Golar LNG in the Hole

Bermuda-headquartered LNG carrier owner and operator Golar LNG reported USD 38 million loss for the fourth quarter, dragged down mostly by non-cash financial and other non-recurring charges of items amounting to USD 32.7 million, the company said in its preliminary report.

However, the company improved its operating revenue to USD 32.6 million in the fourth quarter, a USD 15.3 million increase year-on year.

Golar estimates the average 4Q rate for steam LNG carriers in the short-term market to have been around USD 50,000-USD 55,000 per day and USD 65,000-USD 70,000 per day for TFDE vessels.

Although chartering activity was consistent with that in 3Q, the company says the 4Q market became acutely sensitive to timing and location.

In many cases ships lay idle for significant periods with steam vessels managing only to achieve rates in the USD 30,000 range with limited re-positioning fees. In other cases, charterers experienced a lack of prompt availability of cold and compatible vessels, where some TFDE vessels rates reached USD 80-90,000 per day range on round trip voyages.

Golar expects the market for chartering of LNG shipping to be weak for the first half of 2015, but the start-up of Queensland Curtis in December 2014, the continued successful ramp up of the new Papua New Guinea project and increasing pressure to retire additional less efficient first generation carriers may provide some support.

In the second half of 2015 significant new LNG production capacity is expected to start up. Together with the limited influence of new tonnage entering the market and the seasonal strengthening, Golar expects the LNG carrier market for the second half of the year to show clear improvements.

The combination of falling energy prices and severe power outages in several major regional centres around the world (Brazil and South Africa) has resulted in a recent increase in interest for FSRU’s. The recently experienced lower absolute price for LNG has made the switch to gas more attractive in many parts of the world and the ability of FSRU’s to provide a relatively fast and proven solution to what is in some locations a crisis situation points to a continuing healthy demand in this market, Golar believes.

The last few months have also seen a steady stream of announcements of projects being shelved or significantly scaled back. Golar believes that this new paradigm for the LNG industry plays to Golar’s strengths with its GoFLNG value proposition.

Golar is not satisfied with the current results, but note the 4Q 2014 improvement over 4Q 2013 on the shipping side as well as the solid progress which is being made to secure tariff based long-term employment opportunities for our emerging FLNG activities.