Golar LNG Reaps Fruits of Market Strengthening

Illustration; Image Courtesy: Klaipedos Nafta under CC BY-SA 40 license

Amid the improvement in the shipping market, owner and operator of LNG carriers Golar LNG closed the third quarter of this year with an increase in net income.
The company reported net income of USD 66.2 million in Q3 2018, compared to net income of USD 36.3 million seen in Q2 this year.
Total operating revenues stood at USD 123.1 million during the third quarter of 2018, against 59.4 million posted a quarter earlier.
Revenue from vessel and other operations rose by USD 20.5 million during the three month period and was negatively impacted by one vessel dry-docking.
However, rising LNG production and ton miles together with a seasonal increase in trading activity absorbed vessels resulting in improving utilization and increasing charter rates. Daily TCE earnings increased from USD 19,600 in Q2 to USD 41,200 in Q3.

In the third quarter of 2018, the company completed the sale of initial equity interest in Golar Hilli LLC to Golar LNG Partners LP.

What is more, Golar Power joint venture closed USD 235.5 million financing facility for FSRU Golar Nanook and took delivery of vessel. As informed, construction of the Sergipe power plant and associated FSRU mooring, pipeline and transmission line infrastructure continues to plan and remains on track for commencement of operations on January 1, 2020.

Due to expected vessel shortfall, Golar LNG also reactivated steam vessel Golar Viking. The ship is in the process of concluding an 11-month charter which would result in improvements to Adjusted EBITDA.
Additionally, FLNG Hilli Episeyo completed its first full quarter of operations. The FLNG continues to operate with 100% commercial availability and is currently in the process of exporting its 10th LNG cargo, according to Golar LNG.

“FLNG Hilli Episeyo (…) delivered consolidated Adjusted EBITDA exclusive of unrealized oil derivative related income of USD 52.3 million. Charterers Perenco and SNH are pleased with the vessel’s performance and discussions have commenced with Perenco on the utilization of the vessel’s spare capacity (…) The company also remains focused on being able to support BP on their Tortue project, and developing its pipeline of other FLNG opportunities,” the company said.

Following the quarter end, Golar LNG, Höegh LNG Holdings and Stolt-Nielsen unveiled a combined investment to create  Avenir LNG, a small-scale LNG market leader. Small-scale opportunities to be pursued by Avenir include delivery of LNG to areas of stranded demand, development of LNG bunkering services and supply of LNG to the transportation sector. Avenir has started to build an LNG receiving terminal in Sardinia and is targeting distribution of LNG locally. Avenir may also be able to support future FSRU projects being pursued by two of its sponsors, Golar LNG said.

“A prolonged period of investment of around USD 4 billion worth of LNG infrastructure, including carriers, FSRUs, Hilli Episeyo and the Sergipe project is drawing to a close. Although it has been a challenge in the low oil price environment to carry this through without dilution to equity holders, concepts and investments are finally being transformed into operations and cash flows.

Commencement of Hilli Episeyo, a resurgent shipping market and the pending start-up of Sergipe have transformed Golar into a fully financed cash generative company,” Golar LNG concluded.