Golar LNG Limited - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on July 5, 2012, incorporates by reference the Unaudited Condensed Interim Financial Report for the three months ended March 31, 2012. Golar LNG Limited is a mid-stream LNG company engaged in the transportation, regasification, liquefaction, and trading of LNG. As of the report date, the Company operated a fleet of 13 vessels (nine LNG carriers and four FSRUs) and held firm contracts for 13 newbuilding vessels scheduled for delivery between 2013 and 2015.
Key Financial Metrics (Three Months Ended March 31, 2012)
| Metric | Q1 2012 ($ in millions) | Q1 2011 ($ in millions) |
|---|---|---|
| Operating Revenue | 83.1 | 67.5 |
| Operating Income | 27.8 | 20.4 |
| Net Income (Consolidated) | 24.3 | 13.8 |
| Net Income Attributable to Golar | 15.2 | 16.3 |
| Earnings Per Share (Basic/Diluted) | $0.19 | $0.24 |
| Operating Cash Flow | 7.8 | 24.3 |
| Investing Cash Flow | (159.2) | (20.4) |
| Financing Cash Flow | 192.3 | (39.9) |
| Cash and Cash Equivalents (End of Period) | 107.9 | 128.7 |
| Total Restricted Cash | 233.3 | 213.3 |
| Long-Term Debt | 993.8 | 771.5 |
| Capital Lease Obligations | 412.4 | 405.8 |
| Average Daily TCE | $90,500 | $80,700 |
Material Changes vs. Prior Period
- Revenue Growth: Operating revenue increased 23% to $83.1 million, driven by improved charter rates and utilization on the spot market, as well as revenue from the reactivated vessel Gimi.
- Expense Increases: Vessel operating expenses rose 99% to $27.9 million, primarily due to $11.3 million in reactivation costs for the Hilli and Gandria.
- Acquisition Gain: A one-time gain of $4.1 million was recognized from the acquisition of the remaining 50% interest in Bluewater Gandria (owner of the Gandria).
- Trading Segment: The LNG trading segment reported a net loss of $0.6 million, a significant improvement from the $6.3 million loss in Q1 2011, following a reduction in trading activities.
- Debt Structure: Long-term debt increased to $993.8 million following a $250 million convertible bond issuance in March 2012.
Guidance, Outlook, and Risks
Management Commentary & Outlook: The Company highlighted successful reactivations of the Hilli and Gandria in April 2012 and the completion of the Nusantara Regas Satu FSRU retrofitting. The Company maintains a strong order book with $2.4 billion in outstanding newbuilding commitments. Liquidity is supported by $341.2 million in total cash (including restricted) and undrawn credit facilities.
Risks and Contingencies:
- Financing Risk: Inability to obtain financing for newbuilding vessels on acceptable terms.
- Market Risk: Prolonged weakness in LNG carrier rates or changes in natural gas demand.
- Operational Risk: Delays in shipyard delivery schedules or FSRU conversions.
- Regulatory Risk: New regulations affecting LNG carriers or port access.
Subsequent Events: The Company obtained shareholder approval to delist from the Oslo Stock Exchange in June 2012. Dividends were declared for Q1 2012 ($0.35 per share for Golar; $0.43 per unit for Golar Partners).
Investor Verification Checklist
- Capital Expenditure Commitments: Verify the $2.4 billion outstanding commitment for 13 newbuildings and the Company's ability to fund these through 2015.
- Reactivation Costs: Confirm the $30 million aggregate reactivation cost for the Hilli and Gandria and their subsequent charter status.
- Convertible Bond Terms: Review the $250 million convertible bond issuance (3.75% coupon, $55 conversion price) and its impact on future dilution.
- Customer Concentration: Note that four major customers (Petrobras, DUSUP, Qatar Gas Transport, Pertamina) accounted for approximately 67% of Q1 2012 revenue.
- Trading Segment Status: Monitor the status of the LNG trading business, which was scaled back due to unfavorable market conditions.