Golar LNG Limited

Ladies and gentlemen, thank you for standing by and welcome to the Color LNG Limited 3Q 2020 results presentation conference call. At this time, all participants are in the listen-only mode. After the speaker presentation, there will be a question-and-answer session. And to ask a question during the Q&A session, you will need to press star and 1 in your telephone. I must advise you that this conference is being recorded today, Monday, 30th of November, 2020. and I'd like to hand the conference over to the first speaker today, GOLOR CEO, Mr. Ian Ross. Thank you and please go ahead.

Thank you, operator. Good morning, good afternoon, everyone. Welcome to the GOLOR LNG 2.3 2020 results presentation. My name is Ian Ross and I'm the CEO of GOLOR LNG. Today, I'm joined on the line by CFO Karl Fredrik Staubo, replacing Karl Mitchell Thompson, who has resigned from his position due to personal reasons. We'd like to thank Callum for his contribution to GOLAR. We're also pleased to have Eduardo Maranhao, CFO of Hygo, and Thor-Olaf Proim, Chairman of both GOLAR LNG and Hygo with us today. And as usual, we also have Stuart Buchanan, Head of Investor Relations on call. I'd like to draw your attention to a forward-looking statement on slide one. And if we turn to slide four, let me give you some highlights. Before Karl takes you through the numbers in more detail. Today we report an adjusted EBITDA of $57 million and revenue of $95 million for the quarter, which is driven by a further solid FLNG performance and a steady result from shipping. In shipping, we achieved overall time charter earnings of $39,000 per day, which is ahead of guidance. with the TFDEs earning just under 44,000 per day if you exclude dry dock days. We ended the quarter with a shipping revenue backlog of 198 million compared to 147 million at the end of Q3 2019. Our FSRU LNG Croatia conversion remains on track for handover to our customer LNG Hrvatska in December, at which time we expect to release $17 million in cash from the project and a further $30 million of cash in January next year. Our FLNG operations maintain 100% commercial uptime through the quarter. FLNG GIMI force majeure event with BP has ended, resulting in the project schedule being extended by 11 months and with no other changes to contractual terms. and in downstream, Paul Hanrahan has been appointed as the new CEO of Hygo Energy Transition, that's the new name for Gola Power. Full capacity payments were earned from the Sergipe Power Station and FSRU Nanook and more progress has been made towards a Barkarena Terminal FID. Turning to page 5 and an update on governance, which we take very seriously. The internal review that was instigated following the allegations against the former CEO of Hygo was completed with no findings of wrongdoing. The review has not identified any evidence establishing bribery or other corrupt conduct involving Hygo and confirms solid corporate governance and compliance. Eduardo will go through this overall timeline and provide more detail on Hygo later in the presentation. More detail on the business segments to follow. Let me now hand over to Karl to take you through the numbers and more detail on financing. Thank you.

Thank you, Ian. I'm looking forward to take on the role as CFO for Golar. My name is Karl Fredrik Staubo, and I will start by taking you through the summary results on slide six. Shipping TCE for the quarter came in at $39,100 per day, higher than our guidance of $35,000 a day, and above Q3 of last year at $35,200. However, we were seasonally down from Q2 as expected. FLNG Healey continued its solid and stable operations with 100% utilization and earnings in line with Q2. Net loss for the quarter ended at $22 million. We report a cash position for the quarter of $177 million, of which $100 million is restricted cash related to our letter of credit on the FLNG HILI and consolidated VIE cash balances related to our sale leaseback finance vessels. The unrestricted cash position for the quarter of $77 million was negatively impacted by $17 million due to having to equity fund Gimme CapEx during the BPFM event. Following the ending of the Forsmer Share event, the draw stop under our $700 million facility available during construction has been lifted, and we have made a $75 million draw, which have replaced the $17 million of equity CapEx, increasing our liquidity post-quarter end. This realigns the drawdown ratios to the original debt equity funding ratios. And adjusting for this equity CapEx installment, our cash position for the quarter would have been $94 million. Adjusted EBITDA for the quarter came in at $57 million, a beat against consensus at $52.4 million, driven by higher than expected shipping rates. Returning to slide 7 and adjusted EBITDA development, quarter over quarter our EBITDA was down by approximately $10 million from $67 million in Q2 to $57 million in Q3, primarily driven by seasonally lower shipping rates, which went from $45,000 a day in Q2 to $39,000 a day as mentioned. We also have a COVID-19 related closure of the shipyard where the Golar Tundra was being dry docked, which resulted in significant unscheduled off-fire during the quarter and contributed to the net reduction in our fleet utilization from 93% in Q2 to 80% in Q3. As expected, vessel operating expenses at 28.2 million were higher than those at Q2, which came in at 24 million. The 4 million increase was mainly due to catch-up repairs and maintenance carried out following the lifting of COVID restrictions. As for our trailing last 12 months EBITDA, we're up from $283 million a year ago to $294 million last trailing month. mainly driven by an average increase in our achieved shipping rates. Turning to slide eight and our corporate financing, we have two corporate facilities maturing before year end, a $150 million corporate facility secured against our Hygo shareholding and a $30 million margin loan on our shareholding in Gola Partners. To address these upcoming maturities, we have entered into a $100 million committed corporate debt facility secured in our Hygo shares. This will be drawable at maturity of the 150 facility that now maturing. Furthermore, we are in advanced discussion for an incremental $125 million corporate credit facility drawable upon Hygo IPO. In addition to these facilities, Other key financing events that will increase our available liquidity include contractual drawdown on the Golar Bear facility of an incremental $10 million targeted in January 2021. As Ian explained, the acceptance and delivery of the Golar Viking project converted to an FSRU and on its way to acceptance to LNG Croatia. that will free up net liquidity of $47 million between December 2020 and January 2021. We've also received term sheets for opportunistic refinancings of the vessel Golar Frost and a potential renewal of the maturing DMLP margin loan, which combined can raise $70 million in liquidity to Golar. The net potential liquidity effect, if we draw on all of these facilities, will be an incremental $172 million in liquidity after repaying the maturing $180 million of corporate debt. So we're comfortable with the liquidity situation, assuming we draw on all these facilities. And we think that will create significant flexibility to continue the growth of the company. Turning to slide 9, we have an update on our FLNG GIMI conversion funding sources. We have, as Ian alluded to, agreed with BP to extend the project by 11 months. That is expected to come in at an incremental construction cost of $36 million. Furthermore, we have shifted some of the capex to later in the construction period to benefit near-term liquidity. For next year, the reduction is $7 million in equity requirements before we increase in 2022 and 2023, so we've pushed the installments slightly out. We're also happy that the increase in the construction capex is not more than the $36 million that we anticipate to be the total increase in construction costs, and we worked hard with our subcontractors to make sure that the increase in costs are not more significant given the 11-month delay. That concludes it for the financing section, and I'll now head over for Ian to run through the shipping section.