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2014-05-28

Golar LNG: INTERIM RESULTS FOR PERIOD ENDED MARCH 31 2014

Highlights

* Golar LNG ("Golar" or the "Company") reports a first quarter 2014 ("first
quarter") net income of $13.0 million (including a non-cash loss of $10.1
million on interest rate swaps).
* EBITDA* generated in the quarter amounts to $33.1 million.
* The Company takes delivery of the floating storage and regasification unit
("FSRU") Golar Igloo on February 5th. Maiden cargo delivered on board and
commissioning concluded successfully in Kuwait during March.
* On March 28 Golar completes the sale of its interest in the FSRU Igloo to
Golar LNG Partners (the "Partnership" or "Golar Partners") for $310
million. * The Company concludes financing for four of its remaining five
unfinanced newbuilds.
* Continuing underperformance of global LNG production has resulted in
negative growth and a lack of available cargos. This, together with few
inter-basin arbitrage opportunities, means the spot and short term
chartering market remains challenging.
* Board maintains dividend at $0.45 for the quarter.

* Adjusted EBITDA is defined as earnings before interest, depreciation and
amortization equal to operating income plus depreciation and amortization.

Subsequent events

* Golar takes delivery of the LNG Carrier Golar Crystal ("Crystal") on May
15.
* The Company is on target to complete and fund key contracts for firm the
order of Golar's first Floating LNG production unit within Q2 2014.

Financial Review

Golar LNG Limited Results
The Company's first quarter results show EBITDA of $33.1 million. Operating
revenue at $21.0 million was up on fourth quarter 2013 ("fourth quarter")
operating revenue of $18.0 million. Positive contributions to first quarter
revenue came from the Golar Arctic which provided a full quarter's earnings
having been in drydock for part of the fourth quarter, the Golar Igloo which
contributed to earnings in respect of its 27 day pre-dropdown operations and
the Golar Seal which found voyage charters for part of the quarter as
compared to no utilisation during the fourth quarter. Collectively, the
above provided an additional $8.2 million in first quarter revenue. A poorer
performance from the Golar Viking which was scarcely utilised during the
first quarter compared to 63% utilisation during the fourth quarter reduced
the overall quarter-on-quarter revenue gain to $2.9 million. Voyage costs
increased from $5.7 million in the fourth quarter to $6.1 million in the
first quarter mainly due to fuel consumption by Golar Celcius and Golar
Viking which were idle for most of the quarter. This was partially offset by
lower consumption by the Gimi which commenced layup in mid-January. Vessel
operating costs increased $1.7 million from $12.1 million in the fourth
quarter to $13.8 million in the first quarter. Much of this increase is
attributable to the Golar Igloo which was delivered on February 5 and
commissioned in Kuwait during March, the Golar Celsius which was operational
for a full first quarter as compared to two thirds of the last quarter and
crew costs related to the Company's fleet expansion. Administrative expenses
dropped from $5.8 million in the fourth quarter to $4.9 million this quarter
with lower legal and professional fees accounting for most of the reduction.
Depreciation and amortization increased from $10.6 million in the fourth
quarter to $12.3 million in the first quarter with the increase reflecting
pro-rated depreciation for the Golar Igloo delivered during the quarter and a
full quarter's depreciation in respect of the Golar Celsius which delivered
in late October.

To reflect the sale of the Golar Igloo to Golar Partners on March 28, a gain
on sale of $35.4 million was recorded in the first quarter. A further gain
of $8.7 million has been deferred and will be recognised in equal instalments
over the Golar Igloo's remaining useful life.

The contribution to the Company's net income deriving from the operating
results of Golar Partners comes largely in the form of dividend income on
common units, its general partner stake and incentive distribution rights
("IDRs"), which collectively totalled $6.4 million for the first quarter.
This compares to $8.0 million in the fourth quarter with the drop largely
attributable to the Company's sale of 3.4 million common units held in Golar
Partners in December. Dividend income shown in the income statement does not
include cash received in respect of the Company's ownership of the
Partnership's subordinated units. When all classes of ownership are taken
into account, the aggregate underlying cash dividend received during the
first quarter of 2014 is $14.8 million. This compares to $16.4 million
received in the fourth quarter with the drop reflecting the sale of the above
common units.

Interest expense increased to $2.2 million for the first quarter compared to
$nil for the fourth quarter as fourth quarter interest expense incurred was
fully offset by deemed interest capitalized in respect of the Company's
newbuild program. Other financial items of $16.7 million relate primarily to
non-cash losses on interest rate swaps.

Golar Group-wide Results - Includes Consolidation of Golar Partners (refer
Appendix A)
As the operating performance of Golar Partners has such a material impact on
the Company's overall financial outcome and in response to continuing
investor requests, the following review of the first quarter also considers
group wide results (i.e. including Golar Partners). Following the IPO of the
Partnership by the Company (together "the Golar Group") and subsequent
dropdowns of a large portion of Golar's operating fleet, the majority of the
operating vessels in the Golar Group now reside in Golar Partners. Based on
first quarter operating results of the Company and Golar Partners, 87% of the
aggregate net time charter revenue is sourced from vessels that are operating
within Golar Partners' corporate structure. Following a steady performance
from Golar Partners' fleet which once again reported full utilization, group
wide revenues at $106.2 million were up on fourth quarter operating revenue
of $103.9 million substantially due to the additional contributions from the
Golar Seal and Golar Igloo. Operating expenses have increased $2.6 million
over the fourth quarter to $25.6 million with the increase reflecting the
addition of the Golar Igloo, a full quarter's contribution from the Golar
Celsius and an increase in repairs and maintenance expenditure on two
Partnership vessels, the Golar Freeze and Methane Princess. Voyage related
expenses at $7.3 million are in line with the prior quarter. First quarter
group wide Time Charter Equivalent ("TCE") earnings of $85,794 per day are
slightly higher than the fourth quarter TCE of $84,773.

Underlying administration expenses (i.e. non-project related) of $4.9 million
are lower than the previous quarter at $5.2 million with most of the
reduction attributable to savings in advisory, legal and professional fees.
Project related expenses at $1.6 million in the first quarter are in line
with fourth quarter costs of $1.4 million.

Net financial expenses at $11.5 million are higher than the fourth quarter's
$10.3 million mainly as a result of pro-rated interest on the newly drawn
$161 million Golar Igloo facility, a full quarter's interest charge in
respect of the Golar Celsius facility and a reduction in the amount of
interest that could be capitalised. Other Financial Items posted a first
quarter loss of $23.1 million and consist mainly of non-cash mark to market
valuation of interest rate swap losses. This compares to a $6.4 million gain
in the fourth quarter.

Financing

Company completes the sale of the Golar Igloo to Golar Partners for $310
million
On March 28, 2014, Golar completed the sale of its interest in the company
which owns and operates the Igloo to Golar Partners for $310 million. This
transaction, which will enable Golar Partners to increase its annual
distribution by between $0.09 and $0.11 per unit effective from the second
quarter of 2014, was financed in part by assuming bank debt of $161 million
from Golar together with the $150 million net proceeds of the Partnership's
December 2013 equity offering. Golar will apply the net sale proceeds of
$149 million against the remaining interim instalments of its newbuild
program, dividends and to develop its floating LNG production business. Once
again, the Company's share of the distribution from Golar Partners will also
increase disproportionately by virtue of its ownership of all of the IDRs.
The Company receives 25% of incremental distributed cashflow when
distributions per unit are between $1.9252 and $2.31 (on an annualized basis)
in addition to its distributions received per common and subordinated unit
held. When distributions per unit increase above $2.31 this incentive
distribution will increase to 50% of incremental distributed cashflow. The
Partnership remains on track to reach such a level upon the prospective
dropdown of the Golar Eskimo in early 2015.

Four-unit financing facility
The Company executed a four ship sale and leaseback transaction with ICBC
Financial Leasing Co. Ltd. ("ICBCL") during February. The financing
structure will fund 90% of the shipyard purchase price of each vessel. At
funding, vessels will be simultaneously bareboat chartered by the Company at
a fixed rate for a firm period of 10 years. Consistent with the eight-vessel
$1.125 billion financing agreement executed last year, the lease is not
reliant on long-term charters being in place. Under the leasing structure,
the Company also has options to purchase the vessels after the fifth
anniversary of the financing.

As with the eight-vessel facility, the Company had previously entered into
interest rate swaps in 2012 in anticipation of financing being put into place
which enabled the Company to secure very competitive hedging rates to limit
its interest exposure.

To date $1.54 billion of the total $2.74 billion newbuilding capital
expenditure has been paid. Of this $545.6 million has been funded by
drawdowns against the $1.125 billion facility. Taking into account the
$579.4 million undrawn balance of the $1.125 billion facility and the ICBCL
facility above, the newbuilding program is now fully funded. The Board is
pleased with Management for the attractive financing that has been put in
place for the Company's newbuilding expansion.

Corporate and other matters

FSRU activities
Golar continues to market the 170,000 cbm FSRU Golar Tundra and the Board
remains optimistic that the Company will be able to secure a long term
charter for the FSRU prior to its delivery. More opportunities are presenting
themselves in Africa which has the potential to be an FSRU growth hotspot
while Europe's need to diversify gas supply options could also create further
...

Författare Hugin

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