Golar LNG Q4 2024 Earnings Report

Golar LNG EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.48
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Golar LNG Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $73.54 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Golar LNG Announcement Details

• Quarter: Q4 2024
• Date: 2/27/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 27, 2025
• Conference Call Time: 8:00AM ET

Golar LNG (NASDAQ:GLNG) Ltd. is a leading owner and operator of liquefied natural gas (LNG) carriers and floating infrastructure. The company specializes in the transportation of LNG on long-term and spot charters for major energy firms around the world. In addition to shipping, Golar LNG has broadened its services to include project development and the conversion of existing carriers into Floating Liquefied Natural Gas (FLNG) and Floating Storage and Regasification Unit (FSRU) vessels.

Since pioneering the first purpose-built FLNG conversion project, Golar LNG has been at the forefront of offshore gas monetization. Its flagship FLNG facility, Hilli Episeyo, has delivered LNG cargoes from offshore gas fields in West Africa and Southeast Asia. Complementing the FLNG business, Golar’s FSRUs provide turnkey solutions for rapid deployment of regasification capacity in markets where pipeline infrastructure is limited or under development.

Golar LNG’s fleet strategy combines newbuild carriers with conversion projects to optimize asset utilization and maintain a competitive cost structure. The company’s projects and long-term charters span diverse geographies, including West Africa, Latin America, the Mediterranean and Asia. Through strategic partnerships and joint ventures, Golar continues to expand its platform for integrated LNG solutions, from liquefaction and shipping to regasification and onward delivery by pipeline or truck.

Headquartered in Hamilton, Bermuda, Golar LNG is led by a seasoned management team with deep expertise in maritime operations and project development. Under the direction of CEO Karl Fredrik Staubo, the company remains focused on delivering reliable LNG transport and offshore infrastructure services while pursuing growth opportunities within the global energy transition. Golar’s integrated business model positions it to serve both established gas markets and emerging demand centers.

Golar LNG Q4 2024 Earnings Call Transcript

Key Takeaways

• Golar completed its transition into a pure FLNG company, selling Avenir LNG and Golar Arctic and focusing on its remaining assets: FLNG Hilli, FLNG Gimi, the newly delivered carrier Fuji and the conversion of the Mark II FLNG.
• Acquired the remaining 8% minority interest in FLNG Hilli for $90 million, adding ~\$7 million in fixed tariff cash flow p.a., increased commodity‐linked upside and boosting EBITDA backlog by ~\$500 million.
• FLNG Gimi entered final commissioning with BP FPSO feed gas, targeting its first LNG cargo in Q1 2025 and full commercial operations in Q2 2025 under a 20-year charter, unlocking ~$3 billion of EBITDA backlog.
• Conversion of the Mark II FLNG is on schedule with $600 million spent to date (fully equity funded) of a $2.2 billion total capex, delivery expected end-2027 and advanced charter and asset-level financing discussions underway.
• Strong financial position with 2024 adjusted EBITDA of $241 million, ~$700 million cash on hand, declared $0.25 dividend and a net debt of ~$800 million against an SEK 11 billion EBITDA backlog for enhanced earnings visibility.

Presentation

[Operator]

Welcome to the Golar LNG Limited 4Q twenty twenty four presentation. After the slide presentation by CEO, Carl Frederic Stalbu and CFO, Eduardo Maranau, there will be a question and answer session. Information on how to ask a question will be provided then. At this time, all participants are in listen only mode. I will now pass you over to Karl Friedrich Staubu. Karl, please go ahead.

[Karl Fredrik Staubo, CEO at Golar LNG]

Thank you, operator, and welcome to Golar LNG's Q4 earnings results presentation. My name is Karl Stavo. I'm the CEO of Golar LNG, and I'm accompanied today by our CFO, Eduardo Marinau. We're happy to be diving in from Buenos Aires, where we've been meeting with our coming partners for the FLNG Heating. Before we get into the presentation, please note the forward looking statements on Slide two.

[Karl Fredrik Staubo, CEO at Golar LNG]

We start at Slide three and an overview of Golar today. During the quarter, we finalized our transition into pure FLNG company through the sale of Avenir LNG and Golar Arctic. The sale of Arctic marks the end of Golar's fifty year presence in the LNG shipping market. Our assets now include Dehile, which is currently under a contract for Perenco Offshore Cameroon until contract expiry in July 2026. Thereafter, the vessel will be redeployed here to Argentina for a twenty year contract, establishing Argentina as an LNG exporter.

[Karl Fredrik Staubo, CEO at Golar LNG]

The Gimi is currently under commissioning to start a twenty year contract for BP offshore Senegal and Mauritania. The LNG carrier Fuji was delivered to CNC Raffles Shipyard in Yantai, China during the quarter and the conversion of the Mark II FLNG is progressing according to schedule. Inclusive of the Hilli V contract here in Argentina, our EBITDA backlog stands at SEK 11,000,000,000 before commodity exposure. We expect our backlog to continue to increase and provide further earnings visibility once the Mark II FLNG secure a long term charter. Turning to Slide four.

[Karl Fredrik Staubo, CEO at Golar LNG]

We continue to focus on capital allocation towards FLNGs and agreed to acquire all remaining minority interest in the FLNG Hilli during the quarter. On Christmas Eve, we announced that we acquired approximately 8% of the total vessel capacity from Seagram Shipyard and Black and Veatch. We paid $90,000,000 for the shareholding, of which $30,000,000 in assumed debt and $60,000,000 of equity. The equity portion matches that of the sale of our non core investments in Avanero LNG and the Golar Artios. Both were sold with a total cash equity proceeds of $63,000,000 The transactions will have several positive contributions to Golar, including immediate cash flow accretion, increased earnings visibility through the backlog, reduced volatility of earnings due to the long term infrastructure cash flow profile of FLNG projects versus more volatile and shorter dated cash flows of LNG shipping.

[Karl Fredrik Staubo, CEO at Golar LNG]

This is also an important exit from LNG shipping after fifty years of operations and a concentration on strengthening our market leading FLNG presence. That leads us to Slide five, where we remain the largest FLNG owner and operator, controlling a total liquefaction capacity of 8,600,000 tonnes per annum. Golar is the only proven provider of FLNG as a service, providing charters with natural gas liquefaction without requiring any ownership to the gas reserves. The advantage of this business model to our potential charters includes time to market, outsourcing of engineering, no capital commitments to the charter until they receive cash flow from production and access to Golar's market leading operational uptime. We expect to continue our market leading position and have engaged conversations with capable shipyards for fourth FLNG unit that we will seek to order once we have secured a charter for the Mark II under construction.

[Karl Fredrik Staubo, CEO at Golar LNG]

Turning to business update and the highlights of the quarter on Slide seven. Hilli continued its market leading operational track record and has now delivered 128 cargos since start up in 2018. CP satisfaction for Hilli's recontracting in Argentina is going according to schedule and we expect all CPs to be fulfilled within the second quarter of this year. In January 2025, we received gas from the gas from the accelerated commissioning was replaced by feed gas from the BP operated FPSO, which allowed full commissioning to commence of the FLNG gimi. This milestone triggered the final upward adjustment to the commissioning rate under the commercial reset.

[Karl Fredrik Staubo, CEO at Golar LNG]

LNG is now being produced and subject to receipt of sufficient fee gas, we expect the first LNG cargo to be exported within Q1. We thereafter assume the full commercial operations date to be triggered during the second quarter. This will formally mark the start of the twenty year lease and operating agreement that unlocks approximately $3,000,000,000 of EBITDA backlog, Golar's share. On the back of these developments, the contemplated refinancing of the FLNG GIME is in the final stages and Eduardo will elaborate on that later in the call. The Mark II FLNG under construction is progressing according to schedule as mentioned.

[Karl Fredrik Staubo, CEO at Golar LNG]

The key financial figures for the quarter include adjusted EBITDA of $241,000,000 for the full year of 2024. Our cash position stands at around $700,000,000 and we declared a dividend of $0.25 for the quarter. We see very strong momentum on commercial opportunities for our FLNG service offering, and we will elaborate on this later on in the presentation. Turning to Slide eight. We're pleased with the continued economic uptime for Hilli.

[Karl Fredrik Staubo, CEO at Golar LNG]

The vessel generated SEK277 million of EBITDA during 2024. As a result of acquiring the 8% remaining minority stakes in Hilli, we see immediate cash flow accretion, driven by an increase in the fixed tariff component of approximately $7,000,000 per year, an increase to the Brent linked tariff component, which will increase by approximately $400,000 for every dollar the Brent is above $60,000,000 and an increase in the TTF linked tariff component, which will increase by approximately $500,000 for every $1 TTF prices of TTF price measured on an MMBtu basis. In addition to these immediate cash flow accretions, our EBITDA backlog will increase by approximately $500,000,000 on the back of the 20 redeployment contract in Argentina. Turning to Slide nine. Since we entered into the definitive agreement for the redeployment of Hilli in July, we have actively worked together with Pan American Energy to attract additional Argentinian gas resource owners to the project.

[Karl Fredrik Staubo, CEO at Golar LNG]

We're pleased to see that three of the leading gas producers have now joined. Pompe and Achaia joined with a 20% shareholding, Harbor Energy with a 15% shareholding and YPF also with a 15% shareholding. The addition of these companies further strengthened the project and increased the credit quality of Southern Energy, which is our counterpart in the project. With Argentina's vast proven gas reserves and the level of interest for the project supports the economic solidity of establishing Argentina as an LNG exporter and thereby potential further FLNG deployments by Golar in Argentina. As mentioned, the CP fulfillment are going according to schedule and deal completion is expected within the second quarter of this year.

[Karl Fredrik Staubo, CEO at Golar LNG]

Following the end of the current Franco contract, vessel upgrades and relocation to Argentina, we expect operations here to commence in 2027. Turning to Slide 10 and an update on the Gimi. As you can see from the picture on the top left here, you can see Gimi to the right and then an LNG carrier to your left. Accelerated commissioning activities commenced in mid October, utilizing a cargo from that LNG carrier. That gas stream was replaced during January with first field gas received from the GTA field.

[Karl Fredrik Staubo, CEO at Golar LNG]

This resulted in the final upward adjustment to the commissioning day rate ahead of final COD. The first LNG commissioning cargo is expected within this quarter and the full contracts start up within Q2. Again, we're in the final stages of the contemplated refinancing of the vessel. Turning to Slide 11 and our Mark II construction update. Again, as you can see from the pictures, the conversion is well underway and tracking according to schedule.

[Karl Fredrik Staubo, CEO at Golar LNG]

The donor vessel Fuji entered the shipyard on February 14 after completing its service as an LNG carrier. Several long lead items are now complete and delivered to the shipyard for installation onto the Fuji. The vessel will be the earliest available FLNG globally with delivery in end twenty seven. To date, we've spent around $600,000,000 in CapEx on the project, fully equity funded and the total CapEx budget is around $2,200,000,000 fully delivered to site. We're currently in advanced discussions for deployment of the vessel and expect to secure asset level debt on the vessel after a charter has been secured.

[Karl Fredrik Staubo, CEO at Golar LNG]

We also have an option for further mark to FLNG at the MC Shipyard with delivery within '28 if we order in '25. Turning to Slide 12 for an update on business development. Our position as the only proven service provider of FLNG globally, our market leading CapEx per tonne and proven operational uptime combined with having the earliest available FLNG capacity globally continues to drive interest in our FLNG solutions. With this strong progress on FLNG commercial development, we continue to focus on FLNG opportunities where we have an attractive base tariff and commodity upside participation. So we lock in a base and we participate when offtake prices increase.

[Karl Fredrik Staubo, CEO at Golar LNG]

We're therefore focused on identifying projects that are competitive in the international fleet. We're in advanced commercial discussions for Mark II FLNG deployment and we are also discussing projects with potential for multiple FLNG deployments. On the back of these developments, we have advanced discussions with shipyards for potential fourth FLNG unit development. We, as previously disclosed, are not planning to order such vessel until we've secured a vessel for the March 2, but we want to be ready to go with the fourth unit as soon as that's concluded. Turning to Slide 13 and the LNG market outlook.

[Karl Fredrik Staubo, CEO at Golar LNG]

We continue to see strong demand for LNG globally. In the recently published Shell LNG outlook, the LNG demand forecast for 02/1940 has increased by 10% only since the 2024 report. Demand is driven by increased adoption of LNG globally, driven by LNG's favorable flexibility, environmental attributes and cost competitiveness. China today has more than 2,000,000 LNG fuel trucks on the roads and LNG fuel trucks make up more than a 50% market share of new truck sales. We see further upside potential to LNG demand subject to the relative price of LNG versus other fuels.

[Karl Fredrik Staubo, CEO at Golar LNG]

This development calls for increased LNG production and the cost competitiveness for FLNG developments drive the strong demand that we currently see for our FLNG projects. I'll now hand the call over to Eduardo to present our Q4 results.

[Eduardo Maranhão, CFO at Golar LNG]

Thank you, Carl, and good morning, everyone. I'm pleased to provide an overview of Golar's financial performance for the fourth quarter of twenty twenty four. Moving to Slide 15, let's go through some of the key financial highlights of the quarter.

[Eduardo Maranhão, CFO at Golar LNG]

We achieved total operating revenues of $66,000,000 with FLNG tariffs reaching $86,000,000 in the quarter. Total FLNG tariffs reached $350,000,000 for the full year of 2024. We look at this tariff to be the most accurate measure of all realized liquefaction revenues, including gains from our oil and gas linked fees from Heli operations. Total EBITDA reached $59,000,000 in Q4, which is in line with the previous quarter. Total EBITDA for the full year of 2024 was $241,000,000 This quarter, we reported net income of $15,000,000 This figure is inclusive of a total of 29,000,000 non cash items such as adjustments in the value of embedded TTF and Brent derivatives within the Healy contract, changes to our interest rate swaps and an impairment charge upon the sale of Bolar Arctic.

[Eduardo Maranhão, CFO at Golar LNG]

Total net income for the full year of 2024 reached $81,000,000 a significant improvement from 2023. Our liquidity remains strong with approximately $700,000,000 of cash on hand at quarter end. I'll talk more about these and our initiatives on the financing front in the next slides. Lastly, we are pleased to declare a dividend of $0.25 per share this quarter with a record date of March 11 and payment scheduled for March 18. Turning to Slide 16.

[Eduardo Maranhão, CFO at Golar LNG]

Healy continues to perform, achieving 100% economic uptime and reinforcing its market leading operational track record. When we look at Q4, Healy generated approximately $45,000,000 in free cash flow to equity. Total free cash flow generation in 2024 was $170,000,000 Looking ahead, we expect to have a total debt service for 2025 of around $80,000,000 on the asset level financing that we have on here. I would like to highlight that we remain exposed to both Brent and ETF prices. If these prices continue to improve in the coming quarters, we can expect increased distributions from the Hilli through the duration of its current contract until July 2026.

[Eduardo Maranhão, CFO at Golar LNG]

Following the acquisition of the remaining shareholding of Healy, we have also increased our exposure to TTF and Brent. And now for every dollar per barrel of Brent, since or above prices of $60 per barrel, we generate $3,100,000 of incremental EBITDA per year. Similarly, the sensitivity of TTF prices have also changed and we now make $3,700,000 for every dollar of TTF price movement on an annual basis. So moving to Slide 17, we can see that our total gross debt position at the end of the quarter stood at $1,500,000,000 When considering our cash position of $700,000,000 that leaves us with a net debt position of just over $800,000,000 at year end of last year. So following the execution of twenty years agreement with Southern Energy, we now have a total EBITDA backlog of over $11,000,000,000 This figure doesn't include any further commodity upside and also further inflation adjustments embedded in the contract.

[Eduardo Maranhão, CFO at Golar LNG]

That leaves us with ample room to optimize our debt structure and potentially re leverage our asset level financing for both Gimi, Healy and soon to our Mark II vessel, which has been fully equity funded until now. We continue to be actively engaged in the advanced discussions with potential lenders and credit approvals have been received for the refinancing of Gimi. The deal is now subject to customary closing conditions and third party stakeholder approvals. Regarding the Mark II project, we have fully equity funded approximately $600,000,000 to date. Both the Donner vessel and all related equipment that we have purchased are currently unencumbered and we see room to secure asset level debt for this vessel once the charter is secured.

[Eduardo Maranhão, CFO at Golar LNG]

In this case, we will be targeting a financing amount that could equal approximately four times to six times its contracted EBITDA. So with the robust backlog exceeding $11,000,000,000 from Gimi and Healy, coupled with the potential for substantial liquidity release and ongoing discussions for additional debt financing, we see ourselves in a strong position to support our growth ambitions. We have the flexibility to optimize our capital structure, unlock further value and accelerate growth with the development of our FLNG fleet. With that, I'll hand the call back over to Karl for his closing remarks.

[Karl Fredrik Staubo, CEO at Golar LNG]

Thanks, Eduardo.

[Karl Fredrik Staubo, CEO at Golar LNG]

Turning to the final slide of the deck on Slide 19. In 2024, we saw several key milestones and we're happy with the development of the company. Gimme arrived at the GTA Hub in January. We agreed the commercial reset with BP. We signed definitive agreements for twenty year charter with Southern Energy with an adjusted backlog of $6,000,000,000 before commodity offset.

[Karl Fredrik Staubo, CEO at Golar LNG]

We issued $300,000,000 of unsecured bonds in September. We FYD'd the mark to FLNG shortly thereafter. And we ended the year by selling sorry, acquiring the minority stakes in Hilli and selling non core assets in Avanera and Golar Arctic. We have a very clear plan and want to maintain the momentum into 2025. The first milestone is the refinancing of Gimi.

[Karl Fredrik Staubo, CEO at Golar LNG]

We thereafter conclude the conditions precedent on the twenty year Southern Energy contract in Argentina. We want then target to secure a charter for the Mark II FLNG under construction, target asset level financing of the Mark II and optimize the debt on Hilli, as I just explained by Eduardo, before targeting additional FLNG growth through a fourth FLNG order. That concludes the presentation today and we will hand it over to the operator for any questions.

[Operator]

Thank

[Operator]

Thank you. We will now start with our first question. And this is from Ben Nolan from Stifel. Please go ahead.

[Benjamin Nolan, Managing Director at Stifel Financial Corp]

I appreciate it. Good morning. I guess it is there, Carlin and Eduardo. I wanted to first ask about the Mark II, and specifically with respect to the fourth vessel. Just trying to understand how you're thinking about the option versus looking at an alternative yard.

[Benjamin Nolan, Managing Director at Stifel Financial Corp]

And just wanted to make sure that I understand is, would an alternative yard be instead of exercising the option or are we talking about a unit in addition to the option that you have?

[Karl Fredrik Staubo, CEO at Golar LNG]

Haban, so basically the way we see it is that the commercial developments are progressing on multiple fronts. And the reason for the comment that way is that some of those projects are for where Mark one would be more suitable, I. E, returning to order most likely than at Citrium. We obviously have the option for Mark II at C and C. And we're also progressing projects for the Mark III, which we've spent considerable time and effort developing, which is obviously a 5,000,000 ton unit, which would be by quite a long stretch the largest FLNG in the world.

[Karl Fredrik Staubo, CEO at Golar LNG]

And therefore, it's the fourth FLNG may or may not be the Mark II, but subject to the commercial development either a Mark I or even a Mark III. That's how we see it. But we obviously are not ruling out that it could be a Mark II as well. It's just that the commercial development dictates the size of the fourth segment.

[Benjamin Nolan, Managing Director at Stifel Financial Corp]

Sure. And it could be it's not mutually exclusive. You could do a Mark II and a Mark I just at a different shipyard. Is that sort of the implication there?

[Karl Fredrik Staubo, CEO at Golar LNG]

Correct. But as we have alluded to earlier on, we don't plan to have more than one open, but you can obviously build against contract.

[Benjamin Nolan, Managing Director at Stifel Financial Corp]

Sure. Okay. That is very helpful color. The other thing I was curious about is on the GEMI. You show 2,700,000 tons of capacity, although it's still the previous nameplate capacity, which I think was for your 70%, one hundred and fifty one million dollars But correct me if I'm wrong, I think that's only on $2,400,000 maybe 2,450,000 tons of capacity.

[Benjamin Nolan, Managing Director at Stifel Financial Corp]

Can you maybe walk through, how that extra bit works? And if it does operate at 2.7, is that something that you would be able to realize soon if there is upside on that?

[Eduardo Maranhão, CFO at Golar LNG]

Hi, Ben. Eduardo here. So I think the way it works is that for incremental production above the base capacity of 2.4 MPPA per year, we would then get a proportionate payment, which is in line with the $215,000,000 annual EBITDA. So for incremental production above the base capacity, that would go proportionate to the $250,000,000 that we make every year. For the 90% utilization, yes.

[Benjamin Nolan, Managing Director at Stifel Financial Corp]

Right.

[Benjamin Nolan, Managing Director at Stifel Financial Corp]

And is that a practical assumption? How should we think about how we model it?

[Eduardo Maranhão, CFO at Golar LNG]

So if we were to run the numbers here, so let's assume, for example, that we were to run with 100% utilization, so beyond the base capacity of $2,400,000 So in that case, instead of a $250,000,000 15 million dollars of annual EBITDA, we would be earning $241,000,000 of annual EBITDA, assuming 100% utilization of the 2.7 MCPA nameplate capacity.

[Benjamin Nolan, Managing Director at Stifel Financial Corp]

Got it.

[Benjamin Nolan, Managing Director at Stifel Financial Corp]

Okay. I wish I could go more, but I'm going to try to stick my two. So I appreciate it. Thank you guys.

[Eduardo Maranhão, CFO at Golar LNG]

Thanks Ben.

[Operator]

Thank you. We'll now take our next question. This is from Chris Robertson from Deutsche Bank. Please go ahead.

[Christopher Robertson, Analyst at Deutsche Bank]

Hey, good morning guys. Thank you for taking my questions. I know that in the past that you had talked a bit about having to spend on certain long lead items during Q1 to stay on track to exercise the option for the second Mark II. Could you just clarify whether or not you've spent during the first quarter to date or plan to for the rest of the quarter?

[Karl Fredrik Staubo, CEO at Golar LNG]

We have not. It's something we continue to monitor. We're obviously in conversations with all of the critical suppliers given that we're ordering or just had placed order there for the Mark two. So we monitor the situation both on lead times and costs. So we haven't we currently do not expect to do that within Q1, but it's something we monitor very closely.

[Christopher Robertson, Analyst at Deutsche Bank]

Okay. And then turning to Slide seven, you made a comment here. I don't know if you addressed it during the prepared remarks, but it says on schedule for the Mark II FLNG contract commitment. Can you just clarify what you mean by on schedule and kind of give a bigger picture of what that means for expectations?

[Karl Fredrik Staubo, CEO at Golar LNG]

I think what we've previously communicated that we target to charter the vessel within '25 and that's what that refers to. So we have fixed that ship within this year, which will then enable us for the fourth unit.

[Christopher Robertson, Analyst at Deutsche Bank]

Okay. All right. I'll turn it over. Thank you.

[Karl Fredrik Staubo, CEO at Golar LNG]

Thanks, Chris.

[Operator]

Thank you. Our next question is from the line of Alexander Bidwell from Webber Research and Advisory. Please go ahead.

[Alexander Bidwell, Associate Analyst at Webber Research & Advisory]

Good morning, Carl, Eduardo. Thanks for the time. So on the fourth FLNG vessel, have you guys started identifying conversion candidates if you were to do a Mark I or Mark II? And what would be the timeline for a conversion candidate acquisition?

[Karl Fredrik Staubo, CEO at Golar LNG]

Yes, we've started. We've also inspected vessels. It's something we keep a close eye on. I think if you look at the LNG carrier market, the price of those are it's more downward pressure than upward pressure, to put it that way. There are available vessels that would be suitable to our conversion ambitions.

[Karl Fredrik Staubo, CEO at Golar LNG]

Some of them are direct sisters of the Fuji, others have different characteristics that we may deem beneficial. Given the price dynamics in the market, we don't feel a rush to do, but it's something we keep a very close eye on.

[Alexander Bidwell, Associate Analyst at Webber Research & Advisory]

All right. Thank you. That's all for me. I'll turn it back over.

[Operator]

Thank you. The next question is from Greg Lewis from BTIG. Please go ahead.

[Gregory Lewis, Managing Director at BTIG]

Yes. Hi. Thank you and good afternoon and thanks for taking my questions. Carl, Eduardo, I was hoping you could provide maybe a little color around Argentina. I know that it's been discussed that to kind of put a second unit there.

[Gregory Lewis, Managing Director at BTIG]

There are some infrastructure needs to go in and really my question is around we roughly know that the infrastructure needs to go in. Has there been like an official FEED study? Do we have kind of as we kind of look forward, do we have an are we starting to get real timelines of the project? Or is it something where we just know it needs to be done, but before they can increase their ability to export more natural gas?

[Karl Fredrik Staubo, CEO at Golar LNG]

Hi, Greg. That's a very relevant question, obviously. So for the benefit of everyone on the call, Hilli will utilize the spare capacity of existing pipeline network in Oterra. If you go beyond the Hilli, you need a designated pipeline from the Vaca Marte resource down to some of the years ago where the vessels will be placed. Late last year, there was an FID of an oil pipeline that goes exactly the same direction from the Wako Marte to the same site.

[Karl Fredrik Staubo, CEO at Golar LNG]

That FID then creates the right of way to put the gas pipeline just next to it. The construction timeline of a gas pipeline will be far shorter than the delivery window of the Mark II, if that were to come to Argentina. So the pipeline investment FID or FEED study is currently not a gating item for the start up of a potential contract for MAR2NA in Argentina. The fact that during the quarter, we saw three of the major gas producers in Argentina in Pampa Harbor and YPF joining the Southern Energy project alongside Pan American. We see as a strong testimony to the economic attractiveness of establishing LNG Argentina as an LNG exporter.

[Karl Fredrik Staubo, CEO at Golar LNG]

The details of the pipeline is something you need to ask the gas producers about. We are an FLNG company and we provide FLNG infrastructure. That's our business. But we're obviously monitoring the developments. There is no pipeline without further liquefaction capacity and there's no pipeline without volume commitments from the gas producers. So it's all sort of codependent.

[Gregory Lewis, Managing Director at BTIG]

Okay, okay, great. And then I'll just change gears here. And we're just kind of curious, obviously, you're looking at building the portfolio. I mean, it seems like we have a good line of sight on a couple of new ones. You mentioned the ability to maybe go to Korea to build a larger FLNG.

[Gregory Lewis, Managing Director at BTIG]

My question has been around as the new administration has come into The U. S. And they want to be a massive they want to, I guess, increase their LNG exports, but of course, there's tariffs. Has that realizing usually when we're talking, we're talking about areas outside of North America for Golar solution. Has that kind of changed any of your conversations with any of your customers or is the natural gas market to global market and not really garnering much attention?

[Karl Fredrik Staubo, CEO at Golar LNG]

It's obviously a focus. If you have someone saying that they're going to boost supplies, it's obviously part of the discussions that we are taking part of in any discussion. That said, I think if you do increase production in The U. S, it will likely have an impact on the line you have over time. In addition to that, we see a significant inflationary pressure on the CapEx per tonne in particular for Land Based Solutions well, for any FLNG plant, but in particular for Land Based Solutions in The U.

[Karl Fredrik Staubo, CEO at Golar LNG]

S. So the way we see it, it's something that's part of discussions, but all of the projects we are discussing for should be very competitive to LNG exports because of the cost of the gas elsewhere, our competitive CapEx per tonne and the way we structure the contract with a fixed base tariff to Golar and upside sharing. So all in all, the projects will be competitive to any project out of The U. S. And it's not a massive driver.

[Karl Fredrik Staubo, CEO at Golar LNG]

We also see that off takers, I. E, the demand are looking for diversified sources of LNG. Different places have different shipping advantages and you can there's currently no outlet of significant LNG exports in South America. So to develop local LNG consumption, there's a massive advantage to be closer to end users. And that's another thing that, for example, the Hilli project would bring to the market.

[Gregory Lewis, Managing Director at BTIG]

Super helpful. Thanks, Carl. Thanks, Eduardo.

[Karl Fredrik Staubo, CEO at Golar LNG]

Thanks, Greg. Thank you.

[Operator]

We'll now take our next question. This is from Peter Haugen from ABG Sundal Collier. Please go ahead.

[Petter Haugen, Partner, Equity Research Analyst at ABG Sundal Collier]

Good afternoon guys and thank you for taking my questions. Firstly, on the other of the yards capable of building FLNGs, you're now writing about looking beyond raffles. Could you shed some light on what the upside would be to go to another yard and to the extent that could take CapEx for a 40 units down?

[Karl Fredrik Staubo, CEO at Golar LNG]

As we said, we see inflationary pressure for all of the critical components for liquefaction. So we don't expect prices to be any lower than we have secured for the Mark II under construction. To the contrary, there is inflationary pressure. We see that both on CapEx and on tolling rates. So at least they go hand in hand, so that's a good thing.

[Karl Fredrik Staubo, CEO at Golar LNG]

For us, the decision is solely down to the commercial opportunities that we're currently in discussions with. So it's you need to build the right vessel for the right opportunity.

[Petter Haugen, Partner, Equity Research Analyst at ABG Sundal Collier]

Okay, understood. And to sort of another element in this, there are, of course, great uncertainties on, well, the future of energy markets at large. But perhaps it could be argued that a reversal of sanctions in Europe and potentially then also gas coming back to Europe from Russia could put downward pressure on sort of near term and medium term prices here. To sort of elevate the question to this, is there a global LNG price in which the FLNG business case is making more sense than in others? And more specifically, if we come to sort of a oversupplied gas market, to what extent would you find that to carry risk into FLNG units being delivered over the next couple of years?

[Karl Fredrik Staubo, CEO at Golar LNG]

All right, but there's a needless to say higher gas prices is better. So if you have higher revenue, it's obviously better for the project. That's kind of goes without saying. As I alluded to in the previous question raised by Greg, we want all of the projects to be competitive to the marginal producers. The way we structure our contracts, we have a base tariff and commodity exposure or upside.

[Karl Fredrik Staubo, CEO at Golar LNG]

So for us, we try to lock in what we deem to be an attractive base tariff that secures the investment. And then over time, we then grasp the optionality of the LNG price developments globally through the upside sharing. That creates alignment and obviously potential excess profits for the investments we make. So for us, it's all about making sure that the base tariff and thereby the cash breakeven of the export project is lower than for the incremental producers. We feel confident that the projects we are in today and that we're discussing for development have those characteristics.

[Karl Fredrik Staubo, CEO at Golar LNG]

And therefore, obviously, we would like to see higher gas prices, but that's not a criteria for our business model. What we do see though is that there is significant demand elasticity subject to the relative price of LNG versus other fuels. So as you're aware, a very large part of new ships order are dual fuel. Many of them are currently not going on LNG, but the minute LNG is price competitive to, let's say, low sulfur fuel, there's a massive demand just there. We now see the same on trucking and many other industrial appliances of LNG.

[Karl Fredrik Staubo, CEO at Golar LNG]

So the price elasticity there. So over time, I don't think that one source of energy will price completely out of parity with the alternatives.

[Petter Haugen, Partner, Equity Research Analyst at ABG Sundal Collier]

That was a good answer, Carl. Thank you.

[Operator]

Thank you. And we'll now take our next question. This is from Frederic Deeboard from Fearnley Securities. Please go ahead.

[Fredrik Dybwad, Equity Research at Fearnley Securities]

Hello guys. Thank you for taking my question. Just I was able to provide some more further color on the prospective field for the Mark II prospective contracts. And by that I mean what kind of hallmarks do you look at and size of the fields etcetera?

[Karl Fredrik Staubo, CEO at Golar LNG]

Okay. So we should have at least four pieces of reserve and then sufficient gas flow to feed the FLNG. There are projects today where you have associated production or stranded reserves that can easily be deployed. The key gating item is obviously that the lead time of developing the resource needs to be at par, if not shorter than the delivery window of Mark two. That said, we think that there is significant or very strong opportunities alongside existing projects either we're in or will be in, in addition to new locations.

[Karl Fredrik Staubo, CEO at Golar LNG]

There are several countries with significant stranded and flared reserves that are seeking to monetize those reserves. Fiscal regimes are now falling into place. So we see the theme for FLNG development gaining traction and we're obviously planning to take our share in that development.

[Fredrik Dybwad, Equity Research at Fearnley Securities]

Yes. Thank you. That's highly valuable color. That's all for me. Thank you.

[Operator]

Thank you. And we have no other questions at this time. So I will now hand the conference back to the speakers for any closing comments.

[Karl Fredrik Staubo, CEO at Golar LNG]

Thanks for dialing in and for listening to us today. We look forward to what the rest of 2025 will bring and look forward to speak to you on the next quarterly presentation. Have a good day and thank you all.

[Operator]

Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.

Participants

Executives

• Karl Fredrik Staubo, CEO
• Eduardo Maranhão, CFO

Analysts

• Benjamin Nolan, Managing Director at Stifel Financial Corp
• Christopher Robertson, Analyst at Deutsche Bank
• Alexander Bidwell, Associate Analyst at Webber Research & Advisory
• Gregory Lewis, Managing Director at BTIG
• Petter Haugen, Partner, Equity Research Analyst at ABG Sundal Collier
• Fredrik Dybwad, Equity Research at Fearnley Securities