Golar LNG (US:GLNG)2023-05-30 16:01Financial Data and Key Metrics Changes - Total operating revenues for Q1 2023 were $74 million, a 25% increase compared to Q4 2022 [16] - FLNG tariffs reached $110 million, up 15% from Q4 2022 [16] - Adjusted EBITDA for the quarter was $84 million, while a net loss attributable to the company was $102 million due to noncash mark-to-market charges of $188 million [17][18] - The cash position at the end of the quarter was over $1 billion, with a total share of contractual debt standing at $1.1 billion [18][27] Business Line Data and Key Metrics Changes - The contribution from FLNG operations was strong, with earnings from Hilli increasing to approximately $98 million, a 23% rise compared to Q4 2022 [17] - Adjusted EBITDA from Hilli was $88 million, reflecting a more than 55% increase compared to the same quarter of 2022 [22] Market Data and Key Metrics Changes - LNG demand is projected to grow from around 400 million tons in 2023 to approximately 630 million tons by 2035, representing a compound annual growth rate of 3.5% [9] - The company believes that gas prices have reverted to a more sustainable level, with delivered cash breakeven for FLNG projects between $3 to $5 per MMBtu, compared to forward prices exceeding $10 per MMBtu [5][8] Company Strategy and Development Direction - The company is focusing on securing charters for Hilli before the current contract expires in July 2026, which is crucial for increasing cash flow visibility [93] - Golar LNG is advancing discussions for a Mark II FLNG project and has acquired the Fuji LNG for conversion, aiming for an annual liquefaction capacity of 3.5 MTPA [82][88] - The company is exploring opportunities in both South America and Africa for FLNG development, indicating a diversified approach to sourcing gas [37][96] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model, highlighting the competitive cost structure of U.S. sourced gas [6] - The company anticipates significant upside in FLNG projects and believes that the current balance sheet supports growth, buybacks, and dividend distributions [30][32] - Management noted that the world needs more LNG from a wider range of suppliers at cost-competitive levels, emphasizing the importance of LNG in ensuring energy security [8] Other Important Information - The company has reinstated a quarterly dividend of $0.25 per share and announced a $150 million share buyback program [27][89] - The acquisition of NFE's stake in Hilli is expected to increase run rate adjusted EBITDA by $70 million per year [19] Q&A Session Summary Question: Cost differential between African and South American gas - Management noted that South American opportunities have abundant gas reserves and similar source costs to West Africa, but longer sailing distances may be a factor [37] Question: Process from MOU to contract - Management explained that the MOU process is custom-made and varies by counterparty, with significant resources allocated post-signing [39] Question: Recontracting of Hilli and timing - Management indicated that Hilli is likely to move from its current site, with a clear view expected by mid-2024 for operational planning [44] Question: Shipyard availability for Mark II - Management acknowledged challenges in securing shipyard slots but emphasized strong relationships with yards in Singapore and China [47] Question: Gimi debt optimization - Management discussed various financing alternatives for Gimi, including potential sale-leaseback options and private placement bonds [58][60] Question: Stock valuation and buyback program - Management expressed confidence in the company's valuation and the rationale behind the $150 million buyback program [62][63] Question: Logistics of moving Hilli - Management stated that moving Hilli is straightforward due to its standardized design, with minimal decommissioning costs involved [68]