Tor Olav Troim-led Golar LNG is moving forward on plans for what could be its first floating LNG (FLNG) production newbuilding as the strong gas prices increase customer enquiries.
Golar revealed the development as it reported a deeper third-quarter loss.
"We are continuing constructive discussions with an existing customer for use of a five-million-tonne Golar Mark III newbuild design and rapid progress is being made on potential integrated projects."
The company said it had increased its range of prospective FLNG customers across different geographies during the quarter.
"The current strength of LNG prices and favourable price outlook further increases the attractiveness of our FLNG solutions," it said.
Pricing push
Golar said its first FLNG unit, Hilli Episeyo, logged 100% of commercial uptime during the quarter.
The company recently hedged half of the unit's additional 200,000 tonnes per annum production in the first quarter of 2022 and said this, together with the oil-linked fees from the unit's first two trains, will produce "significant increased earnings" next year.
The outfit added that the strong LNG prices are encouraging an expansion of the drilling programme, which could support an option to up production further from 2023.
Golar said its second LNG carrier-to-FLNG unit conversion of its 126,277-cbm vessel Gimi (built 1976) is 75% technically complete.
It is due to be operational in two years under a 20-year contract with energy major BP for its Tortue FLNG project off Senegal and Mauritania which Golar said will unlock around $3bn of earnings for the company.
"We expect adjusted Ebitda generation from our FLNG segment to quadruple from current levels over the next two to three years on the back of contracted earnings from Gimi and increased earnings from our commodity exposure on Hilli," the company said.
Rates rise
Golar was equally upbeat on prospects for its shipping business.
The company said its average daily time charter equivalent earnings for its vessels were up 27% at $49,500 per day in the third quarter, with an expected fourth-quarter average TCE of around $53,500 per day expected.
The company said it is seeing increasing requests for medium and long-term charters at higher rates and expects its TCE figures to increase vessels are re-contracted at higher expected rates.
Golar said increasing exposure to higher freight rates in 2022, rising asset values, tighter environmental regulations that reduce effective vessel supply and the deleveraging of Golar’s LNG carriers are "all contributing to expectations of a significant increase in cash generation from our shipping segment".
The company said this increases the attractiveness of a planned spin-off of its shipping business.
Golar's net loss for the third quarter soared 317% to $91m, from $21.8m in the same period of 2020. This included a $157.5m loss on New Fortress Energy shares.
But the company scrubbed out its red ink in its year-to-date figures reporting a net income of $405.8m against a net loss of $281.7m in the same nine months of 2020.
Operating revenues for the third quarter rose 12% to $106.6m, up from $95.2m in the same three months of 2020.
Golar secured up to $682m in new financing facilities during the quarter and secured refinancing for its convertible bond.
