Q3 2024 Golar LNG Ltd Earnings Call
[music].
Okay.
Speaker Change: Good day and thank you for standing by welcome to the Golar LNG limited third quarter at 22 that you for presentation.
Speaker Change: The slide presentation by feel Karl Fredrik.
<unk> and CFO Eduardo Naranjo that will be a question and answer session information on how to ask a question about to provide to them. At this time all participants are in listen only mode.
Speaker Change: I'll pass you over to Carl Fred you would sell bulk call. Please go ahead.
Carl Fred: Thank you Hello, and good morning, and welcome to Golar Lng's Q3, 2024 earnings results presentation.
Karl Fredrik: My name is Karl Fredrik struggle, the CEO of Golar, LNG and I'm accompanied today by our CFO, Mr. Eduardo Maranhao, 2% this quarter's results.
Karl Fredrik: Before we get into the presentation. Please note the forward looking statements on slide two.
Karl Fredrik: We start on slide three and an overview of Golar.
Karl Fredrik: During Q3, we ordered our third LNG, a mark to F. LNG with an annual liquefaction capacity of $3 5 million tonnes per annum.
Karl Fredrik: This represents a 70% increase to golar owned liquefaction capacity.
And the Mark to F Lindsey will deliver within 2027.
Karl Fredrik: This will be the first available if LNG for a charter globally.
Karl Fredrik: We will provide further information on the value proposition of the markets you got for Lindsay later in the presentation.
Karl Fredrik: We've also seen positive progress for our two existing F. Lindsay is on the water.
Karl Fredrik: Chile continued her market, leading operational performance during the quarter and positive progress had been made on the conditions precedent for her redeployment under a new 20 year charter in Argentina, following expiry over existing contract in Cameroon, ending in July 26.
Karl Fredrik: During the quarter, we agreed a commercial reset or precede the contractual arrangements for the F. O N G give me under her 20, our contract with BP.
Karl Fredrik: And accelerated commissioning has now started and based on the latest schedule from BP, We anticipate commercial operations dates starting the full cash flow from the 20 year contract to occur in Q2 next year.
Karl Fredrik: We.
<unk> two LNG carriers in the fleets walnuts to Golar, Arctic, which is our legacy assets that we consider for long term charter or sale.
Karl Fredrik: The second carrier. The Fuji is currently on charter until Q1, 'twenty five and following that charter she will enter CMC shipyard in China for a conversion to the Mark to F O N E.
Karl Fredrik: Our financial investments include a 23, 5% shareholding in iron ore LNG and Macau entities, which is a fully owned golar founded startup focused on onshore flair to LNG liquefaction.
Karl Fredrik: Our key figures as of Q3 includes a market cap of just around $4 billion, a cash position of just over 800 million.
Karl Fredrik: Net debt of around 650 million EBITA backlog of approximately $11 billion inclusive of the Pan American energy contract in Argentina.
Karl Fredrik: Excluding commodity exposures that we have in built in the Hilli contract.
Karl Fredrik: Turning to slide four and the key milestone of the quarter the ordering of the Mark to.
Karl Fredrik: The Mark to represents the next phase of Golar growth now as a pure play if LNG company.
Karl Fredrik: The mark to will increase our own liquefaction capacity by 70%.
Karl Fredrik: With the potential to double our EBITA generation.
Karl Fredrik: At the project costs, which is approximately 50% of our current EV.
Karl Fredrik: So at the 50% increase we can increase liquefaction capacity by 70% and EBITA generation by one hundreds so by definition accretive.
Karl Fredrik: Total project cost for the F O N E conversion and delivery to her operational sites will be approximately $2 2 billion.
Karl Fredrik: Which equates to a market leading cost of just over $600 million per ton of liquefaction capacity.
Delivery of the vessel is expected in Q4 27.
Karl Fredrik: And she will thereby be the first available if LNG capacity globally.
Karl Fredrik: Delivering at least two to three years before any competitive F LNG deliveries could be available.
Karl Fredrik: The Mark to F. LNG is an evolution of the same liquefaction technology as we have deployed on the Hilli and the give me.
Karl Fredrik: The combination of the unit being the earliest available if LNG capacity in the world.
Karl Fredrik: Our market, leading construction cost per tonne.
Karl Fredrik: And building upon the technology that has delivered market leading operational performance since we started that for Lindy operations in 2018.
Karl Fredrik: We believe these three factors will drive value to golar in the contracting of the Mark to you.
Karl Fredrik: We are currently in discussions with several potential LNG opportunities for the vessel deployment and target to charter the vessels within 2025.
As part of the yard agreements, we have secured an option for a second mark to F O N D with delivery within 2028.
Karl Fredrik: Slide five provides an overview of the global LNG fleets.
Karl Fredrik: Golar retained its position as the market leader for our for Linzess.
Karl Fredrik: Par with Eni and Petronas in number of assets and market, leading by liquefaction capacity.
Karl Fredrik: The most important takeaway from this overview is golar is positioned as the only proven provider of F. N G. S. A service.
Karl Fredrik: The other existing F. A N G players are focused on utilizing their floating liquefaction units for gas they control.
Karl Fredrik: Or where the target should be the off taker of the gas for their downstream LNG portfolio.
Karl Fredrik: Another important takeaway is that the <unk> market is growing we now have four units under construction versus eight units on the water.
Karl Fredrik: Therefore, the engine technology pioneered by Golar is now gaining acceptance in the market as the most economical technology to monetize stranded in associated gas reserves globally.
Karl Fredrik: Furthermore, the only open capacity of the total F. O N. G fleet is our recently ordered Mark to F O N E.
As explained this provide potential charters with gas monetization two to three years ahead of or versus ordering an alternative LNG solution today.
Karl Fredrik: This was made possible by our significant commitment to the engineering and placing long lead items in anticipation of this F. D of approximately $300 million, which started more than 18 months ago.
Karl Fredrik: That's what enables the delivery within 27.
Karl Fredrik: Yeah.
Karl Fredrik: Okay.
Speaker Change: Turning to slide six we have laid out our growth ambitions based on our existing asset base and security outflows.
Speaker Change: We expect to see strong cash flow growth from organic growth through increased capacity utilization of our existing ethylene. These on the water and through our mark to growth units.
Speaker Change: Okay.
Speaker Change: The organic growth includes the startup or give me expected to.
Speaker Change: Well she's already started accelerated commissioning now, but we expect first gas from the F. P. S. O late Q4 and full operations in Q2 of next year.
Speaker Change: The second phase of the organic growth is the increased capacity utilization of the hilli when redeploying from her existing charter in Cameroon, ending in July 26, two the announced 20 air charter in Argentina, with an estimated startup within 27.
Speaker Change: Once on their 20 year charters. These two existing assets are estimated to generate an aggregate annual EBITDA of approximately $515 million before commodity exposure.
Speaker Change: Through the Mark to you on order for delivery within 27, and another option for a mark to F O N D to potentially deliver within 20 eights.
Speaker Change: We see the potential to more than double our liquefaction capacity to more than 12 million tonnes per annum and triple triple our potential EBITDA generation.
Speaker Change: Assuming that the Mark to F. LNG is chartered on terms similar to the definitive agreements under the Pan American contract in Argentina entered into in July.
Speaker Change: Each mark to F O N D could generate approximately $500 million in EBITDA per year before commodity exposure.
Speaker Change: Hence with Hilli and give me on their respective 20 year contracts and a mark to you on charter at similar terms golar could generate $1 billion of run rate EBITDA from 28.
Speaker Change: If you add to that.
Speaker Change: Second Mark to we could see a run rate of $1.5 billion of run rate EBITDA by 2030.
Speaker Change: Okay.
Speaker Change: Turning to the business update on slide eight.
Healy continued her market, leading operational track record and it's currently Offloading her cargo number 100 in 'twenty two.
Speaker Change: With more than 8 million tons of LNG exported since contract startup in 18.
As explained Pan American entity served also reservation notice in October to utilize the EF LNG Hilli for 'twenty are definitive agreements.
Speaker Change: We'd startup in 2027.
Speaker Change: We continue to make strong progress to fulfill the conditions precedent within these definitive agreements and expect all subjects to be lifted within Q1 of next year.
Speaker Change: Okay.
Speaker Change: A key milestone for the quarter was to conclude the commercial reset with BP resolving all contract disagreements and aligning economic compensation forgive me. His arrival in country on January 10th Center 24 until CRD.
Speaker Change: This commercial reset also unlocks our target to refinance give me at improved terms versus the existing facility.
Speaker Change: And to provide the liquidity relief that we intend to utilize for LNG growth projects.
Speaker Change: On the back of the commercial reset VPN Cosmos has secured an LNG cargo that enables accelerated commissioning, whilst we wait to receive gas from the BP owned F. P. S O.
Speaker Change: Gas was introduced from the accelerated commissioning cargo to gave me in October starting the accelerated commissioning.
Speaker Change: As alluded to the major milestone for the quarter was the ordering of the Mark to F. LNG to be converted at C. N C. A raffle shipyard in China.
Speaker Change: We also secured an option for a second mark to delivering in 2028 as long as we ordered within 25.
Speaker Change: We see continued strong development of our LNG growth pipeline led by activities in South America and West Africa.
Speaker Change: We expect to conclude a charter for the recently ordered Mark two F LNG within 2025.
Q3 financial highlights include adjusted EBITA for the quarter of $59 million.
Speaker Change: Unsecured bond this year of $300 million and a cash position of over $800 million.
Speaker Change: Eduardo will provide further insight into this quarter's financial performance later on in the presentation.
Mccarl entities have now produced and sold its first ISO containers produced from flare gas in Texas U S to industrial clients.
Speaker Change: We continue to fine tune operations to adjust for the gas quality variability from associated U S shale gas production.
Speaker Change: Yeah.
Speaker Change: Turning to slide nine and the highlights of the Pan American energy charter in Argentina.
Speaker Change: In July we entered into agreements for 'twenty are LNG export project.
In October we received the reservation notice risk serving the hilli at VF LNG to be utilized under the 20 are definitive agreements.
Speaker Change: The annual adjusted EBITDA base.
Speaker Change: Based on the Hilli will be $300 million before commodity exposure.
Speaker Change: The project will utilize gas from the walk on water fields onshore Argentina.
Speaker Change: The Walker Martha is the second largest shale gas discovery in the world with an estimated resource of around 300 Tcf of gas.
Speaker Change: This target startup is within 27.
Speaker Change: Which enables us to upgrade and hookup of the Hilli in between charters ending in July 26, and startup in 'twenty seven.
As part of the transaction Golar will become a 10% shareholder in South American logistics.
South American will be the off taker in gas marketing arm of the structure and this will provide further commodity exposure. In addition to the commodity element of the F O M G tariffs.
Speaker Change: As explained the charter is subject to customary closing conditions, including regulatory and environmental approvals.
Speaker Change: We continue to make strong progress in meeting these conditions and we expect deal completion within first quarter of next year.
Speaker Change: We're also together with Pan American in advanced discussions to bring additional local and international partners into the project.
Speaker Change: To further enable potential expansion.
Speaker Change: The Hilli will initially utilize spare capacity in argentinas existing pipeline network.
Speaker Change: Work to construct a dedicated pipeline connecting therefore, indeed terminal directly to the Vaca <unk> shale formation has also been proceeds.
Speaker Change: This could support a multi F LNG vessel project in Argentina, including opportunities for the Mark to an order.
Speaker Change: Okay.
Turning to slide 10, and an operational overview of our two existing assets.
Speaker Change: Starting with Hilli Hershey continue her market, leading operational track record and are in the process of Offloading cargo number 122.
Speaker Change: The existing contract with Perenco offshore Cameroon runs until July 26.
Speaker Change: The vessel will thereafter transit to the Pan American contract in Argentina with increased capacity utilization.
Speaker Change: Following a planned maintenance to enable 20, our continuous operations on site in Argentina.
Speaker Change: Give me is onsite and have started commissioning activities through an accelerated commissioning plan and gas was now introduced in October.
Speaker Change: All of the ongoing commissioning activities are according to plan and design specifications.
Based on the latest guidance from BP first gas from the BP owned S. DSO is now expected in Q4, this year and full C. O D. In next Q2 next year.
Speaker Change: C O D, which is a commencement of operations that will be the start of the 20th contract duration, starting golar share of the $3 billion of EBITA backwards.
Speaker Change: Okay.
Speaker Change: Turning to slide 11, we see strong positive progress for new F LNG opportunities.
Speaker Change: We continue to progress these opportunities, including commercial and technical work.
Speaker Change: Mainly in the Americas, West Africa, Middle East and Southeast Asia.
Speaker Change: As explained earlier in the presentation, we see the most active areas being South America, and West Africa at the moment.
Speaker Change: Increasing project development is driven by Golar position as the only proven provider of ethylene D. S. A service our market leading operational performance.
Speaker Change: Our competitive construction construction cost advantage and the fact that we have the first available F LNG globally.
We remain encouraged by the relative attractiveness of these F LNG growth projects compared to alternative monetization solutions for gas resource owners and the cost competitiveness of these projects versus other LNG export projects out there.
Speaker Change: And again, we are in.
Speaker Change: Targeting to fix the mark to F Lindy within 2025.
I'll now hand, the call over to Eduardo to present, our Q3 results.
Eduardo Maranhao: Thank you Carl and good morning, everyone I'm pleased to provide an overview of <unk> financial performance for the third quarter of 2024.
Eduardo Maranhao: Moving to slide 13, I would like to walk you through some of the key financial highlights for the quarter.
We achieved total operating revenues of $65 million with ethylene G tariffs, reaching $89 million, a slight increase from $88 million in Q2.
Eduardo Maranhao: <unk> growth reflects higher realized variable earnings are linked to Brent mttf prices.
Eduardo Maranhao: We consider LNG tariffs to be the most accurate measure of all realized of liquefaction revenues, including gains from our oil and gas lease fees from Healy operations.
Eduardo Maranhao: Total adjusted EBITDA reached $59 million.
Eduardo Maranhao: Remaining largely consistent with last quarter.
Eduardo Maranhao: Prior to the recognition of some pre operational expenses associated to commissioning activities of gaming as we progress towards <unk>.
Eduardo Maranhao: This quarter, we report a net loss of $35 million.
Eduardo Maranhao: Primarily due to noncash adjustments in the value of embedded DTF and brain to derivatives within the Hilli contract.
Eduardo Maranhao: Reflecting lower oil and gas prices compared to Q2.
Eduardo Maranhao: These movements accounted for approximately $90 million.
Eduardo Maranhao: Additionally, mark to market changes in our interest rates swap portfolio in <unk>.
Eduardo Maranhao: <unk> results by about $16 million.
Eduardo Maranhao: While these factors affected our quarterly results, we remain strategically well positioned to benefit from future market improvement and continue to focus on building our strong long term earnings backlog.
Eduardo Maranhao: Following the issuance of our $300 million bonds in September our share of contractual gross debt reached just under $1 5 billion at quarter end <unk>.
Eduardo Maranhao: Despite substantial commitments to the Mark II project, which has been fully equity funded into year to date with around $400 million invested so far our liquidity position remains robust with approximately $807 million of cash on hand.
Eduardo Maranhao: Based on debt, our net debt position at the end of the quarter stood at $646 million.
Eduardo Maranhao: This gives us significant flexibility to advance our growth initiatives and drive future value creation.
Eduardo Maranhao: Lastly, we're pleased to declare a dividend of 25 per share this quarter with a record date of November 25, and payments scheduled for owner around the December the second.
Eduardo Maranhao: Turning to slide 14.
Eduardo Maranhao: Hilli continued its exceptional performance, achieving 100% economic uptime and reinforcing each market leading operational track record.
Eduardo Maranhao: Here, we show the evolution of Heelys EBITDA contribution over the last quarters Q3 was an excellent quarter for helium delivering a total EBITDA of just over $68 million, which includes $33 million from base tolling fees and approximately $35 million from variable realized Brent in CTF linked fees.
Eduardo Maranhao: I wanted to highlight that we remain positively exposed to Brent in CTF prices. So if dish prices continue to improve in the coming quarters. We can expect to increase the distributions from healy through the duration of its current contract.
Eduardo Maranhao: Moving on to slide 15 heelys.
Eduardo Maranhao: Heelys operational track record has been outstanding since 2018, we have successfully producing over 8 million tons of LNG delivering just over 122 cargoes as of today.
Eduardo Maranhao: On the right hand side of the slide we can see how commodity prices can impact our earnings from Healy.
Eduardo Maranhao: So based on forward Brent in CTF prices. It is expected to generate an adjusted EBITDA net to us of approximately $273 million this year and a total free cash flow of $185 million.
Eduardo Maranhao: Going forward 2020, fives debt service, including principal amortization is expected to come down to $80 million.
Eduardo Maranhao: <unk> in a total free cash flow net to us of approximately $126 million from Healy alone.
Eduardo Maranhao: Turning to slide 16.
Eduardo Maranhao: This quarter, we reached a significant milestone in Oregon contract with the execution of the commercial reset with BP. This contract amendment settled all existing disputes and greatly simplified the contractual cash flows during the commissioning phase we now expect to receive approximately $220 million increase yield the compensation.
Eduardo Maranhao: Inclusive of milestone bonuses of which approximately $130 million will be voice and <unk> 24 of this amount $78 million has been received in 'twenty four and year to date.
Speaker Change: Thanks to this commercial reset we're also able to advance the refinancing of the existing gave me the debt facility potentially unlocking up to $500 million in liquidity to us, which I'll discuss further on the next slide.
Speaker Change: Our balance sheet remains strong with ample flexibility to support our growth initiatives.
Speaker Change: After the $300 million bond issuance in September we are well positioned to manage our upcoming bond maturity next year with no significant debt repayments expected beyond our asset level debt on tier two into 2009.
Speaker Change: The significant existing backlog of $4 $3 billion from gaming supports further debt optimization beyond our currently $700 million facility.
We're actively engaged in advanced discussions with potential lenders and are making solid progress towards securing credit approvals and finalizing contract negotiations.
Speaker Change: Similarly, with <unk> backlog approaching $7 billion, we see a strong potential to unlock significant liquidity from it.
Speaker Change: Currently the asset level debt stands at approximately $570 million, providing us with also ample room for optimization.
Speaker Change: When we look at the Mark II project, we have fully equity funded approximately $400 million to date.
We have also received indicative finance in terms for around one point to $2 billion of asset level debt for the Mark Chu. However.
Speaker Change: However, we believe that once this charter is secured and we're confident in our ability to raise a significantly larger amount at even improve it terms potentially targeting a financing amount equal to four to six times each contracted EBITDA.
Speaker Change: So in summary, our strong backlog of over $11 billion from gaming Healy combined with the potential for significant liquidity release based on ongoing discussions for additional debt financing gives us financial significant financial flexibility dispositions ourselves very well to optimize our capital structure.
Speaker Change: We continue to support our growth initiatives moving forward.
Carl Fred: With that I'll hand, the call over to Carl for his closing remarks.
Carl Fred: Thanks Eduardo.
Turning to slide 19, and some of the key milestones for 24, and our focus for 'twenty five.
Carl Fred: So this year has seen some major milestones in the development of Golar.
Carl Fred: We delivered our second half LNG unit.
Carl Fred: Two BP offshore Mauritania and Senegal in January this year.
Carl Fred: As the project was not ready to start sending us gas at that time.
Carl Fred: We entered into negotiations with BP.
Carl Fred: We agree a commercial reset of <unk> contractual arrangements.
Carl Fred: We're pleased to say that that reset was met in August with the benefits that Eduardo just explained.
Carl Fred: In July we reached another key milestone for the company in signing definitive agreements for a 20 year charter with Pan American energy in Argentina.
Carl Fred: In light of the recently received reservation notice this will utilize hilli women adjusted EBITA backlog of $6 billion before commodity exposure.
Carl Fred: In September we issued a $300 million unsecured bonds.
Carl Fred: And just after we did our third LNG the Mark to F. LNG with a three five M tpa capacity.
Speaker Change: Our action list or focus for 25 is to refinance the give me as just explained by Eduardo.
Speaker Change: To conclude the conditions precedent under the 20 year contract with Pan American.
Speaker Change: To secure a charter for the Mark to F&D and thereafter secure asset level financing for the vessel.
Speaker Change: Once that is locked in we are planning to execute on our option for a second mark <unk> to provide further <unk> growth.
Speaker Change: So turning to slide 20, the last slide of the presentation and to explain what this could mean in numbers.
Speaker Change: Based on our target to secure a charter for the market to order Golar could double RF LNG earnings and EBITA backlog within the next year.
Speaker Change: Based on the 20 year contracts in place forgive me for BP and Healy for Pan American, we Havent EBITA backlog standing at approximately $11 billion before commodity exposure today.
Speaker Change: If we assume a mark to contract at similar terms to the Hilli contract entered into in July we could see the EBITA backlog increase to over $20 billion before commodity exposure.
Speaker Change: Again, we're targeting to secure such contract within 25.
Speaker Change: Due to the strong balance sheet and financial flexibility this cash flow and backlog growth is feasible, whilst maintaining shareholder returns that we already have in place and continue to increase them as we derisked.
Speaker Change: Backlog and continued to get units on stream.
There is further upside to the backlog from commodity linked earnings.
Speaker Change: And that will then be an add on to the overall earnings PC.
Speaker Change: Each mark to you and it has the potential to add around $500 million of annual adjusted EBITDA.
Speaker Change: Based on contracts at the same terms as the recently entered into Argentina contracts.
Speaker Change: We have secured an option for a second Mark Chu with delivery in 2008, which then would more than double our capacity to 12 and Tpa run rates.
Speaker Change: That concludes the prepared remarks for our Q3 presentation I'll now hand, the call over to the operator for any questions. Thank you.
Speaker Change: Thank you Dear participants as a reminder, if you wish to ask a question. Please press star one on your telephone keypad and Batesville and name to be announced can we drew a question. Please press star one again to ensure that everyone has the opportunity to ask a question today. Please limit yourself just to two questions.
Speaker Change: Please somebody will come pilot Kieran narrow studies will take a few moments.
Speaker Change: Okay.
Speaker Change: And now we'll go and take the first question.
Speaker Change: And this comes from the line of Ben Nolan from Stifel. Your line is open. Please ask your question.
Speaker Change: Great.
Speaker Change: I appreciate you guys having me.
I wanted to for my first question I wanted to just dig in a little bit on what's.
Speaker Change: In Argentina, if you could it.
Speaker Change: Specifically it sounds like the Hilli is definitively going and there's not really an option to move it elsewhere.
Speaker Change: To clarify that but then also.
Speaker Change: There has been a lot of movement between Pan American and <unk> and the various projects can you maybe just sort of level set how you see.
Speaker Change: The Argentina, LNG development, playing out truck from your perspective.
Speaker Change: Yeah, Hi, Ben So as we explained the Akamai is the second largest oil discovery in the world with 300 Tcf local consumption in Argentina is around one tcf here. So there is plenty of capacity.
Speaker Change: To provide for exports and the 300 Tcf are currently hostage to the Argentinian domestic market.
Speaker Change: In light of the new government in place.
Speaker Change: There is now a strong drive to.
Speaker Change: Enable LNG exports youre right that theres a lot of different talks in terms of.
Speaker Change: How big should lead it and so forth what seems to be clear to everybody is that the pan American contract utilizing hilli will be the first outlet for Argentinian LNG exports.
Speaker Change: As explained earlier in the presentation, both Pan American Angola would welcome Alder walk on water gas resource owners to partake in the project.
To give further gas supplies, but also to provide for <unk> growth.
Speaker Change: We also think that if we were to source the mark two on order that would be the second fastest available liquefaction capacity, Argentina only beaten by Hayley.
Speaker Change: So if they are true to the ramp up of their ambitions of exports both of those assets should see a home in Argentina.
Speaker Change: First and foremost hill is now locked in through the reservation office received in October.
Speaker Change: And there is no option for that to move somewhere else to correct.
Speaker Change: That's correct the reservation out because that's been given.
Speaker Change: My second question, maybe it's for Eduardo.
You are talking about.
Speaker Change: First of all continuing to progress on the refinancing of the gave me that would bring cash out.
Speaker Change: And then you are talking about potentially after getting a contract on the mark to being able to finance more than youre paying for it really.
Speaker Change: Yeah.
Speaker Change: Maybe could you talk to.
Speaker Change: Your capital allocation thinking.
Speaker Change: If you are able to do those then youre going to have a whole lot more cash.
Coming in than going out.
Yes.
Speaker Change: How are you thinking about sort of what's the what's the right thing to do with that capital how do you see it playing out.
Speaker Change: Yeah, Hi, Ben So I think just starting with the first point here. So when you look at the give me refinancing you're right. We're making further progress on the on the proposed refinancing that we have been discussing for the last quarter.
Speaker Change: Right now we're targeting about $1 4 billion of total financing and we are in advanced discussions with potential lenders.
Speaker Change: When we look at the Mark Chu Finance units and I think their statements. We made in the presentation of between four to six times. The contracted EBITDA I think this is largely driven by the reference are the data points that we have on the current gaming finance. So if we're targeting one four based on a $250 million EBITDA I think that falls within that range.
Speaker Change: We believe that once we have a charter in place for the market sure we could be in a position to reach such amounts.
Speaker Change: We also have received as a as we also stated in the presentation.
Speaker Change: But indicative terms for our proposed $1 $2 billion asset level financing for the Mark to you all.
Speaker Change: However, this financing would be based on the situation as each so basically basically on a situation without a contract. So we believe that once we secure a charter.
Speaker Change: We could be in a position to also significantly improved the commercial terms of that facility.
Speaker Change: And I think the last point with regards to capital allocation I think Carl touched on that one during the presentation as well and we continue to.
Speaker Change: We have pledged to maintain our dividend policy as we have today and we expect to further increase the dividend payments as soon as we de risk our existing projects. So we are progressing with the commissioning of schema and as soon as we reach a COPD or around that time, we could be in a position to further increase our dividend payments.
Speaker Change: And I think our ambition is to further grow our affiliate <unk> portfolio. So we have an option to further develop our second Mark Chu.
Speaker Change: I think provided that we have visibility on earnings of that contract and we continue to execute on our commercial strategy.
Speaker Change: We would have the financial ability to take on debt.
Speaker Change: That project.
Speaker Change: Alright I appreciate it thank you.
Speaker Change: Thank you.
Speaker Change: Now we're going to take over next question.
Speaker Change: And the question comes from the line of Chris Robertson from Deutsche Bank. Your line is open. Please ask your question.
Chris Robertson: Thank you operator, and good morning, good afternoon correlated Florida.
Speaker Change: Hi, Chris.
Speaker Change: Hi, guys I was wondering if you could speak a little bit more on the auction you have for a second mark to it the IMC Raffles yard I think at one point you had communicated that the option had an expiry at the end of the first quarter, but now it sounds like you have some greater flexibility there which is good.
Speaker Change: So I guess could you talk around when that particular option expires as it just throughout the full year of 2025 then.
Speaker Change: A little bit more around what exactly you would need in place to move ahead with the conversion of our second mark to asset.
Speaker Change: Yeah, Hi, Chris so.
Youre right I understand what you're referencing when you say Q1, so what we did say at that point in time is that in order to meet the 28 delivery. The acute critical item is some of the long lead items. So similar to what you saw with you on the first Mark one is that we started committing to some long lead items before FY being the project and this is.
Speaker Change: For us.
Speaker Change: A little bit of cautiousness in terms of securing an attractive delivery slot without taking on the full risk of the EPC before we've secured a charter on the first mark too.
Speaker Change: So.
Speaker Change: There is more flexibility in terms of the EPC contract with the shipyard in Q1 that you do want to see some commitment on long lead items, starting within Q1, and that's really the gating item.
Speaker Change: Obviously, when you're a repeat buyer of the same equipment costs were building two units or could be building two units in relative in parallel there are some advantages with the equipment suppliers as well in terms of lead times.
Speaker Change: Versus what we received when we did the first smartphone.
Speaker Change: So obviously always easier to be a repeat customer then.
Speaker Change: New customer.
Speaker Change: But within Q1, we should make some.
Speaker Change: Norland commitments and I think in terms of then EPC contract itself.
Speaker Change: We have more flexibility than Q1.
Speaker Change: Okay. Great. That's helpful. And then my second question is just turning to the towards two project for a moment.
Speaker Change: I believe EEP and Cosmos, we're evaluating other types of LNG technology beyond F. LNG for the phase III development.
Speaker Change: Just given the recent commercial reset and the possibility that a second mark to asset could be available by 2028.
Speaker Change: Could potentially fit into that phase III ambition.
Speaker Change: Any discussions at all with the towards the partners around potentially taking it up.
Speaker Change: LNG asset as opposed to some of the other technologies that they were considering at one point.
Speaker Change: We normally don't comment on specific projects like that other than when we signed contracts that have been made public the only thing I would say is that.
Speaker Change: For the first phase Kosmos and BP found <unk> to be the most economical and best viable way of monetizing that unit.
Speaker Change: Since then I think the affluent market has proven to become even more of an industry standard and more people are like VPN Cosmos have found <unk> to be the best way of monetizing gas reserves.
Speaker Change: Certainly many of the neighboring countries in the East Africa are utilizing <unk> technology.
Speaker Change: I would think it's very natural that <unk> is at least one of the options. They consider and there are benefits and utilizing the same operator of course, there's many synergies both in terms of Offloading crewing spare parts and so forth.
Speaker Change: That makes a lot of our discussions where we're not.
Speaker Change: This grossing anything.
Speaker Change: And that's our counterparts do.
Speaker Change: Sure I appreciate that and I appreciate the commentary I'll turn it over.
Rick: Thanks, Rick.
Rick: Thank you.
Rick: Now I will go and take our next question.
Rick: And the next question comes from the line of Christopher <unk> from Arctic Securities. Your line is open. Please ask your question.
Speaker Change: Hello, Karl Thank you for taking my question.
Speaker Change: Can you comment please comment a bit on the 10% stake in southern <unk>.
Speaker Change: Should we expect in terms of Capex are going forward.
Speaker Change: Capex element.
Speaker Change: Proportionate with the ownership stake.
Speaker Change: Additionally.
Speaker Change: Eric Capex assumption for <unk>.
Speaker Change: Between the existing Perenco contract.
Speaker Change: Contract with Pan American Energy I assume there's a cost element associated with.
Speaker Change: Rig upgrades and amendment there thanks.
Speaker Change: Yeah, Hi, Chris So I'll take the first part and then.
Speaker Change: And then secondly, the cost.
Speaker Change: Element on redeployment.
Speaker Change: What we're saying is that you need to disconnect in Cameroon, you don't need to physically travel to a shipyard that needs to do overhaul works. It provides for 'twenty our containers operation.
Speaker Change: And then sell to Argentina to connect so what we currently estimate is $2 million to $300 million for the total voyage that includes bunkering crude tug and <unk> upgrading works.
Speaker Change: Thats the all in cost of moving $2 million to $300 million.
Eduardo Maranhao: On the South American logistics Eduardo do you want to cover that one yes sure. So when it comes to southern energy.
Eduardo Maranhao: Based on our 10% stake and we have answered this part of the definitive agreements.
Eduardo Maranhao: To the final forms of the joint venture agreements with Pan American Energy, which stated an indicative budget for the project budget is just.
Eduardo Maranhao: Subject to further.
Eduardo Maranhao: To further review, but as of today, we estimate the amounts between $50 million to $100 million of Capex commitments, which would be attributable to us.
Speaker Change: Okay. Thanks, a lot.
Speaker Change: Thank you.
Speaker Change: I will go and take our next question.
Speaker Change: Just give us some amendments.
And the next question comes from the line of Alexander <unk> from weather recession Advisors. Your line is open. Please ask your question.
Speaker Change: Excuse me Alexander Your line is open please ask your question.
Speaker Change: Good afternoon, thanks for the time.
So taking a look at at March three what are your plans.
Speaker Change: It for that.
Speaker Change: Bill unit and is there a particular driver that would lead you to select our mark III over a mark too.
Speaker Change: Yeah, Hi, Aleksander so when it comes to the Mark III.
Speaker Change: 5 million tonne per annum unit and as you correctly point out its a new built from scratch and not a vessel conversion.
Speaker Change: Hence it has a longer construction time, a higher capex per tonne and it's obviously a very large capacity.
Speaker Change: Hence we are unlikely to order our mark III.
Speaker Change: Speculation, we would only do that against a firm contract.
Speaker Change: So there are currently no immediate plans to these sorts of units for the reasons just mentioned that.
Speaker Change: It's expensive it takes longer and based on the yard capacity of the shipyard, we would utilize could likely deliver at the very end of 'twenty.
Speaker Change: Late 'twenty nine early 2013 quarter today, so we see a better value proposition and going for the March two.
Speaker Change: Do you think that could change that to see if we do a back to back contract, Florida, Mark III that we deem to be attractive.
Speaker Change: Alright, Thank you for any additional color there.
Speaker Change: And then for my second question looking at Macaw. So back in Q1, you mentioned you guys would evaluate separate listing in sometime towards the end of 2024, what are your plans with Mccall stand right now and has a listing in the cards for 2025.
Speaker Change: And so yes, you're right that as these things go.
Speaker Change: There is always some tweaking to the design when you go from the <unk> phase two light hydrocarbon testing.
Speaker Change: As we explained in the presentation. The unit has now sold its first ISO containers from flare gas production that we are.
Speaker Change: Tweaking the unit to better deal with the significant intra day changes in gas quality flows from.
Speaker Change: U S shale gas and once we feel that that's in a more stable territory, we will revisit the fault of a separate listing our business separation of that unit.
Speaker Change: And that.
Speaker Change: Is now a tiny 25 events that we have had industrial interests that have been on high to inspect the unit and the technology and express an interest in continuing to.
Speaker Change: Or to gain exposure to the technology and Macau as a business. So that's an alternative to a separate listing.
Speaker Change: Yeah.
Speaker Change: Alright, Thank you I'll turn it back over.
Speaker Change: Thank you. Thank you.
Speaker Change: Yeah participants as it all lined up if you wish to ask a question today. Please press star one one on the telephone keypad.
Speaker Change: And now I'm going to take our next question.
Speaker Change: And the question comes from the line of them back from B Riley Financial Your line is open. Please ask a question. Thank you.
Speaker Change: Carl hired Wonder how are you.
Speaker Change: Well thanks, how are you.
Speaker Change: Good thank you.
Speaker Change: You've got a second mark too.
Speaker Change: Slated for 2028, what does the backlog of potential credible inquiries look like and to give you a sense as to what the cadence would be as you rollout further LNG.
Speaker Change: There's plenty of stranded gas reserves in the world and I think several of the projects we are in discussions for us.
Speaker Change: For more than one unit, including the discussions we've been having in Argentina.
Speaker Change: So some of these reserves, it's just a matter of getting to first gas and once you do you can see expansion that's true for Bp's plans on the tour to field, whether its an ethylene D or not for the expansion plans, it's true in Argentina and in several other locations that were currently in discussions for so.
Speaker Change: I think in addition to new developments, which there are plenty plenty of there is also expansion of existing.
Speaker Change: And that we see as the biggest potential.
Speaker Change: And as alluded to earlier on one of the previous questions. Here. There are some operational synergies that has a real cost advantage to the gas resource owner, if you put more than one unit and relative proximity when it comes to the marriage Offloading crew boats tugboats spare parts and so forth.
Speaker Change: <unk> saving on a dollar per <unk> basis.
Speaker Change: Which makes the <unk> alternative even more competitive.
Speaker Change: So we think that the fact that there are more people now looking into for Lindy and the design and operational track record are growing growing in acceptance is one that we find to support our growth ambitions and also the fact that we're constructing this is around half the cost of where you're seeing.
Mental capacity being brought on stream in the U S.
Speaker Change: Sure.
Speaker Change: And just touching on an earlier question of those inquiries.
Speaker Change: Are there enough.
For greater capacity than three and a half empty.
Speaker Change: Yes, it really depends on two things the size of the reserve and the flow the gas flow.
Speaker Change: So.
Speaker Change: The GTA project Phase one was originally scheduled to be 10 M Tpa.
Speaker Change: Give me is just around three five of production. So then theoretically there is plenty of capacity there and work on my third we're talking our IPF and LNG, Argentina are talking about 15 to 20.
Speaker Change: Tpa.
Speaker Change: You have several fields like these not several features like Walker, Martha but several feels like the DTA and around the world. So it sort of 25 to 30 Tcf that supports.
Speaker Change: Easily 10 empty pair of annual production.
Speaker Change: The answer is yes.
Carl: Okay. Thank you Carl.
Carl: Thank you.
Carl: Yeah.
Speaker Change: And now we'll go and take one last question for today.
Speaker Change: And the question comes from the line of Charles <unk> from <unk>. Your line is open. Please ask your question.
Speaker Change: Alright, thanks for taking my questions.
First in the summer you signed an Epsilon GE agreement with MLP C. Can you just give us an update on how that conversation is going and are you still thinking we could see a Nigerian LNG project sanction by year end.
Speaker Change: So.
Speaker Change: You are right behind the development agreement with MPC and the target in the project development agreement was by yearend.
Speaker Change: That seems less likely to us that the Nigerian projects will move forward within this year, mainly because.
Speaker Change: I don't think they are having right now are project that's suitable for the affluent is available.
Speaker Change: But there's certainly enough reserves in Nigeria and under in Mpc's control that they could utilize a mark too but to see that happen within 24, we see us.
Speaker Change: Unlikely.
Speaker Change: They are one of the contenders when we say that we think will have the unit contracted within 25.
Speaker Change: Got it so then.
Speaker Change: And about other contenders back to Argentina.
Speaker Change: What needs to happen to get the land based infrastructure up to speed to handle a second <unk> unit and more importantly, give us sense of how long that might take.
Speaker Change: So what you need is a designated pipeline because he lives utilizing spare capacity in the existing network, but it's not sufficient spare capacity in the existing networks to go beyond the hilli.
Speaker Change: So if you want to expand beyond that there needs to be a designated pipeline strong walk on water to the LNG location.
Speaker Change: Work on search pipeline has started.
Speaker Change: We estimate.
Speaker Change: Together with the local pipeline companies, our construction time of around two years the plan would be to make the pipeline alongside an existing oil pipeline. That's currently under completion, so right of way.
Speaker Change: The actual location of the pipeline has been.
Speaker Change: <unk> identified and it's a matter of getting financing and <unk>, it's a bit of a chicken and the egg situation because there's no pipeline without incremental level of <unk> and there is no incremental level of <unk> without the pipeline. So they need to be developed in tandem, but it takes shorter time to construct the pipeline and therefore LNG.
Speaker Change: Okay. That's very helpful. Thanks for thanks for taking my questions.
Speaker Change: Thank you.
Speaker Change: Dear speakers there are no further questions for today I would now like to hand, the conference over to.
Karl Fredrik: Karl Fredrik taobao for any conclusion. Thank you.
Karl Fredrik: Thank you all for dialing in and it's been a very eventful quarter. We're very pleased with the development and I think we have a very clear.
Speaker Change: Lucas for.
Speaker Change: They are ahead.
Speaker Change: We are working hard to execute thanks for dialing in and listening to where we are and we look forward to talking to you next quarter. Thanks, again and have a good day.
Speaker Change: That does conclude our conference for today. Thank you for participating you may now disconnect have a nice day.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change:
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].