Golar LNG Limited

Ladies and gentlemen, thank you for standing by and welcome to Goro LNG Limited 4Q 2020 results presentation. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and 1 on your telephone. I must advise you that this conference has been recorded today, and I would now like to hand the conference over to your speaker, Ian Ross, CEO. Please go ahead.

Thank you, operator. Good morning, good afternoon, everyone, and welcome to the GOLOR LNG Q4 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 Staubo. We're also pleased to have Tor Olav Troim, Chairman of Golar LNG, with us today, and Stuart Buchanan, Head of Investor Relations. Before we start, I'd like to draw your attention to a forward-looking statement on slide one. And clearly, there's a lot to cover this quarter, including the transformative deals with NFE for the sale of 100% of Hygo and Golar's share of the Golar Partners business, which incidentally was approved by the MLP unit holders yesterday. Let me kick off by giving you some outcomes for GOLA from these deals and some quarterly highlights before Karl takes you through the numbers in more detail. I'd like to explain three related themes. Firstly, why the Hygo deal crystallizes value for GOLA. Secondly, how these transactions will financially strengthen the company. And thirdly, that this is the first major step along our journey to simplify the group. If we turn to slide four and look at the value created for shareholders, It's a good story. In 2016, GOLA invested $290 million into the Hygo JV, known as GOLA Power in those days. The company built Latin America's largest combined cycle gas-fired power station at Sergipe, supplied by gas from the GOLA Nanook, and then built a repeatable downstream business around that structure. When the deal with New Fortress completes, GOLA will book a profitable gain of $760 million based on today's closing price of NFE shares. which translates to 3.2 times the invested equity. Turning to slide five and looking at our strength and financial position and just going through the recent activities. We successfully completed the public offering of 12 million shares, raising just over $100 million in December last year. Also in December, our FSRU LNG Croatia conversion project was commissioned, accepted and subsequently sold to our customer LNG Hrvatska releasing total liquidity of $51.7 million after repayment of $113 million in debt. To bring this project in on time and within budget during 2020 is a strong performance and I'd like to acknowledge the effort of everyone involved. We repaid the $150 million bilateral facility and the $30 million margin loan and then executed a new $100 million credit facility. and the agreements to sell both Hygo and our shareholding and goaler partners to New Fortress Energy will deliver a further $131 million in cash together with 18.6 million shares in New Fortress. So the summary of all of that is that post both NFE deal closings, we will add 204 million in cash to the company and that's after paying down a total of $193 million in debt. The third element is simplification. and you can see from slide six that the ownership structure is more streamlined. We will continue to provide operations and maintenance services to the NFE floating assets that they've acquired and we are left with three well-defined business activities. On slide seven, post-transaction, we will have an FLNG business with a contracted adjusted EBITDA run rate that clearly ramps up to $224 million when FLNG GIMI comes online in 2024, a shipping business with an adjusted EBITDA run rate over the last 12 months of $123 million, representing an average TCE of around $50,000 per day, and the ownership of 8.9% of New Fortress Energy, which is focused on the downstream part of the gas value chain. With the adjusted EBITDA, book value and net debt of each segment laid out this clearly, we feel that the underlying equity value becomes more apparent. Turning now to page 9 and a run-through of our Q4 2020 highlights. Today we report an adjusted EBITDA of $78 million on revenue of $118 million for the quarter, which is driven by a further solid FLNG performance and an improved result from shipping. In shipping, we achieved adjusted time charter earnings of $52,000 per day, which is in line with guidance, with the TFDEs earning just under $54,000 per day after adjustments. We ended the quarter with a shipping revenue backlog of $193 million compared to $172 at the end of Q4 2019. Our FLNG operations maintain 100% commercial uptime through the quarter, with an additional $8 million in revenue recognized as a result of overproduction on Haley up to the end of 2020. And a conditional agreement has been entered into with Perenco, which may pave the way for drilling to commence this quarter. FLNG GIMI remains on budget and tracking to the new schedule. Heigl generated $38 million of adjusted EBITDA during the quarter, which, as you can see from the graphic, is largely in line with the last couple of quarters. So more detail on the business segments to follow. Let me now hand you over to Karl to take you through the numbers and more detail on financing. Thank you, Ian.

Turning to slide 10 and the fourth quarter 2020 financial results, we report operating revenue of $118 million for the quarter, up from $96 million in Q3, driven by a seasonal increase in our achieved shipping TTE, which came in at $52,000 for the quarter, a $12,700 increase from Q3. The FLNG Hilly continued its solid and stable operations with the mentioned 100% utilization. Following the Q3 announced revised agreement with Perenco, where we removed the 500 VCF production cap, we have billed Perenco $8 million of incremental revenue for overproduction on the Hilly during 2019 and 2020. Adjusted EBITDA for the quarter came in at $78 million, a beat against consensus of $70.7 million, driven by the mentioned higher shipping rates and the Healey overproduction invoice. We report positive net income for the quarter at $9 million. Our net debt position was reduced by $243 million to $2.06 billion as a result of repayment of $80 million under corporate debt facilities secured against Hygo and MLP shareholdings. a repayment of $112 million on the LNG Croatia and an increase in our cash position of $101 million from our December equity offering. This was only offset by $75 million of debt drawn on the GIMI project. Our cash position at quarter end was $254 million, of which $128 million in unrestricted cash and $126 million in restricted cash. The increase in restricted cash relates to receivables in conjunction with delivery of the LNG Croatia, which will be received during Q1. We expect a further strengthening of our cash position following the closing of the NEP transactions. Turning to slide 11, Golar is transitioning from capex to cash flow as our infrastructure assets on long-term contracts are delivered from the yards. This is coupled with improving shipping rates and reduced shipping spot exposure through our revised shipping charting strategy. We have seen a clear trend in our EBITDA over the last five years, moving from negative in 2016 and 2017 to a stable growth of EBITDA performance during 2018 to 2020. We expect our EBITDA development to continue to build as we take delivery of the GIMI in 2023 as well as potential increased utilization and oil link related revenue from the FLND Hille. Turning to the NFE transactions and explaining them on slide 13. On January the 13th, Golar announced two transactions where we're selling both Hygo and GMLP to New Fortress Energy. The two transactions are independent of each other, but was announced on the same date involving the same counterpart. Starting with the Hygo transaction on the left, Stonepeak and Golar have agreed to sell Hygo. Golar will receive $50 million in cash and 18.6 million shares in New Fortress Energy for its 50% shareholding in Hygo. Based on the closing price of NFV yesterday, this represents a $760 million book gain to Golar. and 3.2 times equity return over the five years we've been invested in Hygo as earlier described by Ian. On the GMOP transaction, Golar agreed to sell its 30.8% common unit interest in GMOP as well as its 2% general partner interest for $3.55 per unit. The bid price represented a 27% premium to the closing price of GMOP on January 12th and a 37.5% premium to the 20-day VVAP pre-announcement. Golar will receive $81 million in cash proceeds for its common and general partner units. Yesterday, the common unit holders of GMLP voted in favor of the transaction. Both transactions are scheduled to close during first half of 2021 and all parties are working to close as efficiently as possible within that time window. Turning to slide 14 and a bit of rationale as to why we decided to do the transaction or both transactions. Again, starting on the left with Hygo. NFE and Hygo share a vision of delivering cheaper and cleaner energy to emerging markets. Once we filed our F1 and later retracted the IPO, we had several suitors around the company, but for us it's important to team up with someone that shares our vision, especially given that we maintain equity exposure in the combined entity. We think the price that was achieved was attractive both from a price and execution risk versus an IPO alternative. The transaction crystallizes the value of Heigl to the LNG shareholders while maintaining exposure to the attractive LNG downstream rollouts. We believe in industry consolidation and this will create the leading LNG downstream company globally. We also see significant advantages in a larger entity with better access to growth capital and a more diversified geographical exposure. Turning to MLP on the right-hand side, we believe the price as mentioned represents an immediate uplift to equity holders, but also saw significant benefit to other stakeholders, including unsecured bondholders in the MLP. By selling MLP, we remove the refinancing and the recontracting risk of the MLP asset portfolio. This is execution of the announced strategic alternatives where we were looking to better find strategic alternatives for the MLP contract backlog and asset base. We had a unanimous board representation for the bid and we also had recommendations from independent investment bank as well as proxy advisors. With that, I'll turn it back over to you, Ian, to run through shipping.