Q3 2020 Golar LNG Ltd Earnings Call
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Ladies and gentlemen, thank you for it.
Welcome to the call right.
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Thank you operator, and good morning, good afternoon, everyone and welcome to the Golar LNG and Street Sweat the 20 results presentation.
My name is he and Ross and I'm, the CEO of Golar LNG today I'm joined on the line by CFO call for drink style day, replacing Kevin Mitchell Thompson, who has resigned from his position due to the personal reasons, we'd like to thank Kevin for his contribution to Golar. We're also pleased to have the board Omar now see it.
Hi, Good day.
All of Troy Chairman of both the Golar LNG and high go with US today and as usual. We also have strip it kind of the head of Investor Relations and coal I'd.
I'd like to draw your attention to forward looking statement on slide one and if we turn to slide for let me give you. Some highlights the for Karl takes you through the numbers and more detail.
Today, we reported and adjusted EBITDA of $67 million and revenue of 95 million for the quarter, which is driven by a further so like the LNG performance and a steady results from shipping.
And shipping really we achieved over all the time charter revenue of $39000 per day, which is ahead of guidance with the T.F.D.E., earning just under 44000 per day. If you exclude the Drydock days and we ended the quarter with the shipping revenue backlog of 198 million compared to 100 and.
47 million at the end of Q3 19 [noise].
Our EPS I saw you LNG, Croatia conversion of remains on track for handover to our customer LNG or but Scott and December at which time, we expect to release $17 million of the cash from the project and the further $30 million of cash and January next year.
Alright, LNG operations maintained 100% commercial of time through the quarter and.
Phil and give me a force majeure event. The E. P has ended resulting in the project schedule being extended by 11 months and with no other changes to contractual terms.
And then Dan stream poll, and Rod has been appointed as the new CEO of high the energy transition. That's the the new name for Golar power food capacity payments and from the sushi the power station and FSRU Nuq and more progress is being made towards a barker and a terminal by the.
Turning to page five and an update on governance, which you take very seriously. The internal review that was instigated following the allegations against the former CEO of Heigl was completed with no findings of wrong here. The review has not identified any evidence establishing bribery or other corrupt conduct involved and I go.
And confirm soul of the corporate governance and compliance and.
The the water will go through this overall the timeline of provided more detail and I go later in the presentation.
So the more detailed and the business second is the follow up let me now handover the call to take you through the numbers and more detail on the financing. Thank you.
Thank you and Oh.
Looking forward to take on the role.
For for gold.
My name is from Fredric Stahl go for.
For taking it through.
And the summary results on slide six.
She thinks the using you for the quarter came in at 39000 Boes per day.
The guidance of $35000 a day.
The board.
Yes 35200.
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And then from Q2 as expected.
And then de link on the news, it's solid and stable operations with 100% utilization and earnings in line with Q2.
And that's the most for the quarter and that absent the $2 million.
We reported the cash position for the quarter.
And $77 million, which $100 million is restricted cash relate the drawer letter of credit on the field and do you live.
So the they the <unk> cash balances related to our sale lease back and fun of vessels.
The unrestricted cash for such petition for the quarter $77 million wasn't that gets the impacted by $17 million.
And you're having to with the home gimmick topics during the BP and some of it.
Following the and being all of the force for sure of him the rules for under our 700 million. The older facility available during construction has been expense.
And we have made the 75 million the older group.
Which uh huh.
We played the $17 million of equity Capex, increasing our liquidity post quarter end.
It really aligns the drawdown ratios to the original.
Some of the ratios and then.
Adjusting for just a quick topics installments, our cash position for the fourth quarter with the been $94 million.
Adjusted EBITDA for the Port for came in the $7 million the beat the against the consensus of 52.4 million driven boyard the unexpected shipping rates.
Turning to slide seven of them.
The adjusted EBITDA, all development quarter over quarter, our EBITDA was down by approximately $10 million from $67 million and Q2.
The $7 million and Q3, primarily driven by seasonally lower shipping rates, which went from four to $5000 a day in Q2 the.
Okay and $9000 a day of mentioned.
We also have the COVID-19 relate to the flow of should grow share of the shipyard, where the golar tundra wells being drilled.
Which resulted in significant and scheduled for for higher during the quarter and contributed to the net reduction and more fleet utilization for 93% and cute you <unk>, 80% and Q3.
That's expected vessel operating expenses up and the 8.2 million were higher than those of Q2 of which came in that sense the formula the.
For me and increased mainly due to capture repairs and maintenance carried out the following the listing of Colgate restrictions.
As for our trading and also month EBITDA, all we're all of from $283 million a year ago to two under the $94 million losses trailing months.
Mainly driven by an average increase and our achieved shipping rates.
Turning to slide eight or corporate financing.
We have two corporate facilities and mature and your per year.
And then see if the middle and lower corporate facility and secured against our shareholding and the.
$30 million more of the known almost shareholding in Golar partners.
Relative to address these upcoming maturities, we have entered into a $100 million for me the corporate debt facility sick.
The secured and I'll probably questionnaires.
This will be withdrawal of the maturity of the hundred them see the facilitate the amount maturing.
Furthermore, we are in the involves the discussion for an incremental 100 and centex hog the million dollar corporate credit facility and draw the <unk> draw for <unk>.
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In addition to these facilities of there.
The U. fundings he financing events the increase our available liquidity include.
On track children of the Golar bear facility of an incremental $10 million targeted and generate 21.
As you and explain the acceptance and the live <unk> all of the Golar Viking for convert to an FSRU and on its way to accept and still in the creation.
That will free up net liquidity and fourq of $7 million between December for instance, when the and and there isn't the ball.
We've also received term sheets for opportunistic refinancings of the vessels Golar force and the potential renewal of the maturing the MLP more the no which combines the can raise the $70 million and liquidity the golar.
The net potential that can be the effect, if we grow and all of these facilities will be and incremental hundred $72 million in liquidity of 30, repaying the maturing $180 million of corporate though.
And so we're comfortable with the decree that the situation assuming the goal.
And we think that will create a significant flexibility after completing the <unk> the growth of the company.
Turning to slide and Martin.
The upside if and when do you give me a conversion of funding sources.
Yeah that's.
Yeah, and then do the to extend the the agreed with the piece or extend the predictable I love the most.
That is expected to come and up and incremental construction cost of $36 million.
Furthermore, we have shipped the.
Some of the cap ex <unk>.
In the construction period should benefit near term liquidity.
For net <unk> for next year, the reduction is $7 million and equate the requirements before we increase interest that you and 23 and we pushed the installments and it's like yeah.
We're also.
The the increase in the construction capex is much more than the $46 million in adults. We anticipate the the the total increase and construction cost and we've worked hard with the or subcontractors to make sure. It of the increase in cost or no more significant given the 11 month for that.
Okay. That's it for the financing section.
I'll now hand over for you to run through the shaping section.
Thank you Carl turning to slide 11, and shipping the court of commenced the JK and I didn't write and $2 15 for other the to you quoted T.F.D. headline spot rates of around $30000 the day.
The seasonal upswing was slower than usual and you do a combination of around 120, U.S. cargo cancelations over the summer higher than normal European storage levels and weather related supply interruptions, which continued into early September as.
As production resumed late Q3, the rates the shipping rates resumed the seasonal upswing, albeit later and lower than last year, the quarter ended with Jackie and at around $5 15 per and maybe to you and quoted TFT. He headline rates of Iraq, and 59 size of the day subsequent to that we have seen.
Jay came above $7 and spot rates briefly above 100000 for single voyage is the.
Dropping back [noise].
The remaining true to our shipping strategy and our focus on utilization is serving us well Q3 utilization of 80% and significantly up and on Q3 2019, our Tc of 39 K. for the quarter of whilst above guidance was this call as mentioned also adversely affected by.
The tons of being and dry dock for much longer than planned due to that cool and shut down and Singapore and this will spill over into the early part of Q4.
She is not of course out of dry dock. Additionally, we have built out of the 23 million of shipping backlog of this quarter of and she can see on slide 12 utilization going into 2021 is strong with the right. Two thirds of 2021 fleet days already backed by contract and the.
For us we may sacrifice, a little of the upside during the winter months, we expect to more than make up for the steering the rest of the year and.
We were anticipating and T.C.E. of around $50000 a day for Q4.
And there's LNG prices cycle, the up and as mentioned, we did see jae Kim over $7 over the last few weeks the prospect of LNG development starts to become more interesting.
So lets now have a look at EPS LNG and slide 14, and they performed well in the quarter with under percent commercial uptime as Carl noted and she is the Offloaded. The 47 cargo the annual two week maintenance shutdown was completed without incident during the quarter, which I think deserves the mentioned due to the covert constraints of the team of.
Traded under during that time.
We agreed to the amendment to the LTAC with Perenco, and SNH, which essentially does two things for us firstly it removes the 500 Bcf cap on the contract volume and so converts the contract to an 80 of fixed duration deal and secondly, and allows us to invoice for any overproduction during the calendar year, which for.
The amount to around $5 million for the overproduction to the end of last year we.
We expect the agreement to be formalized in due course and that.
Discussions with Perenco and LNG production volume increase which is enabled with that amendment within the remaining term of the contract continue and the right direction and we anticipate the Perenco, we'll start the 12 campaign before the end of Q.
Q1 next year in order to prove up the additional reserves to potentially increase utilization of hilli.
Should we reached agreement with Perenco, it will likely be and you risk the line tariff payment for the portion of additional volumes rather than on the fixed.
Turning to slide 15 on EPS LNG gave me we concluded the FM issue with BP as Carl mentioned as a result of the delay to commercial operations of 11 months. The importantly, all other aspects of the contract remain the same and the impact on the overall budget is minimal and the financing milestones of injuries structure just call described.
On the project in Singapore, our contractors are ramped up to over 2400 people working with and covert restrictions and getting on with the project.
We expect the next dry dock, which will include touching parts of the lack of large sponsors of the whole to go ahead the for the year and.
And the LNG business development pipeline, we've experienced the material uplift and the level of interest and that Phil and GE with a number of new inquiries during the quarter and nine opportunities currently being discussed with financially strong counterparties and geographically spread and the include potential deployments and the West Africa Asia the minutes.
The radiant and the Americas.
We have an active engagement on both conversion and the new build the options and remain convinced of not only the commercial and shed Joe benefits of our design, but increasingly of the competitive carbon footprint of our offering.
Clearly we're focused on delivering give me right now, but these deals do take time to put together and I'd like to think that there's potential for good convergence between opportunities being ready for debt by D., possibly and maybe 2022 and the our ability to put together of financing package for the projects with that kind of and over to Eduardo.
My rough math [laughter], okay. The.
Take you through the details on Heiko.
Thank you very much and and good morning, ladies and gentlemen.
So switching to the slide 18, I just wanted to give a brief recap of the major events that took place over the past eight.
Eight weeks so at the end of September our IPO efforts were put on hold as the result of allegations involving our former CEO for it.
Actions Predating his work of title immediately after debt our board of directors engaged with external legal and accounting advisors in order to conduct the detailed internal review of the company's procedures and existing compliance for the says.
Final outcome of this review has been delivered in the end of October and has not identified any evidence the establishing improper for other for ups conduct evolving heigl for its executives and confirms the solid corporate governance and compliance.
During the September our existing power station and so ship it faces the issues with one of its for the step ups transformers, which temporarily reduced the available generating capacity from 1.5 Gigawatts to one gigawatt until the end of the second quarter of 2021, when the replacement Strange for me is expected to be.
Stopped.
We maintain business interruption insurance covert in place and we do not expect material financial impact from this event.
Also in September and September Thirtyth Heigl was the one that I was the only qualified the Buda to present the fed the offer in the official tender to take over the body of terminal from Petrobras.
But the reprise subsequently increased the hike was perceived integrity of risk leading to a temporary disqualification of rich bids we.
We have Dan of fields from this decision and now expect the final outcome from Petrobras before the end of the year.
On October for Hana and was appointed as our new Chief Executive Officer.
As a former CEO of EPS Corporation, Paul brings extensive experience and international business development and emerging markets and has the right skill sets to lead our growth prospects.
We remain fully committed to the develop and of our to our terminalling by the cutting and and after all of our mutual decision to terminate the existing and will you with the most hydro we have and trading to a new agreement with the state owned gas distribution company of the power of state gosh, the put up with the goal to supply the existing regional demand.
For cleaner fuels.
Also in November we have reached an important milestone in the development of the body cutting of terminal when the president of Torrance is granted to us with the final authorization cold outdoor to go to view of the 605 megawatts power station and associated LNG terminal.
Just as of last week, we have also been shortlisted in the open season tender to supply large natural gas volumes to the corporate cash the state owned gas distribution company of the state of putting the book, which has its share and its shareholders. The.
The state of Britain, and book itself Mitsui and also Petrobras. This is a fundamental commercial initiative to accelerate the development of all the Terminalling swapping.
As seen of both we strongly believe that our ability to develop large scale projects and entering two long term partnerships in Brazil remains unchanged, we though and network of a strategically located terminals and critical downstream infrastructure and we will continue and our mission to deliver cheaper and cleaner energy to this huge markets.
Let me switch to the slides and number 19.
And.
The idea would be to give an update on some of the developments in the small scale LNG of piece.
Business so.
We continue to execute and our strategy.
For the first batches of equipment, including ISO containers more by a regas units and gas fueling stations have arrived in Brazil and.
And much more are expected in the coming weeks. So we have no over 100, the ISO containers in the country.
In order to supply when the first of all items, we have partnered with Golan deal to Butte small liquefaction units and the states of Bahia and simple and hybrid will be the first company to the liver bio LNG in the country by using Biomethane from an existing lane, feeling some paula and transforming it into LNG in the.
Well for Brazil, We're also viewed the non strategic distribution club in the city of food away and of which will allow us to supply the existing demand of this important region, including the states of for new of it under the so some of the Cadena and part of it.
Let me switch to the slide 20.
As for wanted to give an overview of the.
The general update on some of the terminals that we have developed and in Brazil.
So I wanted to highlight of the significant milestone is that we have achieved in the but by the end of terminal.
Based on those we believe that the could be in a position to take the final investment decision in the next couple of months and.
I would like to highlight for example, the issuance of the installation of license for the construction of the LNG terminal and the associated facilities for the park.
We have also been awarded the long term port concession by CDP for the use of the existing facilities in the feel of the appointed port in the city of my question.
We have also received binding TPC proposals for the construction of the six other than five megawatt power station from leading international suppliers.
Moving over to swapping Oh, we have also made significant progress over the past quarter subject to the receipt of the find the installation for image. We could also expect the final investment decision in the next couple of months.
And the pull the arrival of the first of and your vessel expected for next year swap is positioned to be the leading distribution center of LNG in Brazil.
Oh, the terminal and start the cup idea of them, which I also wanted to highlight is also coming together for.
Preliminary environmental licenses and approvals from both and tuck and ESP you have been of attained and if I did is expected before the end of next year.
Lastly, when it comes to by year, although we cannot guarantee of the outcome of Petrobras decision. We are confident that our proposal. The approach is the best solution to address all of the commitments that were made for whats the antitrust authorities in Brazil.
It also goes in line with the government's efforts to provide the cheaper and reliable cash supply to divest the local Brazilian market.
So considering the development of all of our terminals hydro could be in a position to deliver over 25 million tons of LNG in Brazil in 2022.
Thanks, Eduardo if we turn now to slide 21, and our EPS GE progress I can highlight a couple of items Firstly the carrier fleet achieve best of of fuel efficiency during the quarter, resulting in lower see of two emissions and the.
The point, that's new is our recently announced partnership with Black and Veatch under which we will be jointly exploring opportunities to modernize some of the processes and activities relating to the hydrogen the economy.
The initial focus will be on two areas, firstly seo to managements of capture storage and transport initially from the LNG supply chain, but equally could be from other industrial users and secondly, floating production of blue ammonia. So that's the ammonia produced using me, saying for few of but capturing the carbon from the exhaust stream.
Two focus areas clearly related but there may well be separate market opportunities evolving from the work early days, but it does look interesting so summarizing our priorities and slide 22, we will focus on opportunistic sites and that the majority of the shipping fleet is on the term charter and then fill and GE our focus is to the live.
Give me safely on time on budget and to continue progress. So it to continue to progress discussions for potential expansion.
Of Haiti, plus the development of our new build mark three opportunities and debt stream hi, the we'll focus on reaching a fight the on the terminal as Eduardo has said that bunker and not building out of the business and Brazil and pursuing international opportunities.
Focus on concluding the refinancing activities the call discuss and of course, we will complete the budget cycle to confirm a sustainable reduction and DNA and then get back to the simplification of the Golar group structure and play.
Please note the handover the Golar chairmen total of choice for some remarks prior to Q and a.
Okay. Thanks, and then I think I.
This call a year ago, and doing a little bit of reflections from the.
For the board on.
One of the due to get particular and its interest may have been true in the last couple of months.
The to this year 20 years of the strong credit so I went to Singapore, and both the company and which at that time was kind of spread the jualin dot com and rose five LNG carriers and I don't know lets the bomb topped off for at ships.
Good day compressed natural gas into bone hundred 6600 talked of all of them create the downtick on on the secs 67 degrees that serves and.
The other most of print the krill business and all possible way the.
I wish and we had when we bought the company most of the LNG you also and interesting LNG going forward.
Time, and all of the talked about your true pollution and new book of business for extremely small and the reason we like the opportunity that you could transform the arch volume of the and then from one part of the World Tour and all the part of the World, we noticed that the energy and gas price and were very different and different countries for contracts had the we'd hope.
The growth in population typically have.
Hi, Paul the prices and paid too much for program effectively Lindy created the kind of bridge from sheep Scouts reserve to high does price for a market.
But we were far far too early indicator for 15 years before the gas can tell us control over LNG production and the only became the commodity.
In the meantime, the production cost for terminals on the LNG production came down and then the became cheaper good I wasn't part of the year and if converting the first of the Regas terminal and also delivering the for our successful that for the and the investment.
Then the revenue we have work and preparing for income under today is producing gas coverage the door device because I've been flared re injected for me, that's substantial and sustainable value creation.
I thought your and viral probably the onboard of other me bought all spray, but the focus the earn out today and see your true reduction of credit and you heard the at least and part of the world. It's.
It's important to know that 85% of all then at the end of August.
Produced from hydrocarbons for the next 20 the chart the Arabs hydrocarbon and produced the material part of the gross and net.
Different parts of the hydrocarbons if another media.
The refinery and Brasilia replace have if you plan to get LNG. The can save seven under $50 for total from C. with true on the other basis.
To the fact that they go off and say significant and that the costs and it looks like and very easy decision to make the.
Consistent of Europe, and then.
USA and we got the driver to stuff and taste of this renewed for the market will take off and the longest changed very very quickly.
Remember that the I'm all day and the the consumption of these market has been going on for 10 years.
20 years ago, and try and are consumed approximately half of the energy consumption in the U.S.
Stop trying to the day consumption you guys have actually gone down our debt.
And the consumption in China, It's gone up three times and now today, approximately 50% larger on the U.S. and double it and at the same time and remember that the major problem developments in these countries sales coal coal contains six to five to seven of the percent of the energy consumed in the if nations are coal fired.
It's called the vehicles is cheap for the developing world and that is affordability and their radio and from poverty and income to daily you understand the provision if of up the politicians if some of the politicians are focusing on.
And then taste of what they can get for them and they are the.
The good news is studying the you're taking all of this making LNG cheaper if I remember the traded LNG EPS impact for left and I never.
True dollar part and the video which is kind of there are other content and all are already.
You are kind of things turn the percent of the theatrical image and you're cutting seven to present the of the particle the mission undercutting the hundred percent of the Fox, but if you're kind of convert I don't think from Q2 LNG.
And we have something healthy and something sheep and the other growth commodity and it.
It is it from all the do growth of 10% there and.
And as of the mining company and the work today, you don't think game of switching from these sort of average your to LNG.
Every day ratings startups of our shipping companies for no building mouse and container vessels small the bulk carriers for whatever they are converting it to the LNG. The do it because it's cheaper it's cleaner they expect the carbon tax and it's done and they're also doing it for the fact of the infrastructure for global distribution of LNG, So coming together.
In China the import in the core with here is up more than 12% last month, it's up to and the 5%.
Alright, and for under 50 talks and trucks of working on the other the units come true.
And that's the second the length of the end of the transformation of transformation for coal to LNG in India, and just announced all of this I don't know going the build a massive infrastructure for LNG, including toast and petrol stations.
I'm proud of all of the team and what our have delivered and they're used your chip technically there our sq DSIC and get the I'm proud of the companies like Exxon BP comes to say and our offices.
That wrote the air Steward of off there for the technology I'm proud of the work done by the shipping team to reduce the risk in our shipping portfolio undercover and to get contract. This area of solid partners.
For all the when I come to feed all of their operating for a private total company produced for unrelated 5000, rebar and this I mean, the guy who are extremely of Tankful for what the update you on the together on the Hilli approach of the effect of the people in Brazil over the last year and have built the pipeline and the 50 lots of nation in the world.
And pipeline with smart and three years, the picket and Petrobras LNG I'm proud of the of the fact that the no and couple of weeks of produce part of few fueling trucks from a lot and fits day since our partner.
I'd be of working afternoon delivered the peak of petrol distribution impressive well the I'm not so proud of is still baby and financed the market. This company you ever doctor to earn and from some or all the competitors and trade.
And that's close to 100 times book or the yard.
Trading at 60% of book and.
The Newbuilding overstates and there for LNG costing more and on a billion and it takes it for years before you see on the cash.
You are in need of a strong liquidity buffer and even if the board and management note of the have flexibility in our balance sheet to sort out the of financing investor should and tough deposit about short term liquidity events their focus should be other 20 aircraft for the coming towards them and.
No for June deduct gifts for stable long term dividends for him.
A fair amount of the company I should take the main responsibility for the fact, the tumor time of this company I've just kind of thought this matters.
And then you have values you have liquid you try and get stuck with the did you can't borrow on your hosts the new new all of your of rented a total for the next trend for five years and you come about amortization of the backlog of the rental income and still have them on the left over that's the flexibility we have the the heico's day based the though.
The old price range.
For the value of non undercut us or give me the rest of the rate of 10 times multiple of for 2.2 billion and there are significant and borrowing base.
Net missed and if its own burts about the recent the Wes aerospace and the calibration Thompson decided to leave the company, we like to comment and both personally and professionally and came when you use the came from the host of north and it probably going back to the political board. The attributed if the leave after six months based on the personnel.
Right for us, but you also confirm to somewhere north of Investor and the left the company and we didnt get sort of that given the over the remaining and then to see upticks importer of Golar and the team.
I'm pleased to say that you throw of spin. The currently been taken over by parts of our goal you know whats the crop the well very well on the U.S. late last me confirm its ability to deliver attractive financing to the company.
And now the touch about the Brazilian events, which have hit so hard on the September trended to art.
And the rest of enterprise to HEICO of pill, and the book actually of US cover. This led to the fact of the former CEO and bugs out of the along the road tokay.
Okay instrumental and building high will from day, well I believe the company the.
The acquisition against the until I really think the rent SAP and five years before you joined our company debt.
The board of the Weibo has from day, one zone and thought this investigation north and on the way the indicated on the of roaming doing cost and be the HEICO well I've heard of board of started and then an extraordinary view of business cost of 50 people very enroll and five weeks coming true the company from eight to set no wrongdoing both from the.
For for weeks or help with the lot of sleep the thought for a lot of us and I'm.
And to say that the even if the still suffering from being the serve dragged into something between should never have been the partner that the business is getting back to normal.
Yes, subsequent to the events quarter, the lot of new business in Brazil.
The about a month and.
No, including being rewarded critical installation licenses from Brexit and alternatives signed deals for mid stage. Some companies. The venture will be are progressing well and we expect to us and Martin.
Now set to take out for the on the go forward and not terminal prior to the end.
We already know the best and progressing very well and some of the National ventures, I like to attack or board member pool and the first.
For stepping in and taking over to see overall, Paul you used to run that supports and five undercover for 10 years and certain of the skill sets and that led to help us make HEICO into that industry leader in and the transition we are truly deserve to be.
Both the high reward and the board of Golar LNG are truly committed to complete the IPO process.
For the documents have been updated between the wells and have been reviewed by all the tariffs and lawyer, but that so far and opened fight the timing of the IPO will be driven by market conditions ongoing business operation and business development activities.
That's the result of the delay of the high go IPO, we're going to have been approach by industrial players, which have expressed interest in different transaction involving how I go how aggressive the board of the are on the board of high GOR will consider this request, but the main track is to develop the company.
And the great potential and we see interest business and then.
GAAP independent companies true an IPO.
People have today and extreme focus on the new you ended the driver like Hydro day, not only on the others Golar entry into this metric for us.
He and the mentioned here and we have no that's been a very credible engineering partner and black and which.
The volume to be an enter the transformation company whoever I wonder and wanting to my experience and LNG for 20 years.
It's both debt and that the transformation true yes.
As of today, the only independent and truly integrated LNG companies developing developing for relative grid, it sort of wishing to maximize the value of that strategic position over the next 10 to 20 years. The strong focus on building LNG infrastructure in the emerging markets, we don't going to wait Trentadue, Turkey years for cost of.
The all in on the hydrogen production of the task with the LNG over the last 20 yards and we really can make good business building that for LNG infrastructure today and.
We just try and spent the five year gifts for the energy majors and be pp BPR bid.
Bid at the yeah, there on the other day out basis of around five and and limiting the problem that very lucrative business.
Target this though to build the fight for worked out for so big that the new instrument of financing becomes available for us that's should come with the increase debit there and with this already programmed into this company by the by the $6 billion and never up the out of backlog we have secured the.
The need to convert from project financing for corporate financing.
And we need to simplify the complexity of the corporate structure is clear target for the board.
We truly support the analyst opinion, the the value of this company of significantly the hard on the current share price and rest assured of the board of honest Tim.
And they can in order to materialize that the French.
Hi include direct distribution of assets sale of assets the merger or whatever it takes in order to get the underlying value of lifting up.
If we can deliver sheep rightly unit and the true the world and make a solid longer term return I think we have a unique business model and though it's time for all single dawn to convert and good business model and the great into the record the platform and a solid the return to shareholders you attributed the.
Sure It and we have a job to do.
Thank you.
Thanks to all of us and and with that I'd like to now and back to the operator for questions.
Thank you, ladies and gentlemen, the win.
The question.
Good question.
The answer the question.
On line, Please press star and one of your telephones and.
Once again, most of which to ask the question. Please press star one the next Arlington County.
Okay. Our first question comes from the line of Dan.
From Stifel. Please ask your questions.
Yeah.
Good morning, first let me say I appreciate the color that you gave on all of the various projects.
As it related to a high go and all of the different various things you're doing in Brazil, I didn't want to.
And first of all on you'd mentioned the synergy that power plant had the transformer issue can you maybe talk for a little bit and appreciating that its covered by insurance, but can you maybe talk through a little bit of what that might mean with respect to.
The cash flows and and earnings.
For <unk> from higher from the the business until it's resolved.
Sure, Hi, bandages and or the here so as I mentioned before we expect to the the threshold and we will be replaced by the.
The end of the second quarter of for next year and until then.
We continue to receive our capacity payments. According to the pp some of the capacity payments remain unchanged and is it.
You may recall, we do benefit from a 60 day notice whenever the power plant the scope for dispatch and the in the event of the power plants being called for dispatch, we would have to compensate for unit exposure of between the current spot the electricity prices and the prices.
Prices that and they are paid in the contract at the point in time our debt.
Debt exposure is debt covered by insurance as mentioned before.
And we do sell you.
We do not expect the material impact in the event of.
For not being called for dispatch and in the event of being called for dispatch, we are covered by insurance for that.
Okay and that's that's helpful.
And then and then secondly for me just as it relates to the two thirds of the shipping book that is now contracted for next year and I appreciate it and probably some of that's on floating rate basis, but is there any color that you might be able to give us and on the type of rate that you've been able to aggregately.
Secure for that two thirds of the business for next year.
Hi, Betsy and.
So you're right, we do have ships on and.
The next link charters couple of the ships the potentially could be in the spot market for the vast majority of the fleet is on a fixed rate structure. Some of it on up to a year and some of it on EPS slightly longer.
We were not guiding to longer term Tc east, but I think it's fair to say the the structure that we put in place and our focus on through year. TC is we're moving in the right direction and I think directionally, we wouldn't we wouldn't want to be going backwards from where we've what we've achieved this year.
Okay. So so better year over year I guess is the how we should think about modeling it and that portion.
Yes, and at least as good as kind of.
Okay, all right perfect well I'll as my two questions I'll turn it over thanks.
Thank you.
Thank you. Your next question comes from the line of Mike Webber. Please ask your question.
Hey, good morning, guys how are you.
And Mike.
Hey, so there's obviously, there's a ton of the swing out here, but I I.
Michael start with with high go.
And maybe maybe tore I know you referenced as being a personal issue for us.
For the personal issue with regards to the Callum, but do you can you just confirm the his departure is in no way related to would have and I go this fall.
Yup.
Okay. Good.
And then and with regards to the debt are viewing and got.
No I think I, specifically said that there has been and contact with some of the biggest share of us and expressed by its leaving aside the.
And that's something related to that.
Okay, Yeah, just the timing and the.
Timing, along the kind of bears the <unk>.
The question, but.
In terms of that review I mean, it certainly seems like I know there was a pretty wide for your view in terms of.
Digging into some of the details and Brazil, pre IPO and and certainly kind of post IPO.
Were you guys able to coordinate.
Coordinated all with with Brazilian authorities and trying to think about the and eventual high go IPO. If you do go down that road to what degree can you.
Formally lift any any potential overhang there I guess I guess, maybe the right way does the questions and he has there been and ongoing dialogue with with any of the authorities and Brazil with the bar to the LNG business, specifically or is it that they made the.
Giving any any comments there for you all.
Absolutely Mike personal hygiene said the order here.
And as I mentioned during the presentation, we do not have any impediments to continue to operate and to do business in Brazil, and and I think that has been clearly stated by the number of different the transactions that we have entered seen so the of inch took place. So I can refer to more use of their testing side of the state owned entities licenses and alternative.
Issues that have been granted by the fed write off for me no no, but you know just because there are signs of prior to the initial is the I mean those are all signed subsequently for the initial issues of again with so I'm not sure of that data stream actually validates. The question I'm asking I'm really just asking whether were you able to coordinate with the authorities and Brazil with regard to that would that independent review anyway.
Well when it comes to deal for interest we have not being a question. The way we have not been ask it to to provide any further explanation for that I mean, the events that happened with Antonella referred to him on a personal level and do not indicated the winning in any way and sure.
Yep Okay.
Just the maybe maybe two of it and tour you mentioned in your remarks, something I think we'd all kind of suspected that you guys would of been approached probably immediately from interested parties around.
All right other strategic options for the Brazilian business or the most people kind of view is and as you know one of the one of the crown jewels of the.
The.
EM.
The kind of front of your state energy transition if.
You are in a unique position in the sense that you actually got almost completely done with an IPO.
And then subsequently the pull it is the right way to think about the valuation benchmark you would use to evaluate strategic interest that value you would have gotten and the IPO and is that is the how you're looking at it and and how we should think about it of someone can come in and kind of beat that did it.
The the right way to think about when you pull the trigger on maybe of some other strategic transaction.
Yeah, I would say.
If you think about the that but we.
Other than IPO range with both between 1.8 and to find well, but well our loss from the sale and I think we'll the art or stone pay for selling on the shares we're issuing primary ishares fair enough selling on the share so from that point of view and you can probably assume that we think the devalue kind of.
Okay are there by the end of consider I think on there's over price round of deposits I.
I think we know what Pittsburgh.
If anything it's probably and I would say that the way the development of in Ohio, and I think we continue to build value the.
And most of 'em lump of Hell.
We are and how long track again I'm Super happy the team I think Paul and I'm of course and brought in some of the ex the.
Hi, guys for he used to work together with them and.
And then doing an excellent job getting this up and run the and I think when it comes to TENX, which are.
Our time and I think I think it for me.
I shouldn't say this but I think it's going to be a variety of hard for instance for North Korea zero to develop the tufting mid.
The LNG without being in contact with the cycle and I think the they clearly see that the there is there is no alternative you spent five years on permitting and stuff.
Got you well, maybe let me sneak one more and your for Ian.
You mentioned the give me and.
BP and Kosmos recently Downscaled for two to 5 million tons, which could imply that the second half LNG unit, the could potentially be and play there it.
Is that your understanding and then to where would that opportunity rank within those nine or 10 projects that you mentioned the you guys are working and.
So Mike you know it says no out of practice the comment on anything of the contracted work that Weve, a and then the other.
Mentioned, many times before and the specific reference to give me any dealings that we have with BP do remain under strict and the but I do refer you as you've mentioned the peace public statements of the subject.
The no surprise for you to see the the cost structure of any future phrase phase is important and.
And that's simply repeat that our view that golar is floating LNG solutions of cost schedule and carbon competitive and we keep pushing for opportunities to discuss.
And our competitiveness with the large number of a large and financial Counterparties I would say that speaking specifically the hypothetically of by BP our portfolio of of potential for LNG customers is very heavily weighted to large cash.
Companies that we can back finance against and that can lift projects, particularly when you look at their ability to take the cargos themselves. So any company the as the characteristics of being able to.
Sort of their own off take and give us a good secured the package with which we can finance the project and then we're very very interested and speeds and.
Uh huh.
Oh, the you know the guys have done a great job selling the yesterday, the major and I.
I think there is probably the Gulf of Mexico sure are afraid they are building and other produce so.
So from that point.
The this is the they are looking out for nurses refer to our current revenue CDW delivered 47, the card with for the Hill.
Non-GAAP harvests from revenue this protocol left on the half of it and then.
The the cost differences I think people the arnaud searching for MACI prisoners and from the majors, which for Ericsson or the.
The amount of the credibility.
The the sort of the Formula you know of today for the different from all the host three years ago.
Yes, certainly seems like the opportunity set is actually kind of quietly expanding as part of the cycle. So the good to hear I will I'll turn it over thanks for the time guys yes.
And Mike Thank you.
Thank you and your next question comes from the line of Shaun.
Evercore. Please ask your question.
Hey, guys.
My first question and probably the best suited for Eduardo and and it was the question on the Bahia lease with Petrobras and so just wondering with the bid acceptance from Petrobras is that that's ongoing and are there other counterbids out and outstanding that the that you guys are sort of competing at this point or the the last.
For the last man standing on that and also maybe just help clarify what the this ruling by the Brazilian mines and energy administration related to the volume is is this.
This petrobras rack and their feet, because they're not really anxious to leases this asset or is it more just contractual legal issues.
Hi, So let me try and tried to clarify what exactly was the Bahia terminal tender. So we were the only company, which was qualified to present the commercial PYD and that took place on the September Thirtyth, we presented the commercial offer which basically.
Basically pads, all the commercial technical and other regulatory requirements pulls and by Petrobras.
Just on the day after debt it through a bunch of on the grounds of a perceived high integrity of risk for HEICO. The disqualified hype of from the process, but we have remained the is the only one that have presented the commercial offer so based on debt we have been of Pute.
Against the decision from Petrobras and we continue to discuss a final outcome for that the process I'm not in a position to comment to what were the reasons behind Petrobras cash position to take the decision, but we firmly believe that there were no reasonable grounds for disqualifying.
Hi go from the process.
Okay and is Petrobras obligated to the find the lessor for the facility at some point why they buy the drilling state.
Yes, they are and.
And as part of the commitments debt was made towards the antitrust authority Petrobras has the obligation to lease of the terminal for a minimum period of three years and that leaves should take place in the.
The next few months.
Okay.
And then one for in on the Hilli.
And just trying to understand the removal of the cap by SNH what was the purpose of the cap and the first place and was there any concession that needs to be made I think you said it was an eight year. So it's just the continuation of the existing contract with this newer terms and increased.
Overcapacity.
That's right. So the original contracts for you recall high the.
And then point stay the does the earlier of 500 Bcf through the vessel or eight years and as we've been producing a little over on the annual amount each year that would of potentially brought the contract to an end of few months early.
So what this has done is its news the contract to the from six to eight years, the duration and we've got about five and a half years left of that but importantly, the two things that come out of the one is that we are light and not to be paid for our overproduction. So weve made about $5 million of over for.
Production up to the end of 29 team and we will bill and the amount for 2020 in January next year. When that's calculated so that's something that will run through the contract and then secondly, importantly, this that cat being lifted and means there's no barrier to being able to come up with the deal.
And that would allow us to put more volume through the hilli.
Okay and that I think you sort of around $5 million of overproduction through the end of 19. So does that does the that revenue recognition all happened in for Q of 20.
I think it will happen and one key oh, it could happen and for Q2 and the if weve and voice the by that I mean, we can confirm that later.
Okay. Thanks, that's all for me.
[noise] [noise]. Thank you and your next question comes from the line of Randy <unk> from Jefferies. Please ask your question.
How the gentleman has gone.
Hi, Randy.
Hey, so looking at the liquidity event, you know I guess the few questions. One of the terms for the new 100 million dollar credit facility again, I go and for the Frost refinancing that's gotta raised an additional maybe 40 million and you say the margin on an additional 30 million. So it was this year decision the push.
These refinancings until the first quarter and and how likely is that margin loan to be upsized and completed and the next few months.
And we call and if you think there's no.
Yeah sure and around.
So the terms of.
Uh huh.
Sure.
Colin.
And the terms of the facility is the.
For plus five under the Bips.
The non lumber pricing bullets.
Let the that we have on the corporate level.
When it comes to the margin known its a question, whether we would like to leverage and the shares or not that's you know we already paying the margin loan.
And now in the Middle of December and we can obviously approach the same banks or a subset of those banks to renew the momentum.
Let's talk of said previously.
If there is any immediate plans to do so but if you don't have the bridge on sort of center shareholdings you can at the later stage companies. There for you also distribute share holdings to shareholders, whether that is that the made for Sage you did the MLP or how you go and something that we are considering.
The such facility, it's in place today, and should certainly be able to be booked the put in place.
It comes to the for the million dollar net liquidity release from the potential refinancing of pearls the.
We received two different term shape or.
Both of which just give them the credit posted sales of such refinancings is more likely to.
Occur early in the new year as opposed to now but.
One of them, we think is extremely attractive and we're pushing the and then the process, but the also you know that the it takes two to the tango and on the.
Refinancing of the Sip and there for regarding on on the.
Q1 of them from on the.
Could the of course and be pushed earlier, but then again lots and lots of lenders find it easier to finance the of initiatives for me and the new year as opposed to late and an old there. If you want to think about the lack of.
Got it Okay, and then for that non amortizing credit facility and the LIBOR plus 500 basis points. That's just one year term.
I won't because volume and.
The what they have engaged with.
Got it all.
All right and then we can go back to the LNG shipping backlog and the increased by $123 million can you provide a little more details on those charters are they all flick fixed offloading and the kind of one of the durations of them.
So the majority of the the new backlog at the site and frankly, I think all of the new backlog is a fixed duration and the duration. So I think the longest one is a couple of years most of them are around.
Right and the but a year and the there's a couple of that might be somewhere in the June.
Got it.
Hi, good deal well, let's keep the train move and thanks, so much the.
Thanks Randy.
Thank you. Your next question comes from the line of screen.
The.
Sure.
Okay.
Oh I just want to clarify the of the Franco update and agreement does not allow for reduced annual cash flow and volumes are lower the and does the agreement eliminate the tons sold to get Upsized and extended terms the could support a favorable project for it for now.
[noise] Oh, there's no linkage to project financing the I'm aware of that would preclude that and I I I can come back to you and they the.
The.
If we under produce I don't think we've really contemplate that with the way the vessels going but I don't believe.
The way the the contract structure and were paid for availability and through the it's just that we've been putting more through and so the the contracts the restructure for that but let me let me come back to you that on that Craig Stuart will follow up for you and the detail and sorry again.
Okay and on the project finance plus and what I meant was the if you had upsized the mid of the 15 year agreement, obviously, the a no brainer to be able to get better financing terms on the projects, whereas of its a little more variable and flexible even the you're going to make more EBITDA for us it's hard to do.
The replaced.
We are focused right now on the increasing the immediate through to own the healthy rather than thinking of a extending the contract because the latent value the sits and not vessel and we want to do what we can see you know get more and more volume through the that vessel and and the you know the outcome from that goes straight to our bottom line and that's out of me.
The focus so we're not really considering you know extensions of escaped the state and the and the game.
Sorry, I Didnt call just a comment on on their previous question the revenue can not.
On the left under the <unk>.
Good day, so because of that you said the were paid for the.
For the capacity and being there and the cannot come though.
Thanks, Scott Thanks for all that that's good to know of.
And Hi go and is there potential true new the north of Hydro aluminum project and the you after the bar for and the and the successful.
Hi go IPO and could we see high go contract for of LNG itself as far as offtake and the next couple of years.
Okay. So with regards to most kind of what I can say is that we continue on and active dialogue with them and.
And our decisions to take the project ahead and move on with the potential fight the before the end of the year.
Our lots of connected entirely to the to the discussions with Norse Kaiser and so we might be enough the solution and good bye.
And with the project without without their country.
With regards to the potential of filling just apply to any hydro project. I think this is of course, one of the potential synergies that we believe that could be achieved.
And we we do contemplated in some potential projects, especially in the north of revenue, but it is something that is for a very pre mature and very preliminary as of today.
Great and and just clarify there and I.
I guess my thinking was the idea.
Bart or I know you are the only game and Tom There's just no way for these guys to convert.
As the promise of the local state.
Through the the more you know and mission friendly natural gas fuel without you.
On slide and guess what I'm asking is the if you do go ahead and that by the and the next month or two.
Do you think the Theres does and the opportunity for north of hydro to return to the table in coming quarters.
I think the what you should do is a true call north theory of data on the alternative.
[laughter].
Okay.
For the I've been said about the drug if you see the location for our term relative to the effective outside the door opener for the address plans and I think I'm hopeful of them. This thing is settling down and that the as possible to to get that back in the for but of course don't take and take for granted.
Great. Thank you.
That's correct.
Thank you and the next question comes from the line of Ken.
From the ask your questions.
Hey, good morning, good afternoon, and Carl and what else tore thanks for the the detailed updates there before maybe toward just your view you mentioned your kind of view on and governance the primary but yet you're on your your for CFO here in two years and and for CEO and in five years.
I guess, just going back to some of the questions before what's the concern here, just and and lack of continuity.
Given that much shuffling and and to give visibility on the the study study had guiding the you know continuing to guide the company.
I think when you're saying we are other for CFO for I stopped total clear right because of the CFO and we have the bid for Graham Robjohns evokes without the fit for 20 years for sure it's slightly different drove the kind of.
I don't think that's that's the GAAP column to cover for so I don't think and necessary. That's right you have out to prevent the EPS effect of the I think you said that the little bit of pickup, but the Utica visionary and three years, that's true and.
The off or.
But of course turnover, it's never gets a and and this is the.
This is the color showers and place director is hard work and.
And the commentaries and entrepreneurial and every the hard drive volume and.
I can.
Admittedly, saying that to have and actively involved share of the might be paying for from time to time and laughing I Miss It [laughter] and I think that's the with the well ever used the affirmed the fredriksen group that they are active lives for professor of on BARDA and.
For the first thing and the thing on the alterations also all of this if executive and walking the completed an orderly came back the merits several times.
Okay and like area all of the people so.
[laughter] I take your reported.
Correct and there are facts.
And because you haven't said CFO for for types of it.
And whatever the it's all of it they're concerned but it's less of a concern about the guidance of the fixed most of the guys. You talked a couple of years because of course it was the limited what it could set and jump into and but they all light Kalamazoo and the other in both the and I tried to convince them to stay for the color from personally.
And she said the live onto the different life.
Okay.
But I mean factually and that in that seat. It is it is the numerically right right, but from tens of Robjohns debt the talented team and.
The Carl but okay, so, but I get your point in terms of its still at the company for all of that just let me flip over into the your thoughts on the the cost from the BP. The light you mentioned the $36 million can you maybe detailed those those cost of I've got that right and and is the shipyard fully operational now and and and what those costs are.
The other way.
Yes, yes, the the shipyards fully operational they it's quite amazing what they're doing in terms of their own and it comes from the Singapore and government to start with they have very strict rules around and how do they transport people. So let me. Let me give you. An example of a lot of the workers live and dormitories and.
They sleep and the same or area of the dormitory as their fellow workmates for a specific area of the projects and the only the specific area of the yard it's a bit of the the ship the they're working on and they go from their door and the trace the there canteen facility and our boss directly to the war.
Carry out they stay with the where it makes the all day and then the come back and they can sort of rinse and repeat and the idea behind that is if there is a true of it I case, the can isolate a unit very quickly and then I deal with it. So we were down to less than the 100 people doing the form and shut down the we expect.
Interest in Singapore, and they're really on care and maintenance activity were not up to 2450 as of today working on the project, which is a higher than it was before we slowed down and back on on track in terms of the additional cost of the 36 million a lot of that has gone into.
Storage pass the vacation and care of equipment that was ready to ship from vendors plus additional time related cost as you might imagine you can certain fixed cost of just continue and they've gone. The 11 months. So as that you know as the percentage of the overall budget 36 million on 30 and 30.
The million it the is pretty good under the circumstances.
Great. Thank you and then lastly, just and maybe just on on a go and a high go the the key risks for the F. idea at Park Arena and swap rates and what are you mentioned kind of some of the things might be coming over the next few weeks is there a chance of of delay or any other issues or other.
Not getting the outside the U.S or anything else that could could delay that process.
We are highly confident that the the progress made bacardi and up to date.
There isn't a very good position and pay for final question the Cleveland.
The next couple of months.
When it comes to swap and we believe that large group and regulatory approval for that are expected to come.
And with the main driver for the.
Great. Thanks for the in FICA resets and.
Okay. Thank you.
Thank you and your next question comes from the line of Greg needs.
Keith Please ask your question.
Yes, and thank you and good afternoon, and and thanks for squeezing me and here Yeah, Yeah, and I guess I just had a question and kind of going through the pair prepared remarks, it sounds like and I'm going to look for a little bit of color around what's been talked about over the last few quarters in terms of strategic reviews and.
The kind of repositioning the company is is it safe to assume that you know and realizing that the capital markets can be for calls on the net and.
And things are always and flux and the capital markets, but it's the right way to think about the of that path here for gold Laurie and trying to.
Crystallize value is that all contingent on the high go the.
IPO before we think about all the things like for the MLP and the conventional fleet. It just kind of curious any color around the you could give us around that.
Well, let me, let me kind of.
If I, if I think about sort of enabling strategic plan and it hasn't really changed much over the last year and the as tore mentioned, we'll see the sum of the parts of the business the.
Equating more to the value recognized in the market, but to achieve that vision of creating separate investable businesses. The few things that where we are focused and let let me and lets them as a seven or eight of the first of all keeping the operations running safely the satisfaction of the customers.
Secondly, working hard to maximize the through years of shipping income. So that's a change of pushing quarter by quarter, where we're looking at it through the course of the year.
Thirdly, delivering LNG, Croatia safely on time and on budget before the end of the year to deliver that $47 million and cash and take on the 10 year operations and maintenance contract number for maximize through two on EPS LNG hilli, whilst on contract Perenco, some maximize that volume, we can get through and therefore the.
The revenue fell.
This is talk the by delivering a guinea safely on time and on budget to commence a 20 year contract with BP and our share of that EBITDA is around $150 million per year.
Sex developing the F. LNG true portfolios to create that realistic and investable set of project opportunities considering both smart one conversion and Mark three Newbuilds weve talked a little bit by the that already but we think the Rs LNG portfolio backed by such high quality customers country interest thing.
Investment opportunities for potential partners going forward.
Seven for the it's been commented on the for the future of HEICO is going to be determined by the board of high go and market conditions.
And eight you know, we'll dabble and new technology to make sure that where we are right. There on the on the on the fringes of things that are happening and the overall market. These are the things the on focusing on on the day to day basis and they feed into consideration is the board may have and I thought I don't know if you want to identify and.
No I I think of the good some of for the day to day open.
I'd say the percentage every day I think what has been the problem for US is of course, we have tried to kind of spin off the shipping activity of several times.
It's been difficult because that's not really the business, we love to be in long term and I think by reducing the risk and by covering and hope for charter and we have got this increase or the downside risk and that business. When it comes true VARUBI of preferring HEICO no. It's because we are ready to go so we kind of go effect.
On a day I think you will see of growing pretty soon and that's why we're giving priority to that first.
And then when it comes true if you're going to do other thing I've described and some of the.
Looking for a partner to build out for the business going forward and you really want to get the lid trend for the up and running you wrong to do some more stuff with BP you want to build the bigger portfolio of before you're bringing the partner.
So for.
But I think the are problematic.
The UK.
If the kind of keep the upstream and downstream all together if all the way on the all the other it's great. Because then you have to hedge fund gets press and open.
Hi, the mid tier if not or business going forward and that shouldnt be but there are no kind of structuring talks to all the people that's well the boat doing something so, let's see and but you're right fiber with priority of wrong, because that's on the block right now.
Okay, great. Thanks, everybody.
Thanks, and with that and I'd like to draw the cold the close to the time constraints. Thank.
Thank you for your participation and interest and Golar. Please stay safe you look forward the sharing our progress with the next quarter with that ill and back to the operator.
Thank you and we won that does conclude our conference for today. Thank you all for frequency.
Good day.
[music].