Interim results for the period ended March 31, 2022
Golar LNG Limited reported a Q1 2022 net income of $345.2 million, surpassing last year's profits substantially. Adjusted EBITDA reached $93.4 million, supported by improved FLNG operations. The sale of 6.2 million shares of New Fortress Energy yielded $253 million in cash, increasing Golar's cash and securities position to $1.3 billion. A notable debt reduction of $0.5 billion was achieved through sales to CoolCo. FLNG Gimi's conversion is 83% complete, with expected earnings of $3.0 billion upon delivery. Golar anticipates annual Adjusted EBITDA exceeding $400 million within three years.
- Net income of $345.2 million, a 1261% increase from Q1 2021.
- Adjusted EBITDA of $93.4 million, a 123% rise compared to Q1 2021.
- Cash and listed securities position increased to $1.3 billion.
- Reduction in contractual debt by $0.5 billion in Q1 2022.
- FLNG Gimi's conversion 83% complete, expected to generate $3 billion in earnings.
- Discontinued operations resulted in a loss of $209.2 million.
- Increased vessel operating expenses from $13.9 million in Q4 to $19.5 million in Q1.
- Golar LNG Limited ("Golar" or "the Company") reports Q1 2022 ("Q1") Net income of
$345.2 million . - Adjusted EBITDA1 of
$93.4 million for the quarter inclusive of FLNG Hilli, Golar Arctic and Golar Tundra but excluding the 8 TFDE vessels and management companies sold to Cool Company Ltd. ("CoolCo"). - Sold 6.2 million New Fortress Energy Inc. ("NFE") shares in Q2 2022 ("Q2") realizing net cash proceeds of
$253 million . Golar now owns 12.4 million NFE shares following the sale. - Q1 Total Golar Cash and Listed Securities1 position increased by
$0.4 billion to$1.3 billion . Golar's share of Contractual Debt1 decreased by$0.5 billion to$1.7 billion in Q1 and a further$0.5 billion in Q2 after sale of remaining carriers to CoolCo in April. - Agreed to sell the steam turbine carrier Golar Arctic as a converted FSRU to Italy's Snam for 269 million Euros (
$288 million ). - Strong progress made on opportunities for FSRU Golar Tundra and on pipeline of FLNG projects.
Shipping spin-off: A key focus for Q1 was the spin-off of our 8 TFDE LNG carriers into CoolCo. CoolCo successfully concluded an upsized
FLNG operations and commodity hedges: FLNG Hilli maintained its unbroken 4-year record of
FLNG Gimi construction: Conversion of FLNG Gimi for its 20-year contract with BP scheduled to commence in Q4 2023 is
FLNG business development: We are in detailed discussions with existing and prospective clients for new FLNG projects. Some of these projects would offer direct access to gas molecules or allow for a commodity linked earnings component, whilst others are on a tolling basis. Based on envisioned funding and ownership structures we expect that our Total Golar Cash and Listed Securities1 position could fund two FLNG growth projects.
FSRU: On May 18, 2022, Italian energy infrastructure company Snam and Golar signed a contract that will see Golar convert the last of its trading steam turbine LNG carriers, Golar Arctic, into a FSRU for delivery to Snam at a port in Sardinia, Italy. After conversion, acceptance and repayment of any vessel related debt, the FSRU will be sold to the Snam Group for 269 million Euros (
Developments in Europe have created an urgent need for more floating LNG terminals. Golar has received multiple approaches from European governments and utility companies for its modern high-spec FSRU Golar Tundra.
Financial Summary
| (in thousands of $) | Q1 2022 | Q1 2021 | % Change | Q4 2021 | % Change |
| Net income attributable to Golar LNG Ltd | 345,182 | 25,364 | 8,009 | ||
| Total operating revenues | 79,688 | 77,456 | 72,414 | ||
| Adjusted EBITDA1 | 93,446 | 41,885 | 59,957 | ||
| Golar's share of contractual debt 1 | 1,743,747 | 2,170,987 | (20)% | 2,239,496 | (22)% |
Q1 highlights and recent events
Financial and corporate:
- Profitability: Net income attributable to Golar of
$345.2 million for the quarter, including:- A
$344.0 million non-cash mark-to-market gain recognized on NFE shares based on a March 31, 2022 carrying value of$42.61 per share. - A
$168.1 million non-cash gain recognized on Hilli Brent oil and TTF natural gas linked derivative instruments. - A discontinued operations net loss of
$209.2 million inclusive of a loss on sale/impairment in respect of the 8 carriers sold to CoolCo. - A
$31.5 million gain on interest rate swaps.
- A
- Hedges: Entered into swap arrangements to hedge
100% of Golar's exposure to Q2 and Q3 2022 incremental Hilli TTF linked 2022 production at an average TTF price of$25.37 5/MMBtu. - CoolCo transaction:
$184.0 million of cash and cash equivalents released to Golar and$340.1 million of Contractual debt1 removed from balance sheet following sale of first 4 vessels to CoolCo in Q1. Remaining 4 vessels sold in April and disposal of management companies contemplated to complete in Q2 expected to release approximately$33.0 million of cash and cash equivalents and derecognize a further$480.9 million of Contractual debt1. - Shares: Repurchased and then cancelled 368,496 Golar shares at a cost of
$6.6 million . 108.0 million shares issued and outstanding as of March 31, 2022. - ESG: 2021 Environment, Social and Governance report published on May 16, 2022.
- Invested in Oslo-based Aqualung Carbon Capture in May 2022, a technology company working on a promising carbon capture and separation membrane system that could be used on future FLNG units.
Financing facilities:
- Convertible Bond:
$317.3 million net outstanding balance of2.75% $402.5 million Convertible Bonds redeemed on February 15, 2022. - Credit Facility:
$131.0 million of new$200.0 million 3-year Corporate RCF drawn on February 4, 2022 and subsequently repaid on May 10, 2022. Facility remains available until 2024. - Bilateral Corporate Facility: Executed a new
$250 million 7-year bilateral corporate facility on February 11, 2022. Currently undrawn and available until June 30, 2022. - Finance tax lease case: Settled long running tax dispute in respect of legacy UK finance lease transactions resulting in an approximate
$66.0 million final cash settlement (including fees) payable by Golar in Q2.
FLNG:
- Utilization: Industry leading operations maintained with
100% commercial uptime by FLNG Hilli. - FLNG Hilli producing additional TTF linked 2022 volumes. Customer drilling campaign to prove up additional reserves completed with well testing underway.
- Construction: FLNG Gimi conversion project
83% technically complete. 19-million man-hours worked with strong safety record maintained. - Commercial: Continued progress on new FLNG projects with existing and new prospective counterparties.
Financial Review
Business Performance:
| 2022 | 2021 | 2021 | |
| Jan-Mar | Oct-Dec | Jan-Mar | |
| (in thousands of $) | Total | Total | Total |
| Net income | 410,014 | 45,811 | 63,104 |
| Income taxes | 375 | 1,110 | 182 |
| Net income before income taxes | 410,389 | 46,921 | 63,286 |
| Depreciation and amortization | 15,536 | 15,621 | 15,646 |
| Unrealized gain on oil and gas derivative instruments | (168,059) | (34,609) | (10,600) |
| Other non-operating (income)/losses | (350,185) | 50,010 | — |
| Interest income | (33) | (69) | (31) |
| Interest expense | 7,577 | 11,098 | 9,089 |
| Gains on derivative instruments | (31,536) | (7,285) | (23,351) |
| Other financial items, net | (527) | 1,204 | 203 |
| Losses/(income) from equity method investments | 1,056 | (1,641) | 682 |
| Net loss/(income) from discontinued operations | 209,228 | (21,293) | (13,039) |
| Adjusted EBITDA (1) | 93,446 | 59,957 | 41,885 |
| 2022 | 2021 | |||||||
| Jan-Mar | Oct-Dec | |||||||
| (in thousands) | Shipping | FLNG | Corporate and other | Total | Shipping | FLNG | Corporate and other | Total |
| Total operating revenues | 9,985 | 62,894 | 6,809 | 79,688 | 9,806 | 56,406 | 6,202 | 72,414 |
| Vessel operating expenses | (3,488) | (14,181) | (1,789) | (19,458) | 2,487 | (11,907) | (4,460) | (13,880) |
| Voyage, charterhire & commission (expenses)/income | (2,241) | (150) | (24) | (2,415) | (1,474) | (150) | 232 | (1,392) |
| Administrative expenses | (2) | (42) | (9,994) | (10,038) | (56) | (14) | (9,545) | (9,615) |
| Project development (expenses)/income | — | (1,540) | 638 | (902) | 143 | (1,055) | 407 | (505) |
| Realized gain on oil and gas derivative instrument (2) | — | 42,631 | — | 42,631 | — | 12,935 | — | 12,935 |
| Other operating income (3) | — | 3,940 | — | 3,940 | — | — | — | — |
| Adjusted EBITDA(1) | 4,254 | 93,552 | (4,360) | 93,446 | 10,906 | 56,215 | (7,164) | 59,957 |
(2) The line item “Realized and unrealized gain on oil and gas derivative instruments” in the Condensed 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 gain/(loss) on oil and gas derivative instruments”. The realized component comprised (i) Brent oil linked revenue of
(3) Included in “Other operating income” is
| 2021 | ||||
| Jan-Mar | ||||
| (in thousands of $) | Shipping | FLNG | Corporate and other | Total |
| Total operating revenues | 14,495 | 54,397 | 8,564 | 77,456 |
| Vessel operating expenses | (4,077) | (12,300) | (2,499) | (18,876) |
| Voyage, charterhire & commission expenses | (6,341) | (150) | (16) | (6,507) |
| Administrative expenses | (34) | (143) | (8,362) | (8,539) |
| Project development expenses | — | — | (1,649) | (1,649) |
| Adjusted EBITDA | 4,043 | 41,804 | (3,962) | 41,885 |
Golar reports today Q1 net income attributable to Golar of
Quarterly amortization of the day one gain recognized in respect of the incremental TTF linked production from FLNG Hilli contributed to the
Vessel operating expenses increased, from
The Brent oil linked component of Hilli's fees generates additional annual operating cash flows of approximately
The mark-to-market fair value of the Hilli Brent oil linked derivative asset increased by
Of the
An increase in the NFE share price between January 1 and March 31 resulted in the recognition of a Q1 unrealized mark-to-market gain of
Balance Sheet and Liquidity:
As of March 31, 2022 Golar had
| Expected FLNG funding sources | USD Million |
| March 31, 2022 Total Golar Cash1 | 329 |
| April 2022: Net proceeds from sale of 6.2m NFE shares | 253 |
| April 2022: Final settlement of legacy UK tax dispute | (66) |
| May 2022: Repayment of outstanding balance of Corporate RCF | (131) |
| Q2 2022 Balance of proceeds expected from CoolCo spin-off | 33 |
| Undrawn balance of | 200 |
| Undrawn | 250 |
| Potential near-term funding sources | 868 |
| Listed Securities1: | |
| NFE, Avenir, and CoolCo shares(3) | 719 |
| Net of Corporate RCF secured by NFE investment | (200) |
| Forecast Total Golar Cash and Listed Securities1 (available for future FLNG investment) | 1,387 |
(3) Based on market value as of May 25, 2022 for NFE and CoolCo and book value of Avenir as of March 31, 2022.
Inclusive of
Included within the
Of Golar's
Corporate and Other Matters:
As at March 31, 2022, Golar had 108.0 million shares issued and outstanding post the repurchase and subsequent cancellation of 368,496 shares during the quarter. There were also 1.1 million outstanding stock options with an average price of
On May 11, 2022 Golar invested
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 income/expenses +/- Income taxes +/- Equity in net (losses)/ earnings of affiliates - Net income attributable to non-controlling interests +/- Unrealized loss/(gain) on oil and gas derivative instruments + Depreciation and amortization + Impairment of long-term assets +/- Net income/(loss) 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 and removing the impact of depreciation, financing and tax items. |
| Last Twelve Months (“LTM”) Adjusted EBITDA | Net (loss)/income attributable to Golar LNG Limited | The sum of the most recent four quarters Adjusted EBITDA (defined above) | Same as Adjusted EBITDA. The 12 month trailing metric removes the impact of seasonality on our results. |
| Liquidity measures | |||
| Contractual debt | Total debt (current and non-current), net of deferred finance charges | '+ Debt within liabilities held for sale +VIE consolidation adjustments + Deferred finance charges + Deferred finance charges within liabilities held for sale | 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. |
| 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 (current and non-current) | We consolidate a number of lessor VIEs for our sale and leaseback facilities. This means that on consolidation, we include restricted cash held by the lessor VIEs. Total Golar Cash represents our cash and cash equivalents and restricted cash and short-term deposits (current and non-current) before consolidating the lessor VIEs. Management believe that this measure enables investors and users of our financial statements to assess our liquidity and aids comparability with our competitors. |
| Total Golar Cash and Listed Securities | Golar cash based on GAAP measures: + Cash and cash equivalents + Restricted cash and short-term deposits (current and non-current) + Other current assets + Equity method investments | Cash and cash equivalents (current assets) + Restricted cash and short-term deposits (current assets), adjusted to remove the effects of VIE restricted cash balance cash balance + Other current assets, adjusted to remove the effects of other current assets apart from Listed equity securities + Restricted cash (non-current assets) + Equity method investments (non-current assets), adjusted to remove the effects of ECGS | We consider our investments in listed equity securities and our equity method investment in CoolCo to be available for us to liquidate at short notice and therefore we consider available for funding our capital intensive growth projects. Management believes that this measure enables investors and users of our financial statements to assess our liquidity position to fund existing and future FLNG projects. |
Reconciliations - Liquidity Measures
Contractual Debt
| (in thousands of $) | March 31, 2022 | December 31, 2021 | March 31, 2021 |
| Total debt (current and non-current) net of deferred finance charges | 1,641,631 | 1,778,978 | 1,605,435 |
| Total debt within liabilities held for sale net of deferred finance charges | 319,263 | 630,823 | 768,447 |
| VIE consolidation adjustments | 285,107 | 315,652 | 295,466 |
| Deferred finance charges | 29,170 | 30,529 | 25,466 |
| Deferred finance charges within liabilities held for sale | 8 | 1,595 | 2,202 |
| Total Contractual Debt | 2,275,179 | 2,757,577 | 2,697,016 |
| Less: Golar Partners', Keppel's and B&V's share of the Hilli contractual debt | (385,932) | (395,081) | (422,529) |
| Less: Keppel's share of the Gimi debt | (145,500) | (123,000) | (103,500) |
| Golar's share of Contractual Debt | 1,743,747 | 2,239,496 | 2,170,987 |
Please see Appendix A for a capital repayment profile for Golar’s contractual debt.
Reconciliations - Liquidity Measures
Total Golar Cash
| (in thousands of $) | March 31, 2022 | December 31, 2021 | March 31, 2021 |
| Cash and cash equivalents | 209,054 | 234,826 | 122,887 |
| Restricted cash and short-term deposits (current and non-current) | 135,870 | 106,074 | 118,721 |
| Less: VIE restricted cash | (16,313) | (16,523) | (26,642) |
| Total Golar Cash | 328,611 | 324,377 | 214,966 |
Non-US GAAP Measures Used in Forecasting
Earnings Backlog: Earnings backlog represents the share of contracted fee income for executed contracts less forecasted operating expenses for these contracts. In calculating forecasted operating expenditure, management has assumed that where there is an Operating Services Agreement the amount receivable under the services agreement will cover the associated operating costs, therefore revenue from operating services agreements is excluded.
Definitions
TFDE: Tri-fuel Diesel Electric engine
FSRU: Floating Storage Regasification Unit
FLNG: Floating Liquefaction Natural Gas
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 “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “may,” “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 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 entered into in connection with the BP Greater Tortue / Ahmeyim Project (“Gimi GTA Project”);
- 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 Gimi GTA Project) and other contracts to which we are a party;
- claims made or losses incurred in connection with our continuing obligations with regard to Hygo Energy Transition Ltd (“Hygo”) and Golar LNG Partners LP (“Golar Partners”);
- the ability of Hygo, Golar Partners and New Fortress Energy Inc. (“NFE”) to meet their respective obligations to us, including indemnification obligations;
- a decline or continuing volatility in the global financial markets, specifically with respect to our equity holding in NFE;
- continuing volatility of commodity prices;
- failure of shipyards to comply with delivery schedules or performance specifications on a timely basis or at all;
- changes to rules and regulations applicable to liquefied natural gas (“LNG”) carriers, floating storage and regasification units (“FSRUs”), floating liquefaction natural gas vessels (“FLNGs”) or other parts of the LNG supply chain;
- 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 our ability to obtain additional financing on acceptable terms or at all;
- the length and severity of outbreaks of pandemics, including the worldwide outbreak of the novel coronavirus (“COVID-19”) and its impact on demand for LNG and natural gas, the timing of completion of our conversion projects, the operations of our charterers, our global operations and our business in general;
- failure of our contract counterparties to comply with their agreements with us or other key project stakeholders;
- changes in LNG carrier, FSRU, or FLNG charter rates, vessel values or technological advancements;
- our ability to close potential future sales of additional equity interests in our vessels, including the Hilli and Gimi or to monetize our remaining interest in NFE on a timely basis or at all;
- our ability to contract the full utilization of the Hilli or other vessels;
- changes in the supply of or demand for LNG or LNG carried by sea and for LNG carriers, FSRUs or FLNGs;
- a material decline or prolonged weakness in rates for LNG carriers, FSRUs or FLNGs;
- increases in costs, including, among other things, wages, insurance, provisions, repairs and maintenance;
- changes in the performance of the pool in which certain of our vessels operate;
- changes in trading patterns that affect the opportunities for the profitable operation of LNG carriers, FSRUs or FLNGs;
- 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 our relationship with our affiliates and the sustainability of any distributions they pay us;
- changes in general domestic and international political conditions, particularly where we operate;
- global economic trends, competition and geopolitical risks, including impacts from the ongoing conflict in Ukraine and the related sanctions and other measures, including the related impacts on the supply chain for our conversions;
- changes in the availability of vessels to purchase and in the time it takes to build new vessels;
- our inability to expand beyond the carriage of LNG and provision of FSRU and FLNGs, particularly through our innovative FLNG strategy;
- actions taken by regulatory authorities that may prohibit the access of LNG carriers, FSRUs 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 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.
May 26, 2022
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
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
Attachment
FAQ
What was Golar LNG's net income for Q1 2022?
How much did Golar LNG achieve in Adjusted EBITDA for Q1 2022?
What cash proceeds did Golar LNG realize from selling NFE shares?
How much cash and listed securities does Golar LNG currently hold?
What is the status of FLNG Gimi's construction?
