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Golar LNG Limited (G2O.F)

Frankfurt - Frankfurt Delayed price. Currency in EUR
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21.00+0.20 (+0.96%)
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  • m
    martin
    TTF Forward curve...

    The current futures contract rates for LNG contracts in Q4 are $36/mmbtu.

    That compares to GLNG's fully hedged Q2 and Q3 rats at about $25/mmbtu

    The sensitivity of annual income is $6.5M per $1/mmbtu increase.

    The futures contract for Q12023 is above $30/mmbtu, at which time T3 of HILLI is expected to see an increase in production.

    I would expect, that once Perenco exercises its option for 2023-2026 production ramp (they have till end of July), that GLNG will promptly lock in both the Q42022 and the increased Q12023 production, if those futures contracts remain as high as today.

    That would translate, in Q12023, to about $60M in net EBIDTA from the increased production above their base contract rate (~$16M/quarter).

    Also, if Brent remains above $100/brl, their Brent-linked increase would be about $25M per quarter.

    If you annualize those numbers, taking account of the increased Hilli production on T3 and the Brent index, annual EBITDA in 2023 would be over $300M. That is quite a remarkable boast from the current high energy prices flowing to GLNG's bottom line.
  • S
    Stephen
    HILLI production

    So little info about this on web. But if they agree to ramp up production, can it be done by the fourth qtr in time for next winter
  • j
    jason
    GLNG itself is not a shipping company per se anymore - but it retains its interest through CoolCo. That was the whole idea...GLNG was too complex and with too many end markets, that it was hard to value. Dropping the shipping assets in CoolCO was supposed to be part of an effort to make it easier to value. Ironically, CoolCo is down less than GLNG - best-laid plans. I find it even more interesting that a fire affects value in people's view. Europe still needs gas...heading into peak season when the plant comes back on line - the SQUEEZE will be that much stronger. Not to mention that ship rates are a function (in part) of the arb between sell prices (in Europe for now) and Buy prices - the more this spread opens the more one can charge for a ship.

    Either way - I have been in this space for a long time and followed GLNG for a while. When so much of the value is on the come and not in reported financials - it's easy to push a small-cap stock around in a news vacuum. Especially one like GLNG - so many stock jockeys...it crossed so-and-so line...it reached "support" here...its underperforming some loosely associated name over the last 60 days...etc...so much nonsense. But ultimately fundamentals prevail and real investors take stakes. That is why the only thing that matters right now is EXECUTION. No need to over promise or pump anything up...just execute.
  • J
    Jason
    This will be tighter and more structural (leading to longer contracts) than post-tsunami.

    https://oilprice.com/Energy/Natural-Gas/LNG-Tanker-Rates-Soar-To-Highest-Level-In-10-Years.amp.html
  • m
    martin
    A drag on GLNG share price is that it continues to trade in ETFs that are shipping focused.

    When that sector sells off, it appears to pull GLNG with it.

    A legacy issue that remains today, even though GLNG is no longer a shipping business.
  • J
    Jason
    I have been following GLNG closely since 2009. It has not been this well set up since the tsunami (when the stock hit $70+) - although this time I would argue is better as its starting basically at book, it has a rock-solid balance sheet, its generating cf, it has better-placed assets, and the macro is more structural than a temporary squeeze generated from a Japanese nuclear shutdown (namely that regardless of how the Ukraine situation resolves - Europe has woken up to the fact that having its nat gas infrastructure dependent on Russian gas is not a good idea).

    It's not a great stock for the sellside - as I think they get the story, but struggle with a PT that they have to give as per convention. Also not good for quant funds and bots that scrape earnings reports looking for momentum and analysts reports looking for PT's and projections. Picking a 6-12 month PT is hard and modeling eps for the next 12 months is not really all that relevant. I think the better way to look at it is that you can load up here as all the optionality is to the upside and the story has largely been derisked. There is so much catalyst-driven upside its hard to predict. I can build you a $40 case...I can build you an $80 case...but basically every realisitic case is up somewhere between a good return and a home run return. I think you back the truck up here, with all the possible positive catalysts in front of you and hope for $80, be happy with $40, and sleep knowing its not going to be $20.
  • Ø
    Øivind
    Upstreamonline today has an aricle about the Fortuna project.

    "Interested parties’: Minister confirms FLNG project being eyed for Equatorial Guinea"

    The interested parties are Golar and NFE.
  • P
    P
    Perenco is buying New Age's Oil & Gas interest in Cameroon. Possibly a new source of gas for Hilli down the road:

    https://www.upstreamonline.com/field-development/new-dawn-perenco-strikes-deal-to-acquire-newages-etinde-asset-in-cameroon/2-1-1232671

    "French independent Perenco has struck a deal to acquire operatorship of the Etinde licence offshore Cameroon from NewAge in a move that could trigger a fresh approach to a challenging gas and condensate project that has been treading water for years.

    Multiple development options have been evaluated for Etinde, including floating liquefied natural gas and gas-to-power solutions, plus exporting the gas to Equatorial Guinea, but issues around geology, resources and relationships with the Cameroon government have stifled the ability to get a project moving.

    Troubled: Challenged West Africa gas scheme hit by sanctions on Russian partner
    Read more
    Privately-owned Perenco is already a key operator in Cameroon, with its Kribi FLNG project its showpiece asset in the country, experience from which could inform its development approach to Etinde.

    Etinde partner Bowleven said today it has been informed by New Age that the operator has signed a “definitive conditional agreement” to transfer all of its interests in the asset and operatorship to Perenco.

    The transaction is subject to customary regulatory approvals by the Cameroon government and the approval of the Etinde partners which also include Russia’s Lukoil and state-owned SNH.

    Last chance saloon? NewAge eyes Equatorial Guinea for Etinde output as all-Cameroon scheme wobbles
    Read more
    Under the terms of the joint operating agreement, both Lukoil and Bowleven have a 30-day right of pre-emption over New Age's interest."
  • P
    P
    Updated sell side analyst price targets (thus far) following Q1, 2022 earnings result:

    Stifel: $31 to $33
    Jeffries: $27 to $30
    Wolfe Research: $30 to $39
    BTIG: Unchanged at $30
    Fearnley's: Unchanged at $35

    Furthermore, said analysts stated further increases to price target would occur following announced contracts for each new FLNG.

    My view is that Golar is a $40 stock in 2022.
  • m
    martin
    Had added in the freefall this morning, after seeing g the presentation. Now, listening to the CEO, feel that their situation is remarkably positive for growth. I suspect the share price decline is again the impatient investing Street that was running ahead of the open hoping for a announcement. But nothing has actually changed, and the EU market new demand for LNG is going to drive a very bright business prospect for GLNG.

    CEO just indicated that the financing costs and partner opportunities with strong EU clients has radically changed, to their great benefit.
  • S
    Stephen
    Oil and gas getting slaughtered. We got ignored the last couple months run-up, I guess why we are not getting hit as bad
  • m
    martin
    Detailed comments on GLNG from Stifel, May 26:

    --------

    Key Points

    New FLNG Projects. GLNG has 3 FLNG options - Mark 1 (2.7 mtpa conversion), Mark 2 (3.5 mtpa conversion), and Mark 3 (5 mtpa newbuild). While there has not been any incremental announcements of new contracts, given the time it takes for contracts to come together, we believe that there is a good chance there are 2 additional contracts in 2022 - BP expansion (Mark 3) in Torture and a second in West Africa (Mark 1). For the BP expansion, the question is does BP keep Gimi and add a Mark 3 bringing capacity to 7.5 million tons or do they simply upsize and replace Gimi. Given Senegal's comments this week that they expect the project to be at 10 mtpa by 2030, we expect Gimi might remain on location until a second Mark 3 can be built close to the end of the decade. Regarding the balance sheet, to do two simultaneous projects, there should be no capital constraints on growth. There is also the possibility to grow past that, but it may require some time for cash flows to materialize from the Hilli or the Gimi.

    Hilli. Given current high energy prices Hilli should generate $91m this year for the oil contract, $81 million from the TTF linked component, and $74 million of base cash flow. With the option for Perenco expiring at the end of July, there is likely upside to those numbers given we believe Perenco will exercise the option. Utilizing existing infrastructure is the cheapest and quickest source of incremental LNG available.

    FSRUs. GLNG does have one FSRU, the Tundra, and a steam LNG carrier, the Arctic. The Arctic, a 19-year-old LNG carrier, will be converted to a FSRU for Sardinia for $288m. It will cost $160m to convert the vessel. The conversion has to wait for a notice to proceed from Snam, and at that point it will take 2 years to convert. With the cost of the current vessel at ~$60 million, that is ~$68 million gain or 30% return. The Tundra is one of, if not the only, modern high spec FSRU available today which given European demand for a pending 18 incremental FSRUs, is in extremely high demand, and we expect a contract on that vessel to be announced before the end of 2Q.

    Valuation. After the start up for Gimi late next year, we expect EBITDA should rise to over $500 million implying 7.5x EV/EBITDA. On this basis, shares are fairly to conservatively valued. However, we expect each incremental FLNG until should add $750 million to $1 billion of value, but some modest upside from a contract or sale of the Tundra. Given our view that perhaps three new FLNG contracts could be signed in the next 18 months, we expect there could be potential for shares to double from current levels. While we are not modeling this into our target price, we believe there is substantial upside option value in GLNG shares with limited downside risk.
  • B
    Billy
    why is GLNG down in pre market when all of oil and gas is way up across the board? Can anyone explain why the dips recently?
  • m
    martin
    Worth noting that GLNG shares traded around $15 just immediately before the Ukraine invasion.

    Shares for GLNG are up over 50% during a time that the overall market fell from near all-time highs to a bear market.

    So, GLNG has done very well, both in an absolute sense and in a relative sense.

    Its increase in share price of bout $8/sh can be justified on how their business has benefited from the

    1- rise in TTF linked pricing for their HILLI increased ,

    2- rise in Brent-linked HILLI production

    3- new demand for their FSRU, with the huge value increase of their 2 vessels

    Under item 1 and 2, their 2022 Hilli revenue will likely now be $200M - $300M above their base rate achieved in 2021. The futures contracts indicate that such an increased income (all bottom line) is likely to sustain in 2023.

    Under item 3, the book value of their FSRU conversion (now sold) and the FSRU Tundra likely increased $200M- $300M relative to their value in 2021.

    Each of those value gains, which were not anticipated in 2021, have added the equivalent of $6-$8/sh to the current value of GLNG via asset inflation and new income.

    None of this calculus includes the improving prospects for FLNG projects, their improved equity stake valuation in NFE (which doubled in the last 3 months; and they sold 1/3 of that stake recently). Concerning the NFE stake they raised about $250M via sale of 6M shares, and rain 12M shares currently having a market value of $500M.
  • S
    Stephen
    Another flng deal today

    ENI

    All golar flng competors and have deals since the russia unkraine war. Some more the one deal. I really hope glng management staff knows what they are doing.
  • c
    cédric
    TUNDRA is sold to SNAM. 350 mios USD less 142 mios debt = 208 mios new cash equivalent to about 2 dollars per share. Great deal. More cash in the bank to finance new FLNG projects.
  • m
    martin
    Stifel Flash Note : some reason for the initial share price decline (now recovering...)

    BUY
    Price $24.75
    FLASH NOTE
    Summary
    First Look: Golar 1Q22 Results
    May 26, 2022
    Golar LNG Limited
    GLNG – NASDAQ
    Maritime

    Golar reported 1Q results which were clouded by the impact of discontinued operations as a result of the spin off of the shipping fleet. The headline number including discontinued operations would have been largely in line with our number, but excluding those the results look light. More importantly, the company continues to make progress on new floating LNG projects, but there were no definitive announcements. Liquidity is good, the outlook for the business is strong, but in our view, this quarter was a non-event.
  • m
    martin
    Per CEO presentation, they now estimate the book value of GLNG at $2.54B, implying shares now trade at 1 x Book.

    The company is effectively debt free, net of cash and securities.

    Their available cash allows them to fully fund ne new FLNG immediately - no new debt required.
  • P
    P
    Recap of recent analyst price targets:

    B Riley = $33.5
    DNB Markets = $29.00
    Jeffries = $30
    Stifel = $33
    Evercore ISI = $33
    Fearnley Securities = $35
    BTIG = $30
    Wolfe Research = $39
    Webber Research = $31
    Pareto = $35

    Average is $33

    And this is before FLNG announced deals and thus de-risking. I actually think these reports are valuing Golar incorrectly and the value should be much much higher.
  • m
    martin
    Dutch TTF July contracts jumped 50% after Freeport LNG announced a much more extensive period of shutdown.

    GLNG has not hedged their Q4 2022 production, so this unexpected event is a boon to them.

    Also, announcement of additional Hilli production is likely forthcoming in July from Perenco.