Golar LNG Limited

Welcome to the GOLA LNG Limited 4Q 2024 presentation. After the slide presentation by CEO Karl Fredrik Staubo and CFO Eduardo Maranhao, there will be a question and answer session. Information on how to ask a question will be provided then. At this time, all participants are in listen-only mode. I will now pass you over to Karl Fredrik Staubo. Karl, please go ahead.

Thank you, operator, and welcome to GOLA LNG Q4 earnings results presentation. My name is Karl Staubo. I'm the CEO of GoalR LNG, and I'm accompanied today by our CFO, Eduardo Maranhao. We're happy to be dialing in from Buenos Aires, where we've been meeting with our coming partners for the FOMG healing. Before we get into the presentation, please note the forward-looking statements on slide two. We start at slide three and an overview of GoalR today. During the quarter, we finalized our transition into pure FLNG company through the sale of Avenir LNG and Golar Arctic. The sale of Arctic marks the end of Golar's 50-year presence in the LNG shipping market. Our assets now include the Hilly, which is currently under a contract for Perenco Offshore Cameroon until contract expiry in July 2026. Thereafter, the vessel will be redeployed here to Argentina for a 20-year contract, establishing Argentina as an LNG exporter. The GIMMI is currently under commissioning to start a 20-year contract for BP offshore Senegal and Mauritania. The LNG carrier Fuji was delivered to CNC Raffles Shipyard in Yangtze, China during the quarter, and the conversion of the Mark II FLNG is progressing according to schedule. Inclusive of the HILI re-contract here in Argentina, our EBITDA backlog stands at 11 billion before commodity exposure. We expect our backlog to continue to increase and provide further earnings visibility once the March 2 FLNG secure a long-term target. Turning to slide four. We continue to focus on capital allocation towards FLNGs and agreed to acquire all remaining minority interest in the FLNG Hille during the quarter. On Christmas Eve, we announced that we acquired approximately 8% of the total vessel capacity from Seatrium Shipyard and Blacking Beach. We paid $90 million for the shareholding, of which $30 million in assumed debt and $60 million of equity. The equity portion matches that of the sale of our non-core investments in Avenir LNG and the Golar Arctic. Both were sold with a total cash equity proceeds of 63 million. The transactions will have several positive contributions to Golar including immediate cash flow accretion, increased earnings visibility through the backlog, reduced volatility of earnings, due to the long term infrastructure cash flow profile of FLNG projects versus more volatile and shorter dated cash flows of LNG shipping. This is also an important exit from LNG shipping after 50 years of operations and a concentration on strengthening our market leading FLNG presence. That leads us to slide five where we remain the largest FLNG owner and operator controlling a total liquefaction capacity of 8.6 million tons per annum. Golar is the only proven provider of FLNG as a service, providing charters with natural gas liquefaction without requiring any ownership to the gas reserves. The advantage of this business model to our potential charters includes time to market, outsourcing of engineering, no capital commitments to the Charter until they receive cash flow from production and access to Golar's market leading operational uptime. We expect to continue our market leading position and have engaged conversations with capable shipyards for fourth FLNG units that we will seek to order once we have secured a Charter for the Mark II under construction. Turning to business update, and the highlights of the quarter on slide seven. Hilly continued its market leading operational track record and has now delivered 128 cargoes since startup in 2018. CP satisfaction for Hilly's re-contracting in Argentina is going according to schedule and we expect all CPs to be fulfilled within the second quarter of this year. In January 25, we received gas The gas from the accelerated commissioning was replaced by feed gas from the BP-operated FPSO, which allowed full commissioning to commence of the FLNG gimmick. This milestone triggered the final upward adjustment to the commissioning rate under the commercial reset. LNG is now being produced, and subject to receipt of sufficient feed gas, we expect the first LNG cargo to be exported within Q1. We thereafter assume the full commercial operations date to be triggered during the second quarter. This will formally mark the start of the 20-year lease and operating agreement that unlocks approximately $3 billion of EBITDA backlog, Golar's share. On the back of these developments, the contemplated refinancing of the FLNG GIME is in the final stages, and Eduardo will elaborate on that later in the call. The Mark II FLNG under construction is progressing according to schedule as mentioned. The key financial figures for the quarter include adjusted EBITDA of $241 million for the full year of 24. Our cash position stands at around $700 million and we declare the dividend of 25 cents for the quarter. We see very strong momentum on commercial opportunities for our FLNG service offering and we will elaborate on this later on in the presentation. Turning to slide eight. We're pleased with the continued economic uptime for Hylli. The vessel generated 277 million of EBITDA during 2024. As a result of acquiring the 8% remaining minority stakes in Hylli, we see immediate cash flow accretion driven by an increase in the fixed tariff component of approximately $7 million per year. An increase to the Brent linked tariff component, which will increase by approximately $400,000 for every dollar the Brent is above 60. And an increase in the TTF linked tariff component, which will increase by approximately $500,000 for every dollar of TTF price measured on an MMBTU basis. In addition to these immediate cash flow accretions, our EBITDA backlog will increase by approximately half a billion dollars on the back of the 20-year redeployment contract in Argentina. Turning to slide nine. Since we entered into the definitive agreement for the redeployment of Hille in July last year, We have actively worked together with Pan American Energy to attract additional Argentinian gas resource owners to the project. We're pleased to see that three of the leading gas producers have now joined. Pompa Energia joined with a 20% shareholding, Harbor Energy with a 15% shareholding, and YPF also with a 15% shareholding. The addition of these companies further strengthened the project and increased the credit quality of Southern Energy, which is our counterpart in the project. With Argentina's vast proven gas reserves and the level of interest for the project supports the economic solidity of establishing Argentina as an LNG exporter and thereby potential further FOMG deployments by GOLAR in Argentina. As mentioned, the CP fulfillment are going according to schedule and the completion is expected within the second quarter of this year. Following the end of the current Franco contract, vessel upgrades and relocation to Argentina, we expect operations here to commence in 2027. Turning to slide 10 and an update on the gimmick. As you can see from the picture on the top left here, you can see GIME to the right and then an LNG carrier to your left. Accelerated commissioning activities commenced in mid-October utilizing a cargo from that LNG carrier. That gas stream was replaced during January with first field gas received from the GTA field. This resulted in the final upward adjustment to the commissioning day rate ahead of final COD. The first LNG commissioning cargo is expected within this quarter and the full contract startup within Q2. Again, we're in the final stages of the contemplated refinancing of the vessel. Turning to slide 11 and a mark two construction update. Again, as you can see from the pictures, the conversion is well underway and tracking according to schedule. The donor vessel, Fuji, entered the shipyard on February 14th after completing its service as an LNG carrier. Several long lead items are now complete and delivered to the shipyard for installation onto the Fuji. The vessel will be the earliest available FLNG globally with delivery in end 27th. To date, we've spent around $600 million in capex on the project, fully equity funded, and the total capex budget is around $2.2 billion, fully delivered to site. We're currently in advanced discussions for deployment of the vessel and expect to secure asset level debt on the vessel after a charter has been secured. We also have an option for further Mark II FLNG at the EMC shipyard with delivery within 28 if we order in 25. Turning to slide 12 for an update on business development. Our position as the only proven service provider of FLNG globally, our market leading capex per ton and proven operational uptime combined with having the earliest available FLNG capacity globally continues to drive interest in our FLNG solutions. We see strong progress on FLNG commercial development. We continue to focus on FLNG opportunities where we have an attractive base tariff and commodity upside participation. So we lock in a base and we participate when offtake prices increase. We're therefore focused on identifying projects that are competitive in the international scene. We have advanced commercial discussions for Mark 2 FLNG deployment. And we are also discussing projects with potential for multiple FLNG deployments. On the back of these developments, we have advanced discussions with shipyards for potential fourth FLNG unit development. We, as previously disclosed, are not planning to order such vessel until we've secured a vessel for the March 2, but we want to be ready to go with the fourth unit as soon as that's concluded. Turning to slide 13 and the LNG market outlook. We continue to see strong demand for LNG globally. In the recently published Shell LNG Outlook, the LNG demand forecast for 2040 has increased by 10% only since the 2024 report. Demand is driven by increased adoption of LNG globally, driven by LNG's favorable flexibility, environmental attributes, and cost competitiveness. China today has more than 2 million LNG-fueled trucks on the roads, and LNG-fueled trucks make up more than a 50% market share of new truck sales. We see further upside potential to LNG demand subject to the relative price of LNG versus other fuels. This development calls for increased LNG production and the cost competitiveness for FLNG development drives the strong demand that we currently see for our FLNG project. I'll now hand the call over to Eduardo to present our Q4 results.

Thank you, Karl, and good morning, everyone. I'm pleased to provide an overview of Gola's financial performance for the fourth quarter of 2024. Moving to slide 15, let's go through some of the key financial highlights of the quarter. We achieved total operating revenues of $66 million, with FLNG tariffs reaching $86 million in the quarter. Total FLNG tariffs reached $350 million for the full year of 2024. We look at this tariff to be the most accurate measure of all realized liquefaction revenues, including gains from our oil and gas linked fees from HILI operations. Total EBITDA reached $59 million in Q4, which is in line with the previous quarter. Total EBITDA for the full year of 2024 was $241 million. This quarter, we report a net income of $15 million. This figure is inclusive of a total of $29 million non-cash items, such as adjustments in the value of embedded CTF and Brent derivatives within the HILI contract, changes to our interest rate swaps, and an impairment charge upon the sale of Golar Arctic. Total net income for the full year of 2024 reached $81 million, a significant improvement from 2023. Our liquidity remains strong, with approximately $700 million of cash on hand at quarter end. I'll talk more about these and our initiatives on the financing front in the next slides. Lastly, we are pleased to declare a dividend of 25 cents per share this quarter with a record date of March 11 and payments scheduled for March 18. Turning to slide 16. HILI continues to perform, achieving 100% economic uptime and reinforcing its market leading operational track record. When we look at Q4, Healy generated approximately $45 million in free cash flow to equity. Total free cash flow generation in 2024 was $170 million. Looking ahead, we expect to have a total debt service for 2025 of around $80 million on the asset level financing that we have on duty. I would like to highlight that we remain exposed to both Brent and TTF prices. If these prices continue to improve in the coming quarters, We can expect increased distributions from the Healy through the duration of its current contract until July 2026. Following the acquisition of the remaining shareholding of Healy, we have also increased our exposure to TTF and Brent. And now, for every dollar per barrel of Brent, above prices of $60 per barrel, we generate $3.1 million of incremental EBITDA per year. Similarly, the sensitivity of TTF prices have also changed, and we now make $3.7 million for every dollar of TTF price movement on an annual basis. So moving to slide 17, we can see that our total gross debt position at the end of the quarter stood at $1.5 billion. When considering our cash position of $700 million, that leaves us with a net debt position of just over $800 million at the end of last year. So following the execution of 20 years agreement with Southern Energy, we now have a total EBITDA backlog of over $11 billion. This figure doesn't include any further commodity upside and also further inflation adjustments embedded in the contract. That leaves us with ample room to optimize our debt structure and potentially re-leverage our asset level financing for both Gini, Healy, and soon to our Mark Chill vessel, which has been fully equity funded until now. We continue to be actively engaged in the advanced discussions with potential lenders and credit approvals have been received for the refinancing of Gini. The deal is now subject to customary closing conditions and third party stakeholder approvals. Regarding the Mark II project, we have fully equity funded approximately $600 million today. Both the donor vessel and all related equipment that we have purchased are currently unencumbered and receive room to secure asset level debt for this vessel once the charter is secured. In this case, we would be targeting a financing amount that could equal approximately four to six times its contracted EBITDA. So with the robust backlog exceeding $11 billion from Gimi and Healy, coupled with the potential for substantial liquidity release and ongoing discussions for additional debt financing, we see ourselves in a strong position to support our growth ambition. We have the flexibility to optimize our capital structure, unlock further value, and accelerate growth with the development of our LNG fleet. With that, I'll hand the call back over to Karl for his closing remarks.