Q1 2023 Golar LNG Limited Earnings Call
And you, you.
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Welcome to the GOLA LNG Ltd.
Q1 2023 results presentation. After the slide presentation by CEO Carl Frederick-Stelbo and CFO Eduardo Maranao, there will be a question and answer session. Information on how to ask a question will be provided then. At this time all participants are in listen only mode.
I will now pass you over to Carl Frederick-Salbert. Carl, please go ahead.
Thank you operator and welcome to Goal RLNG's Q1 2023 earnings results presentation.
My name is Carl Fredrik Staubow, CEO of Golar LNG, and I'm accompanied today by our CFO , Mr. Eduardo Maranello, to present this quarter's results. Before we get into the presentation, please note the forward-looking statements on slide 2.
On slide 3 we present our company overview.
During the quarter, we exited our investments in Cool Company Limited as well as New Fortress Energy.
We also reacquired New Forrester's equity stake in the FOMD healing.
We also sold the LNG carrier Golar Gandria and acquired the LNG carrier Fuji LNG intended for FLNG conversion.
our key assets continue to be the FLNG Hille operating for Perenco in Cameroon.
and the FLNG GIMME delivering later this year to start a 20-year contract for BP on the Tor2 field offshore Mauritania and Senegal.
With the acquisition of Fuji L&D, we are advancing the potential ordering of our third FL&D, which we intend to be a Mark II FL&D with an annual liquefaction capacity of 3.5 MTBA.
Turning to slide 4 and highlights for the quarter.
On the left hand side, starting with Hille, as previously announced, we reacquired NFE's equity stake in Hille for a total consideration of $100 million.
plus our remaining 4.1 million NFE shares and taking over 323 million dollars of debt associated with New Fortress Energy stake in the unit. We also unwound our TTF hedges, locking in a total of 140 million dollars of operating cash flow on the hedges.
whilst maintaining exposure to TTF link production. We also agreed to compensate the 0.04 tons of underproduction in 2022 with a similar amount of overproduction during 2023.
We are also pleased to announce that we have agreed and received credit approval for improved terms under our existing debt financing on Gilead.
This will lower our debt margin and increase our free cash flow to equity from that unit.
Eduardo will explain the amendments in further detail later in the presentation.
GIMI is now 94% technically complete.
Our sail-away dates have been pushed from first half this year until Q3 this year to allow for time to fully complete the vessel, conduct increased testing at the yard and align with the overall schedule for the project.
Under business development, we have over the recent months seen significant increasing interest for our FLNG solutions.
and especially for re-contracting of the FLNG HILI, given her second half 26 availability and proven operational track record.
We're currently in discussion with several gas resource owners.
This includes signing of a memorandum of understanding with NMPC during the quarter to explore FLNG deployment on specific NMPC-controlled proven gas resources in Nigeria.
On the back of increasing commercial interaction for FLNG deployment, we have advanced yard and financing discussions for a Mark II FLNG and acquired the Fuji LNG as already described. Turning to the right hand side in corporate and others.
Q1 financial highlights include a cash position of more than $1 billion.
Adjusted EBITDA for the quarter of 84 million dollars.
Next cash proceeds from exit of NFE and Cool Company of 102 million.
We bought back 20 million dollars of our unsecured bonds at par and agreed to amend the bonds to increase financial flexibility.
Following the bond amendment we have reinstated dividend payments and have approved to pay 25 cents per share for Q1.
Our target is to declare a stable and over time increasing quarterly dividend.
We will address our dividend outlook ambition in further detail later in the presentation.
We have also approved a $150 million shared buyback program.
Turning to business development on slide 6 and some further detail on GIMI.
The majority of remaining works are piping, system testing and pre-commissioning.
As mentioned, expected sail away has shifted from first half until Q3 23.
The updated sail-away timing is not expected to impact first seed gas on the Torque View project.
Due to overall project and FL&D delays, pre-commissioning contractual cash flows have started.
Parts of these contractual cash flows from BP to Golar is currently disputed and we are now working to resolve the matter.
The updated sail-away date and pre-commissioning cash flow dispute will have no impact on the wider execution of the 20-year project that is expected to unlock around $3 billion of adjusted EBITDA backlog to GOLAR, equivalent to an annual adjusted EBITDA of just around $150 million.
Turning to slide 7 and FL&D business development, which is the most exciting area of our business.
We experience increased interest from gas resource owners for FLNG solutions.
We are currently in discussion with five to six gas resource owners for potential FLNG deployment
Our key priority is to secure a charter for Hille at the end of the current contract expiring in July 26.
to secure increased cash flow visibility, increased shareholder distribution, before taking FID on a Mark II FLND.
Several of the potential clients in discussions have resources sufficient to accommodate either HIDL or a Mark 2 FLNG.
We continue to target commercial structures where we together with the gas resource owner focus on attractive cash break-even liquefaction of stranded or associated gas feed and share upside through commodity price off-takes. A fully utilized...
HILI based on current LNG forward prices has an annual revenue potential in excess of $1 billion.
This will then be shared between the gas resource owner and the LOR as the liquefaction provider.
In April we signed the memorandum of understanding with NMPC which is one of the five to six gas resource owners described earlier.
NMPC is Africa's largest domestic energy company.
Nigeria is currently producing 33 million tons of LNG annually.
This compares to more than 4 billion tons of proven gas reserve.
Hence, there is significant capacity and ambition to grow monetization of these volumes. Since signing of the MOU, both parties have allocated significant resources to develop a named gas field for a potential FLNG project.
We've made material, technical and commercial progress.
Overall, the MOU has a five-year duration and both parties have an ambition to explore the potential for multiple FLNG projects to be deployed on proven and stranded gas feeds in Nigeria.
Did we find it best to start with one named one as opposed to try to tackle all at once?
Continued progress is also made with other gas export opportunities, both in West Africa and South America.
Turning to slide 8, on the back of this increased charter interest, we decided to high-grade our FLNG conversion candidate.
We decided to sell Gandria and clear our option to acquire the LNG carrier Fuji.
The key advantages with the enhanced FLNG conversion candidate includes younger age and better sailing condition.
increased cargo capacity,
larger deck space and lower boil off.
We continue to advance YARG EPC discussions as well as progressing a depth facility for a Mark 2 FLNG project.
The final investment decision will be linked to charter visibility on the recontracting of a HILI and or a Mark II FL&D.
Turning to slide 9, the further highlight the earnings potential from integrated FL&D projects.
We continue to see very healthy margins for FLNG projects.
We believe gas prices have reverted to a more sustainable level at the cost advantage to more polluting sources of energy.
supported by long-term visibility in the commodity forward markets.
As described in previous quarterly presentations, we believe stranded or associated gas upstream opportunities can be developed between $1 to $3 per MMBtu in upstream costs.
FL&D OPEX, including fuel costs, equates to about 60 cents per MMBt.
Add shipping costs to end users in Europe or Asia and you have a delivered cash break-even of between $3 to $5 per MMDT.
This compares to forward prices of north of $10 per MMBtu indicating annual EBITDA for a fully utilised HILLE of $550 million or $875 million from MMBtu.
We continue to believe in our business model where the majority of incremental supply over the next five to 10 years will be sourced from the US.
Hence, if you have a business with three key cost components, namely
gas source cost, liquefaction cost and shipping cost.
and you're cheaper on all three components, we believe that's an attractive competitive situation.
As you can see in the top right corner, this business model has an attractive risk reward.
in an historical context with limited downside and significant upside potential. Current forward curves are significantly higher than that of historical LNG prices.
Yes.
Turning to slide 10.
The world needs more and cheaper sources of LND. Looking at gas prices over the past year, it has become clear that the world needs more LND from a wider range of suppliers at post-competitive levels. While LND may previously have been considered a transition Trevor Erdogan with M1 Certified
The events unfolding in 2022 underpins LNG and natural gas as a critical part of long-term solutions to ensure energy security.
However, existing production and current build-out of LNG plans will not be sufficient to cover the expected demand growth in the coming decades.
According to S&P Global, L&D demand is set to increase from around 400 million tonnes in 2023 to approximately 630 million tonnes by 2035.
This is equivalent to a compound annual growth rate of 3.5%.
Turning to the right hand side of the slide, we are shown the estimated capex for liquefaction project currently under construction.
The steep cost inflation recently witnessed is pushing cost higher leading to the supply cost shifting higher.
So you can see from the majority of the US liquefaction projects, you're talking cappedx per tonne of liquefaction capacity way in excess of a billion dollars.
While there are several factors impacting the ultimate economics of a liquid-faction project,
Keeping liquefaction CapEx-contain is one of the three cost drivers of an L&D export project and the key aspect of success, which makes us continued.
Macau was founded by the same team that created Golar Power, which was later renamed Hygo. Golar Power started with an initial investment of $5 million.
and grew through a joint venture between Golar and Stone Peak.
and was sold five years after inception at three to four times the investment capital.
GOLA has committed up to $25 million for the team to concentrate its effort on constructing a proprietary modularized small scale liquefaction unit.
as well as partnering with complementary small scale L&D businesses to develop L&D to EV charging in areas of high flaring activity.
significant, tracking the man and the grid currently not capable of supercharging of EV tracks.
This will include areas like the Permian in the US and several stranded gas resources in South America.
Subject to the continued development of Macau, the Macau management team and Golar will explore a spin-off of Macau energies at a later point in time.
It's a business we believe in. It's a team that has proven to deliver to us previously.
and the model that's replicating what we are doing at larger scale offshore, but this will not be a significant cap ex-requirement funded by roller balance sheet. It will then be lifted out of the balance sheet for capital markets to fund it.
operating revenues of $74 million, up 25% compared to Q4 2022.
We also had the Follinjit tariffs of $110 million, up 15% when compared to Q4 2022.
FL-NG therapy is a key non-gap metric comprised of total revenues from liquefaction services and realized gains on oil and gas derivative instruments. The contribution from our FL-NG operations were very strong this quarter.
and we record that increased earnings from Healy of close to $98 million.
up 23% when compared to Q4 2022. On a consolidated basis, this quarter we recorded an adjusted EBITDA of $84 million.
As a result of non-cash mark-to-market charges of 188 million, we recorded a net loss attributable to us of $102 million in the quarter.
Those charges are inclusive of movements in the value of our TTF and brand derivatives of $115 million, changes in listed equity securities of $62 million, and interest rate swaps of $100 million.
After closing the acquisition of NFIs, we're taking Hilly, just in March, our total share of contract of debt is two that have $1.1 billion.
We continue to have access to ample liquidity and our cash position at the end of the quarter was just over a billion. We continue to have access to ample liquidity and our cash position at the end of the quarter was just over a billion.
So moving on to slide 14, I wanted to provide some further call to our increased shareholding on the FLL in G helip.
In exchange for 50% of the common units which we didn't control, we paid a total consideration to an fee of $100 million in cash, plus our remaining stake of 4.1 million shares.
and also we assumed $300 million of debt.
As previously announced, the acquisition of healing is expected to increase our run rate by $70 million per year.
This transaction has closed on March 15, however the economic benefit to us is effective since January 1st of this year.
At a result of our strong operational track record, corporate simplification and confidence in the unit re-contracting, we received management approval from the existing lander to improve some key terms under the current financial facility.
A combination of reduced interest margins, extended maturity, and reduced amortization schedule is expected to generate additional distributable cash flows to us of approximately $75 million until the end of the current contract.
We expect that those changes will become effective in Q3 of this year. Moving to slide 15, I wanted to provide a recap of our historical earnings from HILI.
As you can see on this slide, the Haley tariffs can be broken down into three main components, a fixed tolling tariffs, a brand-linked fee, and a TTF-linked fee that started on 1 January of last year. The contribution from fixed tolling fees, more than double-discorted to $34 million,
as a result of the closing of the transaction within a few.
Lower gas and oil prices this quarter have reduced the contribution from the TTF and Brent linked fees to $37 million and $18 million respectively.
In total, we had $88 million of adjusted EBDA from Hilly, this quarter, an increase of more than 55% when we compared to the same quarter of 2022.
Moving on to slide 16.
I now wanted to provide some further details around our data optimization strategy for healing which I touched on before.
So as I explained before, we have received management approval from our existing lender to optimize certain conditions of our existing facility.
We're not planning to increase the overall average of the unit, but those changes alone should allow us to increase our free cash flow to equity generation to the tune of $26 million per year, or approximately $75 million until the end of the current contract. In Q1 2023, we crystallized gains of around $140 million under our TTF hedging program.
But it's important to highlight that we remain open and exposed to TTF prices between March until December of this year, as well as 100% between 2024 and 2026 when the currentowi?ric ????heim will ongoing until April 8th, 1963 and April 29th Unidos probability against these requires the
For every incremental dollar change in TTF prices, this will contribute to $3.2 million of earnings to GOLA.
In addition to that, for every dollar change in brand prices above $60 a barrel, we will generate $2.7 million per year.
Moving on to slide 17. Our balance sheet continues to strengthen and we now have greater flexibility to allow for shareholder returns and at the same time to fund our FLNG growth program.
When adjusting for our cash receivables from the unwinding over TTF hedges, we are now practically debt-free, with a net debt position of just $25 million.
Out of the original issuance amount of 300 million, we have bought back 161 million dollars and approximately 139 million dollars is owned by public bondholders. On May 25, we received approval to amend certain distribution conditions under those bonds, which will now allow us to anticipate.
shareholder returns, including the ability to distribute up to 51% of total cool company cash proceeds, which were $371 million.
as well as up to 50% of the last 12 months adjusted net income.
Based on that, we're very pleased to announce the reinstatement of our dividend distribution due to a strong cash flow visibility from our contracted assets, Sheely, as well as the establishment of a $150 million share buyback program.
Now moving on to slide 18. When we look at the implied dollar per ton cost of liquefaction, we believe that gold is attractively priced considering our share of net liquefaction capacity from both Hele and Gimme.
Our proven FLNG technology at only $590 a tonne is extremely competitive and offers the world's leading solution to floating LNG liquefaction in the market.
That supports our approach to share buybacks. And this was one of the reasons which supported our announcement to update our capital allocation strategy.
I will now hand over the call to Karl who can talk a bit more about our approach to shareholder returns and also provide some closing remarks.
Thank you, Eduardo. And turning to slide 20.
As I mentioned, we update on capital allocation.
The way we think about this is with strong cash flow visibility with more than 70% of expected 2024 earnings based on six tariffs.
further upside in commodity exposure we have clear cash flow visibility over the coming years.
Add to that the delivery of GIMI that further enhances fixed cash flow. There's also significant further upside in FL&D projects. We believe dividend should be paid from operating cash flows.
whilst the strong balance sheet position should enable FLNG growth.
As reiterated numerous times during the call, we now have a cash position of more than a billion dollars, we're practically debt-free and we have an attractive capital markets pricing point.
Hence, we believe the current balance sheet enables FL-Indie growth.
buyback program as well as depth optimization of gimme post delivery and securing a depth facility for the potential construction of a Mark II FLMD.
So again to reiterate, operating cash flow is for the stable quarterly dividend distributions growing alongside the delivery of GIMI and further upside in Hille. And the balance sheet will be put to work for FLMD growth.
Turning to slide 21 and summary, we have initiated a quarterly dividend distribution.
We see embedded earnings growth following GIMI delivery.
increased helicopter commodity exposure and 2026 re-contracting opportunities and of course further earnings growth potential from new FL&D projects.
We see the current valuation as attractive and therefore have put in place a $150 million share buyback program. The balance sheet has the capacity to fund FLNG growth.
Therefore, we exercise the option to acquire the Fuji L&D.
And we see the increasing interaction with prospective FLNG clients, including the signed MOU with NMPC, as building in momentum and gives us further confidence of attractive re-contracting of HILI and commercial opportunities for Markz.
This concludes our Q1 earnings presentation. Thank you for dialling in and we'll now hand the call over to the operator for any questions.
This concludes our Q1 earnings presentation. Thank you for dialing in and we'll now hand the call over to the operator for any questions. Thank you.
So to ask a question you'll need to press star one and one on your telephone and wait for your name to be announced. To answer or withdraw your question you can press star one and one again. And please note that questions are limited to two questions per person. Once again that's star one and one to ask a question. We'll now take our first question.
Please stand by. First question from the line of Chris Robertson from Deutsche Bank. Please go ahead.
Hey, good morning, everyone. Thanks for taking my questions. Guys, you've often mentioned the cost advantage of African gas, but I think you mentioned that one of the five or six counterparties that you're currently in discussions with is in South America. Could you briefly talk about any possible cost differential between the two regions, and does this bias lead you to one region or another?
potential gas development and a source cost not too different than what we see for the West African opportunities.
However, subject to what end user you end up with, there are somewhat longer sailing distances but other than that we see them as another area of interest for FLNG.
development and that's why we're also focusing on both South America and West Africa.
I guess my second question relates to the MOU. Not maybe specific to this current MOU but just broadly speaking, can you just talk about the process that an MOU would have to go through in terms of getting to a contract in terms of ?isc.
how long that would typically take, what milestones you typically have to reach, and just kind of a little bit more detail there.
Thanks, Ruiz. I think since we signed the MOU that's the question we've gotten the most. And being the only service provider of FLNG in the world, I don't think there's a textbook as to how these deals go about. It's custom made between us and whoever the counterpart is from time to time and it's only been done two times.
In the past so how standard or not it is I think is it is a bit hard to describe when it comes to the specific MOU with an MTC
The MOU is a requirement to unlock significant resources from the NMPC side, which we have certainly felt the difference in pre and post signing of the NMPC.
That said, we have other potential charters within the group of five to six that we mentioned where we have not formalized the discussions through an MOU, but we're at least equally as advanced as we are with MMPC.
I think it's really down to the procurement process from the charters as well. And then MPC being an NOC, the MOU is a requirement. What we are encouraged by is that none of us sign that MOU for the sake of signing it and read my...
but both of us want to see a resolution sooner rather than later.
Yeah, sure. Thanks for the color on that. I know you're probably limited in what you can speculate on there. Thanks for taking my questions.
answer the color on that I know you're probably limited in what you can look you can speculate on there. Thanks for taking my questions.
Thank you. We'll now take the next question. Please stand by.
I wanted to ask a little bit as it relates to the recontracting of a Hilly. Is it fair to assume in order to get full utilization of the asset that it will likely need to move? And then along with that, how should we think about the timing of contracting?
is likely to move from the existing site. There are other fields within Cameroon that should have the resources to facilitate Hille.
So it will very likely not stay on current site, it could stay in Cameroon and it could equally well go elsewhere. Like the MOU with MMPC is a sign of...
In terms of the timing we would need, I think ideally from an operational engineering point of view, you would like to know around mid-24. That should give sufficient planning for any relocation and site preparation for for re-contracting.
And then obviously there are commercial aspects as to why you would want to see it earlier. But from just an operational and engineering point of view, mid-24 is when we should have a pretty clear view.
Okay, that's helpful. And then I guess as my follow-up, am I understanding it right that the order of priority is the recontracting of the hilly first and then a contract on the second vessel, which we would need in order to go FID? So drive carefully through you.
just trying to think through timing. So if it is anywhere in the, call it the next 12 months, but you know, it could be as much as 12 months for the hilly, should we expect the, a contract on the Mark Two to be center point after that? Or does it not necessarily have to go in that order?
In broad strokes you're correct. So priority number one is to reconfact HILI, thereafter is to FID the Mark II.
The rationale behind this thinking is that we don't want to be exposed to the coming of Contract in July 26 around the time when a mark 2 also would deliver So you want to fix at least one of the two before you FID mark 2
and based on current discussions we believe it's significantly more likely that we fix Hille before fixing Mark 2. If you fix Hille effectively there's sufficient charter interest that you go ahead with Mark 2 even if it's not against the contract from day one.
Okay, I appreciate it. Thank you. Okay.
Thank you. We'll now take the next question.
Thank you. We'll now take the next question. Please stand by.
And this is from the line of Craig Shear from Tuo Ee Brothers. Please go ahead. Hi, congratulations on the progress.
Picking up on Ben's questioning, you know, where does Shipyard's, you know, availability to queue stand and, you know, what's kind of the drop dead time that you need to lock that up.
committed in order to maintain your Mark 2 timeline that you originally envisioned? There's no hiding that YARG slot is an increasing challenge across, I guess, the whole maritime space. Whereas we are publicly
focused on shipyards obviously in Singapore where we built the Hillem Gimme and I think have a strong relationships and we've also explored yard opportunities in China where we believe we would also have the right team to construct a Mark 2 unit. We have as you know secured a long lead item.
potentially somewhat less than a day delivery, data delivery because we continue to progress engineering and preparation work like for example acquiring the project. Gotcha. And as you think about the
So in order to kind of be prepared for that, just how much liquidity do you need to maintain on your balance sheet?
Eduardo, do you want to have a go? Yeah, sure. So, Craig, as you can see under the current amendments, we have also committed to maintain an incurrence test of a minimum cash position of $100 million after the payment of a dividend.
We have stated that we plan to reinstate the dividend program on a quarterly basis. So I think this will be done as Carl mentioned during the call today on a sustainable basis from cash flow from operations. We believe that our current liquidity position is more than enough to allow us to develop the Mark 2 project.
you have also to bear in mind that the capex will be spread out over a period of time, which not only will we benefit from the liquidity position we currently have, but we will also be generating cash during that period. So we feel quite confident that our current position is more than enough to fund both the dividend program as well as the development of a market share.
And I also just add, I think we have several liquidity levers of course in refinancing, gimmick, and completion. That's a 3 billion dollar EBITDA backlog which currently has 700 million dollars of total debt against debt. There's also the potential
to increase leverage on the Leopold re-contracting. I think through the refinancing announced today the support from the existing lenders is very significant and we are also experiencing strong support for death facilities even during construction of a Mark II unit.
So those combined, including the cash flows that Eduardo alluded to, we are confident that we can fund the foreseeable growth.
Thank you. Thank you.
We'll now take our next question. Please stand by. This is from the line of Gregory Lewis from BTIG. Please go ahead.
Hey, thank you and good afternoon and thanks for taking my questions. I was hoping to get a little bit more color and I guess, you know, congrats on starting the dividend. I was hoping to get a little more color around, you know, and realizing it's early days, but how we're thinking about the Jimmy debt optimization.
Really just any kind of broad strokes you can give us as we try to figure out potential cash flow that's going to be available once that. Unit starts working as we think about the dividend rate next year. So really. You know, yeah, anytime I mean, what type of.
Interest rates are we seeing for that type of unit? What type of duration of debt are we thinking about? How much is this going to be like 60% financed or potentially more? Any kind of broad strokes you can give us I think would be super helpful.
Eduardo? Yeah, sure. Hi Greg. I think I can provide some updates on that one here. So when we look at some of the key alternatives we have when it comes to gaming...
I think on a high level basis, considering we have $700 million of debt today, the unit highly under-leveraged. I think we all agree on that one. And we basically have a few alternatives that we have been exploring over the last few months, which range, for example, from existing or up-sized in the existing bank facility. So we have a syndicate of around 11 banks in the current facility. Today we could...
also when it comes to cost. Moving on to the other alternatives we also see a potential same release back as one of the most attractive alternatives here and we have explored the idea of potentially entering into a leasing agreement which could unlock I would say anywhere between 1.2 to 1.3 billion dollars.
in total financing amounts. When we look at tenors, I would say that these would be probably longer in duration when compared to a bank financing. So anywhere from 12 to up to 15 years. So with still a remaining tail of when it comes to the contract duration of 20 years. What we also see as a potential alternative.
at the time of the issuance.
But based on the fact that the total amount will be sized based on the potential cash flows from the project and when looking on a DSCR basis, we believe that this alternative could raise anywhere from 1.5 to 1.7 billion dollars.
As you can see, the alternatives range quite a bit in terms of volume as well as standard.
But we believe that we could benefit the most if we wait until we reach COD. By that point in time, we will then take a decision to move on with the refinancing of Guinea. Yeah, 100 percent. Thank you for that, Eduardo. And then, Carl, I guess just that you announced the buyback.
That was good to see. As you're out talking with investors, clearly you're trading at below $600 a ton on liquefaction capacity. I guess it was a large, but nevertheless that was well over a thousand.
at transactions and where GOLR is today.
That's also one of the questions we get the most is why the stock is trading where it's trading. At the end of the day we need to try to run the business to the best of our ability and the market needs to set the price thereafter.
I think given what we see, not just from dollars per ton, but I think in cash flow multiples following delivery of GIMME and through some of the parts valuation, at least management and board views the valuation as very attractive, which is why we put in place the BABA program.
And that's what we intend to do. Some investors obviously want us to go significantly larger on the buyback program if you see some of the market chapter about what the people are speculating on but at the end of the day for us I think 150 million dollars is meaningful and on top of that we start the dividend which both of them come from.
coming quarters and years. Yeah thank you for that and then just as I think about that if um you know if we were to you know decide to move forward with the conversion candidate of like the Fuji any kind of you know realizing that there's inflation there's shipyard availability all the things that go into doing a mega project like this.
Any kind of thoughts for what we could get that unit up and running for on a cost basis? Yeah, we definitely see inflation, I think everybody sees that everywhere, but where we currently see it based on the EPC contracts and where we have placed the long-lit items.
We believe it is achievable around current pricing of Golar, so call it $600 a ton. But keep in mind that's with construction risk in a couple of years without cash flow. If you buy Golar today, Hill is delivering and generating cash flow and GIMI is delivering this year's starting cash flow.
make sense and you can fund it from balance sheets without having to impact dividend as long as you base dividend on operating cash flow.
Great, as always thanks for the time. Thank you. Thanks Greg. Thank you.
We'll now take our next question. Please stand by. This is from the line of Sean Morgan from Evercore. Please go ahead.
Thanks for taking my questions. So as we kind of circled back to Hilly, I think the contract is up in July of 26. So what sort of logistical challenges are there to moving an FLNG offsite? I imagine there's not a whole lot of precedent cases of this happening or that.
because this is the standardized unit which is designed to be redeployed at different locations. So effectively what you need to do is to disconnect from the upstream pipe and the soft yoke which is the mooring system and off you go. The unit even has engine and propeller so theoretically you don't even need to...
of around $5 million. Okay. And then I guess you have on a calendar basis about two years, but as you, you know, as a management team, you guys realize, obviously the equity markets start to look ahead and equity markets don't tend to love uncertainty. You would have the game up and running by then. So it's not like you wouldn't have any assets producing, like what, what sort of, what's the, what's the, what's the,
very comfortable time if you have.
charter visibility by mid next year from where the unit will be contracted. That leaves plenty of time.
to plan decommissioning, any potential vessel upgrades or amendments and new mooring location. Set up a new shore base and everything that's required. So that's comfortable. It's certainly not lost on us that the capital market...
of interest with the year round the ship now you don't necessarily want to marry the first one that shows up at the door but have a little round on the dance floor to see who delivers best. Okay I like that pseudo-analogy so hopefully Hillary turns out to be that.
Prettiest girl at the ball and you'll have a lot of a lot of choices on where that bus that asset goes Thanks a lot, Carl. Thanks Thank you, and there were no further questions at this time I will hand the call back to Carl starboard for closing remarks Thanks again everybody for dialing in and listening to us and the interest and the...
This does conclude the conference for today. Thank you for participating, and you may now disconnect. Speakers, please stand by.