LONDON--(Marketwire - Nov 28, 2012) -
* Golar LNG ("Golar" or the "Company") reports operating income of $70.2
million for the third quarter of 2012, an increase of 21% from the
* Golar reports consolidated net income of $44.7 million for the third
quarter of 2012.
* Golar LNG Partners L.P. ("Golar Partners") raises net proceeds of $223
million from its first post-IPO equity issue and applies funds to the
Nusantara Regas Satu purchase.
* Vendor financing provided in respect of the Freeze sale is repaid after
Golar Partners places a five year NOK 1,300 million unsecured bond.
* Quarterly dividend increased by $0.025 to $0.425 per share, driven by
improved cash flow and market fundamentals. Golar also resolves to
distribute an accelerated dividend of $0.425 per share for the fourth
quarter of 2012 in December 2012.
* Golar and LNG Partners LLC (Houston, Texas) sign option agreement for
prospective long term charter of two of Golar's newbuild carriers to
service Douglas Channel LNG project.
* Golar signs agreement with Keppel for the development of the Company's
first floating liquefied natural gas vessel ("FLNGV").
* Golar Partners raises a further $181 million following a second
follow-on equity issue.
* Golar sells its interests in the companies that own and operate the LNG
carrier Golar Grand(1) to Golar Partners for $265 million.
Golar LNG Limited reports consolidated net income of $44.7 millionandconsolidated operating income of $70.2 million for the three monthsendedSeptember 30, 2012 (the "third quarter"). Revenues in the third quarterwere$121.1 million as compared to $107.0 million for the second quarter of 2012(the"second quarter").
(1) Golar LNG Partners is a subsidiary of the Company. Accordingly, theeffectof the dropdown of the Golar Grand to Golar LNG Partners was financedthroughthe $175 million proceeds from the Golar Partners' equity offeringand theassumption of its $90 million debt, will be eliminated on consolidationotherthan the impact of movement in non-controlling interest for the purposeof theconsolidated financial statements.
The increase is primarily as a result of a full quarter's earningscontributionfrom NR Satu and Golar Viking whose new charters commenced during thesecondquarter and this is reflected in an improved average Time CharterEquivalent("TCE") rate for the third quarter at $98,473 per day compared to$97,118 forthe second quarter.
As expected, operating costs in the third quarter at $19.4 million arehigherthan the second quarter at $17.8 million. This is mainly due to the NRSatubeing operational throughout the quarter.
Following repayment of the long-term debt due to related parties in Julyand asmall drop in LIBOR, net interest expense for the third quarter fell to$7.8million from $8.5 million in the second quarter.
Other financial items decreased from a loss of $4.4 million in thesecondquarter to a third quarter loss of $3.2 million. This is mainly due toreducednegative mark-to-market valuation movements in respect of currency andinterestrate swaps.
Tax expense is higher this quarter at $1.7 million compared to $0.4million inthe second quarter. This is due to tax provisions made in respect ofthe NRSatu, for which the Company is fully reimbursed by the charterer.
Golar LNG Partners first follow-on equity offering
Golar Partners closed a public offering of 5,500,000 common units on July16 ata price of $30.95 per common unit. In addition, the Underwritersexercised infull their option to purchase a further 825,000 common units bringing thetotalnumber of units sold to 6,325,000. Golar GP LLC, the Partnership'sgeneralpartner, maintained its 2% general partner interest in the Partnership andGolarsubscribed to 969,305 common units in a private placement at a price of$30.95per unit. Golar Partners raised net proceeds of approximately $223 millionas aresult of the offering. Following the private placement Golar's interestin thePartnership (including the general partner stake) was diluted from65.4% to57.5%.
Nusantara Regas Satu(2)
As previously announced and subsequent to the successful acceptanceby itsCharterer on July 13 the Company completed its sale of the FSRU, NRSatu toGolar Partners on July 19, 2012 for $385 million. Golar Partnersfinanced theacquisition using the proceeds from the July 16 equity offering, cashfromoperations and making use of $155 million of vendor financing provided byGolar.The vendor financing is expected to be refinanced shortly when GolarPartnersenters into bank financing in respect of the NR Satu.
Settlement of Freeze Vendor Financing
On September 28 Golar Partners successfully concluded a five yearNOK1,300million bond issue in the Norwegian Bond market that was closed andsettled inOctober 2012. The aggregate principal amount of the bonds isequivalent toapproximately $227 million and has been swapped to USD with an all-in fixedrateof 6.485%. Golar Partners applied $222 million of the net proceedsagainst theequivalent outstanding vendor financing provided by Golar in respectof theGolar Freeze(2). This facility which accrued interest at 6.75% infavour ofGolar was extinguished on October 12.
(2)Golar LNG Partners is a subsidiary of the Company. Accordingly, theeffect ofthe dropdown of the NR Satu and the Golar Freeze to Golar LNG Partners,will beeliminated on consolidation other than the impact of movement in non-controllinginterest for the purpose of the consolidated financial statements.
Golar Partners second follow-on equity offering
Golar Partners closed a further public offering of 4,300,000 commonunits onNovember 7, 2012 at a price of $30.50 per common unit. Golar GPLLC, thePartnership's general partner, maintained its 2% general partnerinterest andGolar subscribed to 1,524,590 common units in a private placement at aprice of$30.50 per unit. The net proceeds to the Partnership from this offeringwereapproximately $181 million. Following the closing, the Company owns11,821,149common units and 15,949,831 subordinated units representing anapproximate52.1% interest in the Partnership. By virtue of its ownership of theGeneralPartner which owns 1,065,225 units, the Company's total interest inthePartnership now stands at approximately 54.1%.
On November 8, the Company completed its sale of interests in thecompanieswhich own and operate the LNG carrier Golar Grand to Golar Partners for$265million. Golar Partners financed the purchase by using $175 million of the$181million proceeds from the equity offering that closed on November 7. Aspart ofthe sale, Golar Partners also assumed a $90 million finance leaseobligation(net of the associated cash deposit) in respect of the vessel.
As a result of the above transactions and assuming Golar Partnersrepays theremaining $155 million vendor loan with a bank facility, as at theend ofNovember, the Company would have approximately $500 million in cashwhich itwill mainly use for funding the remaining equity portion of itsnewbuildingprogram.
Corporate and other matters
The Board has proposed that the cash dividend be increased by $0.025 to atotalof $0.425 a quarter based on another quarter of increased earnings andstrongfundamental outlook. The Board has noted that a significant part of Golar'sU.S.shareholder base may be subject to increased dividend taxation for 2013. Inviewof this, the Board has decided to accelerate the dividend payment for thefourthquarter of 2012 such that the dividend can be paid out together with thethirdquarter dividend. This advanced dividend for the fourth of 2012 is alsoset at$0.425 per share. The total dividend payment due will therefore be$0.85 pershare. The record date for the dividend will be December 7, ex-dividenddate isDecember 5 and the dividend will be paid on or about December 21. In viewof theacceleration of the fourth quarter 2012 dividend payment, no additionaldividendpayment can be expected prior to the declaration of the first quarterdividendin 2013.
As previously announced, Golar was awarded the Gas Atacama MejillonesSeaport'sFSRU Project ("Gas Atacama") on July 5, 2012, subject to certaincontractualconditions related to Gas Atacama achieving a threshold of new powersalesagreements prior to 31 December 2012. The Company is expecting thatthesethresholds are not likely to be met within December 31 and the partieswilldiscuss a possible extension of the deadline.
British Columbia LNG project
On October 10, Golar entered into a 90 day Vessel Charter Option AgreementwithLNG Partners LLC (Houston, TX) for the provision of two newbuild LNGcarriersunder long term contract to deliver LNG production from the DouglasChannel LNGProject in British Columbia (BC), Canada.
The Douglas Channel Project, in which LNG Partners is an equity owner,is aproposed liquefaction facility on the west bank of the Douglas Channel,withinthe district of Kitimat, BC. In addition to prospectivelyproviding twovessels, the agreement confers certain preferential rights forGolar toparticipate in the project with LNG Partners LLC by way ofinfrastructureinvestment or LNG offtake.
Floating Liquefaction ("FLNG")
On October 31, Golar entered into an agreement with Keppel ShipyardLimited("Keppel") to develop the Company's first floating liquefiednatural gasvessel. The agreement is based on the conversion of one of theCompany'sexisting Moss type vessels and includes options for two furthervesselconversions. Keppel has previously worked with Golar converting comparableMosstype vessels into FSRUs.
The Company is targeting projects with pipeline quality gas andunconventionalnatural gas reserves such as coal bed methane and shale gas or lean gassourcedfrom offshore fields, which thereby limits the gas processing equipmentneeded.
The first unit which will be developed through stages according tocustomerrequirements will have a capacity of up to two million tonnes per annum.Thisstrategy is designed to put Golar in a stronger position to utilise itsown LNGcarrier fleet and to provide gas for existing and potential FSRUcustomers. TheFEED study has commenced and conversion is expected to be underway by June2013.
De-listing from Oslo Bors
The company completed its delisting from the Oslo Bors on August 30 asplanned.Golar continues to maintain a VPS register and completed theNorwegian OTCregistration of Golar LNG Limited on August 31 so that Norwegianshareholderscan continue to hold and trade their shares in Norway.
Shares and options
During the quarter a total of 83,309 options were exercised. In connectionwiththis, the Company issued 83,309 new shares. The total number ofremainingoptions is 676,720. As at September 30, 2012 the total number ofsharesoutstanding in Golar excluding options is 80,407,061.
Although an optimistic sentiment within the shipping market continuesin thelonger term, a bearish cargo market prevailed in the third quarter withfallingprices and weak demand in the Far East. Chartering activity remainedthin andlacked direction and consequently, short-term charter ratesexperienced acorrection from rates seen earlier in the year.
Looking to the fourth quarter, weak Far East demand may result inadditionalvessels being released into the market, however, with limited availablemodernundedicated vessels a resumption in interest from buyers could very easilypullrates upward again.
The worldwide LNG fleet currently stands at 365 vessels including FSRUs,with afurther 87 on order including FSRU's/FPSO's. Seventy nine vessels havebeenordered since January 1, 2011, including 22 vessels ordered in2012.Approximately 59% of the order book is already committed. Delivery ofmost ofthis order book is not scheduled to commence until Q3 2013 at whichtimeincreased exports, fleet renewals, new sales contracts and activetradinginterests provide solid support for attractive long term charter rates.
The chartering market is beginning to differentiate between shippingtechnologies by creating a tiered pricing environment where TFDE vesselswillcommand a premium against all other types of tonnage. As such, marketreferences are moving away from steam turbine units and towards the ultra-modernhighly efficient 160-162,000m3 TFDE ship. The efficiencies of ultra-modernTFDE, as compared to steam turbine propulsion systems, generate arecognizedoperational savings of anywhere between US$20-40,000/day given the cost ofvarious considerations (bunkers and LNG; the greater the price the greaterthesavings
Despite tightening supply from minor production issues reported atSnohvit,Qatargas and Yemen LNG, downward pressure on pricing was experiencedprimarilydue to high inventory levels that persisted East of Suez. This reducedarbitragetrade opportunities and negatively impacted the spot market.
Spot cargo prices fell from around $15.00 per mmbtu in July to the low$12.00per mmbtu levels by the end of the quarter. There are however signsthat theprice decline has reached bottom with spot price indicatorsincreasing forwinter cargoes.
Towards the end of the quarter European spot prices declined in theabsence ofre-export/diversion opportunities, ample pipeline gas and low demand.Tradingopportunities diminished as NBP and Far East price spreads fell below$3.00 permmbtu for prompt deliveries. During this period Europe's re-exportsdeclined bymore than 50% from the second quarter.
New LNG supply will soon be coming to the market with thecommissioning ofAngola LNG in the Atlantic Basin. Despite delays at the West Africanprojectduring the third quarter, exports are expected to start early in the NewYear.This represents a set-back of about ten months from the original targetdate forthe country's first LNG project.
In the Far East, ConocoPhillips and Origin Energy announced the sanctioningof asecond train at its Australia Pacific LNG project. The project isplanning tobring the first train on late in 2015 with the second train following in2016.Both trains will be sized at 4.5 million tonnes. Additionally,during thequarter Chevron made positive statements about proceeding with a fourthtrain atits Gorgon LNG project in Barrow Island, Western Australia. There arecurrentlythree trains at Gorgon under construction totalling 15.6 million tonnes.
In addition to Angola, given imminent start-up of the project, supplyprojectsunder construction in both the Atlantic and Pacific Basin have reachedclose to100 million tonnes, with construction officially beginning at Cheniere'sSabinePass LNG export facility.
Golar is currently working on multiple FSRU opportunities and hasbeenshortlisted for five projects. FSRUs have become an acceptableregasificationsolution for most new LNG importers and Golar's speculative FSRU ordershavepositioned the Company to meet demand for projects with short leadtimes. TheCompany notes that there appears to be an increased emphasisplaced onoperators, such as Golar, who can demonstrate prior success in fast-trackproject execution and operational experience.
The Middle East continues to be extremely active as countries addressrapidlydeveloping gas shortages with more than five projects currently invariousphases of development. South Asia and South America are also areas withmultipledevelopment opportunities. All of these regions are, almost exclusively,focusedon floating regasification solutions and the Board feels that thefavorableeconomics of FSRUs will allow Golar to continue to expand its franchisein thefuture.
The Company has in the last nine months raised approximately $0.9billion incash through drop down sales to Golar Partners and financing efforts(inclusiveof the refinancing of the remaining Golar Partners vendor loan). Thetarget hasbeen to fully finance the existing new building program and continue togrow thedividend without raising additional equity or realising any of its $825millioninvestment in Golar Partners. The Board is pleased with the progress made.
The remaining capital expenditure of the thirteen ship new buildingprogram isapproximately $2.3 billion. The Company has received several proposalsfrom itscore banks which support the Company's view that, through a combinationof itsexisting cash position, positive cash flow and the proposed financing it isableto reach this target. Any additional dropdowns or long term charters forthe newbuildings will further improve this situation.
The negative development in the spot charter market in the thirdquarter hasshown that the present shipping market and market balance are sensitiveto anyset back in production volumes. The Board expects that this situationwillgradually improve in the coming three to four years, as large new LNGproductionvolumes will come to the market. A significant part of these volumeshave atpresent not secured shipping capacity.
The Board is excited about the progress made and the prospects for theFSRUbusiness as well as the FLNG business. However significant work isoutstandingin order to convert this progress into additional earnings.
Due to the successful growth in the dividend in Golar Partners, Golar LNGis nowin a position where its wholly owned subsidiaries Golar GP LLC andGolar LNGEnergy Limited, are expected to start to receiving incentivedistributionpayments from the Partnership. Following the drop down of the Golar Grandthisamounts to $2.5 million on an annual basis.
The results for Q4 will be negatively influenced by the planned dry-docking forthe Golar Spirit as well as reduced revenue for Golar Maria trading in thespotmarket. For the remaining vessels earnings are likely to be in linewith thethird quarter.
Further growth in earnings will come when the first new building isdelivered inAugust next year.
The Board remains confident in the way the Company is positioned tomeet thehigh growth in LNG consumption expected in the years to come.
Forward Looking Statements
This press release contains forward looking statements. Thesestatements arebased upon various assumptions, many of which are based, in turn, uponfurtherassumptions, including examination of historical operating trends madeby themanagement of Golar. Although Golar believes that these assumptionswerereasonable when made, because assumptions are inherently subject tosignificantuncertainties and contingencies, which are difficult or impossible topredictand are beyond its control, Golar LNG cannot give assurance that it willachieveor accomplish these expectations, beliefs or intentions.
Included among the factors that, in the Company's view, could causeactualresults to differ materially from the forward looking statementscontained inthis press release are the following: inability of the Company toobtainfinancing for the new building vessels at all or on favourable terms;changes indemand; a material decline or prolonged weakness in rates for LNGcarriers;political events affecting production in areas in which natural gas isproducedand demand for natural gas in areas to which our vessels deliver;changes indemand for natural gas generally or in particular regions; changesin thefinancial stability of our major customers; adoption of new rulesandregulations applicable to LNG carriers and FSRU's; actions taken byregulatoryauthorities that may prohibit the access of LNG carriers or FSRU's tovariousports; our inability to achieve successful utilisation of our expandedfleet andinability to expand beyond the carriage of LNG; increases in costsincluding:crew wages, insurance, provisions, repairs and maintenance; changes ingeneraldomestic and international political conditions; the current turmoilin theglobal financial markets and deterioration thereof; changes inapplicablemaintenance or regulatory standards that could affect our anticipateddry-docking or maintenance and repair costs; our ability to timely complete ourFSRUconversions; failure of shipyards to comply with delivery schedules on atimelybasis and other factors listed from time to time in registrationstatements andreports that we have filed with or furnished to the Securities andExchangeCommission, including our Annual Report on Form 20-F andsubsequentannouncements and reports. Nothing contained in this press releaseshallconstitute an offer of any securities for sale.
November 28, 2012
The Board of Directors
Golar LNG Limited
This information is subject of the disclosure requirements acc. to §5-12 vphl(Norwegian Securities Trading Act)
Golar LNG Limited 3rd Quarter 2012 Results:http://hugin.info/133076/R/1661111/538068.pdf
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Golar Management Limited
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