Tor Olav Troim’s Golar LNG has hedged a swathe of its floating LNG (FLNG) production for 2024 as amid skyrocketing European natural gas prices.
Golar said it entered swap arrangements to hedge about half of its 2024 production linked to Dutch Title Transfer (TTF) gas prices at $51.20 per MMBtu.
The company said this TTF price is the energy equivalent to a Brent oil price of approximately $300 per barrel.
Golar said: “The hedging transaction secures cash flow visibility for part of our 2024 distributable adjusted Ebitda at an attractive historic level, whilst retaining meaningful exposure to the possibility of higher prices.”
On Monday, Europe’s benchmark TTF gas price jumped more than 10% to $85 per MMBtu, before dropping back. This is more than 14 times the average price for the past decade.
Market analysts said the fresh rise was partly prompted by Russia’s notification on Friday that it will close the Nord Stream 1 gas pipeline, which supplies gas to Europe, for maintenance.
Golar said that based on TTF gas prices of $51.20 per MMBtu, and current Brent crude forward prices for 2024 at $86 per barrel, the company’s share of annual distributable adjusted Ebitda for 2024 from its Hilli FLNG unit off Cameroon is expected to be approximately $294m.
This is based on a mix of fixed tariff earnings of $67m, Brent oil-linked earnings of $73m and TTF-linked returns of approximately $154m.
Golar said its share of expected 2024 annual debt service for Hilli is about $47m.