Results of companies

Golar LNG 3Q20 results


Shipping revenues were better than expected with a TCE of $39k/day instead of the $35k/day forecasted previously. It could have been higher but the Golar Tundra was locked down in the yard(Singapore)because of Covid for several months, diminishing the fleet utilisation. Currently, it is Sabine Pass, so it was in the yard probably till mid-October.

Golar Viking conversion project is finished, the vessel is already in Croatia in the testing phase and it will start operations in December. Golar will receive $17MM in December + $30MM in January. Then, Golar will have a 10 years management contract for the LNG Croatia (the new name for Viking FRSU)

Golar says that they expect 4Q20 fleet TCE to be above $50k/day. It means that they have entered in term contracts as the average spot rate for this 4Q20 is around 80k for TFDE. Specifically, Golar says that they have added $123MM of revenue backlog during 3Q20, resulting in $198MM total backlog. It makes sense as they needed a strong backlog to ask for new debt.

They said that some of the vessels have contracts which last more than a year and a couple of vessels (out of eight) will be on spot. My estimations are that they are signed TCE around $40k/d for the entire year (linked to an index, so they have some exposition to market condition)

2/3 of the capacity secured for 2021. 2 vessels will be in the spot market and the rest have contracts of 1 year or even longer. TCE yearly similar to what they obtain this year (at least as good as).

FLNG – Long term contracts and stable cash flows

100% utilisation from Hilli and Gimi expected for the end of 2023.

Delayed the capex commitments of Gimi.

Hilli is on track to sign a train 3 extension (it would double the revenues for Golar LNG). They have removed the cap,and having into account the improvement in natural gas prices, we could expect an agreement in the 1H21.

9 opportunities in FLNG, probably for 2022.

Gimi Debt
Source: Golar LNG

Golar CFO stepped down due to personal reasons.

Hygo – The former Golar Power

Adjusted EBITDA of $15.6MM. Impacted by the low historic rate of Brazilian Real versus Dollar (5.37 avg). Nanook at 100% utilisation and Sergipe around 15%-20%

Barcarena and Suape FID will take place in the next 1-2 months. Barcarena FID is very probable, but for Suape, it is very important to win the auction (HYGO is the best bidder)

Troim(Golar owner) says that they have received offers from private players for HYGO. The main option is the IPO, but if markets conditions are not good enough or if they estimate that they can create more value selling it by parts, they will do this. 

Troim also says that they will do whatever they need to do to arise the value of the company (Simplify the company. Direct distribution of assets, demerger or whatever)

Bahia Tender– Hygo was the only company qualified. They are waiting for a resolution after Petrobras claim.

The value of Hygo would be higher if they sold to private investors or similar if it goes to the market again.

  • New $100 million credit facility backed by Golar’s interest in Hygo.
  • Expected an incremental $125 MM credit facility, drawable upon IPO of Hygo.
  • Currently, Golar has $77MM of unrestricted cash
  • $47MM expected in the next 2 months as a result of selling Golar Viking
Golar 3Q20 results
  1. Hygo (IPO or selling individual assets) – Expected 1H21
  2. Maximize shipping income – Strategy changed from spot to term-contracts
  3. Deliver LNG Croatia (Viking) – Expected Dec-20
  4. Extend FLNG Hilli – Expected 1H21
  5. Deliver Gimi on time – Expected end of 2023
  6. Develop FLNG Portfolio – Expected 2022
Personal views

Turning from spot to fixed contracts 2/3 of the vessels is a good decision to diminish the business. Although the revenue in the 4Q20 will be lower than expected. It will allow Golar to have access to more debt in the coming months.

FLNG is on automatic pilot. I do not expect Brent on $60 in 2021 so Hilli will not obtain the premium. However, I do expect an extension to start using the train 3 in the 1H21.

HYGO, I honestly think that they are seriously consider selling it to a private investor if market is not able to price it as they want. I hope they continue with the IPO, but the conference call of today make me think it. HYGO needs to continue earning biddings and growing, and it needs to increase to utilization rate of Sergipe.

Overall, Golar is trying to reduce the risk, obtain longer contracts and fight against its debt until HYGO and the FLNG segment start producing higher benefits. There are several catalysts in the short term that can increase the market cap of the company.

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One Comment

  • Antti Saarelainen

    Thank you for this memo. I’m Golar shareholder from Finland and I would like to have your material relating to Golar also in future.

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