Golar LNG Ltd. Q1 FY2025 earnings call

• Hilli FLNG maintained 100% operational uptime, secured a 20-year charter in Argentina with $5.7 billion EBITDA backlog before commodity upside, and a dedicated team is working on vessel upgrades and transit to Argentina.
• Gimi is in final commissioning stages, with Golar's share of contractual EBITDA at $151 million, and $196 million in pre-COD payments invoiced.
• Mark II FLNG is in conversion with a definitive 20-year charter agreement, simultaneous with Hilli's FID in Argentina.
• Golar has exited LNG shipping, with a market cap of ~$4 billion, net debt shy of $800 million, and net debt to EBITDA of ~2.8 times.
• Commodity upside: 25% of LNG prices above $8 FOB, downside cap of $210 million, and 10% equity in Southern Energy for commodity exposure.

Golar LNG is a focused FLNG company. Hilli FLNG had 100% operational uptime during the quarter, having delivered 132 cargoes since 2018, totaling over 9.2 million tons of LNG produced. Gimi is in the final stage of commissioning for a 20-year charter with BP offshore Mauritania and Senegal, with Golar's share of contractual EBITDA at $151 million based on 90% capacity utilization. Mark II FLNG is in conversion with a definitive 20-year charter agreement. Financial highlights: Q1 operating revenues were $63 million, FLNG tariffs reached $73 million, with total FLNG tariffs in the last 12 months ending Q1 at $336 million. Pre-COD payments from GTA upstream partners totaled $196 million. Total EBITDA in Q1 was $41 million, with net income of $13 million. Cash on hand at quarter end was approximately $680 million, and a dividend of $0.25 per share was declared.

• Secured 20-year charters for Hilli in Argentina and Mark II FLNG.
• Target to conclude refinancing of Gimi, finalize Mark II charter conditions precedent, and optimize balance sheet for FLNG growth.
• Anticipated EBITDA run rate by 2028: $835 million before commodity upside, with robust leverage ratio supported by earnings visibility through 2045.

• Regulatory and legal risks associated with Argentina charters, including compliance with local and national authorities.
• Commodity price volatility, as LNG prices are uncertain and volatile.
• Construction delays in the conversion of Mark II FLNG, which could impact timeline and EBITDA projections.

Q: Overall commercial strategy for offtake on the Argentina project?

A: Southern Energy will lead, aiming for a basket of offtake including Brent, JKM, TTF linked and some spot volumes.

Q: Argentina contracts excess production upside?

A: Both vessels have full capacity chartered, with Golar's share of EBITDA from excess production via equity in Southern Energy.

Q: Future units ordering timeline?

A: Mark I/II conversions take ~3 years, Mark III takes ~4 years; ramping up shipyard activity to safeguard timelines.

Q: SESA JV breakeven and CapEx?

A: Downside participation starts at $7.5 FOB, Golar liable for 10% of SESA's onshore infrastructure CapEx.

Q: Strategic alternatives if valuation low?

A: Board considers options if undervaluation persists, focusing on running the business and exploring value-unlocking strategies.

Q: Capital structure and ratings?

A: Rating exercise completed, potential bond financing, with anticipated leverage ratio of ~5x based on 20-year contracts.