Golar LNG Ltd (GLNG) 2009 Q4 法說會逐字稿

Good day, and welcome to the Golar fourth-quarter 2009 results presentation conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to your host today, Mr. Graham Robjohns. Please go ahead, sir.

Good afternoon, everybody, and welcome to the results presentation for Golar LNG Limited and Golar LNG Energy Limited for the fourth quarter of 2009. My name is Graham Robjohns, and I'm joined here today by Golar Energy's CEO, Oscar Spieler and also Senior Vice President, Chartering, Ian Walker.

We will follow the agenda on page 3 of the presentation, and so we will start with Q4 highlights for Golar LNG. We will then move on to the Q4 financial results before having a look at the Golar vessel portfolio. And then we will then move on to the presentation for Golar LNG Energy. Prior to moving on to the energy presentation, we will take some questions and answers directly related to LNG Limited -- Golar LNG Limited.

So turning over to page 4 of the presentation, Q4 2009 highlights, we are very pleased to report significantly improved quarterly earnings, and our second-highest ever average time charter equivalent rates for the fourth quarter of 2009.

The fourth quarter has benefited from a full quarter's earnings from the Golar Winter, which, having successfully completed commissioning in the third quarter of 2009, has operated smoothly throughout the fourth quarter.

The quarter has also benefited from improved spot vessel earnings. Utilization is much improved at 93%, up from 80% in Q3. Rates have also steadily improved.

Having said that, however, the outlook for Q1 2010 is challenging with much lower vessel utilization of the spot vessels expected.

During Q4, Golar LNG Energy sold a block of LNG Limited shares, realizing a net gain of $8.4 million.

The Golar Freeze has been in Singapore at Keppel Shipyard since September, undergoing her conversion to an FSRU. And work is now well advanced with a scheduled delivery early in the second quarter of 2010.

Golar LNG Limited has a strong cash flow outlook, which will be enhanced, of course, by the delivery of the Golar Freeze into its charter. And the expectation, as we said in a press release, results press release, is that a cash dividend will commence in respect of the second quarter of 2010. In the meantime, the Board has proposed a second distribution of Golar LNG Energy shares in the same ratio as the previous distribution, one Golar Energy share for every seven Golar LNG Limited shares held.

We now move over to page 6 to look at the financial highlights.

You can see there the obvious improvement in revenue, up from -- this is net revenue after the deduction of vessel voyage expenses -- which is up from $40.7 million in the third quarter to $58.3 million in Q4. Which has also, of course, given rise to the significant improvement in time charter equivalent earnings, up from $44,140 per day to $62,470.

On slide 7, we have the graphical historical presentation of revenue and EBITDA over time. And one point to note from this slide is the element of seasonality that you can see in the chart with Q4 always typically being the best quarter.

Moving over to slide 8, it shows the detailed income statement for Golar LNG Limited consolidated group. One item I should pick up on there which I haven't mentioned yet is the small or relatively small impairment of long-lived assets. That relates to a write-down of FSRU parts that were originally purchased in respect of the Golar Spirit speculative build.

Moving over to page 9, balance sheet assets. The cash and cash equivalents number as you can see has fallen. And the main movement on that is expenditure on the conversion costs in relation to the Freeze. As we mentioned in the results press release, as of November 2009, we have discontinued equity accounting for LNG Limited, or shareholding LNG Limited, and that's largely due to the fact that our percentage shareholding it has fallen, and as a result, that investment has moved from equity in net assets of consolidated investees to other long-term assets.

Moving on over to slide 10, balance sheet liability. The percentage of fixed interest debt has fallen since last quarter, down to 64% on a group basis, now that the drop is largely as a result of the maturity of an interest rate swap in respect of the Golar Mazo that matured in December 2009. That's positive for us moving forward as that swap was at a rate of 6.4%.

Moving over to slide 11, the statement of cash flows. As you can see, we have a relatively healthy operating cash flow at $22.2 million. On investing activities, the main item there to note is the additions to new buildings, vessels, and equipment, which, of course, is predominantly expenditure on the Golar Freeze.

Continuing on cash flow on slide 12, one item to note there at the very top, proceeds from long-term debt, negative. That is a repayment of $20 million of the World Shipholding revolving credit facility.

And then moving over to slide 13, we have the analysis of financial expenses, which sets out our interest rate costs and income, and also analyzed out other financial items. So as you can see, shows a gain on interest-rate swap marked to market valuations of $5.1 million as opposed to a loss of $2.3 million last quarter; a reduced gain on foreign currency lease balance free translations, currency contracts and other currency derivatives.

The equity swap gain of $0.5 million relates to a gain on an equity swap Golar had in its own shares that matured or terminated in the fourth quarter. The previous quarter's $8.8 million represents a termination on equity swap in Arrow Energy that was terminated in the third quarter. And the total of that gives rise to net financial expenses of $4.5 million as opposed to $2 million total last quarter.

On slide 14, a slide that I'm sure many of you have seen before, it shows the Golar vessel and contract portfolio with the long-term contracted assets at Golar LNG parent level at the top. The dark blue bars representing long-term fixed contracts, and the Golar LNG Energy Group assets in the bottom half of the table.

That's a relatively quick run-through of Golar LNG Limited specific items.

We'll now turn the call over to questions and answers. I would ask you that I suspect there will be lots of questions in relation to Golar LNG Energy business, and we would like to take those at the end of the presentation rather than now. That's including questions in relation to the Golar Freeze.

So, if there's anything specifically related to Golar LNG Limited, as I say, I'll turn it over to Q&A now.

Thank you, sir. Ladies and gentlemen, the question-and-answer session will be connected electronically. (Operator Instructions). We have no questions for the moment, sir.

No, that's fine. I suspect people are just waiting for the end of the presentation. So we will carry on now with Golar LNG Energy presentation.

If you move over to the next slide after the Golar portfolio, we have the start of the Golar LNG presentation. And then moving on to page 3 of that presentation, become to the agenda. It's very similar to the previous presentation. We will look at Q4 highlights, Q4 financial results, and then we will spend a little bit more time and I will pass over to Oscar Spieler to talk about the market, floating regasification, LNG shipping, floating liquefaction, and finally, Golar LNG Energy strategy.

So turning to page 4, Q4 2009 highlights, as I of course just mentioned for Golar Energy Limited, spot vessel earnings have improved with good utilization this quarter and increased rates.

Market fundamentals are improving in the medium to long term with a significant reduction in the ship order book and increasing LNG production. However, the outlook for the short term, and particularly Q1 2010, as I said earlier, is challenging, with utilization likely to be particularly poor in the first quarter.

The sale of 9.6 million LNG Limited shares realizes $11 million in cash in the fourth quarter and an accounting profit of $8.4 million. The Company's position after that sale was 6.3%.

We discussed at some length in the results press release the restructuring of the Gladstone LNG project. There have also been press announcements during 2010 from both Arrow Energy and LNG Limited, which some of you may have seen.

Clearly changes were needed to the structure in order for the project to progress successfully and also to progress on the timeline that all parties wanted.

The restructuring is a departure from the position originally planned, of course. However, assuming Golar Energy is successful in securing a revised position of shipping and marketing services provider, then there are significant positives in that for Golar LNG Energy. And that it is removed from upstream and CapEx cost risks. Additionally, the equity requirement from Golar LNG Energy is significantly reduced.

As we previously announced in the first quarter of 2010, Golar LNG Energy and PTTEP mutually terminated their heads of agreement in respect of FLNG development.

Golar Energy has learned a great deal through the process and the joint study process with PTTEP, and it's been a valuable exercise. The companies have parted on good terms and both thankful for the experiences.

And finally, the markets for FSRU's, which really now is gathering some momentum, and I will leave that for Oscar to talk a little bit more about in a moment.

So moving over to slide 5, financial highlights, the first thing to point out here, which is very obvious from the results announcement, that the prior quarter numbers, where we say actual 2009 July to September, is in effect, a trading period from the 12th of August to the 30th of September. The 12th of August being the date the Golar LNG transaction was completed. So, we are of course not really comparing like with like.

And, in particular, I make that point because the time charter equivalent rates that have increased from $36,480 from $35,600 in Q3, the first part of Q3, TCE rates were somewhat worse than $35,600 so it doesn't show there is some full improvement.

Moving over to slide 6, which shows the detailed income statement for Golar LNG Energy. Administrative expenses I think we would say were particularly high this quarter, particularly in relation to, for example, the development costs in relation at PTTEP, so I would expect this to be lower going forward.

Depreciation and amortization also includes depreciation in relation to the Golar Freeze. It's of course currently owned by Energy. So once that vessel is transferred back, that number will be decreased going forward as well.

On slide 7, cash and cash equivalents is reduced from $112 million to $70 million. That is mainly driven by $35 million borrowed by Golar Energy Ltd. in respect of conversion costs in relation to the Golar Freeze.

And on slide 8, balance sheet liabilities, the other current liabilities is a large number of $114 million. That is predominantly made up by the reverse loan due to Golar LNG, and also the seller's credit in relation to the Golar Freeze.

Turning over to slide 9, statement of cash flows, you can see under investing activities, firstly, the additions to vessels and equipment which, of course, is the Golar Freeze, and also the net proceeds from the sale of noncontrolling investee, which relates to the sale of LNG Limited shares.

On slide 10, we just have the continuation of the cash flow statement, which brings us to slide 11 and the market. And at that point, I shall hand you over to Oscar Spieler to carry on with the presentation.

Thank you very much, Graham. I will first talk a bit about the energy market on slide number 11 -- 11, yes.

As we said in our press release, 2009 has been an extraordinary year when it comes to the energy and gas markets. When we look at the long-term demand, in the graph on this page, the LNG demand is expected to topple by 2020 from today's demand at an annual growth of around 6.5%. A majority of this growth will be in currently importing countries. However, not an insignificant portion of the growth will be in the countries that do not import LNG today. I will revert to this when I talk about the FSRU market, as this has a quite important effect on this market. Let's move over to page 12.

When it comes to the supply and demand, we believe that there were more probably an oversupply of LNG in the years to come. This is indicated as the difference between the red line, [disrupting] the demand and the supply curve on the graph on page 12.

However, due to this oversupply and uncertainty in future LNG prices, this could result in that FID for new project will be delayed, which again, would result in a squeeze when it comes to supply later in this entry.

So, how does this actually affect Golar? So, let's move over to page number 3013.

As we said, 19 new countries were started for LNG, which will create opportunities for our services when it comes to the FSRU's. A terminal in Singapore under construction is now built and the cost is around $1 billion, which we could have built an FSRU terminal with the same capacity for a fraction of the cost.

All these 19 countries will need to construct import terminals. And, if normal financial logic works, a lot of these terminals will be based on FSRU solutions. We are in discussion with a number of developers all around the world, and what we see is that the [interests] are more founded and that the developer spends more resources on the development of the project.

We have recently sent in a indicative offer to Jamaica. Pertamina is out with brief qualifications, and they are planning, in addition to the one on East Java, also going to have another project in West Java. They are planning to award a contract for East Java around the middle of the year. And there is also another project in Indonesia, where we will have the pre-qualification out in March.

Israel has sent out their pre-qualification. We believe that there will be a warded at least two projects within the next 12 months. We also believe that the price difference between fuel and LNG prices will increased based on the oversupply of LNG. This will incentivize developers to change from oil to gas and to go for fast-track solutions.

Based on deals done in Asia Pacific recently, the savings from switching from oil to gas based on a 3 million tonne per annum consumption. We will see annual savings, which can be around $[120] million per year.

An FSRU terminal is not only cheaper than a land-based terminal, but they are also able to deliver the FSRU terminals earlier than a land-based. And hence, if you are able to deliver the FSRU three years before a land terminal, the savings will be additional $360 million.

Let's move over to page number 14. Golar has so far delivered two FSRU projects to Petrobras in Brazil. The units have been delivered with different regasification techniques, and both vessels were delivered on time and budget. Both vessels have been operating without any off hire.

We are also developing a third conversion project with DUSUP in Dubai. And the vessel is at the final stage of its conversion at Keppel Shipyard in Singapore. DUSUP has used Shale International to undertake the technical assurance on the project, including inspection of the vessel, the design on engineering, and follow-up of the conversion at the yard.

We see this as a very positive [quality that] for Golar's execution model for the [acceptable] uses of all LNG vessels for these type of projects and the project itself.

When it comes to the status of the downstream facilities in Dubai, the unloading platform, mooring and breast (sic - see "breasting") dolphins and pipeline connections are under construction. All long-lead items had been ordered, and most have already been delivered to site. The contractors is mobilizing to begin work on dredging on the construction of the breakwater, and we believe that everything will be completed by Q4 this year.

The vessel will leave the yard in second half of April and will be on hire around middle of May, provided everything goes as planned.

Let's change to page number 15 and talk a bit about the shipping market. Over the last two years, we have seen a dramatic increase in the LNG fleet by 91 vessels. And the fleet consists today of around 340 vessels. The capacity increase is shown by the yellow line in the graph.

Most of these vessels have been committed to LNG products projects. However, a number of the projects have been delayed and other projects have suffered from technical problems, reducing the demand for transportation, which has resulted in a reduced utilization of the fleet.

That is described on the blue line in the graph. It should be noted that the utilization, represented by the blue line, and left Y access expects around 30% increase in the LNG fleet from end 2010 to 2020. The order book today is only 3% after 2010.

Taking that [bow] into account, we are quite pleased that we managed to keep the utilization of the fleet during the second half of 2009. Unfortunately, we have already lost two months' experience as the winter market this year has disappeared, and the market changed dramatically and in cargoes in the market, resulting in a very low utilization of the fleet so far.

Based on the supply/demand situation, we believe that the spot market will be challenging in the near future. However, with a 6.5 increase in the LNG demand, and a limited new billing book, we believe that we will see a tightening of the market over the next year. We'll also see a change in the LNG market with respect to increased flexible LNG supply. In other words, uncommitted LNG. This will give traders the opportunity to send the cargoes where they optimize their earnings. This should increase the demand for shipping.

Unfortunately, Golar are not able to influence the market with the fleet we have. However, we are, at an early stage, starting to consider and to take steps to look for our consolidation of the open LNG fleet.

The Gladstone deal has changed, as Graham talked about. And, it's now transformed into a pure shipping and marketing deal. And if the Arrow deal goes ahead, we will have secured time charter for two of our vessels over the contract period.

Let's change to page number 16 or slide number 16. We have gained valuable experience in the FLNG projects which we have been involved in. And we are humbled when it comes to both the technical and financial challenges in connection with a full-scale FLNG project. The picture on the right, you see one of the concepts we were working on, on the PTEEP project.

The challenges in our FLNG projects are many. It is a technical unproven solution, complex integration processes. It's a very hard CapEx. There is upstream risk. There is a long time from FID to cash flow. It is difficult to assess the future prices of LNG, and not at least challenging to finance these type of projects in today's financial markets.

Also, the fact that all recent onshore projects have been delayed with huge cost of rents despite they have had the best engineer and cost controllers available, gives us concern if we should be the first one to allocate FLNG. Let's leave this to the [operator] and other players in the market.

The conclusion on the topic based on their bow and their recent developments in the LNG market has been that we have decided to alter the course on FLNG slightly. This started a concept study on low-cost projects, where we liquefy pre-treated gas, in other words, pipe gas, [coals] in gas ore pre-treated assorted gas.

The aim is to have a simple FLNG project with reduced technical and financial risk. Based on the results of the concept study, we can develop a floater with a liquefaction capacity of 1 million tonnes per year for around $400 million in CapEx per tonne produced. This can easily be scaled up to 2 million tonnes per year. This is shown on page 16 on the lower picture. We have discussed this project with potential clients and have achieved very good interest.

Let's change to page number 17, where we are going to discuss a bit about adjusting the course when it comes to strategy. We have spent considerable time on strategic discussions over the last month, looking on our strengths, weaknesses, threats and opportunities. We came to the conclusion that based on where we are and with the resources we have, taking into account the financial markets, the LNG market, cash flow consideration, that our first priority should be the FSRU business, with shipping as a core business.

We believe that we can play an important role when it comes to the simpler FLNG projects, as described previously. This strategy can be summarized as follows -- Maritime-based companies, smaller-scale LNG project development, with a clear aim to be low-cost provider.

Let's go to the last slide, to slide number 18. To explain the rationale behind their goals, on the last slide, we have focused on securing early cash flow, which is extremely important for the Company. On our FSRU project, you see a cash flow 18 to 24 months after FID. Why on FLNG, full-fledged FLNG project, I think it will take more or less around 60 months from FID. This means that our first priority should not be FLNG, but regas. And that we must focus on trying to improve the income from shipping, as this is where our cash flow is today.

Our main strategy will be to find cost competitive LNG solutions whether it is FSRU's or FLNG, based on using old Moss LNG tankers. This gives us a competitive edge versus competitors that flex and accelerate, which have expensive newbuildings, and this will also optimize returns for shareholders. We, Golar LNG Energy, should be the Moss converter.

We do not want to put all the eggs in one basket. And therefore, we have decided to simplify our FLNG approach [and give it] even more resources on regas marketing. We have reorganized, resulting in a better market [covers] and are also looking into employing additional technical staff in order to be better prepared for future projects.

We are now coming to the end of the presentation. And from the investor's point of view, the news in connection with PTTEP and Gladstone have not been according to the expectations. This is a result of the complexity of the LNG industry, the LNG market as it is today, and the escalating CapEx costs, which rise this industry. The decision to not invest in this project was based on a pure risk/reward consideration. And I am happy that we did this now rather than later. The Company is actively pursuing all regas opportunities around the world, and we should be in a good position to secure these contracts.

Thank you for listening, and we are now going over to the Q&A session.

(Operator Instructions). Urs Dur, Lazard Capital.

I must admit, you guys have almost completely stumped me in that almost every question was thoroughly answered.

So I don't normally say this, but I love the detail of the presentation, so thank you. It's all pretty clear.

Can you give us some reasonable color, since I'm looking at GLNG, about a broad sense of a timeline as to when you think you may be able to find the possibility of adding a project from Energy into Golar LNG, say a sixth project. So, would that be next year or something even announced this year as to a timetable? Or is that even going to happen?

Well, Urs, there is no agreement in place between LNG Limited and Energy, assuming this is what you meant.

Sure.

Yes. In connection with the transfer of projects to Limited, presumably, you are thinking here once a project has secured a long-term contract, we've said before that it may make sense at the time for additional equity to be raised at Golar LNG Limited level to acquire assets from Energy, but that's something that would have to be reviewed at the time.

In terms of when projects will be contracted, as Oscar said, we're looking at, at least a couple of FSRU contract awards. We think will be coming in 2010. And then it's just a question of how many of those we actually win.

I hope you win them all.

Yes.

I mean why not. I honestly -- again, I rarely say it, but it's a comprehensive review. My questions are answered. Thank you.

Thank you, Urs.

Martin Korsvold, Pareto.

Hi, good afternoon. I'm just wondering, could you give us some idea of what will be the economics of what is left of the Gladstone Project for you, including what sort of rates would you be looking at if you do conclude the offtake with Arrow?

I think what is left in Gladstone, I think we have said fairly clearly, and that is a shipping deal with a time charter of two vessels. And of that, those will be done on market terms. And I think you are what -- you know what the time charter is today. So it will be done on today's market terms on a time charter.

Okay. And also, just in terms of vessel values, obviously it's [a illiquid] market LNG carriers. But could you give us some idea of where do you think values have gone for LNG carriers since you split Golar and Golar Energy in terms of percentage change? Or is it the same, or --?

I think you can use the new billing prices as I referenced there. On the second hand as well.

The other point to note is of course the assets were transferred at book value at the time.

Okay. Third question, just some recent report that you were in the market or a rumor that Golar was fixing out the vessel at 35Ks. Is that the Golar Arctic? I mean can we assume that you have got new employment for around that rate?

Yes. Can you just repeat?

I just picked up in the press that Golar has fixed out -- rumored to have fixed out the vessel at 35,000 [use of day]. Can we assume that that is the Golar Arctic? Could you give us more details about her employment at the moment?

What would you -- presently we're not really reporting on these conferences. So, but we are -- generally what we have tried to do here is that we will have very high focus on keeping the vessels occupied. The nature of the LNG business is that it's a big difference compared to other types of shipping because we have to keep the boilers of running. So if the vessels are idle in addition to the CapEx, we also have fuel oil in order to keep the boilers rolling. But we don't really comment on recently done [fixed rates].

Okay. Thank you very much.

[Nathan Vice], [Unit Economics].

Just a question around tonne mile demand and some of the recent imports we're seeing in the United States. If I look broadly, if you have a tanker bringing in 3 Bcf total capacity, and say it's a 90-day round trip to the US from gutter, it would require 30 tankers to be able to deliver one Bcf a day, which is almost 9% of the global tanker fleet. How do you kind of look at the Mackenzie data and add on the tonne mile argument and try to come up with a better proxy for what we might actually see for demand over the next few quarters or year or two?

I think this is [safe to continue to] predict demand at the moment, I think. There's a number of factors that are influencing demand in the US and worldwide. I think if you look at the consumption in the US and Northwest Europe over the previous year, although we are experiencing industrial decline in industrial output, there was actually increased demand in both US and Northwest Europe. Basically because we saw there the increased supply come onto the market, lowering the price, backing out some pipeline supply. So, we -- the LNG into US and Northwest Europe remain fairly well covered. Of course, we saw a decline in Japan.

But, with regards to bringing supply from Qatar to US, the 90-day round trip seems -- and I don't have the numbers in my head at the moment, but a 90-day round trip seems a bit lengthy. Of course, you can optimize a fleet by running at slower steaming speed, etc. But, I think healthy outlook for LNG into the US.

Competing, of course, with shale gas as well. It has been talked about a lot at the moment. I'm not quite sure what the full lifecycle cost for shale gas will be. But I have seen a number of studies that seem to say that it will undercut LNG. But LNG at the moment is fairly heavily priced I think. There's a lot of capital tied up in these projects. And I guess the project sponsors and sellers will try to keep the product moving. But quite what the level of a export into -- or import into the US would be is difficult to predict at the moment.

Okay, thank you.

(Operator Instructions). Andy Rosenlund, ABG.

Thank you. Your comments about a weak Q1, does that mean that Shell will not have utilization for the three vessels they have on contract so you may not be incurring revenues on those vessels as well?

Yes, they will certainly be underutilized for a good part of Q1, I would expect.

Okay. So when Shell doesn't utilize one of these vessels, it means zero revenues for Golar LNG Energy group.

Right, yes.

Okay. And the comments that we have seen about spot fixtures being done in the 30s, low 30s, do you subscribe to that view that that's where the spot market currently is?

Yes. There seems to be fairly well reported activity in the spot market. So it's there or thereabouts. It might not be as low as some people are saying, but certainly there's an overhang of tonnage, so it puts pressure on the rates.

Okay, excellent. Thank you very much.

Jeffrey Schwartz, Metropolitan Capital.

Good afternoon, gentlemen. A couple of quick questions here. As to the ships that we are going to be delivering to Dubai, I think you mentioned you are looking at various financing options for it. At what point in time do you think you would feel sufficiently comfortable with the cash flows and the likelihood of permanent financing to reinstitute an ongoing cash dividend?

I think we said in the result press release that the expectation is that we would be paying a cash dividend in respect of the second quarter of 2010.

Terrific. And that's whether or not you have put in place permanent financing for the repurchase of the ship?

At the moment -- I think we will find a solution to the financing even if the current discussions with banks don't turn into a long-term financing. It's difficult to say absolutely, of course. But we are comfortable we will find -- we will get to the right position.

Okay. But I guess where I just want to get to is World Shipping (sic - see below) and the Fredrickson Group has been very supportive shareholders of companies that they have a major stake in. And so, I could easily imagine a scenario where World Shipping continues to provide financial support if the view is that the bank market hasn't healed sufficiently to provide an attractive alternative.

In a scenario like that, do you think that Golar would still feel comfortable to reinitiate a cash dividend, even with the financing being more short term in nature?

A difficult question to answer, I guess. It could have some impact. But I think the Board and World Shipholding I guess are committed to commence paying dividends, the dividend rate may be lower, for example. But it's a difficult one to answer.

Okay. We'll leave that for another quarter then. Perhaps by then, you will have found financing that's suitable.

If you don't mind a follow-up and to change gears, the -- I'm wondering whether the current expectation would be that if you were affix two ships on some sort of long-term charter with Arrow and Toyota, I understand that project won't be coming onstream for a number of years. But, would you imagine those would be the type of -- that would be a type of project that once the shipping commenced, that Golar Energy would look to sell those ships either to Golar LNG or to some other potential buyer? Is that an example of what might be another project for Golar LNG?

Yes, absolutely. I don't think Golar LNG Limited is particularly [fussy] between ships or FSRU's or any other assets for the long-term contracts. But I mean, and as I was saying earlier in response to Urs's question, there's no fixed agreement between the two companies. So it would be a decision at the time as to whether it made sense for Energy, which it may well do, to raise additional capital. And, whether it made sense and was accretive to Golar LNG Limited's shareholders.

As to the shipping and marketing agreement, at this point, is the main remaining issue to securing our position in the Gladstone Project with that shipping concession and a royalty -- is that the finalizing of a contract with Toyota?

That's right. There are certain CPUs in connection with this [edge of] agreements which we have with our Arrow. And one of those are that we have to secure [SBA] with Toyota.

Is there any sense of timing that you could offer for when you would hope we would have some further development with that?

I think we are talking about June.

By the end of the second quarter, to put that to [bed]?

Yes.

Okay. And lastly, with regard to some of these FSRU projects, in particular, the ones in Indonesia seem to have a very short timeframe for the various steps in them, where pre-qualification leading to contracts being awarded later this year and leading to ships being delivered late in '11, early in '12. That would seem to play to our strengths, both by virtue of our experience in having successfully delivered ships on time, and also with some of the pre-ordering that you have done for a speculative newbuild. Is there any further comment you might care to offer in terms of what you are --?

Yes, I'll just give you some comments there. I just said you know they have a very, very tight schedule. We are the only player in the market who have delivered regas vessels and converted regas vessels. So, I think we are in the best position if you are talking about a conversion of our existing [pattern].

The [treatments] which we have ordered already really doesn't fit the requirements from Indonesia because they require a higher capacity. So we will need to order new equipment for that.

But there are also competitors which have vessels, like [Accelerate], which have vessels which are already converted and which more or less can go in. But I think our competitive edge there is that we would be able to more fully offer a more tailor-made solution at a more competitive price.

Thank you.

(Operator Instructions). Andy Rosenlund, ABG.

I'm just curious, why have you changed the names from the just Shell vessels?

Oh, because the original vessels were names of shelves belonging to Shell. And as we transferred the management of those vessels back to our management from [Satco], they were keen to hang onto their names.

Okay. Well thanks a lot. I was just curious.

(Operator Instructions). As we have no further questions, I would like to turn the call back over to you, gentlemen, for any additional or closing remarks.

Okay. Well, thank you, everybody, for dialing in this afternoon. And, we look forward to talking to you all again in three months' time. Thank you very much and good day.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.