2012-11-28 16:16:31 -
LONDON -- (Marketwire) -- 11/28/12 --
* Golar LNG ("Golar" or the "Company") reports operating income of $70.2
million for the third quarter of 2012, an increase of 21% from the
* Golar reports consolidated net income of $44.7 million for the third
quarter of 2012.
* Golar LNG Partners L.P. ("Golar Partners") raises net proceeds of $223
million from its first post-IPO equity issue and applies funds to the
Nusantara Regas Satu purchase.
* Vendor financing provided in respect of the Freeze sale is repaid after
Golar Partners places a five year NOK 1,300 million unsecured bond.
* Quarterly dividend increased by $0.025 to $0.425 per share, driven by
improved cash flow and market fundamentals. Golar also resolves to
distribute an accelerated dividend of $0.425 per share for the fourth
quarter of 2012 in December 2012.
* Golar and LNG Partners LLC (Houston, Texas) sign option agreement for
prospective long term charter of two of Golar's newbuild carriers to
service Douglas Channel LNG project.
* Golar signs agreement with Keppel for the development of the Company's
first floating liquefied natural gas vessel ("FLNGV").
* Golar Partners raises a further $181 million following a second
follow-on equity issue.
* Golar sells its interests in the companies that own and operate the LNG
carrier Golar Grand(1) to Golar Partners for $265 million.
Golar LNG Limited reports consolidated net income of $44.7 million
consolidated operating income of $70.2 million for the three months
September 30, 2012 (the "third quarter"). Revenues in the third quarter
$121.1 million as compared to $107.0 million for the second quarter of 2012
(1) Golar LNG Partners is a subsidiary of the Company. Accordingly, the
of the dropdown of the Golar Grand to Golar LNG Partners was financed
the $175 million proceeds from the Golar Partners' equity offering
assumption of its $90 million debt, will be eliminated on consolidation
than the impact of movement in non-controlling interest for the purpose
consolidated financial statements.
The increase is primarily as a result of a full quarter's earnings
from NR Satu and Golar Viking whose new charters commenced during the
quarter and this is reflected in an improved average Time Charter
("TCE") rate for the third quarter at $98,473 per day compared to
the second quarter.
As expected, operating costs in the third quarter at $19.4 million are
than the second quarter at $17.8 million. This is mainly due to the NR
being operational throughout the quarter.
Following repayment of the long-term debt due to related parties in July
small drop in LIBOR, net interest expense for the third quarter fell to
million from $8.5 million in the second quarter.
Other financial items decreased from a loss of $4.4 million in the
quarter to a third quarter loss of $3.2 million. This is mainly due to
negative mark-to-market valuation movements in respect of currency and
Tax expense is higher this quarter at $1.7 million compared to $0.4
the second quarter. This is due to tax provisions made in respect of
Satu, for which the Company is fully reimbursed by the charterer.
Golar LNG Partners first follow-on equity offering
Golar Partners closed a public offering of 5,500,000 common units on July
a price of $30.95 per common unit. In addition, the Underwriters
full their option to purchase a further 825,000 common units bringing the
number of units sold to 6,325,000. Golar GP LLC, the Partnership's
partner, maintained its 2% general partner interest in the Partnership and
subscribed to 969,305 common units in a private placement at a price of
per unit. Golar Partners raised net proceeds of approximately $223 million
result of the offering. Following the private placement Golar's interest
Partnership (including the general partner stake) was diluted from
Nusantara Regas Satu(2)
As previously announced and subsequent to the successful acceptance
Charterer on July 13 the Company completed its sale of the FSRU, NR
Golar Partners on July 19, 2012 for $385 million. Golar Partners
acquisition using the proceeds from the July 16 equity offering, cash
operations and making use of $155 million of vendor financing provided by
The vendor financing is expected to be refinanced shortly when Golar
enters into bank financing in respect of the NR Satu.
Settlement of Freeze Vendor Financing
On September 28 Golar Partners successfully concluded a five year
million bond issue in the Norwegian Bond market that was closed and
October 2012. The aggregate principal amount of the bonds is
approximately $227 million and has been swapped to USD with an all-in fixed
of 6.485%. Golar Partners applied $222 million of the net proceeds
equivalent outstanding vendor financing provided by Golar in respect
Golar Freeze(2). This facility which accrued interest at 6.75% in
Golar was extinguished on October 12.
(2)Golar LNG Partners is a subsidiary of the Company. Accordingly, the
the dropdown of the NR Satu and the Golar Freeze to Golar LNG Partners,
eliminated on consolidation other than the impact of movement in non-
interest for the purpose of the consolidated financial statements.
Golar Partners second follow-on equity offering
Golar Partners closed a further public offering of 4,300,000 common
November 7, 2012 at a price of $30.50 per common unit. Golar GP
Partnership's general partner, maintained its 2% general partner
Golar subscribed to 1,524,590 common units in a private placement at a
$30.50 per unit. The net proceeds to the Partnership from this offering
approximately $181 million. Following the closing, the Company owns
common units and 15,949,831 subordinated units representing an
52.1% interest in the Partnership. By virtue of its ownership of the
Partner which owns 1,065,225 units, the Company's total interest in
Partnership now stands at approximately 54.1%.
On November 8, the Company completed its sale of interests in the
which own and operate the LNG carrier Golar Grand to Golar Partners for
million. Golar Partners financed the purchase by using $175 million of the
million proceeds from the equity offering that closed on November 7. As
the sale, Golar Partners also assumed a $90 million finance lease
(net of the associated cash deposit) in respect of the vessel.
As a result of the above transactions and assuming Golar Partners
remaining $155 million vendor loan with a bank facility, as at the
November, the Company would have approximately $500 million in cash
will mainly use for funding the remaining equity portion of its
Corporate and other matters
The Board has proposed that the cash dividend be increased by $0.025 to a
of $0.425 a quarter based on another quarter of increased earnings and
fundamental outlook. The Board has noted that a significant part of Golar's
shareholder base may be subject to increased dividend taxation for 2013. In
of this, the Board has decided to accelerate the dividend payment for the
quarter of 2012 such that the dividend can be paid out together with the
quarter dividend. This advanced dividend for the fourth of 2012 is also
$0.425 per share. The total dividend payment due will therefore be
share. The record date for the dividend will be December 7, ex-dividend
December 5 and the dividend will be paid on or about December 21. In view
acceleration of the fourth quarter 2012 dividend payment, no additional
payment can be expected prior to the declaration of the first quarter
As previously announced, Golar was awarded the Gas Atacama Mejillones
FSRU Project ("Gas Atacama") on July 5, 2012, subject to certain
conditions related to Gas Atacama achieving a threshold of new power
agreements prior to 31 December 2012. The Company is expecting that
thresholds are not likely to be met within December 31 and the parties
discuss a possible extension of the deadline.
British Columbia LNG project
On October 10, Golar entered into a 90 day Vessel Charter Option Agreement
LNG Partners LLC (Houston, TX) for the provision of two newbuild LNG
under long term contract to deliver LNG production from the Douglas
Project in British Columbia (BC), Canada.
The Douglas Channel Project, in which LNG Partners is an equity owner,
proposed liquefaction facility on the west bank of the Douglas Channel,
the district of Kitimat, BC. In addition to prospectively
vessels, the agreement confers certain preferential rights for
participate in the project with LNG Partners LLC by way of
investment or LNG offtake.
Floating Liquefaction ("FLNG")
On October 31, Golar entered into an agreement with Keppel Shipyard
("Keppel") to develop the Company's first floating liquefied
vessel. The agreement is based on the conversion of one of the
existing Moss type vessels and includes options for two further
conversions. Keppel has previously worked with Golar converting comparable
type vessels into FSRUs.
The Company is targeting projects with pipeline quality gas and
natural gas reserves such as coal bed methane and shale gas or lean gas
from offshore fields, which thereby limits the gas processing equipment
The first unit which will be developed through stages according to
requirements will have a capacity of up to two million tonnes per annum.
strategy is designed to put Golar in a stronger position to utilise its
carrier fleet and to provide gas for existing and potential FSRU
FEED study has commenced and conversion is expected to be underway by June
De-listing from Oslo Bors
The company completed its delisting from the Oslo Bors on August 30 as
Golar continues to maintain a VPS register and completed the
registration of Golar LNG Limited on August 31 so that Norwegian
can continue to hold and trade their shares in Norway.
Shares and options
During the quarter a total of 83,309 options were exercised. In connection
this, the Company issued 83,309 new shares. The total number of
options is 676,720. As at September 30, 2012 the total number of
outstanding in Golar excluding options is 80,407,061.
Although an optimistic sentiment within the shipping market continues
longer term, a bearish cargo market prevailed in the third quarter with
prices and weak demand in the Far East. Chartering activity remained
lacked direction and consequently, short-term charter rates
correction from rates seen earlier in the year.
Looking to the fourth quarter, weak Far East demand may result in
vessels being released into the market, however, with limited available
undedicated vessels a resumption in interest from buyers could very easily
rates upward again.
The worldwide LNG fleet currently stands at 365 vessels including FSRUs,
further 87 on order including FSRU's/FPSO's. Seventy nine vessels have
ordered since January 1, 2011, including 22 vessels ordered in
Approximately 59% of the order book is already committed. Delivery of
this order book is not scheduled to commence until Q3 2013 at which
increased exports, fleet renewals, new sales contracts and active
interests provide solid support for attractive long term charter rates.
The chartering market is beginning to differentiate between shipping
technologies by creating a tiered pricing environment where TFDE vessels
command a premium against all other types of tonnage. As such, market
references are moving away from steam turbine units and towards the ultra-
highly efficient 160-162,000m3 TFDE ship. The efficiencies of ultra-modern
TFDE, as compared to steam turbine propulsion systems, generate a
operational savings of anywhere between US$20-40,000/day given the cost of
various considerations (bunkers and LNG; the greater the price the greater
Despite tightening supply from minor production issues reported at
Qatargas and Yemen LNG, downward pressure on pricing was experienced
due to high inventory levels that persisted East of Suez. This reduced
trade opportunities and negatively impacted the spot market.
Spot cargo prices fell from around $15.00 per mmbtu in July to the low
per mmbtu levels by the end of the quarter. There are however signs
price decline has reached bottom with spot price indicators
Towards the end of the quarter European spot prices declined in the
re-export/diversion opportunities, ample pipeline gas and low demand.
opportunities diminished as NBP and Far East price spreads fell below
mmbtu for prompt deliveries. During this period Europe's re-exports
more than 50% from the second quarter.
New LNG supply will soon be coming to the market with the
Angola LNG in the Atlantic Basin. Despite delays at the West African
during the third quarter, exports are expected to start early in the New
This represents a set-back of about ten months from the original target
the country's first LNG project.
In the Far East, ConocoPhillips and Origin Energy announced the sanctioning
second train at its Australia Pacific LNG project. The project is
bring the first train on late in 2015 with the second train following in
Both trains will be sized at 4.5 million tonnes. Additionally,
quarter Chevron made positive statements about proceeding with a fourth
its Gorgon LNG project in Barrow Island, Western Australia. There are
three trains at Gorgon under construction totalling 15.6 million tonnes.
In addition to Angola, given imminent start-up of the project, supply
under construction in both the Atlantic and Pacific Basin have reached
100 million tonnes, with construction officially beginning at Cheniere's
Pass LNG export facility.
Golar is currently working on multiple FSRU opportunities and has
shortlisted for five projects. FSRUs have become an acceptable
solution for most new LNG importers and Golar's speculative FSRU orders
positioned the Company to meet demand for projects with short lead
Company notes that there appears to be an increased emphasis
operators, such as Golar, who can demonstrate prior success in fast-
project execution and operational experience.
The Middle East continues to be extremely active as countries address
developing gas shortages with more than five projects currently in
phases of development. South Asia and South America are also areas with
development opportunities. All of these regions are, almost exclusively,
on floating regasification solutions and the Board feels that the
economics of FSRUs will allow Golar to continue to expand its franchise
The Company has in the last nine months raised approximately $0.9
cash through drop down sales to Golar Partners and financing efforts
of the refinancing of the remaining Golar Partners vendor loan). The
been to fully finance the existing new building program and continue to
dividend without raising additional equity or realising any of its $825
investment in Golar Partners. The Board is pleased with the progress made.
The remaining capital expenditure of the thirteen ship new building
approximately $2.3 billion. The Company has received several proposals
core banks which support the Company's view that, through a combination
existing cash position, positive cash flow and the proposed financing it is
to reach this target. Any additional dropdowns or long term charters for
buildings will further improve this situation.
The negative development in the spot charter market in the third
shown that the present shipping market and market balance are sensitive
set back in production volumes. The Board expects that this situation
gradually improve in the coming three to four years, as large new LNG
volumes will come to the market. A significant part of these volumes
present not secured shipping capacity.
The Board is excited about the progress made and the prospects for the
business as well as the FLNG business. However significant work is
in order to convert this progress into additional earnings.
Due to the successful growth in the dividend in Golar Partners, Golar LNG
in a position where its wholly owned subsidiaries Golar GP LLC and
Energy Limited, are expected to start to receiving incentive
payments from the Partnership. Following the drop down of the Golar Grand
amounts to $2.5 million on an annual basis.
The results for Q4 will be negatively influenced by the planned dry-
the Golar Spirit as well as reduced revenue for Golar Maria trading in the
market. For the remaining vessels earnings are likely to be in line
Further growth in earnings will come when the first new building is
August next year.
The Board remains confident in the way the Company is positioned to
high growth in LNG consumption expected in the years to come.
Forward Looking Statements
This press release contains forward looking statements. These
based upon various assumptions, many of which are based, in turn, upon
assumptions, including examination of historical operating trends made
management of Golar. Although Golar believes that these assumptions
reasonable when made, because assumptions are inherently subject to
uncertainties and contingencies, which are difficult or impossible to
and are beyond its control, Golar LNG cannot give assurance that it will
or accomplish these expectations, beliefs or intentions.
Included among the factors that, in the Company's view, could cause
results to differ materially from the forward looking statements
this press release are the following: inability of the Company to
financing for the new building vessels at all or on favourable terms;
demand; a material decline or prolonged weakness in rates for LNG
political events affecting production in areas in which natural gas is
and demand for natural gas in areas to which our vessels deliver;
demand for natural gas generally or in particular regions; changes
financial stability of our major customers; adoption of new rules
regulations applicable to LNG carriers and FSRU's; actions taken by
authorities that may prohibit the access of LNG carriers or FSRU's to
ports; our inability to achieve successful utilisation of our expanded
inability to expand beyond the carriage of LNG; increases in costs
crew wages, insurance, provisions, repairs and maintenance; changes in
domestic and international political conditions; the current turmoil
global financial markets and deterioration thereof; changes in
maintenance or regulatory standards that could affect our anticipated
docking or maintenance and repair costs; our ability to timely complete our
conversions; failure of shipyards to comply with delivery schedules on a
basis and other factors listed from time to time in registration
reports that we have filed with or furnished to the Securities and
Commission, including our Annual Report on Form 20-F and
announcements and reports. Nothing contained in this press release
constitute an offer of any securities for sale.
November 28, 2012
The Board of Directors
Golar LNG Limited
This information is subject of the disclosure requirements acc. to §5-
(Norwegian Securities Trading Act)
Golar LNG Limited 3rd Quarter 2012 Results:
This announcement is distributed by Thomson Reuters on behalf of
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Source: Golar LNG via Thomson Reuters ONE
Questions should be directed to:
Golar Management Limited
+44 207 063 7900
Chief Executive Officer
Chief Financial Officer