Golar LNG blooms on FLNG gains

8 November 2018, Week 44, Issue 543

Golar LNG has reported net income of US$66.2 million for the third quarter, with operating revenues of US$123.1 million. Helping drive the company’s progress was US$77.5 million in unrealised Brent oil-linked mark-to-market derivative gains. 

Operating income reached US$132.5 million, from US$78.4 million in the second quarter. This increase was largely driven by Golar’s interest in the Hilli Episeyo floating LNG (FLNG) project. Operating revenues from this development reached US$54.5 million, including tolling fees. The company said that, assuming operations can continue uninterrupted, operating revenues from this plant should stay at this level. 

Higher oil prices have boosted returns from this FLNG unit, which is moored offshore Cameroon. For every US$1 increment in Brent pricing over US$60 per barrel, cash flows to Golar rise by about US$3 million per year – up to a ceiling. This provided US$11.3 million to the company during the third quarter, up from US$8.2 million in the second quarter.  The interest expense payable on the Hilli Episeyo reached US$32.6 million during the quarter, up by US$8.6 million from the second quarter. 

The FLNG plant is in the process of exporting its 10th cargo, operating with 100% commercial availability, Golar said. Talks are also under way with the field operator, Perenco, on using spare capacity on the floating unit. The company said it believed there would be some clarity on expansion around the end of this year. 

Given the returns from this FLNG unit, it is little wonder that Golar is pressing ahead with additional plans. The company is working on engineering studies for the BP and Kosmos Energy Tortue project, spending US$5.7 million on this during the period. An FID is expected by the end of the year. 

Golar is working on an updated model for its FLNG technology, Mark II. This will have capacity of 3 million tpy and will be cost competitive with the first version, used on the Hilli Episeyo. The company said it had worked with Asian yards on it, and these – backed by export credit agencies (ECAs) and domestic banks – are likely to be able to offer attractive financing packages. This model could be used on the Delfin LNG plan, in the US Gulf of Mexico, which is “on a clear path to FID”, Golar said. Connecting an FLNG unit to existing pipelines would provide the lowest cost liquefaction process in North America, it said. 

 

Power up

Golar’s move into FLNG has been successful thus far, but the next step will be an integrated regasification and power plant in Brazil. The Sergipe power plant should start up in January 2020, generating around US$99 million in adjusted EBITDA, or US$45 million after debt servicing. 

The Golar Nanook FSRU for the plan, which is led by Golar Power – a 50:50 joint venture between Golar and Stonepeak Infrastructure Partners – was delivered in late September. The Sergipe development reached financial close in April of this year, with US$1.34 billion of project financing. 

Golar is also benefiting from increased charter rates, noting some spot rates are approaching US$100,000 per day. The time charter equivalent (TCE) reached US$41,200 per day, from US$19,600 in the second quarter and US$36,000 in the first.

 

Edited by

Ed Reed

Editor

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