Golar LNG Ltd (GLNG) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen.

Welcome to today's Golar LNG Limited Fourth Quarter 2017 Financial Results Conference.

Today's conference is being recorded.

And at this time, I would like to turn the conference over to Brian Tienzo.

Please go ahead.

Thank you, moderator, and good afternoon, and good morning to you all.

Welcome to Golar LNG's fourth quarter earnings call.

As the moderator said, my name is Brian Tienzo.

I'm joined by our CEO, Iain Ross; and our Head of Investor Relations, Stuart Buchanan.

And without further ado, let's go to the presentation by skipping over Page 2 and going over to Page 3 for the financial highlights.

So we report EBITDA of $19.4 million and net income of $3.8 million for quarter ended 31 December, 2017.

In contrast, EBITDA and net loss for 3Q were negative $5.5 million and $43.9 million, respectively.

EBITDA for the quarter has improved materially compared to the previous quarter and has been helped by increase in vessel utilization, which, in turn, has caused rates to go up; and, of course, the demand for ships during the quarter has also led to round-trip economics.

You will note that the Golar Grand charter-back from Golar Partners at $90,000 per day also ceased during the quarter.

Reference to unrealized gain on FLNG derivative relates to the commodity-linked revenue on which -- really, which became relevant when we tendered our notice of readiness in December.

Under the Perenco contract, Golar benefits and additional revenue accrues were Brent crude is above $60.

Going forward, this derivative will be remeasured at each reporting quarter and evaluation arising out of that will be compared to the value of the preceding quarter.

The relative increase in the price of oil from this inception to the end of December resulted in a gain of $15.1 million.

These positive contributions to EBITDA were somewhat negatively impacted by increase in operating costs due to combination of increased maintenance cost and replenishment of ships spared and other vessel-related expenses.

Administration costs also increased this quarter due predominantly to higher project development activity as well as increase in staff costs.

However, despite this, positive mark-to-market movements in the valuation of our total return swaps and also interest rate swaps by the end of the quarter has resulted in a positive net income.

Turning over to the balance sheet now on Page 4. Improvements in shipping revenue and release of cash in the Hilli LLC has helped to maintain satisfactory liquidity position in the quarter.

There are, of course, significant liquidity events over the next quarters connected to the Hilli and these are as follows.

Cash flow from commissioning hire from the Hilli, first tranche of these of actually been received.

And for your guidance, commissioning hire will not be recognized in the income statement; instead, it will go direct to balance sheet.

To date, we have drawn down $640 million from the Hilli debt facility.

This means that a further $320 million is available for drawdown.

Of this, approximately $140 million is free cash.

There remains the possibility, of course, of dropping down the remaining contract capacity of the Hilli, which could produce up to $180 million in free cash.

There is also potential cash flow outside associated with Hilli's Brent-linked relating to the commodity linked revenue under the Perenco contract.

At $65 per barrel, this equates to approximately $15 million per annum.

Once Hilli has produced 1 year's LNG supply, approximately 1.2 million tons, the LC level will drop to $250 million and is expected to release a further $30 million from the cash collateral.

In addition to all of the above, we have seen improvements in shipping rates and utilization whilst we typically see seasonal leveraging during second quarter, we fully expect improvement in these as we progress through the year.

The average cash breakeven of our shipping fleet, which covers full debt service and operating costs, is approximately $50,000 per day, and we can expect to have surpassed this level by the end of the year.

I now hand over the presentation to Iain, who will take you through various business franchises.

Thanks, Brian.

Good afternoon, good morning, everyone.

Thank you for dialing in.

I'd like to take you through our 3 main areas of business focus.

Firstly, FLNG and we'll move to carriers and finally, a round out of FSRU and power.

So if we turn to Page 5 of the presentation and the FLNG update.

So as a recap, Hilli Episeyo arrived in Cameroon late November 2017, completed its mooring hookup connection to the riser and umbilical and then made a cool down cargo transfer from the Golar Bear.

Notice of readiness, as Brian said, was tendered in early December.

This was an important milestone as it started the commissioning period.

And on January 4, we commenced tolling at the reduced or commissioning tariff, so we can now confirm that the Hilli has started generating cash.

Feed gas is introduced from the onshore processing plant and full commissioning of the gas treatment systems are now substantially complete.

Commissioning of the refrigerant trains is still ongoing, and we anticipate commercial production of LNG in the next few days.

Whilst we've taken longer to get to this stage than the initial plan, and we've now used up most of our commissioning phase schedule float, our technical team remains focused on achieving commercial acceptance in mid-April 2018, some 6 weeks from now.

But please note we won't be rushed end and if things do take a few days longer, then we are talking days and not months.

Moving on to Fortuna.

Our efforts to conclude an acceptable finance package have still not yielded a satisfactory outcome.

Therefore, financing remains outstanding.

We really believe in this project and on the back of very strong economics for the development, we continue to have confidence that funding will be secured at acceptable terms.

We feel that the imminent commencement of commercial LNG production from Hilli and her subsequent full commercial acceptance will assist in the -- with the financing dialogue.

Reflecting this level of confidence in the project, the Gandria is currently being prepared for a move for layup to Keppel Shipyard this quarter.

When she reaches Keppel's, we will immediately commence inspection work and prepare the ship remediation and upgrade work scope and this will allow us to make some physical progress on the project in addition to the engineering work that is being carried out in parallel.

And in other areas of focus for OneLNG, we're continuing to make good progress and have a high degree of confidence that further projects will be advanced this year.

Let's turn to the shipping update.

The LNG shipping market continues to tighten and notwithstanding the seasonal softening that we're currently experiencing, all independent market assessments indicates that the supply-demand balance will edge towards a structural shortage of carriers over the next 2 to 3 years.

The main elements of this market tightening to date include firstly, a large demand from China, which has imported an additional 12.8 million tons last year, so that's a growth of some 48%; And sustained or growing volumes from Japan, Korea and India, combined with growing ton miles from a proportionate increase in the volume of U.S.-based exports, supported by an attractive price differential from Henry Hub through to JKM, and a lack of promptly available and suitable vessels.

All of these factors led to spot rates north of $80,000 a day by the end of the year, which I understand to be a 3-year high, and there had been a seasonal softening, as I mentioned, in the first quarter of this year, with TFDE spot rates currently around $65,000 a day.

We've seen the steam ship rates being pulled up by the TFDE entries and in response to this, we've taken the Golar Viking out of layup during the last month.

During 2018, the industry is expecting around 35 million tons per annum of new production to come onstream, a further 33 million tons a year during 2019 and 24 million in 2020.

Correspondingly, there's a planned carrier fleet and the increase of 55, 30 and 10 vessels across these years.

So when the shipping research analysts look at the combination of supply, demand and ton miles, we end up with a shortfall of some 30 to 35 ships over the next 2 to 3 years.

And this leads us to believe we will see continued market tightness and increased rates over the period.

Taking a look at FSRUs and the Golar Power.

The Sergipe project in Brazil continues to progress on schedule and within budget.

Earthworks, civils and foundations are now complete, and we're moving on to the mechanical erection phase, with the first of the modules arriving on site and the delivery, positioning, installation of modules continuing through the next quarter.

We currently have an in excess of 1,200 people on site.

The Golar Nanook remains on target to be delivered to site in Q3 of this year, and we remain confident of closing the full project finance package this quarter.

Turning to the FSRUs, and whilst that market remains competitive, we are managing to position ourselves on some real projects.

One of Golar Power's available conversion candidates is committed to an FSR opportunity, and we expect to hear more about that particular project around mid-April.

And in addition, discussions are reasonably advanced for an FSRU that would utilize one of Golar Partners' steam carriers in a conversion project.

Execution would likely be in a joint venture, therefore, with Golar Power and we continue to look at other opportunities and note that Golar Partners previously announced 15-year Atlantic FSRU contract is indicative of the current market for smaller and cheaper FSRUs.

We continue to believe that the provision of integrated FSRU and power solutions offers us greater upside than standard -- stand-alone FSRU deals, and so we're still progressing the development of several opportunities across Latin America, West Africa and the Indian subcontinent.

So moving to our summary and outlook on Slide 8. Hilli Episeyo is now a cash-generating asset, while slower than initially anticipated, commissioning has been relatively straightforward to date.

Final commissioning is currently expected late-March of this year, with customer acceptance testing scheduled for completion in mid-April of 2018.

Hire will be receivable at the full rate thereafter, which will deliver $164 million a year in operating cash flow.

The third and fourth trains and the Brent-linked cash flows that Brian mentioned, which are attached to first and second trains, represents further upside.

Our experience in the Hilli conversion and commissioning is being applied to the Fortuna project.

Proof-of-concept following acceptance of Hilli Episeyo is also expected to speed up and open a wider variety of financing alternatives.

Some of those alternatives are being actively worked, an initiation of yard works to the Gandria should therefore viewed as indicative of the company's confidence in a final investment decision being reached.

The Sergipe project is expected to be cash flow generative in 2020, ahead of Fortuna.

At current exchange rates, the company expects to record $105 million per year in operating cash flow in respect of its 25% effective interest in the power station and 50% interest in the FSRU.

Options to monetize the FSRU Nanook 65% spare capacity represents additional upside for Golar Power.

Shipping returns are expected to increase over the course of 2018, as a function of an improved supply-demand balance, which is expected to result in higher rates and utilization.

This should material -- materially improve cash generation going forward.

Against this positive backdrop, the company is investigating options to restructure its shipping business to capture more upside for shareholders from the forthcoming market recovery.

TCE rates achieved for the first quarter are marginally up on the fourth quarter 2017.

Due to seasonality of the business and the timing of new production coming onstream, shareholders should not expect a significant improvement in the rates before the third quarter this year.

So with a strong underlying LNG carrier market, the imminent acceptance of Hilli Episeyo, solid progress in the Sergipe power project and the potential for several FLNG, FSRU projects to reach FID, Golar LNG expects significant earnings growth over the coming years.

Thank you for your attention.

We'll now hand back to the operator for questions.

(Operator Instructions) We'll take our first question from Jon Chappell from Evercore.

Iain, thanks for the update on Hilli and Fortuna.

I think those are what we consider kind of known catalysts.

But as we think about maybe the unknown catalyst bucket, Train 3 seems to be very likely as well.

Can you just talk to us about the potential timing for a Train 3 once there's proof-of-concept on Trains 1 and 2?

And both in regards to, through your conversations with Perenco and SNH, when that could be sanctioned?

And then also when that could be cash-flow generative?

Thanks, Jon.

I mean it's fair to say that there's no conversation going to happen until we get Hilli up and running, and I think anything that we talk about now would be purely speculative.

Okay.

That's fair.

My second question then, I know that this is -- Golar's become clearly a midstream FLNG, FSRU story, but the comments around restructuring the shipping business being investigated are pretty interesting, especially as we're at the verge of an uptrend in the cycle.

Can you help us kind of understand what that would include?

Would it be something about breaking off from the current structure, long-term contracts?

How can we think about what the upside potential to shareholders would be through this restructuring?

So on your first point, so yes, rather than thinking about Golar purely as a shipping company, in terms of exposure to LNG, maybe think about us more moving from a cyclic market with its peaks and troughs to a series of businesses that are sustainable and growing cash flows over long durations.

So that's -- that means we're going to be investing preferentially in FLNG and integrated FSRU and power projects rather than pure shipping.

So that's the first point.

Longer-term shipping business is of more interest than simply relying on the spot market.

In terms of the different structure, the only message I really want to leave is that we're not going to sit back and enjoy just the higher rates ride in the spot market over the next few years and that we are looking at different ways of generating sustainable growth.

And we're just not, right now, in a position to disclose any more.

I just wanted people to be aware that we are looking at it and actively considering our options there.

And our next question comes from Mike Webber from Wells Fargo.

First question, just to kind of button up the Hilli.

You guys gave a range of acceptance kind of by mid-April.

Should we take that to mean you're confident that gets delivered in the contracted window?

And then maybe can you just walk us through the math or the process for, say, a week or 2 beyond?

Just to maybe provide some context around what, if any, risk there is around that and how scalable it is, et cetera?

So just a bit more color around that mid-April period would be helpful.

Maybe if I give a little bit of background on what we've done to get there.

We didn't give and we never said we were going to give regular updates on the status because it doesn't really add value to the conversation.

And we -- during the commissioning process to date, we have experienced a number of predictable issues that always arise in commissioning but equally, some that we didn't predict.

And really, the 2 messages around that are: firstly, the commissioning process has multiple fronts.

So when we've encountered a problem in one area or system, we simply move some of our effort to advance another part of the schedule whilst dealing with the issue that's arisen.

The initial schedule has been somewhat influx as the various parts have moved around to enable meaningful progress towards that overall goal.

Secondly, to get Hilli up and running, to capacity, in the first week -- in the coming weeks, there's nothing that we've encountered to date as giving us any concern that we can achieve that.

So they're the 2 sort of the technical messages.

I would -- at this point in time, I would like to have some of that schedule [flowed] up my sleeve, but we've used that up.

The team has got in front of it a schedule that will allow us to reach commercial acceptance by mid-April, which is our contracted time.

And as has been disclosed in the past, in the event that we don't do that, it's something in the order of $100,000 a day in LVs over the next -- well, it's actually quite a long time, next week should we not achieve it.

So for modeling purposes, I guess, those are the numbers that you would want to know, mid-April, 14th, 15th of April, and if we're not commercially accepted by then, then there's a penalty of $100,000 a day, which, of course, is offsetting against the income that we're receiving, so we're still in a net positive position.

Got you, okay.

That's helpful.

I appreciate the context around that.

Then I get to the follow-up around Fortuna.

Iain, you guys mentioned, you kind of made -- it seemed like you made a point a couple of times in the release, you mentioned that you were moving that into position despite the fact that -- and a bit more arduous to knock down financing, even though you've an offtake agreement that we should look at that as a positive development.

One, I'm just curious whether or not -- and then you mentioned, sort of putting some money into it, doing some preliminary work.

Are those expenses borne by Golar or are they borne by OneLNG?

And I'm going to take this as the implication there's some positioning in those costs.

And then two, the -- should we look at that as an endorsement of the idea that because it's more or less buttoned up from a commercial perspective, there's a Plan C or D, if you will, to make that project happen, and financing would be not necessarily looked at as a prerequisite out of the gate?

So on the first part of your question, Mike, they -- so the vessel work that we're doing is kind of generic, so that vessel work, we're going to -- Golar's going to bear the cost of that initially.

It's not going to be a huge amount of money, I don't believe.

And what we're doing is work on -- sorry, say it again?

I'm sorry, you said Golar, of course, would bear those initial costs?

Yes.

Golar is going to bear the initial cost of this and the reason for that is it's simply generic vessel work to get the ship ready for the next phase.

It's work that has to be done and obviously, when the project gets going, it'll form part of the project.

In terms -- and, Brian, have you got any comment on the financing, I mean...

I mean I guess on the financing, as Iain already said, it's taken much longer than we had hoped.

All of the contracts pertaining to the Fortuna project is already in place.

We're not going to go and chase subeconomic financing for a project we believe to be very robust.

And so the progress being made in the Hilli, we believe will help to progress the discussions on the Fortuna financing once that's -- once it's achieved.

So that's what is more pertinent than chasing financing that's not necessarily to the advantage of the project.

So I guess the question would be is that financing necessarily a prerequisite?

And then along the idea that you're getting into position, is that a decision you would make unilaterally?

Or is that something that you would talk to Schlumberger and your partners about and everyone's kind of on the same page and moving forward together?

No.

Clearly, everyone will be on the same page moving forward together.

And without wishing to speak for our partners on this, everyone's very, very enthusiastic about the project, and we all have the will to make it happen and really, that's what we're trying to focus on.

And the move of the Gandria is just a nudge in the right direction to make sure we don't lose more time on the project.

Our next question comes from Fotis Giannakoulis with Morgan Stanley.

I want to jump to that new potential FLNG opportunity that you talked about.

If you can give us a broad description of what type of opportunities are there.

Yesterday, Kosmos talked about moving forward with a Fortuna project through an FLNG.

How does this project look like to you?

And are there opportunities?

And how the economics compare with contracts that we see recently in the U.S.?

Thanks, Fotis.

So first of all, the OneLNG process is pretty rigorous.

We have a number of screening projects, so projects that go through a degree of screening to hit target returns.

And we -- what we're doing is we're targeting Fortuna-like projects.

So projects where we have investment in the asset, along with perhaps, another operator or a national oil company, should it be an African-based type opportunity.

So we go through these screening projects and then develop the solution for that case.

And we've got a number of projects that are in various stages of that screening process and some of them are bit more advanced than others and some we're doing technical work on than others.

But I'm just, at this point, not at liberty to talk about any of them in any specific detail, unfortunately.

Is there a way -- can you describe us the timing or the goal of how many projects do you think that you are going to have in the next couple of years?

In the past, you have talked about 5 or 6 potential opportunities being put together by 2020.

Is this still feasible?

And also, yesterday, Kosmos talked about except of an FLNG, the need for an FPSO to clean the gas that will supply the FLNG.

Is the FPSO part of the business of such projects, something that you would be interested or your focus would be only on the FLNGs?

So OneLNG is focused right now on the liquefaction of gas and the monetization of gas from floating assets.

So sorry, could you just repeat the first part of your question, I actually forgotten it.

Could you just repeat, Fotis, the first part of your question?

Yes, I mean yesterday, Kosmos talked about also of the need for an FPSO that will be a supplement to the FLNG vessel that will supply -- that will clean the gas that will feed the FLNG vessel.

I was wondering if this type of project is something that you would consider as part of your portfolio.

I mean, FPSO's currently in the scope of OneLNG's remit, but if we had to work out how to manage an FPSO as well as an FLNG vessel, for the right development, we'd have a look at it, I'm sure.

But as I said, I'm not going to talk about specific projects on the call, sorry.

I understand.

And can you tell us about your previous goal about potentially having 5 FLNGs by 2020?

A range that -- is this a goal that still stands?

How many vessels do you think that you can have the next 3 years?

Yes, sorry that was the first part, Fotis, sorry.

So 5 LNG, 5 projects FID-ed within 5 years is the goal for OneLNG.

That still stands.

We would hope to take 1, maybe 1.5 this year or what I mean by that is I've one nearly ready to go, so maybe one this year, maybe one early next year.

And so in order to facilitate that 5 projects per year target, obviously, there's effort going on now to try and work out which of the projects that we want to be pushing towards FID, towards the end of 2019.

And then, of course, thereafter, during 2019, work out where the next one is.

So that's kind of the idea where we have probably a couple of projects on the go at any one time with a degree of overlap.

And then as time moves on, you've got another project coming in at the front end.

That's the business model.

Obviously, the hard work is in realizing it and making it happen.

Our next question comes from Ken Hoexter with Merrill Lynch.

But the last quarter, you talked a bit more about Delfin Midstream and the FLNG projects in the Gulf.

You talked about the FID study should be complete by the end of the first quarter.

Can you give an update on that?

And is that kind of part of the next phase of FLNG builds that you anticipate?

So yes, it could be.

The status of that is I haven't mentioned it in the release because it's largely unchanged.

We're still working on the FEED study, still on track to finish it at the end of this quarter and we'll get together with the chaps from Delfin, April, and have a bit of a workshop and see where we are with the technical solution, with off-takers and with -- we know some of the other elements on that particular development.

I'm sorry, so that's waiting until April as well?

Yes, nothing's changed.

We've always said that we would finish the FEED study this quarter and then get together with project partners in April, and I didn't mention it because we're still on track with that.

Nothing's changed.

Okay.

And then I just want to revisit the financing.

It seems you've mentioned the delay or the stalling on a couple of times for the Fortuna.

Is this really -- are the banks or anybody else just waiting to see proof of performance at Hilli?

Or are there other negotiations?

Or is it -- are there specific terms that are still waiting to be worked out?

Well, I'll let Brian comment in a minute, but I feel that when Hilli reaches proof-of-concept and it's commercially accepted that it's going to open up a wider range of discussions on the technical achievement and the feasibility of this type of project.

And we do believe that, that will create a different landscape of conversations if you like.

Do you want to comment any further on that, Brian?

I think I agree with that.

I think as well in the discussions that we have, there's no specific mention of the Hilli given the proximity of Hilli being accepted and fully commissioned.

I mean implicitly, the banks are looking at that, say, well let's -- similarly we as well, in terms of improving economics and the various financing then maybe get that over and done with, being able to point one -- to one that works, it's a much easier discussion to have than various assumptions on the operations of the Hilli.

And our next question comes from Greg Lewis with Crédit Suisse.

So clearly, it looks like there's -- you're thinking about ways to monetize or generate shareholder value with the conventional LNG fleet.

Just as I think about that and your relationship with Golar Partners, in the event that you worked -- in the event that the conventional LNG fleet at Golar was spun out or sold away, does that impact Golar Power -- Golar Partners, your relationship with Golar Partners and your ability in any way?

Greg, it's Brian.

To some extent, not necessarily, there is -- of course, as you remember, there is an omnibus agreement between Golar LNG Limited and Partners where partnership has the ability to buy assets at -- from Golar LNG Limited, for assets that have got contracts of 5 years and longer.

Of course, that -- shipping is one asset that are contained in that omnibus agreement; there are other assets that are included in that.

As we look to structure the shipping portfolio, to try and maximize shareholder return, it could take various different forms.

And certainly, we will be able to -- or we won't be looking to do anything along those -- or to those structures that would harm the relationship that's governed by the ominous agreement.

Okay, great.

And then I mean I guess you talked -- since we're talking about LNG -- that LNG conventional fleet, I guess, we're deciding to reactivate or take the Golar Viking out of layup.

Is there going to be -- what type of pause should we be thinking about associated with that?

No.

The Golar -- so you'll remember, the Golar Viking was in layup for almost a year I believe.

The cost of taking the Golar Viking isn't actually that material.

And the reason we took it out of layup is simply because we saw an opportunity to put the vessel into what we believed to be an improving charter market and there are now opportunities for the Golar Viking that we're considering that she can go into.

So we should expect that vessel to be trading in the second quarter?

Any guidance on when we could start thinking about it actually generating revenue?

Well, certainly, she's operational now.

And yes, so we fully expect the vessel to be contributing to EBITDA in the second quarter.

And we'll take our next question from Herman Hildan from Clarksons.

So apologies for boring a bit on the [near term events] around the Hilli but could you just kind of be a bit clearer on what kind of news flow we should expect in relation to the progress of Hilli?

Is it going to be, call it -- are you going to announce when you make first LNG or, call it, when you have commercially been accepted?

What news flow should we expect going forward from that asset?

I would say that when we reach a commercial acceptance, that that's a particularly material event for us.

So we'll definitely be putting something on that.

In terms of production of commercial LNG, I've said already that it's days away.

I suppose if we haven't done it in a month or so, then we'll have to say something about that.

But I -- and I don't want to be drawn, we may put something out, we may not.

I don't want to be drawn into incremental announcements.

If we feel that our April startup is being materially threatened, I think we would advise something on that in terms of a substantial delay, if that came up.

But as I'm repeating myself now, there's nothing that we are aware of at this point, that would contribute to a material delay.

Okay.

And then the second question is on -- I mean it's also in the LNG outlook, so let's say that rising LNG production would comfortably be absorbed by demand in 2018 and this perceived oversupply of LNG, as global LNG the production ramps up seems to be, obviously, less clear now that yards have opened up and you highlight that in your report as well.

Just a bit curious.

Obviously, you have the bit on the remaining volumes for the Fortuna project.

But how do you experience that the environment for the LNG commodity has changed and the willingness to call it -- or the ability to lock in long-term contracts for the offtake?

Is that something you can comment on?

Can you maybe just tighten your question a little bit, please, and just be a bit more specific.

I'm not sure I'm following your argument.

The LNG commodity, the prices have increased on the back of higher oil prices and so on.

And on the Fortuna project, as an example, you have a pit for the remaining 50% of the volumes on the Gunvor.

The question -- I'm assuming that you're marketing those volumes.

I'm just curious if you can talk a bit around how you view the LNG asset commodity having changed over the last 6 months.

Obviously, prices have been fairly improved.

Yes, indeed.

So obviously, there's a -- there still remains somewhat of a link to Brent.

We've seen Brent improving over the period.

And importantly, the demand from China, in particular, India, coming forward and the move to gas in general, as countries electrify and both electrify and move away from less carbon-friendly sources of energy, such as coal, we think that the LNG market itself is going to continue to be quite progressive and quite an exciting market to be in.

The -- I guess, the question that you're asking about Fortuna, I don't think we want to comment on right at this point in time, I mean, our focus on Fortuna, we have the offtake sorted out for Fortuna.

We've got an arrangement there.

Our focus right now in Fortuna is getting the financing sorted out so we can get going on the project.

Brian, anything you want to add on that?

I think to some extent the sort of improvement in commodity price is exactly the kind of scenario that, that sort of 50% volume was trying to catch.

And of course, we are now in a position and can say justifiably that, that was the right decision to take.

I think -- and of course, a lot of these contracts are very long contracts.

So it's -- as we see now with the Hilli, when we started -- initially started the tolling agreement, the Brent-linked revenue has been justified and the same view goes with contracting the Fortuna volumes.

Said a bit differently, I mean, it's like on the West African FOB LNG price, if I'm not completely mistaken, should have moved from, call it, $6 FOB, 6, 9 months ago to more closer to $8, $9 today, correct?

Or is that not something that you have any income from?

I don't have a particular view on that.

And our next question comes from Chris Wetherbee from Citi.

So I wanted to talk a little bit about the Sergipe project, and just make sure I understood sort of your comments on the time line.

Did you mention something about an FSRU coming on site later this year?

I guess, I want to sort of understand sort of the puts and takes as you think about the 2020 sort of timing of ramp up there.

But can you help me sort of understand that a little bit better.

I potentially misheard but wanted to make sure I understood the FSRU timing there.

So the Nanook's due on site later this year.

She was delayed, as I understand it, from a -- the delivery was delayed to do the conversion work in Korea.

And I guess, all I'm reporting is there are no issues there and we expect it to be delivered on-site at that point in time later this year.

Okay.

And the timing of the project still stands?

There's no sort of significant differences there, just sort of updating on the FSRU, is that the right way to think about it?

Yes, that's exactly right.

The main project we're reporting is currently on schedule and within budget.

Okay.

Okay.

That's helpful.

I appreciate that color.

And then the only other thing I had, which is still sort of the core fleet, you brought the Viking out of a layup.

Is there anything else you have in layup right now?

I mean, how do you think about sort of that ramp as we're kind of moving forward into potentially a stronger carrier market over the course of the next several quarters, potentially, several years?

Anything else in layup that you need to bring out?

Anything else we should be thinking about from a fleet development perspective?

No, I don't think so at this stage.

Okay.

So would you -- and just with a point of clarity, when you think about sort of strategic alternatives or sort of thinking about the carrier fleet, I guess, restructuring, the shipping assets, your thoughts on incremental capital being put to work there.

I mean does that sort of play into it?

Is there just sort of the structuring within the broader Golar housing?

I just want to make sure I just understand there.

Is there the potential to be thinking a little bit more about putting capital to work there or is it more just sort of the structure of it all?

I think -- Chris, I think the only thing we can say to that is there are various opportunities that we see as regards the shipping fleet.

We haven't pinned ourselves down to specific structure just yet, and we can't really comment on what those strategies are until we've committed ourselves to it.

And we have a question from Magnus Fyhr with Seaport Global.

Just one question, if you can, on the LNG shipping market.

We all know that we've seen some seasonal weakness here in rates as of late.

But can you comment on your utilization during the quarter?

You obviously, brought the Golar Viking back here.

Is it fair to say that you were, at one point in time, at 100% utilization?

And can you give a range of utilization for The Cool Pool during fourth quarter and also, currently?

I can't really comment on -- specifically on The Cool Pool, Magnus.

What we can say is we've seen utilization constantly improving throughout 2017.

The -- you'll note that the revenue reported this quarter is materially improved from the last quarter and, of course, rate is part of that, but it goes hand-in-hand with utilization.

It would be wrong to assume that we've achieved 100% utilization in the fourth quarter but it's suffice to say, it's much -- it's materially improved.

It's somewhere between 50% to -- 55% and 75%%.

Okay.

And just on the Hilli, I know you mentioned earlier that you couldn't comment on the third train, but what's the incremental cost for a third train and also for a fourth train on that project?

Yes.

There's no incremental cost really for the third train anyway.

On the fourth train, you'll remember, the fourth, that -- to some extent, the economics in the third train is already predicated in the Perenco contract and the fourth train economics isn't in there.

To some extent, there may be some costs both to ourselves and Perenco to be able to do that.

But if anything, the third train would be the first priority that we would look to be able to achieve out of that project.

So third train has no additional cost to Golar.

And we have a question from Randy Giveans from Jefferies.

Just a few more questions on Hilli -- no, I'm just kidding.

One question on the Tundra, though.

Is that going to be operating in -- as an FSRU?

Are you putting tenders out there?

Are you kind of satisfied with it operating as an LNG carrier in the next year?

So Tundra is, as you point out, trading in the carrier market at the moment.

And we, in parallel, are continuing to look at potential projects to deploy her on as an FSRU.

Okay.

And then other than just getting it to that area, how long is the transfer from LNG carrier to FSRU operations?

Say you were to get a tender to start in June, is that capable?

Will -- it's a very short turnaround time for being a carrier to an FSRU, so it's not a material amount of time at all.

(Operator Instructions) We have a question from [Oliver Clotilde with Tetris Advisers].

I just wanted to actually ask one more question on the Fortuna financing.

I understand you might be not able to answer them, but wanted to ask whether there's still the 3 Chinese banks versus the ICBC negotiating.

Then whether there's any strategic alternative, including Schlumberger, being considered?

And lastly, who is actually updating it that is negotiating in the process?

If you could answer any of those, it would be very helpful.

[Oliver], we can't really comment specifically on parties.

We've not disclosed those people previously.

Suffice to say, there's a range of discussions happening in the background, and we will announce specific deals as they mature, but we can't really -- and we can't really disclose parties on that.

And there are no further questions at this time.

I would like to turn the conference back over to our speakers for any concluding remarks.

Just thank you all for your continued interest and support of Golar, and thank you all for your questions, and we'll talk to you next time.

And once again, ladies and gentlemen, that concludes today's conference.

We appreciate your participation today.