Golar LNG Ltd (GLNG) 2015 Q3 法說會逐字稿

Good day and welcome to the Q3 2015 Golar LNG Ltd earnings conference call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Gary Smith. Please go ahead, sir.

Thank you very much and my welcome also to the call. The agenda for this afternoon's call will be as per previous calls, where I will quickly run through the highlights for the quarter. Brian Tienzo, our CFO, will then run us through the financial highlights for the quarter. And then I will come back with a business update and our summary and outlook session before we throw to Q&A.

So if I can move to slide 4 in the presentation pack, which gives the highlights not only just for the quarter but, importantly for this call also, the subsequent events following the close of the quarter. During the quarter the EBITDA for the Company was a loss of $5.9 million, which is an improvement of some $19.4 million over 2Q loss of $25.3 million. Pleasingly, the Board has maintained the dividend at $0.45 per share for the quarter.

Importantly, during the quarter, Golar, Perenco, and SNH, the national oil company in Cameroon, signed and executed all the contracts that pertain to the implement of GoFLNG Hilli in Cameroon. As we've discussed previously, that vessel is scheduled to commence operation in Cameroon during Q2 2017 with a minimum EBITDA expected of $170 million based on the 50% capacity utilization of the vessel.

We, during the quarter, also placed an order for an additional FSRU with Samsung. And Golar Partners reported a third-quarter EBITDA of $94.9 million, of which 34.7 -- 30.4%, sorry, was owned by Golar LNG.

After the quarter and just recently, Gazprom, Perenco, and SNH signed the offtake agreement for the LNG to be produced by Golar Hilli. And I will come back and talk a little bit more about that. Associated with that signing, Golar Hilli Corporation received a $500 million guarantee from Perenco and SNH for their performance under the contract and, similarly, Golar has issued a $400 million guarantee to Perenco and SNH.

During the quarter, or just after the quarter, sorry, October 1 we launched The Cool Pool and it has commenced operation now. It's into its second full month of operation. Then finally, and pleasingly, during the quarter we signed a five-year charter with West African Gas Limited to employee Golar Tundra in Ghana.

So at that point I will hold over to Brian and I will come back later on.

Thanks, Gary. We [had revised] the financial highlights in page 5. The story of the quarter can really be divided into two bits. One is an improved operational record for Golar LNG Limited and its fleet, but, unfortunately, negatively impacted by non-cash mark-to-market movements of certain of its derivatives. So let's look at the operational performance of Golar LNG during the quarter.

Total operating revenues in 3Q; that is an improvement of $27.4 million compared to 2Q of $20.1 million. Of course, we still continue to incur costs in respect of the chartering of Golar Grand from Golar LNG Partners, and similarly in second quarter we incurred a one-off hit in respect of the Eskimo charter that ended at the end of June. Other voyage expenses have come down from 2Q to 3Q as a result of improved utilization of the vessels.

And going down the page to look at the last red block there, the utilization has improved from 33% to now 43%. And just above that it signifies the importance of that improved utilization from what was a time charter equivalent of $3,908 negative in 2Q to now $10,750 in the third quarter.

Against that we saw a backdrop of negative mark-to-market movements following a decline in both interest rates and also the Company's share price. By the end of June Golar share price was trading at $46.80 per share. At the end of September that had declined to $7.89. As a result of this, we had to book a $67 million loss, mark-to-market loss in the third quarter.

Similarly, as far as interest rates movement are concerned, we saw 40 basis points decline from the end of June to September 30. Again, as a result, we booked a $22.3 million interest-rate swap loss during the quarter. Finally, we looked at the repossession of Golar Salju from Indonesia, and as a result of the lower-than-valuation in respect to the vessel, the Company booked a $[15] million impairment as a result of writing off the part of the loan that led to the sale of Salju in Q1.

Turning over to page 6, this highlights the dividend contribution by partners into Golar LNG Limited. As per our press release, Golar LNG Limited currently receives approximately $13.1 million for all the units it owns of Golar LNG Partners. And of course, as a result of the Tundra being able to find firm employment during in the June quarter with such employment commencing in the second half of 2016, we expect that the Tundra will be dropped down to Golar LNG Partners during this early part of 2016.

And as a result of that we would expect that the IDRs, of which 50% level is currently reached, will also trigger an improvement in dividends that Golar LNG Limited will receive from Golar LNG Partners.

Turning over to page 7 to look at certain balance sheet movements, cash and cash equivalents have decreased from the level of June 30 from $374 million to approximately $222 million at the end of September. This is partly because of the line below that, which is that the Company had to post certain amount of cash collateral to secure the decrease in mark-to-market valuation of the TRS that the Company has entered into.

Furthermore, the Company has also spent certain amounts in respect of the Golar Hilli conversion, which is highlighted in the third -- in the box underneath that. So we had $411 million spent as of June 30, 2015, to now $435 million at the end of September 2015. To date, we have spent $452 million on that vessel.

At the end of June -- at the end of September, the amounts owing in respect of the drop-down of Golar Eskimo $100 million continue to be outstanding. However, as of today, that amount has now been settled, which will augment Golar LNG's cash balance from that settlement.

Going over to page 8 and looking at the main cash flow movement, as a result of improved operations, the net cash used and provided by operating activities has somewhat improved from quarter to quarter. We had a negative $20.649 million at the end of June to now negative $15.384 million at the end of September.

The second red block there shows you the amounts spent in respect of Golar FLNG project. And the third block signifies the amount that has been put in security in order to secure the mark-to-market movements on the Company's TRS investment.

Turning over to page 9 to look at the Company's liquidity position. Notwithstanding our current weak shipping market, and of course reflected by the continued weak operating results, the Company continues to be in good liquidity position. At the end of September the Company had $223 million in cash, $330 million including restricted cash.

As mentioned already, the Company had received $100 million in the fourth quarter from Golar Partners as a result of repayment of the amount outstanding in respect of the Eskimo drop-down. Furthermore, taking delivery of the Golar Tundra recently has released $50 million to Golar LNG Limited. And, of course, the continuing annual distributions received of approximately $50 million from Golar Partners continues to help the liquidity of the Company.

In respect of Golar Hilli, the financing structure, as previously announced, will look up to -- will finance up to 80% of the expenditures on Golar FLNG Hilli. That means the initial period will be to $700 million and that will then become $960 million of facility once Golar Hilli reaches certain conditions after delivery from the yard.

Cameroon projects, as Gary has mentioned just now, has reached FID and, therefore, the financing is now available, which effectively means the Hilli conversion is now fully funded and will no longer be a drain on liquidity. As a result of taking FID on the Cameroon project, the companies involved in the project had to exchange guarantees. $305 million of the $400 million guarantee that Golar LNG provided is cash-backed; however, a portion of that will be coming back to Golar as the bank syndication progresses.

Against this, we see three main points of additional sources of new liquidity. We are now in the process of refinancing the carrier Salju, which we expect to release up to $62.5 million of equity. Furthermore, we are looking at refinancing LNG carriers and we have received interests that allow us to release equity of somewhere between $260 million up to $320 million.

But, of course, Golar Tundra has now firm employment and it will go to Ghana in 2016 and, as such, a drop-down for the vessel is expected. And such drop-down we expect will mean Golar will probably receive in excess of $100 million at the conclusion of such a drop-down.

Finally, looking at the various FLNG opportunities in projects we have, and as far as the cash burn is concerned, there is very unlikely material expenditures on both Gimi and Gandria until employment discussions are more firm. At such point, when those employment discussions are sufficiently firm, we expect to be able to put vessels into financing such that the cash burn to Golar LNG Limited will be fairly reduced.

I now turn the presentation to Gary, who will take you through a business update.

Thanks, Brian, and I will continue on on page 10, which is the familiar Golar portfolio slide. Three changes to this slide during the quarter. The first, pleasingly, is the change of color against the Hilli. We are now -- here employment is dark blue, or contracted, and we will talk more about that in a moment.

Similarly, with Golar Tundra. That vessel is now also fixed and, as Brian has just mentioned, will probably move up into the Partners segment of the portfolio when next we speak or shortly thereafter. And then, finally, as I mentioned in the highlights, there's the FSRU newbuild, hull number 2189, still to be given its first name, which will deliver from Samsung November 2017.

I will move on now to page 11, where we talk a little bit about the LNG carrier segment of our business.

Notwithstanding a pretty depressing story across the market generally, it is a little bit pleasing, I guess, to report an improvement, albeit from that low base. We saw utilization kick up during the quarter from a 33% utilization in Q2 to a 43% utilization in Q3.

Rates have remained essentially unchanged in the sort of range of $35,000 a day, although I can report that we are now starting to see full round-trip economics for these charters as opposed for paid and one-way.

The spot business generally is active. What we do see, however, is rather than inter-basin trade, we are now moving into a world which is predominantly intra-basin trade. So we are not seeing too many of the long-haul trades, particularly the reloads from Europe to the Far East, but rather trades with the basin or indeed trades into the Middle East on the back of the FSRU activity that has been starting up in the Middle East.

So we do see improvement. It's registered in the third quarter. We would expect to see more of that in the fourth quarter as new projects now start to come on-stream. We now have the first of the three northeast Australian projects, the BG QCLNG project, fully handed over and running at two trains. Gladstone has just started up with I think the first two cargoes now loaded, but more anticipated. The AP LNG project is still scheduled to come on-stream between now and year-end and being passed in the US Gulf to start up early in the new year. So there's a wave of new LNG coming at us and, hopefully, we will see that reflected in rates going forward.

Now The Cool Pool, as previously discussed, began operation on the first of October. Very pleasing to see that The Pool has been well accepted. Almost universally the market has adopted what the proposition is here. It's proving already, and you can see in the results, a reduction in positioning costs and the ability, importantly, to actually fix forward, which you cannot do without the sort of liquidity that we have within the fleet at the moment.

A lot of interest and exploratory discussions currently taking place around CLAs and other flexible parts [follows] the contracts not previously seen within LNG. And then finally, The Pool was successful in signing up I think nearly two-thirds of the available charters that were on the market during the month of October.

Moving on then to page 12, which talks about FSRUs. Really we are seeing a pretty significant change in the sort of market landscape for FSRUs. As of today, we have six operating vessels all operating very successfully.

We have just taken in the last week or so delivery of our seventh FSRU, Golar Tundra, and she has now been employed in Ghana. The counterparty there is West African Gas Limited, which is a joint venture between NNPC, or the national oil company of Nigeria, and Sahara. And she is scheduled to begin operation during Q2 of 2016.

The vessel will sail to Singapore; undergo some relatively minor modifications to enable her to operate within that location. As in the press release, the EBITDA from that contract is some $44 million per annum. It's a five-year contract with an extension option for another five years on the same terms as for the initial five years. And as I said just a moment ago, she will hopefully find a home within the Golar Partner portfolio of vessels.

On the back of this success, or indeed just part of this success, we contracted our eighth FSRU and she is scheduled to be delivered during Q4 2017. There really is a lot of interest in that vessel as the remaining uncommitted FSRUs available are slowly being snapped up. We are very confident of being able to find a home for that vessel well in advance of her delivery from the yard.

Then, finally, during the quarter results presentation of last quarter we did indicate our involvement in a Brazilian gas LNG-fired power station in the north of Brazil in a place called Sergipe, working in partnership with our joint venture partner Genpower. The project has conditionally secured a 25-year PPA for a 1.5 gigawatt power station. Angola has the exclusive right to provide the FSRU and at the moment is investigating participating at a level of 25% in the project.

Good progress has been made on this project with all the various land-based EPC contractors and discussions are quite advanced in respect of securing LNG supply for the power station as well. And we remain on track to take a final investment decision on this project within the first half of next year. As we flagged in last quarter results and worth restating, it is Golar's intention to hold this investment in a standalone non-recourse subsidiary of Golar, rather than manage it within Golar LNG itself.

If I move then on to page 13 and just update on the Hilli conversion progress. We were in Singapore just a few weeks ago and had the opportunity to visit the yard and witness the progress, but it's pleasing to report that the conversion project remains on schedule and remains on budget. The contingency budget which we have for this project is relatively untapped and that's what we would expect it to be at this stage of a project of this scale and complexity.

Right at the moment what's happening is the sponsons, which have been prefabricated and you might've seen previously pictures of the sponsors sitting on the key side, are currently being attached to the hull of Hilli. And for those of you can view the PowerPoint presentation we're talking to, you can see on the bottom picture a stern view of Hilli with both the port and starboard aft sponsons now attached to the vessel. Actually, since that photo has been taken, the vessel has been floated out of the dock and spun around and stern into the dock where now they are attaching the remainder of the sponsons.

The attachment of the sponsons will continue for the rest of the year, whilst in parallel the topside modules are being prefabricated and the pipe racks are also being prefabricated, such that they can all be installed in a rather complicated jigsaw puzzle which will be the Golar Hilli when she finally delivers. Also pleasing to report that all the major equipment items which go into making the vessel have been received at Singapore and are available within the yard, all in good time.

If I then move on to slide 14, which just updates progress against the two announced projects. Starting with the Hilli project in Cameroon, which, as we've previously reported, is a project of eight years of life to produce 1.2 million tons of LNG per annum, which is roughly half the capacity of the vessel.

During the quarter the tolling agreement and the midstream gas convention were executed. As you might recall, the midstream gas convention was the tri-[pipeline] agreement between Golar, Perenco, and the government, which covered all the regulatory and fiscal requirements for operating in Cameroon. As previously reported, the EBITDA, based on a two-train operation, will range between a floor of $170 million per annum which corresponds to a Brent oil price of $60 per barrel. So that's the floor and the point below which the toll will not fall, to a cap of some $300 million per annum which corresponds to a Brent oil price of $102 a barrel.

Also contemplated within the tolling agreement is the option to increase capacity to a three-train operation, which then lifts the EBITDA for the same oil price range in the span of $240 million to $430 million. Within the last week, Gazprom and Perenco have publicly announced the signing of the LNG SBA for the full capacity of the project. And so very pleasing now to report that all the documentation, all the contracts both involving Golar and all the other parties that participate in this project are now signed and really it's now simply a task of execution and delivery. The long and somewhat arduous process of negotiation is predominantly behind us.

We remain on track to take FID -- sorry, FID is now taken and we remain on track for our Q2 start up 2017. And there you can see a newspaper article, which means it must be true.

In Equatorial Guinea, also very pleasing to report good progress. The characteristics of this project are a little bit different. Now we're talking a 20-year project life at the full capacity of the vessel, which in this case is 2.2 million tons per annum.

The upstream development by Ophir has made good progress. The fundamentals of the project, so the biogenic gas, is almost pure methane. It's relatively [shale]. The upstream project development is relatively simple and the economics of this project are really quite outstanding.

And most importantly, and I think what we are learning is a very important attribute of any of these projects, is we have strong political support from within the country for this project to proceed. Ophir had a capital markets day within the last month where they publicly announced that they now signed a number of heads of agreements for the LNG offtake. In fact, the project is oversold by several times. Ophir now, through the process of finalizing the LNG SBA, which will support that project with a target to have that SBA concluded probably around the end of the first quarter of next year.

Ophir have also progressed with their financing options and I would direct you towards their presentation with sets that out in a little bit more detail. As we have previously advised, Equatorial Guinea will employ the Gandria project and, indeed, pleasing to report that she is still on track to start up first half of 2019 following what we expect to be very similar FID type announcement during the first half of next year.

Now moving, if I may, to slide 15. On the back of progress made both in Cameroon and Equatorial Guinea, the whole GoFLNG business development part of our business is really continuing to grow in volume, but also in terms of substance of the counterparties that we are talking with.

We are, as previously announced, working aggressively to a mature project with the potential to commence operation in 2018. We are not yet there and so clearly we are starting to run out of time. The window for securing a 2018 start-up is narrowing on us.

We are very conscious of that and we are pushing hard. It's too early to declare either success or failure at this time. We remain optimistic. Various active discussions are continuing. There is, as I've mentioned previously, a short list of projects capable of meeting that start-up. We are not simply dependent upon one project progressing.

Importantly, and I think a point which is worth making strongly, is the commitment in Cameroon for the Hilli project, which was made in the prevailing oil and gas prices of today, has really caused people to take note of the economics possible from a floating LNG approach and our flexible commercial structure really is starting to get some traction within the industry. The fact that we are able to take an FID on these projects in this environment creates a lot of upside and really we tend to be the only option available. The conventional approach to LNG in this current market simply doesn't stack up.

As a result of that we are continuing to see growing interest all the way from the junior explorers until recently where now we are engaged in discussions with some of the oil majors as well. It's yet to be seen where the next project will come from, but certainly a wide-ranging discussion across a number of different counterparties.

And then just before I throw to questions wrap up on slide 16, which is just to summarize what we have been through. The current spot LNG carrier market is showing signs of improvement. You can see that within the results we are reporting today we continue to see it and the new liquefaction capacity now starting to come on-stream can only help in that regard.

The Cool Pool has now launched. It has been well received by the market and is doing well. We are seeing the lion's share of the opportunities that are out there are being secured by The Pool.

Very pleasing to have Golar Tundra fixed. Very proud to be the first FSRU to go into service in Sub-Saharan Africa. We were the first into South America; we were the first into Asia. We were the first into the Middle East, and now preserving our record, now first into Sub-Saharan Africa.

The Brazilian project, power project continues to make good progress. It's a multifaceted project; both the power station, the FSRU component, and the LNG supplier are all coming together with a target to make a decision in the first half of next year.

On GoFLNG, very pleased to report, after a long and focused journey, we now have taken FID on the Cameroon project. In many ways that decision has validated not only the technical approach that we are taking, but also the commercial approach. In a sense it has validated the story which we have been propagating now for some one to two years.

Good progress in Equatorial Guinea with Ophir and the Gandria project, remaining on schedule to take FID in 2016 and that's particularly interesting to see the strength of interest from the LNG buyers who have doubled up or more than doubled up to buy the LNG from that project.

We are working aggressively to employ the Gimi, our third FLNG vessel, but we recognize the tight schedule that we are working against. And then finally, but certainly not least in our thoughts, and as Brian has covered, the strong focus within the Company to carefully manage our cash and manage our liquidity position as we go forward.

So at that point I will stop the formal part of the presentation and we would be very happy to take questions. Thank you.

Fotis Giannakoulis, Morgan Stanley.

Hello, gentlemen, and congratulations for the progress with Hilli FLNG. I want to ask about the additional projects.

I think in the last call you talked about you are working on four opportunities that they can be prompt for 2018. I didn't hear you talking about any specific number in this call. You still see that working on projects for 2018. Can you give us a little bit more color on that?

Thanks, Fotis. Indeed in the last call we did mention four potential candidates to employ Gimi for a 2018 start-up. Three of those four projects are still alive and a potential candidate for 2018. The fourth project, whilst still potentially alive, has sort of slipped back in time and so is no longer realistically an opportunity for Gimi.

So all three of those projects are potentially there, but none of them are, I would say, at the point where we would confidently predict that we are going to close. In addition to that, there are some other opportunities that have come into our field which could be a 2018 start-up, but I think realistically I'd say we are -- we've lost one of those four candidates that we talked about on the last call.

Thank you, Gary. I want to ask about the Cameroon potential. You have made a reference on the EBITDA that could be earned for a third train. Where is this discussion standing at and how feasible is a third train within a short period of time and what will depend upon?

Okay. The ink is only just drying right now on the LNG SBA, and what we have said repeatedly is our focus was on getting the FID done before we then move on to look at how we might enhance the economics of the project.

The first thing to say is there is actually enough gas within the country of Cameroon probably to employ two vessels, albeit in slightly different parts of the country. There are various ways in which we can employ three vessels -- three trains on the vessel. We can do that by either running harder for shorter and then relocating the vessel, or assigning more gas from that geography to the vessel and then look to exploit other parts of the country separately.

All of that is subject to discussion and obviously not solely at Golar's discretion. It involves our partners, Perenco and SNH.

What is clear is that the interest by others who produce LNG within Cameroon is diminishing on the [advise] that the Gaz de France office in Cameroon is now closed, and so it's just a matter of how we best progress with our partners. But we do need to bring them or they need to bring us along with them.

And so, at this moment in time, we are happy to have got the first two trains put away. And as I say, once the ink is dry we will revisit how we take this forward.

Thank you, Gary. Does this also involve the possibility of a fourth train at some point or this unit it has a maximum capacity of three trains?

The vessel is built and fully capable of running at four trains, so the step-up from two to three trains requires zero incremental capital from Golar. And, indeed, the step from three to four trains would require no, or little, any capital input from Golar. There would be some capital involved on behalf of our partners, Perenco and SNH, in securing that fourth train, but the third train could essentially be achieved by just running harder on the reserves that are within the field.

So all of these need to be put together in some economic analysis and decision-making framework and that's where I hope this discussion goes.

But I understand that there can be a potential that are reserves sufficient that Perenco and SNH can get access for a fourth train as well at some time in the future.

Sure. Those reserves -- and as I tried to include in my previous answer, there are reserves in the other part of the country as well, which would simply require relocation of the vessel. There are several ways to approach this, but to date we've not engaged in those discussions.

I want to go on some recent newspaper articles and some statements by officials from Iran. I'm not trying to find out if you can confirm or not -- obviously this is not possible -- but I want to understand what is the potential of the Iranian gas. These articles they were talking about one FLNG; how many FLNGs can Iran give contracts for?

How -- what kind of a process and what kind of steps they need to be taken in terms of sanctions lifting and securities that any potential FLNG provider will need to have?

I'm going to be a little bit careful here, Fotis. Iran sits on the largest single gas accumulation in the world, so in time they have the capacity to employ as many FLNG vessels as we dare to dream. My understanding is, in terms of produced gas of a suitable quality for what we do, there is potentially capacity for maybe one or two of our vessels pumped. Obviously, in time that number could grow.

In terms of sanctions, I'm not the right person to give advice. I think there are lawyers much better qualified to advise on the sanction process.

Thank you, Gary. I wanted to turn a little bit on your liquidity and also if you can clarify us about what these performance guarantees are for and the $300 million. I think that -- I understand that Brian said that out of this $305 million a part of it will be lifted at some point and can be retaken back. Can you explain how does this work and what is the amount that you can take back?

Sure. This $400 million is a guarantee that Golar LNG Limited -- Golar Hilli Corporation, I should say, has given in respect of entering into the Cameroon contracts. Similarly, Perenco and SNH in aggregate have given us a guarantee for $500 million also.

I think, in essence, this whole thing is more of a show of commitment to each parties. We have done this, but in order to be able to cement such a relationship we had to show a certain amount of commitment and we have done that. In order for us to have given that $400 million guarantee, the bank requested us to cash back a portion of that; in this case $305 million.

Having said that, and as mentioned in the presentation, a proportion of that $305 million will come back to Golar as the bank, who is standing in front of the guarantee, progressed with this indication. They are now in the midst of syndicating the amount. We understand a breakdown of those indications, but as far as timing is concerned, whilst we expect some of the amounts to come through shortly, a portion of this indication may take a little longer.

So whilst we have posted $305 million as a cash collateral in respect of this guarantee, we soon should be receiving some of that back into our bank account.

And, Brian, can you clarify the cancellation fee that you have for the second and third FLNG; how -- when it expires? Can continue having it until you get the commercial contract for this unit?

Sure. We have committed $50 million on both Hilli -- sorry, on both Gimi and Gandria, and there isn't really any material expenditures we have in front of us to enable us to still follow the timeline of delivering Gimi in 2018 and Gandria in 2019. Those expenditures that we have now done allows us to maintain those timetables for those vessels.

Our strategy is that, as Gary mentioned earlier, there are certain commercial discussions in respect of the Gimi and certainly, as far as the Ophir opportunity is concerned, that is starting to mature. Our aim is to be able to put financing in place on both of those vessels prior to putting a lot of material expenditures on to Golar such that we continue to protect Golar's liquidity position.

As far as the expiry is concerned, I think for the Gandria we have to declare the end of 2016, and similarly, Gimi, the discussion there now that will allow us to at least keep the expenditures in check, but maintain the timetable whilst maintaining the ability to declare that project until the end of June 2016.

Thank you, Brian. One last question and it has to do with the Tundra and the MLP in general. Obviously, the MLP valuations have been quite disappointing across the entire MLP sector.

How do you envision this drop down and how necessary is this drop down for your liquidity? And if there are any thoughts of a potential using this excess liquidity that we currently have to buy back some shares from the MLP or even making an exchange offer for the MLP given the steep discount, the valuation of GMLP?

Certainly, it was good to put the Tundra away and soon after -- in fact just before it was delivered. As far as the drop down is concerned, that's a process we still have to go through. And as you can imagine, Fotis, the conflicts committee that governs these kind of transactions has to go through a process in finding what the middle ground is in respect of the pricing.

But you can potentially point towards sort of an Eskimo valuation, not necessarily saying that's what it will be, but certainly whilst we see the MLP space as being very challenging at the moment, I think in the previous presentation and I think this Golar LNG Partners press release today suggests that the Company has capacity to be able to buy the vessel, buy the Tundra on potential and an all-debt basis. That's, of course, assuming that the equity market and other potential financing available to it doesn't improve over time.

Of course, it's an important factor to be able to drop down the vessel; not only for Golar LNG Partners in order to demonstrate its ability to be able to grow, but for Golar LNG Limited as well, because one thing that we do want to maintain is our growth trajectory. It allows us to continue building up our FSRU franchise, as well as continuing the progression on Gimi and Gandria commercial discussions.

Thank you very much, Brian. Thank you, Gary.

Ben Nolan, Stifel.

Thanks. I will try to keep this brief, just a couple questions.

First, on the Ophir potential contract there, I noticed that in the release and in the presentation there wasn't any mention of the tolling -- the preliminary tolling rate that you guys had talked about previously. Is that something that you guys would consider or are considering maybe restructuring similar to the Perenco deal where you have a floating toll rather than a fixed rate?

Yes, Ben, so that discussion is in play right now. What Ophir have in front of them is a number of offers from prospective buyers of the LNG. We have heads of terms with Ophir on the basis of a fixed toll, but it does contemplate shifting to a variable toll along the lines that we've done in Cameroon.

So there's a sort of tri part to our discussion where we are trying to get these two contracts aligned, and that's what will be taking place over the next months. I can't predict which way it will go, but there is the potential for us to move off a fixed toll, something toward what we've done in Cameroon, so long as it makes sense for Golar.

Okay, that's helpful. And then my second question relates just to the market dynamic for the vessels.

You talked about how the supply-and-demand equation is tightening a little bit. Just curious how -- if maybe it's possible to quantify, or at least generally speak to, how close you are or how close you think the market might be to an equilibrium where you may actually be able to get some pricing power? Would you envision that to be something that we could see maybe in the first half of next year or are we still a little bit too far away to put some timeframe on it?

Challenging to predict forward. We are seeing right now in the Atlantic prices already starting to affirm, so there's a lot of vessels sitting in and around Singapore in anticipation of the Australian projects coming on stream. A consequence of that is a tightening in the Atlantic and we are seeing some price signals in the Atlantic already.

Once that happens -- when will that happen globally? I guess I'm an optimist; I would like to think it would happen within the first half of next year for sure. And based on the volumes coming on stream, it should happen in the first half of next year.

Okay, very good. I will turn it over and let somebody else have a chance.

Jon Chappell, Evercore ISI.

Thank you, good afternoon. Just a couple of clarifications from some stuff in the press release. First, on the dividend policy.

I was trying to read into this one sentence about may consider reducing in the coming six quarters. Does that mean we should expect a reduced dividend starting in the next quarter until Hilli creates first gas, or does it mean that at some point within the next six quarters the actual payout policy may be reconsidered?

I think it's more the latter. Certainly one thing that we have always maintained is, look, guys, we're going to try and pay dividends but to some extent it's going to be dependent on: one, the commercial opportunities that we have in front of us, and also other how strong cash flows from operations can continue to maintain such dividends. We were able to do that throughout 2015, but what we don't want to be doing is misleading investors to say that we're going to continue paying dividends at the same level between now and when the Hilli comes online.

We are seeing, as Gary mentioned earlier just now, we are seeing sufficient and abundant opportunities as far as FSRUs and certainly when FLNGs are concerned. I think what the Board wants to be able to do is keep the flexibility to be able to reduce dividends when it sees fit in order that those opportunities don't run away from us.

Understood, just wanted the clarification on that. Another area of clarification a little bit is you mentioned in the release that you decided and agreed to delay the effective dates for the Gandria and the Gimi. However, it's still states here that you would be on schedule for 2018 to 2019 gas.

How do those two comments match up? What you doing differently to effectively delay moving forward with this, but yet still have the potential to meet the original targets?

What we have with (inaudible) is a termed up contract for the conversion of both the Gimi and the Gandria and the commitment toward the long-lead items that protect the delivery dates that we have referred to. What we had originally contemplated was, once the Hilli was fully executed and we had access to the financing on Hilli that we would then straightaway launch into the next conversion ahead of a contract in much the same way as we did with Hilli.

What we have decided is just to slow up a little. We still have the ability to hit the 2018 and 2019 start-up dates for the two vessels, but we don't yet actually have to start the physical work in the shipyard at the moment and we think in this environment it's probably prudent of us to get further progressed on both the financing for the second and third project and also the employment of the second and third project before we instruct the yard to actually take delivery of the Gimi and then start preparing her for conversion.

Okay, that makes sense. Then a third one; also you mentioned with the LNG fleet looking at doing things like unencumbered assets or releveraging credit facilities but also open to strategic transactions. Is that to be interpreted as that you may look to monetize some of those assets and maybe reuse that capital in the FSRU business, which you sound far more optimistic about, or in the FLNG business, both of which generate much stronger returns?

There is certainly a possibility of that. I think we're looking at all options. We have seen indicative terms on all options and certainly the Company hasn't made up its mind yet on how best to do it.

I think one thing that the Company wants to be able to do is continue to have certain ownership on the LNG carriers, but at the same time the question remains, okay, well, how many do we need? I think we can be very flexible there. And certainly what we're trying to manage is that we want to communicate to investors that there are certain opportunities in front of us that allows us to release certain equity from these vessels, but yet that's not yet decided. But we are giving heads-up of where those equity -- the ways that financing transactions would release such equity.

Okay, understood. Just one last clarification and then I will turn it over.

Brian, on that $305 million, how is that going to flow through the financial statements I guess for the fourth quarter? I guess this is post September 30. Is there a cash outflow of $305 million that at some point you're going to get back, or is this just pledging some type of balance sheet collateral?

No, it will be a deposit account. It's a cash outflow to the extent that we put into the bank account, but that bank account in ours. So it's securing $400 million of guarantee that we have put out.

We will start seeing that $305 million being reduced. In other words, it's a reclassification in Golar LNG's bank account -- Golar LNG's balance sheet from sort of restricted cash to cash and cash equivalents. So it remains within Golar.

Got it. All right, understood. Thank you, Brian. Thanks, Gary.

Erik Stavseth, Arctic Securities.

A couple of quick ones from me. First of all, have you drawn down on the $700 million facility on Hilli now?

Not yet, but one of the last puzzles of that was the FID of the project and so we're just gearing up to drawdown now.

All right. And also could you tell me -- to channel on Jon's question on the unencumbered assets, do you have any assets that are unencumbered today? Also, secondly, if you were to leverage up instead of strategic transactions or selling the energy carriers, how much do you think you could leverage up on the LNG (inaudible)?

On the first point, in respect to the unencumbered assets, we mentioned that we are taking repossession -- we are repossessing the Golar Viking, which is now called the Salju. So that comes back to Golar and a result of that we will finance that vessel and release up to $62.5 million.

In respect of the other assets, so the interest as far as releveraging is concerned, will allow us to releverage up anywhere between 70% to 85% of the value of the vessel. Hence, the range of equity release that we mentioned in the presentation.

Right. And then a little bit on to the market. We are seeing that there is still Australian gas coming onto the market and the vast majority is fixed for Asian clients; however, the Asian clients may not need that gas at the moment and there's been talks about giving that gas to Europe. Is there any destination flexibility on the Australian gas, or does it have to go Australia-Asia and then potentially Asia-Europe?

I'm not privy to that other than that we have seen certainly early cargoes already head from Australia to Egypt and we have seen reloads out of China heading west, so that would suggest that either directly or indirectly it's perfectly possible for those cargoes to go west. Of course we would prefer the latter option where the cargo gets shipped twice, but nonetheless we are starting to see signs of that happening.

Right. And then the last question. On the Ophir capital market day they indicate the tolling fee on the (inaudible) project which they said we haven't showed you this before, Gary, but they were talking about $2.80 to $2.90 per MMBTU. Do you have any background for how they arrived at that number?

It's all part of the negotiation, I would say. They have a tolling number in the binding heads of terms, which we executed with Ophir earlier in the year, and they are making some assumptions as to where we might move to. But at this point in time there is no agreement. It's subject to a discussion.

All right, thanks.

Ken Hoexter, Bank of America.

Great, good morning. Thanks and congrats on the Gazprom announcement yesterday. When do you have to write-off for the 2008 delivery the Gimi? Or can you develop the two vessels at the same time if it pushes into 2019?

Just to make sure I understand, are you saying when do we have to quit pursuing that opportunity?

Yes, Gary, because you had sounded like you had said before that time was running out in order to still meet those deadlines. So I just want to understand, is there a cutoff point where if you don't have those agreements or financings or heads of agreement in place, that you then have to either have two going at the same time or you have to skip 2018 and go after the Gandria?

The thing that we are sensitive to is not actually being in the position of commissioning two vessels at the same time. We believe we have sufficient bandwidth within the Company to be simultaneously managing conversions, but what we wouldn't want to be is in the position where we are trying to oversee the start up of two vessels at the same time. And that is, for the purpose of this discussion, a six-month window where we wouldn't want to be overlapping vessels.

And then the other variable in this equation is exactly when is it that Ophir will start up. At the moment we have a six-month nominated delivery window and we're kind of hopeful on the basis of the progress we've been making recently that we might come in toward the front end of that window. If you like, early 2019.

We need an opportunity that allows us to start up in the second half of 2018, failing which we would elect to move that opportunity to the second half of 2019. And I think we need to be a lot more confident than we are right now of that opportunity by the end of Q1 next year. So if come end of Q1 next year we're not well into the finalization of discussions, and assuming that Ophir is holding to schedule or even improving as they seem to be doing, then we are more likely to push the Gimi to deliver after Gandria, rather than hang on to the opportunity of delivering it prior to Gandria.

Okay. Thanks for that, Gary. And then going back to Brian, you were talking about the levering up of the vessels. I just want to understand is that for the cash that you are doing on this in hold for the guarantee out and back. Is that what you are levering up for or is there another reason you are talking about the increased availability of levering up the vessels?

It's not for that, Ken. It's really basically -- as Gary mentioned, what we see in front of us is quite a buoyant opportunity as far as FSRUs are concerned and so we are taking this opportunity to try and lever up some of the -- well, six of the vessels really in order to free up the equity.

These vessels are, if you want, sort of low levered now because the initial debt that were put in these vessels have a very steep amortization. And so, as a result, we can now start levering them upward or at least refinancing them to enable us to release some of the equity. It's not for this security that we've talked about; it's for future opportunities we see in front of us.

Perfect, thanks for that. Then, similarly on your cash discussion on the Brazil project, is there additional cash out of hand for that project at investment?

No, not immediately, Ken. I think it's something -- essentially the group; not just ourselves, but the entire project have to look at the cash situation. There is a cash, if you want; a liquidity plan for that project already in terms of financing it.

There will be at some point a sort of injection of investment, but only to the extent that we take the 25% opportunity there. If it's just FSRU, then all we're doing is really just financing the construction progress of the vessel in Korea, but that's not in the immediate future.

Okay. And then I just want to understand the Gazprom agreement just a little bit here. Do sanctions against Russia or anything else through this -- kind of as we move into the larger global war, is there a potential impact this project in terms of the sale, the Gazprom commitment here? Or as that gets committed now that is a financial agreement?

I guess what I'm asking is does that matter or are they fixed with their $500 million -- or whatever it was, $400 million or $500 million contribution, do they put the cash upfront similarly to what you are putting in reserve? Do they have to put the cash up in reserves?

Let me deal with the first part of the question first. There are no conditions attached to the sale of LNG from the project, so to all intents and purposes the LNG is sold unconditionally. And my understanding is there's no impact of sanctions on that contract, although as I said to Fotis earlier, I'm not the right guy to advise on sanctions more generally.

But our understanding is, and the commitment toward the project certainly is, that that LNG is sold unconditionally and there's no hint of any issue around sanctions involving Russia. So that's in relation to the first part of your question.

In terms of the security that Perenco and SNH had to put up toward Golar, how they collateralize their contribution is really a matter to them. So we are not privy to that other than we have the same reciprocal guarantee by Perenco and SNH towards Golar Hilli as Golar Hilli has towards them. The two arrangements are reciprocal and, in all respects, identical.

I don't know if, Brian, you want to add anything to that.

How Perenco -- we each have to give each other a form of a bank guarantee and the way we have done it is partly cash collateral that amount. We're not privy to how Perenco and SNH have done their portion, because ultimately what we are interested in is that bank guarantee that is given to us and we're the beneficiary of it.

Yes. And then lastly, Gary, when you mentioned earlier that the 40 to 45 vessel overcapacity, I'm talking now about the current LNG trading market, were you talking about after the new yards that are coming online in Australia and US that you discussed?

Or is that current right now, and given what is coming online you'd expect part of that at least to be absorbed this next quarter? Just trying to understand your comments on the state of the market currently.

For the last quarter or probably two quarters we had, plus or minus, about 40 LNG carriers more than the market really needed. I think going forward there are two things going on. One is all the Australian and then US Gulf Coast capacity starting up, but you have also got the effects of projects like Angola, where we understand Chevron are getting ready to restart that project and there's some, I forget now, six or seven vessels that they have in the spot market which really shouldn't be there.

And then, finally, we're just continuing to see all the vessels scrapping or pointing home waiting for redeployment. So if you add all those effects together, then that 40 starts to diminish reasonably quickly.

Right, so I got that. You're talking about Angola there and then older vessels scrapped, but when you were mentioning the 40, plus or minus, that is before all these are starting up?

Correct. Before starting up, before Angola comes back.

Back online. Okay, perfect. Thank you so much for the time and insights. Appreciate it.

Gregory Lewis, Credit Suisse.

Thank you and good afternoon. Gary, I just wanted to touch a little bit more on the comments that you made about motivated owners of LNG looking to accelerate FSRU projects. Historically, it looks like you were willing to have one speculative FSRU at a time.

Just given potentially what you are seeing in the markets here, could we see Golar potentially go a little bit farther out on the risk curve and potentially look to take more uncontracted FSRUs into the portfolio, newbuilds?

For sure, there's been sort of a change in the market for FSRUs. Whereas previously there were always potential opponent opportunities for FSRUs but it was always a struggle to marry up those opportunities with LNG supply, the world we find ourselves in now is where there's plentiful supply and people are now trying to work with us and others to open up new markets. So the dynamic has completely reversed.

We have had a strategy for some time now of trying to ensure that we always have one uncommitted FSRU available within our portfolio, and that's the position we find ourselves in right now with Tundra now put away. I am reasonably optimistic that we will find a home for the next newbuild within a relatively short period the time.

We may well be in the position where we have to commit to another vessel, but I'm not sure at this moment in time. And given the discussion we've had about cash and liquidity, that we want to put ourselves in a position where we would have two FSRUs without reasonably strong indication we could put them away.

We, for sure, have some appetite for risk, but we need to be a little bit prudent and we need to be careful that we don't in any way compromise our ability to deliver on the FLNG story as well.

Okay, great. And then just following up with that in terms of maintaining flexibility and execution and delivery of the Ophir contract. I think there were reports in the last couple weeks that Ophir might be potentially -- is potentially entering the world of M&A and could potentially be acquired.

Clearly one would imagine, if someone was going to acquire Ophir, doing it probably to get their hands on this LNG project. But in just thinking about that, it sounds like we have some deadlines here. Their flexibility to extend and if the conversion doesn't have to happen right away is there -- are the banks -- the yard, I imagine is. Is their ability to extend these delivery windows, if need be, giving for something like a change of control on the asset? And the asset I mean the gas.

I think the real issue in relation to that opportunity is, in fact, the position of the government in Equatorial Guinea. They are quite keen that this project maintain schedule and won't be inclined at all to entertain any delay in schedule.

I think Ophir or any other participant would run the risk of not returning onto that license if they tried to delay by any reasonable amount without good explanation. So the relationships with the government at the moment are very solid and very strong. Clearly it's in the government's interests that this project proceed and I think that is the corner from where the pressure will come if there's any suggestion on delay, not the banks.

Okay, great, guys. Thank you very much for the time and let's keep getting some dark blue on that portfolio chart.

(Operator Instructions) Christian Wetherbee, Citigroup.

Thanks, good afternoon. Wanted to ask specifically what type of agreement you need with Ophir to get the Gandria going. I guess I just want to make sure I understand what is the benchmark we should be watching for in terms of sort of committing to that, whether it be what the banks need to commit financing. What's that benchmark, what's that next news point that we need to be focused on for that deal specifically?

So there are a number of parallel work streams happening on the Ophir project and just to quickly run through them, both Ophir and Golar are doing engineering studies or [feed] studies in respect of their own contribution towards the project and both those feed studies are on schedule to conclude within Q1.

The sale of the LNG from the project, and we've already talked a little bit about that where we now have HLAs in place and it is the process of negotiation which will lead to an eventual selection of the LNG buyer or buyers from the project, which will be wrapped up in a challenging SBA. Which, again, is scheduling conclusion within Q1 of next year.

There's a thing in Cameroon which we call the gas convention; in Equatorial Guinea -- the umbrella agreement it's called in Equatorial Guinea. It's effectively the same document. That is currently being negotiated between Golar, Ophir, and the government and making good progress.

Then, finally, Brian is now progressing on the financing of our contribution towards the project and, similarly, Ophir are putting their own financing package in place. All of those activities are scheduled to coincide around about the end of Q1, at which point we should be in a position to move towards FID. As we have learned with Cameroon that's not an overnight process, but in itself is a process that takes a little bit of time.

My belief is we should be in a fairly good position to call this project end of Q1, early Q2 next year, assuming we don't have any unforeseen delays on the trajectory where we are currently traveling. So in Q1, early Q2 we should be -- I think we are already talking quite confidently about this project, but we should be much more solid by then and be able to give you the signals that perhaps you are looking for.

Okay. So for both perspective FLNGs you have that timing in there in answer to the previous question about the Gimi. You have both of that 1Q 2016 you will have a better sense as for how the next step in both processes I guess play out.

Yes, by end of 1Q 2016 we will have very good indications of what the capital costs are for both Golar and Ophir. We will have locked down both the LNG purchase agreement and our corresponding tolling agreement. We will have cleared all the regulatory and fiscal regimes and we will both have our financing packages in place. So we will have, at that time, all the information we need to make a clear decision and then it's just the process of executing that decision.

Okay, that's helpful. Two other quick follow-up questions. Just utilization rates on the LNG carriers in the fourth quarter, I don't know if you gave us an indication there. I think 43% was the third-quarter number. Has it moved higher from here?

Yes, we would predict so. Not -- we had I think it was 33% to 43% step up between Q2 and Q3 and I guess we are continuing on that sort of trajectory.

I'm sorry, so higher in the fourth quarter is what you said or around the third-quarter levels?

No, it will be higher. I think it's continuing to increase.

All right, that's helpful. Then just finally, just on the distribution, on the dividends specifically. Obviously maintaining some stream of liquidity back to the Company by potentially reducing that; I understand that.

Would you go to a zero at any point over the course of the next several quarters? Does that seem like it makes sense, or would it just be a reduction but a maintenance of the dividend just at a lower level? Just trying to get an understanding of how you guys think about that.

Sure, Christian. I think -- if you read our press release, I think the tone from the Board of Directors is that we continue to see dividends as a fairly important return to Golar shareholders, which is why the way it is worded suggests more of a reduction rather than a complete obliteration.

There is a plan, as mentioned earlier. It's not set in stone as to when that will happen, but we would like to manage investors' expectations that it could happen between now and when the Hilli becomes operational in order that to be able to maintain liquidity to explore these opportunities. But that any movement is not to remove dividends, but if anything, it's just to reduce it.

Okay, that's very helpful. Thank you very much for the time. I appreciate it.

Andy Gupta, HITE Hedge.

Just a few questions to try and fill in some of the questions that have been asked before. On slide 9, just to understand, here you lay out your liquidity; how does this get impacted by the $305 million of cash collateral? Is that part of this restricted cash or is the $305 million going to be new restricted cash, following the slide?

The $305 million, or whatever level it may be by the time we get to the end of December, will be a new restricted cash. The $305 million is day one positioned. There is an expectation that a portion of that will already have come back to Golar by the time we hit the end of -- before the end of December.

Understood. And when does this current restricted cash become unrestricted? There's about $100 million here, $110 million here.

That's right. I think this -- the vast majority of the restricted cash we currently have in our balance sheet points towards the Company's investment in the total return swap. So if you look back at the end of June when share price was around $49, $46.80, the restricted cash was actually very small.

Then, of course, as a result of the share price falling down at the end of September to $27.89, then the restricted cash has increased. And the reason for that is any negative mark-to-market movement in respect to the [CRS]; some of that mark-to-market movement has got to be cash collateralized. Not all of it, but some of it has got to be cash collateralized.

If we fast-forward to the end of December and there is an improvement in share price from the $27.89 level, which was at the end of September, then the restricted cash will have reduced already. Unfortunately, it's not something that -- it's market-related basically is what I'm saying, Andy.

I understand, understand. And of the $400 million guaranteed, I understand $305 million that could come down; what about the balance? What form is the balance taking? Is that against a revolver; is that a letter of credit against a revolver? (multiple speakers)

Basically that's the risk that the bank is taking on Golar.

Okay, that's pretty good. One of the things on the dividend policy; I understand there's been commentary about it here, but your liquidity looks fairly good and Hilli does not require any more equity, so why you would consider potentially reducing the dividend?

Well, I guess one of the questions that was asked earlier is what do we, Golar, take open positions on one more FSRU, for example? It's those kind of eventualities that we try to offset really.

Certainly, at the same time whilst we expect to be able to put into place financings in respect of Gimi and Gandria when we take full positions on those, those will not be 100% financed. So there will be certain amount of cash requirement as Golar initiates those projects.

But obviously what we want to be able to do is we want to be able to limit that cash requirement. That's why we are looking to finance those vessels now in order that when we take FID Q1 2016 that we have commitment for financing those projects already. But it's not going to be 100% and it's that gap that we want to be able to nullify.

Do you have a sense -- it's probably too preliminary right now to try and get a sense for quantifying that gap, right?

Sort of. If you look at the financing we've done under Hilli, we were able to finance 80% of the all-in conversion cost of the Hilli. Certainly that's something that we would aim for.

I guess the only difference with the Hilli is that all of the equity that was injected into that project came at the very front, whereas what we're trying to achieve here for Gimi and Gandria is that that equity injection happens on a pro rata basis. So it's not going to be as high requirements as the Hilli, but there is always going to be certain amount of requirement.

And are you guys giving any guidance on potential cost? My guess would be that the cost for these two vessels will probably be lower than Hilli now.

Yes, that's correct. What we're seeing, and I think if you look at the (inaudible) data themselves, we are seeing reductions in the capital costs for vessels two and three. Not huge, but it's certainly trending in the direction and that's I guess a sign of as we do each vessel we learn. And it also reflects the state of the offshore market at the moment and the ability to get good pricing.

Understood. A couple quick ones. In terms of refinancing the LNG carriers, I understand you said because you see opportunities for the FSRU space, but is there any risk that there could be -- you could potentially miss debt service as long as these ships remain merchant?

No, the refinancing then will actually help us because, as mentioned earlier, one of the things we want to try and avoid is to have a debt profile, if you want, that is fairly steep. These vessels are currently in what we believe to be fairly steep debt profile. So were we to refinance these, not only would we look to increase the loan-to-value and therefore release some equity, but also stretch the profile such that we are paying over the -- the loan over a longer period time than they currently are.

One last question for me. In the drop down, I understand it can be done all debt-financed at the MLP. Would there be any willingness to take equity back? Probably not, right?

I guess to some extent that's really a decision that still needs to be made. All we're looking at at the moment is what is the capability of Golar LNG Partners being able to take the Tundra. We pointed towards that simply because we gather that the MLP currently has sufficient capacity to be able to do it, and whether or not it uses that as its main source of funding for the drop down remains to be seen.

Great. Well, I appreciate you taking my questions.

(Operator Instructions) Sunil Sibal, Seaport Global Securities.

Good afternoon, guys, and thanks for taking my question. Most of my questions have actually already been addressed, but I was just curious if you could talk about the terms on the contracts by Gazprom on the Perenco project, vis-a-vis how your contract standing out is. For example, I guess you have eight years of contract for half the capacity of 1.2 (inaudible). How does that compare with the offtake agreements that Gazprom has signed so far?

So I think the first thing to say is we are not party to the LNG SBA. So the LNG SBA or the sale of the LNG, if you like, is between the Perenco, SNH, and Gazprom.

We see that LNG SBA mirrored in our tolling agreement and through the tolling agreement we get some insight as to what the terms of the LNG SBA might be. But because we're not party to it, I think it's inappropriate for me to speculate on what it might look like.

Okay, fair enough. And then on your Cool Pool vessels, I was just curious; seems like you've been realizing some OpEx savings there. Based on what you did in the third quarter, is there still a lot of run room for you guys to reduce OpEx? Have you realized most of the OpEx savings as of now?

So The Cool Pool didn't really kick off until 1 October, so in fact the savings that you see in the results that we presented today really don't include any real contribution from The Pool other than some anticipation of what The Pool might do. So I think the true impact of The Pool and the results won't be visible until we report out in a quarter's time.

Okay, got it. Basically then we are looking at, for the fourth quarter, improving utilization as well as some reduction in OpEx also. Is that fair?

Yes, we'd like to see continuing improvement in positioning costs as The Pool takes effect.

Okay, that's helpful and that's all I had. Thanks, guys, and congrats on a good quarter.

Thank you. There are no currently no further questions in the queue.

In which case we would thank everyone for dialing in and we very much look forward to sharing with you the story one quarter from now. Thank you very much and have a good day.

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