Third Quarter 2018 Results. Golar LNG Limited

Transcription

1 Third Quarter 2018 Results

2 FORWARD LOOKING STATEMENTS This press release contains forwardlooking statements as defined in the Securities Exchange Act of 1934, as amended and which reflect management s current expectations, estimates and projections about its operations. All statements, other than statements of historical facts, that address activities and events that should, could or may occur in the future are forwardlooking statements. Words such as may, could, should, would, expect, plan, anticipate, intend, believe, estimate, propose, potential, continue, or the negative of these terms and similar expressions are intended to identify such forwardlooking 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 forwardlooking statements. You should not place undue reliance on these forwardlooking statements, which speak only as of the date of this press release. Unless legally required, Golar undertakes no obligation to update publicly any forwardlooking 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 forwardlooking statements are: changes in LNG carriers, FSRU and floating LNG vessel market trends, including charter rates, ship values and technological advancements; changes in the supply and demand for LNG; changes in commodity prices; changes in trading patterns that affect the opportunities for the profitable operation of LNG carriers, FSRUs; and floating LNG vessels; changes in Golar s ability to retrofit vessels as FSRUs and floating LNG vessels and in our ability to obtain financing for such retrofitting; increases in costs; changes in our ability to sell additional equity interests in Hilli on a timely basis or at all; our inability to meet our obligations under the Heads of Terms agreement entered into in connection with the BP Greater Tortue / Ahmeyim Project prior to FID, which will result in extensive termination fees; our ability to make additional equity funding payments to Golar Power to meet our obligations under the shareholders agreement; changes in the availability of vessels to purchase, the time it takes to construct new vessels, or the vessels useful lives; changes in the ability of Golar to obtain additional financing; changes in Golar s relationships with major chartering parties; changes in Golar s ability to sell vessels to Golar LNG Partners LP; Golar s ability to integrate and realize the benefits of acquisitions; changes in rules and regulations applicable to LNG carriers, FSRUs and floating LNG vessels; our inability to achieve successful utilization of our expanded fleet or inability to expand beyond the liquefaction, carriage of LNG and provision of FSRUs particularly through JVs; changes in domestic and international political conditions, particularly where Golar operates; as well as 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 forwardlooking statements. Actual results may differ materially from those expressed or implied by such forwardlooking statements. The Company undertakes no obligation to publicly update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise unless required by law. 2

3 Financial Highlights (USD thousands) 2018 JulSep 2018 AprJun 2018 JanSep 2017 JanSep 2017 JanDec (Audited) Total operating revenues Voyage, charterhire and commission expenses Net operating revenues Operating expenses Administrative expenses (1) Project development expenses (1) Realized gain on FLNG derivative instrument Other operating gains and losses Adjusted EBITDA (2) Unrealized gain on FLNG derivative instrument Depreciation and amortization Other nonoperating income (loss) Net interest expense Other financial items, net Income taxes Equity in net earnings (losses) of affiliates Net income attributable to noncontrolling interests Net income (loss) attributable to Golar LNG Limited 123,101 (24,737) 98,364 (28,850) (14,775) (5,741) 11,270 23,260 83,528 77,470 (28,528) (29,539) (8,231) (156) 2,668 (31,000) 66,212 59,374 (16,483) 42,891 (20,496) (13,356) (7,943) 3, ,162 94,700 (20,457) (21,914) 1,831 (490) (4,674) (16,839) 36, ,665 (65,741) 182,924 (67,761) (38,867) (16,964) 14,318 23,278 96, ,770 (65,394) (63,507) (7,637) (640) (3,547) (60,444) 81,529 85,950 (41,828) 44,122 (38,870) (27,188) (6,383) (28,319) (59,937) 108 (48,381) (3,495) (1,070) (19,100) (23,332) (183,526) 143,537 (61,292) 82,245 (55,946) (38,030) (12,304) (24,035) 15,100 (76,522) (81) (53,415) 20,627 (1,505) (25,448) (34,424) (179,703) Number of vessels Dividend (US cents) (1) Presentation changed in Q2 2018, prior periods retrospectively adjusted, see the Appendix attached. (2) Adjusted EBITDA is a nongaap measure. See the Appendix attached for a definition of this nongaap measure. 3

4 Balance Sheet (USD thousands) 2018 Sep Jun Mar Dec 31 (Audited) 2017 Sep 30 Current assets Cash and cash equivalents Restricted cash and shortterm deposits Other current assets & amounts due from related parties Noncurrent assets Restricted cash Investments in affiliates Vessels and equipment, net Asset under development Other noncurrent assets TOTAL ASSETS Current liabilities Current portion of longterm debt and shortterm debt Other current liabilities & amounts due to related parties Noncurrent liabilities Longterm debt Other longterm liabilities Stockholders equity TOTAL LIABILITIES & EQUITY 306, ,456 77, , ,222 3,315, ,176 5,187, , ,659 1,788, ,449 2,146,396 5,187, , ,289 62, , ,664 3,342, ,476 5,192, , ,427 1,855, ,167 1,842,695 5,192, , ,412 43, , ,736 2,061,027 1,212, ,159 4,784, , ,377 1,735, ,569 1,780,588 4,784, , ,265 36, , ,225 2,077,059 1,177, ,504 4,764,287 1,384, ,341 1,025, ,795 1,796,304 4,764, , ,087 31, , ,285 2,093,515 1,032,116 64,317 4,645,223 1,102, ,527 1,199, ,718 1,784,429 4,645,223 4

5 EBITDA (1) Potential: Effective Run Rate (1) USD millions + = Further adjusted EBITDA (1) (Q annualized) Run Rate (1) Above annualized numbers effectively include share option expenses of ~$15m in Corporate and ~$22m of project development expenses (mainly Tortue) in FLNG Further Adjusted EBITDA (1) assumptions: FLNG Every $1/bbl increase in Brent equates to increase of approximately $3m in tolling fees billed; average Brent price in Q3 was $74(2); FLNG amount above is after deducting MLP s interest but before reflecting Keppel and B&V s share. Run Rate (1) assumptions: Shipping: Every $10K increase in TCE equates to increase of approximately $40m in charter hire, with no change to vessel operating expenses. TCE assumes a $25K differential in day rates for TFDE vessels ($80KPD) vs. steam vessels ($55KPD). Fleet assumes 9 TFDE vessels (with Golar Tundra trading as a carrier) and 2 steam vessels. FLNG: Tolling Agreement provides customer an option to exercise Hilli Train 3 with Brent price assumed of $75/bbl. Option not exercised as of 30 September Further this exercise assumes no incremental operating expenses. Power: 25% share of expected power plant operating revenues less operating expenses, assuming BRL/USD exchange rate of 3.7 and full year of operations (expected to commence Jan 2020). 50% share of expected Golar Nanook operating revenues and operating expenses (expected to commence in Jan 2020). (1) Further Adjusted EBITDA and Run Rate are nongaap measures, see Appendix attached for definitions. We have not forecast net income on a run rate basis, which would be the most directly comparable financial measure under GAAP, and we are unable to reconcile differences between these run rates and net income. (2) The unweighted arithmetic average of the Dated Brent Index values for the three months immediately preceding calendar month for which tolling fee is calculated. 5

6 Effective Run Rate (1) and indicative 2020 Debt Service (1) USD millions Sergipe power project has a 25 year contract life but current average debt life is ~9 years (1) Further Adjusted EBITDA and Run Rate are nongaap measures, see Appendix attached for definitions. We have not forecast net income on a run rate basis, which would be the most directly comparable financial measure under GAAP, and we are unable to reconcile differences between these run rates and net income. See assumptions applied in relevant slide where the measure is described in further detail. (2) 2020 Debt Service represents expected contractual repayments in 2020, excluding balloon repayments (see assumptions applied in earlier slide) and receipt of four quarters of minimum quarterly distributions from the Partnership, assuming ownership of 22.7m units and payment/unit of $

7 FLNG FLNG Hilli Episeyo (Cameroon): Vessel continues to operate with 100% commercial availability. Currently in process of offloading10 th LNG cargo. Discussions on utilization of spare capacity commenced. BPKosmos (Mauritania/Senegal): FLNG unit similar to Hilli Episeyo for 20 years. BP indicating that FID scheduled for Golar remains ready to support this. FLNG Hilli Episeyo offshore Cameroon. Delfin LNG (US Gulf Coast): 3.3MTPA Mark II FLNG design with cost per ton, similar to Hilli Episeyo. Expected to deliver a highly competitive liquefaction solution in North America when connected to Delfin s existing pipeline infrastructure. Other FLNG prospects continue to be developed Schematic of US Gulf of Mexico Delfin LNG project. 7

8 Vessels Vessels Shipping Spot rates: Average TFDE vessel spot rates: Prompt vessel availability Orderbook availability Source: Fearnley LNG 8

9 SmallScale LNG StoltNielsen, Höegh & Golar have collaborated to form SmallScale LNG services provider, Avenir: Stolt: 50%; Golar: 25%; Höegh: 25% Investment = combined commitment of $182m. Golar commitment = $46m; $25m paid in 4Q. Target markets include bunkering, LNGtopower and trucks/transportation. Able to deliver end to end supply chain for $ /mmbtu cheaper than conventional fuels across target markets. Ordered 4 x 7,500cbm vessels to date. More under discussion. Oslo OTC market listing planned. Golar have 8 petrol stations (FSRUs) that could potentially support SmallScale supply chains* Example: Mediterranean SmallScale supply chain LNG Production/Reload Terminals/FSRU/FLNG Avenir s LNG Carriers HIGAS Terminal Trucking Regas Pipeline * Golar does not have access to FSRUs under existing charters, except for the Nanook FSRU scheduled to start operations The Golar Spirit and Tundra are immediately available. Renegotiation of remaining charters to secure access to gas storage onboard contracted FSRUs will be considered where appropriate. 9

10 FSRU and Power Sergipe project continues to plan, bids for others being worked: Sergipe on schedule to start operations in less than 14 months. Project fully funded with equity paid in. FSRU Golar Nanook financed and delivered. Next Brazilian power auction scheduled for December Bids submitted for other FSRU projects that suit both conversion and newbuild vessels. Sergipe power station progress to date Sergipe power station progress to date FSRU Golar Nanook delivery ceremony. 10

11 Summary and Outlook Shortterm cash flows: With FLNG Hilli Episeyo in full commercial production and the 4Q LNG carrier TCE significantly exceeding cash breakeven levels, Golar is now cash flow positive. Significant improvements to TCE are expected over the course of Mediumterm cash flows: With Sergipe due to come on stream at the beginning 2020, the potential to fix one or more FSRUs and Avenir s commencement of high growth smallscale LNG distribution operations in late 2020 we expect to see stronger cash flows in the mediumterm. Longerterm cash flows: With our proven low cost and fast FLNG concept leading to one or more project FIDs over the next 12months and further development of our power business we expect an increase in longerterm cash flows from Commencement of FLNG Hilli Episeyo, a resurgent shipping market and the pending startup of Sergipe have transformed Golar into a fully financed cash generative company. Golar will use this cash to grow the company further and to increase the dividend to shareholders. 11

12 THANK YOU 12

13 Appendix: NonGAAP Measures Adjusted EBITDA: Adjusted EBITDA is defined as operating income before interest, tax, unrealized marktomarket movements on the oil derivative instrument, depreciation and amortization. We believe Adjusted EBITDA is widely used by investors to measure a company s operating performance without regard to items such as interest expense, taxes, depreciation and amortization which vary substantially from company to company depending on capital structure, the method by which assets were acquired and depreciation policies. The exclusion of the unrealized marktomarket movements on the oil derivative instrument enables comparability to prior period performance and trend analysis. Management's definition of Adjusted EBITDA provides relevant and useful information to management, investors and other users of our financial information in evaluating the effectiveness of our operating performance in a manner that is consistent with management s evaluation of business performance. The following slides present a reconciliation to the most directly comparable financial measure under US GAAP. This measure should be seen as a supplement to and not a substitute for our US GAAP measures of performance and the financial results calculated in accordance with US GAAP and reconciliations from these results should be carefully evaluated. Further Adjusted EBITDA: We have utilized Q Further Adjusted EBITDA for the purposes of illustrating an annual base Adjusted EBITDA to layer in strategic projects which are anticipated over the coming periods. In arriving at Further Adjusted EBITDA management has made some changes to the Q3 Adjusted EBITDA including removing the impact of nonoccurring items and removing the Partnership s share of Hilli Adjusted EBITDA (defined below). Further Adjusted EBITDA annualizes the Q amount to determine an illustrative annual amount. In looking at Q Adjusted EBITDA management has removed One LNG dissolution costs and receipt of Tundra claim monies as these items would not be expected to occur on a regular basis and therefore management believes that they are not relevant for this illustrative exercise. Management has also removed the Partnership s share of Hilli Adjusted EBITDA as the purpose of the exercise is to illustrate our incremental growth resulting from the actualization of our strategic projects. Management believes that that the definition of Further Adjusted EBITDA provides relevant and useful information to investors and users of our financial information for the purposes of this illustrative exercise. The following slides present a reconciliation to the most directly comparable financial measure under US GAAP. Further Adjusted EBITDA is not intended to represent future cashflows from operations or net income (loss) as defined by US GAAP. This measure should be seen as a supplement to and not a substitute for our US GAAP measures of performance and the financial results calculated in accordance with US GAAP and reconciliations from these results should be carefully evaluated. Partnership s share of Hilli Adjusted EBITDA: In Q3 2018, we completed the dropdown of 50% of the Common Units in Golar Hilli LLC to the Partnership. As we have retained control we continue to consolidate the results of Golar Hilli LLC on a line by line basis. For the purposes of the illustrative run rate exercise included in this presentation management have removed the Partnership s share of Hilli Adjusted EBITDA to illustrate the incremental growth to the Company resulting from the actualisation of our pipeline of strategic projects. The Partnership s share of Hilli Adjusted EBITDA is defined as the Partnership s share of Golar Hilli LLC s revenue and operating expenses before interest, tax, depreciation, and amortization. From a US GAAP perspective the Partnership s share of Golar Hilli LLC is reflected within net income attributable to noncontrolling interests. Partnership s share of Hilli Adjusted EBITDA is not intended to represent future cashflows attributable to the Partnership. The measure should be seen as a supplement to and not a substitute for our US GAAP measures of performance. Run Rate: Reflects the Further Adjusted EBITDA for our pipeline of strategic projects which are actualizing in the coming periods. For the purpose of this project the three growth projects are the improvement in the shipping market, customer s exercise of its option of Hilli Train 3 in FLNG, and the commencement of Golar Power s operations. The shipping element reflects the incremental revenue arising from an increase in rates assuming that operating expenses remain unchanged. For FLNG, the Partnership, Keppel and B&V have a 50%, 5% and 0.4% respective ownership interest of Common Units in Golar Hilli LLC, reflected as noncontrolling interest in our financial statements prepared in accordance with US GAAP; in Run Rate we reflect only the Partnership s 50% interest. We equity account for our investment in Golar Power therefore in the future we will report our share of their earnings net of interest and tax in one line in the Statement of Income Equity in net earnings (losses) of affiliates. In forecasting Golar Power s run rate we have removed the effect of Golar Power s interest, tax and depreciation. Management has not forecasted net income for these initiatives which would be the most directly comparable US GAAP measure. The run rate is not intended to represent future cashflows that will be generated from these projects and the measure should be seen as a supplement and not a substitute for our US GAAP measures of performance. Net Debt: Net Debt is defined as the sum of Current portion of longterm debt and shortterm debt, plus, Longterm debt, less, Cash and cash equivalents, less, Restricted cash and shortterm deposits, less, Restricted cash. Time Charter Equivalent, or TCE: The average 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 offhire. 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 offhire during drydocking. TCE rate is a standard shipping industry performance measure used primarily to compare periodtoperiod 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 nongaap measure, as we believe it provides additional meaningful information in conjunction with total operating revenues, the most directly comparable 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 TCE may not be comparable to that reported by other entities. Refer to our most interim results release on our investor relations section on our website ( for a reconciliation to the most directly comparable financial measure under US GAAP. Change of presentation: With effect from the quarter ended June 30, 2018, we presented a new line item in operating expenses in the income statement. The new line item, "Project development expenses", includes the costs associated with pursuing future contracts and developing our pipeline of activities that have not met our internal threshold for capitalization. Previously, these costs were presented within "Administrative expenses" along with our general overhead costs. We believe that the introduction of this new line item in the income statement provides users of our financial statements greater transparency over a key element of our business. This presentation change has been retrospectively adjusted in prior periods. 13

14 Appendix: Adjusted EBITDA Vessel and operations comprises the sum of: Q As disclosed in our Q Interim Results Release (USD millions) Shipping (1) Corporate (1) Vessel and operations (1) FLNG Total Total operating revenues Vessel operating expenses Voyage, charterhire & commission expenses (including expenses from collaborative arrangement) Administrative expenses (2) Project development expenses (2) Realized gain on derivative instrument Other operating gains (losses) Adjusted EBITDA 66 (17) (23) (1) (15) (12) 69 (17) (23) (15) (1) (12) (1) (5) 11 (3) (29) (25) (15) (6) Reconciliation to operating income (loss): Unrealized gain on oil derivative instrument Depreciation and amortization Operating income (loss) (16) 35 (12) (16) (12) (29) 132 (1) Vessel and operations as presented in our Q3 earnings release is separated into Shipping and Corporate. (2) With effect from Q2 2018, new lineitem Project development expenses is presented which were previously included in Administrative expenses. 14

15 Appendix: Further Adjusted EBITDA Q (USD millions) Vessel and operations comprises the sum of: As disclosed in our Q Interim Results Release Shipping (1) Corporate (1) Vessel and operations (1) FLNG Total Adjusted EBITDA Nonrecurring item: Golar Tundra claim cash recovery (2) Nonrecurring item: OneLNG dissolution costs (3) Partnership s share of Hilli Adjusted EBITDA (4) Further Adjusted EBITDA 51 (26) 25 (12) (12) 39 (26) (17) (26) 3 (17) 43 Annualised Further Adjusted EBITDA (X4) 98 (47) (1) Vessel and operations as presented in our Q3 earnings release is separated into Shipping and Corporate. (2) A cash recovery of $26 million was received during Q as a result of proceedings in respect of a former contract for the Golar Tundra. (3) Costs of $3 million in connection with the dissolution of OneLNG were recognized in Q (4) The Partnership s share of Hilli Adjusted EBITDA is a nongaap measure, see definition presented earlier in this appendix. 15

16 Appendix: Future Repayments & Partnership Distributions* Assumptions applied in the above: Seal and Tundra contractual repayments in Q and Q respectively are refinanced vessel balloon repayment relates to the Arctic; 2020 vessel balloon repayment relates to the Viking; 2020 Corporate debt balloon repayment relates to the Margin Loan. FLNG: Hilli includes 50% of debt, reflecting the Partnership s guarantee of 50% of this debt. Power: Includes 50% of Nanook debt and 25% of CELSE debt, representing our pro rata share of this equityaccounted investment. Our share of Nanook and CELSE debt includes construction period interest repayments that are fully funded and capitalized and assume a BRL/USD exchange rate of 3.7. Corporate: Column Indicative 2020 debt service (assuming refinancing) includes all of the above assumptions, in addition to refinancing of the Viking, Arctic and Margin Loan, and receipt of four minimum quarterly distributions from the Partnership, assuming ownership of 22.7m units and payment/unit of $ * See Appendix A of Interim Results for the Period Ended September 30, 2018 for reconciliation to balance sheet debt. 16

17 Appendix:Net Debt (1) Analysis Shortterm Debt (USD millions) 2018 September 30 Total Debt (USD millions) 2018 September 30 Golar Tundra June Golar Seal December 31, 2018 (extension discussions in progress) 144 Consolidated lessorowned VIE subsidiaries (not shortterm for Golar) 529 Current debt relating to lessorowned VIE subsidiaries 799 Other current debt 32 Current portion of longterm debt and shortterm debt 831 LNG carriers 1,141 FSRU 126 FLNG Hilli Episeyo 911 Corporate debt 442 Total debt (2) 2,620 Cash and cash equivalents (306) Restricted cash and short term deposits (458) Net debt (1) 1,856 (1) Net debt is a nongaap measure. See Appendix attached for a definition of this nongaap measure. (2) Total debt is the sum of Current portion of longterm debt and shortterm debt and Longterm debt as presented on our consolidated balance sheet. 17