Golar LNG Ltd (GLNG) 2022 Q3 法說會逐字稿

Welcome to the Golar LNG Limited Q3 2022 Results Presentation. (Operator Instructions). After the slide presentation by CEO, Karl Fredrik Staubo, and CFO, Eduardo Maranhao, there will be a question-and-answer session. (Operator Instructions). I will now pass you over to Karl Fredrik Staubo, Karl, please go ahead.

Thank you, operator, and good morning, and good afternoon to all. Welcome to Golar LNG's Q3 earnings results presentation. My name is Karl Fredrik Staubo, CEO of Golar LNG. I'm accompanied today by our CFO, Mr. Eduardo Maranhao, to present this quarter's results. Please note our forward-looking statements on Slide 2. Slide 3 provides an overview of Golar. We own 2 FLNGs, the Hilli operating for Perenco in Cameroon and the Gimi that will start a 20-year contract for BP next year. We are focusing our efforts on FLNG growth projects, and we have developed 3 different FLNG designs. All 3 designs are based on the same proven liquefaction technology and maritime interface but differ in liquefaction capacity.

During the quarter, we have placed orders for long-lead items for a new Mark-FLNG with a total liquefaction capacity of 3.5 million tons. The most notable change in the company overview since our last quarters or share sales totaling $430 million, reducing our CoolCo shareholding from 31.3% to 8.3% and the sale of NFE shares, reducing our shareholding from around 6% to just shy of 3%. Turning to Slide 4 and the highlights of the quarter. Hilli generated an EBITDA to Golar of $64.1 million, a 2.6x increase from Q3 last year.

During declared it's 0.2 million tons of production increase from Jan 23 to end of contract in July 2026, meaning that we will maintain production at 1.4 million tonnes per annum for the period. The incremental volume has a tariff linked to TPS gas prices. During the quarter, we entered into hedges for 50% of our Q4 2022 exposure at $70 per MMBtu. We hedged 100% of our 2023 exposure at $50 per MMBtu, and we hedged 50% of our 2024 gas exposure at $51.2 per MBG. In total, these hedges provide the cash flow visibility for EBITDA to Golar of around $260 million. As of today, the TTF hedges are currently about $75 million in the money. Turning to Gimi.

She is now 90% complete and remains on schedule. We have engaged our pre operations, and we'll have a maritime crew of about 120 persons mobilized onboard a vessel by rent. On FLNG growth, we continue to see increased client interaction and strong progress on potential new Folgadcts. During the quarter, we have been working with an upstream partner for a very attractive potential integrated FNB project.

We have also signed 2 development agreements, one with a super major and another with an independent E&P company. Under these development agreements, both parties commit to deliver the fine scope of work within set deadlines to progress potential new FLNG opportunities and agree on key steps to reach FIDs. We believe that securing attractive delivery of our next petulant unit will increase Dollar's ability to drive value with prospective FLNG clients. This is the reason why we have ordered long lead items to secure delivery within 2025.

On corporate activities, we have sold 8 million Coco shares and 6.3 million NPSs. The share sales resulted in net proceeds to Golar of SEK 430 million and is in line with our communicated strategy to reduce our shareholding in financial investments to fund FLNG growth. We also bought back 400,000 shares in the quarter at an average price of $23.25 per share, and our share count now stands at 107.5 million shares. We have committed to invest up to $10 million in Macau Energy, a newly established small-scale LNG liquefaction company, targeting land-based stranded gas and associated gas resources as well as biogas. [Riccited] about the strong track record of the Maka Energies team and believe Golar's liquefaction expertise, combined with the small-scale land focus of Macau can create a successful combination for small-scale liquefaction opportunities. We are also opportunistically considering strategic partnerships or M&A throughout the LNG.

I will now hand the call over to Eduardo to present our Q3 results.

Thanks, Karl, and good morning, everybody. I'm very pleased to provide an update on our group results for the third quarter of 2022. Turning over to Slide #6. I wanted to show some of the financial highlights of this quarter. Our operational performance continues very strong. We recorded total FLNG tariffs of $109 million, up 81% compared to Q3 of 2021 on a year-on-year basis. FLNG tariffs is comprised of total revenues from liquefaction services and also realized gains on oil and gas derivative instruments.

This quarter, we recorded an adjusted EBITDA of $85 million. When compared on a year-on-year basis, this represented an increase of 63% compared to Q3 2021. We ecorded net income of $141 million for this quarter, including $51 million of unrealized gains on NFC shares, $25 million of unrealized gain on interest rate swaps and other derivative issuance, $12 million of unrealized gains on TTF-linked derivatives as well as $10 million in net earnings from other and other equity method investments. Our share of contractual debt at the end of Q3 was $993 million, a significant reduction when compared to the same quarter of the last year when we had $2.1 billion of gross debt.

So moving on to Slide #7. We continue to strengthen our balance sheet, which will allow the company to pursue future FLNG growth projects. Our cash position currently stands at more than $1 billion to date. Total cash at the end of Q3 was $612 million. Further to the end of the quarter, was sold, as Karl mentioned before, 8 million cool company shares and 6.3 million in efficiency, raising additional net proceeds of around $430 million. We now have total cash gain of more than $1.04 billion. When we take into account the value of our listed securities in NSE, cool company in Avenir, our total liquidity position stands just as shy at $1.5 billion. When considering our contract of debt, as I said before, of $993 million, we now have a net cash position of $452 million. As you can see on the right-hand side of the slide, we have no significant debt maturities until 2025, which is when our $300 million bonds matured.

So turning to Slide #8. We would like to provide some further insight into our earnings from Hilli. And I think just by way of recap, so the Hilli tariff is comprised of 3 main components. We received a fixed tolling tariff. We also have a Brent-linked tariff as well as the TTF-linked tariff, which has started in the beginning of this year. Also, as Carl mentioned before, we have managed to hedge our TTS production at a very attractive level. And as a result of that, we continue to see a very strong increase in Hilli's EBITDA generation, which this quarter totaled $64.1 million, which is 2.6x the same amount that we had a year before. So moving on to Slide #9. I wanted to provide some further updates regarding our hedging arrangements.

We have entered into swap arrangements to hedge our exposure to TTF, including 50% of Q4 2022 at a level of $70 per million btu, which has secured $28 million of distributable EBITDA to Golar. We have also hedged 100% of 2023 and 50% of our 2024 TTF-linked production at levels of around $50 per million Btu and $51 for 2024, which in total have secured an additional $233 million of distributable adjusted EBITDA to Golar. Based on that, our share of Hilli's EBITDA generation is expected to reach $295 million in 2023. When we consider that our share of the debt service for next year is expected to be around $50 million we see an expected free cash flow to equity of around $245 million just from Hilli. I'll now hand over the call to Karl who will talk a bit more about our future LNG projects.

Thank you, Eduardo. Turning to Slide 11 -- turning to Slide 11, and I'll update on Gimi construction update. The unit is now 90% complete and remains on schedule for sailaway during first half of next year and contract start-up during second half. We expect to start booking commissioning revenues during second half and contract start-up in Q4 of next year. As a reminder, Gimi will generate $151 million in EBITDA to Golar every year for 20 years once contract start-up. On Slide 12, we elaborate a bit about what we are doing in terms of the scale of the game construction projects.

We now have a construction team consisting of an average daily workforce of 4,600 with 24/7 activities. We have worked 26 million man-hours today. We have done 37,000 tons of new steel and equipment installed on board. We have installed 1,500 kilometers of cables. That's equivalent to the distance between London and Rome. Pre-operations are initiated, and we will have a crew of more than 120 people mobilized to the vessel by year-end. Once in operation, the unit will produce about 2.2 million tons of LNG per year, enough to power more than 3 million U.S. arms. Turning to Slide 13 and an update on the long lead and commercial development for new FLNG projects. Based on strong client engagement for FLNG growth projects, we are of the view that securing attractive delivery for a new FLNG unit increases our ability to drive value with prospective FLNG clients.

We have, therefore, placed orders for main long-lead items required for a new mark to 3.5 million tonne FLNG with total commitments of around $300 million. Included in that, we have engaged more than 200 engineers from the topside provider, shipyard, a third-party engineering company and Golar, all working on Mark II development and to secure attractive delivery within 2025. I -- on the commercial side, we are working together with an upstream company to develop an attractive integrated FLNG project. As mentioned, we have signed paid development agreements with new prospective clients for potential FLNG deployment on large proven gas reserves on behalf of a super major and an independent E&P company. We see LNG economics remaining attractive for both the integrated and tolling fee discussions we are currently having.

Turning to Slide 14 and in support of the value of near-term liquefaction capacity. In August, Exmar announced the sale of its FLNG Tango, which is a 0.6 MTPA liquefaction unit, which was sold to ENI for a price ranging between EUR 572 million and $694 million. This implies a price of around $1 billion per tonne of liquefaction capacity. In September, Kinder Morgan sold 25.5% of their [Elber] liquifaction plant also at an implied value of close to $1 billion per tonne. This compares to the CapEx per tonne that we have guided on of between $500 to $600 per ton. So we see that the attractiveness from charters but also from people looking to acquire liquefaction assets are valuing near-term cash flows, which is further giving support and confidence to why we have placed the long-lead items.

Turning to Slide 15. We have prepared an overview of historically liquefaction FIDs by year. As you can see from the overview, so far in 2022, there's been 26 million tons of liquefaction capacity entered into. One could argue that that's somewhat surprising given the geopolitical theme and the gas prices, both in Europe and Asia. We are less surprised by this development because we know how long the SLNB projects take in terms of environmental sign of governmental approvals and does the share size of the engineering required for large offshore infrastructure projects. We are, however, very encouraged by the activity, and we agree to S&P Connect's view that next year, we'll see a significant uptick in FLD, in liquefaction FIDs.

And hopefully, a significant part of that will be FLNGs. Interestingly, U.S. is driving the majority of new supply growth with 95 million tons of the 148 million tonnes of new liquefaction capacity forecasted until 2030. Turning to Slide 16. We continue to mainly focus on African LNG projects for 3 reasons. When you do an FLNG project, you have 3 key cost inputs, source yes, liquefaction costs and shipping distance to end users. We believe we can source African gas reserves at around $1 to $2 per MMBtu versus current [Henry Hub] prices of $6. So 65% of new liquefaction projects has a cost of 2 to 4x our input cost from the outset, we think we're advantaged. As alluded to, our CapEx per ton is cheaper than competition, both maritime and land-based liquefaction solutions.

And West Africa happens to be closer to end users, both in Europe and Asia. And if you have a business model with 3 key cost inputs and you're lower on all 3, we think that's a good competitive advantage from the outset. To summarize, turning to Slide 18, a familiar slide from all of our quarterly treatment patients, but yet summarizing the company in one slide. In 2021, we had adjusted EBITDA in the company of $74 million. Add to that, the oil upside and the TTF linkage that Eduardo explained, we see commodity-linked production, adding another $200-plus million Delivery of Guinea will add another $151 million of contracted EBITDA, bringing our adjusted EBITDA at current market rates to well north of $400 million. As explained, we now have a cash and listed securities position of $1.4 billion, where $1 billion is cash and the rest is listed securities.

Our contractual debt stands at just shy of $1 billion, leaving us with a net cash position of around $0.5 billion. We believe we're uniquely positioned for FLNG growth, as highlighted on Slide 19. We have 3 FLNG designs ranging from 2.7 million to 5 million tonnes. On slide to the right, you can see the track record of FLNGs globally. -- stability and production of reliability is key for any liquefaction project. And you can see that Hilli has a very stable production since start-up, which has not been the case for other FLNG solutions in the same time period.

We have the lowest CapEx per tonne, and we also have the lowest carbon footprint per tonne of liquefaction produced, which altogether gives us a compelling story for people considering FLB. To summarize, we are focused on attractive FLNG growth projects and have now placed orders for Mk-II long lead items. We expect our earnings growth to quadruple from 2021 to 2024 levels. We have $1.4 billion of cash and listed securities. We have a book value of $2.8 billion in building as we continue to generate healthy free cash flow to equity. Golar has been around for 75 years, 50 of which in LNG, where we have been a market leader in FLNG, both with our proven design and strong operational track record. -- combined, this is what gives us confidence to focus our growth efforts on FLNG. That concludes the prepared remarks.

So I'll hand it over to the operator for any questions.

(Operator Instructions). Our first question comes from the line of Chris Tsung from Webber Research.

Just touching on the divestments of CoolCo and nonfeature I guess, financing LNG project, do you plan to divest the rest for future projects? Or will there be some percentage of these companies you plan to hold on to? And also, what about Avenir?

I think what we have previously said and definitely stand by is that we view all of our shareholdings as attractive financial investments, but we will reduce financial investments to focus on core growth if and when we have core growth. We feel like with our current cash position, we are very comfortable to fund the Mark II project that we're now undertaking. It's safe to say that we don't need to sell any of our shares to fund that project. But if we do other growth initiatives, we will consider to further reduce our shareholdings. But at the moment, as we have previously communicated, we have to be shareholders in all those names and we being shareholders there as better than sitting cash.

Okay. And another one is just -- I know that you -- in this press release, you guys have ordered the only item for Mark II. Did that more or less secured timing of when it could be delivered in 2025? Or does that depend on when you guys take FID?

That is what is required to ensure that we still can deliver in 2025. So by definition, a long lead is the critical timeline. So as long as you secure the delivery of those, you ensure that you can still take 25 delivery. But of course, you need to progress the market investments to safeguard that delivery. So that means formal FID at some point as well. But for now, we have done everything to ensure that we're on track for delivery in '25.

All right. And just to confirm the Mark II, that's an integrated model?

t? So the units can be used on integrated and selling. It's not like a ship is customized to the commercial model of the ship. The ship is hardware at the end of the day. We have discussions for Mark II, both for integrated and falling, and there are several attractiveness of Mark II. One thing is construction timing, but the way the engineering has been put together, we have received very strong feedback on that design.

We will now move on to our next question. Our next question comes from the line of Ben Nolan from Stifel.

This is Frank Galanti on for Ben. I wanted to actually dig into Chris' last question there on the Mark II design, specifically around the vessel. Given that, that's a conversion, have you -- can you talk about what vessel type you need? Have you guys already picked that out? And can you talk around how much that's going to cost?

Yes. So basically, you use most fine ship. So you can take an existing carrier. There are plenty of [MOS] finds out there. And one of the disadvantages of MOS as a shipping vessel is that they're all steam-fired, which means that especially with the new regulations coming into effect from 1st of Jan next year, these ships are far less competitive than the more modern ships for shipping activities, meaning that you should be able to pick them up if you want to acquire them for conversion. We have inspected several suitable candidates, and we are discussing to if and when we will acquire a ship for a conversion. We can also use the Gandria, which we own, so we can also use that one. So we're not 100% dependent on buying another ship. We would like to buy one with somewhat higher storage capacity, but it's not a requirement.

Okay. That's helpful. Great. And then I wanted to switch gears a little bit over under the Hilli. Obviously, given extremely elevated global LNG prices and increased European demand. And can you talk about the possibility of increasing production on the Hilli? Is there -- is there a feed gas in the region that could be easily tapped? And is there any update you can give around the increasing Hilli production before the end of the current contract?

Yes, sure. So Perenco took up the 0.2%, so we're now producing 1.4. The 2 constraints in terms of increasing capacity is the size of the existing gas reserve and the second is the gas flow from the wells. But I think it would be in everybody's interest to increase production. It would benefit us. It would benefit Perenco the offtake, which used to be Gazprom has now been nationalized by Germany and changed name to See. Sef stands for securing energy for Europe. So all else equal, Europe wants more energy, not less energy.

So it could be a triple win where [Setagets] more volume Perenco and we increase production. But it's really down to the upstream part of it, which is under Perenco's control. And for now, it's standing at 1.4 million tonnes. And I think it's fair to say that we're all trying to encourage increased production and see what's possible. I don't think it's right of us to give any guidance on whether or not we think that can happen because it's a bit too early to say, but it's certainly a potential of time.

We'll now move on to our next question. Our next question comes from the line of Craig Shere from Tuohy Brothers.

So with the Mark II, you're now preparing necessarily be targeted to one of the prospective super major independent E&P FLNG customers you're negotiating with? Or in a really best-case scenario, is there a way you could envision perhaps 3 FIDs over the next 18 months?

Let's do one at a time. But for sure, our business is to do FLNG and FLNG growth. We like the development, both of prospective clients and projects. And we are ramping up activities as we have shown both from ordering long list, but equally important to engage a significant engineering team. So we would certainly not rule out that it could be more than 1. I think let's do one at a time because these are large projects. So I think let's focus on one at a time. But for – yes, we're here to move on this opportunity. We have a balance sheet to support it. We have an organization to support it, and we have focus across the company.

So when you rightly point out, these are large projects, and you don't want to get too far over your SKIs, you also noted that the negotiations included both integrated and tolling arrangements, the latter looking a little more like your BP [game], I presume. So I guess my question is, given your successful execution on construction of these things, shipyard interest and potential for another highly rated investment-grade decades-long toll. How do you think about your capital funding options if you were to get a long-term attractive toll? Could that lift a lot of the investment considerations off your shoulders, given the ability to lever that far better than the original Guinea contract?

Yes is the short answer. I think a couple of things. So we obviously have $1 billion in cash. We have $450 million or so in listed securities. I think it's fair to say that there is significant refinancing potential on both Hilli and Gimi, Gimi in particular, post-delivery, that could free up cash and improved terms. If you read the Q2 presentation when we also spoke about FLNG growth, we have received term sheets for financing of FLNG growth projects even during construction at attractive terms and a healthy LTV. So we do not see any balance sheet constraints for FLNG growth for [Opto] the units, we can do, we're really engineering and operations is basically what cuts the cap on capacity and not balance sheet.

We'll now move on to our next question. Our next question comes from the line of Liam Burke from B. Riley Financial.

Karl, on Slide 16, you highlight the production or African gas vis-a-vis Henry Hub. When you look at the FLNG production, just the process itself, are your next-generation FLNGs more efficient? And can they reduce the production cost per MMBtu vis-a-vis Hilli or Gimi?

So anything like when you build a new model of a car, you make it -- when you have a facelift model of a car, it tends to be somewhat more efficient than the previous one. So we constantly do improvements. So it's slightly more efficient. I don't think at the end of the day, that's what's going to make it or break it. When it comes to operational cost, the market is 3.5 million tonnes versus around 2.5 million for mark-on and there is some economies of scale because you don't need to staff up accordingly. So if you like operating costs per MMBTU produced will be somewhat more efficient by economies of scale and slight efficiency improvements of the design.

And do you see any competitive development by anyone else in developing FLNGs? It seems that you're increasing production, you're increasing efficiency, and you seem to have a great deal of interest from the energy majors and independent E&P companies.

Yes. Right now, we are the only ones that FLNG as a service. The only other fonts that operate in the world are oil and gas companies owning FLNGs on their own balance sheet for their own operations. So the only one that is doing this as the service today is Golar. And based on what we see out there, you have other people pursuing that. I think most notably is what NFE is doing on the liquid traction solutions. We encourage that because we think it's needed in the industry to be able to provide shorter time frames and new liquid faction solutions. But they too are focusing on producing hydrocarbons mainly for their own merchant and where they can use it in their downstream development or portfolio. So as a service, we see limited competition for the size of liquefaction solutions we have from credible competitors.

We'll now move on to our next question. Our next question comes from the line of Sean Morgan from Evercore.

I think on the last call for 2Q, we talked about a target date for a new FID announcement by the end of 2022. And we have 1.5 months left. So obviously, there's still a possibility for that. But when you think about what the biggest bottlenecks are for reaching an agreement and I guess, FID a new project, is it the upstream negotiations with partners that are extracting the molecules? Or is it the nation-states that you have to work with the national oil companies in these West African countries? And just what do you see as the major sticking points in terms of slowing down the time frame for new announcements?

The key gating item for all these projects is all of the, call it, engineering upstream integration with midstream, technically making -- planning the project and making it work. Once you have a plan that everybody is comfortable with, then you need to get the governmental and environmental approvals. Subject to what restriction that can take very long, but it can also be somewhat more efficient. I think at the end of the day, the commercial terms are super important, but it's not the sticky because if all the other things work, it's a matter of dividing the cake. But the one thing that takes time is to bake the cake, not to divide it to fit it that way. In terms of timing, I think what we see is that -- and we're trying to highlight that a bit in this presentation is it's important to secure the attractive delivery, and we really see that our ability to drive value with these clients is more significant. If you have more people wanting something, then there is available that tends to drive value in our favor. For now, I think we're most focused on the correct execution to drive value as opposed to have a firm deadline and having to be painted into a corner.

Yes. I think that goes without saying you don't want to sign up to bad commercial terms. And then obviously, a lot of success selling towards some of your, I guess, floating exposure volumes on [TTF] and oil. Just curious what's the limit on, I guess, it's probably different for TTF and oil in terms of forward selling some of that commodity exposure you have. You've gone to 2024. As you look out at the forward curves over the next few months, would you try and sell forward more exposure to end of '24, '25? And how far could that process really take you from where we are right now?

So the commodity linkages are on Hilli, and Hilli has the contract until July 26. So what we are looking to do is we can and probably will hedge TTS volumes all the way out there if we like the overall price. So for us, it's really a matter of weighing the price dynamics in the market with what we can then lock in and provide cash flow visibility for. You also have to have some relationship to the margin or value at risk that we have between now and the timing of when you start producing those forward volumes. But with our balance sheet now, that's not a real constraint.

On the Brent, we haven't hedged thus far. Part of the reason is because we have a ceiling on the Brent [at 1 or 2]. So if you do it, you need to do a color to make sure that you don't end up with 2 massive margin calls and it's bigger potential margin volumes there. So we are likely to do more TTF if we find the overall price level attractive. We are currently less likely to do anything on the Brent side, but that can change subjects. Like if we can lock in 1 or 2 at a long period, you do it because that's your max earnings anyway.

We'll now move on to our next question. Our next question comes from the line of Greg Lewis from BTIG.

Karl, I had a question. You mentioned and realizing you have a pretty strong cash position at this point in time. But you mentioned around potentially refinancing existing projects. As we think about the loan-to-value comment you made, and I can appreciate the slide earlier where you were marking where other projects have been reselling. Could we see potential financing based on implied value, which could be higher than the construction price?

Greg, this is Eduardo here. Yes. So I think the short answer to your question is yes. We have -- as Karl said, we have received indications from a few potential blenders to new FLNG projects, which have indicated that they could be willing to look and to fund for levels beyond the actual construction price of the vessel. So I think when we look at the Gimi, for instance, as we have a 20-year contract with such a long duration, we do have the ability to look at leverage beyond what the usual lender would look like in terms of a regular loan-to-value or 70% or 75% LTV.

So I think in that case, we're effectively looking at the ability of the contract to serve the debt. So for instance, we believe that finance is in excess of $1.5 billion to $1.6 billion could be feasible, just looking at the Gimi alone. But other banks have a different approach and look at those assets on a loan-to-value basis. So on those instances, we believe that levels at around 70% to 80% of the value of the asset could be achieved. So just to summarize, it's not driven for those that propose those type of financing is driven by the contract value and not the LTV on the steel.

Okay. That's good to hear. I did want to ask also around the -- you highlighted the investment in Macaw Energy, realizing that's small-scale LNG. Is there any timelines or framework, you can you tell us where that stands? In other words, could we see a project from this company in the next 2 to 3 years? Or could it be something sooner? I guess how active is Macaw? I'm just not really familiar with that company.

I think one of the attractions there is that what they are looking to do is modularized shore-based small-scale liquefaction. One of the advantages, building smaller scale and in modules is that in the cash flow is shorter. You have plenty of examples of flare gas and stranded gas today. And if you can liquIfy the flare gas and use it to something sensible, it's not only economically attractive. -- it's also environmentally the right thing to do. So those would focus mainly on the U.S. and Latin America. And the plan there is to have the modularized design ready for sure within 12 months and subject to how that design then performs, we will take the next steps on that one. But all else equal, it's exactly what we do on the floating side, we’re based and smaller size.

So that sounds super interesting. And then I just had one other question. As a follow-up to a previous question around number of units, obviously, today, we have been biting doing one project at a time. And Karl, as you look -- as you think about the market, and you think make the decisions or have the opportunities, maybe it's the right better word to do more than one project at a time. What are the gating factors? Are the gating factors, the shipyard, supply chains, labor? As you think about that and the potential to win multiple – have multiple projects under construction at the same time. Any color you can give us around that?

It's yes to all of the above. You need all of that in order to push an FLNG project. But at the end of the day, it's willing clients and a project that's mature enough that we build against it. But for most of the projects, subject to where they are in the somewhat annoying thing if you think about it is all the time it takes to get to FID from FID, the long lead item is the FLNG. It's not the upstream infrastructure. So therefore, that's part of what's driven us to do place the orders for the Mark II long leads because we see how close some of these projects are to development or FID. And if we then have an FLNG available significantly earlier than if you would then go out and place the order, you have an increased attractiveness of that delivery position.

Okay. And then just so I understand this, the $300 million, the long lead time items is really specific to the Mark II, where if it was a March III design, I guess you could always go down to the Mark I, which would probably require less kit. If I needed that Mark II design any sense for how much those long lead time items would all-in cost?

The fact of the matter is that most of the equipment we have ordered is interchangeable across our designs because they're based on the same top side. So once we have moved forward with -- if you're very interested is centrifugal compressors, gas turbines, cold boxes and heat recovery steam generators, which are the long lead items -- longest lead and biggest components of the tops package. So we are ordering them with a Mark II in mind because that's where we see the strongest customer pull. But if for whatever reason, we had to put that equipment on to mark or a Mark I, the absolute vast majority of it can be put on either of those 2 designs. -- more for Mark III, of course, because it's bigger liquefaction side, but it's the same.

There are no further questions at this time. So I'll hand the call back to you for closing remarks.

Thank you all for listening into our Q3 results. Have a good day and speak to you all soon. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.