Tor Olav Troim-controlled Golar LNG has unwound the bulk of its swap arrangements for its European gas price-linked production from the company’s floating LNG (FLNG) production unit Hilli in Cameroon as prices for the commodity fall.
As a result, Golar said it has locked in approximately $140m of Ebitda linked to the Dutch Title Transfer Facility (TTF) natural gas pricing benchmark.
“The total secured value from the TTF hedges entered into in Q3 [quarter three] 2022 amounts to approximately $140m, or approximately $1.3 in cash flow per share,” the company said.
Breaking this down, the company said that it has secured about $76m of distributable adjusted Ebitda for swaps covering March to December 2023, which would be received in ten equal monthly installments through the period.
Golar detailed that it had unwound 100% of its TTF-lined production for the period at $21.80 per MMBtu leading to a net gain of $28.20 per MMBtu.
In addition, Golar said it had secured a further $49m of distributable adjusted Ebtida for swaps covering the full-year of 2024, which would be received in 12 monthly installments during the year.
The company said 50% of its TTF-linked production during this year was unwound at $20.6 per MMBtu giving a net gain of $30.7 per MMBtu.
Golar said its only remaining TTF hedges are for January and February 2023, with an estimated distributable adjusted Ebitda of approximately $25m.
Gas prices have been falling through December and continued their downward trend into the New Year on the back of milder-than-expected winter conditions, low demand and high storage levels in Europe.
The FLNG-focused company, which hedged its forward TTF-linked floater production during the high gas price environment of 2022, said it maintains exposure to its TTF-linked tariff for the 2.4 million tonne per annum FLNG Hilli and set out how this would play out for changes in the pricing over different periods.
“At the current forward curve, this is equivalent to $47m of distributable adjusted EBITDA for 2023 and $56m for 2024,” the company said.
Golar said share of Hilli distributable adjusted EBITDA is expected to be approximately $282m in 2023 and $225m in 2024.
The company said its share of expected 2024 annual debt service for Hilli is about $50m, some $21m of which is interest.