Golar LNG - Q4 2025

Transcript

Operator (participant)

Welcome to the Golar LNG Limited 2025 Q4 results presentation. After the slide presentation by CEO Karl Fredrik Staubo and CFO Eduardo Maranhão, Tor Olav Trøim will have some closing comments prior to a question and answer session. Information on how to ask a question will be provided then. At this time, all participants are in listen-only mode. I will now pass you over to Karl Fredrik Staubo. Karl, please go ahead.

Karl Fredrik Staubo (CEO)

Thank you, operator, and welcome to Golar's Q4 2025 earnings results presentation. My name is Karl Fredrik Staubo, the CEO of Golar, and as the operator said, I'm accompanied today by our CFO, Eduardo Maranhão, to present this quarter's results, and our Chairman, Tor Olav Trøim, to give some closing remarks. Before we get into the presentation, please note the forward-looking statements on slide two. Starting on slide three and an overview of Golar today. Golar owns three FLNG vessels, all with 20-year charter backlog. Starting on the top left, the Hilli is the best performing FLNG globally and delivered another quarter of a 100% economic uptime. The FLNG Gimi started its 20-year contract for BP offshore Mauritania and Senegal in June 2025 and is now producing above the contracted volume.

The Mark II FLNG is under construction and on schedule for delivery by year-end 2027, and thereafter to start a 20-year charter in Argentina alongside the Hilli. We have three growth designs ranging from 2 million-5 million tons per annum, and we have obtained yard availability and pricing for all three designs during Q4. We're listed in Nasdaq with a market cap of approximately $4.5 billion, and pre-year end, we had a cash balance of $1.2 billion and a net debt position of $1.5 billion. We have an EBITDA backlog standing at $17 billion before commodity linked earnings and inflationary adjustments. Our Adjusted EBITDA for 2025 was $232 million, and we expect this to grow to about $800 million once the fleet is fully delivered and on their long-term contracts.

Turning to slide four, is just an illustration of the overview of the long-term cash flow visibility of our 20-year charters. Hilli will end her existing contract for Perenco in Cameroon in July this year and go via Seatrium Shipyard in Singapore for upgrades and life extension work before starting her 20-year charter in Argentina during the second half of 2027. Gimi is producing under a 20-year charter for BP, offshore Mauritania and Senegal, and the Mark II is on schedule to start her 20-year contract during first half 2028. On slide five, we build up the Adjusted EBITDA contribution from the existing fleet. Golar's 70% ownership of the Gimi provide us with an annual EBITDA of $150 million, based on the contracted volume.

Hilli will contribute $285 million once on contract in Argentina. Similarly, the Mark II will contribute $400 million once operational in Argentina. We net off our G&A of around $35 million, we foresee long-term EBITDA generation of $800 million a year before commodity upside, inflationary adjustments, and any incremental FLNG units. The embedded commodity upside comprise of two components. It's the profit-sharing mechanism in the FLNG contract, as well as our 10% shareholding in Southern Energy. The commodity upside provides Golar with an incremental upside of approximately $100 million for every dollar the oil stake price is above $8 Argentine, and a downside of approximately $28 million for every dollar the FOB price in Argentina is below set of cash break-even.

We believe the skewed risk reward of this commodity exposure will contribute meaningful earnings over the 20-year life of our Argentina contracts. Illustratively, if LNG prices return to 2022 levels, the incremental earnings from the commodity upside would be an annual addition of $2.7 billion. If LNG prices remain at current levels, we see an additional commodity upside of approximately $200 million per year. Turning to slide six, highlighting some of the key characteristics of our FLNG charter agreements. We aim to structure our LNG contracts as solid infrastructure cash flow with meaningful contractual protections. Some of the key attributes of these protections include that all of our contracts are paid in U.S. dollars. All cash flows are paid offshore, net of any local taxes in the countries where we operate.

The contracts are made under English law. For all the long-term contracts, our operating costs and maintenance CapEx is either passed through or reimbursable by our counterparts. Moving to the next session and the business update, starting at slide eight. Starting on the left-hand side, Q4 was another active quarter for Golar, concluding 2025 as a record year of execution. During the quarter, all conditions precedent for the 20-year contract for Mark II in Argentina were successfully met. We concluded two financing transactions totaling $1.7 billion in the quarter, comprising of a new $1.2 billion bank refinancing, increasing Gimi from $630 million-$1.2 billion. The new facility has improved terms compared to Gimi's initial financing facility. The new facility proves the bankability of our FLNG assets once operational on their long-term contracts.

We also entered the rated U.S. unsecured bond market with a $500 million bond offering, with a coupon at 7.5%. During the quarter, SESA signed a letter of agreement for an eight-year offtake deal for the first 2 million tons of production in Argentina. The LOI was signed with SEFE, which stands for Securing Energy For Europe, a subsidiary of the German government. They are also the existing off taker for Hilli in Cameroon today. It's an off taker we know and cooperate well with. The terms of the offtake agreement is 1 million tons is linked to Brent prices, and 1 million ton is linked to Henry Hub plus a premium. We expect these LOIs to be formed into a letter of agreement within Q1 of this year, at which point the details of the commercial terms will be disclosed.

During Q4, we bought back and canceled 1.1 million shares at an average share price of $37.76. We're also very pleased with commercial progress made in the quarter for a contemplated fourth FLNG project. We'll describe this in greater detail later in the presentation. Turning to the right-hand side of the full development for the year, 2025 was truly a record year of execution, securing $14 billion in EBITDA backlog across the two 20-year contracts in Argentina. We took new financing facilities of $2.275 billion across the mentioned Gimi bank refinancing and the U.S.-rated bond, as well as a $575 million convertible bond issued in June 2025. We obtained the commercial operations date of Gimi and doubled our operating fleet of FLNGs.

We continue to perform according to our market-leading operational off time, we're especially pleased to see the Gimi join the operational excellence of our sister Hilli, and both vessels produced above their contracted amounts, providing extra value to our stakeholders. In total, during 2025, we bought back 3.6 million shares, confirming the board's and management view that we see attractive value in our own stock. We fully exited LNG shipping after 50 years in the business with the sale of the Golar Arctic and our investment in Avenir Shipping. All in all, we're very pleased with the year that passed and hope to keep the same progress in the year we have now started. Turning to slide nine and a snapshot for the Hilli. Hilli continued her market-leading track record.

For the year, we generated a slight overproduction, recognizing $2.5 million of excess earnings over the 1.4 million tons contracted capacity. In December, we had a major production milestone, producing our 10 million tons of LNG since start up of contract in 2018. At the end of the current charter in July of this year, the vessel will sail from Cameroon to Seatrium Shipyard in Singapore for vessel upgrades and life extension work. The required long-lead items and equipment needed for the work at Seatrium have been ordered, and the prefabrication of certain work scopes has started at the shipyard. During first half of next year, Hilli will sail from Singapore to Argentina to start her 20-year contract, expected to start during the summer of next year.

She will contribute $285 million of annual EBITDA, or $5.7 billion over just the EBITDA backlog over a 20-year period. Slide 10 focuses on Gimi. As mentioned, Gimi achieved its COD in June 25. The unit is still optimizing operations in close collaboration with the upstream partners of the GTA project. Production is ahead of schedule, solid optimization has been achieved to date. In Q4, we invoiced the dayrate 3% above the contractual dayrate, we are now frequently producing at volumes that on an annualized basis, would significantly surpass even nameplate capacity. It's worth to note that the throughput capacity of any liquefaction plant is sensitive to gas quality and ambient temperatures. Throughput variation between winter and summer months should therefore be expected, where colder ambient temperatures during winter benefit the production levels.

Our contracted rate is based on 90% of nameplate, and any production over and beyond that number is a pro rata increase to our earnings. Based on operations to date, we expect Gimi to produce above her contracted values, volumes on an annual average basis. We'll continue to improve how meaningful that can be in the months to come. Turning to slide 11 on the Mark II FLNG. The construction of the unit remains on budget and on schedule for delivery by year-end 2027. Construction is now close to 50% complete, and we have spent approximately $1.1 billion of the total $2.2 billion conversion scope. The full $1.1 billion spent to date has been equity financed. As you can see from the pictures on the right-hand side, meaningful construction progress is now advancing.

The midship manufacturing, which will house the liquefaction plant, is now well underway, and the new midsection will be approximately 63 meters wide and approximately 80 meters long. We've now also surpassed 6 million man-hours without any lost time injuries. On slide 12, SESA is also making strong progress on the infrastructure required to facilitate for the gas grid connection of the FLNG Hilli, as well as the required land-based infrastructure to support FLNG operations in Argentina. SESA has now awarded approximately $500 million of investments to date, including the pipeline connection to the existing grid, support vessels such as tanks and supply vessels, and construction of the land-based warehouse to facilitate spare parts and operational support for our operations in Argentina. On slide 13, SESA is also moving ahead with a designated pipeline from Vaca Muerta to the Gulf of San Matias.

The pipeline comprise of 3 key components. The first component is the turbo compressors. The contract for those was awarded in December 2025. The second component is the line pipes, which will then bring the gas, the approximate 500 km from Vaca Muerta to San Matias. Those were also awarded in December last year. The remaining component is the EPC for the actual construction of the line pipes and the compressor, where we have received eight proposals and expect to have an award within the first half of this year, upon which construction will ramp up. Turning to slide 14.

During the quarter, we confirmed yard availability and price for the three growth designs that we have in question, ranging from Mark I to be built at Seatrium in Singapore, Mark II at CIMC Raffles in China, or a 5 million ton unit that could be built at Samsung in Korea. We're pleased to see that we still obtain attractive CapEx per ton and around 3-year construction time for the conversion candidates and north of four years for the Mark III. This is helpful input in developing our commercial pipeline. The price points and delivery is confirmed interest with our clients. Turning to slide 15, we see multiple discussions for FLNG deployments. We see an increasingly strong demand for FLNG tonnage, driving positive development of our commercial pipeline. We're currently in discussions for deployment of projects in Africa, Middle East, and South America.

Based on the pace of the commercial developments and differences in vessel design requirements of the projects, that will dictate the design that we will order in the end. We do not foresee any meaningful CapEx expenditure until the commercial terms for the next project have matured. We will revert to the market once we have a meaningful update on our fourth unit. Turning to slide 16 and some of the overarching developments of the LNG market. Last year, the LNG market was around 434 million tons, expected to grow approximately 50% in the next five years, mainly driven by supply out of the U.S. We note with interest that U.S., which is already the largest producer in the world, will take the vast majority of incremental growth. That's particularly interesting as the U.S. is already the incremental producer on the cost curve of LNG.

We see strong demand development driven by volumes out of the Far East, where China is currently the most active buyer in the market. Going forward, we need to see additional LNG FIDs to cater for the demand that's coming, and this fits well with the delivery schedule that's just been confirmed by the shipyards and for the commercial discussions and the negotiations. I'll now hand the call over to Eduardo Maranhão to take us through the group results for the quarter.

Eduardo Maranhão (CFO)

Thank you, Karl, and good morning, everyone. I'm happy to share an overview of Golar's financial performance for the fourth quarter of 2025.

We move to slide 18. Let's review some of the key highlights of the quarter. Total operating revenues significantly increased in 2025, reaching $133 million for the quarter, and $394 million during the full year, an increase of over 52% when compared to 2024. This quarter, we report a net income of $23 million and a total of $113 million for the full year of 2025, an increase of 40% compared to 2024. Our Q4 Adjusted EBITDA came in at $91 million, reaching a total of $265 million for the year.

Some key drivers of this performance were Hilli, as Karl mentioned before, has maintained its commercial uptime level of 100% and recognized an additional two and a half million dollars over production in Q4 2025. While Gimi also saw increased earnings in Q4, largely driven by higher production volumes resulting from technical improvements and also improved ambient conditions on site. This quarter, we declare a dividend of $0.25 per share, with a record date of March 9 and a payment scheduled for March 18. In November, we approved a new $150 million buyback program, of which approximately $41 million was spent during Q4 at an average price of $37.76 per share. Across the full 2025, we have been consistently active on buybacks, and we purchased and canceled a total of 3.6 million shares.

I'll provide some further information on this in the next slides. Moving to slide 19. We continue to improve our balance sheet flexibility. Q4 was a very active quarter in terms of transactions. In October, we issued $500 million under our first U.S.-rated five-year senior unsecured notes with a coupon of 7.5%. At that time, we repaid $190 million of our previous outstanding 2021 bonds. In November, we closed a new $1.2 billion commercial bank facility for Gimi, equivalent to just over 5.6x its annual contracted EBITDA. This allows us to release approximately $400 million in liquidity net to Golar. Our cash position remains strong, with $1.2 billion of cash in hand at the year-end.

Our total gross debt stood at $2.7 billion, leaving us with a net debt position of one and a half billion dollars. On a fully delivered basis in 2028, once all FLNGs are in operation in Argentina, our net debt to EBITDA ratio is set to reduce significantly to just over 3.4x. When it comes to the Mark II, we continue to fund its CapEx commitments, and so far we have spent just over $1.1 billion to date. All of that amount has been funded with equity. We continue to evaluate further debt optimization alternatives, which may include the refinancing of Hilli's current facilities and a new long-term debt facility backed by the Mark II. This would allow us to continue to release significant liquidity to continue to support our fund our growth projects.

Moving to slide 20. We continue to focus on accretive growth while maintaining a sustainable quality of shareholder returns. Our plan is to allocate most of operating cash flow after debt service to shareholders, while continuing to recycle capital through asset-level financings and existing debt optimizations to fund growth. In 2025, we returned approximately $250 million in the form of dividends and buybacks, of which $103 million were paid in dividends over the course of the year and $144 million in buybacks, as explained before. During that same period, we continued to grow and we've invested over $750 million on CapEx for our FLNG units.

Moving to slide 21, we can see that our share count has been significantly reduced over time, with a total of just over 101 million shares outstanding as of today. Over the course of last year, we bought back and subsequently canceled 3.6 million shares, as explained before. We currently have a remaining allowance of up to $190 million under our buyback program. We plan to continue our active approach to accretive buybacks from time to time. Moving to slide 22. When our three FLNGs are in full operations in Argentina, we expect our EBITDA to grow to over $800 million before further commodity upside. This can grow even more, subject to further upside from LNG prices under the contract for Hilli and Mark II.

Based on that, our free cash flow generation could reach around $500 million per year or approximately $5 a share before commodity upside. This could represent a total increase of over 5 times our current dividend level of $1 per share, which we're currently paying. Incremental free cash flow could also be re-resulting under the SESA contracts and can be estimated at approximately $100 million per year for every $1 per million BTU increase in FOB prices above $8. Moving to slide 23, I just wanted to recap that there are many ways that investors can get exposure to Golar. We are listed in Nasdaq, our market cap was just over $4.5 billion, with an average daily volume of over $50 million per day.

We currently have $800 million in the two unsecured bonds issued in 2024 and 2025, and also an existing convertible bond of $575 million, which was issued last year. There are many different ways that investors can gain exposure to Golar, and this is a summary of how you can play that. I'll hand now the call back to you, Karl.

Karl Fredrik Staubo (CEO)

Thank you, Eduardo. Turning to slide 25, and a look ahead at what's can, our focus on continued value creation. Near term, we see increasing commodity prices that will boost the commodity-linked earnings for Hilli until end of contract in July this year. Based on the strong performance of Gimi, we also expect to see increased capacity utilization payments that would somewhat improve the Adjusted EBITDA from the unit. We believe one of the most or least understood parts of Golar is the commodity upside of our Argentina contracts. Within this quarter, we expect the commercial terms for the SESA offtake to be announced, and hopefully that can ease the market's understanding of those, of that potential offset. We've done a reproven to do accretive buyback and cancellation of Golar shares, and we have more capacity under the existing buyback program.

Through last year, we'll continue to look for asset level debt optimization, there's plenty of opportunity to do so across Hilli and the Mark II, that could release significant liquidity to fund a fourth FLNG unit and enhance equity returns. The startup of the Hilli and the Mark II contract in Argentina is obvious step changes in earnings growth as well. The commercial pipeline of new project, new FLNG projects remains under strong development, we see the terms in which we believe we can obtain to be highly accretive to our platform value. The commodity exposure on the SESA contract will come into fruition as the two units become operational. As Eduardo Maranhão just explained, the dividend capacity and the capacity to multiply increase that is evident once we're fully operational. We continue to see structural strong LNG demand beyond 2030 onwards.

Our focused FLNG strategy, with proven FLNG conversion expertise and the recently reconfirmed price and delivery schedules from the conversion shipyards, is a further testimony to our business model. Another interesting thing to note is that the net present value of Golar is increasing daily until both FLNGs are operational in Argentina as a function of time. Turning to slide 26, Golar remains the only proven service provider of FLNG globally. We have an adjusted EBITDA backlog of $17 billion before commodity upside and inflationary adjustments. We remain with strong balance sheet flexibility of around 3.4x net debt to EBITDA once fully delivered. This enables growth while still increasing shareholder returns. I'll now hand the call over to our Chairman, Tor Olav Trøim, for some closing remarks before we open up for Q&A. Please go ahead, Tor.

Tor Olav Trøim (Chairman of the Board)

Thanks, Karl. First of all, I want to give some thanks to management for a good execution in the area we have behind us, to effectively secure $14 billion in EBITDA backlog and do more than $3 billion in financing, pay more than $1 billion in debt, in installment on the Mark II, end the year with more than $1 billion in cash. It's puts us in a very strong position to execute what we think should be a aggressive growth strategy, being the world's leading FLNG player in the market. We see today significant more demand for products than we ever have seen, it's more a question about concentrating our efforts into the products we think can give the highest possible overall return.

It's one of the board's mission to maximize the value of the company for all shareholders, both on long and short-term basis. To have an effectively priced equity is a major condition for growing this business. The value of Golar today, as Karl alerted to, is linked to three things. It's the value of the existing contract, it's the value of the options agreement we have, which is pretty much a one-sided call on gas for the next 20 years, and it's effectively the value of the Golar franchise. I know everybody's pretty good in calculating the value of the existing contracts. I don't think anybody really pay attention to the value of the options, I'd like to focus a little bit about the third thing, the value of the Golar franchise.

It's 26 years since Fredriksen took over Golar, we effectively started the venture to build a massive LNG company. It's now 16 years since we effectively started the work on the FLNG activities, which started in 2010. In 2014, we ordered the fourth vessel, the first vessel. It was in operation in 2018, and we now have eight years of extremely successful operation. That franchise, I don't think anybody fully understands the value of, but to illustrate a little bit, we have been approached by one of the largest oil companies in the world, who effectively said, "We cannot do this. Can you be our service arm to deliver FLNG activities going forward?" I think that's a question. To take those kind of things is probably a limited return compared to a lot of the other things we can do.

I think in many ways, to illustrate the value of the franchise we have built, which I think people are grossly estimating when they're trying to do the value. When it comes to the way we in the board look at the value, I think so far it's represented by the fact that we're buying back stocks, and that's a reflection on the fact that we don't think the value, we think that it's almost better to buy back your own stock at an undervaluation than to effectively do anything else.

We have also decided to push out the vessel number four and maybe also vessel number five a little bit, not because of lack of progress, but we're going through two years in 2026 and 2027, where we have limited cash flow because the Mark II has not started and Hilli is in for repair. I think what we want to do is to push the investment phase closer to the period where we are effectively running with an $800 million EBITDA and are actually self-serviced with capital for growth purposes. I was on the call in connection with the Q1 numbers. I said then that if an undervaluation compared to the real value exists over time, the board will kind of start processes which try to take out part of that benefit.

Even if the share price in the latter weeks have shown some signs of recovery, the board still feels that the value of this company, including the value drivers I just mentioned, particularly number two and number three, should mean that the share price should have been higher than where it is today. What we have seen in other situations in this industry is that the valuation typically come when the cash is coming. It doesn't come when the contract is signing. I'm referring to companies like Cheniere, where you actually saw that the share price started to move when the cash finally came from the discussions. In order to kind of look at what we can do in the meantime, we have to explore alternative ways to enhance the value for the period under the cash flow coming in 2028.

We have, as the board, started a process where we're going to seek external advice to consider several ways to improve the value for our shareholders. This thing includes processes, which includes talk to shareholders, it includes talk to industrial and financial potential partners, which can help us in enhancing the value of the company on a more shorter term basis. The market should be aware that we, several years ago, received unsolicited offer for the company, several ones. We structured that into a process. All the offers were, at that time, significantly higher than the share price. The board decided, however, not to recommend the sale of the company, which I think in retrospect has been the right decision to see how we later have built the company.

The Board of Golar today consists of board members, including myself, which represent significant capital invested in the company. You should be assured that the board have no other consideration than to do what we believe is the best interest for all shareholders. There is no other agendas here. The outcome of such a strategic process, which kind of we are in the process of starting, combined with the board's internal discussion, is too early to be expected. We'll keep the market updated, if these processes are likely to lead to material changes in Golar's operational or corporate structure. I hope this confirm the commitment I gave to the shareholders in connection with the Q1 report last year, where I said that, we intend to do things if we don't see a material improvement of share price.

We have seen some, but I think we still feel that with $17 billion of EBITDA backlog and an industry-leading position, including in derivative, which is significant value, that there are rooms for improvement. I genuinely hope that you all guys kind of give us some time to go through this process. As I said, no outcome is given, but I can assure you that the commitment we gave a year ago to explore alternatives way to extract value is kind of on the agenda for the board. That's the only thing I want to say about this thing, we will report back to the shareholders as we make progress on this thing.

In the meantime, as Karl said, the value of the company should increase day by day as closer we get to the window in 2028. What I want to end with is that the venture we started 16 years ago, which was to effectively become a dominant FLNG player, pays off. I'm very proud of the performance of the Hilli contract. I'm equally improved that we now can deliver to BP and probably be the only part of the Greater Tortue project which had delivered on time and on budget, and effectively, you know, delivering more than we should according to the contract. Thanks. I hope that was enough to confirm that what we saying in earlier calls are lived up to by the board. Thank you.

Karl Fredrik Staubo (CEO)

Thank you, Tor. operator, we are now ready for Q&A.

Operator (participant)

Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. There will be a limit of two questions per person on today's call. Following that, you may reenter the queue. Our first question comes from the line of John Mackay from Goldman Sachs & Co. Please go ahead. Your line is open.

John Mackay (VP of Equity Research)

Hey, everyone. Thank you for the time. I appreciate all the thoughts around this strategic review. I just want to, you know, drill into the details a little bit. I understand it's kind of a multifaceted process. Can you walk us through what the specific process you're focused on right now looks like? You know, what could timing be? What are you watching to decide how to move forward? Maybe to put a bow on it, you mentioned you were approached. Is one of the options on the table here, a potential sale of the company?

Tor Olav Trøim (Chairman of the Board)

I think, in view of the discussion we have had in the board, how we want to orientate the market around this, I don't want to give any further comments than what I've effectively already said. I think, hopefully, the shareholders have some respect for the fact that these kind of processes kind of need to be kept a little bit close to the board and not effectively be a public process.

John Mackay (VP of Equity Research)

Okay, maybe asking it a different way. You highlighted, you know, the current value of the company, your desire to push maybe some of the next vessels to the right a little bit to reallocate capital. Is the message here that the focus right now should be on further buybacks, specifically? I guess at what point do you decide to switch from maybe investing in the base business to, or, you know, buying effectively the base business to commercializing the next vessel? Thanks.

Karl Fredrik Staubo (CEO)

I can answer that one. There's no change in our committed focus to develop attractive FLNG projects, and none of the actions taken today will pause the pace of the commercial involvement of the contract in discussion. That said, an FLNG project, if it's just to meet commercial terms with the counterpart, that would be fairly easy. These are very large infrastructure projects that require significant regulatory, governmental, tax, and environmental approvals, including LNG export laws. Most of the, or some of the countries we're in discussions for, didn't export LNG before we started it. That's true for Cameroon, that's true for Mauritania, that's true for Senegal, and it's true for Argentina. There is absolutely no change whatsoever in Golar's committed focus for accretive FLNG growth. What we're saying is some of the projects in discussion have different vessel design requirements.

Hence, instead of going on speculation, number one, because of the different requirements from the various commercial discussions, and number two, for the cash flow profile reasons mentioned by Tor, we've decided to not go on speculation as speculatively as we have previously done, and then continue to mature the commercial pipeline before we commit significant capital. Both because that we believe that's right from a vessel design selection point of view, and also for the cash flow profile that Tor mentioned.

Tor Olav Trøim (Chairman of the Board)

Let me add a little bit to that, Karl. I think, kind of, just have one thing in mind. The process which we're talking about now, where we're seeking some external advice for what the kind of options is for the future of Golar, is not in any way influencing the day-to-day business. What the board has given a clear mandate to management to, is run the business as we run it to the best interest of things, and then don't let any kind of strategic discussions influence what we do in short term. I think any kind of strategic discussion will benefit from continue to building the company like we do. I think that's the most important thing. This is business as usual and nothing else happening, I think we're looking at some other alternatives.

If there are cheaper access to capital, for instance, than effectively we have today. I think that's important. I think when Karl's, what Karl says about 2027 and 2028 is, or 2026 and 2027, is that if he push the kind of cash back a little bit, maybe half a year to a year, we will be in a very different situation. Because in the end of the period, when we have the heavy installments on ship four and potential five, you will also meet that with a massive cash flow coming out from the business. I think it's a pretty thorough decision, which I also know is supported by some of our major shareholders who have given us the same input.

We have been through a history here in this company, where we've done $3 billion dollar projects or more than a $1 billion-dollar project with a pretty finer balance sheet, that had put the balance sheet under stress in some of the cases. I don't think we want that. We want to have a very, very strong and solid balance sheet to execute on multi-billion dollar projects, which we're talking about here.

John Mackay (VP of Equity Research)

Guys, I appreciate the time. Thank you.

Operator (participant)

Thank you. We'll now move on to our next question. Our next question comes from the line of Christopher Robertson from Deutsche Bank Securities Inc. Please go ahead. Your line is open.

Christopher Robertson (Director)

Thank you, operator. Thank you for taking my questions, guys. Just given the strong operational performance of the Gimi over the last several months, it's producing slightly above nameplate, as you say here. How are the counterparties now thinking about the future of expansion at GTA? What other data points do they need to see or evaluate to make a decision around that? What's the current thinking potentially around if an expansion would include a floating asset?

Karl Fredrik Staubo (CEO)

That question is probably better placed to BP and Kosmos, what BP has consistently said is that they want 12-18 months of well data before a decision is made on expansion, but it has to do with how the wells perform. Given that we are now producing above the contracted amount, suggests that not only the FLNG, but the flow from the upstream and the other infrastructure is also working at least as expected, if not better, that should help a decision for expansion. Given that the incremental cost of expansion should be significantly lower than the initial phase, any growth should be accretive to the project economics.

Christopher Robertson (Director)

Thanks for that, Karl. My follow-up question here is, Karl, you mentioned getting quotes at the yards recently. This is kind of a two-part question. One, what's the current thinking around the cost for Hilli upgraded redeployment work? Has that range narrowed at all as we get kind of closer here to the summer months? Then two, could you clarify kind of where things are shaking out in terms of where you're getting quotes at, in terms of a dollar per metric ton? Have we seen any cost inflation since the Fuji project? Any commentary around that would be helpful.

Karl Fredrik Staubo (CEO)

Sure. On Hilli, the conversion budget. When we say conversion budget, that includes everything from disconnecting in Cameroon, towing and bunkering the vessel from Cameroon to Singapore, the yard stay and sailing back to Argentina and connecting and commissioning, OpEx, training, spares, and upgrade work. All in, we estimate $350 million, including a certain level of contingencies. As we continue to execute on the Hilli redeployment, as most of the equipment is now ordered, we feel comfortable with that budget, and we'll try not to eat into all of the contingencies built into the $350. That's the budget. It's important to highlight that that includes everything, not just the upgrades to the ship. The second part of the question is, do we see price inflation? Yes.

The price inflation is not so much on the yard scope, it's more on the top side, and in particular, the long lead equipment on the top side. The primary driver of that cost inflation is competition for the equipment, mainly from AI data centers. We're using the same gas turbines and some of the other critical components, and the massive surge in such developments has caused lead times to go out and prices for that equipment to go meaningfully up. If we look across an FLNG, we see a very limited cost inflation of the Mark II compared to where we ordered last time. We do see a higher cost inflation on the Mark I compared to where we ordered, but that's obviously a function also of it's a longer time since we ordered a Mark I.

The biggest cost inflation is without a doubt on the Mark III, and that's, for the Mark III, it's also driven by competition at the shipyard, namely Samsung. That's, that's how we see it, but we still see that we can obtain a cost advantage compared to land base of up to 40% lower CapEx per ton. For, for Mark I and II, not so much for Mark III.

Christopher Robertson (Director)

Got it. All right. That's helpful. Thank you, Karl.

Operator (participant)

Thank you. We will now move on to our next question. Our next question comes from the line of Alexander Bidwell from Webber Research and Advisory. Please go ahead. Your line is open.

Alexander Bidwell (Associate Analyst)

Good afternoon. Appreciate the time. With the performance thus far on Gimi, how should we think about production above contractual base going forward? You had mentioned ambient temperature and gas composition are both key drivers. Are there any other factors, such as maintenance, which would impact production quarter-over-quarter?

Karl Fredrik Staubo (CEO)

Maintenance is built into the difference between nameplate of 2.7 and the contractual amount of 2.4. That's already taken into account scheduled maintenance. When it comes to the ambient temperature effects, you will see a level of seasonality over and above the 2.4. We don't expect to go under the 2.4 in the summer months, and we expect to be meaningfully higher in the winter months. If you smooth it out, on average, we expect to be well above the contracted amount. For in the case of Q4, that amount was 3%, but we're still undergoing optimizations, and we think more than 3% is fair to assume across the year. Exactly percentages we don't want to commit to right now as we are in the midst of these optimizations.

To have this type of production this early in the project exceeds the expectation, both of Golar and of the charter.

Alexander Bidwell (Associate Analyst)

All right. Thank you. Great color there. Turning over to Argentina, could you walk us through the startup, and commissioning cadence for Hilli and the Mark II once the assets are actually on site? Are there any lessons learned from Cameroon and GTA that you plan to apply for the deployments?

Karl Fredrik Staubo (CEO)

Yes, when it comes to they will be slightly different because Hilli has obviously operated for eight years, while the Mark II will have never operated. We expect the commissioning process of Hilli to be quicker than the Mark II. For simplicity, we expect commissioning of Hilli to be around three-four months, and we expect up to six months for the Mark II, simply because the equipment hasn't been running in the same way. The actual process is that we arrive on site, we connect to the mooring system, and then we start commissioning through gas introduction. The key learning effect that we are debating with Saipem, but are likely to adopt, is that we do expect to arrive cold.

What that means is that we will arrive or likely will arrive with some LNG on the tanks. That allows us to start commissioning before we are reliant on gas flowing through the pipeline. Hence, we can save any time that it would take to connect to the grid, and secondly, the cool down process itself. That has a slight cost within the scheme of FLNG CapEx, almost negligible, but this can save significant time, and it's the same as what we did both for Hilli and Gimi commission.

Alexander Bidwell (Associate Analyst)

All right. That makes sense. I'll turn it back over. Thank you.

Operator (participant)

Thank you. We'll now move on to our next question. Our next question comes from the line of Sherif Elmaghrabi from BTIG. Please go ahead. Your line is open.

Sherif Elmaghrabi (VP of Equity Research)

Hey, thanks for taking my questions. maybe to start off, sticking with the Gimi, our project partners, given production has been, surprised to the upside. Are project partners still interested in debottlenecking? what needs to happen to debottleneck, given Gimi is already capable of exceeding nameplate by a fair margin?

Karl Fredrik Staubo (CEO)

Again, it's a question for the upstream partners more than us, but it's in everybody's interest to debottleneck, provided you can do so, at, call it CapEx, accretive to the CapEx for the unit economics of the project. We do expect that such that the debottlenecking, will be at a very meaningful accretion to unit economics and as such is in the interest of all stakeholders, including our.

Sherif Elmaghrabi (VP of Equity Research)

Okay, thanks for that. Then, turning to a fourth or fifth unit, can you elaborate on these Middle Eastern opportunities? That's not something that was on my radar, but it's interesting, and I'm wondering if that's linked to ramping unconventional gas production in the region.

Karl Fredrik Staubo (CEO)

You are right that that is a region that has, call it, sailed up as more and more actively pursuing FLNG. It's one of the regions where we like the pace of progress in our commercial or in the product development of potential FLNG project. For that one, you are right, that one we haven't spoken as much as about previously, but one we are hopeful that we can continue to develop our pace.

Sherif Elmaghrabi (VP of Equity Research)

All right, thanks for taking my questions.

Operator (participant)

Thank you. We'll now move on to our next question. Our next question comes from the line of Spiro Dounis from Citi. Please go ahead. Your line is open.

Spiro Dounis (Director)

Thanks, operator. Good morning, team. Wanted to go back to demand. I think I heard you guys say several times that you're seeing more demand than ever before for this LNG infrastructure. I was just wondering if you could expand on that. Is that macro related, or is that specific to more of an FLNG solution, or maybe both?

Karl Fredrik Staubo (CEO)

I think it's twofold. One of it is the increasing industry recognition of the efficiency of FLNG versus alternative liquefaction solutions. The fact that you can construct this unit at up to 40% discount to land-based and the flexibility a movable FLNG provides versus land-based is one key driver. The other key driver is that the vast majority of incremental production of LNG will come out of the U.S. All U.S. project or the vast majority of U.S. projects source at Henry Hub. The attraction is when you can find reserves that you can source. In addition to the CapEx saving, but significantly cheaper gas sourcing than Henry Hub, that's the other component that drives the interest. For us, it's increasing industry recognition and the attraction of sourcing cheaper molecules.

Spiro Dounis (Director)

Gotcha. It's a helpful color. Second one, maybe for you, Eduardo. Just you mentioned on this latest refinancing or financing, that it sort of proves out the bankability of these structures. Could you maybe expand on that as we think about the go forward here? You obviously have a lot more financings to do. Does this latest one prove as a blueprint? What lessons did you learn during this last go around?

Eduardo Maranhão (CFO)

Yeah, that's a great point, Spiro. You're absolutely right when it comes to the data point that we had on the latest financing. When we look at the Gimi deal that we closed in November, we raised $1.2 billion, which is just over 5.6x Gimi's annual EBITDA. If we try to apply, and we are in discussions of potential similar transactions to that one, if we were to apply the same multiple to both Hilli and or the Mark II, we could be looking to raise in excess of $1.5 billion for Hilli and over $2 billion for the Mark II. That really shows the whole potential of financing capacity that we have under these contracts.

These are long-term, 20-year agreements. We really believe on the bankability of these contracts that we have signed up to.

Spiro Dounis (Director)

Great. I'll leave it there for today. Thank you, gentlemen.

Eduardo Maranhão (CFO)

Thank you.

Operator (participant)

Thank you. We'll now move on to our next question. Our next question comes from the line of Liam Burke from B. Riley Securities. Please go ahead. Your line is open.

Liam Burke (Managing Director)

Yes, thank you. Karl, you talked about a lot of interest in potential negotiations for future FLNG projects. Does shipyard capacity ever come into the negotiation, or I mean, Chris touched on cost, but shipyard capacity, does that ever come into future discussions?

Karl Fredrik Staubo (CEO)

Absolutely, yes. That is why it's been critical as part of this commercial pipeline development to have confirmed the yard availability and updated yard pricing in continuing such discussions, because delivery is obviously a key part of this. What we see is that for the conversions, Mark I and II, we are still able to maintain a very competitive conversion period of somewhere between 36 and 40 months, whether or not we go Mark II or Mark I. What we see is that if you go bigger on the Mark III, it's meaningfully pushed out, even since we had the update with the shipyard six-nine months ago. On that one, we see the yard availability as a negative. On the first two, we still see it as attractive.

Liam Burke (Managing Director)

Great. Other FLNGs out there, mostly operated by the major energy companies, has there been any potential competition on the FLNG as a service only from any other providers?

Karl Fredrik Staubo (CEO)

Nobody else in the world has done vessel conversions, FLNG vessel conversions. We think that the CapEx and delivery time is better obtained in the current yard and long lead situations for vessel conversion than it is for new builds. As part of the updates we've had with the shipyards, we have also explored new builds on the smaller sizes. That reconfirms that conversion is the cheapest and most efficient way to do, but obviously comes with significant engineering complications that Golar has built up over time. We do see that there are more and more majors going for this type of technology, but there are significant advantages doing it with us as a service provider, as opposed to replicating this through a new build, because you cannot obtain the same benefits.

Liam Burke (Managing Director)

Great. Thank you, Karl.

Operator (participant)

There are no further questions at this time, so I'll hand the call back to Karl for closing remarks.

Karl Fredrik Staubo (CEO)

Thank you all for dialing in and listening to the Q4 presentation. Have a great day.

Operator (participant)

This concludes today's presentation. Thank you for participating. You may now disconnect. Speakers, please stand by.