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Golar LNG Q3 2012 results presentation

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  • 1. Third Quarter Results 2012 28 November 2012
  • 2. Forward Looking Statements 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 liquid 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. 2
  • 3. Agenda 1. Q3 Highlights 2. Q3 Financial Highlights 3. Business Update 4. Summary and Outlook 3
  • 4. Q3 2012: Highlights Consolidated operating income increases 21% over Q2 to $70.2 million; Net income increases 26% to $44.7 million Quarterly cash dividend increases to $0.425 per share Accelerated Q4 dividend of $0.425 per share for the fourth quarter of 2012 in December 2012 Vendor financing of $222 million provided by Golar LNG in respect of the Freeze is repaid following a successful NOK bond issue by Golar LNG Partners Golar Partners raises a further $181million in its 2nd successful follow-on equity issue. Proceeds used to part fund the acquisition of the Grand for $265m Agreement signed with Keppel for development of Golar’s first Floating Liquefied Natural Gas Vessel (“FLNGV”) 4
  • 5. Financial Highlights Q3 Q2 Q1 Q4 Q3 12m to (USD million) 2012 2012 2012 2011 2011 Dec-11 Net operating revenues 117.8 103.9 82.3 79.6 77.4 293.8 Operating expenses 19.4 17.8 27.9 17.6 15.0 62.9 EBITDA (ex. Commodities) 93.4 79.9 48.4 52.7 57.2 203.9 Net financial expenses (11.0) (12.9) (8.8) (5.6) (24.9) (53.1) Net income / loss 44.7 35.4 15.2 17.2 13.7 46.7 Vessel numbers 13 13 13 13 13 13 Time charter equivalent rates ($ p/day) 98,473 97,118 90,464 86,521 91,614 87,659 Utilisation (%) 83.2% 89.7% 99.5% 100% 99.4% 97.1% Dividend 0.425 0.40 0.35 0.325 0.30 1.15 5
  • 6. Net Revenue, EBITDA & DividendsUSD’M USD 140 0.45 Net Revenue EBITDA Dividend 0.4 120 0.35 100 0.3 80 0.25 0.2 60 0.15 40 0.1 20 0.05 0 0 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Note: EBITDA excludes Golar Commodities and any group gains/losses on sale of assets 6
  • 7. Balance Sheet: Assets 2012 2012 2012 2011 2011 Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 (unaudited) (unaudited) (unaudited) (audited) (unaudited) (USD thousands) Short term assets Cash and cash equivalents 118,464 77,489 107,868 66,913 115,412 Restricted cash and short-term investments 45,787 37,420 43,895 28,012 27,787 Other current assets 16,412 15,691 16,099 11,041 16,857 Long term assets Restricted cash (relates to leases) 189,409 186,812 189,438 185,270 185,588 Equity in net assets of non-consolidated investees 5,677 5,455 5,390 22,529 18,936 Vessels and equipment, net 1,791,169 1,800,453 1,770,477 1,704,907 1,684,652 Newbuildings 347,437 300,382 296,578 190,100 181,964 Other long term assets 28,234 27,322 24,080 23,862 33,273 TOTAL ASSETS 2,542,589 2,451,024 2,453,825 2,232,634 2,264,469 7
  • 8. Balance Sheet: Liabilities 2012 2012 2012 2011 2011 Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 (unaudited) (unaudited) (unaudited) (audited) (unaudited) (USD thousands) Short term liabilities Current portion of long term debt 74,763 71,636 64,433 64,306 63,139 Current portion of capital lease obligations 5,866 6,131 6,152 5,909 5,933 Other current liabilities 155,630 175,701 160,661 185,925 194,683 Long term liabilities Long term debt 799,577 811,201 839,381 627,243 729,983 Long term debt to related parties - 90,000 90,000 80,000 - Long term capital lease obligations 406,430 399,677 406,263 399,934 401,626 Other long term liabilities 108,113 109,912 111,702 113,497 111,785 Golar LNG Ltd’s stockholders’ equity 841,802 703,192 694,234 677,765 586,760 Non-controlling interest 150,408 83,574 80,999 78,055 170,560 TOTAL LIABILITIES 2,542,589 2,451,024 2,453,825 2,232,634 2,264,469 Percentage of Fixed Interest Debt 77% 8
  • 9. Statement of Cash Flows 2012 2012 2012 2012 (USD thousands) Jul-Sep Apr-Jun Jan-Sep Jan-Mar (unaudited) (unaudited) (unaudited) (unaudited) OPERATING ACTIVITIES Net Income before non-controlling interests 57,502 44,850 126,693 24,341 Depreciation and amortization 23,280 21,459 64,782 20,043 Drydocking expenditure (2,339) (5,210) (20,753) (13,204) Gain on business acquisition - - (4,084) (4,084) Other changes in operating assets and liabilities (9,675) (1,302) (30,264) (19,285) Net cash provided by operating activities 68,768 59,797 136,374 7,811 INVESTING ACTIVITIES Additions to newbuildings, vessels & equipment (65,865) (38,213) (228,072) (106,478) Other investing activities (6,780) 6,262 (35,686) (52,686) Net cash used in investing activities (72,645) (31,951) (263,758) (159,164) FINANCING ACTIVITIES Proceeds from long-term debt - - 250,000 250,000 Proceeds from long-term debt from related parties 30,000 - 200,000 170,000 Repayments of long-term debt from related parties (120,000) - (280,000) (160,000) Other 134,852 (58,225) 8,935 (67,692) Net cash provided by / (used in) financing activity 44,852 (58,225) 178,935 192,308 Net increase / (decrease) in cash & cash equivalents 40,975 (30,379) 51,551 40,955 Cash and cash equivalents at beginning of period 77,489 107,868 66,913 66,913 Cash and cash equivalents at end of period 118,464 77,489 118,464 107,868 9
  • 10. Market Outlook  Q3 saw a downward correction of spot rates as the arbitrage window tightened on the back of weak Far Eastern demand compounded by unanticipated production decreases  Rates could easily increase as arbitrage opportunities return, unexpected production issues are resolved and the few undedicated modern vessels are placed on longer term contracts  We are seeing some of these triggers now…. 10
  • 11. Market Outlook Despite a Recent Softening of Rates, Market Fundamentals Remain Unchanged LNG Supply LNG Shipping Requirement – September 2012 (Normalized 160,000m3 ships) 400 350 Speculative Possible 300 34% Probable Development Under Construction Operational 250 mmtpa 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Operational 249.4 253.4 252.5 249.0 249.2 250.0 Under Construction 5.3 8.9 12.0 30.4 50.7 69.6 Probable Development 0.0 0.0 0.0 0.0 3.9 7.1 Possible 0.0 0.0 0.0 0.0 0.0 11.5 Speculative 0.0 0.0 0.0 0.0 0.0 3.4 Total 254.7 262.3 264.5 279.4 303.9 341.6 Source: Poten & Partners Source: Wood Mackenzie 11
  • 12. Golar’s Existing Portfolio Capacity Current 3Ship Owned Built m Containment Charterer 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022GOLAR LNG PARTNERS:Methane Princess 100% 2003 138,000 Membrane BG Group BG GROUP (LNGC)Golar Winter 100% 2004 138,000 Membrane Petrobras PETROBRAS (FSRU)Golar Spirit 100% 1981 129,000 Moss Petrobras PETROBRAS (FSRU)Golar Mazo 60% 2000 135,000 Moss Pertamina PERTAMINA (LNGC)Golar Freeze 100% 1977 126,000 Moss DUSUP DUSUP (FSRU)Nusantara Regas Satu 100% 1977 125,000 Moss Nusantara NUSANTARA REGAS (FSRU)Golar Grand* 100% 2006 145,700 Membrane BG Group BG GROUP/GOLAR LNG (LNGC)GOLAR LNG LTDGimi 100% 1976 125,000 Moss E&P MajorHilli 100% 1975 125,000 Moss SpotGandria 100% 1977 126,000 Moss SpotGolar Viking 100% 2005 140,000 Membrane E&P MajorGolar Maria 100% 2006 145,700 Membrane SpotGolar Arctic 100% 2003 140,650 Membrane Trading House * Purchased by Golar LNG Partners effective November 8 2012. Contracted Options Conversion LNGC Reactivation 12
  • 13. Positioned to Capture the Market Capacity Ship/Hull No: Built m3 Type 2012 2013 2014 2015 Hilli 1975 125,000 LNGC Gandria 1977 126,000 LNGC Golar Maria 2006 145,700 LNGC Golar Viking 2005 140,000 LNGC Gimi 1976 125,000 LNGC Hull 2021 2013 160,000 LNGC Hull 2026 2013 160,000 LNGC Hull 2031 2013 170,000 FSRU Hull 2022 2013 160,000 LNGC Hull 2023 2013 160,000 LNGC Hull 2027 2014 160,000 LNGC Hull 2024 2014 160,000 FSRU NEWBUILDS Hull 2055 2014 160,000 LNGC Hull 658 2014 162,000 LNGC Hull 2047 2014 160,000 LNGC Hull 659 2014 162,000 LNGC Hull 2048 2014 160,000 LNGC Hull 2056 2015 160,000 LNGC* OPEN POSITIONS: LNG Carrier FSRU * Possible conversion t o FSRU subject t o GasAt acama sat isf ying f inal cont ract condit ions 13
  • 14. Financing of Capital Expenditure Target is to fully finance newbuild programme and continue dividend growth without additional equity raising or realising $825 million investment in Golar Partners Drop downs and financing efforts have raised approximately $0.9 billion for Golar LNG  Golar LNG Partners IPO together with subsequent dropdowns of the Freeze, Nusantara Regas Satu and Grand has generated approximately $0.9 billion for Golar LNG (assuming refinancing of the $155m vendor loan)  Newbuild vessels with deliveries from late 2013 will generate a steep increase in earnings and be potential candidates for further dropdowns  Material debt capacity with the underlying value of the combined existing and newbuild fleet  $500m cash on balance sheet today (assuming vendor loan refinanced)  Potential additional dropdowns and Partnership IDR higher splits to further improve financing 14
  • 15. FSRUs: Project Updates Growing the FSRU Franchise  Shortlisted for 5 projects (2012-2013 awards)  Gas Atacama award subject to possible extension of charterer conditions deadline Robust Demand for New FSRUs  25+ new projects being developed  Middle East activity continues to be very strong Nusantara Regas Satu  Rising demand has led to a significant increase in FSRU fleet utilization - very few FSRUs available before 2015 Well positioned for New Awards  2 FSRU newbuilds in 2013/2014  Only uncommitted newbuild FSRU in 2013  Conversions to suit market needs  Strong presence with shipyards  Demonstrable track record toward clients Freeze FSRU Picture courtesy of DUSUP 15
  • 16. Floating Liquefaction Simple proven liquefaction concept with minimal gas treatment and low cost execution model Floating solutions for liquefaction of clean and relatively dry gas Construction time of less than 24 months once initial FEED is completed Builds on Golar’s floating regassification model with proven concept and world class partners Modular and scalable for efficient expansions: can be offshore or connected to a jetty Initial vessel based on conversion of 125,000m3 Moss LNG Carrier – Golar is also evaluating barge based liquefaction concepts 16
  • 17. Floating Liquefaction: Commercialization Current focus is on two types of markets:  Pipeline Gas markets in the Americas: rapidly growing markets with significant unconventional production  Stranded Gas markets in Africa and SE Asia: clean and dry gas reserves that are currently uneconomic  Both markets are very well suited for Golar’s liquefaction model Flexible commercial approach:  Integrated midstream transactions  Golar can offer complete range of midstream LNG solutions including liquefaction, shipping and regassification 17
  • 18. Summary and Outlook Record earnings contribution announced to date resulting from long-term and opportunistic charters coupled with efficient operations On track for coverage on newbuild commitments and future increases in dividends without additional equity or realising Golar Partners investment Current short-term weakness in shipping set to improve over the medium to long-term Q4 results negatively influenced by Golar Spirit and reduced revenue on Golar Maria Strong presence in FSRU sphere - shortlisted in five current projects FLNGV initiative signed with Keppel supports Golar’s target for a fully integrated midstream position Company is well positioned to capitalise on high growth in LNG trade volumes in the years to come 18