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    Golar LNG Ltd (GLNG)

    Q4 2023 Earnings Summary

    Reported on Feb 18, 2025 (Before Market Open)
    Pre-Earnings Price$21.21Last close (Feb 28, 2024)
    Post-Earnings Price$21.48Open (Feb 29, 2024)
    Price Change
    $0.27(+1.27%)

    What went well

    • Golar LNG is committed to increasing shareholder returns through stable and potentially increasing dividends. The company expects to increase dividends over time, particularly after the COD (Commercial Operations Date) of the Gimi FLNG project. Shareholder returns are extremely high on the agenda.
    • Golar's FLNG projects have significantly lower breakeven costs compared to U.S. LNG projects, making them highly competitive. The landed cost of Golar's FLNG projects is about half that of U.S. LNG exports, which have breakeven landed costs into Europe of about $10 per MMBtu. Golar's lower costs position their FLNG projects attractively in the LNG market, even as new capacity comes online in the U.S. Gulf Coast and Qatar.
    • Golar has entered into a framework agreement for the redeployment of the Hilli FLNG, indicating potential for long-term contracts and future revenue. The company is confident in meeting the timelines set out in the agreement and aims to have visibility on Hilli's redeployment within 2024.

    What went wrong

    • Uncertainty regarding the redeployment of FLNG Hilli: The company acknowledges uncertainties with governmental approvals and timing for the redeployment of Hilli FLNG after the current contract ends. They aim to have visibility within 2024, but there is no firm timeline, which could lead to potential delays or challenges in securing future contracts.
    • Delayed revenue recognition from FLNG Gimi: Revenues and costs from the commissioning and integration phase of Gimi FLNG will be capitalized and not reflected in the income statement until the commencement of operations, expected in Q3 2024. This means there will be no contribution to earnings from Gimi until after that date, potentially impacting short-term financial performance.
    • Potential distraction from core FLNG business due to other investments: The company has investments in non-core businesses like Macaw Energies and Avenir LNG. While they claim most capital will be directed to FLNG projects, these investments might divert focus and resources away from their main FLNG growth projects.

    Q&A Summary

    1. Dividend Policy
      Q: Will you maintain the dividend amid investment opportunities?
      A: Management intends to maintain a stable, predictable dividend, initially set at $0.25, which they view as highly sustainable. They expect to increase dividends over time but prefer to wait until the COD of Gimi occurs before considering an increase. Shareholder returns are extremely high on their agenda now and going forward.

    2. Hilli Framework Agreement Progress
      Q: Can you update us on the Hilli framework agreement timing?
      A: The framework agreement aligns commercial terms and next steps, but government approvals introduce uncertainty. Joint meetings with authorities suggest alignment with their proposed timeline, aiming for visibility on Hilli within 2024, which aids in planning the next phase, possibly moving from the current location.

    3. Capital Allocation to FLNG
      Q: How are you balancing FLNG investments with other ventures?
      A: Golar focuses its capital solely on FLNG growth projects. They have a legacy investment in Avenir LNG but won't deploy more capital into it. Macaw Energies aligns with FLNG expertise targeting flare gas opportunities, but significant capital deployment is not planned. They may spin off Macaw to accelerate its business.

    4. Gimi Project Income Impact
      Q: How will Gimi commissioning affect income statements?
      A: During Gimi's commissioning and integration phase, revenues and costs will be capitalized until the actual COD start date. These amounts will be reflected on the balance sheet and later amortized over the life of the company.

    5. FLNG Opportunities Amid LNG Expansion
      Q: Has the FLNG opportunity outlook changed with new LNG capacity?
      A: Management sees the expansion of LNG supply from the U.S. and Qatar as beneficial. Stable, plentiful supply leads to stable pricing, encouraging end-user demand. They believe their FLNG projects have a landed cost half that of U.S. LNG volumes, enhancing their attractiveness.

    6. Hilli's Adaptability to Gas Streams
      Q: Can Hilli handle wet gas opportunities?
      A: Hilli's design is generic, based on pipeline-quality gas entering the vessel. If gas composition doesn't meet this quality, a pretreatment facility treats the gas before it enters the FLNG. This approach allows them to achieve favorable CapEx per ton and operational efficiencies.

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