Highlights
* Golar LNG Energy reports net loss of $3.2 million and
operating income before depreciation and amortisation of $5.0
million
* Spot trading vessel earnings strengthening with improved
utilisation and rates
* Equity offering completed and 'greenshoe' option
exercised raising $117 million
* Golar LNG Energy lists on Oslo Axess on October 8, 2009
* Gladstone LNG project makes good progress
* FSRU discussions continue to progress with various
parties and formal tenders beginning to emerge
Financial Review
Golar LNG Energy Limited ("Golar Energy" or the "Company") reports a
net loss of $3.2 million and operating income before depreciation and
amortisation of $5.0 million from inception to September 30, 2009
(the "third quarter"). These results represent trading from the date
of completion of the restructuring and equity offering on August 12,
2009 to September 30, 2009 (the "third quarter").
Revenues in the third quarter were $11.3 million. Earnings from
vessels operating in the spot market have started to improve from the
position in the first half of 2009, at which time these vessels were
owned by Golar LNG Limited. Golar Arctic went on hire from August 16,
2009 and will continue on hire for the vast majority of the fourth
quarter. Average utilisation for the period from August 12, 2009 to
September 30, 2009, the third quarter, was 93%, with average daily
time charter equivalent rates ("TCEs") in the period being $35,600
per day.
Voyage expenses, principally fuel costs whilst the vessels are not on
time charter, were $0.8 million for the third quarter, operating
expenses were $3.8 million and administrative expenses $1.7 million,
resulting in operating income of $0.3 million after depreciation of
$4.7 million.
Net financial expenses were $2.9 million for the third quarter.
Average USD LIBOR has declined during the period to 0.3% by September
30, 2009, which has had a beneficial effect on interest costs for
floating rate debt. Approximately 48% of the Company's debt is swaped
to a fixed rate.
Equity in net earnings of associates relates mainly to the company's
investment in LNG Limited.
Financing, corporate and other matters
The restructuring of Golar LNG Limited's activities by way of the
transfer of various assets and liabilities to its subsidiary, Golar
Energy completed on August 12, 2009. Immediately subsequent to the
restructuring Golar Energy completed a private placement of
approximately 60 million new shares, including the exercise of a
'greenshoe' option, raising approximately $117 million. At the time
of the equity offering the Company also issued 12 million warrants to
subscribe for further shares on 15 December 2010 at a price of $2 per
share.
The underlying rationale for the restructuring was to create an
aggressive, well funded high growth mid-stream LNG company with a
focus on LNG shipping and trading, floating regasification projects
and liquefaction projects.
Golar Energy's shares were listed on Oslo Axess (GOLE) on October 8,
2009 and the prospectus for this listing can be found on the
Company's website at www.golarenergy.com.
Subsequent to the period end the Company issued share options to
directors and employees totalling 3,940,000 at a strike price $2.20.
The grant date was October 23, 2009 and all options vest over a
period of two years and eight months.
In November 2009, Golar Energy sold a block of 9.6 million LNG
Limited shares which reduces its shareholding to approximately 6.3%
of LNG Limited's issued share capital. Golar Energy remains strongly
committed to the Gladstone LNG Fisherman's Landing project and
continues to invest directly in the project in terms of significant
technical and commercial resources including the secondment of
personnel to the project. The Gladstone LNG Fisherman's Landing
project remains an important part of Golar Energy's strategy and
portfolio. The sale will realise funds of approximately USD 11
million and result in an accounting profit of approximately USD 8
million.
Operational Review
Shipping
The spot LNG shipping market will continue to face some challenges in
the short term due to a limited oversupply of vessels. The order book
as at the end of 2010 is limited to 3% of the total fleet. The vast
majority of new vessels will be delivered into specific projects.
Trading performance of the Company's vessels operating in the
spot/short term market improved over the quarter. Rates and
utilisation are still unsatisfactory but improvement continues into
the fourth quarter. Available tonnage in the Atlantic has tightened
over the quarter with very few vessels available cold for
the recent tenders. Several majors have recently been in the market
chartering in medium term tonnage
Charter arrangements are now becoming more balanced and
exhibiting less multiple options and lower flexibility in charterer's
favour than has been evident throughout the year.
There are clear signs that an improved supply demand balance in the
years to come will lead to a much needed improvement in charter
rates. However the current weak demand for natural gas is negatively
influencing the short to medium term demand for LNG
Regasification
Floating storage and regasification market inquiry is firming. As
reported in the second quarter regasification developers are
launching new LNG import projects based on the employment of a
floating storage and regasification solution. Developers, in
addition to recognizing the numerous benefits of floating storage and
regasification projects, recognize an excellent window of opportunity
to launch new projects as near / mid term LNG supply is available.
Various formal invitations (prequalification documents, solicitations
of interest, request for proposals) have recently been issued or are
expected from countries including Israel, Indonesia, Uruguay and
Jamaica.
In addition to these formal invitations, Golar Energy is discussing
numerous other projects directly with interested parties. While
inquiry is worldwide, Asia continues to represent areas of increasing
activity. This formal FSRU market inquiry is testament to the
increasing level of interest and Golar's track record, focus on
developing long term relationships and delivering tailored low cost
solutions should provide a solid foundation for delivering further
FSRU contracts.
Golar Freeze entered Keppel Shipyard on September 5, 2009 to undergo
its FSRU conversion prior to its delivery to Dubai Supply Authority
(DUSUP) under a 10 year charter. The construction of the regas-skids
is completed and they are currently being transported to Singapore
for installation onboard Golar Freeze. A majority of the other main
components for the conversion are already at site, and the conversion
is progressing according to schedule.
Liquefaction
The Gladstone LNG Project continues to move forward positively with
several milestones achieved during the period under review. In early
October 2009, agreement was reached with Gladstone Port Corporation
(GPC) for the project to commence its ground improvement and early
site works programme. The current ground improvement and early site
works will assist in reducing future capital costs and shorten the
overall construction schedule to allow for the Project's first LNG
shipment in 2012. In September 2009, Golar Energy entered into a HOA
with Toyota Tsusho Corporation (part of the Toyota Group) as the end
buyer of the entire first LNG train production of 1.5 mtpa. During
the quarter the project appointed BNP Paribas as the Project's
financial advisor. BNP Paribas will participate in the review and
structuring of all key components of the Project, to ensure the
Project conforms to accepted project debt financing principles and
parameters. In addition CB&I have been appointed as "Project
Management Consultant". The depth of LNG project experience within
the CB&I group will substantially augment the project team, which in
itself has been materially bolstered by the selective recruitment of
LNG industry experienced personnel.
The PTTEP/Coogee project is progressing and will complete the concept
phase by the end of the year. The midstream (FLNG unit) study work
is being done in Oslo with several project engineers from PTTEP on
the project team, while the upstream studies are being done in Perth.
The Company has gained valuable knowledge and experience throughout
the cooperation with PTTEP.
Market
The LNG industry is experiencing additional growth as more
liquefaction projects come on stream to meet long term global demand
growth. Qatar expects to double annual capacity this year to 62
million tonnes and be in a position to export 77 MTPA by 2011.
This year has also seen further LNG production capacity additions in
Russia (Sakhalin), Indonesia (Tangguh) and Yemen as well as more
import capacity, added or about to be added, in Kuwait (Al Ahmadi),
Italy, Brazil, Dubai and Argentina. The addition of new production
capacity and LNG import facilities, some of which are located in
previously inaccessible markets exhibiting a counter-cyclical demand
requirement, offers a greater interaction between, not only Atlantic
and Pacific Basin locations, but also greater diversity between
northern and southern hemispheres. Gas price volatility and arbitrage
between regions will create additional trading opportunities which
will require flexible shipping arrangements to cater for market
developments.
Additionally the market is being tested for more flexible LNG SPA's
in long term contracts in terms of destination flexibility and upward
and downward buyer volume flexibility. This additional flexibility
will also require further flexible shipping arrangements (and
optimisation within shipping portfolios) which hitherto charterers
have been reluctant to recognise in terms of pricing for shipping.
The depressed spot gas and LNG prices during 2009 can be explained by
a number of different factors:
- The new LNG production projects finally starting up,
particularly in Qatar, has significantly increased supply.
- In the US, shale gas can be produced more cheaply than had
been anticipated, which has transformed the marginal cost of supply
in the US, driven prices down and means that LNG has to compete at
lower prices than had been anticipated.
- There has been a global economic downturn, depressing gas
demand, so that Asian LNG buyers have minimized volumes under their
term contracts, forcing some producers to sell to the West or India.
- There has been a glut of LNG shipping so that, despite low
prices, LNG producers have still been able to secure positive
netbacks, so the LNG has kept flowing.
Outlook
The Company believes that in the medium to long term the gas/LNG
market looks attractive. Gas/LNG is likely to increase its share of
the energy market due to shortage of oil, the increased demand for
energy and the fact gas is a cleaner energy than oil and coal. The
price attractiveness of gas which in the US today is selling at a
discount to oil of approximately 70 % measured on an energy content
basis is further strengthening the case. In order to develop the LNG
market further and increase its market share Golar Energy believes
there will be an increased demand for floating regas solutions and
floating LNG projects. With Golar Energy's fleet, expertise and the
track record, the Board believes that the Company is in a very good
position to take advantage of this opportunity. By utilizing
existing LNG vessels for conversions the Company believes that it is
able to create the most cost effective solutions for customers and
partners.
Golar LNG Energy has a platform for growth within the mid-stream of
the LNG supply chain and plans to aggressively pursue the development
of its regasification and liquefaction projects as well as shipping
and trading opportunities.
The results for the fourth quarter will be influenced by a steadily
improving spot market for LNG vessels, with trading of the Company's
spot market vessels showing improvement in the fourth quarter. There
is however a drydock of one vessel scheduled for the fourth quarter
which will negatively impact earnings. The fourth quarter will
benefit from an approximate $8 million gain on the sale of part of
the shareholding in LNG Limited.
Forward Looking Statements
This press release contains forward looking statements. These
statements are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including examination of
historical operating trends made by the management of Golar LNG
Energy. Although Golar LNG Energy believes that these assumptions
were reasonable when made, because assumptions are inherently subject
to significant uncertainties and contingencies, which are difficult
or impossible to predict and are beyond its control, Golar LNG Energy
cannot give assurance that it will achieve or accomplish these
expectations, beliefs or intentions.
Included among the factors that, in the Company's view, could cause
actual results to differ materially from the forward looking
statements contained in this press release are the following:
inability of the Company to obtain financing for the new building
vessels at all or on favourable terms; changes in demand; a material
decline or prolonged weakness in rates for LNG carriers; political
events affecting production in areas in which natural gas is produced
and demand for natural gas in areas to which our vessels deliver;
changes in demand for natural gas generally or in particular regions;
changes in the financial stability of our major customers; adoption
of new rules and regulations applicable to LNG carriers and FSRU's;
actions taken by regulatory authorities that may prohibit the access
of LNG carriers or FSRU's to various ports; our inability to achieve
successful utilisation of our expanded fleet and inability to expand
beyond the carriage of LNG; increases in costs including: crew wages,
insurance, provisions, repairs and maintenance; changes in general
domestic and international political conditions; the current turmoil
in the global financial markets and deterioration thereof; changes in
applicable maintenance or regulatory standards that could affect our
anticipated dry-docking or maintenance and repair costs; our ability
to timely complete our FSRU conversions; failure of shipyards to
comply with delivery schedules on a timely basis and other factors
listed from time to time in subsequent announcements and reports.
Nothing contained in this press release shall constitute an offer of
any securities for sale.
November 26, 2009
The Board of Directors
Golar LNG Energy Limited
Hamilton, Bermuda
Questions should be directed to:
Golar Energy Management Ltd
Oscar Spieler: CEO - +65 6296 5518
Golar Management Ltd - +44 207 063 7900:
Graham Robjohns: CFO
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.