GLNG

Business Context and Reporting Period

This Form 6-K filing by Golar LNG Limited, dated February 26, 2008, reports preliminary fourth-quarter and full-year 2007 results. Golar is a Bermuda-based company engaged in the ownership and operation of LNG carriers and the development of Floating Storage and Regasification Units (FSRUs). The reporting period covers the three months ended December 31, 2007, and the twelve months ended December 31, 2007.

Key Financial Metrics

Dividends: The Board declared a final dividend of $0.25 per share for 2007. Total dividends paid in 2007 were $2.25 per share.

Material Changes vs. Prior Period

• Quarterly Performance: Q4 2007 operating income improved to $24.7 million from $18.9 million in Q3 2007 due to better vessel utilization and charter rates. However, Q4 2007 net income ($2.7 million) was significantly lower than Q4 2006 ($32.3 million), primarily due to an unrealized non-cash loss of $8.3 million on interest rate swap valuations.
• Annual Performance: Full-year 2007 net income ($136.8 million) nearly doubled compared to 2006 ($71.7 million). This increase was driven by a $41.1 million gain on the sale of a newbuilding and a $73.5 million aggregate gain from the sale of the company's investment in Korea Line.
• Revenue Trends: Full-year revenues decreased slightly to $224.7 million from $239.7 million in 2006, attributed to the Golar Spirit completing a long-term charter in late 2006 and trading in the spot market before entering conversion in October 2007.
• Debt Structure: As of January 31, 2008, total debt and net capital lease obligations were approximately $1.1 billion. Approximately 58% of this debt is fixed-rate or swapped to fixed-rate, with an average fixed interest rate of 4.9%.

Outlook, Management Commentary, and Risks

• Market Outlook: Management anticipates a deterioration in Q1 2008 earnings from spot vessels compared to Q4 2007 due to expected rate declines as Atlantic LNG producers return to traditional markets. However, utilization is expected to remain good.
• Financial Risks: The Board anticipates a significant loss on mark-to-market interest rate swap valuations in Q1 2008 if long-term interest rates remain low, though this will be partially offset by lower interest payments on floating debt.
• Strategic Projects:
  • Golar Spirit conversion to an FSRU for Petrobras is on track for delivery in Q2 2008.
  • Final MOU signed for the sale of the Golar Frost for $231 million; transaction expected to finalize mid-2008.
  • Acquisition of the Granatina completed in January 2008, financed by a $77.5 million equity raise and a $120 million loan facility.
  • Chartered in the Ebisu to maintain spot market presence.
• Restructuring: Plans to restructure the company by separating long-term charters from other business opportunities are advanced but the public announcement is delayed until Q3 2008 due to market conditions.
• Key Risks: Inability to secure financing, prolonged weakness in LNG carrier rates, political events affecting gas production, operational difficulties at LNG plants (e.g., Snohvit, Nigeria LNG Train 6), and delays in FSRU conversions.

Investor Verification Checklist

• Verify the impact of unrealized interest rate swap losses on Q1 2008 net income.
• Confirm the timeline and regulatory approvals for the $231 million sale of the Golar Frost.
• Monitor the progress of the Golar Spirit FSRU conversion and its scheduled Q2 2008 delivery to Petrobras.
• Assess the sustainability of spot market TCE rates given the expected return of Atlantic cargoes to traditional markets.
• Review the details of the delayed corporate restructuring and its potential impact on long-term contract visibility.