paulo, where it will capture and liquefy biomethane from landfills. This cluster will have an initial production capacity of up to 15 tons of Bio-LNG per day. LNG from these clusters will be loaded into ISO containers and delivered by road to end users. Operations are expected to start before the end of the year.
- Golar Power and BR Distribuidora S.A. are also on track to formalize their announced partnership by the end of the year. This partnership seeks to use BR Distribuidora S.A.'s 7,600 fuel stations and 95 supply bases to facilitate the inland rollout of LNG supply to Brazil's transportation and industrial sectors.
As at June 30, Golar Power had 185 LOIs signed/under discussion, 9 contracts under negotiation and 5 executed contracts as shown below:
| Customer development status | Q1 2020 | Q2 2020 |
| LOIs signed/under discussion | 190 | 185 |
| Contracts under negotiation | 8 | 9 |
| Contracts executed | 3 | 5 |
The
Growth projects
Progress continues to be made on other growth projects being pursued. In order of expected FID, these are:
1) Barcarena Terminal and Power Plant: This Project represents the first LNG terminal in the North of Brazil. The initial aim is to supply gas to both Norsk Hydro’s Alunorte Aluminum plant from mid-2022 and an associated 605 MW thermal power plant (previously contracted under a 25 year PPA) from 2025. Concluding final agreements with Norsk Hydro will therefore be an important step toward FID for the terminal which is expected within the next 4 - 6 months. Assuming a FID within this timeframe, Golar Power expects to bring a FSRU into operation during H1 2022. Thereafter, Golar Power plans to roll out a comprehensive LNG distribution network across Pará and the region. The recent MoU with Norsk Hydro is also a major step towards delivering what could become one of the world’s largest greenhouse gas reduction initiatives. A FID on the power plant component of the project is expected in mid-2021.
2) Suape LNG Terminal: Golar Power has signed a Protocol of Intentions with the government of the State of Pernambuco to develop an LNG import terminal in the Port of Suape, Northeast Brazil. Initially, a FSU will be used to supply LNG. This will connect to onshore truck loading amenities to facilitate loading of LNG ISO containers. These would then be distributed to industrial, commercial and residential off-takers in regions that are underserved or not served by traditional pipeline networks. Golar Power recently delivered its first batch of ISO containers to the region. The FSU will also act as a transshipment location to break bulk LNG for downstream distribution. Subject to a FID, which is expected before the end of 2020, operations are expected to commence in mid-2021.
3) Santa Catarina Terminal: Key regulatory and environmental licenses have been secured to develop the Santa Catarina FSRU terminal on the southern coast of Brazil. Golar Power owns
4) Global Terminal Projects: Golar Power is now actively seeking to replicate its Brazilian execution model elsewhere and is in the evaluation or development stage on more than fifteen other terminals worldwide.
The reinvestment of cash generated by the Sergipe Power Plant and the Barcarena terminal when operational as well as other financing are expected to allow Golar Power to fund these projects without recourse to shareholders, Golar and Stonepeak.
FLNG:
FLNG Hilli Episeyo continues to maintain
The attractiveness of FLNG over land based facilities is becoming better understood by gas asset owners, resulting in an increased interest in FLNG over the last quarter.
LNG Shipping:
The quarter commenced with LNG prices at around
With the completion of Freeport and Cameron T3, and Elba Island T9 ready for service, the roll-out of the first wave of US liquefaction is concluding. Originally poised for global production additions of around 30mtpa, COVID-related market turmoil and resultant shut-ins will likely see 2020 growth limited to between 5 and 10mtpa. The un-utilized 20-25mtpa of production capacity is expected to ramp up from 2021. Between now and 2023, around 30mtpa of new nameplate capacity is due to become operational. From 2024, a new wave of projects with a combined nameplate capacity of around 100mtpa are then scheduled to start-up in phases, completing in 2027. The low levels of new production scheduled to come online in the next three years together with deferral of most FID decisions due to have been reached this year for additional projects has resulted in a significant reduction in 2020 vessel new build orders.
There is now an emerging optimism among market players who expect a stronger rate environment heading into the autumn and seasonally stronger winter. Key Asian markets are showing signs of recovering demand. This is beginning to erode the LNG supply overhang, resulting in fewer US cargo cancellations for September, and should support stronger prices over the coming months. This is shown by JKM recovering to its current level of
Analysts forecast further substantial increases in LNG prices over the 2020 - 23 period, albeit from a historically low base. Rising prices are expected to facilitate a re-emergence of regional price differentials, inter-basin trading and rising ton miles, all of which will support improving levels of vessel utilization without compromising LNG’s price competitiveness relative to other less environmentally friendly energy sources.
Golar Partners (a non-consolidated affiliate of Golar LNG):
Golar Partners' Q2 adjusted EBITDA1 improved relative to Q1. This was the result of a full quarter's contribution from the FSRU Golar Igloo, which commenced its 2020 regasification season on February 24, but was partially mitigated by reduced hire in respect of the Golar Maria which earned a lower daily rate during the quarter. Operating costs for the fleet were also lower due to reduced costs for the FSRU Igloo and lower levels of scheduled maintenance as a result of COVID-related service engineer movement restrictions. A much smaller movement in swap rates during the quarter also reduced the
On April 1, 2020, the Partnership approved a
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 | |||
| Adjusted EBITDA | Net (loss)/income attributable to Golar LNG Limited | +/- Net financial expense + Other non-operating expenses +/- Income taxes +/- Equity in net (losses)/ income of affiliates +/- Net income attributable to non-controlling interests +/- Unrealized loss/(gain) on oil derivative instrument + Depreciation and amortization + Impairment of long-term assets | Increases the comparability of total business performance from period to period and against the performance of other companies by excluding the results of our equity investments, removing the impact of unrealized movements on embedded derivatives and removing the impact of depreciation, financing and tax items. |
| 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. | 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 | |||
| Adjusted 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 + VIE Restricted cash + VIE consolidation adjustment + Deferred finance charges + TRS Restricted Cash | In consolidating the lessor VIEs, we also consolidate their cash position. We reflect the lessor VIEs’ cash as “restricted cash” on our Consolidated Balance Sheet as we have no control or ability to access this cash. In calculating our adjusted net debt based on our contractual obligation, we remove the lessor VIEs’ restricted cash. We have elected an accounting policy to show margin cash posted against our derivative positions separately to the associated MTM liability. 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 (Adjusted EBITDA)
| 2020 | 2020 | 2019 | 2019 | |||||
| (in thousands of $) | Apr-Jun | Jan-Jun | Apr-Jun | Jan-Jun | ||||
| Net loss attributable to Golar LNG Limited | (155,634) | (259,881) | (112,682) | (154,423) | ||||
| Net financial expense | 12,233 | 86,509 | 37,804 | 71,048 | ||||
| Income taxes | 185 | 382 | 176 | 381 | ||||
| Equity in net losses of affiliates | 139,365 | 177,301 | 26,970 | 39,869 | ||||
| Net income attributable to non-controlling interests | 32,209 | 45,205 | 24,297 | 48,554 | ||||
| Operating income | 28,358 | 49,516 | (23,435) | 5,429 | ||||
| Adjusted for: | ||||||||
| Unrealized loss/(gain) on oil derivative instrument | 11,810 | 39,620 | 27,630 | (750) | ||||
| Depreciation and amortization | 26,982 | 54,222 | 28,121 | 56,284 | ||||
| Impairment of long-term assets | — | — | 7,347 | 41,597 | ||||
| Adjusted EBITDA | 67,150 | 143,358 | 39,663 | 102,560 | ||||
Reconciliations - Performance Measures (Average Daily TCE Rate)
| 2020 | 2020 | 2019 | ||||
| (in thousands of $) | Apr-Jun | Jan-Mar | Apr-Jun | |||
| Total operating revenues | 102,242 | 122,559 | 96,745 | |||
| Less: Liquefaction services revenue | (54,524) | (54,524) | (54,524) | |||
| Less: Vessel and other management fees | (5,131) | (5,050) | (5,141) | |||
| Time and voyage charter revenues | 42,587 | 62,985 | 37,080 | |||
| Less: Voyage and commission expenses | (1,539) | (4,827) | (14,327) | |||
| 41,048 | 58,158 | 22,753 | ||||
| Calendar days less scheduled off-hire days | 910 | 940 | 933 | |||
| Average daily TCE rate (to the closest | 45,100 | 61,900 | 24,400 | |||
Reconciliations - Liquidity Measures (Adjusted Net Debt)
| (in thousands of $) | June 30, 2020 | June 30, 2019 | March 31, 2020 | |||
| Net debt as calculated by GAAP | ||||||
| Total debt (current and non-current) net of deferred finance charges | 2,544,865 | 2,467,508 | 2,557,316 | |||
| Less | ||||||
| Cash and cash equivalents | (128,661) | (139,834) | (130,976) | |||
| Restricted cash and short-term deposits - current and non-current portion | (136,535) | (405,586) | (172,380) | |||
| Net debt as calculated by GAAP | 2,279,669 | 1,922,088 | 2,253,960 | |||
| VIE consolidation adjustment | 255,129 | 111,977 | 206,584 | |||
| VIE restricted cash | 39,987 | 114,976 | 68,260 | |||
| Deferred finance charges | 31,063 | 13,020 | 32,034 | |||
| TRS restricted cash (1) | — | 96,763 | — | |||
| Total Adjusted Net Debt | 2,605,848 | 2,258,824 | 2,560,838 | |||
| Less: Golar Partners' share of the Hilli contractual debt | (405,750) | (438,750) | (414,000) | |||
| Less: Keppel's share of the Gimi debt | (67,500) | — | (67,500) | |||
| GLNG's share of Adjusted Net Debt | 2,132,598 | 1,820,074 | 2,079,338 | |||
(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.
Reconciliations - Liquidity Measures (Contractual Net Debt)
| (in thousands of $) | June 30, 2020 | June 30, 2019 | March 31, 2020 | |||
| Total debt (current and non-current) net of deferred finance charges | 2,544,865 | 2,467,508 | 2,557,316 | |||
| VIE consolidation adjustments | 255,129 | 111,977 | 206,584 | |||
| Deferred finance charges | 31,063 | 13,020 | 32,034 | |||
| Total Contractual Debt | 2,831,057 | 2,592,505 | 2,795,934 | |||
| Less: Golar Partners' share of the Hilli contractual debt | (405,750) | (438,750) | (414,000) | |||
| Less: Keppel's share of the Gimi debt | (67,500) | — | (67,500) | |||
| GLNG's share of Contractual Debt | 2,357,807 | 2,153,755 | 2,314,434 | |||
Please see Appendix A for a capital repayment profile for Golar’s contractual debt.
Non-US GAAP Measures Used in Forecasting
Distribution coverage ratio: As defined in Golar LNG Partners LP most recent quarterly earnings release (Form 6-K), section "Appendix A - Non-GAAP Financial Measures and Definitions".
Revenue Backlog: Revenue Backlog is defined as the 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.
Definitions
TFDE: Tri-fuel Diesel Electric
FSRU: Floating Storage Regasification Unit
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 “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 ("LOA") entered into in connection with the BP Greater Tortue / Ahmeyim Project (“Gimi GTA Project”);
- continuing uncertainty resulting from current or 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;
- the length and severity of outbreaks of pandemics, including the ongoing 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 including impact to our vessel operating costs and our business in general;
- changes in our ability to obtain additional financing on acceptable terms or at all;
- Golar Power Limited's ("Golar Power") ability to operate the Sergipe power station project and related FSRU contract and to execute its downstream LNG distribution and merchant power sales plans;
- changes in our relationship with Golar LNG Partners LP ("Golar Partners"), Golar Power or Avenir LNG Limited ("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;
- changes in LNG carrier, floating storage and regasification units ("FSRUs"), or floating liquefaction natural gas vessel ("FLNG"), or small-scale LNG market trends, including charter rates, vessel values or technological advancements;
- our vessel values and any future impairment charges we may incur;
- challenges by authorities to the tax benefits we previously obtained under certain of our leasing agreements;
- continuing volatility of commodity prices;
- a decline or continuing weakness in the global financial markets;
- fluctuations in currencies and interest rates;
- our ability to close potential future sales of additional equity interests in our vessels, including the Hilli Episeyo and FLNG Gimi 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 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 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 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 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 13, 2020
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda
Investor Questions: +44 207 063 7900
Iain Ross - CEO
Callum Mitchell-Thomson - CFO
Stuart Buchanan - Head of Investor Relations
FAQ
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