2013-02-28 15:28:22 -
· Golar LNG Partners reports net income attributable to unit holders of
$27.3 million and operating income of $46.0 million for the fourth quarter of
· Generated distributable cash flow of $22.4 million for the fourth
quarter of 2012
· Distribution increased to $0.50 per unit for the fourth quarter of 2012
· Completed second follow-on offering raising net proceeds of approximately
· Completion of acquisition of interests in the companies that lease and
operate the LNG carrier Golar Grand
· Issued and listed NOK 1,300 million bonds in the Norwegian market
(approximately $227 million) and repaid $222 million vendor loan from Golar
LNG Limited in respect of the Golar Freeze acquisition
The $155 million vendor loan from Golar LNG Limited in respect of the
Nusantara Regas Satu ("NR Satu") acquisition is repaid following the successful
completion of the NR Satu refinancing
· Increase in distribution announced following the completion of
acquisition of interest in the company that owns and operates the LNG
carrier Golar Maria
· Completed third follow-on equity offering raising total net proceeds
of approximately $130 million
Financial Results Overview
Golar LNG Partners LP ("Golar Partners" or the "Partnership") reports net
attributable to unit holders of $27.3 million and operating income of $46.0
million for the fourth quarter of 2012 ("the fourth quarter"), as compared to
net income attributable to unit holders of $25.2 million and operating profit of
$35.5 million for the fourth quarter of 2011(1).
(1)Following the acquisition of the Golar Grand and NR Satu from Golar, the
comparative results for the fourth quarter and year ended 2011 assume that the
Golar Grand and NR Satu were wholly owned by the Partnership for the entire
period that the vessels have been under the common control of Golar.
As required by US GAAP, following the acquisition of the LNG carrier, the Golar
Grand from Golar LNG Limited ("Golar" or "Golar LNG"), the results
fourth quarter and year ended December 31, 2012 and comparative numbers for the
fourth quarter and year ended December 31, 2011 assume that the Golar Grand was
wholly owned by the Partnership for the entire period that the vessel has been
under the common control of Golar. These results therefore include the
historical carved out results of the Golar Grand.
There was a significant improvement in operating results for the fourth quarter
of 2012 compared to the same period in 2011 due largely to the contribution of
the NR Satu. This is because the NR Satu was on hire throughout the fourth
quarter of 2012 but was undergoing its conversion to an FSRU during the fourth
quarter of 2011 and, therefore, not generating revenues. The Golar Spirit was
offhire from December 11, 2012, as planned, when the vessel commenced its
transit to its first drydock as an FSRU. Operating results for the fourth
quarter have therefore been negatively impacted by this offhire time for Golar
Spirit and the related fuel costs. All other vessels operated well throughout
the quarter with 100 per cent utilization.
Total offhire time for Golar Spirit drydock is now expected to be approximately
eleven weeks. This is not however, expected to be indicative of future drydock
offhire time. The Golar Mazo is planned to drydock at the beginning of the
second quarter of 2013 but no offhire time is expected due to the time allowance
for drydocking provided by the charter. The Methane Princess is expected to
drydock towards the end of the second quarter of 2013 and approximately 3-4
weeks offhire time is expected.
Towards the end of the first quarter of 2013 the Golar Winter is expected to
commence its drydock and agreed modification work. Golar Winter is expected to
be offhire for a total of approximately six weeks commencing March/April 2013.
Following the completion of the agreed modification work to Golar Winter, Golar
Partners will receive approximately $24 million in additional revenue evenly
over the remaining term of the contract (eleven years) commencing in the third
quarter of 2013. This is before the effect of rate escalation as provided for in
the time charter.
Net interest expenses increased to $10.7 million for the fourth quarter of
2012 compared to $6.8 million for the same period in 2011. This is principally
due to additional interest cost associated with the vendor loan from Golar in
respect of the NR Satu. During the fourth quarter, the Partnership entered into
a $155 million term loan facility and a $20 million revolving loan facility with
a group of banks and repaid the vendor loan in respect of the NR Satu in
Other financial items loss for the fourth quarter of 2012 of $0.5 million is
consistent with the loss of $0.5 million for the fourth quarter of 2011.
The Partnership's Distributable Cash Flow(2) for the fourth quarter of 2012 was
$22.4 million as compared to $25.2 million in the third quarter of 2012. These
amounts are after adjustments to remove dropdown vessels results prior to their
actual acquisition date. The reduction is due to offhire time and fuel cost
related to the Golar Spirit drydocking in the fourth quarter as well as higher
average operating costs in the fourth quarter. This is offset in part by the
contribution of the Golar Grand from November 8, 2012.
On January 23, 2013, Golar Partners declared an increased distribution for the
fourth quarter of $0.50 per unit. This represented a 5.3% increase from the
third quarter of 2012 and reflected the full accretive value of the acquisition
of the Golar Grand. The dividend was paid on February 14, 2013.
(2)Distributable cash flow is a non-GAAP financial measure used by investors to
measure the performance of master limited partnerships. Please see Appendix A
for a reconciliation to the most directly comparable GAAP financial measure.
Follow-on Equity Offerings
In November 2012, the Partnership completed its second follow-on equity offering
selling a total of 4,300,000 common units, representing limited partner
interests, at a price of $30.50 per common unit. In addition, Golar GP LLC, the
Partnership's general partner, contributed approximately $3.6 million to the
Partnership to maintain its 2.0% general partner interest in the Partnership.
Simultaneously, the Partnership also closed a private placement of 1,524,590
common units to Golar at a price of $30.50 per common unit. The Partnership's
total combined net proceeds amounted to approximately $180 million.
Subsequent to the quarter end, in February 2013, the Partnership completed its
third follow-on offering selling a total of 3,900,000 common units, representing
limited partner interests, at a price of 29.74 per common unit. In addition,
Golar GP LLC, the Partnership's general partner, contributed approximately $2.6
million to the Partnership to maintain its 2.0% general partner interest in the
Partnership. Simultaneously, the Partnership also closed a private placement of
416,947 common units to Golar at a price of $29.74 per common unit. The
Partnership's total combined net proceeds amounted to approximately $130
LNG carrier Golar Grand
In November 2012, the Partnership completed the acquisition of interests in the
companies that lease and operate the LNG carrier Golar Grand for a purchase
price of $265 million. In connection with the acquisition, the Partnership
assumed a $90 million finance lease liability (net of restricted cash) in
respect of the Golar Grand with the balance of the purchase price funded using
the proceeds of its second follow-on equity offering. The Golar Grand is on a
three year charter to Methane Services Limited ("MSL"), a wholly owned
subsidiary of BG Group. MSL have an option to extend the charter term for an
additional three years. The Partnership have also entered into an Option
Agreement pursuant to which the Partnership has the right to cause Golar LNG to
charter the vessel from March 2015 until October 2017, in the event MSL does not
exercise the option to extend. The Partnership estimates that the Golar Grand
acquisition will give rise to annual revenues between $42 million and $44
million and annual net cash from operations (before the deduction of interest
costs) between $36 million and $38 million during the term of its charter with
Methane Services Limited.
LNG carrier Golar Maria
In February 2013, the Partnership completed its acquisition of interests in the
company that owns and operates the LNG carrier, the Golar Maria, from Golar LNG
for a purchase price of $215 million. The Golar Maria was delivered to its
current charterer, LNG Shipping S.p.A. ("LNG Shipping"), a subsidiary of Eni
S.p.A in November 2012 under a charter with an initial term expiring in December
2017. The acquisition is expected to generate annual revenues between $28
million and $29 million and annual net cash from operations (before the
deduction of interest costs) between $22 million and $24 million during the term
of its charter with LNG Shipping.
The Partnership financed the acquisition of the Golar Maria by assuming the debt
on the vessel amounting to approximately $89 million and the remainder from the
net proceeds of its equity offering that completed in February 2013.
Financing and Liquidity
Bond issuance for NOK 1,300 million
In September 2012, the Partnership successfully completed the issuance of a NOK
1,300 million bond in the Norwegian bond market with maturity expected to be on
October 12, 2017. The aggregate net principal amount of the bonds is equivalent
to approximately USD 227 million and has been swapped to US dollars, with a
fixed interest rate of 6.485%. Golar Partners listed the bonds on the Oslo Stock
Exchange in December 2012.
Subsequent to the issuance of the bonds, in October 2012, the Partnership used
some of the net proceeds to repay the vendor loan from Golar of $222.3 million
in respect of the Golar Freeze acquisition.
NR Satu Debt Financing
In December 2012, PT Golar Indonesia, the company that owns and operates the
FSRU, NR Satu, entered into a 7 year secured loan facility. The total facility
is $175 million and is split into two tranches, a $155 million term loan
facility and a $20 million revolving facility. The facility is with a syndicate
of banks and bears interest at LIBOR plus a margin. The facility has a balloon
payment of $52.5 million payable after 7 years.
Immediately after the closing of the NR Satu facility, the Partnership used the
proceeds to repay the vendor loan from Golar of $155 million in respect of the
NR Satu acquisition. The $20 million revolving tranche remains undrawn.
In February 2013, the Partnership entered into interest rate swaps to fix the
LIBOR interest rate on a principal amount of $122.5 million in connection with
the NR Satu financing at an average rate of 1.27%.
As of December 31, 2012 the Partnership had cash and cash equivalents of $66.3
million and undrawn revolving credit facilities of $40 million. Total debt and
capital lease obligations net of restricted cash was $930.4 million as of
December 31, 2012.
Based on the above debt amount and annualized(3) fourth quarter 2012 adjusted
EBITDA(4 )Golar Partners has a debt to adjusted EBITDA multiple of 3.9 times.
As of December 31, 2012, Golar Partners had interest rate swaps with a notional
outstanding value of $759.6 million (including swaps of notional amount of
$227.2 million in connection with the Partnership's bonds) representing
approximately 81.6% of total debt and capital lease obligations, net of
restricted cash. As noted above, subsequent to the quarter end, the Partnership
swapped an additional notional amount of $122.5 million. The average fixed
interest rate of swaps related to bank debt and capital lease obligations is
approximately 2.5%. Average bank margins paid on outstanding bank debt in
addition to the interest rate are approximately 1.84%. The all in rate of
interest payable on the Partnerships bonds is 6.485%.
(3)Annualized means the figure for the quarter multiplied by 4.
(4)Adjusted EBITDA: Earnings before interest, other financial items, taxes, non-
controlling interest, depreciation and amortization. Adjusted EBITDA is a non-
GAAP financial measure used by investors to measure our performance. Please see
Appendix A for a reconciliation to the most directly comparable GAAP financial
Since Golar Partners IPO in April 2011 quarterly distributions have increased
from the minimum quarterly distribution of $0.385 per unit to $0.475 as paid
prior to December 31, 2012. This represents an increase of 23.4%. As a result of
the Golar Grand acquisition, Golar Partners' has further increased quarterly
distributions from $0.475 per unit to $0.50 per unit. This increased
distribution, representing a 5.3% increase, was declared for the fourth quarter
of 2012 and paid in February 2013.
Following the acquisition of the Golar Maria the Partnership's management
intends to recommend to the Board an increase in the Partnership's quarterly
cash distribution of between $0.0125 and $0.0175 (or an annualized increase of
between $0.05 and $0.07), which would become effective for the distribution with
respect to the quarter ending March 31, 2013. If approved this would result in a
quarterly distribution level of between $0.5125 and $0.5175 representing an
increase of between 2.5% and 3.5% over the $0.50 distribution paid in February
The Board is pleased with the acquisition of the Golar Maria, particularly as it
is further demonstration of the strong incentive of both the Partnership and
Golar to pursue further drop-down transactions. It also maintains the pace of
strong distribution growth that the Partnership is highly focused on.
First quarter 2013 operating results will be positively impacted by the
acquisition of the Golar Maria but will also reflect offhire related to the
Golar Spirit drydock and the likely commencement of the Golar Winter drydock and
modification work. The rate increase in connection with the Golar Winter
modification work will commence in the third quarter of 2013.
Golar has a fleet of eleven newbuild LNG carriers, four of which deliver in
2013 and two FSRU's, one of which delivers in 2013. With strong market
fundamentals and this fleet of potential drop-down vessels that Golar owns, the
Board remains optimistic that Golar Partners can continue its high growth rate
and continue to increase distributions over the long-term.
February 28, 2013
Golar LNG Partners L.P.
Questions should be directed to:
C/o Golar Management Ltd - +44 207 063 7900
Brian Tienzo or Graham Robjohns
GMLP Q4 RESULTS:
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Source: Golar LNG Partners L.P. via Thomson Reuters ONE