Golar LNG Ltd (GLNG) 2016 Q4 法說會逐字稿

Good day and welcome to the Golar LNG Limited Q4 2016 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Oscar Spieler. Please go ahead, sir.

Hello everybody, and welcome to the fourth quarter 2016 results presentation. Joining me is our CFO, Brian Tienzo. As you have seen, fourth quarter has been a very busy quarter for us and this has continued into the New Year and Q1.

Going to slide number three, the net income has improved compared to Q3 and we ended up with a loss of $13.7 million, while EBITDA and operating loss in Q4 was $15.9 million and $32.7 million respectively. We have over the years discussed [management structures] with Ophir and we have [now firmly agreed] on form of JV between Ophir and OneLNG to commonly develop the Fortuna reserve. This means that we are aligned throughout the project with our partners. They are made substantial progress with government and filed the term-sheet with the Chinese bank.

Golar Power has taken FID on the Sergipe project and signed a 25-year FSRU agreement with the project. In addition to this, they have secured a long-term sale and purchase agreement for supply of LNG. The GMLP exchanged Golar's existing IDRs for additional common units and General Partner units and reset the level at which the IDRs accrued dividends. In Q4, [we met some uncertainty] with an equity unsecured a $150 million margin loan to deal with the $250 million convertible bond due in March 2017. As you all maybe aware, we issued $402.5 million five-year unsecured convertible bonda at [2.75%] with a capped call giving an effective conversion price of $48.86 recently.

Going over to slide number four, the Golar Group of Companies cover all levels of the LNG chain. They are -- we are able to develop project producing gas from the well and (inaudible) on our FLNGs shipping it, [regassing] it on our FSRUs and producing power from our own gas-fired power station. By teaming up with Schlumberger, we get the best reservoir wellbore technology and production management [capabilities industry] country-wide. Golar is one of the leading companies developing (inaudible) solutions, such as FLNGs and FSRUs Golar Power and its partner like Stonepeak and utilizing General Electric gives the best expertise to develop gas fired power projects. This setup gives us a lot of credibility in the market, both from a technical, operational point of view and on sales point of view. Together with our partners and through the GMLP. This was in a prime position when it comes to financing. This is large product, which is one of the major obstacles in order to take advantage.

So, giving it over to Brian, he will take you through the financials for Q4.

Thank you, Oscar. So, (inaudible) with the highlights for the quarter is, that we have reduced our loss -- from an EBITDA loss of $15.8 million compared to an EBITDA loss of $11.3 million in Q3. The net revenue, net of voyage expenses for 4Q16 was [approximately] $10.5 million from net revenues in 3Q of $10.6 million. The main decrease is, it is attributed to weaker performance in the overall fleet from the Cool Pool. However, that was slightly mitigated by certain amounts received from WAGL for the Tundra during the quarter. Utilization rates for the Golar fleet increased during the quarter, slightly to 39% from 37% in 3Q. But TCE rates decreased from $10,893 per day from $13,852 per day. Also direct operating cost of the ships decreased to $11.4 million from last quarter's $12.1 million. The improvement is mainly as a result of the settlement of an insurance claim for the Golar Viking relating to damage of diesel generators back in 2014. This means that in the quarter, the operating costs improved for the fleet to [$7,837] per day from [$8,446] per day in 3Q. This number of course includes vessels and [layer]. By far the biggest movement in the quarter is administration costs, which was at $14.9 million when compared to $9.8 million in 3Q. This is largely due to increase in share options charge following Awards in November. And in 3Q, we also saw credits against share option charge from forfeiture of certain rules. In addition to that, we saw increase in project cost as a result of higher project development also during the quarter.

Turning over to page 6 for the balance sheet. Golar's liquidity position improved from 3Q of $138 million to 4Q of $224 million. This is a result of the successful equity offering the Company did in November, when we raised $170 million to -- finances convertible bond that matures next month. The equity Golar have purchased [$30 million] of the bond at par value.

Also during 4Q, cash improved further due to reduction in the cash required to secure the Hilli Letter of Credit. And as Oscar already mentioned, the company's liquidity position will further improve following successful convertible bond offering this month. We were able to raise [$360 million] net cash of the $402.5 million, which included the [Greenfield], but after the cost of entering into a capped call option. The effect of the capped call is mitigate the dilutive effect of the bonds when they eventually mature, but also reflects the Board's positive outlook on Golar. Having included under convertible bond, the company is now able to meet this initial equity obligations for both the Sergipe and the Fortuna projects as well as meet this liquidity needs with shipping operations. The other highlighted numbers there in the table simply shows the progress being made under conversion of Hilli. And again, just highlighting the development notes relating to the numbers on long-term debt and short-term debt as they include numbers of the little companies rather than numbers that Golar actually owns.

That concludes the discussion on the numbers. I'll now turn the presentation back to Oscar for business update.

Thank you. Let's start from shipping on slide number seven. The order book is around 104 vessels when it comes to LNG Carriers and with an increased production going forward, the utilization of the well LNG should increase as you can see on the upper left graph on the slide. However, the material portion of this -- of the new volumes comes in -- at the end of 2017. The activity level so far in Q1 has been approximately the same as last year. We see an increased activity in (inaudible) charters trying to secure time charters, indicating that both oil companies and traders have the same (inaudible) the market will tighten. We, Golar are in advanced discussions with several charters for our vessels in this respect. The time charter equivalent for 4Q as Brian mentioned was $11,000 per day with a utilization of 39%. So far in Q1, we have fixed 50% of our carriers into Q2 and the rates for Q1 will be higher than Q4 and Q3.

Moving over to slide number eight, looking at the FSRU market, as you all know, the FSRU concept is well-accepted and the preferred solution for mine the projects due to its flexibility, time for construction and cost. 70% to 80% of the new import terminals have chosen FSRU solution since 2007. With increased availability of LNG and low LNG prices to other energy sources, the demand for FSRU is increasing. We believe that this market will be strong going forward and that we will see a more diversified demand for FSRU when it comes to [signs], send out requirements, and the way the FSRU provider participate on the import projects. The market of our FSRU is undertaken by Golar Power and they are now working on a number of product in South America, Africa and (inaudible). We will not be able to comment on specific project they are working on -- time. Golar Power is making very good progress on the Sergipe projects. I have signed and the Sergipe Power projects have finally -- from contract to build and operate with Sergipe Power plant with General Electric. We have a sign up a flexible and supply agreement with Exxon and the Sergipe projects have also sign up the 25-year FSRU under [the number] permitting and financing our ongoing according to plan.

In addition, Golar Power has ordered long-lead items for its first FSRU conversions. And FSRU will be available mid-2018. I'm afraid I do not have [avenues] on Tundra. And the Tundra contract with WAGL is a major concern for us. We are in a positive dialog with WAGL on trying to find solution and we are exploring different options. In a parallel, we are also continuing to protect our contractual and legal rights.

Moving over to slide number 9. Coming to our major projects. Hilli will be renamed Hilli Episeyo. And we will have a renaming ceremony with the government of Cameroon around middle of the year. We are making good progress on Hilli and we are on schedule to start of pre-commissioning in Cameroon in end of September, 2017. Have still close to 4,000 people working on the project, daily with a night shift of around 400. It is a huge projects and we are now in the phase where we are getting the vessels to a mechanical complete. It is extremely important to get the individual differences to mechanically complete because only then we will be able to start the pre-commissioning and testing of the systems. We have started off the pre-commissioning of certain systems that we have lost some time in this respect lately.

However, we are still comfortable with [tendering] of notice of [revenues] at the end of September, in Cameroon. When it comes to cost, we are well below budgets and are confident that we will continue to be below at the project end and unless anything unforeseen happens. When it comes to the specific work on the Cameroon project in Cameroon, we are on track with permitting and mooring. Operational preparedness is on schedule and we do not see any major concerns there. Perenco is on track with their scope and it will be ready, we arrive with our vessel. Both SNH and Perenco are supporters of filling the remaining trains after we have completed (inaudible).

Moving over to slide number 10, the Hilli will generated a substantial free cash in the year after it is accepted. The first two trains will generate $130 million in annual EBITDA, we will release [$160 million] in net debt release and release $90 million from the Letter Of Credit with Perenco. If you then deduct the debt service, the Hilli will have a net cash release of $310 million. On the last slide, it says $390 million, so you just -- so you are aware of it, it should read $310 million. Hilli has an addition to potential -- the potential to generate cash from the increased oil price about $60 of $130 million and in addition, around $70 million to $130 million for additional freight. Golar is also in discussions with GMLP regarding the drop down of parts of Hilli.

Moving into slide number 11, Fortuna product has made good progress and I believe we will -- we are able to take FID around middle of the year. In our experience, to put these agreement together takes a lot of time and effort, especially to get everybody aligned and comfortable and takes much longer than [we and you would be thought]. OneLNG and Ophir have signed a shareholder agreement where OneLNG will own 66.2% resulting that we are all aligned throughout the project. The total CapEx for the project is around $2 billion and the project is expected to generate around $560 million based on the (inaudible) price of $6 per million BTU.

In addition, we have signed a financing term-sheet with the Chinese banks and we have made good progress on the fiscal and regulatory framework with the government. The National Oil Company Equatorial Guinea have expressed interest in the midstream. Before the project can take FID, we need to get to the Umbrella Agreement signed and get the Presidential decree to get the agreement ratified. We need to execute the financing agreements including the due deal from the banks and finally get a few shareholder approval. In addition, we have strategic discussions with our partners with regard to offtake discussion -- how to do the offtake. We will shortly move Gandria to Keppel and start off some limited preoperational work for the vessel.

Moving on to slide 12, OneLNG [SNR] focusing on African gas based on our belief that West African gas is highly competitive. We believe that the typical cost for an FLNG, further including the upstream and midstream is in the region of [$2 billion] producing around [2.4 million] tonne per year with a FOB price of around $5.5, this gives around free cash flow of around $500 million per year, resulting in a payback period of four years. This type of economics are sufficient to take FID without offtake agreements in place and only make sure you have -- in Europe where the forward prices are around $6.5 delivered to Europe. OneLNG are working on a number of project, in West and East Africa, -- Golar, in addition also working on project out of the US Gulf.

Moving over to slide 13. Over the last six months, our finance people have been extremely -- and we have strengthened our financial position and should have sufficient cash to deliver Hilli, meet our share of our Golar Power's equity contribution to Sergipe project to fund the initial equity contribution on Fortuna project, in addition to support our LNG carriers. The GMLP are in discussion on our deal structure to dropdown parts of Hilli. The most important thing going forward for Golar is to complete Hilli. Get it accepted and start off the production on schedule, on budget. The Sergipe project is progressing well. Fortuna project are making progress, and we think we will make FID middle of the year. And with increased LNG production to LNG carry market will improve over time. Golar Power has a laser focus on [new Episeyo] business and Power business, and with LNG and with the new FLNG projects. We have the best partners we could -- and all believe that we are very well-positioned to take a major role in developing future FLNG and FSRU projects going forward.

Thank you very much. Operator, we can go into the Q&A session.

(Operator Instructions) Michael Webber, Wells Fargo.

Good morning, guys. How are you?

Hi, Mike, good thanks.

Good. Oscar, I'd wanted to start first on your comments -- around additional projects or looking for slightly larger projects, you're into the geographies there, I was just hoping you could maybe prioritize those for us in terms of where you think the next most likely project comes from, be it West Africa, East Africa or Southeast Asia, maybe kind of prioritize those and then maybe a bit of color around the types of fields you're looking at and how that FLNG technology would be used, there is early-stage production or there is wholesale solution?

I would say that we are -- as I said, we're working on these project and I think there are the probability that these project will happen if it's quite equally spread around the world. We are working on project in the Far East, which is potentially -- project and we have several projects in Africa, West Africa and East Africa. Personally I'm in the favor of the African projects, because of the price and so forth and it's very well to go with our execution model. On the other side, we sometimes have some more challenges when it comes political situation in different countries. So my favorite where I think it's more likely that we will take FID is most probably in West Africa. I will not go into details about different projects. When it comes to US, you are taking out the political risk, but of course, you have some other risk, which with your more destiny of your own -- control your own destiny more in US than in West Africa manually.

Right, and there is a cost of that too. I guess maybe looking at the kind of projects you're looking at with -- on your own and then with one, the OneLNG JV with Schlumberger. Can you maybe parse out that kind of work you would look at with them versus what you look at on your own, if there was a large fields with a major involved and you're looking at early stage production, is that something you would still likely do with the JV, or is that a scenario where it's more likely you would go on your own?

I think most projects there is -- if there is an upstream angle to it, we will definitely do that in the OneLNG and we will also -- potentially also do even if it's not an upstream angle on it with OneLNG, but that's not decided yet. Of course, if there are a few FLNG and there are nothing in there for our partner, it might not be a natural place to be. But that's a discussion we will need to have. And so how many come to when it comes to big projects, if there are oil majors involved, I think we will definitely like to have compulsory in there.

Okay. Just two more and I'll turn it over. Brian on Hilli and the potential investment from the Equatorial Guinea government. Give a sense on how larger stake they would want to take and what the timing of that would be, would that impacts the capped call associated with the JV, I'm assuming that does hit FID or would that be later?

That's for the Gandria not the Hilli, but in respect of the government, I mean, so, those discussions are ongoing at the moment right, so we can't really comment on values into the extent of shareholding and so on, but the interest is already communicated to us.

Okay. And then finally with the Tundra. I know it's a bit of a sensitive scenario, you requested a trade that earlier I guess on the spot market as the carrier, just any update as to whether you've actually be able to gain any employment for the Tundra? And then maybe how you think about either a drop-dead date for negotiations there and-or how you handle the worst-case scenario for that asset, given that it's already at the MLP level?

We are (inaudible) with WAGL when it comes to Tundra and we have tried to get them to release the vessel, but we have not been able to do that without compromising our contractual rights and legal rights, so we have decided not to do it. But we're still continuing, we have positive discussions with them and we believe that this project will happen over time, so we are continuing the discussions and of course, we can't continue it forever, but we will give it considering when we should stop that discussions or not, but we will -- we still believe that there is a good hope that project will go forward, it will be delayed, so we need to find alternative structures to the time charter agreements, which we have today.

(Operator Instructions) Jon Chappell, Evercore ISI.

Thanks guys. First question regarding the Hilli, there's obviously some hope or potential, I guess for third and fourth just wondering what needs to be done in that regard both what we're kind of waiting on for the government approval, is it just kind of proof of concept that the first two trains are running efficiently? And then also for that $70 million to $130 million potential further EBITDA contribution. What is the new investment that would be required to tap into a third train for that?

Okay. It's Oscar. On our side, we don't need any extra investments (inaudible). And when it comes to the discussions we have had with SNH and especially for Perenco, they are saying that they don't want to invest an additional money before we see [a lot] acceptance on the Hilli and that they see a stable production on Hilli. When it comes to them, moving from two trains to three trains is a relatively marginal investment for Perenco. They will have to utilize the plant they have today 100%, without on the contingency, but they are able to do -- they will be able to do that with a marginal investment. Over time they will need to invest in some additional drilling, potentially some small pipelines, but this is relatively small amounts compared to, they built for Perenco SNH and us.

When it comes to train number four, if they want to go for training number four, they need to invest more infrastructure onshore, but still that we believe is relatively marginal investments portfolio all in for train three and four below $100 million based on my own assumptions.

Got it. Thanks, Oscar. And then for my second question, just trying to think about the competitive landscape for you guys. And the solution that you provide, so obviously there's a big other West African project that's been talked about a lot recently in Senegal Mauritania, and although Golar hasn't been mentioned specifically as we think about who you would be going up against to get a project that could be an FID next year or that or any project that could take FID next year to have first gas by 2020 or 2021. Are there any other realistic solutions for independent oil companies or majors to pursue or is your conversion process kind of the only game in town as it stands right now?

I would say in order for somewhat [to startup] FEED study, it will take them 1.5 year to do the FEED study. Then they will need to negotiate with a shipyard, that'll take another half year. So, two years at least before they actually can take FID on the product, if you ask me. Then there will be a period between 36 and 48 months. So that's what they're up against. What we have seen in the past when it comes to oil -- to shipyards, we see a cost, which is more or less double the cost of ours when it comes to cost per produced tonne. So I think there are nobody at present, which are close to our cost basis. So in that respect, I don't think we have too many competitors, but of course, we only have a lead for certain time and most probably people are working on concepts now, which could compete with us looking at differences structures, but we haven't seen it so far and we are also working on a new concept, which will reduce our cost as well. So I think we are pretty lonely here, but of course there are one thing is to be able to offer the FLNG, but another the way is to actually finance it, which is one of the major obstacles. So I still think we have some time alone in this market, but not for long -- not for too longer, maybe two, three years.

Two to three years, okay, great. Thanks very much, Oscar. I appreciate it.

(Operator Instructions) Fotis Giannakoulis, Morgan Stanley.

Yes, hello, guys and thank you. Oscar, it seems that this has been a very busy period for you and a very critical period in terms of delivering the first FLNG. There are a lot of people have aim -- they are concerned and a lot of people they are expecting to see the successful delivery of the FLNG and the ability of the company to do multiple of these projects. Can you please give us what are the main milestones that between now and September that will make investors feel more comfortable that the conversation really works and production can start by the end of September as you are envisioning?

I think first of all, if you're thinking about the prequel process, if you are in doubt of that work, I think we have a real life example of the commissioning of the brought down in China that has been fully commissioned, fully accepted by the customer and produced over capacity. So that is when it come to the prequel. Then you have the performance of Keppel and ourself and Black & Veatch on Hilli, we are down there every week, the milestones now is to get there some mechanical completion, that will happen over the next month or so. And then we will continue to be pre-commissioning over as long as possible, we will stay in Singapore, as long as possible in order to be able to do as much pre-commissioning as possible, and that's the real milestones. All equipment is onboard, all engineering is done. We are finalizing the way of acceptance from DNB and so forth. I don't see any obstacles, it is just to get the work actually done. And that's a challenge, but -- so, that's for sure, but we still have some -- way and we believe that unless we have seen any big unforeseen issues going forward that we will be able to stay in the vessel, in the middle of the summer we will be able to get it around [cap] we will be tendering it -- whether or not it will take them a month to prepare the vessel off. We have tendered notice of -- of two, three weeks and then we will start off the fire of the gas plants, and the stock production, in each schedule [its constant] commissioning. This is, lower than what we have in the contract. In the contract, we have 201 days, we believe we can do it in the shorter time.

Thank you, Oscar. Can you also describe as what are the main risk between now and September, you will have the first conversion of FSRU ever, how much more complicated this project is and what is the risk that investors should be aware of? Is there a chance that you go in Cameroon and the project, the vessel does not work, does not produce or you think that there is no way that something like that this going to happen?

We will definitely meet some challenges, but we have in the business -- not the vessel (inaudible). Going forward, we need to test around [11,000] tests going forward. We need to test pipes. We need to dry out all the systems. We need to transport the vessel from around cap. I mean, (inaudible) Gulf after moving station. And then we need to start off commissioning. All these things are critical, I think we have good control over it. Of course, it's a much, much more complex project on FSRU. We are spending 17 million hours on this vessel to convert it. We have had a lot of focus on the issues I just mentioned from the very, very beginning that this should be able to do mechanical completion, that we must be able to do the testing, drawing out cleanliness et cetera, et cetera. So the risks, but there are much less risk today than it was a month ago, two months ago, four months ago and six months ago, so we have just become -- we are moved much closer to the goal today.

Ben Nolan, Stifel.

Yes, thanks. So, two quick questions. The first is sort of, I know you don't talk about specific projects and that's fine, but with respect to both the Golar Power and the OneLNG, what is your sort of target in terms of new project announcements, what would make you happy, one or two of each per year or is that sort of the goal or any sort of context that maybe you could place around what you're aiming at?

I think when it comes to FLNGs, I think what we have discussed with the Board is to have one at the final stage, one in the middle stage and one in the beginning stage, we have three parallel FLNGs going forward. When it comes to FSRUs historically, it has been done around four FSRUs every year. If we manage to get between 35% and 50% of those, I think we would be pretty happy. We would like to be a part of the new development of the receiving terminals by being more actively in the power business and the value of this terminals ourselves. We also believe that as I said earlier on the call, that FSRU market is changing a bit, people are requiring smaller FSRUs, you need to deeply pull the LNG train, so there are opportunities in this respect going forward as well, which I think we should be a part of.

Okay. And then -- my next question relates to the FLNG business, in the press release you talked about I think it was three or four incremental or maybe four, five incremental projects that you're currently working on, some of which would require multiple units. We're just curious, how you would break that down, I mean, do you do many of them, require multiple units and by multiples, I mean four or two in terms of just trying to connect, rationalize the size of --

You answer the question four and two. -- I mean, on the US project, we are talking about more than two, in other projects we are talking about two projects, only for two -- we have been speaking about two vessels. As you know, we are working on a project up in Mauritania potentially with [oil major], the challenge when it comes to some of the oil major is that our execution model is quite different from the oil majors and we need to try to meet -- to merge those to executional dose in a good way, so everybody feel comfortable and we have a positive discussion with the oil major in this respect.

Okay. I guess that does it for my two questions. Thanks a lot.

John Humphreys, Bank of America Merrill Lynch.

Hi, good morning, gentlemen. Brian, if you could just walk through what Oscar done, what risks lay ahead from a financing perspective, obviously over the last year you guys done an incredible amount of work, adjusting the liquidity around the future projects. But with the debt now being fully funded, if you could sort of walk through, if the Tundra financing of the $170 million that could be due to the partnership, should the Tundra discussion not work out as planned. If you could just sort of go through how you plan to address potential issues that lay ahead in 2017?

Sure. So I think we mentioned in our press release that we currently have around $550 million worth of cash and cash equivalents. I mean, taking a worst case scenario and Tundra's put back to Golar that's potentially a leakage of $107 million. We still out of that bank cash balance, we still have to pay $70 million to settle the remaining -- actual bond. But at the same time, as we are talking about the Tundra, there is of course the possibility where we would try and mitigate that through a potential dropdown of at least one train of the Hilli. So potentially, there is a potential, exchange of assets in respect of an FLNG and FSRU that would retain, that would make Golar LNG Limited the whole in terms of cash leakage. But what we have done as a result of the convertible offering that we did recently is, we will be able to ride through all of the stuff that I've mentioned, but we also have prepared ourselves for the FID events on the Fortuna project and of course we are -- we have obligations in respect of the Sergipe projects, in which we have 25%. So the convertible and the finances we've done recently takes care of that. And then you get to 2018 and of course, Oscar has already mentioned the potential cash release coming out of the Hilli, within the year of the Hilli becoming operational. So to some extent in our minds, the financing requirements in order to take FID, progress the projects that we've been talking about is already done, and that gets us to a position where we can now concentrate on delivering the Hilli this year.

Great, thank you, Brian. It's. That's very helpful. And then lastly on the Fortuna side. The government, if you could just sort of give us some color on the hurdles how high and low that bar is? How many agencies are involved or its certain individuals, just -- I don't have a great sense of --

You can say that at all, I would say major obstacles when it comes to the government has been solved. We have (inaudible) from Umbrella agreement, which is going to be signed over the next few weeks. And then it needs to get the Presidential decree. Then we also need to agree with [Schlumberger] on their shareholder agreement with them when it comes to their participation in the midstream. That's what more or less this outstanding on the government to part of Fortuna. Then we have the financing, which is spoke about on the Ophir shareholder acceptance.

Got it. You mentioned earlier mid, you're targets of a mid-year FID -- contract, okay.

I mean, we are frustrated as you guys, when it comes to take the times to develop these agreements, but there also many parties involved and there are not only commercial people, but also political people. So things just take time, but we believe that also a few items left. So, we are very optimistic that we will be able to do this around mid-year.

Greg Lewis, Credit Suisse.

So, you clearly mentioned that there is a handful of projects out there that you're looking forward or looking to, a lot of these have been very public. At what stage in the process does this OneLNG typically get involved, i.e., if I've a project in West Africa, and I'm already talking and thinking about an FLNG is a solution, is OneLNG and they're doing a pre-FEED study or is it the customer decides that that's the solution and at that point, then Golar OneLNG starts working with the customer. If you can give any sort of color around timing?

Generally, if you look at the Golar Group now, we have two marketing vehicles and that is the Golar Power and OneLNG, they are doing -- OneLNG are doing all the marketing going forward on FLNG, while Golar Power is doing all the marketing on FSRU for Golar Power. So OneLNG, they are doing all the FLNGs apart from the US Gulf project, which is using pipe gas from US and they will develop it, they will then have -- so Golar act as a build, or we will support that during business, and we will build the assets and we will operate the asset, while OneLNG will own it.

Okay. And then just as we think knowing that negotiations around the Tundra are ongoing, as we look out over the next 12 to 18 months, how many marketed FSRU opportunities are there -- are out there at the moment as we think about start-up in the next 12, 18 months?

It's very difficult to say, they've seen in the past that they are being certain urgent requirements and what we see today is that there might be only two of them going forward for the next 12 to 18 months. But those opportunities are quite uncertain, I would say, but there are one to three potential opportunities for that.

Okay guys. Thank you very much for the time.

Chris Wetherbee, Citi.

Good afternoon. This is Prasanth on for Chris. Thanks for squeezing us in. The question -- first question I wanted to ask was, I mean I know has been touched on earlier in the call, but talking about the Hilli, I'm looking forward a little bit towards the dropdown to GMLP, I know you're in discussions, I understand, but there's a lot of variability there. But given the MLP market is improving, we're going to see more supply come on in the LNG commodity landscape in the back half of this year, we should start to see a tightening overall carrier market as well. What are some of the potential scenarios in terms of dropdown and timing in terms of maybe taking down a couple of chunks or how many would go down, I mean, and how do you think about that or I guess maybe more broadly, how is that change since the last time that you talked about it, given the underlying market and how it's inflecting?

Yes. So, I guess from the MLPs perspective, there's been an awareness that certain contracts are expiring at the end of this year. And so to some extent, we want to be able to show some [mitigates] against that. Obviously, the Hilli is certain, it is coming, it's contracted with Perenco, [or] everything is in place as far as contracts are concerned, or we're waiting for [now] is the delivery of the vessel and also the vessel becoming -- putting into commissioning. So, the discussions there for potential dropdown has progressed quite well actually. So our expectation is that's, a train of the time will be dropped down. I think, a [two] train dropdown is a bit too chunky in the current position. But of course there is also, as you say, there is also possibility of ships being putting into charter, but those aren't yet certain. I mean, whilst we're working on various potential charter opportunities, until such time as we put those vessels into charters that we call really, contemplate those potential dropdowns, but the Hilli, we can. So that's what we're working and discussing with the MLP.

Okay, great, that's very helpful. And sort of picking up where you left off and ran about the chartering environment, with the [four] carrier which you have, Golar FLNG, how do you think about placing those on long-term charter as rates start to get better? I mean maybe next year, back half of this year versus keeping them in terms of optionality to service some of your floating projects or related to other power projects that you have going on. What's the balance of the calculus there? Is there a priority, a clear priority or is it really sort of determined by what kind of cash flows we would look at?

I think going forward shipping will not be crucial part of Golar going forward, but it's very important that we keep the shipping alive in Golar, due to fact that we are recruiting a lot of people, both for FSRUs and FLNG. When it comes to time charters, when the market picks up, I think if we see $78,000 per day, we will start to consider to do time charters. We are quite bullish on the market going forward in to 2017, to 2018 and 2019. So, and I think it will be most probably from a strategic point of view, maybe to reduce some of the countrywide to get some of the fleet out on time charters and keep the rest as the support, maybe 50% if you -- just on top of my head and then we leave the remaining vessels as conversion kind of that and to serve potential projects -- FLNG project and FSRU projects in the future.

Okay, thank you guys. That's very helpful. I'll turn it over.

Herman Hildan, Clarksons Platou.

Good afternoon, guys. First question is a follow-up on the potential dropdown the Hilli, did I understand your -- Brian that you will have to take delivery of the Hilli before you can do the dropdown of the first train?

No, not necessarily, Herman. I think what we actually said, what we're trying to do is, I mean the Hilli, if you look at -- if you listen to what we've talked about the Hilli contract, it's quite a complicated contract, because there're potentially three revenue streams. One is the existing EBITDA as we see it today, the train three and four EBITDA and of course is the EBITDA coming out of -- as a function of oil price. So it's -- we don't necessarily wait until the vessel gets delivered, we need to structure it now, because we want to be able to put the restructure place, it's not like buying a ship for example, when you've got one source of income.

So how do you think about the dropdown in taking those different revenue streams into account?

Well, that's what we're working towards. I mean it's -- as I said, it's not -- it's a slightly more complicated structure and I'm sure we will share that with you and everyone else when we found the right balance for us.

Okay. Thank you. Last question, you talked kind of generally about the ambitions for the future, because you give some hard goals for 2017 and beyond, just delivering and taking delivery of the Hilli and (inaudible). What's the ambition for new projects within OneLNG and Golar Power?

I think on Golar -- when it comes to the FLNG business, deliver Hilli, sign up Fortuna, startup or maybe complete the [mark to], that means the next version of our FLNG and come in and have one term-sheet signed on another FLNG, of a term-sheet that I -- call it as an agreement, something like that. And as I said earlier, our target is to have one vessel in the final one, in the middle and one in the beginning. When it comes to FSRUs, I think if you manage to do one FSRU contract over this year, I think we will be happy.

And on Golar Power?

That was one of our FSRU.

So, no additions and further collect power plants?

We have that business for sure, but it's -- I'm trying to be a bit realistic. So, I think it will take a bit longer time to develop our power plant going. Based on where we are today, we are working on -- we have been working on -- opportunity for a long time and that can materialize, if we're very optimistic, but it just takes time, and as you may know the power business is quite competitive.

(Operator Instructions) Matt Niblack, HITE.

In terms of the FLNG business development effort, when would you expect to announce another project beyond Fortuna? What's the timeframe? And then also related to that, if you could give us -- you've given sort of five gross projects that you're interested in. If you could maybe a probability weighted number of projects for a number of FLNGs that would also be helpful?

As I said, we don't go into details on our different projects. But as I've just said, I mean if you manage to say, [China] has agreement with one or other FLNG project this year. I think we are pretty satisfied and we have one vessel in the beginning, one vessel in the middle and one vessel finalizing. So, this means that they will try to sign up maybe one FLNG per year or one product. One product could be multiple units, one of the products, which we are working on is [notable] vessels. We believe that project will take a longer time to take FID. We're talking about 2018, 2019. When it comes to project in US, we need to do the permitting and develop this mark to, so that is most -- late 2018 project. So, and then we have some other West African project, which can materialize. But as we know this, as I've said several times during this call, these projects takes long time to develop.

(Operator Instructions) There is no further questions in the queue at this time, I'd like to turn the call back over to you for any additional comments.

Thank you very much for attending the call. Look forward to the Q1 call and hopefully, we'll be able to give you good news from Hilli and also from the rest of the business. Thank you very much.

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