Highlights and subsequent events

• Golar LNG Limited (“Golar” or “the Company”) reports Q3 2023 Net income of $114 million and Adjusted EBITDA1 of $75 million, inclusive of $39 million of non-cash items1.
• Total Golar Cash1 of $841 million, inclusive of $114 million of restricted cash.
• FLNG Hilli achieved operating milestone as world’s first FLNG to offload 100 LNG cargoes.
• FLNG Gimi sailed from Singapore to start its 20-year contract for BP offshore Mauritania and Senegal.
• Finalized the sale of 1977 built LNG carrier Gandria.
• Continuing development of FLNG growth pipeline.
• Repurchased 0.2 million shares at an average cost of $21.36 per share. 105.9 million shares issued and outstanding as of September 30, 2023.
• Declared dividend of $0.25 per share for the quarter.

FLNG Hilli: Maintained its market leading operational track record throughout the quarter, and became the world’s first FLNG to export its 100th cargo on October 14 and its 102nd cargo on November 15, 2023. Q3 2023 Distributable Adjusted EBITDA1 from FLNG Hilli was $77 million, of which Golar’s share was $73 million, a $6 million decrease compared to Q2 2023, due to lower Brent oil and Dutch Title Transfer Facility (“TTF”) prices. For the remainder of 2023 and 2024, the locked in TTF Distributable Adjusted EBITDA1 as a result of the effective unwinding of prior TTF hedges, which will be in addition to Golar’s share of tolling fees and market linked Brent oil and TTF exposures, will be allocated as follows:

• October-December 2023: 100% of TTF linked production unwound securing approximately $23 million of Distributable Adjusted EBITDA1; and
• Full year 2024: 50% of TTF linked production unwound securing approximately $49 million of Distributable Adjusted EBITDA1 equivalent to approximately $12 million per quarter in 2024.

As the TTF hedges have been effectively unwound and secured, Golar remains fully exposed to TTF prices, with additional Distributable Adjusted EBITDA1 of around $9 million expected for Q4 2023. For 2024, based on a forward price of $15.00/MMBtu, Golar expects additional Distributable Adjusted EBITDA1 of $39 million, increasing or decreasing by $3.2 million per annum for every dollar change in TTF.

FLNG Gimi: Sailed from Seatrium shipyard in Singapore on November 19, 2023, heading for its operational location offshore Mauritania and Senegal. Construction, pre-commissioning and sea trials are all complete and the vessel is expected to be ready for production once connected to the Greater Tortue Ahmeyim (“GTA”) hub.

The journey to site is expected to take around 60 days inclusive of two refueling stops. Subject to readiness of the overall project, we expect to receive daily commissioning payments subsequent to the connection date, or alternatively, provided Golar is ready, a standby day rate until commissioning starts. Commissioning is expected to take approximately six months from the commissioning start date with commercial operations (“COD”) expected thereafter. Golar and the GTA partners are working on initiatives to further optimize the commissioning period in order to achieve COD as early as possible. COD triggers the start of the 20-year contract.

With the construction phase of FLNG Gimi now complete, we will increase focus on debt optimization alternatives for FLNG Gimi, targeting an increase in facility size, a reduction in margin, and an extended repayment profile and duration compared to the current facility. We are in discussions with potential lenders and have received term sheets with improved terms for potential new vessel debt facilities.

FLNG business development: Continued progress made on re-contracting FLNG Hilli upon the end of its current charter in July 2026 with a number of counterparties and gas field owners increasingly interested. Now in detailed commercial discussions for three re-contracting opportunities with a 2024 commitment targeted.

We continue to progress the FLNG growth pipeline, including advancing commercial terms with gas resource owners, technical site-specific work and governmental interaction and approvals across several West African countries. We are also seeing increasing interest for our market leading FLNG solution in other geographies, including the Americas.

Most of the projects under discussion are structures where Golar either participates as an equal partner with the gas resource owner and upstream partner in a gas field development, or commercial structures where Golar is exposed to gas offtake prices. Golar’s market leading capex per ton and focus on proven gas reserves with attractive lifting costs in geographical areas with shorter shipping distances to end users versus US export projects secures a low break-even LNG production cost with attractive upside to current and forward LNG prices.

We continue to progress construction of long lead item orders for a MKII 3.5mtpa FLNG project and expect to take delivery of the Fuji LNG carrier intended for FLNG conversion during Q1 2024. Engineering and detailed design is fully developed and ready for project initiation. The complexity of offshore gas developments drives the timeline for these contemplated FLNG growth projects. Until commitments on a gas field and secured debt financing are in place, we do not plan to take a final investment decision or incur significant incremental MKII FLNG capex beyond current committed levels.

Other: Operating revenues and costs under corporate and other items is now comprised of two FSRU operate and maintain agreements in respect of the LNG Croatia and Tundra.

Golar’s remaining carrier Golar Arctic completed a 12-month charter in September and her 5-year drydock in early November. Alternatives for this vessel including conversion projects, chartering or sale are being considered.

Share buyback and dividends: During the quarter 0.2 million shares were repurchased and cancelled at an average cost of $21.36 per share, leaving 105.9 million shares issued and outstanding as of September 30, 2023. Of the $150.0 million approved share buyback scheme, $117.3 million remains available for further repurchases which will continue to be opportunistically pursued.

Golar’s Board of Directors approved a total Q3 2023 dividend of $0.25 per share to be paid on or around December 11, 2023. The record date will be December 1, 2023.

Golar reports today Q3 2023 net income of $114 million, before non-controlling interests, inclusive of $39 million of non-cash items1, comprised of:

• TTF and Brent oil unrealized mark-to-market gains of $34 million; and
• mark-to-market gains on interest rate swaps of $5 million.

The Brent oil linked component of FLNG Hilli’s fees generates additional annual cash of approximately $3.1 million (Golar share equivalent to $2.7 million) for every dollar increase in Brent Crude prices between $60 per barrel and the contractual ceiling. Billing of this component is based on a three-month look-back at average Brent Crude prices. A $14 million realized gain on the oil derivative instrument was recorded in Q3 2023 of which Golar has an effective 89.1% interest. A Q3 2023 realized gain of $5 million was also recognized in respect of fees for the TTF linked production of which Golar has an effective 89.4% interest. A $23 million realized gain (100% of which is attributable to Golar) on the hedged component of the quarter’s TTF linked fees was also recognized during the quarter. Collectively a $42 million Q3 2023 realized gain on oil and gas derivative instruments was recognized.

The non-cash mark-to-market fair value of the FLNG Hilli Brent oil linked derivative asset increased by $70 million during the quarter, with a corresponding unrealized gain of the same amount recognized in the unaudited consolidated statement of operations. The non-cash mark-to-market accounting fair value of the FLNG Hilli TTF natural gas derivative asset decreased by $15 million during the quarter with a corresponding unrealized loss of the same amount recognized in the unaudited consolidated statement of operations. A $21 million unrealized loss in respect of the economically hedged portion of the Q3 2023 TTF linked FLNG Hilli production was also recognized during the quarter. Collectively, this resulted in a $34 million Q3 2023 unrealized gain on oil and gas derivative instruments.

Balance Sheet and Liquidity:

As of September 30, 2023, Total Golar Cash1 was $841 million, comprised of $727 million of cash and cash equivalents and $114 million of restricted cash.

Within the $327 million current portion of long-term debt and short-term debt as at September 30, 2023 is $306 million in respect of the FLNG Hilli lessor-owned VIE subsidiary that Golar is required to consolidate. Golar’s share of Contractual Debt1 amounts to $1,172 million as of September 30, 2023. Deducting Total Golar Cash1 of $841 million from Golar’s share of Contractual Debt1 of $1,172 million leaves debt of $331 million.

Inclusive of $19 million of capitalized interest, $42 million was invested in FLNG Gimi during the quarter, with the total FLNG Gimi asset under development balance as at September 30, 2023 amounting to $1.34 billion. Of this, $630 million was drawn against the $700 million debt facility secured by FLNG Gimi. Both the investment and debt drawn to date are reported on a 100% basis.

Expenditure on long-lead items, engineering services and deposits paid on conversion candidate Fuji LNG for the MKII FLNG amounted to $159 million as of September 30, 2023, and is included in other non-current assets.

On November 1, 2023 the sale of Gandria closed and Golar received $13 million, representing the balance of the agreed $15 million sale price.

Non-GAAP measures

In addition to disclosing financial results in accordance with U.S. generally accepted accounting principles (US GAAP), this earnings release and the associated investor presentation contains references to the non-GAAP financial measures which are included in the table below. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance.

This report also contains certain forward-looking non-GAAP measures for which we are unable to provide a reconciliation to the most comparable GAAP financial measures because certain information needed to reconcile those non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside of our control, such as oil and gas prices and exchange rates, as such items may be significant. Non-GAAP measures in respect of future events which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied to Golar’s unaudited consolidated financial statements.

These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures and financial results calculated in accordance with GAAP. Non-GAAP measures are not uniformly defined by all companies, and may not be comparable with similarly titled measures and disclosures used by other companies. The reconciliations as at September 30, 2023 and for the nine months period ended September 30, 2023, from these results should be carefully evaluated.

Adjusted EBITDA backlog: This is a non-U.S. GAAP financial measure and represents the share of contracted fee income for executed contracts less forecast operating expenses for these contracts. Adjusted EBITDA backlog should not be considered as an alternative to net income or any other measure of our financial performance calculated in accordance with U.S. GAAP.

Non-cash items: Non-cash items comprise of impairment of long-lived assets and mark-to-market (“MTM”) movements on our TTF and Brent oil linked derivatives, listed equity securities and interest rate swaps (“IRS”) which relate to the unrealized component of the gains/(losses) on oil and gas derivative instruments, unrealized MTM (losses)/gains on investment in listed equity securities and gains on derivative instruments, net, in our unaudited consolidated statement of operations.

Source: Golar LNG