Tor Olav Troim-led Golar LNG plans to spin off the company into several different standalone businesses following a strategic review.
In a second quarter results statement Golar said its board has approved a range of specific options to re-organise the company into “separate, attractive and investible businesses.”
The company said each business line would be financed on a standalone basis.
“We intend to implement a selection of these options in the near future subject to further board approval,” it said.
Golar’s second quarter net loss climbed 38% to $155.6m from $112.7m in the same three months of 2019.
Company chief financial officer Callum Mitchell-Thomson said the jump in losses was largely caused by an impairment of $135.9m on Golar’s 33% investment in Golar LNG Partners.
Second quarter operating revenues inched up 6% to $102.2m from $96.8m in the comparable period.
The company reported a first half net loss of $259.9m for the year, up 68% on the same six months in the previous year.
Golar refinanced one LNG carrier ahead of schedule during the quarter, earlier than expected freeing up around $40m in liquidity. It plans to refinance two more vessels this year.
Power play
The company said its joint venture Golar Power’s first full quarter of operations of its Sergipe power plant and floating storage and regasification unit in Brazil generated revenue less operating costs of $51.0m, of which $19.0m is attributable to Golar LNG.
During the quarter Golar Power signed a memorandum of understanding with Norsk Hydro to provide LNG and regasification capacity for their Alunorte alumina refinery at Barcarena, Para in Brazil.
Golar said it intends to convert this MOU into an agreement for LNG and regasification capacity in Barcarena and take a final investment decision (FID) on the terminal within four to six months. Six months later we expect to take FID on the associated 605MW power station, it added.
The company said Golar Power, which plans to grow its use of bio-LNG to supply small-scale customers under its new parternship with Galileo Technologies, has been approached by a number of other mining companies seeking a similar solution.
Golar Power will also finalise plans before the end of this year to site an LNG floating storage unit at Suape.
“Replicating the success of the Brazil gas to power business internationally remains a focus for the remainder of 2020 and into 2021,” Golar said.
Golar LNG chief executive Iain Ross said: “The appetite for LNG noted by Golar Power in Brazil is not unique. The company is being asked for similar rapid start-up solutions around the world which we anticipate will result in material and sustainable growth in LNG demand.”
Updating on BP’s force majeure claim to delay work by 12 months on the under-conversion FLNG unit Gimi, Golar said this remains in place and a force majeure claim has also been received from the conversion shipyard.
“The contemplated delay to Golar's ability to deliver the vessel is anticipated to be less than that currently claimed by BP, and constructive discussions with BP to agree these two schedules are continuing,” the company said.
Solid
Ross said the company had produced “another solid performance” for the quarter.
He flagged up the performance of the company floating LNG unit Hilli Episeyo, which has offloaded its 42 nd cargo and over 2.5 million tons of LNG since start-up, and second quarter time-charter equivalent rates of $45,100 per day on its ships, up from $24,400 in the same period last year.
Golar said fleet utilisation stands at 93% in line with Q1, up the 66% achieved in Q2 2019
The company expects third quarter TCE rates of around $35,000 per day, with utilisation of 78% based on fixtures to date.
“We will continue to seek to place those vessels coming off contract into new long-term charters, adopting a portfolio of structures that focus on utilisation,” Golar said.
Based on the current gas price contango, the potential upside for rates is substantially higher than current headline levels. No further dry-docks are planned this year.
