Golar LNG Ltd. Q3 FY2024 earnings call

Management Statement and Operational Highlights:

• Ordered third FLNG (Mark II FLNG, 3.5 mtpa, delivering 2027), increasing Golar's liquefaction capacity by 70%, with potential to double EBITDA.
• Hilli making progress on redeployment to Argentina under 20-year charter, expected startup 2027.
• Gimi in accelerated commissioning, first gas late Q4, full ops Q2 2025.
• Pan American Energy charter in Argentina: Hilli to start-up 2027, Golar to become 10% shareholder in South American Logistics.
• Macaw Energies produced first ISO containers from flare gas in Texas, fine-tuning operations for gas quality variability.

Segment Performance:

• FLNGs:
  • Hilli: Continued market-leading operational performance, offloading cargo number 122, with over 8 million tons of LNG exported since 2018. Q3 EBITDA over $68 million, including $33 million from base tolling fees and ~$35 million from variable Brent/TTF-linked fees. Expected to generate adjusted EBITDA net to ~$273 million in 2024 and $126 million in 2025.
  • Gimi: Accelerated commissioning started, with first gas expected late Q4 and full operations in Q2 2025. Commercial reset with BP completed, expecting ~$220 million in pre-COD compensation, $130 million invoiced in 2024.
• LNG Carriers: Golar Arctic (legacy, considered for long-term charter/sale); Fuji (on charter until Q1 2025, then conversion to Mark II FLNG).
• Investments: 23.5% shareholding in Avenir LNG and fully-owned Macaw Energies (first ISO containers from flare gas produced in Texas).

Guidance:

• Gimi expected first gas late Q4 2024, full operations Q2 2025.
• Hilli redeployment to Argentina in 2027, aggregate annual EBITDA ~$515M before commodity.
• Mark II FLNG on order to deliver 2027, potential to double liquefaction capacity to >12 mtpa and triple EBITDA by 2028.
• Target to charter Mark II FLNG by 2025.
• Each Mark II FLNG could generate ~$500M EBITDA annually if chartered similar to Pan American contract.

Risks:

• Delays in regulatory/environmental approvals for charters.
• Commodity price fluctuations impacting earnings from FLNGs.
• Construction delays for Mark II FLNG affecting delivery timeline.

Q: Ben Nolan from Stifel asked about Argentina, specifically Hilli's definitive move and Argentina LNG development.

A: Karl Fredrik Staubo said Hilli is definitively going to Argentina, Vaca Muerta is large shale gas reserve, Pan American and Golar welcome other partners, and Mark II could be second FLNG in Argentina.

Q: Chris Robertson from Deutsche Bank asked about Mark II option expiry and Tortue project.

A: Karl Fredrik Staubo said Q1 was reference, need long-lead commitments in Q1, and FLNG is a viable option for Tortue Phase 2.

Q: Kristoffer Barth Skeie from Arctic Securities asked about 10% stake in South American Logistics and CapEx for Hilli redeployment.

A: Karl Fredrik Staubo said redeployment cost ~$200M-$300M, Eduardo Maranhao said 10% stake in South American Logistics has ~$50M-$100M CapEx attributable to Golar.

Q: Alexander Bidwell from Weber Research asked about Mark III and Macaw listing.

A: Karl Fredrik Staubo said no immediate plans for Mark III due to higher CapEx and longer lead time, Macaw's listing to be revisited in 2025 after tweaking design.

Q: Liam Burke from B. Riley Financial asked about Mark III inquiries and capacity.

A: Karl Fredrik Staubo said plenty of stranded gas reserves support larger capacities, Mark II is more viable currently.

Q: Sherif Elmaghrabi from BTIG asked about NNPC FLNG agreement and Argentina infrastructure.

A: Karl Fredrik Staubo said NNPC project unlikely to be sanctioned in 2024, Argentina needs designated pipeline with ~2-year construction time, developed tandem with FLNG expansion.