Conversion Contracts
GoFLNG
Hilli conversion progress remains on schedule with the project's
contingency budget remaining substantially untapped. During the quarter
the vessel re-entered Keppel drydock and prefabricated sponsons are now
in the process of being attached to the hull. This work will continue
for the remainder of this year. Pre fabrication of the process top side
modules and pipe racks has now commenced with most major equipment items
for the conversion now delivered to the shipyard.
Golar
continues to work constructively with Keppel Corp with respect to the
scheduling of the conversion of Gandria and Gimi. The total commitment
to these two ships remains at $50 million.
Both contracts allow for
their termination after deduction of a set cancellation fee. In view of
the prevailing uncertainty in the energy markets, Golar does not intend
to accelerate these conversions before satisfactory financing and firm
client contracts are in place.
The ordering of long-lead items for these
two vessels does however preserve Golar's ability to meet clients 2018
and 2019 production schedules.
FSRU Newbuild
On July 17
Golar placed an order with Samsung Heavy Industries for an additional
FSRU newbuild. Delivering in November 2017, this FSRU is timed to meet
the requirements of a number of specific FSRU opportunities that Golar
is currently pursuing. Buoyed by attractively priced and available LNG
supply, current demand for FSRUs is strong. On November 25 the Company
took delivery of its 7th FSRU, the newbuild Golar Tundra.
Golar Tundra will shortly proceed to Keppel where the vessel will
undergo some minor modifications required to make the FSRU compatible
with receiving facilities currently being constructed in the port of
Tema, Ghana.
GoFLNG - Business Development Progress
All
contracts for the GoFLNG Hilli project have now been signed and the
project has taken FID. A Sale and Purchase Agreement for the LNG
off-take has also been executed by Perenco, SNH and Gazprom.
The
GoFLNG Hilli is expected to deliver an EBITDA for Golar in the first
full year of operation, based on the utilisation of 2 of the available 4
liquefaction trains, in the range of a minimum of $170 million to
maximum of $300 million. The vessel tariff is floored and capped
indexed to Brent in the range of $60/bbl to $102/bbl. GoFLNG Hilli will
commence operations in Cameroon in Q2 2017 and the contract has a
duration of 8 years. The field has reserves to support more than the
current two train commitment and Golar will work to increase utilisation
of the vessel. Increasing production to 3 trains is expected to
increase EBITDA to between $240 million and $430 million without
increasing capital costs.
Ophir's
Fortuna project in Equatorial Guinea where GoFLNG Gandria will be
deployed from 1H-2019 has taken credible steps forward including
substantial progress on LNG HoA's with buyer interest oversubscribed.
Additionally, material progress has been made by Ophir on full field
development. Golar expects to make the conversion agreement effective
and issue the notice to proceed to Keppel for the Gandria conversion by
mid-2016, coincident with the project taking FID. Project economics
recently presented by Ophir demonstrate very healthy project economics
and robust options for financing.
New
GoFLNG business development activity remains focused on maturing
projects that have the potential to commence operations in 2018 with
good progress recorded against a number of potential projects. It is
however acknowledged that the window for securing a 2018 start-up GoFLNG
project is now narrowing.
Golar
is pleased to report that good progress has been made with the
Brazilian "Sergipe" greenfield power project, with solid steps made by
the joint venture on EPC contracts for the power station and associated
infrastructure and progression of SPA discussions with potential
suppliers of LNG to the project. The project remains on track to sign
binding PPA agreements within the first half 2016. Total committed
capital as of today is $5 million in cash and $24 million in guarantees.
It remains Golar's intention to spin off the on shore investment in
Sergipe.