Golar LNG Shrinks Third Quarter Loss

Liquefied natural gas (LNG) shipping company Golar LNG has managed to cut its net loss in the third quarter of 2017 on the back of an improvement in the shipping market.

During the three-month period ended September 30, the company generated a net loss of USD 43.9 million, against a net loss of USD 73.8 million reported in the previous quarter of the year.

The company’s operating loss was slightly less at USD 22.9 million, compared to an operating loss of USD 24 million seen in the second quarter of 2017.

A pick-up in utilization toward the end of the quarter resulted in a small rise in time charter revenues which increased USD 1 million to USD 25 million in the third quarter of 2017.

Following the end of the three-month period, the company completed the delivery and start-up of FLNG Hilli Episeyo, a vessel that will generate base operating cashflows under its tolling agreement of some USD 164 million per year over the coming 8 years. The unit arrived on site in Cameroon and production is expected to commence shortly.

“The shipping market recovery is underway. Shipping demand has exceeded supply growth for the first time since 2013. Demand growth has been supported by a combination of additional liquefaction volumes and rising ton miles,” Golar LNG said.

During September vessels began to pull out of the spot market to service dedicated volumes. Rising LNG prices in the East in response to significant demand from China and Korea also resulted in additional arbitrage opportunities and ton miles as more US volumes headed further eastward.

Looking to 2018, around 45 vessels are scheduled for delivery, equivalent to 10% of the current fleet. This compares to more than 12% expected production growth for the year.

“Growth in ton miles is expected to further tighten the market and this sentiment is translating into a notable increase in enquiries for term charters.”

“The shipping market is showing strong signs of improving. As of today, the effective time charter rates being achieved in 4Q are more than twice that recorded in 3Q. An improving trend is expected to continue into 2018-2019 when shipping supply should lag demand created by increased production,” the company said.