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Golar LNG (GLNG) Inks Deal With BP for FLNG Gimi Construction

Zacks Equity Research

Golar LNG Limited’s GLNG newly incorporated subsidiary — Gimi MS Corporation — has signed a 20-year Lease and Operate Agreement (LOA) with BP for the charter of an FLNG vessel, Gimi. The agreement is aimed at servicing the Greater Tortue Ahmeyim project.

The FLNG Unit, Gimi, is likely to begin production in 2022. It will be able to produce approximately 2.5 million tonnes of LNG per annum in the first phase of the Greater Tortue Ahmeyim project.

The FLNG Gimi has an estimated cost of nearly $1.3 billion, excluding financing costs. On acceptance under the contract, Golar LNG anticipates annual EBITDA (earnings before interest, tax, depreciation and amortization) of around $215 million or more.

Markedly, the recently announced LOA is Golar LNG’s second such FLNG tolling agreement. Earlier in May, FLNG Hilli Episeyo — the world’s first FLNG vessel developed as a conversion project from an LNG carrier — began production. With the onset of the Hilli Episeyo operation, Golar LNG has been witnessing a significant increase in free cash flow. Earnings from Hilli are expected to boost the company’s overall results in the fourth quarter, set to be released on Feb 27.

Zacks Rank & Stocks to Consider

Golar LNG has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Transportation sector are Frontline Ltd. FRO, Trinity Industries TRN and Expeditors International of Washington EXPD. While Frontline and Trinity sport a Zacks Rank #1 (Strong Buy), Expeditors carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Each of the companies has an impressive earnings history. While Frontline and Expeditors have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, Trinity has trumped estimates in three of the preceding four quarters.

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