UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May 2005
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Golar LNG Limited
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(Translation of registrant's name into English)
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F
Form 20-F [X] Form 40-F [_]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-
Item 1. INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 99.1 is a copy of the press release of Golar LNG Limited
(the "Company"), dated May 31, 2005.
Exhibit 99.1
Golar LNG
March 2005
FIRST QUARTER RESULTS
Golar LNG reports net income of $17.7 million for the three months ended March
31, 2005 and operating income of $18.3 million as compared to $19.1 million and
$21.2 million, respectively, for last quarter ($13.4 million and $17.3 million,
respectively, for the first quarter of 2004). Net cash provided by operating
activities for the quarter was $18.4 million, which is consistent with the
fourth quarter of 2004 at $18.6 million.
These results have been affected by one off costs in respect of the
reorganisation of the Company's fleet management function, as reported last
quarter, and the write off of deferred financing costs in connection with the
refinancing of part of the existing fleet. These charges amounted to $1.1
million and $1.8 million respectively.
The Company's share of Korea Line Corporation's ("Korea Line") net income for
the three months to March 31, 2005, is $10.0 million as compared to last
quarter's $3.9 million ($5.1 million for the first quarter of 2004)(1) in
respect of Golar's 21% shareholding.
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1 Golar's results reported for the quarter ended March 31, 2004 have been
adjusted to reflect the adoption of equity accounting in respect of Korea
Line, which has added $5.1 million to previously reported net income for
the quarter ended March 31, 2004.
The mark-to-market revaluation of interest rate swaps has resulted in a net gain
(after minority interest) of $5.5 million. Unrealised foreign exchange and
currency swap losses in respect of the Company's leases amounted to $1.5m.
Operating revenues for the first quarter of 2005 were $44.2 million as compared
to $45.4 million for the fourth quarter of 2004 ($36.0 million for the first
quarter of 2004). Average daily time charter equivalents (TCEs) were $50,600 for
the first quarter of 2005 against last quarter's $54,300 ($55,500 for first
quarter of 2004). The average daily TCE was affected by commercial waiting time
in respect of the Golar Frost, which traded for one month out of the quarter,
and the Golar Winter and the Golar Viking both of which traded for approximately
1.5 months each. Revenue was also lost due to the drydocking of one vessel; no
further drydockings are due this year.
Vessel operating expenses for the first quarter of 2005 were $9.6 million
compared with $9.6 million for the previous quarter ($8.2 million for the first
quarter of 2004).
Administration costs were $3.2 million for the quarter as compared to $3.1
million last quarter and $1.7 million for the first quarter of 2004. As noted
above however, this quarter's administrative expense includes a charge of $1.1
million in connection with the Company's reorganisation of its fleet management
function.
Net interest expense for the first quarter of 2005 was $10.7 million, which
compares to $8.8 million for fourth quarter of 2004 and $6.1 million for the
same period in 2004. The increase is primarily due to the addition of the Golar
Viking to the fleet and its associated debt. Interest expense and interest
income includes $9.8 million and $8.2 million respectively relating to the
Company's lease finance transactions.
Other financial items of $2.6 million income includes a gain of $6.4 million
associated with the increase in fair value of interest rate swaps, including the
effect of an additional $60.0 million of interest rate swaps. This compares to a
gain of $4.1 million last quarter ($2.9 million expense for the first quarter of
2004). The gain on swaps relating to the 60% owned Golar Mazo, are reduced by
the minority interest element of 40% resulting in a net book gain on all swaps
of $5.5 million as compared to a $2.6 million gain last quarter ($1.9 million
charge for the first quarter of 2004). Other financial items also include net
foreign exchange translation and currency swap losses. The Company recorded a
net unrealised foreign exchange and currency swap loss of $1.5 million in
respect of its leases during the first quarter of 2005, as compared to a gain of
$2.6 million last quarter. Other financial items also includes the write off of
$1.8 million of financing fees as a result of refinancing part of the existing
fleet during this quarter.
Earnings per share for the quarter were $0.27 as compared to $0.29 for the
quarter to December 31, 2004 ($0.20 for the first quarter of 2004).
The number of shares outstanding as of March 31, 2005 was 65,562,000 (December
31, 2004: 65,612,000). During February 2005, the Company repurchased 50,000
shares in Golar LNG through market purchases, which were subsequently cancelled.
The weighted average number of shares outstanding for the first quarter of 2005
and the twelve months ended December 31, 2004 was 65,584,778 and 65,612,000
respectively.
FINANCING
In January 2005, the Company entered into a $120 million loan facility in
respect of its newbuilding the Golar Viking delivered in January 2005, which
generated approximately $27 million in additional liquidity for the Company.
In March 2005, the Company successfully completed a $300 million refinancing for
part of the existing fleet, which provided approximately $55 million of
additional liquidity and which has achieved substantially lower interest rate
margins.
In April 2005, the Company completed a lease finance transaction in respect of
its newbuilding DSME Hull 2226, which is due for delivery in January 2006. As
with the Company's Golar Winter lease, this transaction does not produce an
immediate cash benefit but rather provides reduced cost financing over the term
of the lease. The net amount funded in the transaction will be approximately
$105 million, $47 million drawn down in April with the balance to be drawn on
delivery of the vessel.
The Company has entered into interest rate swaps on an additional $60 million of
debt during the quarter and a further $105 million in May, in respect of the
lease transaction completed in April in connection with the next newbuilding to
be delivered in January 2006. As at March 31, 2005 approximately $488 million of
debt accrues interest at a fixed rate, which represents approximately 51% of
total bank debt and net (after deduction of restricted cash deposits) capital
lease obligations. Taking into account the April lease transaction noted above
this percentage effectively increases to approximately 54%.
CORPORATE AND OTHER MATTERS
As reported last quarter the Company under took a reorganisation of its
technical fleet operation during the first quarter of 2005. This process is now
largely complete and the transition to the two new management companies has been
executed smoothly and without any interruption for clients.
Due to the rapid expansion of the LNG fleet experienced LNG seafarers are in
strong demand, and in order to secure the services of sufficient numbers, Asian
shipping companies, as well as newcomers to the market, are bidding up salaries
for experienced personnel. Golar is in a good position with a large fleet to
allow for the training of new officers, but will however have to accept
increased salaries in order to keep valuable crew. It is expected that this cost
increase will be compensated by the increased efficiency and the lower
purchasing costs anticipated from the new management solution.
The second and final Service Conference in respect of the Livorno project went
ahead on April 14, 2005, with a majority voting in favour of the project. The
next step is for the Italian Government to issue a decree formally approving the
permit for the terminal. Golar is currently discussing with the project
developer Crossgas the structure of the future ownership and throughput capacity
of the terminal.
During the quarter the Company invested $3.0 million in TORP Technology AS,
giving it ownership of 16.1% of the share capital of the company. TORP
Technology holds the rights to the HiLoad LNG Re-gasification Technology
developed by Remora Technology. TORP Technology is planning to build an offshore
LNG re-gasification terminal 50 miles offshore in the US Gulf of Mexico and is
expecting to file for a permit with U.S. Coast Guard towards the end of 2005
with start up in early 2009.
The Company has been developing, together with Saipem SPA, a Floating Power
Generating Plant (FPGP). The concept is based on the conversion of an existing
Golar LNG carrier and the fitting of gas turbine combined cycle power generators
that will be capable of producing 240 MW of power. Golar has applied to the
Cyprus Energy Regulatory Authority (CERA) for licences to construct and operate
an FPGP and sees this as a logical extension to the floating storage and
regasification projects (FSRU's) that it is currently working on.
The Company sees floating terminals as a major area for business development and
is investigating and in exploratory discussions with regard to three other
projects.
In furtherance of this strategy Golar is working with an Asian shipyard in order
to develop an engineering specification for conversion of one of Golar's
existing vessels to a floating regas/floating regas and power generation unit.
The preliminary conclusion of this study is expected to be ready shortly. Based
on the very positive response Golar has received for this concept from potential
end users the Company may consider converting one vessel without having fixed
long-term employment
MARKET
The trade in LNG continues at unprecedented levels and only lack of liquid
supply has held back further growth. This has stemmed from production
restrictions in Algeria, and continuing delays caused by production delays in
new projects, particularly Egypt's first LNG project.
LNG production during the first quarter of 2005 was at a record level of 152
million tonnes per year (mmta). Further production of up to 16.8 mmta is
expected on-stream during 2005 and 15.4 mmta is scheduled for 2006. The
continued strength of demand for LNG has ensured accelerating development of new
LNG production projects: Total's Yemen Project is now seeking tonnage, CPC will
come to the market in July of 2005, while the expected confirmation of Shell's
Qatar project, following the ExxonMobil and ConocoPhillips projects, as well as
new projects in Nigeria (OK, and Brass River) will further enhance demand for
shipping. It is further assumed that Korea's Kogas will be in need of additional
tonnage to meet increasing demand.
However, the volume of LNG taken into the US this year has shown a slower rate
of growth than that of recent years. The main reason for this is lack of
available product as it is the mature markets in the Far East and Europe that
have taken most of the increased volumes. The high level of activity to develop
US LNG infrastructure is exciting, but it is important to remember that all LNG
infrastructure projects will need sufficient LNG production and LNG production
is the current bottle-neck. In order to develop the business further and to
reduce this constraint, Golar intends to seek strategic partnerships with major
local LNG producers.
Currently there are 174 existing LNG carriers with 114 more on order. In the
long-term shipping market continuing demand, from Qatar, Yemen, and Nigeria is
leading to pressure on the availability of newbuilding slots and newbuilding
prices continue to firm right through to 2009 and 2010.
Demand for shipping in the spot market has been restrained by lack of product,
and rates restrained by excess supply of shipping. The majority of this excess
reflects the delivery of ships for long term projects that have been delayed,
the very strong Far East demand for LNG reflecting demand growth in Korea, and
both demand growth and the ongoing need for nuclear power replacement in Japan.
Far East supplies therefore have all been diverted to the Far East markets,
rather than distant US/Europe ones, severely reducing the tonne mile requirement
in the short term.
However, it is believed that the combined negative effect of all these factors
has now peaked; the delayed projects coming on stream in the next months mean
that the vessels dedicated for these trades will now commence operation thus
reducing the spot pool; Atlantic basin projects (including both Egypt and
Nigeria) are all targeting Europe and the US as their market so that tonne mile
demand can recover. Furthermore the commercial control of new import capacity in
both the UK and especially the US means that sellers will have better and more
economic access to these markets enhancing demand in these crucial areas.
The Board anticipates that while there will be more opportunities for spot
vessels to obtain business from mid 2005 onwards, the margins available for
transportation will remain small with producers able to take the major benefit
of high spot sales prices, and thus shipping rates will remain soft, potentially
for the next 1-2 years. The increase in activity though should improve earnings
by reducing idle time. Increased focus on safety, reliability and efficiency
will give an advantage to the modern ship trading in the spot market.
The Board believes credit should be given to TK Shipping and CitiGroup for the
development of TK LNG Partners, a Master Limited Partnership (MLP), which is a
new instrument to the LNG shipping industry for financing long-term LNG shipping
contracts. The low cost of capital required to support such a structure will
lead other Companies to consider similar ideas. Golar is currently evaluating
this structure but in view of the Company's wish to have flexibility and to be a
more integrated part of the LNG chain the structure might not be so effective
for Golar.
OUTLOOK
The Board is highly disappointed by the development of the spot market. The
short-term shipping overcapacity and the fragmented ownership structure is
likely to lead to low utilization and low rates for the next 1 - 2 years. More
industry consolidation might improve this situation somewhat and Golar will seek
opportunities to this effect.
The strong development in Oil prices has created a significant energy price
spread between Oil products and Natural Gas. Several oil fired power stations
are becoming uneconomical and in many cases would strongly improve their margins
by conversion to gas. There is thus a window for conversion projects including
floating solutions. Golar believes this is a highly attractive market based on
the cost savings which can be created for customers. This niche market will be
enhanced by the lack of energy generating capacity, particularly in China and
India.
The market for long-term LNG charters is today highly competitive and the likely
returns from current tenders do not meet Golar's expected long-term returns.
Opportunities for Golar's available newbuildings may however arise as a function
of a tight LNG vessel delivery situation.
The average cash break even rate for the three open new buildings operating in
the spot market is approximately $36,200 per ship per day. In the current market
a spot ship will struggle to achieve these rates for the remainder of the year.
The Board remains optimistic about the Company's long-term outlook however, and
feels that satisfactory progress has been made in the project portfolio. The
Board sees challenges in the short-term created by the temporary over supply of
tonnage. Financially the Company is well prepared to meet these challenges.
The 7 ships fixed on long term charter are expected to show a slightly improved
margin this year and together with the contribution from Korea Line lead to a
satisfactory overall result for 2005.
FORWARD LOOKING STATEMENTS
This press release contains forward looking statements. These statements are
based upon various assumptions, many of which are based, in turn, upon further
assumptions, including examination of historical operating trends made by the
management of Golar LNG. Although Golar LNG believes that these assumptions were
reasonable when made, because assumptions are inherently subject to significant
uncertainties and contingencies, which are difficult or impossible to predict
and are beyond its control, Golar LNG cannot give assurance that it will achieve
or accomplish these expectations, beliefs or intentions.
Included among the factors that, in the Company's view, could cause actual
results to differ materially from the forward looking statements contained in
this press release are the following: inability of the Company to obtain
financing for the newbuilding vessels at all or on favourable terms; changes in
demand; a material decline or prolonged weakness in rates for LNG carriers;
political events affecting production in areas in which natural gas is produced
and demand for natural gas in areas to which our vessels deliver; changes in
demand for natural gas generally or in particular regions; changes in the
financial stability of our major customers; adoption of new rules and
regulations applicable to LNG carriers; actions taken by regulatory authorities
that may prohibit the access of LNG carriers to various ports; our inability to
achieve successful utilisation of our expanded fleet and inability to expand
beyond the carriage of LNG; increases in costs including: crew wages, insurance,
provisions, repairs and maintenance; changes in general domestic and
international political conditions; changes in applicable maintenance or
regulatory standards that could affect our anticipated dry-docking or
maintenance and repair costs; failure of shipyards to comply with delivery
schedules on a timely bases and other factors listed from time to time in
registration statements and reports that we have filed with or furnished to the
Securities and Exchange Commission, including our Registration Statement on Form
20-F and subsequent announcements and reports.
May 31, 2005
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda
Questions should be directed to:
Tor Olav Tr0im: Director and Chief Executive Officer +44 7734 976 575
Graham Robjohns: Chief Accounting Officer & Group Financial
Controller +44 207 517 8600
Charlie Peile: Executive Vice President, Head of Commercial +44 207 517 8600
GOLAR LNG LIMITED FIRST QUARTER 2005 REPORT (UNAUDITED)
INCOME STATEMENT 2004
(in thousands of $) 2005 Jan - Mar 2004
Jan - Mar Unaudited Jan - Dec
unaudited (restated) unaudited
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Operating revenues 44,196 35,988 163,410
Vessel operating expenses 9,572 8,244 35,759
Voyage expenses 1,044 284 2,561
Administrative expenses 3,185 1,698 8,471
Depreciation and amortisation 12,135 8,476 40,502
Total operating expenses 25,936 18,702 87,293
Operating income 18,260 17,286 76,117
Interest income 8,710 6,873 31,879
Interest expense (19,433) (12,930) (61,987)
Other financial items 2,597 (2,894) 4,804
Income before taxes and minority interest 10,134 8,335 50,813
Minority interest (2,279) 16 (7,575)
Taxes (125) (97) (420)
Equity in net earnings of investee 10,017 5,136 15,780
Net income 17,747 13,390 58,598
Earnings per share ($) $0.27 $0.20 $0.89
BALANCE SHEET 2005 2004 2004
(in thousands of $) Mar 31 Mar 31 Dec 31
unaudited unaudited unaudited
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ASSETS
Short term
Cash and cash equivalents 116,372 102,551 51,598
Restricted cash and short-term investments 46,946 41,765 41,953
Other current assets 17,438 22,069 22,358
Amounts due from related parties 316 127 294
Long term
Restricted cash 698,590 636,495 714,802
Equity in net assets of non-consolidated investee 62,714 28,725 51,634
Newbuildings 76,989 207,551 145,233
Vessels and equipment, net 1,249,429 757,850 1,078,383
Other long term assets 10,523 6,282 6,839
Total assets 2,279,317 1,803,415 2,113,094
LIABILITIES AND STOCKHOLDERS' EQUITY
Short term
Current portion of long term debt 54,457 61,946 66,457
Current portion of capital lease obligations 2,557 - 2,662
Other current liabilities 47,566 62,600 46,401
Amounts due to related parties 550 597 374
Long term
Long term debt 813,719 581,376 636,497
Long term capital lease obligations 823,044 632,353 842,853
Other long term liabilities 85,185 93,668 86,033
Minority interest 28,561 18,690 26,282
Stockholders' equity 423,678 352,185 405,535
Total liabilities and stockholders' equity 2,279,317 1,803,415 2,113,094
STATEMENT OF CASH FLOWS 2004
(in thousands of $) 2005 Jan -Mar 2004
Jan - Mar Unaudited Jan - Dec
unaudited (restated) unaudited
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OPERATING ACTIVITIES
Net income 17,747 13,390 58,598
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortisation 12,135 8,476 40,502
Amortisation of deferred charges 2,026 254 1,270
Income/(loss) attributable to minority interests 2,279 (16) 7,575
Equity in profit of non-consolidated investee (10,017) (5,136) (15,780)
Drydocking expenditure (8,875) (1,225) (13,299)
Change in market value of interest rate and currency (1,204) 3,180 (12,237)
derivatives
Unrealised foreign exchange (gain)/loss (3,697) (611) 5,161
Change in operating assets and liabilities 8,033 1,862 3,744
Net cash provided by operating activities 18,427 20,174 75,534
INVESTING ACTIVITIES
Additions to newbuildings (105,452) (3,374) (278,560)
Additions to vessels and equipment (1,588) (1,604) (8,232)
Long-term restricted cash (1,253) 1,441 (37,515)
Purchase of unlisted investments (3,000) - -
Short-term restricted cash and investments (4,993) (21,082) (31,633)
Net cash used in investing activities (116,286) (24,619) (355,940)
FINANCING ACTIVITIES
Proceeds from long-term debt 420,000 - 110,000
Proceeds from long-term capital lease obligation - - 163,715
Repayments of long-term capital lease obligation (1,417) - (894)
Repayments of long-term debt (254,777) (11,913) (62,281)
Additions to long-term lease obligation 2,204 1,997 6,321
Financing costs paid (2,710) (964) (2,733)
Proceeds from issuance of equity net of issuance costs - (7) (7)
Payments to repurchase equity (667) - -
Net cash provided /(used in) /by financing activities 162,633 (10,887) 214,121
Net increase/(decrease) in cash and cash equivalents 64,774 (15,332) (66,285)
Cash and cash equivalents at beginning of period 51,598 117,883 117,883
Cash and cash equivalents at end of period 116,372 102,551 51,598
03849.0004 #579313