Kuwait National Petroleum Company 5 Year Contract ... USD$213 million covering both capital and operating elements over five years,
The Board of Golar LNG Limited ("Golar" or the "Company") is pleased to announce that Golar has executed a firm contract to provide the Kuwait National Petroleum Company ("KNPC") with floating storage and regasification ("FSRU") services to support their LNG import operations at Mina Al Ahmadi.
The contract will be for an initial period of 5 years and comprises the provision of portside FSRU services for an anticipated nine months of the year together with a three month window where the vessel is free to pursue spot carrier and other short term business opportunities. Winter scheduling of the three month stand-down period together with favourable positioning mean that the company is optimistic for the vessels trading prospects. The 170,000cbm newbuild FSRU Golar Igloo which delivers during the fourth quarter of 2013 will service the contract that is set to commence in March 2014. With a total contract value of approximately USD$213 million covering both capital and operating elements over five years, Golar expects to supplement these earnings with additional hire payments during the winter months each year.
Golar LNG`s CEO, Doug Arnell said "Kuwait is an established LNG importer and we look forward to working closely with our new customer. We are very pleased that an experienced LNG industry player such as KNPC has entrusted Golar with their FSRU services which demonstrates our established reputation as a leading operator of floating midstream LNG assets. As this is a five year charter the vessel will be offered to Golar LNG Partners L.P. ("Golar Partners") to acquire providing for another potential acquisition with a new and particularly strong counterparty."
Great to see the FSRU newbuilds lining up with charters, and the dropdown backlog building up for GMLP.
This charter doesn't seem especially GMLP friendly with the 3 offhire months per year. It seems to me that GLNG would have to backstop those 3 months (say, they take it for the entire period at a fixed rate of $80k/day, and take on the risk of finding short term employment) before dropping it down to GMLP. Otherwise the annual EBITDA is too variable.
I'm sure it will work out, the timing and location are favorable. Would have been nice to see a 10 year charter for 100% FSRU usage though.
Will be interesting to see (or hear on the upcoming quarterly call) what is going on with the newbuild carriers. I had expected at least 1 of the 4 delivering this year to be a dropdown candidate....maybe keeping up a 2/yr pace for the next several years.
Given GLNG has a good dividend yield, healthy balance sheet, low PE, positive cash flow from operations, and a new $1.2 Billion financing secured for fleet additions I don't understand why this stock is priced so low. Any comments on why this might be?
I'm thinking for long term focus it will be beneficial to add to my position in GLNG.
Thanks in advance for your comments.