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Golar LNG Q1 2013 results presentation

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  • 1. First Quarter Results 201330 May 2013
  • 2. This presentation contains forward-looking statements (as defined in Section 21E of the SecuritiesExchange Act of 1934, as amended) which reflects management’s current expectations, estimates andprojections about its operations. All statements, other than statements of historical facts, that addressactivities and events that will, should, could or may occur in the future are forward-looking statements.Words such as “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,”“believe,” “estimate,” “predict,” “propose,” “potential,” “continue” or the negative of these terms and similarexpressions are intended to identify such forward-looking statements. These statements are notguarantees of future performance and are subject to certain risks, uncertainties and other factors, some ofwhich are beyond our control and are difficult to predict. Therefore, actual outcomes and results maydiffer materially from what is expressed or forecasted in such forward-looking statements. You should notplace undue reliance on these forward-looking statements, which speak only as of the date of thispresentation. Unless legally required, Golar LNG 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: changes in liquified natural gas (LNG) and floating storage and regasification unit(FSRU) market trends, including charter rates; changes in the supply and demand for LNG; changes intrading patterns that affect the opportunities for the profitable operation of LNG carriers and FSRUs;changes in Golar LNG’s ability to retrofit vessels as FSRUs and the timing of the delivery and acceptanceof such retrofitted vessels; increases in costs; changes in the availability of vessels to purchase, the time ittakes to construct new vessels, or the vessels’ useful lives; and changes in the ability of Golar LNG toobtain additional financing, in particular, currently, in connection with the turmoil in financial markets.Unpredictable or unknown factors herein also could have material adverse effects on forward-lookingstatements.Forward Looking Statements2
  • 3. Agenda1. Q1 Highlights2. Q1 Financial Highlights3. Business Update4. Summary and Outlook3
  • 4. Q1 2013: Highlights & Subsequent Events4Q1 HIGHLIGHTSOn the basis that the results of Golar Partners are no longer consolidated,Golar reports operating income of $75.9 million and net income of $85.6million.Golar Partners completes its third follow-on equity offering raising netproceeds of $130 million.Golar sells its interests in the company that owns and operates the LNGcarrier Golar Maria to Golar Partners for $215 million.Golar Spirit completes its first post FSRU retrofit drydock.Golar chosen as preferred bidder for Jordan FSRU. Time Charterdiscussions progressing well.Board declares increased dividend of $0.45 for the quarter.
  • 5. Q1 2013: Highlights & Subsequent Events5SUBSEQUENT EVENTSGolar agrees terms for participation in the Douglas Channel LNGproject with a view to reaching Final Investment Decision (FID) in Q32013 and on stream date of late 2015 or early 2016.Golar Winter drydocking and modification work commenced.Hilli and Gandria enter layup in Indonesia.
  • 6. Deconsolidation of Golar Partners6Company determines that Golar Partners is deconsolidated effective from13 December, 2012.Q1 results reflect deconsolidation but also show consolidated basis tohelp with prior quarter comparatives.Main impact of deconsolidation are:De-recognise assets and liabilities associated with GMLP, replacedby recognising the fair value of its investment in GMLPFuture dropdowns will be at fair value (vs common control treatment),and gains/losses recognisedCash distributions received from GMLP derived from ownership ofcommon units, GP units and IDRs are recognised as DividendIncomeCompany re-iterates that cashflows in respect of its relationship withGMLP are not affected(See appendices for detailed accounting guidance on treatment of investments in GMLP)
  • 7. Financial HighlightsStandaloneConsolidated audited(USD million)Q12013Q12013Q42012Q32012Q22012Q1201212m toDec-12Net operating revenuesOperating expensesEBITDA (ex. Commodities)Gain on dropdown of MariaGain on loss of controlNet financial expensesNet incomeVessel numbersTime charter equivalent ($p/day)Utilisation (%)Dividend33.49.619.565.2-(1.8)85.6566,15261.8%0.45105.521.678.3--(11.1)39.01394,74882.9%0.45107.523.876.9--(13.4)22.81391,47979.1%0.425117.819.493.4--(11.0)44.71398,47383.2%0.425103.917.879.9--(12.9)35.41397,11889.7%0.4082.327.948.4--(8.8)15.21390,46499.5%0.35400.586.7288.8-854.0(42.9)971.3694,40087.1%1.67
  • 8. Balance Sheet: Assets(USD thousands)2013Mar 31(unaudited)2012Dec 31(audited)2012Sep 30(unaudited)2012Jun 30(unaudited)2012Mar 31(unaudited)Short term assetsCash and cash equivalentsRestricted cash and short-term investmentsOther current assetsLong term assetsRestricted cash (relates to leases)Investments in available-for-sale securitiesInvestment in affiliatesCost method investmentsVessels and equipment, netNewbuildingsOther long term assetsTOTAL ASSETS373,9711,55117,370-404,079362,294201,144435,648603,65647,8242,447,537424,7141,55113,660-353,034367,656198,524573,615435,85945,7862,414,399118,46445,78716,412189,409-5,677-1,791,169347,43728,2342,542,58977,48937,42015,691186,812-5,455-1,800,453300,38227,3222,451,024107,86843,89516,099189,438-5,390-1,770,477296,57824,0802,453,8258
  • 9. Balance Sheet: Liabilities(USD thousands)2013Mar 31(unaudited)2012Dec 31(audited)2012Sep 30(unaudited)2012Jun 30(unaudited)2012Mar 31(unaudited)Short term liabilitiesCurrent portion of long term debtCurrent portion of capital lease obligationsOther current liabilitiesLong term liabilitiesLong term debtLong term debt to related partiesLong term capital lease obligationsOther long term liabilitiesGolar LNG Ltd’s stockholders’ equityNon-controlling interestTOTAL LIABILITIES9,400-51,815404,784--90,9651,890,573-2,447,53714,400-72,659490,506--72,5151,764,319-2,414,39974,7635,866155,630799,577-406,430108,113841,802150,4082,542,58971,6366,131175,701811,20190,000399,677109,912703,19283,5742,451,02464,4336,152160,661839,38190,000406,263111,702694,23480,9992,453,8259
  • 10. Statement of Cash Flows10(USD thousands)2013Jan-Mar(unaudited)2012Oct-Dec(unaudited)2012Jul-Sep(unaudited)2012Jan-Dec(audited)OPERATING ACTIVITIESNet Income before non-controlling interestsDepreciation and amortizationDrydocking expenditureGain on business acquisitionGain on loss of controlGain on disposal to Golar PartnersOther changes in operating assets and liabilitiesNet cash provided by operating activitiesINVESTING ACTIVITIESAdditions to newbuildings, vessels & equipmentOther investing activitiesNet cash used in investing activitiesFINANCING ACTIVITIESProceeds from long-term debtProceeds from long-term debt from related partiesRepayments of long-term debt from related partiesOtherNet cash (used in) provided by financing activityNet (decrease) increase in cash & cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of period85,5648,806(789)--(65,239)(25,857)2,485(167,797)116,919(50,878)---(2,350)(2,350)(50,743)424,714373,971887,74920,742(186)-(853,996)-23,13177,440(94,915)87,972(6,943)192,241--43,512235,753306,250118,464424,71457,50223,280(2,339)---(9,675)68,768(65,865)(6,780)(72,645)-30,000(120,000)134,85244,85240,97577,489118,4641,014,44385,524(20,939)(4,084)(853,996)-12,862233,810(342,987)52,287(290,700)442,241200,000(280,000)52,450414,691357,80166,913424,714
  • 11. Financing of Newbuilding Programme11Golar’s progress in financing its newbuild programme is proceeding positivelyTo date the Company has paid $688m in pre-delivery instalments . A further$101m is expected to be paid before the first delivery in August. The Companycurrently have unrestricted cash reserves of approximately $270mDeliveries will be funded by a combination of: ECA funding – Korean ECAs have been engaged and a financing plan inrespect of a number of deliveries is being structured with them. Bond market proposals under consideration Bank funding - the Company continues to discuss various financingstructures with banks and termsheets agreed Dropdowns to GMLP – this continues to be major source of funding for theCompany. To date this structure has generated more than $1bn and theCompany remains confident of further dropdowns (and increased dividendsthrough its IDRs ) to assist the funding programmeA big portion of the financing will be in place prior to the first newbuild delivery
  • 12. Douglas Channel LNGGolar establishes a presence in a keydevelopment region with excellent partners andsignificant expansion optionalityFramework agreement executed between Golar,Haisla First Nation, LNG Partners and a largeenergy companyProject partners have made firm fundingcommitments to take project to Final InvestmentDecision (FID), expected in Q3 2013Golar has secured a minimum of 25% of theproject0.6–0.7 mmtpa of capacity expected on streamlate 2015/early 2016Golar has opportunity to provide shippingThe project partners will investigate the executionof additional train of 1.1 mmtpaGolar will have an option to own a minimum of25% of additional liquefaction trainProject is stepping stone for further opportunitiesin the region12
  • 13. Floating LiquefactionAdditional projects are at various stagesof developmentDeveloping projects based on pipelinequality gas in the Americas and strandedor flared gas in West AfricaBuilding relationships with world classpartners in the upstream and downstreamis key to the successful execution ofprojectsDouglas Channel model of partnering withproject sponsors and off takers to bereplicated globallyInitial projects have very strongeconomics but significant executionhurdles remainGolar Production will be formed asfunding commitments ramp up – currentlyexpected in 2H 2013Golar is receiving rights to provideshipping to multiple projects13
  • 14. Market Outlook Strong demand in Asia coupled with weak European demand should keep the Europe – Asia spreadwide. This will pull Atlantic Basin cargoes east and be supportive for day rates for the balance of 2013 Vessels will arrive before liquefaction ramps up to full capacity• Golar will manage portfolio with a mixture of spot, mid and long term charters to allow Golar tocapture value as trains ramp up to capacity Spot market remains firm with steady rates – beginning to see increased activity as seasonal demandramps back up from Q2 low Newbuild DFDE’s have a significant fuel efficiency advantage over steam turbines and older vessels First Generation tonnage will exit the market over 2014 and 2015 offsetting some of the new buildadditions14Vessels Arrive Before Liquefaction Day Rates vs. Asia-NBPSource: Arctic Securities
  • 15. Market Outlook – US LNG Exports15Freeport LNG becomes second project to receiveDOE permit to export LNG to non-FTA countriesSabine Pass and Freeport create 28 million tonnesper annum of nameplate export capacityUS Exports will lead to a material increase in tonnemiles if targeted at Asia Australia to Japan ~ 0.75 LNGCs per 1.0mmtpa of LNG USGC to Japan ~ 1.5 LNGCs per mmtpa (usingPanama) USGC to Japan ~ 2.25 LNGCs per mmtpa(using Suez)Project off takers are pursuing a variety of strategiesto secure tonnage – including long term chartersSome additional projects that may receive exportauthorization in the next 24 months: Cove Point (5.0), Cameron (13.5) and LakeCharles (15.0) combined could be an additional~ 33 mmtpa of nameplate capacitySabine Pass Liquefaction1st 5 projects ~ 60 mmtpa
  • 16. Golar’s Existing Portfolio16* Purchased by Golar LNG Partners effective February 7 2013.
  • 17. Positioned to Capture the Market17CapacityShip/Hull No: Built m3TypeHilli 1975 125,000 LNGCGandria 1977 126,000 LNGCGolar Viking 2005 140,000 LNGCGimi 1976 125,000 LNGCSeal 2013 160,000 LNGCCelsius 2013 160,000 LNGCIgloo 2013 170,000 FSRUCrystal 2013 160,000 LNGCPenguin 2013 160,000 LNGCBear 2014 160,000 LNGCEskimo 2014 160,000 FSRUFrost 2014 160,000 LNGCGlacier 2014 162,000 LNGCSnow 2014 160,000 LNGCKelvin 2014 162,000 LNGCIce 2014 160,000 LNGCTundra 2015 160,000 LNGCOPEN POSITIONS: LNG Carrier FSRU FLNG Conversion Candidate20152013 2014NEWBUILDS
  • 18. 18Nusantara Regas SatuFSRUs: Project UpdatesGolar Spirit leaves drydockCommercial discussions with Jordan are nearingcompletion on Golar Eskimo Project expected be operational by end of2014 or early 2015Golar Igloo is attracting significant interest in themarket Only uncommitted FSRU available before2015 Short listed for 2 tenders Direct negotiations with project developersare also underwayGas Atacama – Golar remains exclusive providerbut project remains in indefinite delayFSRU market continues to expand – Middle Eastand South America remain key development areasWest Africa, South Asia and South East Asia arebeginning to see more credible projects
  • 19. Summary and OutlookMinimal operational downtime and continued superior safety performanceQ2 results will be impacted by further drydockings and longer term resultsaffected by volatility in shipping ratesGrowth in dividends highlights Board’s confidence in Company’sperformance with firm intention to maintain current levelsFinancing of newbuild deliveries progresses positively. Company looking toput into place a multi-vessel facility prior to receiving its first deliveryFSRU opportunities continue to expand. Jordan FSRU contracts substantiallyagreed and the Company is short-listed for another 2 projectsDC Project provides Golar with its first liquefaction deal and a significantstepping stone for further opportunities in that regionAdditional liquefaction projects are under developmentGolar schedules launch of new FLNG entity to coincide with completion ofFEED work and funding requirement of active opportunities become morematerial19
  • 20. AppendixAPPENDIX
  • 21. Appendix AInvestment typeAccounting ClassificationDuring Subordination period*Following expiry of subordinationperiod*Common UnitsAvailable-for-sale securities. (These arere-measured each quarter withmovement taken to Accumulated OtherComprehensive Income “AOCI”).Associate (equity method ofaccounting)Subordinated Units (Convert intocommon units upon expiry ofsubordination period*)Associate N/aGeneral Partner Units (“GP”) Cost-method investment AssociateIncentive Distribution Rights (“IDRs”) Cost-method investment Cost-method investmentBalance Sheet Treatment of Investments in Golar Partners
  • 22. Appendix BIncome Statement Treatment of Investments in Golar PartnersAccounting treatmentDuring Subordination period* Following expiry of subordination period*OPERATINGINCOMEA) Gain on dropdowns to GolarPartnersDeferred profit allocated (on a fair value basis) to thesubordinated units only.Deferred Profit calculated based on interests in:- common,- GP units.Deferred Profit is amortised on a straight-line basis and based onthe underlying asset allocated on a pro rata basis to – vessels (UEL)and charters (term).NON-OPERATINGINCOMEB) Gain on loss of control(deconsolidation)One-off Q4’12 gain, being difference of fair value less the carryingvalue of Golar Partner’s net assets and non-controlling interest.N/aThe gain will result in a basis difference that will be amortizedgoing forwards.C) Dividend income (excludingincome on associate portion)Dividends receivable from: Dividends receivable fromCommon units, IDRs onlyGP interest and IDRsD) Gain on disposal or deemeddisposal of Available-for-salesecuritiesUnrealized gain or loss in Accumulated Other ComprehensiveIncome (“AOCI”) will be recognized in the P&L upon disposal.The common units will be reclassified as an Associate interest andconsidered a deemed disposal. The unrealized gain or loss in AOCIwill be recognized in the P&L.E) Equity in net earnings of affiliates(comprises 2 components)i) Share of associate earnings based on subordinated units, only. To be based on interests in common units and GP units.ii) Less: Amortization expense of basis difference arising on Gainon loss of control. The “basis difference” (defined in B above) isallocated only to subordinated units (fair value basis).Amortization to increase to reflect share of basis difference relatingto common & GP units.