Interim results for the period ended 31 March 2019

Tuesday, 21. May 2019 20:25


  • Gross contract earnings backlog1 increased from $7.3 billion to $10.3 billion.
  • Golar's ("Golar" or "the Company") total operating revenues decreased from $181.9 million in 4Q 2018 to $114.3 million in 1Q 2019.
  • Adjusted EBITDAdecreased from $121.2 million in 4Q 2018 to $62.9 million in 1Q 2019.
  • After recognition of $28.4 million of unrealized Brent oil linked mark-to-market derivative instrument gains and a $34.3 million impairment charge in relation to the Golar Viking, Golar reported operating income of $28.9 million for 1Q 2019.
  • Golar and BP executed contracts for the provision of an FLNG vessel to service the Greater Tortue/Ahmeyim project offshore Mauritania and Senegal for 20 years.
  • Golar received a Final Notice to Proceed with the conversion, sale and subsequent operation of Golar Viking as a FSRU in Croatia. The sale is expected to generate net positive cash of approximately $40 million in 2020.
  • The shipping fleet recorded Time Charter Equivalent1 ("TCE") earnings of $39,300 per day ($39,100 for spot TFDE vessels).
  • FSRU Golar Nanook loaded first Sergipe commissioning cargo from FLNG Hilli Episeyo.
  • Net of financing expenses, equity in net losses of affiliates, taxes and net income attributable to non-controlling interests, Golar reported a 1Q 2019 net loss of $41.7 million.

Subsequent Events

  • Gimi MS Corporation ("Gimi MS") received a firm $700 million underwritten financing commitment for the FLNG Gimi.
  • As intended, First FLNG Holdings Pte. Ltd, an indirect wholly owned subsidiary of Keppel Corporation Limited held through Keppel Capital Holdings Pte Ltd. subscribed to 30% of the issued ordinary share capital of Gimi MS.
  • Gimi MS issued Keppel Shipyard with a Final Notice to Proceed with FLNG Gimi conversion works.
  • A 2-year extension to the Golar Tundra sale and leaseback facility was agreed and a 5-year restated and amended facility in respect of the Golar Arctic was credit approved.
  • Dividend of $0.15 cents per share declared for quarter.
  • At a recent meeting in Bermuda, the Board decided to proceed with a spin-off of the Company's Trifuel Diesel Electric ("TFDE") LNG carrier business, subject to satisfactory market conditions, and to focus the Company's future activities primarily around FLNG and downstream assets. This will allow LNG shipping investors more direct exposure to the LNG shipping market and reposition Golar's core business toward LNG infrastructure on long-term contracts.

Financial Review

Business Performance

(in thousands of $)Vessel and
FLNGTotalVessel and
Total operating revenues59,763 54,524 114,287 127,415 54,524 181,939 
Vessel operating expenses(18,176)(13,072)(31,248)(18,407)(10,692)(29,099)
Voyage, charterhire & commission expenses (including expenses from collaborative arrangement)(16,140)(360)(16,500)(40,690)605 (40,085)
Administrative expenses(12,893)(652)(13,545)(12,902)227 (12,675)
Project development expenses(668)(922)(1,590)(928)(3,798)(4,726)
Realized gain on oil derivative instrument(2)- 2,233 2,233 - 12,419 12,419 
Other operating gains (losses)9,260 - 9,260 14,740 (1,296)13,444 
Adjusted EBITDA(1)21,146 41,751 62,897 69,228 51,989 121,217 
Reconciliation to operating income (loss)      
Unrealized gain (loss) on oil derivative instrument(2)- 28,380 28,380 - (195,740)(195,740)
Depreciation and amortization(16,112)(12,051)(28,163)(16,244)(12,051)(28,295)
Impairment of long-lived assets

(34,250)- (34,250)- - - 
Operating income/(loss)(29,216)58,080 28,864 52,984 (155,802)(102,818)

(2) With effect from the quarter ended September 30, 2018, we have split the line item "Realized and unrealized gain on oil derivative instrument" relating to income from the FLNG Hilli Episeyo Liquefaction Tolling Agreement into two line items, "Realized gain on oil derivative instrument" and "Unrealized (loss) gain on oil derivative instrument". The unrealized component represents a mark-to-market gain of $28.4 million (December 31, 2018: loss of $195.7 million) on the oil embedded derivative, which represents the estimate of expected receipts under the remainder of the Brent oil linked clause of the Hilli Episeyo Liquefaction Tolling Agreement. The realized component amounts to $2.2 million (December 31, 2018: $12.4 million) and represents the income in relation to the Hilli Episeyo Liquefaction Tolling Agreement receivable in cash. This presentation change has been retrospectively adjusted in prior periods.

Golar reports today 1Q 2019 ("1Q") operating income of $28.9 million compared to a $102.8 million loss in 4Q 2018 ("4Q"). 

Total operating revenues net of voyage, charterhire and commission expenses decreased from $141.9 million in 4Q to $97.8 million in 1Q. Of the 1Q total, $43.6 million is derived from vessel and other operations and $54.2 million is from FLNG operations.

Revenues from vessel and other operations, including management fee income, net of voyage, charterhire and commission expenses decreased by $43.1 million to $43.6 million in 1Q. China's decision to pull LNG purchases forward into 4Q18 to avoid gas shortages together with a mild winter in Asia resulted in elevated LNG inventory levels into 1Q19.  Asian LNG prices dropped, Inter-basin trading opportunities disappeared and ton-miles, utilization and rates fell as a result. Fleet utilization decreased from 93% in 4Q to 51% in 1Q. Full fleet TCE1 earnings decreased from $77,600 in 4Q to $39,300 in 1Q.

In line with prior quarters, FLNG Hilli Episeyo generated operating revenues of $54.5 million including base tolling fees and amortization of pre-acceptance amounts recognized.

Vessel operating expenses at $31.2 million in 1Q were $2.1 million higher than 4Q.  Most of the increase is attributable to FLNG Hilli Episeyo due to increased crew tax costs as well as additional repairs and maintenance.

At $13.5 million for the quarter, total administrative expenses were $0.9 million higher than 4Q.

Capitalization of costs incurred in relation to the BP-Kosmos FLNG project from the point of FID in December 2018 resulted in a $3.1 million reduction in project expenses from $4.7 million in 4Q to $1.6 million in 1Q.

The Brent oil linked component of Hilli Episeyo's fees generates additional annual operating cash flows of approximately $3 million for every dollar increase in Brent Crude prices between $60.00 per barrel and the contractual ceiling. Billing of this component is based on a three-month look-back at average Brent Crude prices. Amounting to $2.2 million in 1Q, the realized gain on the oil derivative instrument was down $10.2 million on 4Q. The decrease in this hire component is the result of lower oil prices, particularly during December and January.

The mark-to-market fair value of the derivative asset increased by $28.4 million during the quarter, with a corresponding unrealized gain of the same amount recognized in the income statement. The fair value increase was driven by an upward movement in the expected future market price for Brent Oil. The spot price for Brent Oil increased from $50.57 per barrel on December 31 to $68.39 on March 31 and has recovered further, to $71.97 per barrel on May 20.

Other operating gains and losses within vessel and other operations reported a 1Q gain of $9.3 million, representing a final settlement from the terminated contract for the Golar Tundra.

Depreciation and amortization at $28.2 million in 1Q was in line with the prior quarter.

On the 29th March, Golar signed contracts with LNG Hrvtska d.o.o. relating to the conversion and subsequent sale of the converted carrier Golar Viking. Although the sale is not expected to close until 4Q 2020, the transaction triggered an immediate impairment test. As the current carrying value of the vessel exceeds the price a market participant would pay for it as a carrier today, a non-cash impairment charge of $34.3 million has been recognized. The sale is expected to generate net positive cash of approximately $40 million.

Net Income Summary

 2019 2018 
(in thousands of $)Jan-Mar Oct-Dec 
Operating income (loss)28,864 (102,818)
Interest income3,214 2,983 
Interest expense(29,352)(31,251)
Losses on derivative instruments(5,699)(23,605)
Other financial items, net(1,407)(780)
Income taxes(205)(627)
Equity in net losses of affiliates(12,899)(154,089)
Net income attributable to non-controlling interests(24,257)(2,770)
Net loss attributable to Golar LNG Limited(41,741)(312,957)

In 1Q, the Company generated a net loss of $41.7 million. Key items contributing to this are summarized as follows:

  • A small reduction in LIBOR, 2 fewer days in the period and a $0.4m increase in capitalized interest in respect of FLNG Gimi resulted in a $1.9 million reduction in 1Q interest expense.
  • 1Q recorded a $5.7 million loss on derivative instruments compared to a 4Q loss of $23.6 million.  Most of the $17.9 million reduction in 1Q relative to 4Q is attributable to a smaller loss on the Golar shares Total Return Swap ("TRS").
  • The $12.9 million 1Q equity in net losses of affiliates is primarily comprised of the following:
    -- a $4.0 million loss in respect of Golar's 50% share in Golar Power;
    -- a $7.7 million loss in respect of Golar's 32% stake in Golar Partners; and
    -- a $0.4 million loss in respect of Golar's 22.5% stake in Avenir.
    The 4Q loss in respect of Golar's stake in Golar Partners was substantially higher at $157.9 million following a $149.4 million impairment of the carrying value of Golar's interest in the Partnership. Further losses on interest rate swaps, which are a part of the Partnership's interest hedging program, were a major contributor to the Partnership's 1Q net loss.

Net income attributable to non-controlling interests represents external interests in the Hilli Episeyo and the finance lease variable interest entities ("VIEs").

Commercial Review

LNG Shipping

Golar recorded a 1Q TCE1 of $39,300 per day, up 9% on the $35,900 per day achieved in 1Q 2018 but down 49% on the $77,600 achieved in 4Q. This is comprised of a TCE1 of $39,100 in respect of its total TFDE fleet, and $40,100 for its two steam ("ST") vessels.

The 1Q LNG shipping market declined from strong 4Q levels in line with historic seasonality.  LNG demand growth in China and other SE Asian countries was largely offset by declines in Japan and Korea due to a combination of a milder than expected winter and the re-start of several nuclear facilities.  Chinese 1Q demand was up 20% up on 1Q 2018. During the quarter LNG prices reached 3-year lows, which eliminated inter-basin trading opportunities.  At quarter end, LNG was trading at around 6% of Brent, well below energy parity.  Atlantic basin cargoes from the US and Russia into Europe doubled by volume compared to 1Q 2018.  With these additional volumes remaining in Europe, ton-miles and shipping rates continued to fall throughout the quarter, with spot TFDE and ST rates reaching $40,000 and $24,000 respectively by the end of March. The recently introduced tariffs for US LNG into China have also limited US export volumes into China.

Shipping rates achieved so far in 2Q 2019 have been weaker than 1Q but rates and activity have now commenced their seasonal recovery. The strong contango in the gas market with forward prices of $9mmbtu being quoted for December 2019 give solid support to an improved shipping market. The 2019 vessel demand growth of 15% is expected against supply growth of 9%.  Further vessel demand growth of 14% is expected in 2020 with supply growth again lagging at 9%.  This reinforces our belief that LNG shipping will enter a period of structural shortage for the next few years. 

Leading brokers continue to forecast a 10+ vessel shortfall at the end of 2019, increasing to more than 20 at the end of 2020. Rates are expected to reflect this from 2H 2019 and remain strong for the next two years. This has resulted in an increase in requests for medium to long-term charterers. Golar has recently concluded several charters with oil and gas majors and large LNG charterers. These charters are based on index-linked rates and secure full utilization of the chartered vessels.

At its recent meeting in Bermuda, the Board made a decision to proceed with a spin-off of the Company's TFDE LNG carrier business, subject to satisfactory market conditions, and to focus the Company's future activities primarily around FLNG and downstream assets. This will allow LNG shipping investors more direct exposure to the LNG shipping market and reposition Golar's core business toward LNG infrastructure on long-term contracts. Golar are in talks with other owners of similar tonnage to join the new shipping company and have discussed with Golar Power exchanging one of their LNG carriers for the FSRU Golar Tundra.  Management of Golar's vessels will remain with Golar Management Norway AS. Assuming the joint structure proceeds as planned, Golar's direct exposure to the carrier market will then be limited to one modern steam turbine vessel, Golar Arctic, with Golar Viking contracted to be sold in 2020 post FSRU conversion.

Golar Partners (a non-consolidated affiliate of Golar LNG)

The Partnership reported a 1Q net loss of $15.0 million as a result of further mark-to-market interest rate swap losses, scheduled winter downtime for the FSRU Igloo and additional idle time for the spot traded LNG carrier Golar Mazo, partly offset by commissioning hire billed in respect of the FSRU Golar Freeze from 11 January.

The FSRU Golar Igloo completed its scheduled 5-year drydock during the Kuwait winter downtime period ahead of commencing its 6th annual regas season on February 25. The vessel will remain in service until December 31 with potential for a further contract extension later in the year via a tendering process.

With respect to the Partnership's ships, charterers of the carrier Golar Grand exercised the first of their one-year extension options. The option rate between May 2019 and May 2020 will represent a material improvement on the initial 2-year rate.  This will be partly offset by reduced utilization of the Golar Maria and Golar Mazo in the spot market.

By virtue of its 50% interest in Hilli Episeyo's common units, the Partnership is entitled to 50% of the net earnings of Hilli Episeyo attributable to common unit holders. The Partnership received a dividend in 1Q amounted to $3.0 million.

Distribution coverage1 for 1Q each year is typically low as a result of the scheduled Golar Igloo winter downtime. This remains the case for 2019 where distribution coverage1 fell from 1.2 in 4Q to 1.01 in 1Q.  A full quarter's contribution to adjusted EBITDAfrom both FSRU Golar Igloo and FSRU Golar Freeze partly offset by more volatile near-term earnings in respect of carriers Golar Maria and Golar Mazo is expected to result in a solid improvement to 2Q 2019 distribution coverage.


FLNG Hilli Episeyo continues to achieve 100% commercial uptime. By early May Hilli Episeyo had satisfied its first 1.2 million tons of production, which is expected to result in the release of approximately $29.0 million of letter of credit ("LC") cash to 2Q 2019 liquidity. Detailed discussions continue with field operator Perenco with respect to the logistics and timing of increasing both the vessel's utilization and potentially materially increasing the overall duration of the contract term.  These discussions remain on track to conclude before the end of this year.

On February 26, a 100% owned Golar subsidiary, Gimi MS entered into an agreement with BP for the charter of an FLNG unit, Gimi, for a 20-year period expected to commence in 2022. On April 16, Keppel subscribed to 30% of the ordinary share capital of Gimi MS. Total conversion works for FLNG Gimi are expected to cost approximately $1.3 billion, excluding financing costs. Annual contracted revenues less forecasted operating costs of approximately $215 million are expected, equivalent to a total forecasted Contract Earnings Backlogof $4.3 billion, of which Golar's 70% share is expected to be $3.0 billion.

The Gimi chartering contract with BP has been signed and the conversion contract with Keppel Shipyard is now effective. Financing has been secured, the first yard installment has been paid and the project is proceeding according to schedule.

A term sheet expected to form the basis of a shareholders agreement has also been agreed with respect to the US Gulf of Mexico "Delfin LNG" project.  Discussions with potential off-takers continue.

The successful commencement of Hilli Episeyo has led to a significant pipeline of new FLNG opportunities. Investors should however be cognizant of the time it takes to execute FLNG opportunities. In most cases FLNG projects include large upstream development processes and material governmental interaction linked to permits, taxation and government participation. The strong cashflows from these projects makes them attractive financing prospects after commencement of operations however pre-delivery construction financing remains capital intensive.

Golar is working actively with yards, equipment providers and financial institutions to develop a design, reduce the capital requirements and to identify a commercial model where our FLNG business becomes more scalable. These developments are all based on the successful technical experience we have gained from the Hilli and Gimi projects.

Golar Power (50/50 Golar/Stonepeak Infrastructure Partners non-consolidated downstream joint venture)

Construction of the Sergipe power plant remains on track for commencement of operations on January 1, 2020. The power station is now nearing mechanical completion and pre-commissioning of selected systems has commenced in anticipation of first firing of the gas turbines in early July. Transmission lines from the substation to the grid were connected on May 3 and the FSRU Nanook with its commissioning cargo is ready for hook-up to the mooring.

Golar's share of expected annual contracted revenues less forecasted operating expenses from the fully financed Sergipe power project and Golar Nanook FSRU is around $99 million assuming a BRL/USD exchange rate of 3.7, regardless of whether power is dispatched or not.

As indicated in February, Golar Power commenced a strategic review during the quarter.  Following the initial phase of this review, the Board of Golar Power has deferred any decision on a potential IPO until 2020. Golar Power will now capitalize on its local presence by focusing on the downstream small-scale LNG market in Brazil.  Successful development of these opportunities can generate a material contribution to Golar Power's earnings in 2020 and 2021. The main focus of the small-scale distribution model is to replace diesel, LPG and fuel-oil with LNG. The market in Brazil is large with diesel consumption equivalent to approximately 40mtpa of LNG demand.

The excess capacity of Golar Nanook is key to developing these opportunities. Nanook has excess throughput capacity of up to approximately 200 million mmbtu per annum over and above what must be reserved for full dispatch at the power station.  This represents approximately two thirds of the vessels capacity.

Assuming a spread of USD $1.00 p/mmbtu can be captured for this open capacity, this would lead to approximately USD $100 million in additional adjusted EBITDA per annum1 for Golar Power. By integrating further downstream this margin can be materially increased. Golar Power has received a number of expressions of interest from potential customers and the level of interest has provided the confidence to move ahead. In the event that not all the capacity is used by small-scale development, there is still the potential for Sergipe expansion. The downstream distribution model created by virtue of Golar Power's interest in FSRU Nanook is characterized by capital expenditure/adjusted EBITDA1 multiples of around 2-3 times, and also by a short period between investment and commencement of cashflow.

The Government of Brazil has made a clear strategic commitment to use LNG as a cheaper and cleaner energy source. The diesel riots of 2018 and a consequent desire to reduce dependence on diesel are a key driver behind this.

This model can be repeated at other locations in Brazil including Barcarena and Santa Catarina where Golar Power has already received initial licenses for the establishment of terminals and FSRUs. The fact that Golar has prompt FSRUs available increases its ability to capitalize on these opportunities in the short term.  Noteworthy is the fact that neither of these initiatives are dependent on Golar Power securing further power provision capacity.

Avenir (22.5% interest in LNG small-scale venture, a non-consolidated affiliate)

Good progress is being made with Avenir's HIGAS terminal in Sardinia. Tank bases are complete, tank construction is underway and commissioning is scheduled for August 2020. Evidence of physical progress is generating interest from potential local customers. Avenir is also working on a significant demand for a new industrial plant in the south of the island starting up at the end of 2020. Further afield, active customer interest in bunkering and small-scale power has also been noted.

As a result of better functionality and cost, two 7,500cbm shipbuilding contracts with Sinopacific were recently signed to replace Avenir's contract for two similar vessels at Keppel. Although there have been several requests to charter Avenir's vessels at attractive rates these assets are viewed more as strategic tools that allow it to become an integrated LNG distributer. Opportunities to this end are preferred.

The value of Golar's Avenir shares has, since the offering last year, increased by 75%.

Financing Review

Golar's total current cash position as at March 31 was $690.3 million (including long-term restricted cash), of which $212.7 million was unrestricted. Included within restricted cash is $174.8 million relating to lessor-owned VIEs and $175.0 million relating to the Hilli Episeyo LC. Of the $175.0 million restricted cash securing the Hilli Episeyo LC, approximately $29.0 million is expected to be released to free cash in 2Q 2019. Sale of the converted Golar Viking is expected to add a further $40 million to liquidity in 2020. A further $85 million is expected to be released from the Hilli LC in 2021.

On April 16, Gimi MS, a 70% owned subsidiary of Golar, received a firm $700 million underwritten financing commitment for the FLNG Gimi.  Available during construction, the financing has a tenor of 7-years post commercial operation date ("COD") and a 12-year amortization profile. Interest payable on the facility will be the aggregate of LIBOR plus a margin of 400bps during construction, reducing to LIBOR plus 300bps post COD.

A 2-year extension to the Golar Tundra sale and leaseback facility has been agreed and a 5-year restated and amended facility in respect of the Golar Arctic has been credit approved.

Golar's contractual debt1 including 100% of Hilli Episeyo as at March 31 was $2.6 billion. Golar's adjusted net debt1 was $2.2 billion.

Included within the $924.5 million current portion of long-term debt and short-term debt on the Balance Sheet is $745.3 million relating to lessor-owned VIE subsidiaries that Golar is required to consolidate in connection with 8 sale and leaseback financed vessels, including the Hilli Episeyo.

Corporate and Other Matters

As at March 31, 2019, there were 101.3 million shares outstanding, including 3.0 million TRS shares that had an average price of $45.49 per share. The TRS, which is fully collateralized, was marked-to-market as of March 31, 2019 when the closing price was $21.09 per share. The cash collateral posted against the swap is included within the restricted cash balance on the Balance Sheet. There were also 3.8 million outstanding stock options in issue with an average price of $36.03.

The Board has approved a dividend of $0.15 for the quarter.

Profitable growth through delivery of Cleaner and Cheaper Energy

Golar believes that natural gas has a critical role to play in providing cleaner energy for many years to come.  Our pioneering infrastructure assets provide safe, competitive and sustainable ways of liquefying, transporting and turning gas into energy around the world. Illustrating the business potential, the consumption of diesel and heavy fuel in the transportation, power and shipping markets today amounts to approximately 30 million barrels per day, while the total LNG market by comparison is equivalent to only 7.4 million barrels per day.

LNG prices have historically been linked to oil prices. Long-term prices were supported by an energy content equilibrium of around 16% of Brent.  The lower production cost of gas relative to oil combined with increased LNG volumes from Qatar, Australia and the US has reduced long-term LNG prices by approximately 30%. Long-term LNG contracts today trade at around 10-11% of Brent.  The spot Brent price is currently around USD $70 per barrel, while spot LNG prices in Europe and Asia are currently trading between USD $4-5 per mmbtu, equivalent to 6-7% of Brent.

The significant cost advantages of current LNG prices creates new opportunities.  A 14,000 TEU container ship fueled by LNG, will, based on today's spot prices, have a pre-tax operating bunker benefit of approximately $40,000 per day compared to an oil-fueled vessel.  An LNG truck in Brazil could reduce its annual pre-tax fuel cost by approximately USD $19,000 relative to a diesel truck.

Current diesel prices along the main trucking routes in Brazil are in excess of USD $25.0 mmbtu equivalent gas cost. There are two million heavy vehicles in Brazil. The potential market for a diesel to LNG conversion is therefore substantial.

Additional to the financial savings as a result of converting to LNG are the equally important environmental benefits. A conversion from diesel to LNG reduces C02 emissions by approximately 30%, SOX by close to 100%, NOX by 33% and particle PM10 pollution by a little over 66%.


Golar has been transformed since 2013. Significant investment has been injected into FLNG projects, the power project in Sergipe and the development and permitting of further downstream assets. The company has been transformed from an LNG shipping company into an integrated LNG energy company.

The initial focus in 2019 has been to take FID on the Gimi (BP FLNG) and Viking (LNG Hrvatska FSRU) projects, secure project finance and award contracts for these projects.  With those tasks completed, the main focus will be to streamline the company and increase the utilization of existing assets. The intention is to significantly increase the return on investment ("ROI") without committing major capital. As noted above, the Board has, as a part of the new strategy, concluded that it would be right to spin off the TFDE shipping fleet into a separate entity, subject to market conditions. This will materially reduce the company's net debt and highlight the strength of the strong long-term cash flow coming from the remaining assets.

Shipping: With the LNG carrier market showing signs of seasonal recovery and edging into a time-frame where a structural shortage of ships appears inevitable, Golar expects that the new LNG shipping company will be an attractive pure play vehicle for investors to participate in the strong growth and cyclical recovery of the LNG shipping market.

This will allow us to reposition Golar LNG and focus primarily on two business lines:

FLNG: Our project teams will work diligently to safely deliver the Gimi project on time and on budget.  Golar will also work with Perenco to conclude an agreement to increase utilization and provide a meaningful potential extension to the charter duration for FLNG Hilli Episeyo by the end of 2019.  For future FLNG projects, Golar will continue to drive home its competitive advantage and unique FLNG operating experience.  Development of the robust FLNG pipeline, finance permitting, will add further long-term contract earnings backlog1 to the $3.7 billion (Golar share) already secured.

Golar Power: We expect commissioning of the Sergipe power station to complete in 2H19 ahead of the January 1, 2020 COD. At COD, the combination of Sergipe and Nanook will initiate the realization of approximately $2.5 billion of contract earnings backlogattributable to Golar. Golar Power will now develop the downstream small-scale market in Brazil, which can create significant earnings as early as 2020/21.

The Board of Directors is pleased with the work done to date in underpinning the business with key projects. The Board is however humble to the fact that these achievements have not yet been positively reflected in the Company's share price. We believe that separation of the company's assets into two entities will better position both companies.  A stock price that reflects the true strategic and contracted value of the underlying assets is a key condition to be able to grow a company.  After a period of rapid expansion and significant capital investment to build the foundation, it is time to reap the $10.3 billion gross contract earnings backlog1 and implement stronger capital discipline with full focus on ROI.  We see substantial potential for cash flow improvement through increased utilization of existing assets.

In repositioning Golar as a solid long-term cashflow business from projects that create large cost and environmental benefits for our customers the Company expects to materially broaden investor interest. With an LNG growth rate of approximately 10% pa, a gross contract earnings backlogof $10.3 billion, strong growth in contracted earnings, a well-financed balance sheet, a unique market leading position in FLNG, integrated power projects and a solid pipeline of opportunities, the Board is increasingly optimistic about the future.

Non-GAAP measures

Adjusted EBITDA: Adjusted EBITDA is calculated by taking net income before interest, tax, unrealized mark-to-market movements on the oil derivative instrument, depreciation and amortization. We believe that the exclusion of these items enables investors and other users of our financial information to assess our sequential and year over year performance and operating trends on a more comparable basis and is consistent with management's own evaluation of business performance. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net (loss) income or any other indicator of Golar's performance calculated in accordance with US GAAP. The table below reconciles net (loss) income, the most directly comparable US GAAP measure, to adjusted EBITDA.

 2019 2018 2018 2018 
(in thousands of $)Jan-Mar Oct-Dec Jan-Mar Jan-Dec 
Net (loss) attributable to Golar LNG Limited(41,741)(312,957)(21,002)(231,428)
Adjusted for:    
  Interest income(3,214)(2,983)(1,944)(10,133)
  Interest expense29,352 31,251 13,998 101,908 
  Losses on derivative instruments5,699 23,605 874 30,541 
  Other financial items, net1,407 780 363 1,481 
  Income taxes205 627 (6)1,267 
  Equity in net losses of affiliates12,899 154,089 1,541 157,636 
  Net income attributable to non-controlling interests24,257 2,770 12,605 63,214 
Operating income/(loss)28,864 (102,818)6,429 114,486 
Adjusted for:    
  Unrealized (gain)/loss on oil derivative instrument(28,380)195,740 (13,600)9,970 
  Depreciation and amortization28,163 28,295 16,409 93,689 
  Impairment of long-lived assets34,250 - - - 
Adjusted EBITDA62,897 121,217 9,238 218,145 

In the Golar Power section of the commercial review, we refer to an additional adjusted EBITDA of $100 million. Nameplate capacity of the FSRU Nanook is 5.8 MTPA, approximately 1.7 MTPA will be tied up to Sergipe at 100% dispatch, hence 4.1 MTPA of the Nanook's capacity is spare capacity available. 4.1 MTPA is equivalent to 205 million MMBTU. Assuming $1.00 p/MMBTU would amount to $102.5m EBITDA ($1 x 205 million MMBTU x 50%). This is a forecasted number. Management has not forecasted net income as information to do so is not available without unreasonable effort. Additional adjusted EBITDA is not intended to represent future cashflows.

Adjusted net debt: The Company consolidates a number of lessor VIEs, which means that on consolidation, Golar's contractual debt under various sale and leaseback facilities are eliminated and replaced with the lessor VIE's debt. Adjusted net debt is calculated by taking net debt defined by GAAP line items and reversing out the lessor VIE debt and restricted cash balances and replacing it with Golar's contractual debt under the sale and leaseback facilities. We believe that the exclusion of the lessor VIE's debt enables investors and users of our financial information to assess our liquidity based on our underlying debt obligations and aids comparability with our competitors. This presentation is consistent with management's view of the business. Adjusted net debt is a non-GAAP financial measure and should not be considered as an alternative to net debt or any other indicator of Golar's performance calculated in accordance with US GAAP. The table below reconciles net debt based to adjusted net debt:

(in thousands of $)March 31, 2019 December 31, 2018 
Net debt as calculated by GAAP  
Total debt (current and non-current) net of deferred finance charges2,513,190 2,565,359 
Cash and cash equivalents(212,673)(217,835)
Restricted cash and short-term deposits - current and non-current portion(477,598)(486,426)
Net debt as calculated by GAAP1,822,919 1,861,098 
VIE Consolidation Adjustment98,543 87,045 
VIE Restricted Cash174,816 176,428 
Deferred Finance Charges15,056 21,546 
TRS Restricted Cash (1)86,050 82,863 
Adjusted Net Debt2,197,384 2,228,980 
(1) Restricted cash relating to the share repurchase forward swap refers to the collateral required by the bank with whom we entered into a total return equity swap. 


(in thousands of $)March 31, 2019 December 31, 2018 
Total debt (current and non-current) net of deferred finance charges 2,513,190 2,565,359 
VIE Consolidation Adjustments98,543 87,045 
Deferred Finance Charges15,056 21,546 
Golar's Contractual Debt2,626,789 2,673,950 

Please see Appendix A for a capital repayment profile for Golar's contractual debt.

TCE: The average daily TCE rate of our fleet is a measure of the average daily revenue performance of a vessel. TCE is calculated only in relation to our vessel operations. For time charters, TCE is calculated by dividing total operating revenues (including revenue from the Cool Pool, but excluding vessel and other management fees and liquefaction services revenue), less any voyage expenses, by the number of calendar days minus days for scheduled off-hire. Under a time charter, the charterer pays substantially all of the vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during dry-docking. TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in an entity's performance despite changes in the mix of charter types (i.e. spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods. We include average daily TCE, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with total operating revenues, the most directly comparable US GAAP measure, because it assists our management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. Our calculation of average daily TCE may not be comparable to that reported by other entities. The following table reconciles our total operating revenues, the most directly comparable US GAAP measure, to the average daily TCE rate.

(in thousands of $)ST TFDE 
Total operating revenues8,074 46,235 
Less: Voyage and commission expenses(1,612)(14,527)
Calendar days less scheduled off-hire days161 810 
Average daily TCE rate (to the closest $100)40,100 39,100 


 2019 2018 
(in thousands of $)Jan-Mar Oct-Dec 
Total operating revenues114,287 181,939 
Less: Liquefaction services revenue(54,524)(54,524)
Less: Vessel and other management fees(5,453)(8,241)
Time and voyage charter revenues54,310 119,174 
Less: Voyage and commission expenses(16,140)(40,690)
 38,170 78,484 
Calendar days less scheduled off-hire days971 1,012 
Average daily TCE rate (to the closest $100)39,300 77,600 

Contract Earnings Backlog: Contract earnings backlog represents Golar's share of contracted fee income for executed contracts less forecasted operating expenses for these contracts. In calculating forecasted operating expenditure, management has assumed that where there is an Operating Services Agreement the amount receivable under the services agreement will cover the associated operating costs. For contracts which do not have a separate Operating Services Agreement, management has made an assumption about operating costs based on the current run rate. The only material application of this methodology was to the Hilli Episeyo Earnings backlog where we assumed operating costs of approximately $120,000 per day.

For consolidated subsidiaries where we do not own 100% of the share capital, management has only included our proportionate share of contract earnings.  The material application of this assumption was to Gimi (70% ownership) and Hilli Episeyo (44.5% of the Common Unit entitlement). No contracted fee income was included for Hilli T3 or the oil derivative.

For equity accounted investments (the Partnership and Golar Power) we have included our proportionate share of their contract earnings backlog under the same assumptions that we have applied to our consolidated subsidiaries. In the future when our contract earnings backlog actualizes, we will show our share of their earnings net of interest and tax in one line in the Income Statement "Equity in net earnings/(losses) of affiliates". The Golar Power numbers are calculated based on an exchange rate of 3.7BRL:1USD.

Management has not forecasted net income for these initiatives as information to provide such a forward-looking estimate is not available without unreasonable effort. Contract earnings backlog is not intended to represent EBITDA or future cashflows that will be generated from these projects nor is it intended to represent the dividend income that will be payable to Golar from our equity investments. This measure should be seen as a supplement and not a substitute for our US GAAP measures of performance.

Gross Contract Earnings Backlog: Gross contract earnings backlog represents each Golar entity's share of contracted fee income for executed contracts less forecasted operating expenses for these contracts. In calculating the forecasted operating expenditure, management has applied the same methodology in preparing the "Contract Earnings Backlog" measure above. Management has not forecasted net income for these initiatives as information to provide such a forward-looking estimate is not available without unreasonable effort.  Contract earnings backlog is not intended to represent EBITDA or future cash flows that will be generated from these projects nor is it intended to represent the dividend income that will be payable to Golar from our equity investments. This measure should be seen as a supplement and not a substitute for our US GAAP measures of performance.

Distribution coverage: As defined in Golar LNG Partners LP form 6-K, section "Appendix A - Non-GAAP Financial Measures and Definitions".

Forward Looking Statements

This press release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflects management's current expectations, estimates and projections about its operations. All statements, other than statements of historical facts, that address activities and events that will, should, could or may occur in the future are forward-looking statements. Words such as "may," "could," "should," "would," "will," "expect," "plan," "anticipate," "intend," "forecast," "believe," "estimate," "predict," "propose," "potential," "continue," or the negative of these terms and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Golar undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.

Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: 

  • our inability and that of our counterparty to meet our respective obligations under the Lease and Operate agreement entered into in connection with the BP Greater Tortue / Ahmeyim Project;
  • changes in liquefied natural gas, or LNG, carrier, floating storage and regasification unit, or FSRU, or floating liquefaction natural gas vessel, or FLNG, or small-scale LNG market trends, including charter rates, vessel values or technological advancements;
  • Golar Power's ability to successfully complete and start up the Sergipe power station project and related FSRU contract;
  • the ability of Golar to increase the utilization under, and term of, the liquefaction tolling agreement for the Hilli Episeyo and the benefits that may to accrue to us as the result of any such modifications;
  • changes in our ability to retrofit vessels as FSRUs or FLNGs and in our ability to obtain financing for such conversions on acceptable terms or at all;
  • our ability to close potential future sales of additional equity interests in Golar Hilli LLC on a timely basis or at all;
  • changes in the supply of or demand for LNG carriers, FSRUs, FLNGs or small-scale LNG infrastructure;
  • a material decline or prolonged weakness in rates for LNG carriers, FSRUs, FLNGs or small-scale LNG infrastructure;
  • changes in the performance of the pool in which certain of our vessels operate and the performance of our joint ventures;
  • changes in trading patterns that affect the opportunities for the profitable operation of LNG carriers, FSRUs, FLNGs or small-scale LNG infrastructure;
  • changes in the supply of or demand for LNG or LNG carried by sea;
  • changes in commodity prices;
  • changes in the supply of or demand for natural gas generally or in particular regions;
  • failure of our contract counterparties, including our joint venture co-owners, to comply with their agreements with us;
  • changes in our relationships with our counterparties, including our major chartering parties;
  • challenges by authorities to the tax benefits we previously obtained under certain of our leasing agreements;
  • a decline or continuing weakness in the global financial markets;
  • changes in general domestic and international political conditions, particularly where we operate;
  • changes in the availability of vessels to purchase and in the time it takes to construct new vessels;
  • failures of shipyards to comply with delivery schedules or performance specifications on a timely basis or at all;
  • our ability to integrate and realize the benefits of acquisitions;
  • changes in our ability to sell vessels to Golar Partners or Golar Power;
  • changes in our relationship with Golar Partners, Golar Power or Avenir and the sustainability of any distributions they pay to us;
  • changes to rules and regulations applicable to LNG carriers, FSRUs, FLNGs or other parts of the LNG supply chain;
  • our inability to achieve successful utilization of our expanded fleet or inability to expand beyond the carriage of LNG and provision of FSRUs, FLNGs, and small-scale LNG infrastructure particularly through our innovative FLNG strategy and our joint ventures;
  • actions taken by regulatory authorities that may prohibit the access of LNG carriers, FSRUs, FLNGs or small-scale LNG vessels to various ports;
  • changes in our ability to obtain additional financing on acceptable terms or at all;
  • increases in costs, including, among other things, wages, insurance, provisions, repairs and maintenance; and
  • other factors listed from time to time in registration statements, reports or other materials that we have filed with or furnished to the Securities and Exchange Commission, or the Commission, including our most recent annual report on Form 20-F.

As a result, you are cautioned not to rely on any forward-looking statements. Actual results may differ materially from those expressed or implied by such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless required by law.

May 21, 2019
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda

Questions should be directed to:
Golar Management Limited +44 207 063 7900
Iain Ross - Chief Executive Officer
Graham Robjohns - Chief Financial Officer and Deputy Chief Executive Officer
Stuart Buchanan - Head of Investor Relations

1. Refer to section "Non-GAAP measures" for definition and reconciliation to the most comparable US GAAP measure.

A PDF accompanying this announcement is available at

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