Golar LNG Limited

Welcome to the GOLA LNG Limited fourth quarter 2023 presentation. After the slides presentation by CEO Karl Fredrik Staubo and CFO Eduardo Maranhao, there will be a question and answer session. Information on how to ask questions will be provided then. At this time, all participants are in listening only mode. I will now pass you over to Karl Fredrik Staubo. Karl, please go ahead.

Thank you, and good day, and welcome to GOLAR LNG's Q4 2023 earnings results presentation. My name is Karl Fredrik Staubo. I'm the CEO of GOLAR LNG, and I'm accompanied today by our CFO, Mr. Eduardo Maranhao, to present this quarter's results. Before we get into the presentation, please note the forward-looking statements on slide two. We start at slide three in an overview of GOLAR today. We own two FLNGs. Hilli operating for Perenco in Cameroon, and FLNG Gimmi delivered from Seatrim Shipyard in November last year, and currently moored to the GTA hub offshore Senegal and Mauritania, which will be her home for the next 20 years. We own two LNG carriers. We agreed to acquire the Fuji intended for Mark 2 FLNG conversion and expect to take delivery of the vessel next week. We also own the LNG carrier Golar Arctic, which is a non-corp to our FLNG focus, and we are currently considering options for the vessel, including charter opportunities or a potential sale. We have two financial investments, Avenir LNG, a small-scale LNG shipping company, and Macao Energies, a land-based liquefaction company targeting monetization of flare gas, focused on operations in the Americas. We're particularly excited about the outlook for Macau and we'll share more color on development on that later in the presentation. Turning to slide four, Golar is the world's largest owner and operator of FLNDs and the only FLND player offering floating liquefaction as a service. This is relevant as gas resource owners of proven reserves, either stranded, reinjected or flared gas, look to monetize these proven reserves while maintaining meaningful ownership and exposure to their own resource. Golar's position as the only service provider of maritime liquefaction enables us to offer these resource owners a unique value proposition. We own and operate the largest FLNG fleet in the world by liquefaction capacity and at par with ENI and Petronas in number of units. Golar pioneered the SL&D concept with the construction and delivery of HILI and I've also demonstrated the lowest CAPEX per ton and market leading operational track record. Turning to slide five, we provide an overview of the global LNG supply and the attractiveness of SL&D project development. The global LNG market is approximately 400 million tons and based on projects under construction or pending final investment decision, market supply is estimated to grow by up to 220 million tons or more than 50% by 2030. The largest incremental producer of LNG will be the US with a current market share of 22% of global volumes and 57% of planned added production. On the far right hand side, this compares the cost curves of global suppliers volumes landed in Europe. This cost stack includes the cost of source gas, liquefaction and shipping. Based on forward curves for Henry Hub, a significant portion of US volumes have a landed price into Europe of about $10 per mm BTU, providing support for LNG prices. We target LNG developments with significantly cheaper source costs for the gas. Based on our demonstrated lower capex per ton and shorter shipping distance from the locations we are targeting, We see landed gas prices for projects currently in discussion of around $5 per MMBTU. This suggests that the project economics for the FL&D development currently in development by Golar can generate a margin of $5 per MMBTU to where US exports have break-even landed costs. Hence, at this break-even landed cost for the majority of US projects, The EBITDA of the FLNG project in discussion is ranging between 600 and 875 million dollars, dependent on whether we look at the HILI or a March 2 FLNG solution, where the economics will be shared between the resource owner and GOLAR. The attractive break-even cost of these projects also ensure a robust business model if gas prices continue to be volatile. Turning to business updates in the next session and a summary of Q4 and subsequent events on slide 7. Hilly continued their operational excellence, having now delivered 108 cargoes since start-up of operation in 2018 and more than 7 million tons of LNG to date. Gimmi, as explained, has now been moored to the GTA hub and is ready to commence operations under her 20-year contract with BP Offshore Senegal and Mauritania. We continue to progress our Mark 2 growth project, having spent $187 million to date and taking delivery of the Fuji LNG, our vessel conversion candidate, next week. We see strong development for FLNG projects, including redeployment projects for Hilly and new projects for Mark 2 FLNGs. We're currently in discussions for charter opportunities ranging from 12 to 20 year duration, and we are pleased that we are aligning commercial terms with gas resource owners. Turning to the right hand side and corporate and other. The financial highlight for the quarter was adjusted EBITDA of $114 million, inclusive of the catch up of 2022 underutilization of the FLNG Helix. Current liquidity position stands at approximately $800 million, and Eduardo will provide further detail on the financial performance for the quarter later in the presentation. We continue our focus on shareholder returns, declaring a dividend of 25 cents for the quarter and share repurchases of 1.3 million shares during Q4. We also resold $61 million of our unsecured treasury bonds Following this sale, we now have $200 million of bonds outstanding in the market and $100 million remains in treasury. Turning to slide eight, GIMI sailed away from Citrium on November 19th, completing a four-year construction period. This was extended due to COVID effects on the conversion process. We arrived on the GTA field on January 10th, 2024, following an efficient tow from Singapore to Senegal Mauritania. The vessel is now moored to the GT hub with all 26 mooring lines, which will keep the vessel steady and be her home for the next 20 years. As explained, the vessel is ready to commence operations and we are currently waiting for feed gas pipeline connection and commencement of operations. The client advises that first gas is expected in Q3 2024, subject to final completion of upstream activities and installation of the FPSO. Turning to slide 9. and further highlighting the key steps for GIMMI and the GTA field to reach COD. With the first two key milestones now concluded, we are waiting to embark on LNG production. The commissioning period is expected to be approximately six months with commercial operations anticipated thereafter. GIMMI expects to receive a standby day rate and daily commissioning payments ahead of commencement date. The commencement date triggers the start of the 20-year lease and operate agreement that unlocks the equivalent of around $3 billion of adjusted EBITDA backlog to GOLAR, or about 150 million of annual EBITDA. Turning to slide 10 and shifting gears to Healy. Healy produced our highest production since startup during 2023. In total, the unit produced 1.46 MTPA during 2023, inclusive of the 2022 underproduction, and also exceeding the contractual volume by approximately $300,000. The vessel continues its market-leading operational uptime since delivery, and we continue to be highly pleased with both the unit, the technology, and the operating teams that support the daily operations. Turning to Mark 2 on slide 11. As previously guided, we have committed more than $400 million to our planned next FLNG vessel, a Mark 2 FLNG with a 3.5 MTPA liquefaction capacity. Long lead items are now 55% completed with construction, and we have spent $187 million of the commitment to date. Next week we expect to take delivery of the LNG carrier FUJI, which is intended to be used as a conversion candidate for the project. We plan to operate FUJI as an LNG carrier until she will start her conversion work. We have reconfirmed pricing and yard availability for a potential order of a Mk2 FLNG, and expect 2027 delivery provided that we take final investment decision within 2024. Progress has also been made on a potential Mark 2 debt facility where terms are being finalized and the facility will not be dependent on a charter for the unit. Turning to slide 12, we have seen strong development of new FL&E projects during the quarter. We're pleased that we are aligning around commercial terms with gas resource owners and the attractiveness of these potential gas developments with sufficient resources to support 12 to 20-hour charters. We recently signed a framework agreement for a potential new FLNG project, which can either utilize the HILI or a Mark II FLNG. In addition to the commercial progress made with these counterparts, we're working on the technical and fiscal terms in parallel. As previously discussed on our quarterly calls, these are large infrastructure projects that need approvals from environmental bodies and governmental sign-offs in addition to commercial agreements with gas resource owners. We're excited about the development and progress on all these aspects of the potential projects in discussions. Turning to slide 13 and an update on Macau, another aspect of our portfolio where we see very positive development. As a reminder, Macau is a fully-owned subsidiary of Golar. The company is targeting land-based FLIR to LNG mobile solutions that we have named F2X, where the ISO containers containing the LNG will be named LiquidFLIR. As you can see from the right hand side of the slide, we have completed the construction of the first unit on time and budget, and we will start production testing in Q2 2024. We see strong interest from prospective clients that look to monetize flare gas, both for economic and environmental benefits that this technology enables. Once we have proven production, we will evaluate a separate listing of Macau to facilitate an accelerated rollout of this technology. I'll now hand the call over to Eduardo to present our Q4 results.

Good morning, everyone, and thanks, Karl. I'm glad to share an overview on Golar's financial performance during Q4. Turning over to slide 15, I wanted to show some of the highlights of this quarter. Total operating revenues amounted to $80 million, with total FLNG tariffs reaching $106 million, an increase of 12% compared to last quarter. FLNG tariff is a critical metric, which reflects a comprehensive approach to liquefaction revenues, including realized gains on oil and gas derivatives. Adjusted EBITDA came in at $114 million, up 52% from the previous quarter. positively impacted by Healy's performance, which exceeded her contracted 2023 production volume, resulting in a release of the remaining 2022 underutilization balance of $29 million. We had a net loss of $31 million in Q4. This figure includes a total of $117 million non-cash items, such as movements in the value of TTF and Brent derivatives, and our interest rate swaps. We closed the year with a total cash position of $753 million and total contractual debt of $1.2 billion. When considering the value of the remaining receivables from our TTF hedges, our net debt position at year end was $411 million. Now moving to slide 16. We can see the evolution of Healy Zebeda contribution over the last quarters. When looking on a year-on-year basis, Healy generated $84 million in Q4, which is 15% greater compared to the previous quarter. That number includes $33 million from base tolling fees. Brent-linked fees were up to $20 million from $13 million last quarter, and TTF-linked fees of $31 million, up from $28 million in Q3. Moving on to slide 17, you can see that we remain exposed to TTF prices for the remainder of 2024. while at the same time expect to benefit from locked-in gains from our previous swaps. These locked-in gains resulting from the unwinding of our TTF hedges will be allocated in addition to our fixed tolling fees and variable Brent and TTF revenues. That represents approximately $49 million of EBITDA or approximately $12 million per quarter in 2024. Total debt service, including principal amortization, is expected to come down to 87 million in 2024, resulting in total free cash flow to equity generation of approximately $174 million, based on forward prices for both Brent and TTF. As you can see on this graph, the total free cash flow to equity generated just between 2022 and 2024 is expected to surpass $620 million, with room for potential upsides subject to oil and gas prices. Now, moving to slide 18. We remain committed to shareholder returns, and as you can see, in 2023, we paid over $430 million in dividends, share buybacks, and the purchase of NFE stake in FLNG Healy. This quarter, we declared the dividend of 25 cents a share, with a record date on the 12th of March, and payment on the 20th of March. We have also repurchased 1.3 million shares this quarter, leaving 104.6 million shares outstanding. Out of the $150 million approved share buyback program, $88 million remains available for further repurchases, which we will continue to personally pursue. I'll hand it over to Karl and offer some closing remarks.