Golar LNG Ltd (GLNG) 2018 Q1 法說會逐字稿

Good day, and welcome to the Golar LNG Limited 1Q 2018 Conference Call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Iain Ross.

Please go ahead, sir.

Good afternoon, good morning, everyone.

Welcome to the Q1 2018 Golar LNG Earnings Call.

My name is Iain Ross.

I'm the CEO, and I will take you through the business update in a few moments.

But firstly, I'd like to introduce you to our new CFO, Graham Robjohns, who's, of course, known to many of you through his time as CEO of the MLP and prior.

So I'd like now to hand over to Graham, who will run you through the numbers.

Thank you, Iain, and good day to everybody.

If we start the presentation on Slide 3, financial highlights and our income statement.

As anticipated, our operating revenues were increased in Q1 as a result of further improvements in hire rates and round-trip economics, which increased the company's earnings from the Cool Pool.

As referenced in our earnings release, we expect the Cool Pool earnings to dip in Q2 due to the usual second quarter seasonal softening, exacerbated by delays in the startup of the Cove Point LNG production facility and production interruptions in Papua New Guinea.

It will, of course, negatively impact Q2 revenues.

However, we are now seeing production increasing and new production coming on, so we expect the LNG shipping market to continue its recovery in Q3 after this pause in Q2.

And Iain will talk a little more about that later.

Vessel operating expenses were higher as a result of the reactivation of Golar Viking during the quarter, but administrative expenses were lower at $14 million as compared to $16.8 million last quarter.

We again made a gain on the derivative that represents the fair value of the estimated discounted cash flows of pavements due in respect of FLNG Hilli Episeyo as a result of the Brent crude price moving above $60 a barrel over the contract term.

The total asset increased from $94.7 million to $108.3 million during the quarter as a result of the improvement in the Brent forward curve.

And as a result, an unrealized fair value gain of $13.6 million was recorded under other operating income.

Interest costs were higher this quarter due to lower deemed interest capitalized, mainly in respect of Hilli.

Other financial items were a loss of $1.2 million as compared to a gain of $24.1 million in Q4.

This noncash loss was predominantly the result of a mark-to-market loss of $9.2 million on the $3 million total return swap shares that we are exposed to following a $2.45 quarter-on-quarter decrease in the company share price.

And this is partly offset by a gain of $7.3 million in respect of mark-to-market valuations of interest rate swaps.

This compared to a significant gain of $20.5 million last quarter in respect of the TRS shares and as well a gain of $5.6 million in respect of interest rate swaps.

Turning over to Slide 4 and the balance sheet.

There are limited movement in the balance sheet this quarter, however, cash has decreased slightly from $215 million at the end of the year to $172.4 million free cash as at the end of March.

Significant cash payments included funding to Golar Power of approximately $40 million, which included the final equity payment in respect of Sergipe, [petty] costs of approximately [$90 million] and regular debt repayments.

This was partly offset by debt drawdown under the Hilli facility of $115 million and dividends from Golar Partners of $13 million.

Turning over to Slide 5. We have set out on this slide the constituent parts of our current debt, given that it's a fairly large number relative to our total balance sheet, and I think takes a little bit of explaining.

As you can see from the slide, we have 2 sale and leaseback facilities for the Golar Tundra and the Seal that are both long term but have requirements for term employment by specific dates.

If term employment is not in place by these dates, then the bank has an option to require repayment.

We have been advised of an extension on the time limit to executive term employment for the Tundra until June 2019, subject to documentation.

At the Seal facility, employment deadline is December 31, 2018, and we are in discussions with banks to -- with regards to refinancing this facility or potentially extension of the existing facility.

Also including short-term debt, is $397 million of debt related to the bank leasing subsidiaries of sale and leaseback banks that, under U.S. GAAP, we are required to consolidate, so-called variable interest entities.

This debt is economically not short-term to Golar, but GAAP requires it -- requires us to show it for short term.

We then, of course, have $640 million of Hilli debt, which will be refinanced by an already committed $960 million sale-and-leaseback facility upon acceptance of Hilli.

And finally, of course, we have the actual current portion of long-term debt of $28 million.

So thank you.

And with that, I will hand back to Iain to carry on with the business update.

Thanks, Graham.

Turning to Slide 6 and the FLNG update.

Hilli Episeyo commissioning has progressed well, and albeit with a frustratingly large number of small commissioning-related issues that I have to say our teams on the vessel and onshore support have overcome with dedication and persistence.

And consistent with my remarks on the Q4 2017 call, I can confirm that none of the commissioning issues experienced today lead us to doubt in any way the process or our ability to meet our performance criteria.

We are in commercial production.

We offloaded our first full cargo this month.

And whilst we are late on achieving full commercial acceptance, we are cash-positive from our notice of readiness, which was tendered in December.

We're currently offloading to Golar Maria, which will take our second full cargo, noting that we've already delivered the first part of that cargo to date.

Production on the Hilli has stabilized, and we're now consistently producing at or above nominated or contractual rates.

And we hope to achieve final acceptance with our customer in the coming days.

Moving on to the Fortuna project.

We report that finding a financing solution that's in the best interest of our shareholders remains elusive despite significant amount of effort, particularly over the last few months.

And as a consequence of this lack of finance, our JV partner, Schlumberger, has advised Golar that it no longer wishes to participate in the Fortuna project.

Golar and Schlumberger now plan to wind down the OneLNG joint venture.

And Golar and Schlumberger have agreed to work together in the future on a project-by-project basis.

We still believe in the Fortuna project, and therefore, Golar will continue to work with operator Ophir and the Equatorial Guinean government to bring this development, with its strong economic returns, to fruition.

However, I must state that we're not prepared at this point to expose shareholders to significant equity raising in order to fund this project.

And whilst a financing solution may take some more time, including potentially introducing new equity partners, it's not our intention to make any further announcements or commentary on Fortuna until it becomes a viable project.

As a result of the plan to wind down OneLNG and recognizing the time and difficulty associated with the development of integrated asset FLNG projects, I'd like to make 2 comments: Firstly, that the asset-related projects remain attractive to Golar and we still believe in the value that can be created across the full value chain from a gas module that sits in the reservoir right the way through to the electron that's generated in the power station; and secondly, we don't want to lose our first-mover advantage in FLNG that we've created through the Hilli project.

So in recognizing that asset-based projects take more time, we will concurrently pursue tolling or time-related arrangements, such as Hilli, to develop our FLNG offering and keep the production line moving.

The experience we will gain from the tolling projects will help us derisk any integrated asset-based project of the future, and we do hope that Fortuna is the first of these to come through.

And in that vein, Golar was pleased to announce the commencement of the FEED update for the BP Tortue project offshore Mauritania and Senegal.

This is a tolling project that positions the Golar Guinea, which is a sister ship to the Hilli, as the next likely conversion candidate.

The FEED update is expected to run for the next few months, allowing BP to work with its partners and hopefully take FID later this year.

And finally, our Mark II FEED has been completed, and the design looks to be competitive both in terms of cost and schedule, still, we will continue to pursue opportunities for that product, including the Delfin development and other projects.

Moving on to the shipping market.

And during the first quarter, we enjoyed steady rates and charter activity, supported by strong underlying demand sustaining firm prices and supporting rates up to $85,000 a day during January.

A seasonal softening and activity resulting in falling LNG prices and an end to interbasin trading opportunities by late February, charter rates with TFDE dropped accordingly to around $65,000 per day.

And by early April, the rates were down to about $45,000 a day.

Whilst the average winter rates were about 50% to 60% up on the same period last year, the shipping market does remain finely balanced.

And what we've observed between first quarter and into the second quarter is that the few extra ships coming into the market during the period, that shoulder period, has had a short-term effect on the spot rates.

And this also translates into reduced ballast and positioning payment, so that when we combine this with the lower utilization, you do get a drop-off in TCE for the period.

Exports from Cove Point have now commenced, and PNG has, of course, restarted production.

Wheatstone train 2, Ichthys LNG are also scheduled to commence production, whilst both Yamal trains 2 and 3 are now expected to start producing before the year end.

Rates are improving once again and indicate a solid year-on-year improvement, which is occurring earlier and earlier in the calendar year than last year.

Looking further ahead, despite a recent spike in vessel orders for delivery in 2020, 2021, it doesn't -- the market remains structurally short by about 25 vessels over the next 2 to 3 years.

Material improvements in September to March average winter rates, which increased from around $40,000 per day in 2016, '17, to around $60,000 per day in 2017, 2018, can also be expected over the coming years.

And strengthening European and Japanese LNG prices, which up around 50%, indicates strong demand for LNG and create good opportunities for U.S. export, where Henry Hub prices are, in fact, lower than 2017 levels.

So we're seeing tightening again as we move into the summer season, positive arbitrage opening up between Henry Hub and Southeast Asia.

And of course, the telltale sign of more term-related inquiries starting to come in.

Longer-term, we remain of the view that we expect upward pressure on rates commencing in quarter 3, firming up more into quarter through -- quarter 4 and through into 2019.

Now having a look at FSRUs and power.

The Sergipe power station project in Northeastern Brazil continues to make good progress.

As announced earlier in the quarter, we completed our project financing.

We have all equity now paid in and full nonrecourse debt facilities in place.

CapEx at current exchange rates is about $1.75 billion, which includes construction, finance and a cash reserve comprising $1.35 billion in debt and $400 million in equity, with the Golar share of all of that at 25%.

The power plant modules continue to be delivered, and we have around 2,000 workers now on site.

The FSRU Nanook charter agreement has been concluded, financing of the vessel is in progress.

And Golar share of the vessel is 50%.

So the total Golar share of the Sergipe project, the power plant and the FSRU is expected to deliver around $100 million in EBITDA per year with further upside potential in the utilization of the remaining gas capacity in the FSRU.

We remain fully committed to finding additional integrated gas-powered projects to leverage the experience we have gained through Sergipe, and this involves upfront development, particularly around permitting.

And we're active already on a number of those projects.

In other FSRU business, we continue to see opportunities that would involve newbuilds.

These do remain highly competitive and are under licenses to us.

We remain of the view that smaller-scale FSRU conversion projects and integrated gas to power projects make stronger investment cases for us, and we will continue to pursue these.

Finally, turning to the summary and outlook.

The acceptance of Hilli Episeyo will validate Golar's low-cost FLNG solution.

Valuable lessons learned during conversion and commissioning also create opportunities to further enhance the facility design and the yard productivity.

We believe that Golar has a significant lead in this business.

Post acceptance, hire on Hilli at the full rate is expected to generate approximately $164 million of base level annual EBITDA, 50% of which will accrue to Golar Partners.

Assuming the current price of around $75 per barrel is sustained, the Brent link associated with contracted trains 1 and 2 would add approximately a further $45 million in additional cash flows per year, all of which would accrue to Golar.

Trains 3 and 4 represent an attractive commercial opportunity, and the company is optimistic that these will be utilized in due course.

Executing a binding Heads of Terms with BP for up to 2 FLNG units to service the Tortue fields, offshore Mauritania and Senegal, enhances the credibility of Golar's FLNG offering and is a significant and very positive step for both the company and the project.

FEED work is being progressed at pace in order to meet the required timetable for FID later this year.

Work on the draft commercial and construction agreements has also commenced, and preliminary financing discussions indicate a good appetite from a wide variety of lenders.

We're attracting further interest in our FLNG product.

And whilst we remain committed to the integrated asset development opportunities, there's a good short-term business and the ability to refine our delivery through further FLNG tolling opportunities.

The seasonal softening of the shipping market was expected.

This will negatively impact the second quarter 2018 TCE, which is expected to be around half our first quarter of 2018 levels.

The underlying thesis of a sustainable recovery in the shipping market from the third quarter of this year, however, remains intact.

This is supported by new production and the large price differential between European, Asian and U.S. gas prices, which is increasing our ton miles.

The 25-year Sergipe power project is now fully funded.

Based on the current exchange rates Golar's share of EBITDA annually from its effective interest in the combined power station-FSRU is expected to be around $100 million.

And options to monetize the FSRU Golar Nanook's 65% spare capacity are also being pursued.

Demand for competitively priced FSRU conversions remain robust and Golar has a strong lead in this market.

Startup and acceptance of Hilli Episeyo and financial close for the Sergipe project are 2 significant steps towards the derisking of the Golar investment case.

Earnings from Hilli and the resurgent carrier market are expected to result in significant and sustained improvements to earnings from the second half of 2018 forward.

We are progressively transforming from an LNG shipping and FSRU company to a more integrated gas to power company.

We believe that creation of a strategic platform, which includes long-term FLNG and power contracts, represents a solid basis for long-term value creation.

Thank you for listening.

We're pleased to take your questions now.

(Operator Instructions) And we can now take our first question from Jon Chappell from Evercore.

Iain, the comments about keeping the first-mover advantage, I think, are important in the tolling structure as well.

So just kind of a bigger-picture thing.

You said you had some inquiry from others since we've had proof-of-concept on the Hilli.

How quickly can things move forward with either FEED studies, FID, realistic first gas?

And is that something that needs to be done through now newbuilds?

Or are there other older vessels you can acquire for the conversion process similar to that of Hilli?

I -- look, I think it's a sum of all of the above.

We're working on a combination of a Mark I, which is the Hilli design, with our Mark II, where, as we've mentioned previously, we're also examining newbuilds.

I think it depends very much on the opportunity, the customer, the mad ocean conditions and the speed in which they want to come to market.

Our Mark I and Mark II designs are faster to market, and newbuilds may take longer.

So -- and it just depends on the opportunity.

In terms of the timing of how we can get these going, how quickly we can get this going, I would say that it's early days for us to determine the exact sequencing.

What I do know is that we're focused on getting the BP project through to FID, we get the Hilli up and running with commercial acceptance.

And I think as a combination of those 2 events, we will get further confidence in the product, and I believe that's going to drive many more additional inquiries coming to market as people look to monetize marginal gas assets.

Okay.

And then my second question, I know you're not going to be able to say too much on kind of the next steps in Fortuna, but I think there's the fear out there that this project's dead.

So to the extent that you can just talk about your willingness to pursue other options, the timing that, that may take.

And then also kind of the -- tying these 2 questions together, what's happening with the Gandria right now?

I know you've done some work on that.

Does that maybe jump ahead to the BP project?

Could that be used for another potential project that we don't know about yet?

Are you still kind of holding that for Fortuna, potentially?

We -- what we've done with the Gandria is we brought it into the Keppel yard.

And we said at the time, we'll carry on -- carrying on early works that will allow us to -- I guess, to create a generic FLNG position.

So there's nothing that's specific to any project that's been done on the Gandria.

It's early work surveys, life of vessel expansions, which will accelerate any project, if you like, as it goes forward.

And in terms of Fortuna, we're continuing to support the project.

We're having discussions -- we're continuing having finance discussions.

I was involved in some discussions last week, as late as last week, and trying to get this thing going.

So I don't believe it's dead at all.

We'd like to keep the project going.

And we are also in discussions with other potential partners to replace Schlumberger on the project.

It's obviously relatively fresh news to us, so we're moving forward.

But we do believe in the project.

We do think they have strong economics.

And if we can get the financing away with the right partnership, then we're ready to go on it.

Next question comes from Michael Webber from Wells Fargo Securities.

I wanted to talk a bit about the kind of the shuffling of the project pipeline that you just mentioned.

And it seems like it's something that's been kind of happening kind of drifting kind of gradually for the past 6 or 9 months.

And it seems like it's been formalized today, with you guys starting to kind of dissolve the JV and Fortuna sliding into the right and potentially off the board and Tortue kind of moving front and center.

So if we kind of dissect that a little bit.

This will be the second time that Schlumberger would have walked away from this project.

And I guess the sense has always been that this was an appetizer for them in terms of looking for something beyond EG, something scalable that would be kind of more meaningful for their scale.

In that -- I guess within that context, it seems like you guys have found that in Tortue, which could be anywhere from 1 to 4 more FLNG assets and Schlumberger wasn't involved there.

I'm curious, to what extent does that play a role in you guys dissolving that JV?

And is -- do you need Schlumberger as much today as you did maybe 2 years ago when you guys formed that JV?

I would say the Schlumberger -- what we hoped to create with OneLNG was that Schlumberger would bring the upstream capability, and we would bring our FLNG capability.

You put it together, put a wrap around it and be able to bring, obviously, finance to our project.

And I think the ongoing delays, together with other capital and resource priorities that are within the Schlumberger organization, has concluded their decision to end participation in Fortuna.

And from my point of view, Golar's got to be very clear with the market and potential customers who do those -- where do those opportunities come into the company.

And having uncertainty as it relates to OneLNG is not helpful to our end market.

So our view is let's bring them into Golar to start with as if FLNG is the key to unlocking the monetization of the reserves.

And if we can bring in Schlumberger or another partner at that point, then we'll do it.

So it's more about us taking control of our own destiny than anything else.

Sure.

Okay.

If I think about kind of that shakeup and kind of the shuffling of the pipeline, it seems like you guys had to drive and still are driving the bus on Fortuna to a large degree.

If that slides to the right and this, the Tortuna -- or Tortue, rather, is front and center, that's a BP and Kosmos-led project.

I certainly wouldn't call you guys a passenger on that, but I think there's probably less heavy lifting associated with that on your end than maybe some of the projects you guys have really, really had to drive the bus on.

Can you talk a bit about how quickly you think that could scale?

And when they might need a second asset?

Would that be -- would you need to deliver the first before you would actually see a second FLNG unit going to hook up to that FPSO that I believe FTI is working on?

And maybe what sort of internal resources were tied up with Fortuna that might now be available to look at Tortue and other projects?

Considering that it seems like you have to do maybe less commercial work around that than you had to do with Fortuna?

I think it's a fair comment that just focusing on Fortuna relieves certainly some of the technical and commercial resources than trying to do 2 projects in parallel.

I do believe that we could have done 2 projects in parallel.

However, we are absolutely focused on getting the BP project to the point where they feel confident toward FID.

And in terms of what comes next, they probably said that they got 10 million tons a year to get going.

I don't know if it's appropriate for me to talk publicly about their project schedule.

It would probably better to ask them.

I would imagine that they would not be waiting until their first FLNG vessel's up before they've at least decided how they're going to move forward with the next 1 or 2.

Sure.

It seems like the FEED work they're doing on the FPSO would be able to handle 2 FLNG assets.

So the idea behind an FID, it just -- it seems that the -- if you're going to FID the FPSO with the availability to handle 2 FLNG assets, is it fair to say that first gas on that project would likely include 2 FLNG units?

I would imagine the first gas will include one, and then there will be another one a bit after it.

And then more after that.

But you're right about the capacity of the FPSO to deliver the gas.

Our next question comes from Fotis Giannakoulis from Morgan Stanley.

I want -- I'm trying to understand if the FLNG projects need, going forward, a large E&P partner, an oil major similar to what Perenco did to guarantee the economics of the project.

And you talked about new potential partners for the Fortuna project.

What type of partners can they be?

How many partners they are available?

If you can give us, a little bit, a profile of the potential partners.

Well, they could be -- I guess if you think about it in one extreme, they could be technical subsurface partners that are big, and have a balance sheet and prepared to bring equity to the project.

Or on the other extreme, they could be more of an operating type of partner or a sort of an oil company, a gas company-type of partner and anything in between.

I think there's a lot of interest -- or there's reasonable interest in the Fortuna project.

It's a case of between ourselves and Ophir and the Equatorial Guinean government, finding a combination of partnerships, plus ourselves, that can come up with a financing solution that works for all of us.

And I just got to reemphasize that it's the finance that's become a problem on this project rather than anything else.

And regarding this issue there, the financing difficulty that this project has faced, and I assume that, that could be a similar problem for other projects.

Is it a country risk?

Is it the balance sheet behind its projects, the projects can get financing when you have BP, but it's more difficult when you have smaller companies?

What is exactly the difficulty?

And why the Perenco project did not face this kind of difficulty in getting financing?

And it got financing at such high levels.

Fotis, it's Graham.

I think it's a combination of all of those that you mentioned in your first question, reference the ease of financing and whether a large credit-worthy counterparty is required.

But country political risk is certainly a factor in these projects.

Complexity of the structure is certainly a factor, and that can be a plus and a minus if you're including the upstream assets and the midstream unit all-in-one financing.

Obviously, there's additional security there, but there's additional complexity.

And then of course, the counterparties involved are also important.

So if it's a tolling agreement, then obviously having BP as a counterparty is pretty helpful in terms of financing.

Next question comes from Chris Wetherbee from Citi.

This is [William] on for Chris.

So as we looked at some of your cost, they kind of, like, stepped up this quarter.

I'm just kind of wondering if you can give us a sense of, like, how things are going to change after the Hilli's accepted and now that you have Golar Viking included.

If you can just kind of give a sense on, like, your vessel operating expenses and, like, potential run rates going forward.

Sorry, just so I've got that question clear.

You're asking what happens to the -- our operating expenses post-Hilli startup?

Yes.

And also, like, the Golar Viking that was kind of with that as well.

Well, I guess Viking, Golar Viking's been operational for most of the quarter.

But -- on LNG carriers, ship operating expenses are in the sort of, pristine vessel, around $13,000, $13,500 a day.

And the FLNG unit OpEx is in the ballpark of plus or minus $4.40 million a year, something like that.

Maybe a little higher to the low 4s.

All right.

And also on your agreement with BP, apart from, like, the July 1 date that you have in your release, I was just wondering if there any other major dates that we could kind of be looking for as part of that, and the potential FID by [back half] 2018.

There are no other specific dates that we can discuss.

What we can say is that the FID of that project is solely the hands of BP.

(Operator Instructions) Next question comes from Randy Giveans from Jefferies.

So looking at the Hilli, obviously, trains 1 and 2 are now basically complete, so congrats on that.

Two questions there.

So with the Golar Maria currently taking a cargo, is there a possibility that, that vessel, or maybe even the Mazo, signs a multiyear time charter to ship Hilli cargoes?

I wouldn't have thought so.

Anyway, that's -- no, I don't think we've got any comment on that at all.

All right.

And then second, what is the time line around train 3 and/or train 4?

How long would it take those running once FID is approved?

And what is keeping train 3 from happening?

Well, train 3 is already running, if you like, in terms of production capability.

Once we get our formal acceptance from our customer, then we'll start the dialogue on train 3. The only comment we'd make is it looks like it's a sensible thing for everyone to get involved around the economics of that additional train.

So we're very hopeful that, that will happen in due course.

Okay.

And then any updates on the Tundra operating as an FSRU?

Or is that still an LNG carrier currently?

Tundra's still operating as a carrier at the moment in The Cool Pool.

And we're continuing to look for opportunities to position her as an FSRU.

Obviously, she's already converted, so it makes it easier to place her if we can get the right rate.

But as we've commented before, some of the rates in the FSRU market are quite low.

So yes, she's trading.

And yes, we still are looking for FSRU opportunities for her.

Okay.

And then on the LNG shipping side, what is kind of current fleet utilization for both your spot vessels during 1Q '18 and then kind of currently now in the second quarter?

We don't tend to comment on what utilization has been.

Obviously, in the first quarter, it's been fairly good.

And it'll probably drop off a little bit in the second quarter as we've mentioned, as headline rates will do as well.

Obviously, as I'm sure you're well aware, the TCE rate or sort of net earnings in a vessel is a combination of the headline spot rate that you get and the utilization.

What we're saying is that we think the second quarter TCE will be about half of the first quarter TCE.

And that the large component of that is actually (inaudible).

Including (inaudible).

Okay, great.

All right last question for me, just to clarify a lot of the earlier questions.

So what would you ballpark the chances of Fortuna actually happening?

And could it happen without Ophir?

I don't think I'm going to answer either of those questions, sorry.

All right.

I just wanted to give you the opportunity.

Last question comes from Michael Webber from Wells Fargo Securities.

Just want to follow up with one more.

In the release, I think kind of beyond the shuffling of the projects, you guys kind of detailed $50 million of additional cash flow that stems from the S curves on the Hilli contract.

So something that's difficult to put into our models, into our numbers, but it's good to know that -- obviously, that those contracts are in the money and is generating that much cash.

Can -- I believe you've renegotiated a toll on train 3 and it's obviously subject to increasing the export license and proof-of-concept, et cetera.

Can you maybe walk us through the time line associated or the sequence of events, I guess, associated with train 3?

Is that something that you would need government approval for first?

I'm assuming Perenco will push that to the government.

And then is there -- I'm assuming some sort of a RoFR associated to get -- with Gazprom around that tolling structure for train 3. Or would it be just off to the open market?

Mike, it's Graham.

Just let me first answer the first bit of it about -- on the Brent forward curve and then allow Iain to comment on your second part of this -- the question.

But the additional EBITDA from the Brent forward curve is kind of -- well, easy to model in a simplistic way in terms of you kind of simply take the Brent forward curve and multiply every dollar above $60 oil by $3 to a cap of $100 oil.

So -- which is how we came up with the sort of $75 oil equals $45 million a year in EBITDA.

That's not sort of perfect because it doesn't quite exactly (inaudible) calculation for this.

It's very -- it's a good approximation of what the EBITDA will do.

It's not linear, yes.

And in terms of train 3, like I said earlier, we are focused on getting acceptance of trains 1 and 2 commercially out of the way, and then we'll dive into conversation with Perenco.

And I don't think we would disclose any details of that particular contract.

And we'll be pleased to tell you when we're producing from 3 trains rather than 2, but other than that, I think you just leave it at that just now.

Fair enough.

Just, is it fair to assume there be an S curve on a train 3 tolling agreement as well?

Yes, I think that would be a fair assumption.

Next question comes from Greg Lewis from BTIG.

Iain, in the presentation, you talk a little bit about -- you kind of mentioned it on a high level about the power update with -- there's high interest.

Can you talk a little bit about the types of opportunities in terms of size and scale?

And when we could actually -- realizing that these are multiyear projects, when -- at what point can we expect to maybe hear from Golar about maybe being a little bit more active with future projects, now that Sergipe is kind of put to bed in terms of ready to start moving forward with?

So it's a good question because we've obviously not been that great in trying to update the market on the fact that we are progressing some of these power projects.

There's a couple of variants of this.

There's projects that we're focusing on, perhaps, around the Indian subcontinent, which are, I guess, less formal in their construct.

So that involves a lot of work in trying to get them up with a local partner, with how we're going to get the power offtake sorted.

If you go back to Brazil, where the Sergipe project is, it's a very regulated and organized process that requires an auction, and they have auctions several times a year.

And we are positioning for a number, so more than one of these auctions over the coming months.

And in order to qualify to bid in an auction, you have to do a certain amount of work to obtain the right license to be able to bid on the auction.

And that process, as I said, is quite formal and regulated.

So we've been spending quite a lot of money picking and choosing the opportunities that we want to pursue.

And we will be, I hope, bidding on some of those this year.

So the time line for -- of size, they're kind of the same sort of scale as Sergipe, maybe a little bit smaller.

So have to -- the size of Sergipe.

And it would take a similar amount of time to get going.

And they're of a comparable level of complexity.

Next question comes from Eric Almeraz from Apis Capital.

I noticed -- first of all, congratulations on getting the Hilli up and running.

I mean, you guys have been talking about that for years.

And that entire type of ship has been in discussion for many, many years that I've been following the company.

So congratulations on that.

I wanted to ask you about just some of the hiccups that you had in terms of ramping it up.

It sounded like there were a lot of small things to deal with.

And I know that many of your potential customers are watching that as well as your investors.

I wonder if you could talk a bit more about that and what you've learned in the process.

And maybe how, as you continue to roll these out in the future, you'll be able to get it up and going a bit faster.

So I mean, it's been an interesting journey.

As I said before, there's not been one major thing that's stopped the commissioning process.

And I guess before go into comment on that in a little bit more detail, every commissioning process of any process facility has got commissioning-related upsets.

And anyone that's been involved in commissioning knows that you can't predict everything that will go wrong.

We've seen things that have been inside our control and that we can do a better job of next time, and things that have been less inside our control and we just had to deal with them.

Some of the things inside our control relate to some of the vendor selection.

We've had a lot of support, good support from equipment vendors on the facility.

While we've had breakdowns and change-outs of certain components that have failed.

And of course, as you are in the -- as you're bobbing around in the ocean offshore West Africa, it's a bit harder to fix some of this sort of equipment than you are when you're in the yard in Singapore.

So perhaps do even more at the onshore facility is probably one of our goals for next time.

You can be assured that we've gathered a really comprehensive list of lessons learned as we've developed the project.

And in fact, the basic design on Gandria and Guinea has already got some of these incorporated.

So I -- it's been a first of a kind, it's been a prototype.

I think the team that's worked on this has done an outstanding job of getting us there in really record time and record cost.

And as we move forward, we want to continuously improve that so that we move from prototype into production line.

Next question comes from Fotis Giannakoulis from Morgan Stanley.

I just want to clarify, is there a deadline on the licenses for the Fortuna project that can be extended beyond the end of 2018?

I think that's a matter between the Equatorial government -- Guinean government and Ophir.

So the -- it does exist.

And this is this something that -- is there discussion to be extended if necessary?

Is this something that is possible?

I'm sure it's possible.

Anything is possible around that.

All I'm trying to advise you is that that's between -- we're not a party to that production-sharing contract.

That's between Ophir and the EG government.

Okay.

And one last question.

Can you give us an idea if Tortue projects, if we shall expect an oil-linked upside for the Tortue product, similar to what you have for the Perenco project?

No, we're not going to comment on that at this [stage].

There are no further questions in the queue.

I would now like to turn the call back to the host for any additional or closing remarks.

I'd just like to thank everyone for their continued interest in Golar.

And thank you for your questions.

And we look forward to talking to you next quarter.

Bye-bye.

Thank you.

That concludes today's conference.

Thank you for your participation, ladies and gentlemen.

You may now disconnect.