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    Golar LNG Ltd (GLNG)

    Q2 2024 Earnings Summary

    Reported on Feb 18, 2025 (Before Market Open)
    Pre-Earnings Price$33.56Last close (Aug 14, 2024)
    Post-Earnings Price$33.85Open (Aug 15, 2024)
    Price Change
    $0.29(+0.86%)

    What went well

    • GLNG holds a leading position in providing FLNG as a service, with limited competition and significant barriers to entry, as other companies lack the in-house engineering, operational, or financial capabilities to undertake such projects.
    • GLNG is well-positioned to capitalize on massive gas resources like Argentina's Vaca Muerta field (300 TCF) and stranded gas in West Africa, offering competitive advantages with lower CapEx per tonne—around half the price of incremental U.S. LNG projects—which enables them to develop projects more economically.
    • GLNG has strong growth prospects with ongoing discussions with multiple potential clients, particularly concentrated in West Africa and South America, indicating robust demand for their FLNG services and potential to expand their fleet and increase earnings.

    What went wrong

    • Golar's FLNG growth prospects are heavily reliant on a few regions, primarily West Africa and South America, which may expose the company to geopolitical and regional risks.
    • Deployment of additional FLNG units beyond the first in Argentina will require significant investment in pipeline infrastructure, potentially causing delays and higher costs. This could impact the company's ability to capitalize on the vast gas resources in the region.
    • The swap option to deploy the Mark II FLNG unit in Argentina must be executed before the Final Investment Decision (FID), introducing time constraints and uncertainty in project execution.

    Q&A Summary

    1. Argentina Mark II Swap & EBITDA
      Q: Should we expect over $400 million EBITDA if Mark II is swapped in Argentina?
      A: Yes, swapping in the larger Mark II FLNG in Argentina would result in an expected annual EBITDA contribution pro rata for the size, exceeding $400 million.

    2. Argentina Opportunity & Multiple Units
      Q: How does Golar view the opportunity set in Argentina?
      A: Argentina's Vaca Muerta has vast gas resources of 300 TCF, much larger than the 25 TCF reservoir at Greater Tortue where Gimi operates. The market opportunity for Argentinian gas exports is massive, likely beyond what Golar alone can deliver. Golar aims to be the first enabler for Argentina's gas exports, utilizing proven assets like Hilli or Mark II FLNG units.

    3. Pipeline Needs for FLNG Units
      Q: Is a bigger pipeline needed for Mark II versus Hilli in Argentina?
      A: The existing infrastructure supports at least one FLNG unit, whether Hilli or Mark II. Going beyond one unit (i.e., beyond 3.5 MTPA), expansion of the pipeline infrastructure would be necessary.

    4. Global FLNG Discussions
      Q: How many potential counterparties are you in discussions with globally?
      A: Discussions are concentrated around West Africa and South America, with fewer clients in the Middle East and Southeast Asia. The quality of discussions is high in all locations, but the greatest concentration is in West Africa and South America.

    5. Multiple Units in Other Regions
      Q: Are there opportunities for multiple FLNG units elsewhere?
      A: West Africa has significant stranded gas resources that can be developed much cheaper than incremental U.S. LNG projects. Golar can construct FLNG units at CapEx per tonne around half the price compared to U.S. projects. Multiple units could be deployed in South America, West Africa, and to some extent, the Middle East, while Southeast Asia offers opportunities for one unit initially.

    6. Hilli Refinancing Timing
      Q: Could you secure a Hilli refinancing in the first half of 2025?
      A: Yes, once all subjects and FID on the project are taken, expected later this year, it would be natural to look at refinancing initiatives into next year.

    7. Second Mark II FID Timing
      Q: When would you need to issue FID for a second Mark II to meet a 2028 delivery?
      A: FID for a second Mark II would have to be based on current positions unless improved, around within Q1 2025.

    8. FLNG Competitors
      Q: Are other companies stepping up to provide FLNG as a service?
      A: Cedar LNG, backed by Pembina, has taken FID for an LNG export project in Canada. Other than that, while initiatives exist, no other contenders have the in-house engineering, operational, or financial capabilities comparable to Golar.

    9. Focus on FLNG vs. Outside Investments
      Q: How are you balancing future FLNG projects versus outside projects like Macaw and Avenir?
      A: Golar has streamlined to focus on FLNG. Avenir LNG is a legacy investment of around $50 million; Golar doesn't plan to deploy more capital but wants to reap the benefits. Macaw aims to replicate FLNG technology onshore to capture flare gas, but Golar's focus remains on FLNG growth, and it doesn't plan to divert significant capital elsewhere.

    10. Argentina Infrastructure Requirements
      Q: What infrastructure is required for the Argentina project?
      A: Key requirements are mooring, covered by South American Logistics, and a short pipeline from the existing grid to the site.

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