Golar LNG Limited Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Fleet Contraction: Existing fleet of 3 FLNGs fully contracted on 20-year charters with a total EBITDA backlog of $17 billion before commodity upside and inflationary adjustments.
• Fourth FLNG Development: Made significant progress on 3 growth designs (Mark 1, 2, 3) for the fourth FLNG, with updated pricing, delivery, and payment terms obtained from shipyards. Key pressure on delivery is from long lead items affected by AI data center boom.
• Financial Updates: Secured over $1 billion in new corporate debt facilities, retired $190 million Norwegian bond, with $1 billion cash position and net debt of around $1.4 billion. Declared a dividend of $0.25 per share.
• Gimi Operations: Gimi's operations are stabilizing and improving in throughput, with active work on value-enhancing initiatives for the GTA projects.

Segment Performance

• Hilli: Generated $51 million of adjusted EBITDA in the quarter. Contributes to the EBITDA backlog.
• Gimi: Started commercial operations in June, with daily production frequently exceeding base capacity. Generated $48 million of adjusted EBITDA in the quarter. On track for a new $1.2 billion bank refinancing facility closing within the quarter.
• Mark II: Reached Final Investment Decision (FID) in August and completed Contract Performance (CP) satisfaction in October. On schedule for delivery in Q4 '27 and commencement of operations in Argentina in '28. Year-to-date, secured $14 billion in adjusted EBITDA backlog across Hilli and Mark II.

Guidance

• EBITDA set to quadruple once existing fleet is fully delivered by 2028.
• By 2028, free cash flow to equity generation expected around $500 million to $600 million (approximately $5 to $6 per share before commodity upside).
• Plan to use liquidity from debt financing to fund accretive FLNG growth, with potential to raise up to $3 billion from refinancing Hilli and Mark II debt, to be used for further FLNG growth.

Risks

• Cost inflation on long lead items due to AI data center boom in the US, impacting delivery and pricing.
• Competition for shipyard slots and long leads from other industries (e.g., container ships, LNG ships), though no competition for FLNG as a service currently.

Q: Comment on SESA's strategy for long-term offtake agreements in Argentina.

A: Contracts are 20-year durations, structured independently of political parties. SESA expected to sign first offtake contracts within the quarter, with strong interest from industrial and trading houses due to Argentina's large shale reserves.

Q: Comment on CapEx to EBITDA ratio for future projects.

A: Topside equipment cost inflation and construction time offset donor vessel savings, but targeting similar economics to existing projects with CapEx to EBITDA ratios.

Q: Thoughts on Gimi's potential capacity increase.

A: Nameplate capacity of Gimi is 2.7 mtpa, contracted at 2.4 mtpa. Debottlenecking exercise ongoing, but no commitment to percentages until exercise is complete.

Q: Buyback program and shareholder returns.

A: New $150 million buyback program to be actively executed. Consideration of acquiring Gimi's 30% stake if accretive to growth and market valuation.

Q: Impact of gas turbine order book on delivery timelines for future FLNGs.

A: Significant delays in gas turbine delivery lead times due to AI data center boom, emphasizing importance of locking in long leads for timely delivery