Golar LNG reports $80.1M net loss in Q1 2016
Golar LNG Limited ("Golar" or "the Company") in the first quarter period ended 31 March 2016 had an adjusted operating loss of $41.2 million as compared to $31.6 million in 4Q 2015 and generated a net loss of $80.1 million, the Company said in a press release.
Although headline shipping rates remained relatively unchanged, utilisation fell from 42% in 4Q 2015 to 24% in 1Q and revenue dropped accordingly from $20.1 million in 4Q of 2015 to $16.6 million in 1Q. The two carriers employed by Nigeria LNG in January 2015 concluded their charters during March 2016 and have both since been entered into the Cool Pool. Partially mitigating the loss of this income was revenue earned by the Golar Arctic which commenced its two year FSU service with New Fortress Energy offshore Jamaica. Layup of the steam turbine vessel Golar Grand at the end of 4Q 2015 together with efficient deployment of vessels by the Cool Pool has helped to mitigate bunker costs associated with the increase in idle time. Of the $13.2 million voyage and commission expenses, $5.8 million represents the cost of chartering in the Golar Grand from our affiliate Golar LNG Partners LP ("Golar Partners"). As charterers of the Golar Grand, Golar have now placed the vessel into layup pending a recovery in the shipping market. This has resulted in operating cost savings of approximately $10,000 per day during the quarter which are being passed back to Golar by way of a lower daily hire rate under the terms of the charter agreement.
Vessel operating expenses increased $2.1 million to $15.6 million. Of this increase, $1.7 million is due to a full quarter's cost of the Golar Tundra, having been delivered on 25 November 2015, and additional repairs and maintenance and storing up costs incurred in advance of the Golar Arctic commencing service off Jamaica. Administration costs at $11.6 million were $1.5 million higher than 4Q 2015. Project costs increased by $1.0 million and share option charges normalised following a credit in 4Q of 2015 in respect of options forfeited.
Collectively the above resulted in a $9.7 million decrease in EBITDA from a loss of $12.0 million in 4Q to a loss of $21.7 million in 1Q.
In 1Q notable contributors to $80.1 million net loss were the following:
· 1Q net interest expense at $5.1 million has decreased from the prior quarters $9.2 million. The funding costs in respect of the six bank owned subsidiaries set up for the sale and leaseback financed vessels, which Golar consolidates, have increased. This has been more than offset by an increase in capitalised interest (a credit to interest expense) in respect of assets under construction.
· Other Financial Items at $28.9 million for 1Q were in line overall with the prior quarter cost of $27.0 million. A 1Q mark to market gain of $11.1 million was recorded against the Company's Total Return Equity Swap compared to a 4Q loss of $35.6 million representing the increase in Golar's share price from $15.79 on December 31 to $17.97 on 31 March. Following a decrease in interest rates a 4Q non-cash gain of $16.1 million on mark-to-market valuations of interest rate swaps became a 1Q loss of $23.4 million. An impairment charge of $8.1 million was recorded in respect of a loan receivable from the now cancelled 0.6mtpa Douglas Channel project. Repayment of the loan was dependent on the projects replacement sponsors reaching a Final Investment Decision ("FID"). Amortisation of debt related expenses increased from $1.8 million in 4Q to $4.4 million in 1Q following the write off of expenses in connection with a former Golar Seal facility which was extinguished during the quarter. Charges in respect of unhedged interest rate swaps amounted to $3.1 million for the quarter.
· Golar Partners overall contribution to the Company's 1Q result was lower by $11.6 million compared to 4Q following a $40.4 million decrease in Golar Partner's reported net income. Cash flows are not however impacted by this. In line with 4Q, the Company has received $13.2 million in cash in respect of its common units, subordinated units, GP and IDRs in Golar Partners.
Golar LNG
We are one of the world’s largest independent owners and operators of LNG carriers with over 30 years of experience. We developed the world’s first Floating Storage and Regasification Unit (FSRU) projects based on the conversion of existing LNG carriers. We lead the industry with committed projects. We are progressing plans to grow our business further upstream via Floating liquefaction (FLNG). Our strategic objective is to become an integrated midstream player in the LNG industry.