Ad hoc-Mitteilungen

Interim results for the period ended March 31, 2022

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  • Golar LNG Limited ("Golar" or "the Company") reports Q1 2022 ("Q1") Net income of $345.2 million.
  • Adjusted EBITDA1 of $93.4 million for the quarter inclusive of FLNG Hilli, Golar Arctic and Golar Tundra but excluding the 8 TFDE vessels and management companies sold to Cool Company Ltd. ("CoolCo").
  • Sold 6.2 million New Fortress Energy Inc. ("NFE") shares in Q2 2022 ("Q2") realizing net cash proceeds of $253 million. Golar now owns 12.4 million NFE shares following the sale.
  • Q1 Total Golar Cash and Listed Securities1 position increased by $0.4 billion to $1.3 billion. Golar's share of Contractual Debt1 decreased by $0.5 billion to $1.7 billion in Q1 and a further $0.5 billion in Q2 after sale of remaining carriers to CoolCo in April.
  • Agreed to sell the steam turbine carrier Golar Arctic as a converted FSRU to Italy's Snam for 269 million Euros ($288 million).
  • Strong progress made on opportunities for FSRU Golar Tundra and on pipeline of FLNG projects.

Shipping spin-off: A key focus for Q1 was the spin-off of our 8 TFDE LNG carriers into CoolCo. CoolCo successfully concluded an upsized $275 million equity raise in January, listed on the Euronext Growth Oslo exchange in February, recruited a designated management team in March and closed its acquisition of 8 LNG carriers and The Cool Pool Limited from Golar during March and April. The sale of the management companies is contemplated to complete in Q2. In total the CoolCo transactions will reduce Golar’s contractual debt1 position by $821 million, release approximately $217 million in cash and cash equivalents to Golar, whilst maintaining a 31.25% shareholding in affiliate, CoolCo.

FLNG operations and commodity hedges: FLNG Hilli maintained its unbroken 4-year record of 100% uptime during the quarter and started to produce its incremental 0.2mtpa of production, increasing scheduled production volume from 1.2mtpa to 1.4mtpa. The incremental 0.2mtpa that has a tariff linked to Dutch Title Transfer Facility ("TTF") gas prices contributed $22.6 million of incremental proceeds net of commodity swaps to Golar during Q1. The Brent oil linked component of the tariff contributed $15.6 million, bringing Golar’s pro-rata share of gross proceeds from Hilli for the quarter to $64.0 million. Golar's share of the TTF linked gross proceeds is expected to be $19.0 million in Q2 (fully hedged), $19.0 million in Q3 2022 (fully hedged) and $20.0 million in Q4 2022 (open). Estimated Q4 2022 TTF linked gross proceeds are based on a TTF spot price of $26.90/mmbtu and can be expected to increase (or decrease) by $0.8 million for each $1.00/MMBtu change in the TTF forward price. Hilli's earnings could increase further from 2023 until the end of the contract if the customer exercises a one-time 0.4mtpa TTF-linked option that expires on July 31, 2022.

FLNG Gimi construction: Conversion of FLNG Gimi for its 20-year contract with BP scheduled to commence in Q4 2023 is 83% technically complete. Once delivered, Gimi is expected to unlock around $3.0 billion of earnings backlog1 to Golar, equivalent to $151 million in annual Adjusted EBITDA1. The commercial start-up of FLNG Gimi together with the commodity linked production from FLNG Hilli could result in Golar's share of annual Adjusted EBITDA1 generation from Hilli and Gimi exceeding $400.0 million within 3-years, a quadrupling of 2021 FLNG related earnings.

FLNG business development: We are in detailed discussions with existing and prospective clients for new FLNG projects. Some of these projects would offer direct access to gas molecules or allow for a commodity linked earnings component, whilst others are on a tolling basis. Based on envisioned funding and ownership structures we expect that our Total Golar Cash and Listed Securities1 position could fund two FLNG growth projects.

FSRU: On May 18, 2022, Italian energy infrastructure company Snam and Golar signed a contract that will see Golar convert the last of its trading steam turbine LNG carriers, Golar Arctic, into a FSRU for delivery to Snam at a port in Sardinia, Italy. After conversion, acceptance and repayment of any vessel related debt, the FSRU will be sold to the Snam Group for 269 million Euros ($288 million). Initiation of activities including procurement of long lead items for the conversion is subject to Snam’s issuance of a Notice-to-Proceed. Once received, the process of conversion and sale is expected to take up to two years, with the vessel being required in a yard for around 9-months. Prior to entering the yard the Golar Arctic will continue to be traded by Golar as an LNG carrier. The estimated conversion cost is approximately $160 million due to the high specification of equipment required and inflationary market conditions.

Developments in Europe have created an urgent need for more floating LNG terminals. Golar has received multiple approaches from European governments and utility companies for its modern high-spec FSRU Golar Tundra.

Financial Summary

Q1 highlights and recent events

Financial and corporate:

  • Profitability: Net income attributable to Golar of $345.2 million for the quarter, including:
    • A $344.0 million non-cash mark-to-market gain recognized on NFE shares based on a March 31, 2022 carrying value of $42.61 per share.
    • A $168.1 million non-cash gain recognized on Hilli Brent oil and TTF natural gas linked derivative instruments.
    • A discontinued operations net loss of $209.2 million inclusive of a loss on sale/impairment in respect of the 8 carriers sold to CoolCo.
    • A $31.5 million gain on interest rate swaps.
  • Hedges: Entered into swap arrangements to hedge 100% of Golar's exposure to Q2 and Q3 2022 incremental Hilli TTF linked 2022 production at an average TTF price of $25.375/MMBtu.
  • CoolCo transaction: $184.0 million of cash and cash equivalents released to Golar and $340.1 million of Contractual debt1 removed from balance sheet following sale of first 4 vessels to CoolCo in Q1. Remaining 4 vessels sold in April and disposal of management companies contemplated to complete in Q2 expected to release approximately $33.0 million of cash and cash equivalents and derecognize a further $480.9 million of Contractual debt1.
  • Shares: Repurchased and then cancelled 368,496 Golar shares at a cost of $6.6 million. 108.0 million shares issued and outstanding as of March 31, 2022.
  • ESG: 2021 Environment, Social and Governance report published on May 16, 2022.
  • Invested in Oslo-based Aqualung Carbon Capture in May 2022, a technology company working on a promising carbon capture and separation membrane system that could be used on future FLNG units.

Financing facilities:

  • Convertible Bond: $317.3 million net outstanding balance of 2.75% $402.5 million Convertible Bonds redeemed on February 15, 2022. 
  • Credit Facility: $131.0 million of new $200.0 million 3-year Corporate RCF drawn on February 4, 2022 and subsequently repaid on May 10, 2022. Facility remains available until 2024.
  • Bilateral Corporate Facility: Executed a new $250 million 7-year bilateral corporate facility on February 11, 2022. Currently undrawn and available until June 30, 2022.
  • Finance tax lease case: Settled long running tax dispute in respect of legacy UK finance lease transactions resulting in an approximate $66.0 million final cash settlement (including fees) payable by Golar in Q2.

FLNG:

  • Utilization: Industry leading operations maintained with 100% commercial uptime by FLNG Hilli.
  • FLNG Hilli producing additional TTF linked 2022 volumes. Customer drilling campaign to prove up additional reserves completed with well testing underway.
  • Construction: FLNG Gimi conversion project 83% technically complete. 19-million man-hours worked with strong safety record maintained.
  • Commercial: Continued progress on new FLNG projects with existing and new prospective counterparties.

Financial Review

Business Performance:

(2) The line item “Realized and unrealized gain on oil and gas derivative instruments” in the Condensed Consolidated Statements of Operations relates to income from the Hilli Liquefaction Tolling Agreement (“LTA”) and the natural gas derivative which is split into: “Realized gain on oil and gas derivative instruments” and “Unrealized gain/(loss) on oil and gas derivative instruments”. The realized component comprised (i) Brent oil linked revenue of $17.5 million (December 31, 2021: $12.9 million), (ii) TTF-linked proceeds of $26.2 million and (iii) commodity swap expense of $1.1 million and represents the contracted amounts in relation to the Hilli LTA receivable in cash.
(3) Included in “Other operating income” is $3.6 million for excess production over the contracted tolling capacity of 1.4 million tons. 

Golar reports today Q1 net income attributable to Golar of $345.2 million. Golar also reports Adjusted EBITDA1 of $93.4 million inclusive of FLNG Hilli, Golar Arctic and Golar Tundra but excluding the 8 TFDE vessels and The Cool Pool Limited sold to CoolCo in March and April 2022, and the management companies, the sale of which is expected to complete in Q2. Q1 results associated with the 8 TFDE vessels and the Cool Pool Limited sold to CoolCo and the management companies still to be sold have been reclassified to Discontinued operations with Q1 2021 and Q4 2021 ("Q4") numbers  adjusted on a retrospective basis for comparison in the discussion of material movements below.

Quarterly amortization of the day one gain recognized in respect of the incremental TTF linked production from FLNG Hilli contributed to the $7.3 million increase in Total operating revenues which increased from $72.4 million in Q4 to $79.7 million in Q1. Fees for the additional TTF linked production are accounted for within Realized and unrealized gains/losses on oil and gas derivative instruments. Revenue from shipping (Golar Arctic and Golar Tundra), net of voyage, charter hire and commission expenses was $7.7 million and decreased by $0.6 million from $8.3 million in Q4.

Vessel operating expenses increased, from $13.9 million in Q4 to $19.5 million in Q1, Q4 costs having been suppressed by a $5.4 million insurance recovery.

The Brent oil linked component of Hilli's fees generates additional annual operating cash flows of approximately $3.1 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. As a result of rising prices, a $17.5 million realized gain on the oil derivative instrument was recorded in Q1, up from the $12.9 million realized in Q4. Golar has an effective 89.1% interest in these earnings. A realized gain of $26.2 million was also recognized in respect of fees for the additional TTF linked production that commenced in Q1. Golar has an effective 86.3% interest in these earnings. Offsetting this was a $1.1 million realized loss (100% attributable to Golar) on the hedged component of the quarter's TTF linked earnings. Collectively a $42.6 million realized gain on oil and gas derivative instruments was recognized as a result.

The mark-to-market fair value of the Hilli Brent oil linked derivative asset increased by $169.6 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. Similarly, the mark-to-market fair value of the Hilli TTF natural gas derivative asset increased by $24.1 million during the quarter with a corresponding unrealized gain of the same amount recognized in the income statement, also driven by an upward movement in expected future TTF prices. Offsetting the unrealized TTF gain is a $25.7 million unrealized loss in respect of the hedged portion of Q2 and Q3 2022 TTF linked Hilli production. Collectively this therefore resulted in a $168.1 million Q1 unrealized gain on oil and gas derivative instruments.

Of the $3.9 million Other operating income in Q1, $3.6 million was recognized in respect of LNG production over and above the quarter's pro-rata share of 1.4mt of full year 2022 contracted production.

An increase in the NFE share price between January 1 and March 31 resulted in the recognition of a Q1 unrealized mark-to-market gain of $344.0 million on Golar’s 18.6 million NFE shares in Other non-operating income. The fair value of these shares was $42.61 per share as of March 31, 2022. Together with $1.9 million of dividend income from NFE and a foreign exchange gain on the final tax settlement with the UK tax authorities relative to the foreign exchange rate used when recognizing the liability at December 31, 2021, this collectively contributed to $350.2 million of Other non-operating income during the quarter.

Balance Sheet and Liquidity:

As of March 31, 2022 Golar had $209.1 million of cash and cash equivalents and $135.9 million of restricted cash. Restricted cash includes $16.3 million relating to the Hilli lessor-owned VIE. Total Golar cash1 position therefore amounts to $328.6 million. As of March 31, 2022, $131.0 million had been drawn down against the Corporate RCF of $200 million, secured by our stake in NFE.  On April 6, 2022 Golar sold 6.2 million NFE shares raising net proceeds of $253 million and on May 10, 2022 the $131.0 million Corporate RCF was repaid. The full $200 million undrawn Corporate RCF continues to be available for future drawdown and is now secured by Golar's remaining 12.4 million NFE shares. On February 11, 2022 Golar also entered into a $250.0 million bilateral corporate facility secured by the Company's equity stakes in FLNG Hilli and Gimi. Undrawn as of March 31, 2022 and to the current date, this facility remains available until June 30, 2022.

(3) Based on market value as of May 25, 2022 for NFE and CoolCo and book value of Avenir as of March 31, 2022.

Inclusive of $10.6 million of capitalized interest, $82.4 million was invested in FLNG Gimi during the quarter, increasing the total Gimi Asset under development balance as at March 31, 2022 to $960.3 million. Of this, $485.0 million had been drawn against the $700 million debt facility. Both the investment and debt drawn to date are reported on a 100% basis. Golar's share of remaining capital expenditure, net of the Company's share of remaining undrawn debt amounts to $213.0 million. Subsequent to the quarter end, a further $50.0 million has been drawn against the $700 million facility.

Included within the $517.0 million current portion of long-term debt and short-term debt as at March 31, 2022 is $370.9 million in respect of the Hilli lessor-owned VIE subsidiary that Golar is required to consolidate. The Current assets held for sale and Current liabilities held of sale of $644.1 million and $383.7 million respectively in Q1 include the remaining four TFDE vessels and The Cool Pool Limited sold in April 2022 and the management companies yet to be sold to CoolCo but contemplated to complete in Q2. After sale of the remaining four TFDE vessels, The Cool Pool Limited and the  management companies, Golar's Q2 equity method investments will increase by approximately $62.5 million. 

Of Golar's $1.7 billion share of Contractual debt1 as of March 31, 2022, $0.5 billion relates to the 4 TFDE vessels sold in April 2022, leaving $1.2 billion. Net of Total Golar cash of $0.3 billion, Net Debt1 therefore falls to around $0.9 billion. If Listed Securities1 are taken into account, this figure reduces to $0.2 billion. Assuming current commodity prices prevail, Golar's share of 2022 Adjusted EBITDA1 remains on track to reach $200.0 million. This could increase further in 2023 if the customer exercises their option to increase Hilli production to up to 1.6mtpa, and should exceed $400.0 million after the first full year of Gimi operations, expected in 2024. Offering strong debt coverage, near-term earnings power and meaningful growth potential that can be financed, the simplified Golar is well positioned for new FLNG projects. 

Corporate and Other Matters:

As at March 31, 2022, Golar had 108.0 million shares issued and outstanding post the repurchase and subsequent cancellation of 368,496 shares during the quarter. There were also 1.1 million outstanding stock options with an average price of $15.63 and 0.2 million unvested restricted stock units awarded. Of the initial $50.0 million approved share buyback scheme, $19.0 million remains available for further repurchases which will continue to be opportunistically pursued.

On May 11, 2022 Golar invested $2.4 million in Aqualung Carbon Capture, an Oslo-based technology company that has developed and achieved proof of concept for a CO2 capture and separation membrane technology. Subject to the successful completion of a commercial pilot project with an industrial user, the technology could be used in future FLNG projects, enabling Golar to offer interested customers the opportunity to further reduce emissions from our already low carbon footprint FLNG solutions. Golar has a 4.6% interest and a board seat in this company.

In addition to disclosing financial results in accordance with U.S. generally accepted accounting principles (US GAAP), this earnings release and the associated investor presentation contains references to the non-GAAP financial measures which are included in the table below. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance.

These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP. Non-GAAP measures are not uniformly defined by all companies, and may not be comparable with similarly titled measures and disclosures used by other companies. The reconciliations from these results should be carefully evaluated.

Contractual Debt

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

Reconciliations - Liquidity Measures

Total Golar Cash

Non-US GAAP Measures Used in Forecasting

Earnings Backlog: Earnings backlog represents the 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, therefore revenue from operating services agreements is excluded.

Definitions

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 “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “may,” “could,” “would,” “predict,” “propose,” “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 (“Gimi GTA Project”);
  • continuing uncertainty resulting from potential future claims from our counterparties of purported force majeure under contractual arrangements, including but not limited to our construction projects (including the Gimi GTA Project) and other contracts to which we are a party;
  • claims made or losses incurred in connection with our continuing obligations with regard to Hygo Energy Transition Ltd (“Hygo”) and Golar LNG Partners LP (“Golar Partners”);
  • the ability of Hygo, Golar Partners and New Fortress Energy Inc. (“NFE”) to meet their respective obligations to us, including indemnification obligations;
  • a decline or continuing volatility in the global financial markets, specifically with respect to our equity holding in NFE;
  • continuing volatility of commodity prices;
  • failure of shipyards to comply with delivery schedules or performance specifications on a timely basis or at all;
  • changes to rules and regulations applicable to liquefied natural gas (“LNG”) carriers, floating storage and regasification units (“FSRUs”), floating liquefaction natural gas vessels (“FLNGs”) or other parts of the LNG supply chain;
  • 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;
  • changes in our ability to obtain additional financing on acceptable terms or at all;
  • the length and severity of outbreaks of pandemics, including the worldwide outbreak of the novel coronavirus (“COVID-19”) and its impact on demand for LNG and natural gas, the timing of completion of our conversion projects, the operations of our charterers, our global operations and our business in general;
  • failure of our contract counterparties to comply with their agreements with us or other key project stakeholders;
  • changes in LNG carrier, FSRU, or FLNG charter rates, vessel values or technological advancements;
  • our ability to close potential future sales of additional equity interests in our vessels, including the Hilli and Gimi or to monetize our remaining interest in NFE on a timely basis or at all;
  • our ability to contract the full utilization of the Hilli or other vessels;
  • changes in the supply of or demand for LNG or LNG carried by sea and for LNG carriers, FSRUs or FLNGs;
  • a material decline or prolonged weakness in rates for LNG carriers, FSRUs or FLNGs;
  • increases in costs, including, among other things, wages, insurance, provisions, repairs and maintenance;
  • changes in the performance of the pool in which certain of our vessels operate;
  • changes in trading patterns that affect the opportunities for the profitable operation of LNG carriers, FSRUs or FLNGs;
  • changes in the supply of or demand for natural gas generally or in particular regions;
  • changes in our relationships with our counterparties, including our major chartering parties;
  • changes in our relationship with our affiliates and the sustainability of any distributions they pay us;
  • changes in general domestic and international political conditions, particularly where we operate;
  • global economic trends, competition and geopolitical risks, including impacts from the ongoing conflict in Ukraine and the related sanctions and other measures, including the related impacts on the supply chain for our conversions;
  • changes in the availability of vessels to purchase and in the time it takes to build new vessels;
  • our inability to expand beyond the carriage of LNG and provision of FSRU and FLNGs, particularly through our innovative FLNG strategy;
  • actions taken by regulatory authorities that may prohibit the access of LNG carriers, FSRUs and FLNGs to various ports; 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 26, 2022
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda
Investor Questions: +44 207 063 7900
Karl Fredrik Staubo - CEO
Eduardo Maranhão - CFO

Stuart Buchanan - Head of Investor Relations

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