Q3 2022 Golar LNG Ltd Earnings Call
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The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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Welcome to the Golar LNG limited Q3, 2022 results presentation. At this time all participants are in a listen only mode. After the slide presentation by C E I called Fredric Stahl by and.
Yes, I it wall to my right now there will be a question and answer session.
Ask a question during the session you will need to press star one one on your telephone you will.
Then here an automated message advising Johan is raised.
Please be advised that today's conference is being recorded.
I will now pass you over to called Fredric Stahl by Carl Please go ahead.
Thank you operator, and good morning, and good afternoon to all welcome.
Welcome to Golar Lng's Q3 earnings results presentation. My name is Karl Fredrik Steinberg CEO of Golar LNG.
Accompanied today by our CFO , Mr. Eduardo Mariano to present this quarters results.
Please note that forward looking statements on slide two.
Slide three provides an overview of golar.
We own two excellent.
But he lived operating corporate go in Cameroon.
I have to give me that will start the 20 year contract for BP next year.
We are focusing our efforts on Columbia growth projects and we have developed three different the Columbia device.
All three of the songs are based on the same proven liquefaction technology.
Perfect.
Her in liquefaction capacity.
During the quarter, we have placed orders for long lead items for you Mark.
M D with a total liquefaction capacity of three and a half million dollars.
The most notable change in the company overview and the last quarters, our share sales totaling $413 million, reducing our pool codeshare holding from 31, 3% to eight 3%.
The sale of NAC shares, reducing our shareholding from around 6% to just shy of 3%.
Turning to slide four and the highlights of the quarter.
He leads generated in EBITA.
So a lot of $64 1 million.
Two six times increase from Q3 last year.
Good declared its point 2 million tonnes of production increase from Janssen between the end of contract in July of 2026, meaning that we will maintain production at one 4 million tonnes per annum for the period.
The incremental volume has a toric linked the tcf gas prices.
During the quarter, we entered into hedges for 50% of our Q4 trying to transfer to your exposure at $17 per Mb ear.
We hedged 100% of our 2023 exposure.
$60 per Mb tier.
And we hedged 60% of our country for gas exposure at 51.2 dollars Brent number here.
In total these hedges provide the cash flow visibility for EBITA to golar of around $260 million.
As of today, the TPS hedges are currently about $75 million in the money.
Turning to give them that she is now 90% complete and remains on schedule.
We have engaged our three operations and will have a maritime crew of about 100.
20 persons mobilized onboard the vessel by year end.
<unk> growth, we continue to see increased client interaction and strong progress on potential new ethylene to your products.
During the quarter, we have been working with an upstream partner for a very attractive potential integrated there couldnt be project.
We have also signed two development agreements, one with a supermajor and another with an independent.
E&P company.
Under these development agreements both parties commit to deliver on the final scope of work within the launch progress potential in the vehicle and the opportunities and agree on key steps to reach this.
We believe that securing attractive delivery of our next vessel into unit will increase golar <unk> ability to drive value with prospective clients.
This is the reason why we have ordered the long lead items to secure delivery within France isn't defined.
On corporate activities, we have sold 8 million called co shares and $6 3 million end users.
Sure since resulted in net proceeds to golar at $430 million and is in line with our communicated strategy to reduce our shareholding in financial investments to fund the ethylene Guillermo.
We also bought back 400000 shares in the quarter at an average price of $23 five per share.
And our share count now stands at $107 5 million shares.
We have committed to invest up to $10 million in my call energy and newly established small scale LNG liquefaction company.
Targeting land based stranded gas and associated gas resources as well as biogas.
We're excited about the strong track record of the Mccall analyst here.
And believe Golar liquefaction expertise combined with the small scale land focus of Macau can create a successful combination for small scale liquefaction project.
We are also opportunistically, considering strategic partnerships or M&A throughout the LNG of Allergan.
I will now hand, the call over to Eduardo 2%, our Q3 results.
Thanks, Carl and good morning, everybody.
Very pleased to provide an update on our group results for the third quarter of 2022.
Turning over to slide number six I wanted to show some of the financial highlights of this quarter.
Our operational performance continues very strong we recorded total <unk> $109 million up 181% compared to Q3 of 2021 on a year on year basis.
LNG Terrace is comprised of total revenues from liquefaction services and also realized gain on oil and gas derivative instruments.
This quarter, we recorded an adjusted EBITDA of $85 million.
When compared on a year on year basis. This represented an increase of 63% compared to Q3 2021.
We recorded net income of $141 million for this quarter, including $51 million of unrealized gains remain a few shares $25 million of unrealized gains on interest rate swaps.
The derivative issuance 12.
$12 million of unrealized gains of ETF linked derivatives.
As we I was $10 million and net earnings from other and other equity investor equity method investments.
Our share of contractual debt at the end of Q3 was $993 million.
Difficult reduction when compared to the same quarter of the last year, when we had $2 $1 billion of gross debt.
So moving on to slide number seven.
We continue to strengthen our balance sheet, which will allow the company to pursue future LNG growth projects.
Our cash position currently stands at more than $1 billion to date.
Total cash at the end of Q3 was $612 million.
Further to the end of the quarter were sold as Carl mentioned before 8 million coal company shares and $6 3 million Inofficious raising.
Raising additional net proceeds of around $430 million.
We now have total cash gain of more than one point over $4 billion.
When you take into account the value of our listed Securities and energy Coal Company and Avenue. Our total liquidity position stands just shy at $1 5 billion.
When considering our contractual debt as I said before it was $993 million. We now have a net cash position of 400 ships attributed.
As you can see on the right hand side of the slides, we have no significant debt maturities until 2025, which is weighing over $300 million bonds mature.
So turning now to.
Slide number eight.
I'd like to provide some further insights into our earnings from Chile.
And I think just by way of recap. So the Healy tariffs is comprised of three main components, we receive a fixed totally tariffs. We also have a branch linked Paris as railroads are CTF linked tariffs, which has started in the beginning of this year.
Also as Carl mentioned before we have managed to hedge our TTS production at a very attractive level and as a result of that as we continue to see a very strong increase in helix EBITDA generation, which this quarter totaled $64 1 million.
Which is two six times the same amounts of debt, we had a year before.
So moving on to slide number nine I wanted to provide some further updates regarding our hedging arrangements we.
We have entered into a swap arrangements to hedge our exposure to TTS, including 50% of Q4 between 2020 chip at the level of $70 per million Btu, which has secured $28 million of distributable OIBDA to golar.
We have also hedged 100% of strains of 23, and 50% of our 'twenty to 'twenty four tcf linked to production at levels of around $50 per million Btu and $51 four trains intrinsic floor.
In total have secured an additional $233 million of distributable adjusted EBITDA.
Based on that our share of Hilli is EBITDA generation is expected to reach $295 million in 2023.
When we consider that our share of the debt service for next year is expected to be around $50 million, we see and expect that free cash flow to equity up around $245 million just from helix.
I will now hand over the call to Karl who will talk a bit more about our future insulin gyp contracts.
Thank you Eduardo.
Turning to slide 11.
Alright.
Okay.
Turning to slide 11, and I'll update on given the construction of it.
Okay.
The unit is now 90% complete and remains on schedule per se the way during first half of next year and contract start up during second half.
We expect to start booking commissioning revenues during second half and contract start up in Q4 of next year.
As a reminder, gaming will generate $151 million in EBITA to Golar every year for trend Tr's once contract startup.
On slide 12, we elaborate a bit about what we are doing in terms of the.
Scale of the gaming construction project.
We now have a construction team consisting of an average daily workforce of 4600.
With $24 seven activities.
We have worked 26 million man hours today.
We have done 37000 tons of new steel and equipment installed on board.
We have installed 1500 kilometers of cables.
Equivalent to the distance between London and Rome.
Pre operations are initiated and.
And we will have accrued more than 120 people mobilized to the vessel by year end.
Once in operation the unit will produce about $2 2 million tons of LNG per year.
Enough to power more than 3 million U S homes.
Turning to slide 313, and an update on the long lead and commercial developments for <unk>.
Based on strong client engagement for LNG growth projects, we are of the view that securing attractive delivery for a new <unk> unit increases our ability to drive value with prospective clients.
We have therefore placed orders for main long lead items required for a new mark to three and a half million ton vessel Lindy.
With total commitments of around $300 million.
Included in that we have engaged more than 200 engineers from the top side provider.
A third party engineering company.
Golar, all working on Mark II development and to secure attractive delivery with incentives antibodies.
On the commercial side, we are working together with an upstream company to develop an attractive integrate with the Colombia project.
As mentioned, we have a high paid development agreements with new perspective clients.
<unk> potential excellently and deployment on large proven gas reserves.
Behalf of a supermajor and an independent E&P company.
We used vehicle Lindsay economics remaining attractive for both the integrated and tolling fee discussions we are currently having.
Turning to slide 14, and in support of the value of near term any protections about today.
In August X Smart announced the sale of its <unk> tango.
Which is a six.
Six MTA liquefaction units.
Which was sold to Eni for a price ranging between 572690 $4 million.
This implies a price of around $1 billion per ton of liquefaction capacity.
In September Kinder Morgan sold 25, 5% of their Elba liquefaction plants also at an implied value of close to $1 billion per ton.
This compares to Capex for <unk> that we haven't got them at all.
Between five to $600 per ton.
So we see that the.
The attractiveness from charterers, but also from people looking to acquire liquefaction assets are evaluating near term cash flows, which is further giving support and confidence <unk> placed the long lead items.
Turning to slide 15, we have prepared an overview of historically.
Liquefaction by year.
As you can see from the overview so far in 2022, Theres been 26 million tons of liquefaction capacity entered into.
One could argue that that's somewhat surprising given the geopolitical scene.
The gas prices, both in Europe and Asia.
We are not surprised by this development because we know how long the ethylene <unk> project to take in terms of our environmental final governmental approvals and just the sheer size of the engineering required for large offshore infrastructure projects.
We are however, very encouraged by the activity and we agree to S&P connect you that next year, we will see.
Significant uptick in extra Lindsay sorry in liquefaction at Farley and hopefully a significant part of that will be <unk>.
Interestingly U S isn't driving the majority of new supply growth.
With 95 million tons.
The 148 million tons of new liquefaction capacity forecasted until 2013.
Turning to slide 16, we continue to mainly focus on African LNG projects for.
For three reasons we.
When you do have to Lindsay project, you have three key cost inputs.
Source, yes, liquefaction costs and shipping distance to end users.
We believe we can source African gas reserves at the round one to $2 per btu.
<unk> current Henry hub prices of $6.
Our cost of <unk>.
Q2, four times, our input costs from the outset, we think we're advantaged.
As alluded to our Capex per ton is cheaper than competition, both maritime and land based liquefaction.
Solutions.
And this Africa happens to be closer to end users both in Europe and Asia.
And so if you have a business model with three key cost inputs and your lower on all three we think thats a good competitive advantage from the outset.
To summarize turning to slide 18.
Slide from all of our quarterly presentations.
But yet summarizing the company in one slide.
In 2021, we have the adjusted EBITA in the company of $74 million.
Add to that the oil upsides and the Tcf linkage doesn't garner explain.
We see commodity linked production, adding another 200 plus million dollars.
Delivery of GMA will add another $151 million of contracted EBITDA.
Bringing our adjusted EBITA of current market rates to well north of $400 million.
As explained we now have the cash and securities position of 1.4 million would have been done this cash and the rest of the listed securities.
Our contractual debt stands at just shy of $1 billion, leaving us with a net cash position of around half a billion dollars.
We believe we are uniquely positioned for <unk> growth as highlighted on slide 19.
We have three <unk> designs, ranging from $2 7 million to 5 million tonnes.
On slide to the right you can see the track record of excellent globally.
Stability and production reliability is key for any liquefaction project and you can see that he may have very stable production.
<unk> startup.
Which has not been the case for other <unk> solutions in the same time period.
We have the lowest capex per ton and we also have the lowest carbon footprint per ton of liquefaction produced.
Altogether gives this a compelling.
Story for people considering <unk>.
To summarize we are focused on attractive <unk> growth projects and have now placed orders for a mark to long lead items.
We expect our earnings growth to could ripple from.
<unk> 2021 to 'twenty 'twenty four levels.
We have $1 $4 billion of Capstone listed securities.
We have a book value of $2 $8 billion and building as we continue to generate healthy free cash flow to equity.
Golar has been around for 75 years, six there, which in LNG, where we haven't been.
Market leader in <unk>, both with our proven design and strong operational track record combined this is what gives us confidence to focus our growth efforts on our for Linda.
That concludes the prepared remarks, so I'll hand, it over to the operator for any questions.
As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
Each participants may ask up to two questions. Please standby, while we compile the Q&A queue.
Our first question comes from the line of Chris sung from <unk> Research. Please go ahead. Your line is open.
Hi, Good afternoon, Carl how are you.
Good thanks.
Just touching on the.
The divestments of coal co and then M T shares I guess financing.
LNG project do you plan to divest the rest for <unk>.
Projects or will there be some percentage of these companies you plan to hold on to and also what about Avenue.
I think what we have previously said and definitely standbys that we've.
You are all of our shareholdings.
Attractive financial investments, but we will reduce financial investments to focus on core growth if and when we have a cargo.
We feel like with our current cash position, we are very comfortable to from the March two.
Jack we're now undertaking.
It's safe to say that we don't need to sell any of our shares.
From that project.
But if we do other growth initiatives, we will consider to further reduce our shareholdings, but at the moment as we have previously communicated we're happy to be shareholders and all of those names.
Being shareholders, there as better than 15 cash.
Great Okay. Thanks.
And another one is I know that you're in this press release, you guys had ordered the long lead items for Mark to does that more or less secured timing of when it can be delivered in 2025 does that depend on when you guys take care.
That is what is required to ensure that you still can deliver in 2025 or so.
Definition of long lead.
Critical power.
Online.
So as long as you secure the delivery of those you ensure that you can still take 25 delivery.
But of course, you need to progress them.
Mark two investments too.
Safeguard that delivery so that means formal F&D at some point as well.
Now we have done everything to ensure that.
We're on track for delivering quantified.
Alright, alright, thanks, and just to confirm the mark to that that's an integrated model right.
So the unit.
Can be used on integrated I'm told and it's not like the ship is customized to the commercial model of the ships. The ship is hardware at the end of the day so.
We have discussions for Marc II, both for integrated them tolling and there are several.
<unk> of March to one thing as construction timing, but the way the engineering has been put together.
We have received very strong feedback on that.
Alright, great. Thank you that's it for me Thank you Carl.
Alright. Thank you we will now move onto our next question. Please standby.
Our next question comes from the line of Ben Nolan from Stifel. Please go ahead. Your line is open.
Yes, Hi, this is Frank galanti on for Ben.
I wanted to actually dig into Chris's last question there.
On the Mark to designed specifically around the vessel.
Given that that's a conversion have you sort of.
Can you talk about what vessel type you need.
Have you guys sort of already picked out and can you sort of talk around how much that's going to cost.
Yes, so basically you use most of the volume shipped so.
You can take an existing carrier there are plenty of most of the signs out there.
The disadvantages of most shipping vessel Theyre, all steam fired which means that especially with the new regulations coming into effect from first of John next year.
Ships are far less competitive than the more modern ships.
Okay for shipping activities, meaning that you should be able to pick them up.
We want to acquire them for conversion.
We have inspected several suitable candidates and we are discussing too.
If and when we will acquire.
For our commercial we can also use the gondola out which we own. So we can also use that one so we're not 100% dependent on buying another ship.
Would like to buy one with somewhat higher storage capacity, but it's not a requirement.
Okay. That's helpful.
Great and then.
I wanted to switch gears, a little bit over under the Hilli.
Obviously, given excuse me elevated global LNG prices.
Hum.
And sort of rate increase European demand.
Can you sort of talk about the.
Possibility of increasing production on the Hilli.
Is there sort of as their feed gas in the region that could be easily tapped.
Is there sort of any.
Perhaps you can give around the increasing OE production before the end of the current contract.
Yes, sure. So perenco took up the point too. So we're now producing one four.
The two constraints in terms of increasing capacity is the size of the existing gas reserve in the second is the gas flow.
From the wells.
But I think it would be in everybody's interest to increase production.
With us it would benefit Perenco and <unk>.
The offtake or which used to be Gazprom has now been nationalized by Germany unchanged named to setback SaaS Paas transfer securing energy for Europe .
So all else equal Europe , once more energy not less energy and so it could be a triple win whereas half against more volume per Inc. And we increased production.
But it's really down to the.
<unk>.
The upstream part of it which is underpinning cost control.
And for now.
Rounding out the one 4 million tons and I think it's fair to say that we're all trying to encourage increased production and see what's possible.
Sure.
I don't think it's right for us to give any guidance on whether or not we think that can happen because it's a bit too early to say, but it's certainly a potential upside.
Perfect. Thank you very much.
Thank you.
Thank you, we'll now move on to our next question.
Please standby.
Our next question comes from the line of Craig Shere from Tuohy Brothers. Please go ahead. Your line is open.
Good good morning, New York time.
So with the Mark to your now preparing necessarily be targeted to one of the prospective super major independent E&P LNG customers you're negotiating with.
And a really best case scenario is there a way you could envision.
<unk> three <unk> over the next 18 months.
Now, let's move on at the time, but first of all Jim.
Our business is <unk> growth.
The development both of.
Prospective clients.
Jay.
And we are ramping up activities.
We have shown both from ordering long list, but equally important to engage a significant engineering team.
So we would certainly not rule out that there could be more than one I think newborn at the time because these are large projects. So I think.
It's focused on that at the time, but yes.
We are we're.
We're here to move on this opportunity we have a balance sheet to support. This we have an organization to support that and we have a focus across the company.
So when you rightly point out these are large projects and you don't want to get too far over your skis.
You also noted that the negotiations included both integrated and <unk>.
Tolling arrangements.
Later, looking a little more like your BP Jimmy I presume.
So.
Yes. My question is given your successful execution on construction of these things.
Shipyard in trust and potential for another.
Highly rated investment grade.
Decades long.
How do you think about your capital funding options. If you were to get a long term attractive toll I mean could that lift a lot of the.
Investment considerations off your shoulders, given the ability to lever that far better than your original <unk> contract.
Yes.
The short answer I think I think a couple of things.
We obviously have a billion in cash we have 450 or so in listed securities.
I think it's fair to say that there is significant refinancing potential on both.
Helium.
Gave me in particular post delivery.
Alright that can free up cash and improved terms.
And if you read the Q2 presentation. When we also spoke about actual India growth we have received.
Term sheets for financing of Epsilon GE growth project, even during construction at attractive terms on our <unk>.
Healthy LTV.
We do not see any balance sheet constraints for <unk> growth.
For up to the units we can do.
Really engineering.
<unk> is basically.
What puts a cap on capacity on the balance sheet.
Thank you.
Thank you, we'll now move onto our next question. Please stand by.
Our next question comes from the line of Liam Burke from B Riley Financial. Please go ahead. Your line is open thank.
Thank you good afternoon Carl.
Excuse me.
Yes.
Carl.
On Slide 16, you highlight the production of African gas vis vis Henry hub.
When you look at the LNG production.
Just the process itself or your next generation for LNG is more efficient and can they reduce the production cost per <unk> vis vis hilli or forgive me.
So like any anything.
Build a new model of a car you make it.
Facelift model of a car.
Tends to be somewhat more efficient than the previous one so we constantly do improvements.
So it's slightly more efficient I don't think at the end of the day, that's let's call that make you bear break it.
When it comes to operate operational costs.
$2 $3 5 million tons versus around $2 four mark once and there is some economies of scale because you don't need to staff up accordingly.
So if you think operating cost.
MBT <unk> produced will be somewhat more efficient by economies of scale.
Slide and efficiency improvements over the time.
And do you see any competitive development by Andy.
Els and developing LNG as it seems that youre, increasing production youre, increasing efficiency and you seem to have a great deal of interest from the energy majors and independent E&P companies.
Yes, right now we are the only ones.
Sorry, Linda Yes, the service.
The only all direct lenders.
We operate in the world are.
Oil and gas companies owning <unk> on their own balance sheet for their own operations. So the only one that is doing this as the service today as Golar.
And based on what we see out there you have other people pursuing that.
<unk>.
I think most notably is what <unk> is doing on the early protection solutions.
We encourage that because we think it's it's needed in the industry.
To be able to provide shorter timeframes.
Liquefaction solutions.
Two are focusing on producing hydrocarbons, mainly for their own merchant and where they can use it in their downstream development.
Our portfolio so that's.
The service, we see limited competition for those types of.
Liquefaction solutions, we have from credible.
Competitors.
Great. Thank you Carl.
Thank you we will now move on to our next question. Please standby.
Our next question comes from the line of Sean Morgan from Evercore. Please go ahead. Your line is open.
Hey, Carl Nevada, Thanks for taking the question.
I think on the last call for two <unk>, we talked about a target date for our new RFID announcement by the end of 2022, and we are a month and half left so obviously there is still a possibility for that but.
When you think about what what the biggest bottleneck SAR four for reaching an agreement I guess sort of <unk> and new project as it is at the upstream negotiations with with partnerships that are distracting the molecules or as it is.
The nation States that you kind of have to work with the national oil companies in this west African countries, and just sort of what do you see as the major sticking points in terms of slowing down the timeframe for new announcements.
The key gating item for all these project as all of the call It engineering upstream integration with midstream Tech.
Technically making planning the project and making it works once you have a plan that sort of everybody is comfortable with then you need to get the governmental and environmental approvals.
Subject to what jurisdiction that can take very long, but it can also be some locked.
More efficient I think at the end of the day. The commercial terms are super important, but it's not the thinking.
Thinking about it.
If all the other things work, it's a matter of sort of dividing the cake.
The one thing that takes time as the base case to the divided.
Exactly.
In terms of timing I think what we see is that them.
And we're trying to highlight that a bit in this presentation.
It is important to security attractive delivery and we really see that.
Our ability to drive value with these clients. It's more significant if you have more people one thing something them there is.
Available that tends to drive value in our favor. So for now I think we're most focused on the correct execution to drive value as opposed to having a firm deadline and having to bear entered into a corner.
Yes, yes.
Yes.
Think that that kind of goes without saying you don't want to sign up to bad commercial terms.
So and then.
Obviously, a lot of success selling forward some of your floating exposure volumes on CTF in oil and just kind of curious what's what.
Limit on on I guess, it's probably different for TTM in oil in terms of kind of forward selling some of that commodity exposure you have gone through 2024.
As you kind of look at the forward curves cycle.
Over the next few months would you try and kind of sell forward more exposure it into 2020 four 'twenty five and how far could that process really take you from where we are right now.
So the commodity linked gives us our own here and he may have to contact them till July 26, So what we're looking to there is.
We can and probably will hedge TTS Williams, all the way out there if we like.
The overall price.
So for us, it's really a matter of.
Weighing.
The price dynamics in the market with what we can lock in and provide cash flow visibility for.
You also have to have some relationship to the margin or value at risk that we have between now and the timing of when.
When you start producing those forward volumes, but with our balance sheet now that's not a real constraint.
On the brand.
We havent hedged thus far part of the reason is because we have a ceiling on the brand power, except one or two.
So you could do it you need to do something about.
A color to make sure that you don't end up with two massive margin calls and it's bigger potential margin volumes there.
So we are.
Likely to do more TTS refined the overall price level attractive.
We are currently less likely to do anything on the brand side, but that can change subject like if we can lock in one or two out the long period you'd do it because that's your Max earnings anyway.
Okay. That's that's really.
Full for I understand that thank you.
Thanks.
Thank you, we'll now move on to our next question. Please standby.
Our next question comes from the line of Greg Lewis from <unk>. Please go ahead. Your line is open.
Hey, Thank you and get after every afternoon everybody.
I had a question you mentioned.
And realizing you have a pretty strong cash position at this point in time that you mentioned around.
Actually refinancing existing projects.
Okay.
As we think about the loan to value comment you made and I can appreciate the slide earlier, where you kind of were marking where other projects have been reselling.
Could we see potential financing based on unemployed value, which could be higher than the construction price.
Our.
Hi, Greg This is Eduardo here, yes, I think the short answer to your question is yes, we have as Karl said, we have received indications from a few potential Glenn there is two new LNG projects, which have indicated that it could be reading to look into funds for four levels.
And.
The actual construction price of divestments. So I think when we look at the gaming for instance, as we have a 20 year contract in which such a long duration.
Do have the ability to look at levels beyond what.
Unusual Amanda would look like in terms of our regular loan to value of 70% to 75% LTV. So I think in that case, we're effectively looking at.
<unk> of the contract to service that debt. So for instance, we believe that.
Finance is in excess of one and a half to $1 $6 billion could be feasible just looking at the give me alone.
But.
Other banks have a different approach and look at those assets on a loan to value basis. So on those instances we believe that.
<unk> was at around 70% to 80% of <unk>.
The value of the asset could be achieved.
Just to summarize.
Not driven for dose the proposed those type of financing is driven by the contract value or not the LTV on the steel.
Okay.
Thank you for that.
Good to hear.
I didn't want to ask also.
Around the.
You highlighted the investment in Macao energy.
Realizing that's.
Small scale LNG is there any kind of.
Timelines or framework, you can kind of tell us where that stands.
In other words could we see a project.
From this company in the next two to three years or could it be something sooner.
I guess, how active is mccall I'm, just not really familiar with that with that company.
I think one of the attractions there is that they are looking to do is multiyear.
Sure based small scale liquefaction.
One of the advantages building smaller scale and modules is that time to cash flow as shorter you have plenty of examples of flared gas and stranded gas today.
Today, and if can liquefy the flare gas.
And use it to something sensible, which not only economically attractive.
Also environmentally.
I think today, so those would focus mainly on the U S and Latin America.
And the plan there is to have them modernize this heightened red for sure within 12 months subject to hold up the signed on performance.
We will take.
Next steps on that loan, but all else equal it's exactly what we do.
On the floating side, just based on smaller size.
So that's a super interesting and then I just had one other question.
As a follow up to a previous question around.
Number of units obviously.
We kind of have been biting doing one project at a time at Karl as you look as you think about the market.
And yesterday makes it decisions or have the opportunities maybe it's the right better word to do more than one project at a time.
What are the gating factors are the gating factors the shipyard supply chains labor I mean like as you as you think about that and the potential to win multiple.
They have multiple projects in line on a.
And at the same time or any kind of any kind of color you can give us around that.
It's kind of yes to all of the above you need all of that in order to Pearson, That's LNG project, but at the end of the day, it's willing clients.
Project Thats mature in office building.
For most of the project subject to where they are.
Somewhat annoying thing if you think about this.
All the time it takes to get to.
<unk> from FY <unk> the long lead item is the <unk>, it's not the upstream infrastructure.
So.
Therefore, that's part of what's driven us to place the orders for to Mark too long.
We see how close some of these projects are two development RFID.
And if we don't have enough for Lindsay.
The more.
Significantly earlier than if you would then go out and place. The order you have an increased attractiveness over that delivery position.
Okay, and then just so just so I understand this $300 million of long lead time items is really specific to the mark to where if it was the March three design I guess, you can always go down to the Mark one which would probably require less cat if I needed that mark III design at any kind of sense for how much those long life.
Lead time items.
All in cost.
The fact of the matter is that most of the equipment. We have ordered it's interchangeable across service lines because they are based on the same top side. So we'll show you have.
We look forward if you bear.
Interest in the centrifugal compressors gas turbines cold boxes, and heat recovery steam generators, which are the long lead items.
Longest biggest components.
Topside package.
So.
We are ordering them with Marc II in mind, because thats, where we see the strongest customer pool.
But.
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If for whatever reason, we had to put up the equipment long term mark Walnut remarks, III. The absolute vast majority of it can be cut on either of those two designs.
Okay. So thank you very much.
More for Mark three of course, because it's bigger liquefaction sites.
Sure Okay. Thank you.
Thank you.
There are no further questions at this time, so I'll hand, the call back to you for closing remarks.
Thank you all for listening into our Q3 results have a good day and speak to you all soon.
Bye bye.
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