Iain Ross, CEO, Golar LNG, said:
"Golar is pleased to report Q2 operating revenues of $102.2 million and adjusted EBITDA1 of $67.2 million. This was driven by another solid performance in FLNG, with 100% commercial uptime on Hilli Episeyo, and a shipping business that continues to benefit from higher utilization, delivering a Q2 TCE1 of $45,100/day; which is above guidance and represents an 85% increase on the $24,400 achieved in Q2 2019. Both Golar Power and Golar LNG Partners also performed well.
By virtue of its integrated business model, Golar has, to a large extent, insulated itself against LNG price volatility. High LNG prices support the company's upstream FLNG offering, while low LNG prices create strong growth opportunities for Golar Power's downstream business. The latter is clearly evidenced by a surge in business and investor inquiries currently being fielded by Golar Power.
The weak LNG prices recorded throughout Q2, often below $2.00/mmbtu, are incentivizing energy customers to convert diesel, fuel oil and coal based energy generation to LNG. Despite the challenges of COVID, access to cleaner and cheaper energy remains a priority for a vast number of people. The cost and environmental advantages of gas as a transition fuel, mean that, despite a sharp deceleration this year, LNG demand has been more resilient than other more carbon intensive energy sources. The appetite for LNG noted by Golar Power in Brazil is not unique. The company is being asked for similar rapid start-up solutions around the world which we anticipate will result in material and sustainable growth in LNG demand. For the time being, these same low LNG prices have however created challenges for financing new liquefaction capacity. The increase in demand and the reduced growth in liquefaction capacity are therefore expected to result in a more balanced LNG market in the next 3 - 4 years.
Golar is focused on sustainability through the delivery of innovative, flexible, reliable, cost effective and implementable solutions to the world’s energy problems. It is therefore uniquely placed to benefit from the accelerated post pandemic shift to a cleaner energy mix."
Q2 2020 Highlights
Financial:
- Cash of $265.2 million as at June 30, 2020.
- Golar Bear refinanced, releasing $37.7 million of liquidity, ahead of schedule. A further $10 million of liquidity will be released in Q4.
- Good progress made on a revolving credit facility with a syndicate of banks to replace the November maturing $150 million term loan and September maturing $30 million margin loan. Expected closing is Q3 2020, in line with schedule.
- Term-sheets agreed for the refinancing of the Golar Frost and Golar Seal, completion remains subject to market conditions.
Golar Power:
- First full quarter of operations of Sergipe power plant and FSRU Nanook generated revenue less operating costs of $51.0 million, of which $19.0 million is attributable to Golar LNG.
- Partnered with Galileo Technologies to supply initial small-scale customers in Brazil with up to 45 tons per day of locally produced Bio-LNG, allowing supply and demand requirements to be matched.
- Signed a Memorandum of Understanding (“MoU”) with Norsk Hydro to provide LNG and regasification capacity for their Alunorte alumina refinery at Barcarena, Para.
- Delivered first batch of ISO containers to Suape.
FLNG:
- FLNG Hilli Episeyo: Vessel off-loaded 42nd cargo, with 100% commercial uptime maintained. In excess of 2.5 million tons of LNG exported over the 9 quarters since start-up.
- Previously disclosed FLNG Gimi force majeure claim from BP Mauritania Investments Ltd (“BP”) in relation to a delay in the order of 12-months to the target connection date remained in place. A force majeure delay claim from the conversion shipyard has also been received. Discussions are progressing well to agree a revised plan to delivery.
Shipping:
- Q2 2020 Average Daily Time Charter Equivalent (“TCE”)1 earnings of $45,100 for the fleet, above guidance and substantially higher than the $24,400 achieved in Q2 2019.
- Golar Tundra entered dry-dock.
- Utilization at 93% in line with Q1, up on 66% achieved in Q2 2019.
- Revenue backlog from shipping as at June 30, 2020 stands at $105 million.