Interim results for the period ended June 30, 2023
- Golar reports Q2 2023 net income of $7 million and adjusted EBITDA of $83 million. They have executed amendments to reduce debt service cost and sold an LNG carrier for $15 million. They have signed an agreement with Nigeria National Petroleum Corporation for joint development of gas fields. FLNG Gimi conversion works are 97% complete and the yard departure is scheduled for September 2023. Golar has repurchased 1.4 million shares and declared a dividend of $0.25 per share for the quarter.
- None.
Highlights and subsequent events
- Golar LNG Limited (“Golar” or “the Company”) reports Q2 2023 Net income of
$7 million , and Adjusted EBITDA1 of$83 million , inclusive of$72 million of non-cash items. - Total Golar Cash1 of
$884 million , inclusive of$113 million of restricted cash. - Executed amendments to existing Hilli debt facility that reduce debt service cost.
- Exercised option to acquire 2004 built LNG carrier Fuji LNG targeted for conversion to a 3.5mtpa MKII FLNG.
- Agreed to sell 1977 built LNG carrier Gandria for net consideration of
$15 million . - Signed heads of terms with Nigeria National Petroleum Corporation (“NNPC”) for joint development of gas fields using FLNG, expanding on the Memorandum of Understanding (“MOU”) signed in April 2023.
- FLNG Gimi conversion works
97% complete. Yard departure scheduled for September 2023. - Repurchased 1.4 million shares at an average cost of
$21.06 per share. 106.0 million shares issued and outstanding as of June 30, 2023. - Declared dividend of
$0.25 per share for the quarter.
FLNG Hilli: Maintained strong operational performance throughout the quarter. Q2 2023 Distributable Adjusted EBITDA1 from FLNG Hilli was
-
- July-December 2023:
100% of TTF linked production unwound securing approximately$46 million of Distributable Adjusted EBITDA1 equivalent to approximately$23 million for each of quarters 3 and 4; and - Full year 2024:
50% of TTF linked production unwound securing approximately$49 million of Distributable Adjusted EBITDA1 equivalent to approximately$12 million per quarter in 2024.
- July-December 2023:
As the TTF hedges have been effectively unwound and secured, Golar remains fully exposed to TTF prices, with additional Distributable Adjusted EBITDA1 of
Amendments to improve the existing sale and leaseback financing for FLNG Hilli through reducing the margin and extending the amortization profile and term were executed during the quarter. Effective June 2023, FLNG Hilli’s annual debt service cost will reduce from around
FLNG Gimi: Is scheduled to leave the yard in September 2023. Final checks, storing up and sea trials will then take place in Singapore ahead of her voyage to Mauritania and Senegal, expected to commence around the end of September/early October.
A contract interpretation dispute between Golar and BP regarding parts of the pre-commissioning contractual cash flows remains and arbitration proceedings have been initiated. This does not impact the wider execution of the 20-year project that is expected to unlock around
FLNG business development: Strong progress with the potential deployment of Golar’s FLNG vessels to various gas fields in Nigeria has been made since signing the MOU with NNPC in April. Under a further heads of terms signed with NNPC on August 1, 2023, Golar and NNPC have agreed an integrated contractual framework for the joint development of specific gas fields towards potential FLNG projects. The relevant fields could fully utilize FLNG Hilli following the end of her current contract in mid-2026, or utilize a MKII FLNG.
Development of commercial opportunities also continues outside Nigeria for FLNG Hilli and our prospective MKII FLNG, including commercial term negotiations with gas resource owners and government interaction in potential countries of operation. The complexity of offshore gas developments drives the timeline for potential announcements of binding terms for incremental FLNG work. We continue to develop our potential MKII FLNG project with an annual capacity of 3.5MTPA. The cost of a converted FLNG Fuji is expected to be around
FSRU: Costs associated with the Development Agreement to assist Snam S.p.A (“Snam”) with FSRU Tundra’s drydocking, site commissioning and hook-up amounted to
Snam’s deadline for issuing a Notice to Proceed with the FSRU conversion of the Golar Arctic expired during the quarter. Capitalized engineering and professional services for the conversion have therefore been charged to project development expenses, with a corresponding recognition of compensation received from Snam under other operating income. Golar is considering alternatives for the vessel including other conversion projects, chartering or sale.
Buyback and dividends: During the quarter 1.4 million shares were repurchased and cancelled at an average cost of
Golar’s Board of Directors approved a total Q2 2023 dividend of
Financial Summary
| (in thousands of $) | Q2 2023 | Q2 2022 | % Change | YTD 2023 | YTD 2022 | % Change |
| Net income/(loss) | 6,910 | 286,538 | (98)% | (85,659) | 696,552 | (112)% |
| Net (loss)/income attributable to Golar LNG Ltd | (4,545) | 230,032 | (102)% | (106,408) | 575,214 | (118)% |
| Total operating revenues | 77,530 | 67,227 | 151,498 | 140,165 | ||
| Adjusted EBITDA 1 | 82,815 | 100,917 | (18)% | 166,963 | 190,575 | (12)% |
| Golar’s share of Contractual Debt 1 | 1,176,630 | 1,002,228 | 1,176,630 | 1,002,228 |
Financial Review
Business Performance:
| 2023 | 2022 | ||
| Apr-Jun | Jan-Mar | Apr-Jun | |
| (in thousands of $) | Total | Total | Total |
| Net income/(loss) | 6,910 | (92,569) | 286,538 |
| Income taxes | 1,445 | 252 | (212) |
| Net income/(loss) before income taxes | 8,355 | (92,317) | 286,326 |
| Depreciation and amortization | 12,450 | 12,577 | 13,122 |
| Impairment of long-lived assets | 5,021 | — | 76,155 |
| Unrealized loss/(gain) on oil and gas derivative instruments | 76,646 | 115,011 | (181,548) |
| Realized and unrealized mark-to-market losses on investment in listed equity securities | — | 62,308 | 49,001 |
| Other non-operating expense/(income), net | 1,305 | (11,128) | (3,887) |
| Interest income | (11,836) | (11,482) | (921) |
| Interest expense | 610 | 362 | 5,279 |
| (Gains)/losses on derivative instruments, net | (11,673) | 9,376 | (16,341) |
| Other financial items, net | 464 | 911 | 4,198 |
| Net losses/(income) from equity method investments | 1,577 | (1,281) | (4,065) |
| Net income from discontinued operations | (104) | (189) | (126,402) |
| Adjusted EBITDA (1) | 82,815 | 84,148 | 100,917 |
| 2023 | ||||||||
| Apr-Jun | Jan-Mar | |||||||
| (in thousands of $) | FLNG | Corporate and other | Shipping | Total | FLNG | Corporate and other | Shipping | Total |
| Total operating revenues | 60,373 | 11,697 | 5,460 | 77,530 | 56,221 | 12,347 | 5,400 | 73,968 |
| Vessel operating expenses | (15,869) | (7,006) | (1,834) | (24,709) | (15,643) | (2,664) | (266) | (18,573) |
| Voyage, charterhire & commission expenses | (150) | — | (74) | (224) | (150) | (19) | (67) | (236) |
| Administrative (expenses)/income | (42) | (7,962) | 10 | (7,994) | (50) | (10,017) | (1) | (10,068) |
| Project development expenses | (1,965) | (16,590) | — | (18,555) | (272) | (18,123) | — | (18,395) |
| Realized gain on oil and gas derivative instruments (2) | 46,451 | — | — | 46,451 | 57,452 | — | — | 57,452 |
| Other operating income (3) (4) | 2,499 | 7,817 | — | 10,316 | — | — | — | — |
| Adjusted EBITDA (1) | 91,297 | (12,044) | 3,562 | 82,815 | 97,558 | (18,476) | 5,066 | 84,148 |
(2) The line item “Realized and unrealized (loss)/gain on oil and gas derivative instruments” in the Unaudited Consolidated Statements of Operations relates to income from the Hilli Liquefaction Tolling Agreement (“LTA”) and the natural gas derivative which is split into: “Realized gain on oil and gas derivative instruments” and “Unrealized (loss)/gain on oil and gas derivative instruments”.
(3) The line item “Other operating income” in the Unaudited Consolidated Statements of Operations includes FLNG Hilli's overproduction of
(4) The line item “Other operating income” in the Unaudited Consolidated Statements of Operations includes the first advance payment of
| 2022 | ||||
| Apr-Jun | ||||
| (in thousands of $) | FLNG | Corporate and other | Shipping | Total |
| Total operating revenues | 60,527 | 6,700 | — | 67,227 |
| Vessel operating expenses | (14,972) | (1,439) | (1,685) | (18,096) |
| Voyage, charterhire & commission expenses | (150) | (25) | (569) | (744) |
| Administrative income/(expenses) | 13 | (10,038) | 71 | (9,954) |
| Project development (expenses)/income | (3,462) | 761 | — | (2,701) |
| Realized gain on oil and gas derivative instruments | 55,019 | — | — | 55,019 |
| Other operating income | 10,166 | — | — | 10,166 |
| Adjusted EBITDA(1) | 107,141 | (4,041) | (2,183) | 100,917 |
Golar reports today Q2 2023 net income of
- TTF and Brent oil unrealized mark-to-market losses of
$77 million ; - impairment of Gandria of
$5 million ; and - mark-to-market gain on interest rate swaps of
$10 million .
The Brent oil linked component of FLNG Hilli’s fees generates additional annual cash of approximately
The non-cash mark-to-market accounting fair value of the FLNG Hilli Brent oil linked derivative asset decreased by
Balance Sheet and Liquidity:
As of June 30, 2023, Total Golar Cash1 was
Within the
During Q2 2023,
Inclusive of
Expenditure on long-lead items, engineering services and deposits paid on conversion candidate Fuji LNG for the MKII FLNG amounted to
Sale of the Gandria was agreed for net consideration of
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.
This report also contains certain forward-looking non-GAAP measures for which we are unable to provide a reconciliation to the most comparable GAAP financial measures because certain information needed to reconcile those non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside of our control, such as oil and gas prices and exchange rates, as such items may be significant. Non-GAAP measures in respect of future events which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied to Golar’s unaudited consolidated financial statements.
These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures and 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 as at June 30, 2023 and for the six month period ended June 30, 2023, 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 income/(loss) | +/- Income taxes + Depreciation and amortization +/- Impairment of long-lived assets +/- Unrealized (gain)/loss on oil and gas derivative instruments +/- Other non-operating (income)/losses +/- Net financial (income)/expense +/- Net (income)/losses from equity method investments +/- Net loss/(income) from discontinued operations | 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, depreciation, financing costs, tax items and discontinued operations. |
| Distributable Adjusted EBITDA | Net income/(loss) | +/- Income taxes + Depreciation and amortization +/- Impairment of long-lived assets +/- Unrealized (gain)/loss on oil and gas derivative instruments +/- Other non-operating (income)/losses +/- Net financial (income)/expense +/- Net (income)/losses from equity method investments +/- Net loss/(income) from discontinued operations - Amortization of deferred commissioning period revenue - Amortization of Day 1 gains - Accrued overproduction revenue + Overproduction revenue received - Accrued underutilization adjustment | Increases the comparability of our operational FLNG, Hilli from period to period and against the performance of other companies by removing the non-distributable income of Hilli, project development costs and the operating costs of the Gandria and Gimi. |
| Liquidity measures | |||
| Contractual debt (1) | Total debt (current and non-current), net of deferred finance charges | '+/- Debt within liabilities held for sale net of deferred finance charges +/-VIE consolidation adjustments +/-Deferred finance charges +/-Deferred finance charges within liabilities held for sale | During the year, we consolidate a lessor VIE for our Hilli sale and leaseback facility. This means that on consolidation, our contractual debt is eliminated and replaced with the lessor VIE debt. Contractual debt represents our debt obligations under our various financing arrangements before consolidating the lessor VIE. 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 our competitors. |
| Total Golar Cash | Golar cash based on GAAP measures: + Cash and cash equivalents + Restricted cash and short-term deposits (current and non-current) | -VIE restricted cash and short-term deposits | We consolidate a lessor VIE for our sale and leaseback facility. This means that on consolidation, we include restricted cash held by the lessor VIE. Total Golar Cash represents our cash and cash equivalents and restricted cash and short-term deposits (current and non-current) before consolidating the lessor VIE. Management believe that this measure enables investors and users of our financial statements to assess our liquidity and aids comparability with our competitors. |
(1) Please refer to reconciliation below for Golar’s share of Contractual Debt
Adjusted EBITDA backlog: This is a non-U.S. GAAP financial measure and represents the share of contracted fee income for executed contracts less forecast operating expenses for these contracts. Adjusted EBITDA backlog should not be considered as an alternative to net income or any other measure of our financial performance calculated in accordance with U.S. GAAP.
Abbreviations used:
FLNG: Floating Liquefaction Natural Gas Vessel
FSRU: Floating Storage Regasification Unit
MKII FLNG: Mark II FLNG
MMBtu: Million British Thermal Units
mtpa: Million Tons Per Annum
Reconciliations - Liquidity Measures
Contractual Debt
| (in thousands of $) | June 30, 2023 | December 31, 2022 | June 30, 2022 |
| Total debt (current and non-current) net of deferred finance charges | 1,189,278 | 1,189,324 | 1,382,277 |
| VIE consolidation adjustments | 177,440 | 152,133 | 132,790 |
| Deferred finance charges | 29,672 | 20,955 | 24,444 |
| Total Contractual Debt | 1,396,390 | 1,362,412 | 1,539,511 |
| Less: Golar Partners’ (1), Keppel’s and B&V’s share of the FLNG Hilli contractual debt | (33,760) | (358,484) | (376,783) |
| Less: Keppel’s share of the Gimi debt | (186,000) | (160,500) | (160,500) |
| Golar’s share of Contractual Debt | 1,176,630 | 843,428 | 1,002,228 |
Please see Appendix A for a capital repayment profile for Golar’s Contractual Debt.
(1) On March 15, 2023, we completed the reacquisition of Golar Partners’ Common Units of Hilli LLC from New Fortress Energy Inc ("NFE"). As a result GLNG’s share of FLNG Hilli’s Contractual Debt increased from
Total Golar Cash
| (in thousands of $) | June 30, 2023 | December 31, 2022 |
| Cash and cash equivalents | 770,567 | 878,838 |
| Restricted cash and short-term deposits (current and non-current) | 132,219 | 134,043 |
| Less: VIE restricted cash and short-term deposits | (18,804) | (21,691) |
| Total Golar Cash | 883,982 | 991,190 |
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 “if,” “subject to,” “believe,” “assuming,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “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 based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. 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. Other important factors that could cause actual results to differ materially from those in the forward-looking statements include but are not limited to:
- our ability and that of our counterparty to meet our respective obligations under the 20-year lease and operate agreement (the “LOA”) entered into in connection with the Greater Tortue/Ahmeyim Project (the “GTA Project”), including the timing of various project infrastructure deliveries to sites such as the floating production, storage and offloading unit and our FLNG, the FLNG Gimi (the “Gimi”). Delays to contracted deliveries to sites could result in incremental costs to both parties to the LOA, delay commissioning works and the unlocking of FLNG Gimi adjusted EBITDA backlog1;
- that an attractive deployment opportunity, or any of the opportunities under discussion for the MKII, one of our FLNG designs, will be converted into a suitable contract. Failure to do this in a timely manner or at all could expose us to losses on our investments in long-lead items and engineering services to date. Assuming a satisfactory contract is secured, changes in project capital expenditures, foreign exchange and commodity price volatility could have a material impact on the expected magnitude and timing of our return on investment;
- our ability to close the sale of the liquefied natural gas (“LNG”) carrier Gandria on a timely basis or complete the acquisition of LNG carrier Fuji LNG on a timely basis or at all;
- 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 GTA Project) and other contracts to which we are a party;
- failure of shipyards to comply with delivery schedules or performance specifications on a timely basis or at all;
- failure of our contract counterparties to comply with their agreements with us or other key project stakeholders;
- our ability to meet our obligations under the liquefaction tolling agreement (the “LTA”) entered into in connection with the Hilli Episeyo (“FLNG Hilli”);
- our expectation that we will produce the 2023 contract year capacity pursuant to the LTA during 2023. Failure to produce this contracted capacity will require settlement of the resulting production shortfall at the 2023 average excess tolling fee as a reduction to our final LTA billing in 2026;
- continuing uncertainty resulting from our claim for certain pre-commissioning contractual prepayments that we believe we are entitled to receive from BP Mauritania Investments Limited (“BP”) pursuant to the LOA, including timing of eventual resolution, whether our claim will be upheld, any eventual recovery or amounts that we may be required to settle;
- our inability to expand our FLNG portfolio through our innovative FLNG growth strategy;
- our ability to recontract the FLNG Hilli once her current contract ends, and other competitive factors in the FLNG industry;
- our ability to close potential future transactions in relation to equity interests in our vessels, including the Golar Arctic, FLNG Hilli and Gimi or to monetize our remaining equity holdings in Avenir LNG Limited (“Avenir”) on a timely basis or at all;
- increases in costs as a result of inflation, including but not limited to salaries and wages, insurance, crew provisions, repairs and maintenance;
- continuing volatility in the global financial markets, including but not limited to commodity prices and interest rates;
- changes in our relationship with our equity method investments and the sustainability of any distributions they pay us;
- claims made or losses incurred in connection with our continuing obligations with regard to NFE, Floating Infrastructure Holdings Finance LLC (“Energos”), Cool Company Ltd (“CoolCo”) and Snam S.p.A (“Snam”);
- the ability of Energos, CoolCo and Snam to meet their respective obligations to us, including indemnification obligations;
- changes in our ability to retrofit vessels as FLNGs or FSRUs and our ability to secure financing for such conversions on acceptable terms or at all;
- changes to rules and regulations applicable to LNG carriers, FLNGs or other parts of the LNG supply chain;
- changes in the supply of or demand for LNG or LNG carried by sea and for LNG carriers or FLNGs;
- a material decline or prolonged weakness in charter rates for LNG carriers or tolling rates for FLNGs;
- global economic trends, competition and geopolitical risks, including impacts from the length and severity of future pandemic outbreaks, rising inflation and the ongoing Ukraine and Russia conflict and the related sanctions and other measures, including the related impacts on the supply chain for our conversions or commissioning works, the operations of our charterers and customers, our global operations and our business in general;
- changes in general domestic and international political conditions, particularly where we operate, or where we seek to operate;
- changes in the availability of vessels to purchase and in the time it takes to build new vessels and our ability to obtain financing on acceptable terms or at all;
- actions taken by regulatory authorities that may prohibit the access of LNG carriers and FLNGs to various ports; and
- other factors listed from time to time in registration statements, reports or other materials that we have filed with or furnished to the Commission, including our annual report on Form 20-F for the year ended December 31, 2022, filed with the Commission on March 31, 2023 (the “2022 Annual Report”).
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.
Responsibility Statement
We confirm that, to the best of our knowledge, the interim unaudited consolidated financial statements for the three and six months ended June 30, 2023, which have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) give a true and fair view of the Company’s unaudited consolidated assets, liabilities, financial position and results of operations. To the best of our knowledge, the interim report for the three and six months ended June 30, 2023, includes a fair review of important events that have occurred during the period and their impact on the interim unaudited consolidated financial statements, the principal risks and uncertainties for the remaining period of 2023 and major related party transactions.
August 10, 2023
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda
Investor Questions: +44 207 063 7900
Karl Fredrik Staubo - CEO
Eduardo Maranhão - CFO
Stuart Buchanan - Head of Investor Relations
Tor Olav Trøim (Chairman of the Board)
Dan Rabun (Director)
Thorleif Egeli (Director)
Carl Steen (Director)
Niels Stolt-Nielsen (Director)
Lori Wheeler Naess (Director)
Georgina Sousa (Director)
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
Attachment
FAQ
What is Golar's net income for Q2 2023?
What is Golar's adjusted EBITDA for Q2 2023?
Has Golar made any amendments to reduce debt service cost?
Has Golar sold any LNG carriers?
Has Golar signed any agreements with Nigeria National Petroleum Corporation?
What is the progress of FLNG Gimi conversion works?
Has Golar repurchased any shares?
What is the dividend declared by Golar for the quarter?
