Golar LNG Limited (GLNG) Earnings

Management highlights

- Operational Performance * Q1 2026 was a record quarter for GOLA LNG production, with GIMI achieving all-time high output 19% above contractual levels; the 19% outperformance is not annualizable due to seasonal temperature impacts, but management expects meaningful full-year overproduction with no associated incremental costs. * Hilli maintained 100% economic uptime since commencing operations in 2018, and is scheduled to end its Cameroon charter in July 2026, sail to Singapore for 6-7 months of upgrades, then start a 20-year contracted operation in Argentina in summer 2027. * The Mark II FLNG unit remains on budget and on schedule for delivery by the end of 2027, with midship fabrication (housing the full liquefaction plant) completed at the CIMC shipyard in Yangtze, China; it is scheduled to start its 20-year Argentine charter in summer 2028. * GOLA acquired a 10% equity stake in the San Matias gas pipeline, which will transport gas from Vaca Muerta to the Argentine Gulf of San Matias to support both Hilli and Mark II operations; GOLA expects to invest a total of ~$77 million in the pipeline equity, which will generate attractive long-term infrastructure returns over 20 years. All Argentine pipeline construction (shorter connection for Hilli, 500+ kilometer dedicated pipeline for Mark II) is on schedule and under budget, with all major contracts awarded. * CESA (GOLA's Argentine joint venture) signed an 8-year LNG sale and purchase agreement with Securing Energy for Europe for 2 million tons of annual Argentine production, half linked to Brent indices and half linked to Henry Hub prices. * GOLA launched a strategic review in Q1 2026 to explore options to accelerate FLNG growth and maximize shareholder returns; no further commentary will be provided until the review is complete. - Market and Value Driver Context * Management forecasts 42% global LNG demand growth by 2035, with supply growth increasingly concentrated in the US and Qatar (rising to 53% of global supply from 42% currently), driving strong customer demand for supply diversification. * GOLA's FLNG-as-a-service offering has a 30-40% cost advantage over land-based liquefaction, and GOLA holds a unique position as the only proven provider of floating FLNG infrastructure. Management expects the FLNG industry to follow a growth trajectory similar to the FPSO industry, growing to well over 100 units long-term from 14 currently. * GOLA's three core value drivers are: (1) Growing NPV of the $17 billion base contracted backlog (all contracts are 20 years, with OPEX, maintenance capex, and local taxes covered by charter counterparties); (2) Attractive commodity upside embedded in Argentine contracts, with recent LNG price increases raising the value of GOLA's commodity exposure by $200-$500 million annually in the first three years of CESA operations; (3) GOLA's unique market position enabling repeat growth in new and existing LNG markets. - Balance Sheet and Capital Allocation * GOLA ended Q1 2026 with just over $1 billion in total cash and ~$1.7 billion in net interest-bearing debt. The Mark II unit is currently fully unencumbered despite $1.2 billion invested to date, providing significant financing flexibility for future growth. * Capital allocation priorities are: maintaining balance sheet flexibility, funding accretive FLNG growth, and increasing shareholder returns over time. GOLA declared a Q1 2026 quarterly dividend of $0.25 per share, translating to a $1 per share annual run rate. * GOLA deployed ~$200 million in Q1: $25 million to shareholder dividends, $134 million to FLNG growth projects, with all $1.2 billion in Mark II investment funded via equity. * GOLA's current market capitalization is ~$5.7 billion, with average daily trading volume exceeding $100 million.

Guidance

- Once all three existing FLNG units (GIMI, Hilli, Mark II) are operational, GOLA expects annual run-rate EBITDA to exceed $800 million before commodity upside, with net leverage falling to ~3.4x, supported by long-term contracted cash flows. * Management expects annual free cash flow generation to reach ~$5 per share before commodity upside once all three units are operational, supporting potential future annual dividend growth to over $5 per share. * Every $1 per million BTU increase in LNG prices above $8 is expected to generate ~$100 million in incremental annual upside, with 20 years of average remaining contract duration providing long-term upside visibility. * Management reaffirmed the target to order the fourth FLNG unit within 2026, and expects construction to take ~36 months, resulting in the earliest available new liquefaction capacity globally. * Management reaffirmed the long-term target to add at least one new FLNG unit per year after the fourth unit is ordered. * The 500+ kilometer dedicated San Matias pipeline in Argentina is on track to be completed well within 2 years, in time for Mark II's 2027 delivery.

Segment performance

GOLA LNG has two operating FLNG units in Q1 2026, with the Mark II unit still under construction: 1. Hilli (operating in Cameroon): Generated $47 million in Q1 2026 revenue, maintained 100% economic uptime through the quarter, and has completed 152 cargo offloads to date. 2. GIMI (70% equity owned by GOLA): Produced 19% above contractual capacity in Q1 (driven by favorable cold ambient temperatures), generated over $700,000 in daily revenue during the quarter, and contributes a base annual EBITDA of $150 million to GOLA before utilization bonuses. 3. Corporate/Other: Modest residual revenue from legacy FSRU/LNG carrier operations, all of which have now been terminated. Total consolidated results for Q1 2026: Total operating revenue = $138 million; consolidated EBITDA = $106 million (16% quarter-over-quarter increase); net income = $102 million. Revenue contribution: ~34% from Hilli, ~60% from GIMI, ~6% from other activities.

Risks & headwinds

- Geopolitical disruptions (including recent Middle East conflict that removed 7 million tons of global LNG supply for 3-5 years) highlight ongoing volatility in global energy markets, but management notes this disruption also increases demand for LNG supply diversification and accelerates GOLA's commercial pipeline. * Achieving early startup of Argentine operations depends on alignment of multiple infrastructure projects (FLNG modification, pipeline construction) to all be completed on schedule; if one component is delayed, there is no early startup upside even if other components are finished early. * Seasonal temperature impacts will reduce GIMI production in the summer months, so Q1's 19% overproduction will not be sustained through the full year. * The long-term growth of the FLNG industry depends on continued development of stranded gas reserves in new markets, which faces project-specific regulatory and commercial risks.

Analyst Q&A

• Q: How has geopolitical disruption in the Middle East changed GOLA's commercial progress for new FLNG units, and have discussions about a fifth unit accelerated? /

  A: The removal of 7 million tons of global LNG supply from the market after the Middle East disruption has increased urgency among customers to secure early delivery of new capacity. This dynamic shifted commercial discussions from competing on price to competing for the earliest available delivery slot, which is much more favorable to GOLA. Yes, commercial interest in additional capacity beyond the fourth unit has picked up, which is a key reason the company launched its strategic review to accelerate growth.

• Q: When selecting a donor vessel for the fourth FLNG, is the vessel specific to Mark I or Mark II design, and will commercial terms align with past guidance? /

  A: Any donor vessel GOLA selects can be converted to either a Mark I or Mark II design, as the donor vessel does not dictate the final design. The company is currently positioning to be able to deliver a Mark II, which is the most likely outcome for the fourth unit. Commercial discussions are aligned with prior guidance of 15-20 year long-term contracts with 5-6x capex to EBITDA ratios, including inflation adjustments and some level of commodity upside. Terms vary by counterpart: large IOCs often prefer fixed long-term rates rather than commodity exposure, while other counterparties accept more commodity-linked terms.

• Q: For the combined Hilli and Mark II Argentine capacity, how much LNG does CESA plan to sell via long-term contract versus spot? /

  A: Total guaranteed capacity for the two units is just under 6 million tons per year. 2 million tons have already been sold via long-term contract, leaving 4 million tons remaining. CESA shareholders are discussing reserving ~1 million tons for spot sales, to serve emerging local demand in South America (for example, new gas-fired power generation in Brazil) that is expected to command higher FOB prices than long-term contracts. The approach will be measured, with volume adjusted over time based on market development.

• Q: As Hilli is moved from Cameroon to Argentina, what modifications are needed to adjust for the new operating environment? /

  A: GOLA's FLNG units are generic, so only limited targeted modifications are required. Two key changes are needed: adjustments to the anchoring mooring system to accommodate Argentina's different metocean conditions, and limited winterization of exposed key components to handle the negative winter temperatures that do not occur in Cameroon. No other major modifications are needed.