fourth quarter 2018 results/media/files/g/golar-lng/...perenco and snh cameroon (50% capacity) •...
TRANSCRIPT
© Golar LNG Limited
Fourth Quarter
2018 Results
© Golar LNG Limited
FORWARD
LOOKING
STATEMENTS
2
This press release contains forward-looking statements as defined in the Securities Exchange Act of 1934, asamended and which reflect management’s current expectations, estimates and projections about itsoperations. All statements, other than statements of historical facts, that address activities and events thatshould, could or may occur in the future are forward-looking statements. Words such as “may,” “could,”“should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “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 certainrisks, 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 suchforward-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 obligationto update publicly any forward-looking statements whether as a result of new information, future events orotherwise.
Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changes in LNG carriers, FSRU and floating LNG vessel market trends, includingcharter rates, ship values and technological advancements; changes in the supply and demand for LNG;changes in commodity prices; changes in trading patterns that affect the opportunities for the profitableoperation of LNG carriers, FSRUs; and floating LNG vessels; changes in Golar’s ability to retrofit vessels asFSRUs and floating LNG vessels and in our ability to obtain financing for such retrofitting; increases in costs;changes in our ability to sell additional equity interests in Hilli on a timely basis or at all; our inability to meetour obligations under the agreement entered into in connection with the BP Greater Tortue / AhmeyimProject; our ability to make additional equity funding payments to Golar Power to meet our obligationsunder the shareholders agreement; changes in the availability of vessels to purchase, the time it takes toconstruct new vessels, or the vessels’ useful lives; changes in the ability of Golar to obtain additionalfinancing; changes in Golar’s relationships with major chartering parties; changes in Golar’s ability to sellvessels to Golar LNG Partners LP; Golar’s ability to integrate and realize the benefits of acquisitions; changesin rules and regulations applicable to LNG carriers, FSRUs and floating LNG vessels; our inability to achievesuccessful utilization of our expanded fleet or inability to expand beyond the liquefaction, carriage of LNGand provision of FSRUs particularly through JVs; changes in domestic and international political conditions,particularly where Golar operates; as well as other factors listed from time to time in registrationstatements, reports or other materials that we have filed with or furnished to the Securities and ExchangeCommission, 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 differmaterially from those expressed or implied by such forward-looking statements. The Company undertakesno obligation to publicly update or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise unless required by law.
© Golar LNG Limited
Financial Highlights
3
(USD thousands)
2018
Oct-Dec
(Unaudited)
2018
Jul-Sep
(Unaudited)
2017
Oct-Dec
(Unaudited)
2018
Jan-Dec
(Unaudited)
2017
Jan-Dec
(Audited)
Total operating revenues
Voyage, charter-hire and commission expenses
Net operating revenues
Operating expenses
Administrative expenses(1)
Project development expenses(1)
Realized gain on FLNG derivative instrument
Other operating gains and losses
Adjusted EBITDA(2)
Unrealized (loss) / gain on FLNG derivative instrument
Depreciation and amortization
Other non-operating income (loss)
Net interest expense
Other financial items, net
Income taxes
Equity in net (losses) earnings of affiliates
Net income attributable to non-controlling interests
Net (loss) income attributable to Golar LNG Limited
Number of vessels
Dividend (US cents)
181,939
(40,085)
141,854
(29,099)
(12,675)
(4,726)
12,419
13,444
121,217
(195,740)
(28,295)
-
(28,268)
(24,385)
(627)
(154,089)
(2,770)
(312,957)
14
0.15
123,101
(24,737)
98,364
(28,850)
(14,775)
(5,741)
11,270
23,260
83,528
77,470
(28,528)
-
(29,539)
(8,231)
(156)
2,668
(31,000)
66,212
14
0.15
57,587
(19,464)
38,123
(17,076)
(10,844)
(5,919)
-
-
4,284
15,100
(16,585)
(189)
(5,034)
24,122
(435)
(6,348)
(11,092)
3,823
14
0.05
430,604
(105,826)
324,778
(96,860)
(51,542)
(21,690)
26,737
36,722
218,145
(9,970)
(93,689)
-
(91,775)
(32,022)
(1,267)
(157,636)
(63,214)
(231,428)
14
0.475
143,537
(61,292)
82,245
(55,946)
(38,031)
(12,303)
-
-
(24,035)
15,100
(76,522)
(81)
(53,415)
20,627
(1,505)
(25,448)
(34,424)
(179,703)
14
0.20
(1) Presentation changed in Q2 2018, prior periods retrospectively adjusted, see the Appendix attached.
(2) Adjusted EBITDA is a non-GAAP measure. See the Appendix attached for a definition of this non-GAAP measure.
© Golar LNG Limited
Balance Sheet
(USD thousands)
2018
Dec 31
(Unaudited)
2018
Sep 30
(Unaudited)
2018
Jun 30
(Unaudited)
2018
Mar 31
(Unaudited)
2017
Dec 31
(Audited)
Current assets
Cash and cash equivalents
Restricted cash and short-term deposits
Other current assets & amounts due from related parties
Non-current assets
Restricted cash
Investments in affiliates
Vessels and equipment, net
Asset under development
Other non-current assets
TOTAL ASSETS
Current liabilities
Current portion of long-term debt and short-term debt
Other current liabilities & amounts due to related parties
Non-current liabilities
Long-term debt
Other long-term liabilities
Stockholders’ equity
TOTAL LIABILITIES & EQUITY
217,835
332,033
100,069
154,393
571,782
3,271,379
20,000
139,104
4,806,595
730,257
269,881
1,835,102
145,564
1,825,791
4,806,595
306,387
302,456
77,563
155,320
702,222
3,315,960
-
327,176
5,187,084
830,911
268,659
1,788,669
152,449
2,146,396
5,187,084
375,067
276,289
62,772
176,029
708,664
3,342,677
-
251,476
5,192,974
868,725
290,427
1,855,960
335,167
1,842,695
5,192,974
172,380
215,412
43,888
175,782
726,736
2,061,027
1,212,762
176,159
4,784,146
731,053
199,377
1,735,559
337,569
1,780,588
4,784,146
214,862
222,265
36,333
175,550
703,225
2,077,059
1,177,489
157,504
4,764,287
1,384,933
247,341
1,025,914
309,795
1,796,304
4,764,287
4
© Golar LNG Limited
Further Adjusted EBITDA1
5
Further adjusted EBITDA1; full year 2018 for shipping & corporate, 4Q annualized for FLNG Annualized EBITDA1 4Q 2018
(1) Adjusted EBITDA, Further adjusted EBITDA and annualized EBITDA are non-GAAP measures. See the Appendix attached for a definition of this non-GAAP measure.
© Golar LNG Limited 6
Shipping
0
50
100
150
200
250
300
350
400
450
2016 2017 2018 2019 2020 2021 20220.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
2016 2017 2018 2019 2020 2021 2022
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2012 2013 2014 2015 2016 2017 2018
Global Production (mmtpa) US Production (mmtpa)
Ton Miles Shipping balance
IHS Markit - Connect
IHS Markit - Connect IHS Markit - Connect
Clarksons Platou
© Golar LNG Limited
FLNGFLNG Hilli Episeyo (Cameroon):
Continues to operate with 100%
commercial availability.
16th cargo being offloaded to FSRU
Golar Nanook.
Train 3 option likely to be exercised
during 4Q 2019 with production
starting before year end.
Discussions with Perenco and SNH
also initiated regarding Train 4.
7
FLNG Hilli Episeyo and FSRU Golar Nanook alongside offshore Cameroon.
Gimi alongside Gandria at Keppel Shipyard.
BP-Kosmos (Mauritania/Senegal):
20-year contract for converted FLNG Gimi.
Conversion expected to cost approx. $1.3
billion exclusive of financing costs with
annual contracted revenues less forecasted
operating costs of $215m.
Keppel Capital to own 30% of Gimi shares.
Credit commitment for $700m construction &
long-term financing facility being finalized.
Gimi has arrived in Keppel Shipyard where
conversion work will shortly commence.
© Golar LNG Limited
FLNG
8
FLNG technology facilitates development of Tortue field
Pictures courtesy of BP.
© Golar LNG Limited
FLNG Gimi compared to Hilli Episeyo
9
Hilli Gimi
Construction & Design
Contract
Capex
Number of Trains
• Base Capacity approximately 2.5 mmtpa
• Vessel EPC by Keppel Shipyard in Singapore
• Black & Veatch PRICO liquefaction technology and topside E&P services
• 8-year term variable price tolling contract facing Perenco and SNH Cameroon (50% capacity)
• Contract earnings less forecasted operating costs of ~$160m p.a. plus Brent-linked income
• Capex budget of approximately $1.3Bn
• Delivered under budget
• In full production
− 2 trains operational
− 1 train available at customers option
− 1 train uncontracted, under negotiation
• 20-year term fixed price tolling contract facing BP
• Contract earnings less forecasted operating costs $215m p.a. plus performance upside
• Base Capacity approximately 2.5 mmtpa
• Vessel EPC by Keppel Shipyard in Singapore
• Black & Veatch PRICO liquefaction technology and topside E&P services
• Capex budget of approximately $1.3Bn
• 4 liquefaction trains fully contracted
Ownership • Original ownership 89% Golar / 10% Keppel / 1% B&V • 70% Golar / 30% Keppel
Similar / SuperiorPositioning?
Financing• $700 MM debt facility during construction
• $260MM top up post acceptance
• $700 MM senior secured loan
• Plan to increase closer to acceptance
Opex • Opex cost risk resides exclusively with Golar• Operating cost inflation mitigated by contract structure.
Fee receivable to cover operating costs in addition to bareboat rate
© Golar LNG Limited10
Golar experiencing a
step-up in FLNG
interest from other oil
majors and national
oil companies.
FLNG Prospects
© Golar LNG Limited
FSRU and PowerSergipe project continues to plan, bids for othersmaking progress:
Progress continues on schedule for Jan 2020 COD.
First commissioning cargo being collected.
Diesel to LNG switching opportunities targeted for
part use of remaining FSRU capacity.
Other FSRU-to-power opportunities being pursued
in Brazil, including Barcarena project.
Bids also submitted for FSRU projects requiring
both new build and conversions outside Brazil.
11
LNGC conversion candidate Golar Viking/ Croation FSRU site
Sergipe power station progress to date
Croatia FSRU - convert, sell and operate:
Golar LNG executed binding agreements with
project developer LNG Hrvatska d.o.o. to
convert, sell and operate the Golar Viking as
an FSRU in Croatia.
Conversion capex to be funded by stage
payments under the agreement.
Start-up in 4Q20. Conversion to commence
at end of current LNGC contract in 1Q20.
Commencement subject to certain conditions
precedent including confirmation of funding.
© Golar LNG Limited
Summary and Outlook
12
Carriers: Structural shipping shortage thesis still stands. Remain bullish. Shipping spin-off planned, pending market conditions.
FSRU & Power: Sergipe commences operations in less than 11 months. Further growth potential in Brazil this year. Strategic options for Golar Power being discussed with joint venture partner.
FLNG: FLNG tolling contract now agreed with BP. Hilli performing well and T3 utilization expected to commence during 4Q19. Significant uptick in FLNG interest.
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1 5 9 13 17 21 25
$'0
00
45% of FLNG Hilli T2
Golar’s share of contract earnings backlog1:
32% of GMLP (Incl. Hilli T1)
25% of Sergipe + 50% of Nanook
70% of FLNG Gimi
(1) Contract earnings backlog is a non-GAAP measure. See the Appendix attached for a definition of this non-GAAP measure.
THANK YOU
© Golar LNG Limited13
© Golar LNG Limited
Appendix: Non-GAAP Measures
14
Adjusted EBITDA: Adjusted EBITDA is calculated by taking net income before interest, tax, unrealized mark-to-market movements on the oil derivative instrument,
depreciation and amortization. We believe that the exclusion of these items enables investors and other users of our financial information to assess our sequential and
year over year performance and operating trends on a more comparable basis and is consistent with management’s own evaluation of business performance. Adjusted
EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net (loss) income or any other indicator of Golar's performance calculated
in accordance with US GAAP. Please see next slide for a reconciliation of Adjusted EBITDA to Net Income.
Further Adjusted EBITDA: We have utilized Q3 2018 Further Adjusted EBITDA for the purposes of showing the proportion of Adjusted EBITDA that is attributable to
Golar after removing the Partnership’s share of Hilli Adjusted EBITDA and the impact of non-occurring items. In looking at Q4 2018 Adjusted EBITDA, management has
removed One LNG dissolution costs and receipt of Tundra claim monies as these items would not be expected to occur on a regular basis. Management believes that
that the definition of Further Adjusted EBITDA provides relevant and useful information to investors. The following slide presents a reconciliation to the most directly
comparable financial measure under US GAAP. Further Adjusted EBITDA is not intended to represent future cashflows from operations or net income (loss) as defined
by US GAAP. This measure should be seen as a supplement to and not a substitute for our US GAAP measures of performance and the financial results calculated in
accordance with US GAAP and reconciliations from these results should be carefully evaluated. Please see next slide for a reconciliation of Further Adjusted EBITDA.
Partnership’s share of Hilli Adjusted EBITDA: In Q3 2018, we completed the dropdown of 50% of the Common Units in Golar HilliLLC to the Partnership. As we
have retained control we continue to consolidate the results of Golar Hilli LLC on a line by line basis. In order to calculate our proportionate share of Adjusted EBITDA
management has removed the amount attributable to the Partnership. The Partnership’s share of Hilli Adjusted EBITDA is defined as the Partnership’s share of Golar
Hilli LLC’s revenue and operating expenses before interest, tax, depreciation, and amortization. From a US GAAP perspective the Partnersh ip’s share of Golar HilliLLC
is reflected within “net income attributable to non-controlling interests”. Partnership’s share of Hilli Adjusted EBITDA is not intended to represent future cashflows
attributable to the Partnership. The measure should be seen as a supplement to and not a substitute for our US GAAP measures of performance.
Contract Earnings Backlog: Contract earnings backlog represents Golar’s 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. For contracts, which do not have a separate Operating Services Agreement
management has made an assumption about operating costs based on the current run rate. The only material application of this methodology was to the Hilli Earnings
backlog where we assumed operating costs of approximately $120kpd. For consolidated subsidiaries where we do not own 100% of the share capital, management
has only included our proportionate share of contract earnings. The material application of this assumption was to Gimi (70% ownership) and Hilli (44.5% of the
Common Unit entitlement). No contracted fee income was included for T3 or for the Hilli oil derivative. For equity accounted investments (the Partnership and Golar
Power) we have included our proportionate share of their contract earnings backlog under the same assumptions that we have applied to our consolidated subsidiaries.
In the future when our contract earnings backlog actualises, we will show our share of their earnings net of interest and tax in one line in the Income Statement “Equity
in net earnings/(losses) of affiliates”. Management has not forecasted net income for these initiatives as information to provide such a forward-looking estimate is not
available without unreasonable effort. Contract earnings backlog is not intended to represent EBITDA or future cashflows that will be generated from these projects.
This measure should be seen as a supplement and not a substitute for our US GAAP measures of performance.
Change of presentation: With effect from the quarter ended June 30, 2018, we presented a new line item in operating expenses in the income statement. The new
line item, "Project development expenses", includes the costs associated with pursuing future contracts and developing our pipeline of activities that have not met our
internal threshold for capitalization. Previously, these costs were presented within "Administrative expenses" along with our general overhead costs. We believe that the
introduction of this new line item in the income statement provides users of our financial statements greater transparency over a key element of our business. This
presentation change has been retrospectively adjusted in prior periods.
© Golar LNG Limited
Non-GAAP Reconciliations
15
Adjusted EBITDA Reconciliation 2018 2018
(in thousands of $) Oct-Dec Jan-Dec
Net (loss) income attributable to Golar LNG Limited (312,957) (231,428)
Adjusted for:
Interest income (2,983) (10,133)
Interest expense 31,251 101,908
Losses on derivative instruments 23,605 30,541
Other financial items, net 780 1,481
Income taxes 627 1,267
Equity in net losses (earnings) of affiliates 154,089 157,636
Net income attributable to non-controlling interests 2,770 63,214
Operating (loss) income (102,818) 114,486
Adjusted for:
Unrealized loss (gain) on oil derivative instrument 195,740 9,970
Depreciation and amortization 28,295 93,689
Adjusted EBITDA 121,217 218,145
Further Adjusted EBITDA
Adjusted EBITDA 121,217 218,145
Non re-occurring cash item: Golar Tundra Cash Recovery Claim (14,740) (50,740)
Non re-occurring cash item: One LNG dissolution 1,296 13,978
Partnership’s Share of Hilli Adjusted EBITDA (21,211) (38,180)
Further Adjusted EBITDA 86,562 143,203
Further Adjusted EBITDA Annualised 346,248 -
16
Non-GAAP Reconciliations ctd.
(Rounded to the nearest million)
Q4
“Vessel and Operations” compromises the sum of:
As disclosed in our Q4 2018 Earnings Release
Shipping1 Corporate1 Vessel and Operations1
FLNG Total
Adjusted EBITDA 76.45 (7.25) 69.20 52.00 121.20
Tundra claim (14.70) (14.70) (14.70)
One LNG 1.30 1.30
Partnership’s share of Hilli
(21.20) (21.20)
Further Adjusted EBITDA
61.75 (7.25) 54.50 32.10 86.60
Q4 Further Adjusted EBITDA annualised
247 (29) 128 346
(1) “Vessel and Operations” as presented in our 4Q Earnings release is separated into “Shipping” and “Corporate”.