Q4 2019 Earnings Call
Well come true San Francisco leaves continues its done by your conference will begin shortly.
[music].
Ladies and gentlemen, I'm thinking for standing by and welcome to Golar LNG limited afford Q1, FY 19 results preservation, let's stop all participants are in listen only mode.
Third guest speakers preservation and there will be a question and answer session to ask question. During the session you need to press Star one are your telephone how do we older limit their questions at the time I must advise you that it's been friends are being recorded today. She is they ptwenty five up everywhere every twentytwenty I would like you had to conference.
Your first speaker today, Yes, Ross. Please go ahead Sir.
Thanks up right Doug Good morning, Good afternoon, everyone. Welcome to the Golar LNG Q4, 2019 results call. My name is even Ross and I'm, the CEO of Golar LNG joint.
Joined today by our CFO Graham Robjohns, I know head of Investor Relations Stuart because.
Turning to slide three in the highlights today, we reported Q4 adjusted EBITDA Olson $93 million as a result, so contribution from the Elliot LNG and improved shipping performance.
We've had good operational performance across all our assets I know projects continued to progress to plan.
Done stream development gathering pace and I'll talk more about that later in the presentation.
Slide four and a closer look at shipping our T.C.D. for the carriers was $77000 today, noting that this included completion of the final two ships and dry dock, we concluded 2019 with $172 million in shipping revenue backlog.
Slide five enough LNG heavy continues to perform well with 100% commercial uptime, and sobibor cargoes and I will flow through.
Give me project remains on track from both the cost did I should point of view with approximately 2000 people currently working on site in Singapore.
<unk> Threed Newbuilds feeders completed its first pass we're currently working on some project specific scenarios as well as developing the larger LNG capacity variant of the vessel.
Slide six and then stream at this.
At this I use that it was fully commissioned during the quarter. She is performing well supplied gas for the sushi bar station commissioning, which is also going according to plan with the full load acceptance test expected to be completed this quarter.
Budget planning for the bucket ran a terminal is progressing well I just a small scale business development.
Turning to slide seven on our license to operate the safety of our people I know contractors and partners that we work with remains at the height of our priorities. We recently took time to celebrate 2 million man hours beside the lost time injury on the give me projected Keppel shipyard.
We remain on track to published up first E.S.G. report after concluding our Q1 2020 results come back with more details in our sectors, but with this I'll handover the grant to run to the financials and stuff.
Thank you and good day, everybody turning to slide eight.
As you can see our total operating revenues was significantly up this call sort of 139 million from 99 million last quarter.
There was also significantly proved shipping milk you about vessels Drydocking in Q4.
Fleet utilization was also significantly improved to 90% in total fleet to see increased from 34200 in Q3 to 77000 in Q4.
TC for the first quarter Twentytwenty are expected to be slightly lower but given the contract coverage. We now have still $60000 per day.
Twentytwenty will also benefit from the fact that we only have one show to dry docking as opposed to eight during 2019.
We didn't present and shipping revenues in the pleasingly consistent performance of healthy our adjusted EBITDA increased from 59 million Q3, So 93 million in Q4.
[noise] with improved adjusted EBITDA and without noncash loss losses on derivatives at the last couple of quarters. We reported net income for the quarter 24.8 million, that's compared to a net loss of 82 million in Q3.
Year on year results of also improved with adjusted EBITDA was up 17% at $255 million driven by significant increase.
For LNG EBITDA as a result, a full year operations for the Hilli to say.
Turning to the balance sheet unrestricted cash position was down slightly at 222 million product, primarily as result of.
Equity payments into the Gimme project offset by the release of some cash from the LLC security.
During the quarter, we reached the 300 million equity paid in milestone required for the bank financing and other at December 31, we have drawn down 130 million in debt all capex will be funded but until we drew 300 million of debt and then there was a 60 40 plus equity contribution pre wrote a richer.
Our adjusted net debt increased during the quarter results will draw down of the hundred 30 million on that can be facilitate a reduction in restricted cash primarily the heavy LC offset by some desktop monetization during the quarter.
[noise] turning over.
Last 12 months adjusted EBITDA was 255 million as I've said.
Adjusting for one of guidance on the MLP show, Italy, a further adjusted EBITDA was 169.
On slide nine or you can see that our 2019 EBITDA has moved further improvement.
From 144 million two dozen relating to 169 million 2009 thing.
This is being driven by an improvement in LNG earnings as a result for the full years operations for the elite.
Corporate costs have remained constant.
[laughter].
It should also be noted that shipping earnings outperformed a 2000 and I think despite this coming out to dry dockings to during 2009, saying.
And then finally on.
Slide 11.
We have set out here they give me BP project Capex and profile to see how do the project is fully funded and as at December 31, where pays an active termed a 96 million.
And rich the required milestone for the bank drawdown as I mentioned, we have drawn down on June 30 million debt.
Rent.
Total capex spend is a 416 million.
The remaining equity requirement on some basis until Sidoti Sidoti turning 26 million.
770% share of this 758 million is payable from Twentytwenty through 20 to 20 to 59 million in Twentytwenty 70 million in 2021 29 million in Twentytwenty too.
With that I'll hand back to it. Thanks, Graham So take a closer look at the sectors turning to page 12.
Our shipping fleet is currently on charter and you can see from the graphic that we've increased our effective shipping revenue backlog by over six times to around 172 million compared to the beginning of last year.
This improvement has been the result of a change to our shipping strategy over the last year or so focusing on developing deals with long term customers the fixes utilization as well as giving some certainty around rates.
We're running a portfolio of different contract styles can setting a mix of floating and fixed rate contracts.
That does delivered so far over 60% of the Twentytwenty fleet days backed by a contract.
And as Graham mentioned as a result of the dry dock completion, we go to right 250, additional earning days compared to last year.
Prevailing rates, we expect Q1 Tc to be a bit lower but it still around $60000 per day.
On to slide 13, NFL, Angie really is Offloaded 34, cargos in terms of extending the hilli contracts in the only update I halfway today is informal advice and perenco that they're proceeding with their plan drilling campaign, which is good news in order to prove up reserves and hopefully find a way forward to.
Since we were heavily.
And the picture and the slide is guinea being maneuver towards dry docks to finish off the key life extension to work on the ship. She is currently in the third a five dry docks and the next time she had to the dry dock, which would be later this year. It will be to have the push the sponsons attached to our Hell no sponsons are structurally complete having been.
Painted and not being fitted out with piping and equipment over the coming months.
Well there is potential for the covert 19 issues to disrupt the supply chain and therefore shed Joe there is no current impact and we continue to monitor the situation and our remediation options.
And in terms of project funding Grant has gone through that 20% of a 700 million debt facility has been drawn and we hopefully have clearly showing you the equity contributions to C or D by the end of 2022.
In terms of extending to get to lend GE business, we continue to about to develop the portfolio I know that both the conversion and the new build solutions, we offer school well on free metrics.
Firstly low cost liquefaction, a small industry footprint.
Secondly, hi can pets is highly competitive carbon footprint compared to traditional onshore solutions and thirdly world class shed, you'll from Efiling to first export LNG and with low LNG prices our strategy of focusing on larger companies you could take the LNG into their portfolios fits well with the market upset.
The.
Now turning to downstream on slide 14, there two main message is I'd like to convey to today on that during the first message is that lower LNG prices make an already economically viable business even more compelling.
Second message is that the current development plan being contemplated within Golar power, which is our dad Street business can be executed for free cash flow from that business.
So he think commissioning isn't its final stages, the C or D expected to be completed in March we carried that our first ship to ship transfer of LNG from a carrier onto Golar Atlantic, which is also performing well as part of the commissioning process. The power station is generating power, which is being sold in the grid.
Availing electricity prices.
The excess capacity of the Golar, Nick and the FSRU that we will place at the bucket ran at terminal can that generate additional income from several different sources.
Firstly through the distribution of LNG to end consumers in remote areas and we will do this by transporting LNG and ISO containers by truck or by barge into the interior, Brazil, particularly the north of the country.
The LNG and consumers have expressed strong interest in switching from their current fields of diesel or fuel oil to LNG as a result of highly competitive pricing combined with that being a cleaner fuel we have over 100 small scale customers across Brazil ready to convert to from supply contracts.
Secondly, we can supply LNG to the massive transportation sector in Brazil, and long rich trucking and conversions from diesel to LNG and thirdly associate base through the sale of electricity and to the merchant power market and the power stations now calls for dispatch and also the potential to you. So she pays a hub to supply.
Yes to the northeast of the country by connecting to the existing trunk line.
We of course, we also have the opportunity to bid for a second PPI associate base, which you'd have very competitive economics, as an expansion or brownfield project.
The table at the bottom on slide 14 shows the EBITDA potential for using the spare FSRU capacity to generate income from any of these sources expressed simply as a dollar per MBT margin that golar part can make on a percentage utilization of the spare capacity of the FSRU.
Now looking more closely the couple of examples.
Slide 16 illustrates the economics associated with burning of a cargo a few through the so she power plant at various sport electricity prices.
Some practicalities to show how this is feasible firstly it takes 15 days to burn a cargo when the power station is running 24 hours a day.
Secondly, under our PPSA 60 days notice is required to be given by the power Offtaker tried to dispatch. So the first station is not call to dispatch there is opportunity pitch to produce merchant bar.
And then thirdly, the cost of power is a function of the LNG purchase price.
As LNG prices currently at a real time costs not seen since an idea seventys the potential to generate income.
Is real and the graph on page 16 shows the profit potential per cargo by LNG at $3 per MBT shown against various historical spot power prices and the average for cargo is $32 million of profit.
Another example, shown on slide 17, as it relates to switching fuels and road transportation.
There are currently 2.8 million trucks in Brazil, moving commodities and products, such as soybeans grains, even be or across the country on road trains.
Each truck in seems to size into two to ask the isn't MBT use a few per year.
Right now that diesel and some and some LPG and the truckers are currently paying an LNG equivalent price of up to $26 per NBT, depending on the state therein.
If we take the previous example of LNG costing $3 premise BT, then there's a spread of up to $23 million.
Legacy dollars probability that can be shared between the end users and the LNG suppliers by converting from a diesel powered truck to LNG field truck.
Distribution channels are crucial to make this happen and I recently announced partnership will be our provides golar power with access to be honest distribution networks and sites, which will host the LNG refueling stations.
The our has committed to replace 1000 diesel trucks per year with LNG fuel trucks over the next five years and to put this into perspective, there's an annual turnover of a ride 85000 trucks per year.
So the table on slide 17 shows the EBITDA potential for a range of truck numbers, depending on how much of the 23 and maybe $2 spread is taken by Golar power. So these are really examples of our business benefiting from lower LNG prices.
Another way to think of the overall goal our business is shown on slide 18, if we consider energy parity of LNG compared to Brent at around 60%, we looked at the LNG pricing expressed as a percentage of Brad we can see other cycles oscillate between preferred economics in upstream versus downstream over the years.
We believe go up participates across that value destroying value train chain.
And the F. LNG sector, our current contracts, representing $3.4 billion of EBIT by EBITDA backlog, essentially tolling arrangements with no negative linkage to LNG pricing, yes, there are potential oversupply there is potential oversupply in the markets for the next couple of years that will likely create a ceiling for spot.
LNG that makes it difficult for non for portfolio players to get projects that way with two comments on that firstly, the iOS the majors and those seasoned portfolio players take a longer term view of LNG pricing, we're focused on them as potential customers due to their ability to take fight the gearing up towards the end of it that cycle.
Ken lay as our customers take a view that the LNG pricing cycle is gaining upward momentum all wrapped LNG project will offer the fastest scheduled the production unimportant play an extremely competitive cost for any greenfield development and with a carbon footprint that meets or beats many of the onshore alternatives.
And shipping demand slowed that may see reduction of ton miles, bringing rates under pressure for short periods. We've mitigation against this by securing utilization of the majority of the fleet as long term customers on a combination of fixed and floating rate structures, which should result in a superior commercial outcome compared to previous years. Additionally, we remain.
Committed putting our carrier fleet into a different vehicle, which might be better equipped to deal with the cyclic nature of the shipping market.
And last but not least downstream, where we see great an immediate opportunity with lower LNG pricing the economic argument behind fuel switching.
For more environmentally damaging diesel and fuel oil to LNG was already compelling when LNG was priced much higher than is currently with lower LNG prices. It simply put more emphasis on our first mover advantage, particularly in Brazil, stressing the economic argument for the end users supporting fuel switching and consequential increased demand.
For LNG.
And whilst our immediate focus is pushing ahead with our competitive advantage in Brazil were also investigating other geographies that will benefit from a similar type of business business rollout.
You asked these quite powerful cheaper energy kliebert cleaner and greener footprint and we will bring it to you.
So interesting point on slide 19, and some of our listed company compared to group, we think builders and a relatively small group of companies that can benefit from higher LNG pricing and the upstream sector right through to benefiting from lower LNG pricing in the downstream distribution sector.
And as a reminder, slide 20, we've built in a fully financed EBITDA backlog of $7 billion and as detailed on slide slide 21, So in summary.
Our financial and operational performance in 2019 was solid we see improved cash flows into 2020, we're building a sustainable business that can thrive in Ellen any LNG price environment and our immediate focus is on growth opportunities with low capex to EBITDA multiples and short payback times to maximize the value for asset portfolio.
With that I'd like to hand back to the operator to take your questions.
Thank you, Sir ladies and gentlemen will allow began to question and answer session.
Just to ask questions. Please press star one telephone and wait for your name to the analysis.
Okay. So if you wish to Cancellara questions press the hash key once again, please press star one final question.
Okay.
Again, Sir your first question comes from the line up Chris Wetherbee from CBS. Please go ahead. Your line is open.
Hi, This is Lee I'm on for Chris Thanks for taking my question.
Hello.
So I just wanted to start out with.
Could you provide an update on your spin off real can do for your Ellen LNG carrier fleet, and where are you on that process and when you think it might be complete.
So we remain committed to the spinoff and were I'd say, we're making good progress or on the alternative structures where.
Developing following the disappointing outcome that we had late last year, and we hope to be able to give an update and they in coming months on how we're going on that.
Okay and June for for some of these vessels I know you got sale leasebacks or some of them.
Do you have the ability to kind of walk away from these arrangements and potentially put back the vessels to the lenders and is it something you would consider if you can't sell or spin off the fleet.
I think there the only point, we'd make as part of our proposed.
Spinoff and a different vehicle a key component of that is a is a comprehensive refinancing package that we're confident we'll go hand in hand with what we're trying to do the ships.
Got it and just one additional question here what are your plants in terms of your dividends now that you're Trs share repurchase program has been completed.
Well, that's a matter for the board I mean, clearly there's a number of uses of excess cash we can use it to pay down debt. We can use it to invest an attractive projects. We can return to shareholders lives in the form of buybacks and dividends.
No matter for the board and my view, the current share price paying dividends isn't the preferred option compared to the to the alternatives but.
Got it.
We're taking the questions.
We've got another question comes from the line ever want to Gibbons from Jefferies. Please go ahead. Your line is open.
How do you gentlemen, how's it going.
Hey, So you continue to guide to I guess 78 million now in annual EBITDA for Golar power Aster, Jeep and 21 million for the Nook. When do you expect that to be kind of fully ramped up meaning when do you expect to earn the let's call. It 25 million in quarterly EBITDA.
And what does that EBITDA guidance for the second quarter.
But I think that will come on when we reach C or D, which is forecast for the end of this quarter. So the following quarter, we should have.
Through payment remembering that we get that payment.
Whether we're dispatched or not so that says basically availability payment and there is a small uptick in the event, where we are cold to dispatch.
Got it okay, so starting up and ramping up pretty immediately.
That's right.
Excellent and yet no that's exactly right. The contract once were available we get a 100% of that.
Perfect and then kind of second part of that question looking at the kind of growth story on I guess slide 14, it pretty massive range there right from $11 million to.
I guess 2 billion do you have any kind of the expectation for maybe a base case at what were on that table.
Should we kind of earmarked 2021 take 22.
Hey, I guess I guess, we're showing these tables. So you can use your judgment as well I mean, we're working very hard and the bike ride to develop these these projects and what we're trying to illustrate.
We have talked to some of these numbers before so for example, with Sushi Bay, we only required to use one third of the capacity of that vessels. So two thirds, 66% of the capacity that is available.
Obviously, what we don't want to do is how do you think that all of that's going to be used it immediately available, but you've got to think there'll be some healthy proportion of that will be available and it will ramp up over a over a period of time of over months in years and I think last time, we talked about ASO profile that runs from now right the way through to 2000.
25 in terms of increasing EBITDA.
I think I think I.
I think I'd also I guide you back to the announced the prepared remarks that made on the various forms of generating that EBITDA and that we're not relying simply on one type of.
Industry supply and where were working ahead on many different fronts.
Sure. So clearly some substantial upside there and then I guess second and final question you mentioned that goal. Our is now fully funded in quotes in the press release does that only refer to the remaining kind of project capex or also due to the debt due this year and with that how much of the I guess 411.
Million of capital repayments over the next 12 months do you expect to refinance.
Roundys Graeme so.
We are fully funded in terms of our ability to fund.
This thing up projects.
Refinancings.
The coming up this year and futures, we would expect to refinance and we have no concerns about her producers do up so I mean, not my take on that is that where we're fully funded and.
We don't have a problem with liquidity a toll.
We are pushing ahead with our projects and in that regard.
Sure. So I guess for the term loan in the margin alone 250 million playing on just refinancing at this year.
Yes.
Cost up for 11 that you quoted also include some some of the.
So cool the short term debt, which is isn't really at our debt.
Right right all right just kind of asking more about the 250 thats coming up here, but it sounds like Youre refinance that Oh, that's it for me. Thank you so much.
You too.
Another question comes from the line Chriss Snyder from Deutsche Bank. Please go ahead. Your line is open.
Hey, guys and thanks for taking the question. So my question is around the BP toward two contract and the associated cash flow stream. So you have a 20 year contracts with annual EBITDA of 151 million.
And just given where BP bonds are yielding appears to be a disconnect here between the value of the cash flow stream and the goal our equity value can you maybe talk about transactions to potentially realize or pull forward the value here and maybe any thoughts around the opportunity to sell the casual shifting back to BP or potentially trying to securitize, the cash flow and sell it.
Welcome to the market just to kind of addressed the disconnect.
No. We haven't it's interesting point that will maybe tick up offline, we haven't really spent too much time on that.
We had I think as we've talked about in previous quarters considered.
Selling parts of the Gimme project too.
Two funds of subscription, but we decided not to proceed without at the current on.
Largely because we get better value as we get close to feel good.
Hi, good Okay fair enough I, just thought could be interesting, just given where BP can issue debt and raise capital home it could be value create for both sides to potentially buy for them to buy part of the castle stream back I'm, just because that's obviously obligation on Marin.
It could.
Raise money quite cheaply.
Thank you.
The other side, we just think we'll get a better deal close to the theater.
Okay fair enough.
Then you know on kind of for the follow up switching over to the downstream business. You guys are obviously, making pretty good progress here and the roll out and you know with three dollar LNG prices would expect.
Pretty strong uptake so in the slide you guys, who are really good job of laying out you know the investment case would just certainly attractive and then the long term potential with a wide array.
Ranges and I guess you know.
So I guess my question is not on like where can it go but more where does it start when can we start to see meaningful EBITDA showing up here and just given that there is you know some level of fixed costs involved with this business what kind of scale do you need for the small scale venture to be cash flow positive.
So we think this small scale venture will be cash flow positive, we're going out with certainly within a couple of years much of this investment required capex to EBITDA multiples of somewhere between two and three cents a very attractive business. My point of view and also the scale the size of that Capex investment is much smaller than for example.
So as you pay.
Okay Fair enough what does it for me it's actually congrats.
Thanks.
We got another question comes from the line up John Schuff Valspar Evercore ISI. Please go ahead. Your line is open.
Thank you good afternoon guys.
Hi, John short term one one long term for me first on the short term.
The 172 million of revenue backlog in the shipping business. It sounds like shipping is still kinda far from core but it is the tail wags. The dog sometime so can you explain the duration of that because if we kinda back into 62%.
Your current fleet contracted days of the 172 million backlog for this year alone it points to a Tc rate, that's well in the seventies, which would be phenomenal. So what's that 172 as it fits to 2020, and what's kind of the Tc rate associated with that for the next 12 months.
So without giving guidance on our TC for 12 months, we tend to do that quarter by quarter as you know, but what we're trying to illustrate why that is it words, but surely are the ones 72, and a much better positioned than we were this time last year, we contracted backlog that we have runs between some contracts are six to 12 months and although we have other.
The contracts it got as far as five years.
But that 172 relates to.
Basically the those both of those scenarios.
So you just have to I'm sorry, just to go calculate it yourself, we're not going to give us as such specific guidance I would say somebody just to give you a little bit to help the majority of that is a is.
Less than three years.
And certainly it's the minority as they have the contracts and rollout to five years. Okay. Not last that's helpful. The second part is the second question kind of longer term clearly just from the tone of the presentation. The focus on the downstream is significant which is maybe a bit of a shift from two years ago or the focuses more on the upstream in the F. LNG. So.
As you think about the cash flow generation as it starts to accelerate at the company from all the different segments and you said that you're fully finance, but where do you kind of focus the capital envelope going forward should we think about building out the small scale the downstream, which you've already said, it's kind of low capex at the expense of some of the.
Upstream stuff or can that kind of switching a dime again, depending on the LNG price environment.
I think it's a bit both both John I mean, we are focused on the downstream right now and I think if we if we look at the next couple of years Theres the driver to get that going.
In terms of LNG, yes, it's an interesting business at the low prices that we go right now we would need a customer to take us with them on a journey, where they were prepared to take offtake.
If that came with a financing solution of course would be interested and looking at it but right now our capex that we are generating within Golar power and obviously, we do some refinancing in there as well with the to improve our that profiles, but that's where that a initial focus of capex is the next slow.
There are just fewer customers willing to take on that journey today kind of in a short term environment, because I think even as recently as the last earnings release, there was conversation or there was talk about a lot of conversations with people on that upstream and.
Look where we're actually working right now in developing our portfolio. It hasn't really slowed down that much I'm just trying to be realistic about how long it takes to make an F.F.I.D. and the LNG space in the upstream space and also the difficulties that some customers will have and getting their cost against such low.
LNG prices I had my own suspicion is that when LNG prices stabilize and look like they're going to turn the corner, which could be no. Later this year could be into next year. Beyond then we'll see far more interest and what we're trying to demonstrate is our business model is robust and flexible to be able to cope with both of those scenarios.
And right now our focus is on the downstream HM very helpful. Thanks again.
We got another question comes from the line up that Ben Nolan from Stifel. Please go ahead. Your line is open.
Yes. Thank you operator, [laughter] morning afternoon Graham so.
A couple of.
I have a couple.
Number one is I'm trying to get a sense I I. Appreciate the chart that you put on page 16, showing the potential earnings that you could get out of the.
Excess.
Capacity on the or.
The portion of the power generation that isn't dispatched incentive.
What the dispatch rate is likely to look like are we thinking that you know it'll be 90% dispatched or.
Or 50% dispatched to me any idea there.
We don't know, but we're guessing about a third of the time.
Okay.
And I I think you'll find a as we as we move forward over the next month, we'll understand the experience of says you pay a lot more the good news is that where we're around the corner from.
C or D and actually talking about the ability to dispatch for Jeff I'm quite attractive.
Yeah I'm interested to.
And then I have it just it a few sort of Oh.
Record keeping take questions here. So you mentioned two Randy that you expect full contribution from surgery Bay, starting in the second quarter, but obviously you are selling little bit currently any sense of what the first quarter contribution is likely to look like at about 25 million a quarterly EBITDA.
It will be negligible. It's it's it's commissioning at electric today and of course in the commissioning. These big bar stations you ramp up you shut down you do some more tests tweak change things.
I guess the point I'm trying to make and talking about the is it the power station works and that can generate electricity and on fuel look that's that's actually the main point that.
Okay, perfect and then the the last little a one for me is I believe for Bakaray. Not you guys had said that you expected to award the FSRU contracts at some point the first quarter any update.
On where that is or or any thinking as to which vessel or which.
Version of a MSR you might be using there.
No we haven't we havent a state too much around exactly what we're going to do but we expect to be able to take if I'd sometime this year, maybe as quickly as early as the middle of this year on on the terminal of course associated with that would be our plans for the FSRU and in the one of our emphasis I use and that could be a conversion of one of the two existing gold.
Our vessels or it could be another one that we've already gotten the cap.
We haven't concluded that yet, but we're working hard and we should have the answer and.
In the coming a few weeks or months.
Okay perfect I appreciate it thank you.
We get another question comes from the line, but Sanjay.
Swami. Please go ahead from Bank of America. Please go ahead. Your line is open.
Hi, guys. Thanks for taking my question.
Hi, a quick on moving and so I think John mentioned this before but.
Going into little bit into the shipping shortage and how that's changed obviously with the intention of I guess, reducing the volatility with the earnings that.
But we're saying 2021 thing right, 62% contracted should we kind of expect thought.
That percentage to remain.
At that level, given but side the shipping spin off does take longer than expected. All all the time line does change there how should we kind of think about that moving forward.
So the first part and that it's a it's disconnected from weather that we spend the ships offer no. It's a fundamental shipping strategy and it will continue into the new vehicle.
Yes, I don't know, where it will exactly and but from my point of view I want that percentage to increase and for us to put more business on.
Tom related deals and just have a few ships up to three ships maximum playing on the spot market.
Sure that makes a lot of sense and maybe just a question given the.
Quite a few slides mentioning that the cadence of lower <unk> LNG price environment in the benefits of kind of moving more into downstream.
How should we kind of expect I guess the percentage business mix.
When we look at galata to shift into.
More about downstream business as opposed to upstream.
Well I think at the moment, we will $3.4 billion of backlog of EBITDA backlog in our upstream business.
Out of a total of seven I think.
Logic would say they were going to build EBITDA backlog and the in the downstream business and at some point and hopefully it will swing the other way we can enjoy live from upstream again, but.
That's the way to look at it.
I got show Yeah, that's all for me thanks.
Another question comes from the line up Gregory Lewis of from she see I see. Please go ahead. Your line is open.
Yes, Thank you and good afternoon.
Yes.
Yes.
I just have a bigger picture question kind of I mean, clearly there's been a lot of focus and you guys seem to be moving full steam ahead and thats all our power.
And you kind of alluded to the uptick that we're going to see in spreads given where LNG prices are but then you kind of alluded to hey, eventually we think LNG prices could stabilize we agree with that we think where we are today, you know projects will either be delayed or demand will accelerate and just thinking about.
That as you think about capturing a spread has there been any thoughts or is it kind of still early days before goal our potentially thinks about.
As you move more into power about sort of lining up long term LNG contracts.
You can kind of lock in a price or is it kind of I'm, just trying to understand and and square that out.
So it's a it's a good topic and it is early days first but yes, we obviously saw a lot of by that and the beauty of the Golar businesses that we have a position in upstream across the transportation midstream and into that downstream arena. So we are contemplating what we can do.
To take advantage of that and the spreads associated with it but I think I'd come back to the first steps. We've got a 1.3 billion dollar LNG project that we're in the middle of and Singapore, where just commissioning the power station and we'll learn how to use that and generate value from it from the other downstream ways that I.
With discussing earlier, so I think the they.
The spread and the day the ability to supply our own LNG is of course, something that's of interest we'll learn how to do that.
As we move forward over over the coming months and perhaps perhaps yes.
That's a great topic.
Okay perfect. That's it for me thank you very much.
Another question comes from the line of I'd like share from JV Braggers. Please go ahead. Your line is open.
Good morning, and this is judson actually pitching in for Craig.
Just.
How are you today I'd just touching on the Hilli you guys mentioned that Franco is kicking off another campaign in Q2.
In terms of the timeline as to you know assuming it's positive.
When do you think you might be in a position to learn a little bit more about you know the upsizing any extension of the contract is is that more likely a 2021 event.
Oh.
Correct, because there is difficult to say like we're doing everything that we can to encourage perenco to invest in drilling where we're trying to help them with cargos, if that's going to get us to to the a endpoint in a and moving more volumes.
I just remain very hopeful that they use the drilling campaign to prove up in reserves and the we end up having a very detailed and strong dialogue about how we can.
Improve both the volume and the duration of the of the Hilli deal its app and personalize the source of frustration that we haven't been able to go faster, but some of these things are just outside of our control, but we are doing what we can.
To to help make it a attractive for Perenco depreciate had with that drilling.
Okay, and then a second one for you.
After a the guineas completed and refinanced.
Do you guys still consider a 10 or or 20% shell down.
Yeah, it's something it's something that we look I think what Graham said earlier is is spot on is that we did receive some fairly attractive offers the under consideration. We just thought we will focus on the refinance between now and C or D and we think we'd be able to get even more value out of a transaction closer to that time.
Certainly interest in the and they both the vessel under contract.
Okay that that that make sense and that's it and congratulations again on the corridor.
Thanks, Justin.
And we got our question comes from the line up Liam Burke from.
Be our please go ahead. Your line is open yes. Thank you good afternoon.
On slide 19, you highlighted the competitive landscape the a both true ups are particularly upstream and downstream.
Is there any particular change or any increase in the competitive front, there I understand namely capital and.
And expertise.
Pretty high barrier to entry.
I wouldn't say so I mean, the I guess the purpose of this slide is what we often get can looked at as a as a shipping company and of course, we have ships, we love them.
Yeah, we are involved in upstream and we are involved in downstream and those two areas is where we have deployed capital over the last five years and then the point of the slides is just to try and.
Let people look at a slightly differently.
Were more than a shipping company and interesting lay where were more than just a simple LNG totaling company as well so there's a complexity around golar. This.
Often decried, but I think it's working our favorite at the moment because of our ability to participate at these low price.
Times.
You know, we'll we'll be right in front of the keys to take advantage of the higher prices when they come back.
Thank you.
Sorry, I know my question at this moment please continue.
Thanks, Okay, well. Thank you for your attendance of the call today and your continued interest in goal I hope, we've demonstrated that where that business is flexible enough to make money and prosper even with the lower lower LNG prices with that we look forward to catching up with you over the coming weeks and again next quarterly call have a good day and goodbye.
That concludes our conference for today. Thank you Barbara dissipating you may now all disconnect.
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