Golar LNG Q2 2013 results presentation
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Golar LNG Q2 2013 results presentation Golar LNG Q2 2013 results presentation Presentation Transcript

  • Second Quarter Results 2013 29 August 2013
  • This presentation 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 “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “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 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 presentation. 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 in trading 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 acceptance of such retrofitted vessels; increases in costs; changes in the availability of vessels to purchase, the time it takes to construct new vessels, or the vessels’ useful lives; and changes in the ability of Golar LNG to obtain 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-looking statements. Forward Looking Statements 2
  • Agenda 1. Q2 Highlights 2. Q2 Financial Highlights 3. Business Update 4. Summary and Outlook 3
  • Q2 2013: Highlights & Subsequent Events 4 Q2 HIGHLIGHTS Golar reports second quarter 2013 net income of $59.0 million (including a non-cash gain of $47.9 million on interest rate swaps). EBITDA generated in the quarter amounts to $8.2 million Underlying dividends received from Golar LNG Partners during the second quarter increase to $16.0 million from the first quarter level of $14.4 million. Spot market remains volatile and inefficient – as a result Hilli and Gandria enter layup in Indonesia. Board maintains dividend at $0.45 for the quarter.
  • Q2 2013: Highlights & Subsequent Events 5 SUBSEQUENT EVENTS Golar concludes $1.1 billion funding facility for 8 of its 13 newbuilds. Ten year FSRU time charter for the Golar Eskimo concluded with the Hashemite Kingdom of Jordan. Five year FSRU time charter for the Golar Igloo concluded with the Kuwait National Petroleum Company. Golar Tundra shipbuilding contract amended to include FSRU capability with new delivery date of November 2015. Golar Viking continues to trade in the spot market.
  • Financial Highlights Deconsolidated (unaudited) Consolidated (unaudited) Audited (USD million) Q2 2013 Q1 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 12m to Dec-12 Net operating revenues Operating expenses EBITDA Gain on dropdown of Maria Gain on loss of control Net financial income/(expenses) Net income Vessel numbers Time charter equivalent ($p/day) Utilisation (%) Dividend 26.1 12.3 8.2 0.1 - 48.9 59.0 5 86,955 80.3% 0.45 33.4 9.6 19.5 65.2 - (1.8) 85.6 5 66,152 61.8% 0.45 100.5 24.0 69.6 - - 36.8 77.7 13 107,945 94.2% 0.45 105.5 21.6 78.3 - - (11.1) 39.0 13 94,748 82.9% 0.45 107.5 23.8 76.9 - - (13.4) 22.8 13 91,479 79.1% 0.425 117.8 19.4 93.4 - - (11.0) 44.7 13 98,473 83.2% 0.425 103.9 17.8 79.5 - - (12.9) 35.4 13 97,118 89.7% 0.40 400.5 86.7 288.8 - 854.0 (42.9) 971.3 6 94,400 86.8% 1.6 6 Since Partners’ IPO and subsequent dropdowns, the majority of EBITDA contribution now resides in Golar Partners Golar continues to benefit from dropdown proceeds and increase in operating cashflow through higher dividends
  • Statement of Cash Flows 7 (USD thousands) 2013 Apr-Jun (unaudited) 2013 Jan-Mar (unaudited) 2013 Jan-Jun (unaudited) 2012 Oct-Dec (unaudited) 2012 Jan-Dec (audited) OPERATING ACTIVITIES Net Income before non-controlling interests Depreciation and amortization Drydocking expenditure Gain on business acquisition Gain on loss of control Gain on disposal to Golar Partners Other changes in operating assets and liabilities Dividends from Golar Partners Net cash provided by operating activities INVESTING ACTIVITIES Additions to newbuildings, vessels & equipment Other investing activities Net cash used in investing activities FINANCING ACTIVITIES Proceeds from long-term debt Proceeds from long-term debt from related parties Repayments of long-term debt from related parties Other Net cash (used in) provided by financing activity Net (decrease) increase in cash & cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 58,969 8,865 554 - - (126) (67,400) 16,868 17,730 (131,112) (30,409) (161,521) - - - (38,723) (38,723) (182,514) 373,971 191,457 85,564 8,806 (789) - - (65,239) (25,857) 14,422 16,907 (167,797) 102,497 (65,300) - - - (2,350) (2,350) (50,743) 424,714 373,971 144,533 17,671 (235) - - (65,365) (93,257) 31,290 34,637 (298,909) 72,088 (226,821) - - - (41,073) (41,073) (233,257) 424,714 191,457 887,749 20,742 (186) - (853,996) - 23,131 - 77,440 (94,915) 87,972 (6,943) 192,241 - - 43,512 235,753 306,250 118,464 424,714 1,014,443 85,524 (20,939) (4,084) (853,996) - 12,862 - 233,810 (342,987) 52,287 (290,700) 442,241 200,000 (280,000) 52,450 414,691 357,801 66,913 424,714
  • Dividend contribution by Partners 8 Since IPO, Golar Partners’ quarterly dividends have grown by 34% Golar dividend income from Partners has increased by 82% Since Q3 2012 total IDRs received have increased by 300% IDRs are currently at 23% level (25% including GP). With 2 FSRUs contracted and potential dropdowns, the level of IDRs gets closer to the highest level of 50% (including GP). Through its Partnership dividends, operational cashflow from its newbuildings, Golar is confident of at least maintaining its current level of dividend. 0 5000 10000 15000 20000 25000 30000 35000 40000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 IDRs Sub Units Common Units GLNG Divs GMLP Divs 30.0c 27.5c 40.0c 43.0c 43.0c 44.0c 47.5c 50.0c 51.5c 51.5c 32.5c 35.0c 40.0c 42.5c 42.5c 45.0c 33.4c 33.4c
  • Balance Sheet: Assets (USD thousands) 2013 Jun 30 (unaudited) 2013 Mar 31 (unaudited) 2012 Dec 31 (audited) 2012 Sep 30 (unaudited) 2012 Jun 30 (unaudited) Short term assets Cash and cash equivalents Restricted cash and short-term investments Other current assets Long term assets Restricted cash (relates to leases) Investments in available-for-sale securities Investment in affiliates Cost method investments Vessels and equipment, net Newbuildings Other long term assets TOTAL ASSETS 191,457 - 58,854 - 417,540 356,890 201,144 424,961 734,358 78,879 2,464,083 373,971 1,551 17,370 - 404,079 362,294 201,144 435,648 603,656 47,824 2,447,537 424,714 1,551 13,660 - 353,034 367,656 198,524 573,615 435,859 45,786 2,414,399 118,464 45,787 16,412 189,409 - 5,677 - 1,791,169 347,437 28,234 2,542,589 77,489 37,420 15,691 186,812 - 5,455 - 1,800,453 300,382 27,322 2,451,024 9
  • Balance Sheet: Liabilities (USD thousands) 2013 Jun 30 (unaudited) 2013 Mar 31 (unaudited) 2012 Dec 31 (audited) 2012 Sep 30 (unaudited) 2012 Jun 30 (unaudited) Short term liabilities Current portion of long term debt Current portion of capital lease obligations Other current liabilities Long term liabilities Long term debt Long term debt to related parties Long term capital lease obligations Other long term liabilities Golar LNG Ltd’s stockholders’ equity Non-controlling interest TOTAL LIABILITIES & EQUITY 9,400 - 35,519 403,605 - - 87,583 1,927,976 - 2,464,083 9,400 - 51,815 404,784 - - 90,965 1,890,573 - 2,447,537 14,400 - 72,659 490,506 - - 72,515 1,764,319 - 2,414,399 74,763 5,866 155,630 799,577 - 406,430 108,113 841,802 150,408 2,542,589 71,636 6,131 175,701 811,201 90,000 399,677 109,912 703,192 83,574 2,451,024 10
  • Financing of Newbuilding Programme 11 Having confirmed that the Golar Tundra is to be built as an FSRU, the total newbuild program CAPEX stands at $2.74 billion. To date the Company has paid $749m in pre-delivery instalments. A further $20m is expected to be paid before the first delivery in September. The Company currently has unrestricted cash reserves of approximately $146m. $1.125 billion ECA funding secured against first 8 vessel deliveries:  Represents approximately 65% LTV.  12-Year repayment profile.  All-in interest cost for first 7-years of 3.74%.  Transferrable between Golar and Golar Partners. Balance of approximately $720m will be funded as follows:  Potential dropdowns to GMLP of Golar Igloo and Golar Eskimo.  Another multi-unit facility, high yield bonds or short-term revolvers.  Operating cashflows, MLP dividends and IDRs.
  • Market Outlook Recent fixtures in $100,000 to 110,000 range for steam vessels LNG day rates continue to be driven by historically wide AB-PB spread and high tonne miles Initial Dry docking of the 2007 – 2009 fleet build out will continue in 2013-2014 – keeping dry docks at high levels African supply likely supportive  Angola and Algerian (Skikda) ramps may finally be taking place  Continued problems in Egypt on going but factored into market Long term charter rates continue to be supported by US exports:  Lake Charles approval could add 15 million tonnes of capacity by end of decade  ~ 40 million tonnes have now been approved for export to Non-FTA - Cove Point and Cameron approval expected in 2013 & 2014 12 Arctic Securities
  • Market Outlook New Build Tri-Fuel Diesel Electric day rates should be supported by fuel efficiency premium:  Currently ~ $15,000 per day.  Fully loaded TFDEs could have a benefit as high as ~ $30,000 day at current LNG prices.  Golar will control much of the undedicated TFDE fleet. First generation vessels will continue to be scrapped – laid up – converted –  ~ 10% of current fleet capacity.  Replacing vessels over 20 years would require about 30-40% of the new build orderbook.  Exit of first generation tonnage should cushion arrival of new builds. 13 Based on Fearnley LNGs weekly market report; chart prepared by Arctic Securities Based on Clarksons Fleet List; chart prepared by Arctic Securities
  • Golar’s Existing Portfolio 14 Capacity Current Ship Owned Built m3 Containment Charterer 2013 2014 2015 2016 2017 2018 2020 2021 2022 GOLAR LNG PARTNERS: Methane Princess 100% 2003 138,000 Membrane BG Group Golar Winter 100% 2004 138,000 Membrane Petrobras Golar Spirit 100% 1981 129,000 Moss Petrobras Golar Mazo 60% 2000 135,000 Moss Pertamina Golar Freeze 100% 1977 126,000 Moss DUSUP Nusantara Regas Satu 100% 1977 125,000 Moss Nusantara Golar Grand 100% 2006 145,700 Membrane BG Group Golar Maria 100% 2006 145,700 Membrane Eni SpA GOLAR LNG LTD Gimi 100% 1976 125,000 Moss E&P Major Hilli 100% 1975 125,000 Moss Layup Gandria 100% 1977 126,000 Moss Layup Golar Viking 100% 2005 140,000 Membrane E&P Major Golar Arctic 100% 2003 140,650 Membrane Trading House Spot Options Contracted FLNG Conversion Candidates 2019 PERTAMINA (LNGC) PETROBRAS (FSRU) DUSUP (FSRU) NUSANTARA REGAS (FSRU) ENI (LNGC) BG GROUP/GOLAR LNG (LNGC) BG GROUP (LNGC) PETROBRAS (FSRU)
  • 15 Current Newbuild Delivery Schedule Capacity Ship/Hull No: Built m3 Type Seal 2013 160,000 LNGC * 26 September 2013 Celsius 2013 160,000 LNGC * 16 October 2013 Igloo 2013 170,000 FSRU * 15 December 2013 Crystal 2013 160,000 LNGC * 3 January 2014 Penguin 2013 160,000 LNGC * 25 January 2014 Bear 2014 160,000 LNGC * 15 March 2014 Frost 2014 160,000 LNGC * 15 June 2014 Glacier 2014 162,000 LNGC * 11 July 2014 Snow 2014 160,000 LNGC * 30 September 2014 Kelvin 2014 162,000 LNGC * 2 October 2014 Ice 2014 160,000 LNGC * 30 November 2014 Eskimo 2014 160,000 FSRU * 24 December 2014 Tundra 2015 170,000 FSRU 30 November 2015 * 20152013 2014
  • Operations 16 Through its subsidiary management company, Golar Wilhelmsen Management, Golar ensures: An operation in compliance with ISO 9001 and 14001 with a goal of zero harm to people and a minimal environmental footprint. Strong and competent shore organisation with vast experience in LNG operation of LNGCs and FSRUs. Highly motivated and skilled crew, with a retention rate above 99%. Excellent safety statistics with a zero LTIF both in 2012 and 1st half 2013. Excellent operational performance with an up-time of close to 100% for the fleet. An extensive crewing programme ongoing to recruit, train and plan for crew to join the 13 newbuilds.
  • 17 FSRUs – Continued Success Continued growth in the FSRU Market anticipated Golar established as preferred FSRU provider for long term service. 6 firm long term (5 years or more) contracts for FSRUs representing approximately 40- 50% of the long term market. Firm contract signed with Samsung Heavy Industries to add regasification capacity to the Golar Tundra:  170,000 cubic meters of storage with 750 mmscf/day regasification capacity.  Ability to trade as an LNGC with DFDE propulsion.  Delivery in Q4 2015. Golar may also pursue niche opportunities using conversions – several smaller <3.0 mmtpa regasifcation projects well suited for fast track conversions.
  • 18 FSRUs – Jordan FSRU with Jordan finalized - 10 year contract:  First 5 years EBITDA of $46 Million.  Second 5 years EBITDA of $43 Million.  Jordan has option to terminate contract after 5 years with payment of a termination fee. FSRU is Golar Eskimo:  160,000 cubic meters of storage.  Up to 750 mmscf/day of regasification capacity.  Fuel efficient regasification process. Project start up expected Q4 2014 or Q1 2015. Excellent candidate for MLP drop down.
  • 19 FSRUs – Kuwait 5 year contract with Kuwait National Petroleum Company:  $213 Million TCP value over 5 years.  Contract is for 9 months of regasifaction service per year.  Golar will trade vessel as LNG carrier during off season. FSRU is Golar Igloo:  170,000 cubic meters of storage.  Up to 750 mmscf/day of regasification capacity.  Fuel efficient regasification process.  DFDE engines allow if to trade as very efficient LNG carrier. Project start up March 2014. Middle East is a significant area of LNG supply and demand – potential fixtures on both departure and return legs of off season. Excellent candidate for MLP drop down.
  • Floating Storage and Liquefaction Vessel FEED with Keppel near completion. Expected to confirm technical and economic viability of liquefaction solution. Construction time of approximately 30 months. Toll of $3-$4 per mmbtu. Based on converting a 125,000 cubic meter LNG Carrier:  2 to 4 liquefaction trains.  Each train 0.5 to 0.7 mmtpa of liquefaction capacity. Flexible liquefaction solution will allow Golar to offer contracts of 10 to 25 years. Modular design allows solution to be easily and efficiently scaled up or down depending on field requirements.  Golar is working on projects with reserve sizes that range from 500 BCF to 4 TCF. 20
  • Floating Liquefaction Continued progress on Douglas Channel:  FEED continues to progress.  Permitting process well underway.  Several key commercial and shareholder issues remain to be clarified before FID. Additional opportunities progressing in the Americas and West Africa. West Africa is an excellent fit for Golar’s technology:  Mature basin with a large number of offshore stranded fields.  Many opportunities to reduce gas flaring.  Offshore conditions relatively benign.  Most gas is relatively clean – low CO2 content.  Host governments have been very supportive of Golar’s fast track solution.  Technical due diligence and commercial discussions underway. 21
  • Summary and Outlook Significant milestones recently achieved: 2 long term FSRU contracts secured and $1.1bn newbuild facility concluded. Solid operational up time and safety performance despite some cost overruns on drydocking budgets. Medium to long term shipping fundamentals looking strong however some volatility anticipated short term as market rebalances. Vast majority of vessel earnings reside in Golar Partners - Golar LNG LTD’s non consolidated earnings will appear challenged pending chartering of newbuild fleet and subsequently leveraging MLP structure. Newbuild finance package supports superior competitive position for Golar newbuilds. Near term process being planned to structure and finance our commitment to FLNG business where tremendous potential exists - entry barriers remain high. 22