Q1 2025 Golar LNG Ltd Earnings Call
[music].
Okay.
Welcome to the Golar LNG limited first quarter 2025 presentation. After the slide presentation by the CEO called Fredrikstad Bowl. So yes, we'd like to my right now C T O.
Speaker Change: Oh, 10 skull and chairman Tor <unk> trim that would be a question and answer session information on how to ask a question will be provided then.
Speaker Change: This time all participants are in a listen only mode. I will now pass you over to Carl Fred weeks Toggle called please go ahead.
Speaker Change: Thank you operator, and welcome to Golar Lng's Q1, 2025 earnings results presentation. My name is Karl Fredrik Stubble CEO of Golar, LNG and I'm very pleased to be accompanied today by our chairman Mr. For all of the time, our CFO Eduardo more now and our Chief Technical Officer, Mr. Martin Cheung Super Center desk.
Speaker Change: <unk> results.
Speaker Change: Before we get into the presentation. Please note the forward looking statements on slide two.
Speaker Change: As normal we start on slide three with an overview of Golar today.
Speaker Change: Golar is now a focused <unk> company, we own three units of which two is on the water and one is on the conversion.
Speaker Change: The key events of the quarter, while securing all 20 of our charters.
Speaker Change: One for our F O N G Healy falling following the end of our current chartering Cameroon in July next year.
Speaker Change: As well as entering into definitive agreements for 'twenty, our charter for Mark to U S LNG under construction.
Speaker Change: As announced on our Q4 call. We have now fully exited LNG shipping with the sale of the Golar Arctic and our sale of the equity stake in oven are LNG.
Speaker Change: We currently have a market cap of around $4 billion total net debt or shy of 800 million and that's truly delivered net debt to EBITDA of around two eight times.
Speaker Change: Our strong cash flow visibility solid balance sheet and market, leading position as the only premium provider of LNG as a service.
Speaker Change: The company up for continued attractive LNG growth.
Speaker Change: We have three excellent redesigns available for growth and we will elaborate on our growth ambitions as we go through todays presentation.
Speaker Change: Turning to slide four and a focus on Hilli, which is still the best performing F LNG globally.
Speaker Change: Hilli continue their market, leading 100% operational uptime during the quarter.
Speaker Change: Hilli has now delivered 132 cargoes since contract commencement in 2018 or.
Speaker Change: Or more than $9 2 million tonnes of LNG produced.
Speaker Change: On may 2nd all C piece for her 20 air redeployment in Argentina was concluded and final investment decision was given.
Speaker Change: This secures five $7 billion of EBITA backlog before commodity oxides.
Speaker Change: We have now designated a dedicated team of project and operations people to the redeployment scope for he leaves the planned vessel upgrades in transit from Cameroon to Argentina to foresee.
Speaker Change: Will it take for 20 years of on site operations.
Speaker Change: Yeah.
Speaker Change: On slide five we focus on our second epilepsy, the gaming, which is in her final stage of commissioning and to start or 'twenty air charter for BP offshore Mauritania and Senegal.
Speaker Change: Yeah.
Speaker Change: The commencement of operations they will activate the vessel on our P&L statements Golar.
Speaker Change: Golar share of the contractual EBITA is $151 million based on 90% capacity utilization.
Speaker Change: Any production above such level will translate into a pro rata increase in Golar shares of EBITA generation Bugging me.
Speaker Change: Following the commercial reset announced in August last year, Golar have invoiced $196 million in pre C. O D payments from the GTA upstream partners.
Speaker Change: This amount is recognized on our balance sheet and will be amortized over the contract duration.
Speaker Change: We have now successfully offloaded to LNG cargos and expect <unk> to remain on track within this quarter.
Speaker Change: That should mark the start of the 20 year contract period.
Speaker Change: The picture on the bottom left is from Thursday last week, where we attended an official statement by the precedence of Senegal, and Mauritania to the GTA hub.
Speaker Change: With senior management from BP Cosmos, SMH, petrosyan, marking the introduction of Senegal, and Mauritania LNG exporting countries.
Speaker Change: Turning to slide six for an update on our mark to excellent conversion.
Speaker Change: The conversion of the LNG carrier Fuji in tier three 5 million tonnes per annum Mark to U S. LNG is well into construction.
Speaker Change: During Q1, the Fuji arrived at the shipyard in China.
Speaker Change: The vessel has now been divided into and skidded onshore.
Speaker Change: The liquefaction plant will be built on a new midship section is well underway and a significant portion of our long lead items have arrived at the shipyard ready for installation.
Speaker Change: The project remains on schedule for delivery by year end 2027.
Speaker Change: On may 2nd simultaneous with the final investment decision for the F. LNG Hilli charter in Argentina.
Speaker Change: We entered into definitive agreements for 'twenty Air charter for the Mark to you to operate alongside <unk> in Argentina.
Speaker Change: The contract is subject to the same C piece as far the helix when we entered into her definitive agreements in July last year.
Speaker Change: This C piece include environmental assessment.
Speaker Change: Export license.
Speaker Change: Rigi protection and F and final investment decision by the partners.
Speaker Change: All the C piece are expected to be lifted within 2025, and we expect the relevant approvals to benefit from the recent daily process.
Speaker Change: The capex to EBITA for the Mark to you is around five and a half times before commodity upside for 'twenty Air charter periods.
Speaker Change: With a further five year extension option and the charterers favor.
Speaker Change: Okay.
Speaker Change: On slide seven we have visualized these substantial charter developments on our slides.
Speaker Change: Our contract backlog now stands at more than 60 years of combined contract backlog across our three F. <unk>.
Speaker Change: Or in dollar terms, we have an EBITA backlog of approximately $17 billion before commodity exposure.
Speaker Change: The existing fleet is now fully contracted.
Speaker Change: And we are progressing towards our express targets to transform into a market leading infrastructure company with attractive commodity upsides.
Speaker Change: In the next section we will elaborate further on the key attributes of our F LNG charters in Argentina.
Speaker Change: So turning to the next section in slide number nine we illustrate the LNG value chain and southern energy its role in introducing Argentina as an LNG exporting nation.
Speaker Change: As part of the Argentina, Argentina, Southern energy has secured fixed price gas sales agreements for 20 years from the upstream partners all SASSA to provide the project with natural gas sourced from the walk on water onshore field in Argentina.
Speaker Change: SASSA will be irresponsible to facilitate for a dedicated pipeline to bring the natural gas from the walk on water to the F. N G location in the Gulf of somebody else.
Speaker Change: A distance of about 500 kilometers.
Speaker Change: This will equate into fixed pipeline fee to SASSA.
Speaker Change: SASSA will then be responsible for chartering in operating the <unk> as well as marketing of the gas.
Speaker Change: Hence cfo's responsibilities include all activities to be taken from the walk on water until LNG is produced and ready for export.
Speaker Change: The export point price is referred to as free on board.
Speaker Change: The difference between free on board prices M. B LNG prices you typically recognized on your screen if the shipping costs.
Speaker Change: The production sites to its destination of consumption.
Speaker Change: The destination price is referred to as delivery X ship or deaths pricing as highlighted on the site.
Speaker Change: As part of the Charterers Golar will receive 25% of all achieved LNG prices above $8 per M of Btu and <unk> price.
Speaker Change: Hence when considering the upside the element the applicable methodology is to consider desk prices.
Speaker Change: Les one to $2 per <unk> and shipping costs.
Speaker Change: In the current market Tcf and J K M spot prices are trading around $12. Hence today, there is a two to $3 upside above the eight dollar thresholds if the project was producing today.
Speaker Change: Okay.
Speaker Change: Turning to slide 10, and some of the contract highlights.
Speaker Change: Both vessels have a 20 year contract term.
Speaker Change: Hilli will have an annual EBITDA of $285 million and $400 million Mark too.
Speaker Change: Opex is pass through for both vessels.
Speaker Change: Both EBITA tariffs are subject to a CPI adjustment equivalent to 30% of U S. CPI from your six.
Speaker Change: Both vessels have the same upside element of 25% above $8 Fob.
Speaker Change: And combined the two contracts provide golar with an EBITA backlog of $13 $7 billion before the mention of CPI adjustments and the commodity upside.
Speaker Change: Okay.
Speaker Change: Turning to slide 11, and further elaborating on the commodity upside element of the charters.
Speaker Change: Yes.
Speaker Change: As explained Golar will have a 25% oxide above eight.
Speaker Change: For every dollar above we have an annual EBITDA of around $70 million.
Speaker Change: Over the contract lifetime that with equivalent to one $4 billion of EBITA backlog for every dollar.
Speaker Change: Achieved pricing is above it.
Speaker Change: Importantly, this calculation is based on monthly achieved prices.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: We have also introduced a limited downside elements.
Speaker Change: Where golar gave a temporary discounts should annual average fob prices be below seven and a half and down to $6.
Speaker Change: This is capped at a total exposure of $105 million over two years, which is equivalent of $210 million.
Speaker Change: Hence the total commodity exposure for the contract has a maximum downside of $210 million in return for no cap on the upside.
Speaker Change: If this contract was in place over the course of the last five years, you can see in the table on the bottom right.
Speaker Change: That we would have meaningful additional EBITA above the contracted amounts.
Speaker Change: If you take the extreme example of 2020 to.
Speaker Change: The commodity element alone will contribute.
Speaker Change: One 7% to $2.1 billion of additional EBITA to Golar, if the contracts were in place at that time.
Speaker Change: Even today, if the contracts were operational today, we would see an additional contribution above the contracted amount of an additional $250 million.
Speaker Change: So to summarize this simplistically for every dollar fob prices are above eight golar makes an additional $70 million of annual EBITDA.
Speaker Change: Turning to slide 12, and a further commodity exposure that's in built into the contracts.
Speaker Change: Golar is a 10% shareholder in southern energy alongside our upstream partners Pan-american wipe.
Speaker Change: <unk> P F.
Speaker Change: Tom Palmer here and Harbor energy.
Speaker Change: Hence golar makes an additional 10% of commodity exposure. This is this has no downside or upside cap. So the true truly aligns shareholder.
Speaker Change: We're a $1 change in the gas price impacts golar EBITA generation by around $28 million.
Speaker Change: Hence if you combine the $70 million upside tariffs and the 28 million dollar equity ownership one dollar change.
Speaker Change: <unk> provides golar with approximately $100 million of EBITA oxides.
Speaker Change: This is further illustrated on page 13, where you can see our EBITA buildup.
Speaker Change: Helios a base tariff of $2 85, Mark two or 400 combined that's 685.
Speaker Change: The downside element, we have is linked to our equity ownership in SASSA and the rest is upsides.
Speaker Change: Okay.
Speaker Change: Every dollar above eight equates to around $100 million every dollar below is the downside of around 28.
Speaker Change: We see this as a highly attractive risk reward.
Speaker Change: And also in light of current and future LNG prices, we expect meaningful additional EBITDA contribution from the commodity elements.
Speaker Change: Okay.
Speaker Change: Turning to slide 14.
Speaker Change: Contracting in Argentina has historically not been truly without risks.
Speaker Change: And we have gone to great extent to look at risk mitigation, both regulatory and legally in the framework supporting the charters.
Speaker Change: Some of the highlights include English law for all charters.
Speaker Change: All payments are made in U S dollars.
Speaker Change: The millet led government of Argentina has introduced several regulatory frameworks.
Speaker Change: Domestic investment in Argentina.
Speaker Change: And we are pleased to have received the support of both the state and local authorities to achieve the first ever therapy are non interruptible LNG export license in the case of <unk> Hilli.
Speaker Change: And we have also been accepted to their large investments incentive scheme under the legal protection, which was a law introduced last year.
Speaker Change: The important highlights of the Rigi includes certainty and regulatory stability for the duration of the project.
Speaker Change: We cannot be subject to any new national provincial or munis municipal taxes.
Speaker Change: And we have full freedom to repatriate profits dividends and capital during the life of the contract term.
Speaker Change: These are the same protections that Arctic sea piece that we will meet for the Mark to charter.
Speaker Change: Turning to slide 15, and looking at the global LNG market and how our SASSA contracts are placed in the wider scheme of the market.
Speaker Change: When entering this year the LNG market stood at around 430 million tons, where the USA is the largest current producer with a 23% market share.
Speaker Change: More importantly, the significant expected growth in the coming years is driven by volumes out of the U S.
Speaker Change: Hence we want to identify ourselves with projects that are highly competitive versus U S exports as the marginal producer.
Speaker Change: If you look on the cost curve on the right hand side, you can see that the delivered price of U S. Export projects is north of $10 per Mb tier.
Speaker Change: Before them further elaborate on slide 16, how the recently announced Argentina, golar contracts stack up versus U S liquefaction projects.
Speaker Change: There are some interesting data points to note.
Speaker Change: First and foremost the gross tariff that we have achieved is significantly higher than that the recently entered into U S liquefaction projects.
Speaker Change: The EBITA Terry if you typically see in the U S is net of Opex and maintenance costs hearing around $2, whilst we have secured around 245.
Speaker Change: The Capex per ton is currently sitting around $1 billion for U S liquefaction projects versus $600 million in the case of the Mark to.
Speaker Change: Inflation adjustment is typically hovering between 20 and 30% in the U S, 30% for our contracts in Argentina.
Speaker Change: In addition, theres no commodity upside for U S liquefaction tolling arrangements, whilst we have the mentioned 25% above $8 of F&B.
Speaker Change: Hence what this these characteristics mean, well if you have a higher EBITA tariff and the lower Capex per ton you have a higher return on capital employed.
Speaker Change: Our commodity oxide within the tariff provides us with strong upside participation without sports cargo risks.
Speaker Change: The fixed price gas sales agreements for 'twenty Ers provides SASSA with a call option on international LNG offtake prices for 20 years.
Speaker Change: I think no one knows exactly where the gas prices, but you know it will be volatile and we are there to capture 25% of monthly volatility.
Speaker Change: The Opex pass through combined with our 30% CPI adjustments provides for improved inflation protection versus U S liquefaction projects.
Speaker Change: Hence all in all we believe we compare very favorably to the alternative infrastructure investments within LNG liquefaction.
Speaker Change: This is further illustrated on slide 17 star.
Speaker Change: Starting off with the graph on the far left.
Speaker Change: You want to have as lowest possible capex per tonne and as high as possible average tariff in dollars per M and btu basis, and compared to some of the listed U S. Liquefaction alternatives, we compare favorable on both measures.
Speaker Change: Then you want long term cash flows cash flow visibility. We now have 20 are across all of our three assets and stops the remaining average life of our contracts.
Speaker Change: Lastly to the far right, we've lifted up capital markets pricing on a per on the liquefaction capacity basis.
Speaker Change: If you take total EV and avoid all over liquefaction capacity in operation you can see that Golar is trading at just north of $1 billion per tonne, whilst our U S colleagues are trading more favorably.
Speaker Change: If you work to include a fairly significant.
Speaker Change: Growth program across all the three companies you can see that the capital markets pricing.
Speaker Change: Further reduces in the case of Golar to shy of $900 million per tonne.
Speaker Change: Whilst comparing to our our U S listed peers have a significantly higher pricing.
Speaker Change: If you were to put that pricing into golar share price that would be a very meaningful pickup from our current capital markets pricing.
Speaker Change: Okay.
Speaker Change: Moving on I'm, turning to business updates on slide 19, the highlights of the quarter across the BD. The Parkman is obviously the final investment decision for healing the definitive.
Speaker Change: Agreements for the Mark to.
Speaker Change: However, we continue to see strong progress on further <unk> commercial development.
Speaker Change: There are very few.
Speaker Change: Yard slots that can deliver within the 2000 twenty's.
Speaker Change: And we now see increased attention from the project projects that lost out on the Hilli under Mark too.
Speaker Change: We continue to target opportunities with competitive wellhead gas to secure an attractive base tariffs with commodity upside participation.
Speaker Change: We are in detailed commercial conversations across our different vessels the sign Mark one two and three.
Speaker Change: And some of these discussions include projects, where the charterer may want an equity participation in there for Lindsay.
Speaker Change: Okay.
Speaker Change: I'll now hand, the call over to our Chief Technical Officer, Mr. Martin Cheung to further elaborate on our service offering and the different designs available for growth.
Speaker Change: Good morning, good afternoon.
Speaker Change: And Golar, we have three different Avalon Geoscience, Mark Wong the Mark too on the Mark III. These.
Speaker Change: These range in LNG liquefaction capacity from around 2 million tons per annum up to a maximum of $5 4 million tonnes per annum. This depends on LNG configuration feed gas properties and ambient conditions at the site.
Speaker Change: The Mark one at Ctrip is a highly successful design with two units on the water and a stellar track record for the Hilli during its contract in Cameroon for Perenco.
Speaker Change: Meanwhile, our first market to conversion is progressing well at CMT Raffles and EPC contract contains an option agreement for a second vessel.
Speaker Change: Our Mark III reflects years of innovative engineering and Samsung some things work, leading <unk> track record.
Speaker Change: Common to all three of the science is black and Veatch pre co liquefaction technology, enabling golar to harvest vital lessons learned between <unk> designs.
Speaker Change: Most important commonality is however, the inputs and leadership from Golar.
Speaker Change: Class projects and operations teams.
Speaker Change: With helix and the signing of definitive agreements for democracy in Argentina. We are now advancing work with our contractors to confirm updated pricing schedule for our LNG the sites.
Speaker Change: We've also completed ship inspections for potential donor vessels for either Mark Wong Ora, Mark too and we are confident that we can secure a conversion candidates with fujitsu LNG storage capacity or higher at an attractive price.
Speaker Change: Furthermore, we are in discussions with long lead equipment suppliers for slot reservations or preorders to ensure that lead times for critical equipment will support the overall schedule for our next project.
Speaker Change: The work we are doing now will enable us to proceed with at least one of LNG EPC Awards.
Speaker Change: This year.
Speaker Change: And whatever design, which use within the 2000 twenty's.
Eduardo: With that I'll hand over to our CFO, Mr. Eduardo <unk> for the Q1 group results.
Eduardo: Thank you Morten and good morning, everyone.
Speaker Change: I'm pleased to provide an overview of Golar <unk> financial performance for the first quarter of 2025 move.
Speaker Change: Moving to slide 22, let's go through some of the key financial highlights of the quarter.
Speaker Change: We achieved total operating revenues of $63 million ethylene J tariffs, reaching $73 million in the quarter.
Speaker Change: Total F LNG tariff in the last 12 months ended in Q1 reached $336 million.
Speaker Change: We would refer to total LNG tariff to illustrate that the total revenue generated from ethylene G Healy, including realized gains from TTS Brent linked fees.
Speaker Change: In addition to dish Gimme has it started to contribute to our cash flows and as of May 2025, we are having voice at around $196 million of <unk> under the commercial reset agreements.
Speaker Change: Most of which has already been received.
Speaker Change: <unk> does not show in our P&L and is currently being recognized on the balance sheet in <unk>.
Speaker Change: Total EBITDA reached $41 million in Q1, largely driven by lower Brent Mttf prices.
Speaker Change: Total EBITDA for the last 12 months ended in Q1 was $218 million.
Speaker Change: This quarter, we reported net income of $13 million.
Speaker Change: In line with the previous quarter. This figure is inclusive of a total of $32 million of noncash items, such as adjustments in the value of embedded DTF and brain to derivatives, we think the hilli contract as well as changes in our interest rate swaps.
Speaker Change: Our liquidity remains strong with approximately $680 million of cash on hand at quarter end I'll talk more about these and other initiatives on the financing front in the next much.
Speaker Change: Lastly, we're pleased to declare a dividend of 25 cents per share this quarter with a record date of June 3rd and payments scheduled for June detention.
Speaker Change: So this equates to around $105 million per year on a run rate basis.
Speaker Change: Now turning to slide 23.
Speaker Change: We now take a closer look on our debt position at the end of Q1, we had just under one and a half a billion dollars of gross debt when adjusted for our 70% stake in gaming when an asset level basis based on the existing $17 billion EBITDA backlog that Karl spoke about before our units are still significantly under.
Speaker Change: <unk> leverage considering the cash flow visibility beyond 2045, with further growth from increased capacity utilization as well as commodity exposure.
Speaker Change: Last March we signed a one point to $2 billion debt facility to refinance the ethylene G gaming with a consortium of leading Chinese leasing companies. This facility features a tenor of 12 years and a 17 year amortization profile.
Speaker Change: Upon closing and repayment of the existing debt facility, we expect to generate net proceeds of approximately $530 million of which 70% of these proceeds or an amount equivalent to $370 million will be released to us.
Speaker Change: We are currently working on the remaining closing conditions, which includes third party stakeholder approvals and we expect that closing could take place around summer.
Speaker Change: In addition to these initiatives and to further evaluate that.
Speaker Change: Ladies and gentlemen, please continue to stand by your conference will resume shortly.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, please continue to stay.
Speaker Change: By your conference will resume shortly thank you for your patience.
Speaker Change: Okay I think.
Speaker Change: You May now hear me back so if we go back to slide 23.
Speaker Change: We now take a closer look on our debt position.
Speaker Change: At the end of Q1, we had just under one and a half billion dollars of gross debt and adjusted for our 70% stake on gaming.
Speaker Change: When an asset level basis based on the existing $17 billion backlog that Carl mentioned before our units are still significantly under levered, considering the cash flow visibility beyond 2045, with further growth from increased capacity utilization and commodity exposure.
Speaker Change: On March we signed a $1.2 billion debt facility to refinance LNG gaming with a consortium of leading Chinese companies. This facility features a tenor of 12 years and a 17 year amortization profile.
Speaker Change: Upon closing and repayment of the existing debt facility, we expect to generate net proceeds of approximately $530 million of which 70% of these proceeds or equivalent to $370 million will be released to US. We are currently working on the remaining closing conditions, including third party stakeholder approvals.
Speaker Change: And expect to close around the summer.
Speaker Change: In addition to these initiatives and to further evaluate that optimization alternatives. We have completed the rating process of the company with key rating agencies, allowing us to tap the capital markets in a more efficient way to ship.
Speaker Change: If we look at Healy for example, we have an EBITDA backlog of more than $6 billion, which gives us plenty of room to optimize its financing from the current levels of around half a billion dollars.
Speaker Change: In addition to that Mark Chu remains fully unencumbered and so far we have invested around $700 million of equity in each construction.
Speaker Change: So moving to slide 24.
Speaker Change: We currently maintain a net debt position of around $800 million, which is projected to increase to approximately $2 3 billion upon.
Speaker Change: Upon completion of the market your remaining Capex by 20 to 28 with Mark Chu fully operational or anticipate that fully delivered run rate EBITDA is expected to reach $835 million before any further commodity upside this positions us with a robust leverage ratio of two eight times.
Speaker Change: Net debt to EBITDA supported by clear earnings visibility extending through 2045.
Speaker Change: Assuming a conservative five times net debt to EBITDA ratio and leveraging on our secured long term contracts the refinancing of our existing debt under optimize the terms could potentially unlock over one $9 billion of equity does move aims to release additional equity accelerating our growth initiatives include.
Speaker Change: The funding of additional <unk> units.
Speaker Change: Once these units are contracted financing at similar leverage ratios of around five times EBITDA becomes viable. This approach allows us to efficiently recycle capital facilitating sustainable and self funded expansion.
Speaker Change: That concludes my update I'll now hand, the call back to our chairman Tor Olaf trains.
Speaker Change: Yep.
Speaker Change: Hi.
Speaker Change: I'm not going to bother you for a long time, it's probably 10 years since I've been involved if cost plateau level here for your desk given it lyrica whatever happened in his 25 years is that you cover and also give some credit to the people who have.
Speaker Change: Effectively create to this company over the last years.
Speaker Change: I think she tankers took overall spread as a conglomerate in 1999 to Thompson.
Speaker Change: Turn it into an R&D growth to weaken we have the ambition that it indeed was a high commodity groups and it seems like we have a right because at that time. It was around 100 charter ships I think today, we are more than 600 after the numbers.
Speaker Change: Jeremy I think brief dramatically in a period of time.
Speaker Change: Correct.
Speaker Change: So you are correct.
Speaker Change: Probably a 15 yesterday early in many ways.
Speaker Change: And that was part of the problem.
Speaker Change: We entered the wrong, we decided to go for shipping people. We went to confront savi good changed market be able do commodity shipping rates booked so edge people told me, we're crazy, but really in three four years.
Speaker Change: The other situation.
Speaker Change: Rare.
Speaker Change: The people follow us a mirror effect the Turkey people in the same kind of group.
Speaker Change: And the return went down so we've had rather do something else. We then had some good technical experts at the company.
Speaker Change: They looked LNG terminals carriers into terminals.
Speaker Change:
Speaker Change: And we met with precedent rely in Brazil, and you wanted to be independent I believe in gas and in some way we became in Fsrus company. Good returning to beginning same thing have brand accelerated B V live almost Eric everybody kept mouth threat adderall ceremony there either.
Speaker Change: And when we came to 2040 and a major transformation must necessary gallon girt on F&B concepts from 2010.
Speaker Change: However drove a big dispute join Mr Fredriksen and myself.
Speaker Change: I'll, let Jim my departure from seed bankers within our range to buyout the wrong part date millions billion stake from.
Speaker Change: From a feedback gets a bit good support from institutional holders and then went ahead first Declan D order.
Ross: At Ross.
Speaker Change: The challenging start.
Speaker Change: <unk> been oil market typically trended for Ken.
Speaker Change: Got the contract with Perenco on the first vessel.
Speaker Change: And we also hired the share amount from at BP from BG, Frank Zappa was helpful. In setting up the second contract, which we then got because once in your script, but.
Speaker Change: Of late conclude David V P.
Speaker Change: As prices fell in 2014, we also economy went into the proper cycle and by granting alone unattended five year public purchase contracts have you ever actually produce widespread at that time.
Speaker Change: Including the Fsrus business the carrier business, a part of our business everyday there is that if you're going to achieve something is well we have to focus.
Speaker Change: We then decided to focus.
Speaker Change: We divested the crude company, we divested appropriate station in Britain, and LNG prices came up again, because the business was not that good in a longer a mirror of the divested the carnival.
Speaker Change: The carriers are in.
Speaker Change: <unk>.
Speaker Change: When the market both strong is albeit we were stuck with it.
Speaker Change: Some LNG efforts.
Speaker Change: And we had already at that time.
Speaker Change: Red Robin I'll have done in the last year built the largest effort in the company in the world.
Speaker Change: Yep.
Speaker Change: I'm also proud to say that bring gorilla or the people who have no enough in the LNG business longest which I consider to be the best oil company and the burnt by the computer of the run their business.
Speaker Change: They know now from 2012, I think and I think they've done business with us from the fight finished 2018 and older.
Speaker Change: They are also our largest shareholder.
Speaker Change: And Theyre also as of last week, we have centered on the board.
Speaker Change: No.
Speaker Change: So then.
Speaker Change: Paul and the team concluded the block over $17 billion spanning over 20 years is that the board is appointed at the latest deal has resulted in a higher share price.
Speaker Change: To some extent you probably are.
Speaker Change: It's the same board are there today, who bravely ridiculous private equity offers.
Speaker Change: Pretty close to where we are today at the time of an award of broken his company, but from the 25% of the.
Speaker Change: What it is today because we knew at that time that we can deliver more value to shareholders over time.
Speaker Change: That's safe.
Speaker Change: That said if you wanted to run the growth company you need a retirement effectively price degradation crucial to continue to grow.
Speaker Change: And if public investors are unwilling to wait two years before this strong cash flow comes in and the board is convinced that alternative structure exists for this company long profitability, which I think Randall interbedded weighted by dwell and his team is to try to look at the bond financing structure, which clearly will.
Speaker Change: And the homestead equity return in this company in the World. If you look at the book came in coming last time, and I think we see from interest rates for it already the interest private equity having it barring an order backlog of 17 billion as I said last time, there were clubs to paying what the share price yesterday. They found the order back.
Speaker Change: August four times bigger so I think the number is significantly higher.
Speaker Change: But this is not what the board really want I think the board wants to continue to build this company.
Speaker Change: We have a confirmation of the Mark to later on this year, which it has been.
Speaker Change: Told the investors. We also have the possibility of concluding a commitment progressed before I'm five went in for <unk>.
Speaker Change: <unk> may be five we'd interfered with Eva overreact and being shortly going to build more.
Speaker Change: We are undoubtedly Harrison diallo needed shirt and theyre in the business set for massive massive growth.
Speaker Change:
Speaker Change: I think didn't depicted in fact lake Charles we are in a pretty strong breakout I don't see any competition behind us.
Speaker Change: And I think if you look into what happened into F. Jethro industry. It's grew effectively from two units to 250 units in 40 years I think we will see very similar track here and they're easily if the same it filled over across the economics to build floating units than it is to build this.
Speaker Change: Massive structure rebuild into on the edge of the Lambeth and Ethernet and it provides significant more flexibility given you can move things around you can offer take higher political risk by going to a country. If you couldnt go to b to fixed installation.
Speaker Change: Martin former bolster fan of AGA and they told me when I was Cherokee and don't focus solely on money. If you bring the right people together and you have a good beef if I D money will ultimately come to your big time.
Speaker Change: He started unlike increase you started five years ago and today, the cop 20 billion, who started from scratch and torsten probably have unfortunately more than 10 billion I. It was wrong because you have a good idea and added great people.
Speaker Change: It's exciting to have an earnings secured a two and a half million dollars a day for the next 20 are starting advantage seventh mandate with what is truly motivating me as the chairman and his team is still a massive massive opportunity. If you have to grow this company along with some of the best people at least I am.
Speaker Change: Verburg together with another some of them are extraordinarily if you take for instance.
Speaker Change: About the chief executive would be averages company I would say that probably by far.
Speaker Change: I think our problem Mercury 40, 50 different people are there's clearly among the top two or three guys <unk>.
Speaker Change: As a chief executive Fantastic Guy I think Martin all great financial most demand.
Speaker Change: We are working strongly on the financing.
Speaker Change: If it <unk> CTO.
Speaker Change: 10 years, it drifting borders and I'm trying to Commonwealth with innovation, where Marcus Brown, who is the guy who created the whole Argentinian farmers to get the real coffee undrawn.
Speaker Change: And believable people get it I'm not a guy who operates a Lan also the limit you have perfect record got Ted debit order deliberately BP better than other people can do their processes.
Speaker Change: Fantastic key metrics here on the picture here.
Speaker Change: Describes the whole Golar team I think is unbelievable and I think this in Monovisc forget the $17 billion asset we have the smartest people got the same people.
Speaker Change: Israel Company SPM said that we were going after if indeed it may just died and predict crossover it it will never happen. That's the same unit two in several years have delivered every day production and according to schedule there are no downtime.
Speaker Change: I'm Super excited by Walter Comerica, but I'm Super excited because of the opportunities and the team we have together, but the reason why the opportunity is so much better now is affected we had $17 billion in backlog you had close to a billion to finance to grow going forward further.
Speaker Change: I think when you can find a business everybody hates stick on AR.
Speaker Change: Hopefully industry. These days, but I think the latest statistic for me al.
Speaker Change: Electric consumption is going to end up at around 4% year on year.
Speaker Change: Although that effect.
Speaker Change: 11% is for frontier a renewable is down 3.1% gas is a major driver with 8% I think if you are in the gas. If this if we have a massive growth area ahead of us and.
Speaker Change: And if you can I think we can really do something monumental there I think if you build assets for Trinity are contracts at five times five clients plus EBITDA and add on top of that you haven't upside on the equity which in this case, Argentina posted 30% if gas price tags.
Speaker Change: Thank you at creates its uptake absolutely unique.
Speaker Change: I don't expect to see this.
Speaker Change: From day to day, but I think as you go along this story it run growth for most of the people. It took US 25 years to get there I'm sure. It will take three to five years for us to have any serious competition if business as well I think when major oil companies one of the three major oil companies in the world from stocks and say we can't do this.
Speaker Change: Are you willing to do it for us I mean, they said no we're going to do it for ourselves I'm proud of what they upgraded so I'll leave that back remember Dr. Carl and I said, you look at the situation dumped our trucks day by day with the company very effectively over the last years have built 10 $15 billion in order back.
Speaker Change: At least give us some credit thank you.
Speaker Change: Thank you tore a much appreciated from for converged I've truly echo.
Speaker Change: Especially the words around the organization and it's also nice to know that I can stretch a bit further to two <unk>.
Speaker Change: Further increased to think with versus the other Ceos that you've previously encountered so we will keep working hard on our side. Thank you.
Speaker Change: So to the fund remarks, turning to slide 32, we now have 20 year plus charter on each assets, obviously hilli concluding her contract in July next year, and then repositioning toward antenna give me to just about to start up her 20 our contract.
Speaker Change: For BP offshore, Mauritania, and Senegal, and Mark too to conclude her conversion and third straight to her truncate our charter in Argentina again.
Speaker Change: So to highlight we have more than $17 billion of EBITDA backlog with significant commodity upside as explained.
Speaker Change: So for the final slide of the prepared remarks, turning to slides 33, and some of the key milestones and focus that you should expect to see for the rest of the air.
Speaker Change: Give me is now complete concluded her two first LNG cargos. The third cargo is underway in CRD is expected within Q2.
Speaker Change: We've concluded the F D of the 20 year charter with salamander energy for Healy with an adjusted EBITDA backlog of $5 7 billion.
Speaker Change: We fully sold out of the shipping related assets, including Avenir, Angola, Arctic and delivered Arctic to her new owners.
Speaker Change: Some of the remaining actions that you should anticipate is our targets for the reminder of the year is to conclude the refinancing on give me as Eduardo explained.
Speaker Change: To conclude the conditions precedent for the 'twenty Air charter for the Mark to which are the same C piece as we have recently completed for the Hilli.
Speaker Change: To further target balance sheet optimization on the back of 'twenty, our charters and recycle the capital for attractive LNG growth units.
Speaker Change: This concludes our prepared remarks for our Q1 call and I'll now turn the call over to the operator for any questions.
Speaker Change: Thank you.
Speaker Change: A reminder to ask a question. Please press star one and one on your telephone and wait for your name to be announced until we drill. Your question. Please press star one and one again once again, please button Alwan N. One on your telephone and wait for them to be announced to withdraw. Your question. Please press star one and one again for the benefit of all participants on today's.
Speaker Change: Call. Please limit yourself to two questions per person. Thank you.
Speaker Change: We are now going to proceed with our first question.
Speaker Change: The questions come from the line of Alexander be dwell from Weber Research and advisory. Please ask your question.
Speaker Change: Good afternoon I appreciate the time could.
Speaker Change: Could you touch on the overall commercial strategy for offtake on the Argentina projects is there a target mix of merchant and contracted volumes that you guys are aiming for.
Speaker Change: Sure. So that work will be led by southern energy.
Speaker Change: Where we are obviously, a shareholder and will assist the target is to have.
Speaker Change: The basket offtake, probably between the basket between Brent JK empty Daphne and then some volume left Horsepox. The interesting part is that there are no LNG exports in this region of the world.
Speaker Change: And there are some high paying.
Speaker Change: Countries very close to Argentina that should boost our earnings further so the idea is to have a combination yes.
Speaker Change: Alright, thank you for the color.
Speaker Change:
Speaker Change: And I guess, a quick one again on the Argentina contracts is there any sort of I guess additional upside on that base charter rate for excess production similar to a D Jimmy contract.
Speaker Change: Now also they have chartered the full capacity of 685 is for the full capacity similar to the give me, we only guarantee 90% of nameplate.
Speaker Change: And recapture any excess earnings above the 90% through our shareholding in southern energy.
Speaker Change: Alrighty, Thank you I'll turn it back over.
Speaker Change: Thank you.
Speaker Change: Thank you we are now going to proceed with our next question.
Speaker Change: The question has come from the line of Sherif El Mcabee from B P. I G. Please ask your question.
Speaker Change: Hey, good afternoon, thanks for taking my questions.
Speaker Change: Maybe starting with.
Speaker Change: Potential future unit.
Speaker Change: If we're thinking about ordering one by year end when do we start thinking about ordering the long lead items for another newbuild and.
Speaker Change: You know if we order one this year, what the delivery timeline look like.
Speaker Change: So for Denmark.
Speaker Change: One and two which are both based on conversion. The conversion time is approximately three years.
Speaker Change: For the Mark three because we start from scratch you need to add them all the Ericsson approximately four years.
Speaker Change: The reason why we're ramping up the shipyard activity at the moment is too.
Speaker Change: Safeguard that three year construction time and at some clients you should expect to see long leads also being included in such preparations.
Speaker Change: Got it and then for the southern Energy JV.
Speaker Change: Just a couple of related questions.
Speaker Change: How do we think about the JV breakeven price for the commodity exposure.
Speaker Change: And do you get through your 10% stake do you have any capex obligations for the onshore infrastructure they need to put together.
Speaker Change: So we haven't disclosed the exact breakeven on sasol, but I think it's fair to assume that the downside participation starts at seven and a half on the upside from eight so within that region should be a very fair assumption keep in mind that both the gas sales agreements and.
Speaker Change: We anticipate the pipeline they will be fixed for 20 year term. So I don't expect significant changes to that breakeven overtime.
Speaker Change: And yes, Golar is liable for 10% of the require investments by SASSA. However, it's important to highlight that that does not include any of the upstream work that's only the infrastructure required.
Speaker Change: Silicate exports.
Speaker Change: It's mainly port port infrastructure in local simultaneous the relatively short pipeline connection of 19 kilometers and the mooring system for the ethylene this where we are applicable proper office sure.
Speaker Change: Thanks, Karl I'll turn it over.
Speaker Change: Thanks.
Speaker Change: We are now going to proceed with our next question.
Speaker Change: And the question comes from the line of Chris Robertson from Deutsche Bank Your question.
Chris Robertson: Hey, good morning. Thank you for taking my questions guys. Obviously the company just made a major announcement with the idea of the Hilli and entering into a definitive agreement for the Fuji I think tore hit on this but.
Speaker Change: Just wanted to clarify if the share price stays here at current levels.
Speaker Change: The company currently considering strategic alternatives.
Speaker Change: And would that process be made public at that.
Speaker Change: That's the direction that the board chose to go down.
Scott Smith: This is Scott I'll kick it off from management and then Tor can add if he wants Smith.
Scott Smith: In terms of management, we are running the business to the best of our ability and trying to make the best possible decisions.
Scott Smith: It is our responsibility to also find out where the best bid or the companies.
Scott Smith: That said our focus is on running the day to day business.
Scott Smith: And then we're obviously open for any outside investors, but we are not actively chasing any such bids are in terms of management. Our focus is to run the business.
Scott Smith: When it comes to any strategic alternatives, that's a board matter and should be a comment on by the board to the extent that they see that necessarily I don't know Im sorry, if you have anything to add.
Scott Smith: Yeah I think.
Scott Smith: The board has a pretty good idea about what the current value of our backlog is we also have a current good idea about the future opportunities. We have ahead of us.
Scott Smith: We think there is significant value here, but if the stock market doesn't appreciate that value over time, I think we need to do something we are here to create value for shareholders. We are not there for running our company.
Scott Smith: So from that point of view, but I wouldn't judge that based on bond months' trading our tree month's trading I think we need to see a structure over time.
Scott Smith: We need to see that and coming in other contracts from.
Scott Smith: Mark Jewish Colombia in the second part of the year and if you don't move the share price at that time, I think the board needs to come together and discuss what to do but I think we are.
Scott Smith: We are shareholder friendly we are big shareholders, a lot of the people and the board on return to our shareholders I think you'll do what is necessary, but but I also say that meet iridex to the bid last time, because we typically run better to run the company.
Scott Smith: But.
Scott Smith: Profits like that normally start to get from the incoming lessors you don't go out and settled a company, but we're adding duration of interest in the company today from people here, you'll see valeant backlog.
Scott Smith: But my my filtration is just that I think that there is company value here today is not necessarily a $70 billion in backlog. If that's nice it's what we can build without basis.
Scott Smith: And the people, we have and the market position yet.
Scott Smith: But.
Scott Smith: All three of our ancillary Claire if validation stage Nov over time, we'll do something.
Speaker Change: Thank you so I appreciate the comments there.
Scott Smith: We'll get more mundane question here from my follow up can you guys clarify around any remaining capex associated with Gimme.
Scott Smith: He spent during the first quarter and second quarter here ahead of C. O D and do you expect that going back to a previous question do you expect any capex related to SASSA.
Scott Smith: To be deployed this year.
Laura: And Laura do you want to cover that one.
Laura: Yeah sure. So when it comes to the remaining Capex on gaming, we don't expect any material payments in the second quarter. So I think as alluded to on the call are all revenues that we have received a pre C. O D. They have been accounted for in our balance sheet and this equates to around just under $200 million.
Scott Smith: We are nearing C O D and once we start operations, we will start to see contributions in our P&L all from our revenues under that contract.
Scott Smith: Okay.
Scott Smith: Yeah.
Scott Smith: Got it thank you.
Scott Smith: We are not going to proceed with our next question.
Scott Smith: Sure.
Speaker Change: The question comes from the line of Frederic <unk> from <unk> Securities. Please ask your question.
Speaker Change: Thank you so much and thank you for a great great earnings calls so far my question revolves around the.
Speaker Change: Potential additional units to be ordered in a in this year or potentially next year.
Speaker Change: Your comment that you considered mcglaun mark to your credentials on Mercury.
Speaker Change: So just for me to get the filler for us to get the feel of the differences the sizes can you get there.
Speaker Change: High level overview of the prospective suitable fields for.
Speaker Change: For example, how many contract opportunities does the market won't have compared to a mark to I would assume that the market will need much more flexible.
Speaker Change: Yeah. That's a relevant question so first and foremost all three designs are based on a generic designed it's the same liquefaction methodology, which means that we will not tailor made for more specific fields.
Speaker Change: It can all be redeployed at various different opportunities to your point.
Speaker Change: The larger you go the more gas reserves and gas flow is required to fully utilize the vessel hence.
Speaker Change: Hence therefore, there are buy number more commercial opportunities for the smaller sizes.
Speaker Change: And then somewhat fewer further larger however for some of these larger opportunities.
Speaker Change: You May also need this level of size to make the development economics.
Speaker Change: So what you should expect to see is that we are we are right now progressing conversations or negotiations.
Speaker Change: Which for all three different designs and you could see us progressing with more than one ship this year.
Speaker Change: I think it's also fair to say that there are several people that we have advanced stages of commercial negotiations with that are now left without <unk>.
Speaker Change: Illiquid fire <expletive>.
Speaker Change: The Argentinian.
Speaker Change: Contracts took both the hilli under Mark too and as such there is no available lesser Lindy and those are obviously the counterparties that we are concentrating on from the commercial side right now.
Speaker Change: Thank you and just one small follow up on that you had.
Speaker Change: Previously you said that you want to just have them units clayton's on speculative order that is one unit without a contract.
Speaker Change: Do you have the same stance now or are you open to potentially ordering two new vessels without the contract that you did on this on the Fuji.
Speaker Change: So what we've said is that as long as we have visibility for charter we will only have one opened the way we see it now we think it's extremely likely that the mark to.
Speaker Change: We'll be a fixed in Argentina.
Speaker Change: There is no coincidence that the definitive agreements on the marks here was signed simultaneous with the final F. A D on on the Hilli, it's economical for them to utilize both ships in the same area. There are significant operational synergies and further advantages in transporting the gas from the well come out at the two sites, which.
Speaker Change: Benefits from the two ships, hence in our view we believe we can proceed with unit number four without adding.
Speaker Change: Without changing our express strategy of maximum one open ships and even if you plan to or could order up to two vessels. This year and we will still committed to our stated strategy of maximum one open ships that means that one of those ships would effectively be built against contracts if not both.
Speaker Change: Perfect. Thank you so much.
Speaker Change: Thank you.
Speaker Change: We are now going to proceed with our next question.
Speaker Change: And the question is come from the line of Peter <unk> from a BG Sunday will call year. Please ask your question.
Peter: Good afternoon, guys, a quick clarification to begin with in terms of the shipyard adjustments.
Speaker Change: I read it as if its applicable to both of course the base EBITDA.
Speaker Change: And to the to the upsides of.
Speaker Change: Or to the upside ceiling of eight stellar it's permanent that to you, but I also understand it to be applicable for the 7.5 and $6 Brendan but to you related to the downside potential is that correct.
Speaker Change: I'm glad that we have a clear presentation of them that's correct.
Speaker Change: Thank you so much.
Speaker Change: And if I may in.
Speaker Change: As we have the chairman.
Speaker Change: On the line here.
Speaker Change: We've already touched upon this but.
Speaker Change: Is it possible to say something about what the board would now are perceived to be fair valuation.
Speaker Change: The business Ive said.
Speaker Change: While both stands on the knowing about the growth opportunities ahead.
Speaker Change: I don't think it's I think we have a August in border commenced economy grocery relation assume the different scenarios, but I don't think it's fair to speculate on it the only thing I would say is I.
Speaker Change: I think that should go for antibody can and do your accounting should be significant the hard on <unk>.
Speaker Change: I don't think we would like to give out any kind of guidance on value.
Speaker Change: The other than saying that if John the validation we have today persists over time, where the board will be forced to do.
Speaker Change: Find ways to unlock that value.
Speaker Change: That could be it could be take oil kind of forum chicken I think we ever had earlier bids for part of the outfits together good prices.
Speaker Change: It can be selling the company can be.
Speaker Change: We're growing the company with different capital structures.
Speaker Change: But between north consistency on an undervaluation over time, but we can see that marches on valuation for a month or two or three that that'd be a patient enough to that.
Speaker Change: I think.
Speaker Change: Everybody now talks about the two years, we have pain until we effectively get their cash flow turned on but I think you should.
Speaker Change: I've had trended five era of paying until I have here for another two years doesn't take me that long actually and I think the inverse.
Speaker Change: <unk> in this case should see that bump you're trying to do is to build significant value over time.
Speaker Change: Most of the value short term.
Speaker Change: Understood. That's good color. Thank you so much.
Speaker Change: Okay.
Speaker Change: We are now going to proceed with our next question.
Speaker Change: And the question is come from the line of Michael Webber from Webber Research. Please ask your question.
Michael Webber: Hey, good morning, guys how are you.
Michael Webber: Linzess.
Michael Webber: I just wanted to follow up on the answer and specifically the gas, it's adding to both the hilli on another unit.
Michael Webber: The Hilli now teed up to utilize latent capacity from an existing pipeline network and then they're looking to build a dedicated pipes now for the other asset.
Michael Webber: Is that gas already treated and <unk>.
Michael Webber: Or does there need to be treatment built for either the hilli or subsequent assets onshore.
Michael Webber: More offshore that wasn't done as part of our onshore, but more commodity gas is extremely lean states. It's almost very very little treatment needed in the necessary treatment facilities more or less in place existing so that's not an issue.
Michael Webber: So the existing treatment is already in place for the hilli or for or is there enough eyeglass treatment capacity to handle additional assets to the gas specification of the Walker Martha what we're talking about Paris, producing lean gas.
Michael Webber: They will obviously require upstream investment, meaning wells that need to be drilled in Walker Martha to increase flow mhm extremely limited treatment that's required of that gas and that's part of the attraction to us mark homage to for exports.
Michael Webber: Okay. So specifically the.
Michael Webber: And I'm thinking about the timing of any treatment capacity that needs to be built in conjunction with when those charters would start now so do you see that as a yes.
Michael Webber: Risk factors that could come after that I started the Portland and any associated infrastructure has the construction period.
Michael Webber: Significantly less than two years.
Michael Webber: You've already spent together with Tesla moored on the air and all the planning so I think.
Michael Webber: Very well on track to facilitate up infrastructure.
Michael Webber: Great. That's helpful guys. Thanks for the time.
Michael Webber: Thank you.
Speaker Change: Thank you and the interest of time, we have time for one last question.
Michael Webber: And the question is come from the line of Eric Bolton from families. Please ask your question.
Eric Bolton: Hey, guys congrats on a great quarter.
Eric Bolton: Just quickly on the capital structure, you mentioned that you're engaging with rating agencies to get the rating.
Eric Bolton: And that you could look at the bond financing should we expect a rate in sort of benchmark bonds coming out of you guys soon.
Eric Bolton: Also just to follow up on that you indicated and asset level financing around five times.
Eric Bolton: That's something you can look at the corporate level as well.
Eduardo: Eduardo do you want to start yes, sure. So you're right. So we have started an exercise with rating agencies don't consume born a rating.
Eric Bolton: That exercise has been completed however, any outcome of that ratings are still confidential.
Eric Bolton: We could potentially be looking at.
Eric Bolton: Transactions at the corporate level or alternatively at an asset level basis, Israel. So I think we were using that five times as the guidance, which takes as a proxy the same relates back financing that we have signed four gaming, which was done just under six times. So I think we view five times as a as a leverage ratio as of course.
Eric Bolton: Service of assumption of what can be done on the back of these 20 year agreements.
Eric Bolton: Great. Thanks.
Abu: This concludes our question and answer session I will now hand back to Mr. Abu <unk> for closing remarks.
Speaker Change: Thank you all for dialing in and listen to our Q1 presentation much appreciated and we look forward to reconnect and during our Q2 presentation. Thanks, again and have a great day.
Eric Bolton: Okay.
Speaker Change: This concludes today's conference call. Thank you all for participating you may now disconnect. Your lines. Thank you and have a great day.
Eric Bolton: Okay.
Eric Bolton: Okay.
Eric Bolton: [music].
Eric Bolton: Sure.
Eric Bolton: [music].
Eric Bolton: Yes.
Eric Bolton: [music].