Fourth Quarter Results Golar LNG Partners 1 LP
FORWARD LOOKING STATEMENT This presentation 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 may, could, should, would, expect, plan, anticipate, intend, forecast, believe, estimate, predict, propose, potential, 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 presentation. Unless legally required Golar LNG Partners LP undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Important factors that could cause actual results to differ materially include, but are not limited to: statements about market trends in the floating storage and regasification unit (or FSRU), liquefied natural gas (or LNG) carrier and floating liquefied natural gas vessel (or FLNG) industries, including charter rates, factors affecting supply and demand, and opportunities for the profitable operations of FSRUs, LNG carriers and FLNGs; statements about Golar Partners and Golar LNG Limited s ability to retrofit vessels as FSRUs or FLNGs and the timing of the delivery and acceptance of any such retrofitted vessels by their respective charterers; Golar Partners ability to maintain distributions and the amount of any such distributions; Golar Partners ability to consummate the Acquisition of Hilli Episeyo on a timely basis or at all; the timeliness of the Golar Hilli Episeyo commissioning and acceptance; Golar Partners ability to integrate and realize the expected benefits from acquisitions and potential acquisitions, including the FLNG Hilli Episeyo; Golar Partners future share of annual contracted revenues, net of operating expenses relating to the Hilli Episeyo, which we expect to be accounted for under equity method; Golar Partners anticipated growth strategies; statements about Golar Partners cost of equity and cost of capital; the effect of the worldwide economic slowdown; turmoil in the global financial markets; fluctuations in currencies and interest rates; general market conditions, including fluctuations in charter hire rates and vessel values; the liquidity and creditworthiness of Golar Partners charterers; changes in Golar Partners operating expenses, including drydocking and insurance costs and bunker prices; Golar Partners future financial condition or results of operations and future revenues and expenses; the repayment of debt and settling of interest rate swaps; Golar Partners and Golar LNG Limited s ability to make additional borrowings and to access debt and equity markets; planned capital expenditures and availability of capital resources to fund capital expenditures; the exercise of purchase options by the Partnership s charterers; Golar Partners ability to maintain long-term relationships with major LNG traders; Golar Partners ability to leverage Golar LNG Limited s, Golar Power Limited s and OneLNG S.A. s relationships and reputation in the shipping industry; Golar Partners ability to purchase vessels from Golar LNG Limited in the future; Golar Partners continued ability to enter into long-term time charters, including our ability to re-charter the FSRUs and carriers following the termination or expiration of their time charters; Golar Partners ability to maximize the use of its vessels, including the re-deployment or disposition of vessels no longer under long-term time charter; timely purchases and deliveries of newbuilding vessels; future purchase prices of newbuildings and secondhand vessels; Golar Partners ability to compete successfully for future chartering and newbuilding opportunities; acceptance of a vessel by its charterer; termination dates and extensions of charters; the expected cost of, and Golar Partners ability to comply with, governmental regulations, maritime self-regulatory organization standards, as well as standard regulations imposed by its charterers applicable to Golar Partners business; availability of skilled labor, vessel crews and management; Golar Partners general and administrative expenses and its fees and expenses payable under the fleet management agreements and the management and administrative services agreement; the anticipated taxation of Golar Partners and distributions to Golar Partners unitholders; challenges by authorities to the tax benefits Golar Partners previously obtained estimated future maintenance and replacement capital expenditures; Golar Partners and Golar LNG Limited s ability to retain key employees; customers increasing emphasis on environmental and safety concerns; potential liability from any pending or future litigation; potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists; Golar Partners business strategy and other plans and objectives for future operations; and other factors listed from time to time in the reports and other documents that Golar Partners files with the U.S. Securities and Exchange Commission. Factors may cause actual results to be materially different from those contained in any forward-looking statement. Golar Partners does not intend to release publicly any updates or revisions toany forward-looking statements contained herein to reflect any change in Golar Partners expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based. 2
Recent Highlights Net income attributable to unit holders of $25.4 million and operating income of $40.5 million. Generated distributable cash flow 1 of $26.0 million for the quarter, with a distribution coverage ratio of 0.63 2 low coverage due to no earnings from Golar Spirit, dry-dock of Golar Winter & reduced earnings from Golar Maria and Golar Grand. Closed a Series A Preferred Unit offering raising net proceeds of $133 million. Initiated sale of Common and General Partner units under At-The-Market facility. Secured a 15-year contract starting 4Q 2018 for one of the Partnership s two available FSRUs. Declared unchanged distribution for 4Q of $0.5775 per unit. 1 Distributable cash flow is a non-gaap financial measure used by investors to measure the performance of master limited partnerships. See Slide 7. 2 Distribution coverage ratio is a non-gaap financial measure and represents the ratio of distributable cash flow to total cash distributions paid. See Slide 7. 3
Income Statement (USD thousands) Oct-Dec Jul-Sep Apr-Jun 2016 Oct-Dec Jan-Dec 2016 Jan-Dec (audited) Total operating revenues Vessel operating expenses Voyage and commission expenses Administrative expenses Depreciation and amortization Total operating expenses 90,113 15,384 2,220 5,456 26,556 49,616 105,635 17,198 3,853 4,933 26,356 52,340 135,969 18,620 1,561 2,249 26,142 48,572 114,942 13,390 1,501 2,674 25,286 42,851 433,102 68,278 9,695 15,209 103,810 196,992 441,598 59,886 5,974 8,600 100,468 174,928 Operating income 40,497 53,295 87,397 72,091 236,110 266,670 Interest income Interest expense Other financial items Other non-operating income Income before tax 3,079 (18,446) 9,080-34,210 2,105 (19,876) (2,034) 922 34,412 1,447 (18,856) (7,710) - 62,278 969 (16,984) 20,556 1,318 77,950 7,804 (75,425) (7,567) 922 161,844 4,295 (66,938) (2,745) 1,318 202,600 Income taxes (4,475) (4,378) (4,652) (2,822) (16,996) (16,858) Net income before non-controlling interests 29,735 30,034 57,626 75,128 144,848 185,742 Net income attributable to non-controlling interests (4,380) (3,491) (3,798) (3,685) (15,568) (13,571) Net income 25,355 26,543 53,828 71,443 129,280 172,171 4
Balance Sheet: Assets (USD thousands) Dec 31 Sep 30 2016 Dec 31 (audited) Current assets Cash and cash equivalents Restricted cash Amount due from related parties 246,954 27,306 7,625 206,821 21,817-65,710 44,927 23,914 Other current assets 29,611 20,059 26,376 Non-current assets Restricted cash Vessels and vessel under capital lease, net Amount due from related parties Other long term assets 155,627 1,694,868 177,247 88,133 158,476 1,710,578 177,247 86,975 117,488 1,763,896 107,247 103,150 TOTAL ASSETS 2,427,371 2,381,973 2,252,708 5
Balance Sheet: Liabilities & Equity (USD thousands) Dec 31 Sep 30 2016 Dec 31 (audited) Current liabilities Current portion of long-term debt Other current liabilities 118,850 61,237 158,067 87,295 78,101 137,371 Non-current liabilities and equity Long term debt Obligation under capital lease Other long term liabilities 1,252,184 126,805 20,694 1,273,037 126,051 20,312 1,296,609 116,964 19,234 Total Partners capital Accumulated other comprehensive loss Non-controlling interest TOTAL LIABILITIES AND EQUITY 771,031 26 76,544 2,427,371 645,013 34 72,164 2,381,973 541,506 (5,053) 67,976 2,252,708 NET DEBT 1 1,069,228 1,171,152 1,264,336 NET DEBT 1 TO ANNUALIZED ADJUSTED EBITDA 2 MULTIPLE 4.0x 3.6x 3.2x DEBT LESS LONG-TERM RESTRICTED CASH SWAPPED TO A FIXED RATE 99% 100% 93% AVAILABLE AND UNDRAWN REVOLVING CREDIT FACILITIES 0 0 25,000 1 Net debt is a non-gaap financial measure. See Appendix A 2 Annualized adjusted EBITDA is a non-gaap financial measure. See Appendix A 6
cash flows to total cash distributions declared for the period. Distributable Cash flow (USD thousands) Three months ended Dec 31, Three months ended Sep 30, Adjusted EBITDA 1 67,053 80,573 Interest Income Interest expense (excluding amortisation of deferred charges) Other cash financial items Current income tax charge Deferred income Estimated maintenance & replacement capital expenditures (including drydocking reserve) Non-controlling interest s share of DCF before maintenance and replacement capital expenditure Distributions relating to preferred units Distributable cash flow Depreciation and amortisation Unrealised net gain from interest rate derivatives Unrealised gain/(loss) on IDR reset Unrealised foreign exchange loss Amortisation of deferred charges Deferred income Movement in deferred tax liability Release of deferred tax asset Distributions relating to preferred units Estimated maintenance and replacement capital expenditures (including dry-docking reserve) Non-controlling interest s share of DCF before maintenance and replacement capital expenditure Net income before non-controlling interests Distributions declared 3,079 2,105 (17,055) (18,452) (1,625) (1,820) (3,434) (2,493) 332 914 (15,672) (15,699) (4,636) (4,165) (2,080) - 25,962 40,963 (26,556) (26,356) 9,222 4,278 1,559 (2,500) (76) (1,992) (1,391) (1,424) (332) (914) (540) (530) (501) (1,355) 2,080-15,672 15,699 4,636 4,165 29,735 30,034 41,478 40,807 Distribution coverage ratio 2 0.63 1.00 1 Adjusted EBITDA is a non-gaap financial measure. See Appendix A 2 Distributable cash flow is a non-gaap financial measure used by investors to measure the performance of master limited partnerships. Distribution coverage ratio represents the ratio of distributable 7
Distribution Coverage & Debt Ratio 400 350 300 250 200 150 100 50 0 2011 2012 2013 2014 2015 2016 EBITDA Net Income Distributions Paid Maintenance & Replacement CAPEX 1.2 0.99 1.04 1.28 1.23 1.33 1.07 4.3x 3.7x 2.8x 2.7x 3.5x 3.4x 3.1x Distribution Coverage Ratio 1 Net Debt to adjusted EBITDA 2 1 Distribution coverage ratio is a non-gaap financial measure. See slide 7. 2 Net debt and adjusted EBITDA are non-gaap financial measures. See Appendix A. 8
FSRUs $2.6bn of Effective Revenue Backlog* Revenue Backlog and effective revenue backlog is defined as the contracted daily charter rate for each vessel multiplied by the number of scheduled hire days for the remaining contract term, which includes the Partnerships pro-rata share of Hilli Episeyo revenues which are expected to be recorded as equity in net earnings of affiliates. * Assumes pro-rata share of interest in FLNG Hilli Episeyo 2018 2019 2020 2021 2022 2023 2024 2025 Golar Spirit/Golar Freeze 15-year Atlantic FSRU contract Golar Freeze or Golar Spirit Energy and logistics Company Atlantic basin Golar Winter 10-year contract extended to 15 year Golar Freeze 9-year contract Nusantara Regas Satu 11-year contract Golar Igloo 5-year contract Golar Eskimo 10-year contract Government of the Hashemite Kingdom of Jordan LNG Carriers FLNG Hilli Episeyo 8-year contract Methane Princess 20-year contract Golar Mazo (60% owned) Spot market Golar Grand 2-year contract Golar Maria Spot market Recent dropdown Acquisition subject to closing conditions Shell Spot market International Oil Major Spot market Base contract duration Options Expected short-term trading Dusup = Dubai Supply Authority. Nusantara Regas = Joint venture between Pertamina and PGN (National Gas distribution company of Indonesia). Pertamina = National oil company of Indonesia. KNPC = Kuwait National Petroleum Company. 9
FLNG Hilli Episeyo Mooring hook-up, connection to riser & umbilicals and cool down cargo transfer from Golar Bear complete. Notice of Readiness tendered. Feed gas introduced from onshore processing plant. Full commissioning of gas treatment systems substantially complete. Commissioning of refrigerant trains ongoing. Safety first! We remain on track but will not be rushed. Acquisition of 50% of Common Units in Golar Hilli LLC (Numbers quoted in USD $ Million) Full Debt Drawdown Current Budget Debt Agreed purchase price 658 658 Financed by: Assumption of 50% of CSSCL Sale and Leaseback facility (480) (468) Deferred purchase price receivable - Tundra Put Sale (107) (107) $70 Deposit paid on August 16, and cash at closing (71) (83) Approximate forecast share of Adjusted EBITDA $82 million per annum 10
Uncommitted Newbuilds Committed Newbuilds Shipping Update Spot rates (USD/day) and prompt availability New build deliveries through to 2020 20 15 6 5 10 1 12 2 8 5 11 9 6 4 6 3 4 5 0 1 1 1 2 2 1 5 5 10 15 Project Portfolio Open 20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 2020 Source: Affinity Shipping Approaching 2018 shoulder season from a position of strength: Steam turbine carrier rates today are approximately 80% higher than this time last year (TFDE up 67%). Around two thirds of 2018 vessel deliveries scheduled to deliver into shoulder season. Rates and utilization weakening accordingly. Start-up of US projects including Cove Point in May followed by Elba Island and Freeport T1 to drive up ton miles and absorb vessels. Further growth in Asian demand combined with Panama Canal bottlenecks also likely to have positive impact on shipping balance. Declining deliveries & limited uncommitted tonnage expected to support step-up in enquiries for long-term shipping in 2H18. Mazo and Maria likely to trade in the spot market until then. Suitable long-term charters expected to be more plentiful thereafter. 11
FSRU Update New contract award: An increasing number of emerging markets for LNG require smaller volumes on more flexible terms: Recently executed 15-year contract for mid-sized Atlantic based FSRU with flexible throughput-based tariff indicative of this. Contract to be served by suitably sized Golar Freeze or Golar Spirit. Q4 2018 start-up expected. $0.4 billion of revenue backlog added. Potential additional contracts: Lower capital cost of existing assets + access to low cost conversion model allows Golar Partners to transact at rates that support other small-mid size projects whilst still generating attractive returns: Similar opportunities being pursued elsewhere for remaining FSRU. Identified project for a converted Golar Maria being actively pursued in conjunction with Golar Power. Acquisition target: Golar Nanook represents a 2020 acquisition target and good progress has been made on the Sergipe project that this FSRU will service: Modified FSRU to be delivered in August/September 2018. 25-year time Time Charter Party and Operations and Services Agreement agreed with effectiveness subject to financial close. Approximate forecast annual EBITDA* $40 million. * EBITDA is a non-gaap financial measure and means the sum of earnings for the quarter before interest, other financial items, taxes, non-controlling interest, depreciation and amortization 12
Summary Solid contract base Effective revenue backlog 1 of $2.6 billion equivalent to 7.3 revenue backlog years 2 including Atlantic FSRU contract and initial interest in FLNG Hilli Episeyo. Excellent operating results 100% utilization achieved for scheduled operations once again. Strong financial profile Net debt 3 to annualized adjusted EBITDA 4 of 4.0x; distribution coverage ratio 5 of 1.07; Coverage ratio of 1.2 for last 3-years after deduction of $210 million of maintenance and replacement capex. Fast growing LNG market LNG trade expected to grow by approximately 30% over the next 5 years. LNG shipping market is tightening and plentiful low cost LNG is also generating significant interest in smaller / less expensive FSRUs. Future acquisition and recontracting opportunities Remaining Common Units in Golar Hilli LLC and Hilli expansion; Golar Power 25-yr Sergipe project; new Golar Power FSRU projects and OneLNG FLNG projects; Golar s LNG carriers; Golar Maria FSRU conversion project and other potential organic projects for existing assets. 1 Revenue Backlog/effective revenue backlog or Contracted Revenue is defined as the contracted daily charter rate for each vessel (including Atlantic FSRU contract and a pro-rata share of Hilli Episeyo) multiplied by the number of scheduled hire days for the remaining term of the contract. Some of this revenue may be recorded under Equity in net earnings of associates. 2 Revenue backlog years is defined as effective revenue backlog divided by annualized current quarter revenues (including Atlantic FSRU and a pro-rata share of Hilli Episeyo). 3 Net debt is a non-gaap financial measure. See Appendix A. 4 Annualized EBITDA is a non-gaap financial measure. See Appendix A. 5 Distribution coverage ratio is a non-gaap financial measure. See slide 7. 13
Appendix A (USD thousands) Year Three months ended ended December 31, December 31, Net Income before non-controlling interests 144,848 29,735 Depreciation and amortization 103,810 26,556 Interest Income (7,804) (3,079) Interest Expense 75,425 18,446 Other Financial Items 7,567 (9,080) Tax 16,996 4,475 Adjusted EBITDA 340,842 67,053 Annualized Adjusted EBITDA (Adjusted EBITDA X 4) n/a 268,212 Current portion of long-term debt 118,850 118,850 Long-term debt 1,252,184 1,252,184 Obligation under capital lease 128,081 128,081 Total Debt 1,499,115 1,499,115 Cash and cash equivalents (246,954) (246,954) Restricted cash short-term (27,306) (27,306) Restricted cash long-term (155,627) (155,627) Total cash and cash equivalents (429,887) (429,887) Net Debt 1,069,228 1,069,228 Net Debt to Annualized Adjusted EBITDA n/a 4.0 Net Debt to Adjusted EBITDA 3.1 n/a 14
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