Tor Olav Troim whet the appetite for further dividend growth at Golar LNG as his plan for the company comes together.
The progress comes despite what the Golar chairman called a sad divorce with Schlumberger on the OneLNG project this spring.
Golar yesterday hiked its divided as it moved from a $4bn investment period into a “cash flow phase”.
'I've never been more excited'
Speaking on the company's second quarter conference call Troim said he was a firm believer in LNG solutions. Having been involved with the company for 19 years, however, he now accepted “we started far too early".
Troim said: “In many ways, in all my business life - which includes 19 years working in the Fredriksen Group - I've never been more excited and convinced that we are in the right growth commodity business."
Golar boosted its quarterly dividend by 150% to $0.125 per share having ended the second quarter with $800m in cash.
Analysts responded positively to the development. “We liked it before, but we love it here,” said Ben Nolan of Stifel.
“Cash, cash, cash,” sang Jon Chappell of Evercore ISI in a post-results report.
“With cash flow now beginning to come in the door and more projects on the way, we estimate the sum of the parts to be over $40 per share,” said Chappell.
“We expect improving earnings and new project announcement to act as a catalyst driving share higher over the next 18 months.”
Skin in the game
Troim owns 5.5 million Golar shares having invested in additional stock this year.
He said the most important thing for him as chairman was “that we’re coming to the start of the cash flow period" that would deliver “a very good return” to shareholders in the years to come.
“This includes unique projects like the Sergipe and Nanook projects which will start next year, generating cash flow of more than $1m a day for the next 25 years,” Troim said.
“A 100% uptime and delivered significantly under budget is in addition a great testimony to the Golar staff in commencement with the Hilli operation.
"It’s probably the best advertising for FLNG solutions to monetize stranded gas.
“Perenco’s return on the first LNG transaction done on a speculative basis is nothing else than spectacular,” he added.
Schlumberger separation explained
Troim explained his appearance on the conference call came after criticism for not being on the previous presentation to “take heat from the Schlumberger divorce” given he had been a big promoter of the venture.
“The divorce from Schlumberger was sad,” Troim said. “And I really believed in the concept of working together with a great upstream partner.
“However, in a partnership, you also need a partner willing to commit to necessary resources to the partnership.”
He said Schlumberger had committed in January not to invest further in the SPM arena, which meant the partnership was clearly not working.
“That had nothing to do with their belief in Fortuna project. It had all to do with their appetite for SPM investments,” Troim said.
“It was more about Schlumberger’s commitment to their shareholders to focus on existing business than an evaluation of what they were doing together with us.”
He said the termination of the Schlumberger agreement has opened new doors, and, in many ways, improved the outlook for this and other prospects.
“The Fortunate project is a project which showed the great return with LNG prices at around $4 and these, obviously, are showing significant better return with LNG price at $8," he said.
