Q1 2021 Golar LNG Ltd Earnings Call
Good day and thank you for standing by welcome to the Golar LNG limited Q1 kind of treading on results presentation. At this time all participants are in the listen to all of the day. After the speaker's presentation share will be of question and answer session. Gotcha question. During the session you will need the press star 1 on your telephone.
Please be advised that today's conference is being recorded if you recall operator assistance. Please press star Zero I'll now hand, the call over to her speech of delay the start of called Starbucks. Thank you. Please go ahead.
Thank you speaker and welcome to Golar LNG is Q1 earnings release. Thank you for taking the time the dial in my name is called Fredric Stahl of both the recently appointed CEO of Golar LNG.
Before we get the into the quarterly results. Please note the forward looking statements on slide 2.
I'm joined today by Mr. Edmar, Tamara Lowe who's taken over my former role as CEO CFO of Golar Eduardo was formerly the CFO of how you go and it's well known to the majority of Golar stakeholders.
We are together looking forward to contribute thinks of the continued success of Golar.
Turning to slide 3 for Q1 highlights.
We report adjusted EBITDA for the quarter of 78 million and net income of 25 million. Both ahead of consensus estimates.
Our shipping portfolio achieved the TCE of $61700 of day for the quarter and our shipping revenue backlog stands at $187 million of portraits.
Hey, Lee continues to deliver 100 presents a of fun with the 56th LNG cargo currently being offered all of it.
The main remains on schedule and is currently 69 per cent technically complete.
During Q1, we announced April 15th closed the sale of how you go and the MLP to new fortress energy.
The transactions will be accounted for in our Q2 numbers, but it is expected to generate an accounting big profit in excess of $650 million and increase liquidity and liquid assets with around 900 million.
We have initiated from the announced the buyback program for both of the $250 million with 1.2 million shares bought back to date.
Our cash balance as of Q1 of 245 million of does not include sales proceeds from any of your transactions.
I'll now turn the call over to the Bordeaux to take us through the first quarter numbers.
Thanks, Carl and good morning to everyone on.
I'm excited to provide an update on our financial results for the first quarter of 2021.
So turning on to slide 5 we can see that the group had a very strong performance in Q1 total operating revenues for the first quarter, where the $126 million, which was 7% above the numbers that we had in Q4 of last year.
Adjusted EBITDA came in at $78 million and was in line with the previous quarter of.
The key driver for this performance came from the higher utilization and higher charter rates of all the carrier fleet.
Which contributed to the total revenues of $63 million.
We're able to execute on our shipping strategy and increased TCE rates up $10000 a day from the last quarter.
S. LNG revenues from the Hilli came in line with our expectations at $54 million, although lower than the previous quarter. When we had the effect of overproduction revenue from past years those numbers reflect the exceptional operational performance of all of the team, which again delivered the 100% commercial uptime.
The commencement of operations of our long term O&M agreement with LNG Croatian resulted in the higher management fees, which have also contributed to the increase of all the other operating revenues totaling $9 million in the quarter.
Net income was $25 million, which is $17 million higher than the previous quarter. This was mainly driven by improvements in noncash mark to market gains in our interest rate swaps following favorable rate movements.
On the financing side, our net debt position at the end of Q1 was just close to $2.1 billion and a slightly higher than Q4 that was mainly driven by the $45 billion of drawdown under the gaming facility, we're going to provide further updates on that later on in the presentation.
At the end of Q1, our total cash position as previously mentioned by Carl was $245 million and debt did not take into account the sales proceeds from the end of the few transaction.
So moving on to slide 6 the.
The closing of the Hydro and then Jim LP of transactions last months have further enhanced our liquidity position.
With the $150 million of unrestricted cash on hand at the end of the quarter and the $131 million of cash proceeds received on April 15th all of the balance sheets has been materially strengthened.
Based on yesterday's closing price our stake in NFC is not worth close to $800 million and that creates a lot of optionality to our funding strategy.
See the thing that we have now over $1 billion of illiquid assets as you can see on the left hand side of the slide.
We're now well positioned to meet our existing Capex commitments and also to fund future attractive investment propositions.
Wanted to highlight that our focus for 2021 group of centered on optimizing all of the debt structure, which includes the refinancing of our April of 'twenty true convertible bonds.
We're going to continue to further simplify our group structure.
And we will also looking forward to focus on the F LNG and upstream the business developments.
So with that I'll turn the call back over at the quell.
Thank you Eduardo.
Turning to slide 8.
Shipping performance.
As mentioned our shipping TCE for the quarter came in at $61700 a day.
We have fixed 90 per cent of remaining vessel days for 'twenty 'twenty 1.
Out of the 90% contracted days 19, IFF in the index linked and 71% is on the fixed rate charters.
We took a cautious approach to shipping exposure coming into 'twenty 'twenty, 1 as we saw 50 newbuild deliveries coming this year for about 2 thirds of deliveries have charter parties and 1 third on the rebuilds remain open.
We are however positively surprised by the strong LNG afraid grades of our currently seeing despite the normal seasonal weakness during spring and summer months. This Furthermore supports our positive outlook for our shipping segment going forward.
In line with our increasingly optimistic outlook for shipping rates, we haven't increasing exposure to LNG afraid grapes, 3 floating rate charters and vessels coming of fixed charters.
We have 3 per cent spot exposure for the second quarter and 11% for Q3 and 40 per cent for Q4 of line.
To match the normal seasonal strengthening of LNG afraid grades as we entered the winter months.
For Q2, we expect to see T F. The E TCE rates of around $47000, a day with 98 per cent fleet utilization on the back of our high contract coverage for the worker.
Turning to slide 9 we.
We are increasingly optimistic about the future outlook for LNG carriers the total.
The current LNG fleet on the Walter stands at 500 on line 7 ships the.
The fleet comprised of 254 steam carriers 183 of T. F. The E carriers, 44, Q flex and Q Max.
60, and Mega ships, plus another hundred on Thursday on order.
On the supply side, we believe the order book will be offset by less efficient in carriers coming of their long term charters and facing you and stricter emission standards, forcing these vessels the slow steam or be economical for international trading.
By number of vessels, the 22% or the British compares to 42 per cent of existing vessels on the water being steam ships. So we think that more than offsets the order book.
The mine continues to build with 361 million pumps on the LNG transported last year.
According to Clarksons, 1 ton of LNG transported consumes 1.4, LNG carrier per year on average.
We didn't anticipate the growth over the next 3 to 4 years of almost 100 million pumps. This assumes 140 incremental ships needed.
For the more increasing distances as most of the Incrementals volume is transported from the U S to the far east consumes 2 times or 2 LNG carriers per ton.
And the hence would require almost 200 chips.
Lastly, the 3 Korean shipyards capable of building high quality LNG carriers are filling up with container orders and hence there cannot be any meaningful additions to the order book with the debris before 'twenty 'twenty 4 of the earliest.
This makes us very optimistic to the medium and longer term outlook for LNG carriers, and we are positively surprised by the current seasonal strength in the year of 50, newbuild deliveries and the demand side still negatively affected by Covid.
Turning to slide 10 to elaborate on.
Some of the environment Poodle regulations coming into play first and foremost the E X, which stands for energy efficiency existing ship index will come into play from 'twenty to 'twenty 3.
E X I, it's a pledge made by IMO to work towards reducing C. O 2 emissions by 50% within front of 50.
That's still far ahead, but due to the long life of assets operated in the LNG industry.
This is in many ways.
Current problem.
Additionally, the first goal of the 20th birthday targets, 40% of Cup and carbon intensity.
All of them on will require all ships across all segments to comply with the common the agreed index of.
Before first of all January 29th Street.
In order to meet these requirements all ships trading in international trades need to take action in form of either reducing speed change sticky in their viewers such as LNG ammonia or hydrogen.
Or make all of the retrofits of the ship this volume to increase energy efficiency.
For LNG shipping this will likely result in slow speeding or redundancy of a significant part of the steam carriers and as mentioned on the previous slide. This represents 42 per cent of the global LNG carrier fleet.
Turning to ethylene D and starting with the Hilli on Slide 12, Healy continues to operate with 100% commercial all the time with its 56 cargo currently being offered all of it.
We've made continuous progress with respect the increased utilization of the Hilli.
We have executed all documentation required to remove any of production caps on gas reserves.
And to enable production above the current contract capacity.
We are in advanced discussions for additional production.
The anticipated to start up in first quarter of next year.
In addition, we would like to remind you that we are now in a territory, where we would recognize Brent linked earnings from the second quarter of this year.
Golar makes $2.7 million in annual EBITDA for every dollar the Brent curve is above $60.
Based on current Brent forward curve, we expect the continued to see Brent contribution from here late in the coming years.
Yeah.
Turning to page 13 on in upstate on give me.
The conversion project is now 69% technically complete on track and on budget.
We have surplus of mine million man hours with around 2400 yard workers currently allocated to the conversion on a daily basis.
The vessels fifth and final dry docked the husky and all of the remaining sponsors blocks attached to the vessel and is on schedule to be completed within this quarter.
Give me is expected to sail away from Singapore in the first quarter of 2023, it will start to make commissioning revenues from the second quarter of 2023, and it will start its 20 year contract with BP from the fourth quarter of 2023 with the total EBITDA backlog of $4.3 billion.
We also note that of course smoothed bp's partner on the torture you field stated in their Q1 report that they are working to maximize the ethylene day capacity that fits their current infrastructure.
By that the infrastructure I mean, the F. P S O and the brake Walter that the project is putting in place.
That would equate to 5 million tons per year.
Give me as a reminder, habit of capacity of $2.5 million tonnes hence.
Hence in order to meet the 5 million tons per year of liquefaction capacity that will support of Mulder Mark 1 of the sign ups LNG or alternatively of March redefine the ethyl indeed to satisfy the full of 5 million pills.
Yeah.
Turning to slide 14, we are now in a territory, where the gas price suggests that's LNG economics is strongest in upstream.
We've made the illustrative example of ethylene Deanna economics on the left hand side.
The gas reserve on the sprint.
Cost of assumed at the dollar per in the midyear.
2 dollar tolling fee, which includes a 10% unlevered return to the affluent the older.
We can be the 3 upper limb day technology.
The gas of $3 per M of Btu.
Based on current healthy shipping rates shipping to the far east with the other another $1.5 per M. D to you then.
The levered.
The bird LNG price of $4.5 per I'm a bit here.
As you can see on the right side. This equates to a very attractive downside versus historic JK on pricing with a very healthy upside potential.
So to illustrate whatever are the dark blue line is above the green line.
The Epsilon the provider will make money.
With current JK on price of $10 per M. B to you this needs the healthy margin for the gas producer of around $1.4 billion per year.
The risk reward coupled with the gas forward prices is what drives both increased interest from majors for our ethylene the tolling arrangements as well as Golar this higher to revert our focus on integrate the upstream model, where we can capture more of the gas upside.
We preferred or elaborate what's the potential economics of gas of chips.
Looks like on page 15, you are seeing on March 3.4 of 5 million tons per annum.
Excellent.
5 million tons of liquefaction capacity equates to $250 million on the minutes of use per year.
Hence the 2 dollar margin equates to $500 million in annual EBITDA.
Again current and forward the LNG prices sort of suggests that the economics for such projects will be between 2 to 4 times EBIT EBITDA.
Integrated gas acquisition from production is not the new concept of Golar.
But we see fundamentals for this potential upsides in Golar business model stronger than ever.
Due to the supportive gas forward prices due to our proven track record of 100% utilization on helium.
And lastly, because we have the balance sheet now capable of lifting such project and execute on the strategy.
We're currently pursuing strands of gas and the associated gas reserve that may enable the rollout of our integrated upstream strategy and we will update the market as soon as we have further developments on this front.
Turning to corporate and strategic focus we announced today, our 2020 ESG report that can be found on our website.
Although the has been an integral part of the Golar separations as since the formation of the company, we are increasing our transparency to the market on our performance.
Some of the highlights of the Crs report can be found on slide 17.
The carbon footprint of our ethylene day technology is competitive to shore base of liquefaction Mega projects.
We have reduced fleet wide carbon in the sense from an H E. R of $9.95 to 871.
And on Hilli, we haven't we're now up to 35.4 local employees and I've spent more than 10 millions of dollars on purchases locally.
We've also published our ESP targets until 'twenty of 13.
These are either a line or exceed any regulatory requirements for our fleet and the operations.
Turning to slide 18, and the earnings power from our existing asset portfolio.
Following the sale of probably go on the MLP to new Shortlisted in the gym Golar has significantly simplified our asset portfolio and financial performance should be easier to predict envelope.
Our shipping segments comprised of 10 vessels of which 8 are T. FTE carriers, 1 steam carrier on Walnut Fsrus currently operating as the carrier.
The fleet is fully delivered on generated an EBITDA over the last 12 months of $121 million the <unk>.
$10000 change in rates equates to $32 million in change in EBITDA.
We are optimistic that this segment will see improved performance on the back of the strength in LNG carrier market uptick.
On the Hilli, we continued to see 100% utilization.
And with a pro rata the last 12 months EBITDA generation of anti <unk>.
<unk> millions of dollars, we do expect to see further upside on her performance as well.
This upside will be driven by building of potential overproduction.
Oil derivative of earnings.
Our execution of the advanced discussions on increased capacity utilization from first quarter of 2022.
Give me as mentioned is on schedule to start up of its 20 year contracts of BP in Q4, 'twenty to 'twenty 3 adding another $151 million in contracted EBITDA the golar.
We also have further EBITDA potential and upside of the time bonus on gave me.
Hence we expect this year run rate EBITDA based on the existing asset portfolio. Once give me the members of at least $352 million versus EBIT over the last 12 months of $201 million.
As previously discussed there was significant further upside in Epsilon, the tolling and integrated projects that may add significant further EBITDA potential.
Yes.
So to conclude on slide 19.
We are optimistic on increased earnings power for our shipping business as we are seeing stronger than anticipated current rates of positive market outlook and have increasing exposure to shipping freight rates through our charter portfolio.
Well net for Lindy, we expect increased earnings from Hilli due to the oil derivative of earnings and progress on discussions of increased capacity utilization and.
And give me remains on time on budget.
Gas price is supportive of our vessel LNG growth and we experienced increased interest for pulling business and are very excited about the potential to develop integrated gas and they fill in the upstream opportunities.
On corporate on the investments we have a strong liquidity position following the sale of how you go into the MLP. This will enable financing of growth projects and the optimization.
Lastly, we will continue to work on further group's simplification likely Smith, our midstream shipping business and upstream ethylene the business into 2 separate vehicles over time.
That concludes Golar skew 1 earnings presentation, we will thank you all for dialing in and I'll turn it over to the operator for any questions.
Thank you.
<unk> asked the question you will need the press star 1 area of the telephone to withdraw your question press the pound key.
Please standby low income pie of the Q&A roster. So all of the first question is from the line of Randy Givens from Jefferies. Thank you. Please ask your question.
Oh, the gentlemen, how's it going.
They're on the.
Hey of first off obviously, you congrats to you call on the CEO role of Eduardo on the CFO role. It seems like a great time to begin these new roles here.
With that for the LNG kind of business first.
Some people are counting the Qatar expansion is somewhat unbeatable right, because it's $5 or so a landed cost. Your slide 14 shows that first year of your S. LNG projects can be debt. So I guess 2 part question here any.
Any interest in participating in that tender offer for the 100 day 150, LNG carriers from Qatar and then more importantly for Golar with trains 3 and 4 having better economics, what are the hurdles and maybe expected timeline to get perenco to ramp up trains 3 and 4 I know you mentioned <unk> 'twenty 2.
2 but any chance for an earlier commencement.
Thanks, Ron the so when it comes to the Costar kind of there were obviously aware of it. However, we believe our edge is.
And in upstream and therefore, the and the developments on our incremental dollar is more of like it to the spend on that the in shipping. So we have no current plans to attend the tender.
Okay, when it comes to and.
The upside in our production.
And I think most of the agreements that sit between Oh, some of the local governments and awesome Perenco is true.
Close to find the largest if not finalized there are however, a existing off takers on all of their part this the up needs to have agreements with perenco in place on such agreements are outside of our control.
With this gas price, it's sufficient economics for everyone. The around the table and every day, it's not producing is.
And opportunity of dollar most so.
We are encouraged and hopeful that people will find.
A common solution for all parties, we do not expect for the ramp up of significant incremental production from.
Production, we might be able to bill under the existing overproduction of arrangements, but but not any substantial increase until Q1 the next year.
Okay.
The answered everything that's good Hum now I guess for your balance sheet. Obviously, it's in stellar shape here following the new force your shares I guess what are your plans for the billion dollar in liquidity you know, it's well above your 500 million of remaining Capex. As you showed on that slide you have some expensive sale leasebacks, we can repay at.
At the same time your shares are wildly undervalued. So do you expect to complete the remaining the remainder of the $50 million repurchase in the second quarter and can you provide some updated details on the convert refinancing a timing and options there as well as the N F E for G LNG share exchange.
Okay. That's fair that's sort of asking the question I'll start on on the order of please chime in as we go along so on the buyback program and you sort of would be repurchased 1.2 million shares that we basically have to stop because we entered into the blackout period prior to Q1 numbers.
The initial framework, we have approval for at board level is 50 million and I think it's fair to assume that the strongest the share price keeps trading at the.
The discount to both book underlying values are we expect to continue the buyback program.
The next set of question is on on the C. B I think what we have said there is that we have a few different alternatives open to us.
Bye bye and those sort of particular order, we could do on exchangeable offering.
Exchangeable into 1 of your shares.
We could do a CB or unsecured bond on the LNG level.
All the kids settling cash either through cash available from balance sheets or sell down of Derisked assets such as gave me.
So we have several different venues all of the dressing that the maturity when it comes to exactly book Route we are planning to take that depends on the.
On the relative share price of between F. E N G LNG to some extent it depends on the absolute share price of the LNG, but by the up I mean, if you are to do of C. B on the LNG you, obviously wouldn't do at the around current levels.
And lastly, it depends on on near term growth projects that we.
Our planning to address it during second half of the theater and the primary reason for addressing it at that point. The stopped them. We are we have no restrictions on any of our liquid assets and therefore are in the position to that sort of weigh the alternatives in the interim we are keeping a close dialogue with the construction.
The investment bank and all of the investors is proposing are.
The different alternatives and we are keep.
Keeping them on file and comparing where we think we can do the best solution.
Okay.
And then I guess quickly on the N F E G LNG share exchange.
Any additional details or color on that possibility.
And we have like the exchange offer or distribution of any of your share So which 1 are you referring to.
You mentioned in the press release, you could you know the exchange NFC shares for Golar common shares in terms of a young people or so.
The.
That is also the bump to the relative share price on an FTE versus golar and its something we will consider a well throughout the of the lockup period, which is 90 days after closing, which most of the 15th of April.
Got it alright, well that's it from me thanks, so much on.
Thank you thank you Randy.
Thank you. Our next question is from from the line of Chris Wetherbee from Citi. Please ask your question.
Good morning, guys James on for Chris.
Just wanted to follow up on some of it.
Just wanted to follow up on some of the commentary you had around.
The priority is just when you think about the end markets in terms of Allen the carrier side.
So on G side.
What do you sort of see it as essentially.
More of that where you can essentially put capital work.
Sooner and then also on that.
On the on that line of questioning is there anything that you need to tidy up before we could potentially see something along the lines of of transaction on the either 1 of the 2 places.
I'll kick it off again, so when it comes to.
On.
Yeah, our Incrementals dollar I think we're we as golar have more of a unique edge is on upstream and F. N D S.
As we said in the presentation. We've now delivered of 56 cargo of LNG from the Hilli.
On an unprecedented operating utilization of 100 per cent and delivery. So we believe that's where all of our edges is that sort of in the upstream on our incremental dollar.
We'll go to.
And for Lindsay on upstream growth as opposed to shipping.
However, as we've said in the presentation, we have 10 ships, we have meaningful exposure.
We like the outlook, but we do not intend to add the ships to our portfolio.
Got it and when it comes from the next steps in terms of when we can do either line.
We've just concluded the $5 billion EBIT transaction and selling the MLP and then if he.
On the wall now that's closed on the on the 15th of April, but I think for us.
We see you sort of know immediately press.
Pressure to resolve the 2 at the same time, we believe part of the reason why we're trading at the discount to the underlying value.
Is that the investors are seeking clean their exposures to either upstream or shipping them. So we will be opportunistic and try to execute a further simplification as soon as we have.
The unattractive way of doing so and there we are exploring different alternatives. Both for just been on shipping and to also create an upstream company. So we're open to either.
Got it.
In terms of the shipping.
On that side of the house.
Looking at to potentially the split out or whatnot.
There any sort of tax youre, taking gear the chartering strategy.
Essentially trying to like the increased coverage or anything along those lines.
Make it more marketable or is there any sort of like work to be done or is that something that really sort of once if there is a bid for each of you do you feel that he could be cycling.
Separated sooner rather than later.
Yes.
Yeah sure. So basically you know.
A little while back 12 months of a 12 to 18 months back we changed our shipping strategy somewhat to take more coverage.
They've been really about 2 things number 1 we saw.
A lot of new builds entering the market in 'twenty, 1 and we did not want to have too much exposure given the fact that we have 50, new builds coming to market on top of Covid. So we tried to take that.
Quite a bit on coverage and to some extent we've been positively surprised by how strong the rates on on arguably we got a bit too conservative.
The reason our driver for us taking this much called right of.
Culver as early as we did it was the this was all of them prior to the NFU transaction.
Where we did not have the same balance sheet position as we have today. So we wanted to be cautious not to sort of get on this 2.
2 years of pricing rates.
However, as we've tried to state quite clearly on page 8 we have an increasing exposure to the market as we are very.
Optimistic to what the the outcome of gifts.
And the 4 now.
<unk> to be increasingly exposed to the spot market.
Through a floating rate the arrangements or just from vessels naturally rolling off the fixed rate charter.
Got it I guess, what I'm trying to get at is if you feel on that.
Harder to do sort of a strategic.
The other transaction.
You just need like 1 of the 3 things basically work done.
Prove the quality of the assets in 1 way or another.
You think the during the second bucket I guess, you could say if you think that the market timing just isn't right or in the third if you just think you need a little bit more time, given the fact that you just did the senior.
Significant transaction and it actually sounds like they're kind of the assets, you've kind of where you want them to be the market timing isn't something you were taking a view on and it's really just about the sort of putting some distance between you and the last major transaction you did in the sort of the right way to think about areas of my Misconstruing that.
If there's any interesting of the transaction, we could do it tomorrow I don't think we have of any problems doing it tomorrow I think it's commonly known in the marketplace like we've been actively looking at alternatives for our shipping fleet, including creating a sort of a consolidation play.
The not think we need to do any of high grading of our fleet <unk> carriers are if you like the work of course of the industry and we see the pressure to be more on the team.
The vessels so for US we don't expect the high grading our I don't the.
I think we've rest of the out of them are complete with the NFL deal. So we have certainly have enough energy and the.
No.
The tennis on in the company that if we find the right transaction Tomorrow, we will have to go for it so for US it's a matter of all of the finding the right home for.
For the shipping clip.
Like it the way it is today, we think it's going to get better but at the same time, we do believe that we're somewhat penalized from keeping it in the same company assets in the upstream. So we're opening open to resolve this as soon as we find the right home.
Perfect. Thank you.
Thank you all of our next question is from the line of Mike Webber from Webber Research thinking please answer the question.
Yeah.
Right.
Hello.
Hey, Mike.
Hey, guys.
I wanted to zero in on.
Slide 23, we don't mind cause I think it's helpful and I just want to make sure I'm interpreting that the right way and in the your last question was around everything from the realized the answer was around.
What's the deal with the carrier fleet.
And it certainly seems like the right analog here is in terms of the value prop of golar at the whole, it's kind of like Teekay 2015 were.
You can find a home for the carriers all of a sudden the value proposition looks a lot simpler and a lot cleaner and golar.
But I didn't know I know you've talked of it but I know that you know distributing the carriers or or spinning them didnt make it onto the.
The strategic initiatives slide on slide 23.
Given the difficulties in doing that 1 on either finding a buyer for a fleet that size or presumably.
Pumping some equity into it so there's some value there to distribute is it fair to say the at the right now of that looks a bit more difficult.
And then the what you've listed on slide 23 in terms of disturbing NFU share then.
And some of the other strategic initiatives.
No.
Don't know exactly what they're referred to on slide 23.
In the appendix, but I think what we when we say further group simplification of what we mean by that is.
Basically finding a home for our shipping or Korea.
Creating the same simplification of our potentially spending out of the upstream. So I think we're open to both when it comes to desktop to my station on the shipping fleet. We stated in the earnings release released today.
The part or following the N of feed transaction, we have agreed to reduce the debt on 4 of our ships, where we basically invest $60 million of the cash into 4 of the ships of reducing debt by 15 million of ship in return for the total debt reduction of 102 million. So we pay in 6 day.
2 items.
And on the bulk of quota.
Hey, we're working side by side along them and if we can achieve something then we'll figure out how we can benefit from that just kind of any kind of is there any kind of.
Britain contract in place.
Okay. So as part of the merger on this has mainly been made public but when it comes to the operation of the assets. The acquired from US we continue to technically of Brett and there's also a certain transition services. We continued to serve from Golar to on a fee for those services, we get the pre agreed feed.
<unk>.
For anything incremental to those fees were basically paid on a consultancy basis, that's for certain development projects, we see it as an investment both for all sounds for an F E on to improve the value of NFC. So I think it comes on to exactly what parts of the serve.
Or is this.
That you referred to but in general.
We get the.
Compensate the 40 hours that's invested into such projects.
And then when it comes to Corporation B on that upside that we have a very good relationships.
Instead of on all levels of the respective organizations and it's a bit more on instead of all.
The play as we go on them, if we find an attractive solution, we'll see how we potentially can then all of it together or if it makes more sense to do so on the Standalone basis. So we're partly doing things together and were partly doing things.
And I think you have the.
Sort of fairly.
Good understanding of the various targets of the 2 groups.
Okay, Great and then just 1 on ACA.
Okay. Yeah, that's perfect. Thank you very much for the time of everybody.
Thank you.
And for our last question is from the line of William Brooks from B Riley. Thank you Peter answered the question. Thank you Carl.
Hi.
Carl you talked about the new Mark design and moving away from tolling.
The returns on both Hilli and Jim gave me a very strong.
What is the return profile of the new design and then moving away from tolling.
I think of way to think about the is that if someone's willing to charter something from you they must make them on the on chartering it from you.
Basically the way we thought the balance of this yes, we make good money on tolling, yes, we will continue to do tolling project, where we see where it turns out sufficiently attractive.
But if you just look on a current gas price.
The the profit that the people basically of chartering ethylene from us what we make is it's almost peanuts compared to what they make and with the cash breakeven support that you have.
Versus historical gas prices, we think it could be very attractive if we were able to produce gas for our own account, we're at least take part in the arbitrage.
So for us.
Thank you should expect us to the part tolling fees altogether book.
We've sort of taken.
<unk> taken a lot there.
Or a slightly deeper look and see the the real economics are.
Upstream if you can.
Also have exposure to the sales price of the gas.
Great and then on the F. LNG designs, you've got the you've got the first LNG plus the Mark series are you seeing any competing designs out there or are you are you pushing the envelope here by providing a faster cheaper alternative.
Controlling assets got that filling the clothing excellent net sales got the produce the X smart has got the phone book. So there are certainly all the people that are doing sort of the floating liquefaction.
I don't think anyone has.
Well no 1 has delivered more cargos than we have and secondly, I don't think any of the others have a cheaper cost per ton of liquid volume and I think the combination of our cost point of.
Our performance track record and the.
Sort of of the fairly quick and the speed to market.
Thank you.
We are very competitive versus peers and I think the fact that BP has embraced our ethylene technology is the further testimony to the fact that they don't see investors center of smelter.
Great. Thank you Carl.
Yeah.
Yeah.
And there are no further questions. Please continue.
Thank you all for dialing in thank you for the interest in Golar, we're very excited about the future.
We have some tailwind across our different segments and we look forward to speaking to you all soon.
Thank you.
So that does conclude our conference for today you may all disconnect.
Yes.
Yeah.
Yes.
No.