Interim Results for the Period Ended September 30, 2021
Golar LNG reported total operating revenues of $106.6 million and an Adjusted EBITDA of $74.5 million for Q3 2021, reflecting a 12% and 30% year-over-year increase, respectively. A net loss attributed to Golar reached $91.0 million. The FLNG Hilli maintained 100% commercial uptime, with increased earnings projected due to favorable LNG prices. Golar secured $682 million in new financing, improving liquidity. Future prospects include a significant earnings backlog from FLNG Gimi, with expected Adjusted EBITDA generation to quadruple in the next 2-3 years.
- Total operating revenues increased by 12% YoY to $106.6 million.
- Adjusted EBITDA rose by 30% YoY to $74.5 million.
- FLNG Hilli achieved 100% commercial uptime.
- Secured $682 million in new financing, enhancing liquidity.
- Anticipated quadrupling of Adjusted EBITDA from FLNG segment in the next 2-3 years.
- Net loss attributable to Golar of $91.0 million.
- Unrealized loss of $157.5 million on New Fortress Energy shares.
- Total operating revenues of
$106.6 million and Adjusted EBITDA of$74.5 million , up12% and30% YoY respectively - Signed 1-year shipping time charter at approximately
$100,000 /day - Secured up to
$682m in new financing facilities, securing refinancing of the convertible bond on favorable terms and balance sheet liquidity improvement - Growing customer interest for new FLNG projects
- Golar positioned to capitalize on macro tailwinds, benefiting from operating and financial leverage going into 2022+
FLNG Hilli achieved another quarter of
FLNG Gimi is
We expect Adjusted EBITDA generation from our FLNG segment to quadruple from current levels over the next 2-3 years on the back of contracted earnings from Gimi and increased earnings from our commodity exposure on Hilli.
The current strength of LNG prices and favorable price outlook further increases the attractiveness of our FLNG solutions. This is driving momentum for potential new FLNG projects. We are continuing constructive discussions with an existing customer for use of a five-million-ton Golar Mark III newbuild design and rapid progress is being made on potential integrated projects. Our portfolio of prospective FLNG customers across different geographies increased during the quarter.
Shipping Q3 2021 average daily Time Charter Equivalent1 (“TCE”) earnings of
Golar expects to see a significant increase in Adjusted EBITDA generation over the next 2-3 years, benefiting from operating and financial leverage from its existing asset portfolio in shipping and FLNG. This includes start-up of earnings from Golar’s current
Financial Summary
| (in thousands of $) | Q3 2021 | Q3 2020 | % Change | YTD 2021 | YTD 2020 | % Change |
| Net (loss)/income attributable to Golar LNG Ltd | (90,955) | (21,802) | 405,842 | (281,683) | (244)% | |
| Total operating revenues | 106,603 | 95,152 | 336,717 | 319,953 | ||
| Adjusted EBITDA | 74,489 | 57,287 | 219,127 | 200,645 | ||
| Golar's share of contractual debt1 | 2,100,733 | 2,361,936 | (11)% | 2,100,733 | 2,361,936 | (11)% |
Q3 Highlights and recent events
Financial and corporate:
- Profitability: Net loss attributable to Golar of
$91.0 million , and Adjusted EBITDA1 of$74.5 million for the quarter, including:$157.5 million non-cash mark to market loss recognized on New Fortress Energy Inc. ("NFE") shares based on September 30, 2021 discounted carrying value of$27.75 per share.$64.1 million non-cash gain recognized on Hilli Brent oil and TTF natural gas linked derivative instruments.$8.9 million realized gain on Hilli Brent oil derivative. This is expected to increase to around$13.0 million in Q4 2021.
- Hedges: Entered into swap arrangements to hedge part of incremental TTF linked production for Q1 2022 at a TTF price of
$28 /MMbtu.
Financing facilities:
- Unsecured Bond: Successfully placed USD
$300.0 million Norwegian Bonds. - Convertible Bond: As of November 8, 2021
$85.2 million of the February 2022 maturing$402.5 million 2.75% Convertible Bonds had been redeemed. Current net outstanding balance under the Convertible Bonds is now$317.3 million . - Credit Facility:
$200.0 million 3-year Revolving Credit Facility ("RCF") in executable form to replace existing$100.0 million December 2021 maturing RCF. - Loan:
$158.0 million 5-year Golar Tundra facility that can be increased to$182.0 million in final stages of documentation, replacing current$104.4 million June 2022 maturing facility. - Lender credit approval received to extend January 2022 maturing Golar Seal debt facility by 3-years.
FLNG:
- Utilization: Industry leading operations maintained with
100% commercial uptime by FLNG Hilli. - Agreed 0.2mtpa TTF linked increase in 2022 capacity utilization of Hilli and a one-time option for up to 0.4mtpa of additional capacity utilization from 2023.
- Construction: FLNG Gimi conversion project
75% technically complete. Over 13 million man hours worked. - Commercial: Significant progress made on new tolling based and integrated FLNG projects. Increasing portfolio of prospective FLNG customers across different geographies developed during the quarter.
Shipping:
- Shipping Rates: Q3 2021 TCE1 of
$49,500 for the fleet, up13% on Q2 2021 and27% on Q3 2020. Q4 2021 TCE1 of around$53,500 expected. - LTM TCE1 for the fleet was
$50,900. - Utilization: Fleet utilization at
98% , in line with Q2 2021 and up on the80% realized in Q3 2020. - Time Charter: Fixed an LNG carrier on a 12-month charter at approximately
$100,000 per day in October. - Revenue Backlog1: increased to
$267 million as of September 30, 2021. - Outlook: Increasing number of requests for medium and long-term charters at higher rates.
Financial Review
Business Performance:
| 2021 | 2020 | |||||
| Jul-Sep | Apr-Jun | Jul-Sep | ||||
| (in thousands of $) | Total | Total | Total | |||
| Net (loss)/profit | (55,635) | 507,335 | 8,104 | |||
| Income taxes | 152 | 156 | 216 | |||
| (Loss)/profit before income taxes | (55,483) | 507,491 | 8,320 | |||
| Depreciation and amortization | 26,489 | 26,493 | 26,875 | |||
| Unrealized (gain)/loss on oil and gas derivative instruments | (64,092) | (70,590) | (220) | |||
| Other non-operating losses, net | 153,791 | 158,125 | — | |||
| Interest income | (6) | (27) | (29) | |||
| Interest expense | 13,763 | 14,467 | 16,093 | |||
| (Gains)/losses on derivative instruments | (581) | 6,869 | 4,686 | |||
| Other financial items, net | (227) | (607) | (1,997) | |||
| Equity in net losses of affiliates | 718 | (839) | 129 | |||
| Net (income)/loss from discontinued operations | 117 | (574,356) | 3,430 | |||
| Adjusted EBITDA (1) | 74,489 | 67,026 | 57,287 | |||
| 2021 | ||||||||||||||||
| Jul-Sep | Apr-Jun | |||||||||||||||
| (in thousands of $) | Shipping | FLNG | Corporate and other | Total | Shipping | FLNG | Corporate and other | Total | ||||||||
| Total operating revenues | 45,829 | 54,480 | 6,294 | 106,603 | 41,833 | 55,737 | 6,717 | 104,287 | ||||||||
| Vessel operating expenses | (16,216) | (13,243) | (2,477) | (31,936) | (15,001) | (13,745) | (2,682) | (31,428) | ||||||||
| Voyage, charterhire & commission expenses | (1,211) | (150) | (25) | (1,386) | (2,072) | (150) | (25) | (2,247) | ||||||||
| Administrative expenses | (204) | 143 | (8,542) | (8,603) | (117) | (185) | (9,768) | (10,070) | ||||||||
| Project development (expenses)/income | — | (1,371) | 70 | (1,301) | — | (745) | 1,484 | 739 | ||||||||
| Realized gains on oil derivative instrument (2) | — | 8,862 | — | 8,862 | — | 2,975 | — | 2,975 | ||||||||
| Other operating income | 2,250 | — | — | 2,250 | 2,770 | — | — | 2,770 | ||||||||
| Adjusted EBITDA (1) | 30,448 | 48,721 | (4,680) | 74,489 | 27,413 | 43,887 | (4,274) | 67,026 | ||||||||
(2) The line item “Realized and unrealized gain/(loss) on oil and gas derivative instruments” in the Condensed Consolidated Statements of Operations relating to income from the Hilli Liquefaction Tolling Agreement (“LTA”) and natural gas derivative is split into: “Realized gains on oil derivative instrument” and “Unrealized gain/(loss) on oil and gas derivative instrument”. The unrealized component represents a mark-to-market gain of
| 2020 | ||||||||
| Jul-Sep | ||||||||
| (in thousands of $) | Shipping | FLNG | Corporate and other | Total | ||||
| Total operating revenues | 35,582 | 54,524 | 5,046 | 95,152 | ||||
| Vessel operating expenses | (14,899) | (13,459) | 125 | (28,233) | ||||
| Voyage, charterhire & commission expenses | (476) | — | — | (476) | ||||
| Administrative expenses | (436) | (204) | (7,349) | (7,989) | ||||
| Project development expenses | (39) | (32) | (1,096) | (1,167) | ||||
| Adjusted EBITDA (1) | 19,732 | 40,829 | (3,274) | 57,287 | ||||
We report today a Q3 net loss of
Total operating revenues increased from
Revenue from shipping, net of voyage, charter hire and commission expenses was
Total operating revenues from FLNG Hilli including base tolling fees and amortization of pre-acceptance amounts recognized normalized at
Scheduled repairs to a damaged motor on one of the carriers contributed to a
The Brent oil linked component of Hilli's fees generates additional annual operating cash flows of approximately
An ongoing loss of hire claim in respect of the recently repaired motor that failed on board the carrier referred to above accounts for the shipping related Other operating income of
Depreciation and amortization, at
The mark-to-market fair value of the Hilli Brent oil linked derivative asset increased by
After entering into agreement with the customer in July 2021 to increase Hilli production by 0.2 million tons in 2022, a derivative asset of
A decline in the NFE share price between July 1 and September 30 and discounting for the 15-day balance of the six-month holding period restriction resulted in the recognition of a Q3 unrealized loss of
As a result of the agreed
Equity in net losses of affiliates of
Net losses attributable to non-controlling interests relate to the Hilli, the Gimi and the finance lease lessor VIEs.
Financing and Liquidity:
Our cash position as at September 30, 2021 was
Inclusive of
Included within the
Corporate and Other Matters:
As at September 30, 2021, there were 108.2 million shares outstanding. There were also 2.2 million outstanding stock options with an average price of
Golar’s Annual General Meeting was held on August 10, 2021 in Bermuda.
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)/profit | '+Income taxes +Depreciation and amortization +/-Unrealized (loss)/gain on oil and gas derivative instrument +/-Other non-operating losses/(income), net -Interest income +Interest expense +/-(Losses)/gains on derivative instruments +/-Other financial items, net +/- Equity in net (losses)/earnings of affiliates +/- 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 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, which is also otherwise known as total operating days of the fleet. | 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 | |||
| 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. |
| 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. |
Reconciliations - Performance Measures (Average Daily TCE Rate)
| 2021 | 2021 | 2020 | ||||
| (in thousands of $) | Jul-Sep | Apr-Jun | Jul-Sep | |||
| Total operating revenues | 106,603 | 104,287 | 95,152 | |||
| Less: Liquefaction services revenue | (54,480) | (55,737) | (54,524) | |||
| Less: Vessel and other management fees | (6,294) | (6,717) | (5,046) | |||
| Time and voyage charter revenues | 45,829 | 41,833 | 35,582 | |||
| Less: Voyage and commission expenses | (1,210) | (2,072) | (476) | |||
| 44,619 | 39,761 | 35,106 | ||||
| Calendar days less scheduled off-hire days | 901 | 910 | 899 | |||
| Average daily TCE rate (to the closest | 49,500 | 43,700 | 39,100 | |||
Reconciliations - Liquidity Measures (Contractual Debt)
| (in thousands of $) | September 30, 2021 | June 30, 2021 | September 30, 2020 | |||
| Total debt (current and non-current) net of deferred finance charges | 2,281,721 | 2,379,581 | 2,541,773 | |||
| VIE consolidation adjustments | 321,427 | 316,894 | 255,936 | |||
| Deferred finance charges | 24,816 | 26,417 | 29,227 | |||
| Total Contractual Debt | 2,627,964 | 2,722,892 | 2,826,936 | |||
| Less: Golar Partners', Keppel's and B&V's share of the Hilli contractual debt | (404,231) | (413,380) | (397,500) | |||
| Less: Keppel's share of the Gimi debt | (123,000) | (123,000) | (67,500) | |||
| GLNG's Contractual Debt | 2,100,733 | 2,186,512 | 2,361,936 | |||
Please see Appendix A for a capital repayment profile for Golar’s contractual debt.
Reconciliations - Liquidity Measures (Total Golar Cash)
| (in thousands of $) | September 30, 2021 | June 30, 2021 | September 30, 2020 | |||
| Cash and cash equivalents | 123,690 | 207,272 | 76,696 | |||
| Restricted cash and short-term deposits (current and non-current) | 144,480 | 131,268 | 162,199 | |||
| Less: VIE restricted cash | (65,105) | (51,228) | (61,738) | |||
| Total Golar Cash | 203,065 | 287,312 | 177,157 | |||
Non-US GAAP Measures Used in Forecasting
Revenue Backlog: Revenue backlog is defined as the minimum 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.
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
Unrestricted cash: Unrestricted cash refers to our cash and cash equivalents
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;
- our ability to formalize a settlement agreement with authorities regarding tax benefits previously obtained under certain of our leasing agreements;
- 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 NFE to meet their respective obligations to us, including indemnification obligations;
- changes to rules and regulations applicable to LNG carriers, FSRUs, FLNGs or other parts of the LNG supply chain;
- changes in our ability to retrofit vessels as floating storage and regasification units (“FSRUs”) or floating liquefaction natural gas vessels (“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 liquefied natural gas (“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 vessel values and any future impairment charges we may incur;
- our ability to close potential future sales of additional equity interests in our vessels, including the Hilli and Gimi or to monetize our 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 carriers, FSRUs or FLNGs;
- a material decline or prolonged weakness in rates for LNG carriers, FSRUs or FLNGs;
- 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 LNG or LNG carried by sea;
- continuing volatility of commodity prices;
- 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 to us;
- a decline or continuing volatility in the global financial markets, specifically with respect to our equity holding in NFE;
- 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;
- failure of shipyards to comply with delivery schedules or performance specifications on a timely basis or at all;
- our inability to achieve successful utilization of our fleet or 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;
- 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.
November 9, 2021
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
Attachment
FAQ
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