Golar LNG Partners L.P.

May 22, 2012 09:11 ET

Golar LNG Partners LP Earnings Release: Interim Results for the Period Ended March 31, 2012

NORWAY--(Marketwire - May 22, 2012) -


Highlights

* Golar LNG Partners reports net income attributable to unit holders of $19.5 million and operating income of $31.8 million for the first quarter of 2012 * Generated distributable cash flow of $19.0 million for the first quarter of 2012 * Declared dividend of $0.43 per unit for the first quarter of 2012 * Golar Winter charter extension concluded during the quarter

Financial Results Overview

Golar LNG Partners L.P ("Golar Partners" or the "Partnership") reports net income attributable to unit holders of $19.5 million and operating income of $31.8 million for the first quarter of 2012, as compared to $23.8 million and $30.4 million, respectively for the first quarter of 2011[1].

While operating results were improved in comparison to the first quarter of 2011, net income was lower largely due to the interest cost associated with debt incurred to acquire the Golar Freeze which is not reflected in the historical results.

Operating results for the first quarter of 2012 were improved compared to the same period in 2011 due to increased revenue as a result of inflation escalators within the Petrobras charters and reduced administrative costs, offset in part by higher operating costs. Operating costs were higher in the first quarter of 2012 largely as a result of annual scheduled maintenance work on the two FSRU vessels operating in Brazil. It is anticipated that operating income from the two Brazilian FSRUs will increase during the balance of the year due to increased charter hire, as a function of the operating element hire rate escalation and lower expected operating costs. All vessels operated well throughout the quarter with 100 per cent utilization.

Net interest expenses increased to $7.8 million for the first quarter of 2012 compared to $3.7 million for the same period in 2011. As noted above, this was principally due to additional interest cost associated with the $222 million loan from Golar LNG Limited ("Golar") in connection with the acquisition of the Golar Freeze.

Other financial items increased $1.6 million to a loss of $1.6 million for the first quarter compared to the same period in 2011. The variance mainly relates to the changes in non-cash mark-to-market valuations of financial derivative instruments, principally interest rate swaps that are hedges against future interest rate movements.

The Partnership's Distributable Cash Flow[2] for the first quarter of 2012 was $19.0 million as compared to $20.5 million in the fourth quarter of 2011. This is partly due to the fact that there is one less operating day in the first quarter of 2012 compared to the fourth quarter of 2012, resulting in $0.6 million lower revenue and due to the annual scheduled maintenance work referred to above that resulted in approximately $0.7 million additional operating expenses.

Golar Partners declared a dividend for the first quarter of $0.43 per unit. The dividend was paid on May 16, 2012.

Golar's Newbuilding Programme

Golar announced during the quarter that it had entered into two further contracts with Samsung Heavy Industries Co. Ltd to build two LNG carriers for delivery in 2014 and 2015. This increases Golar's newbuild programme to thirteen vessels consisting of eleven LNG carriers and two FSRUs. Five of the newbuilds are due for delivery in 2013 with the rest in 2014 and early 2015. Golar has a positive view of the long term charter market and has so far refrained from fixing any of the new buildings on long term charter. Golar has indicated that in its view long term charter rates will increase moving forwards based on a continuing tight shipping market and as the delivery dates for its newbuildings approach. Given the positive outlook for the LNG market, and Golar's obligation to offer to sell to the Partnership any such vessels that it may charter for a term of five or more years, Golar's expanded newbuilding program is a positive development for the future growth potential of the Partnership.

Floating Storage and Regasification Unit ("FSRU") Nusantara Regas Satu (formerly Khannur)

The Partnership has an option to acquire the FSRU Nusantara Regas Satu. The vessel left the shipyard, following its FSRU retrofit, in April 2012 and was delivered to its charterers, Nusantara Regas, in early May 2012. The vessel has received its first cargo of LNG and is currently undergoing its commissioning procedures, which are progressing well. The Partnerships management is currently discussing the terms and timing of a possible acquisition of the Nusantara Regas Satu from Golar.

Financing and Liquidity

As of March 31, 2012 the Partnership had cash and cash equivalents of $49.9 million and undrawn revolving credit facilities of $20 million. Total debt and capital lease obligations net of restricted cash was $715.9 million as of March 31, 2012.

Based on the above debt amount and annualized[3] first quarter 2012 adjusted EBITDA[4] Golar Partners has a debt to adjusted EBITDA multiple of 4.4 times, which leaves significant flexibility to finance further growth given debt covenant requirements of 6.5 times.

As of March 31, 2012, Golar Partners had interest rate swaps with a notional outstanding value of $460 million representing approximately 93% of senior bank debt and capital lease obligations, net of restricted cash. The average fixed interest rate of these swaps is approximately 2.7%. Average margins paid on outstanding debt in addition to the interest rate are approximately 1.5%. The fixed rate of interest paid on the $222 million Golar LNG loan is 6.75%.

Golar Partners has entered into constructive discussions with banks regarding secured debt financing to finance future growth, including discussions in relation to a possible future acquisition of the Nusantara Regas Satu.

Outlook

The Partnership's board of directors (the "Board") is pleased that the Partnership has made significant progress since the initial public offering. During 2011, the Partnership made its first acquisition, the Golar Freeze, which gave rise to an 11.7% increase in distributions.

Golar Partners has also developed its existing business and thereby contracted revenue backlog, with the extension of the time charter with Petrobras in respect of the Golar Winter, which was extended by 5 years to 2024 during the quarter.

As noted above the acquisition of the Nusantara Regas Satu is currently under consideration. Golar Partners has an option to acquire the FSRU, Nusantara Regas Satu, which is contracted under an 11 year charter to Nusantara Regas, a joint venture between Pertamina and Indonesian gas distributor PGN. The vessel began operations under its charter on May 4, 2012.

Golar Partners also has the right to acquire any of Golar's LNG carriers and FSRUs that in the future obtain charters of greater than five years. Golar currently has a fleet of 21 vessels, including newbuildings on order, which may, in the future, be chartered on a long-term basis. This potentially creates, if successfully developed, a solid platform for significant future growth in Golar Partners.

According to Wood Mackenzie, LNG liquefaction capacity is expected to grow by an average of 6% per annum between 2012 and 2017. These estimates could possibly increase if there were significant future debottlenecking of existing projects. There are currently 72 LNG carriers on order and 351 vessels in the existing fleet (excluding FSRU's). Of the existing fleet 46 vessels are more than 30 years old.

In the Board's view there is stability in the Partnership's earnings from the existing long term contracts, and there is potential to increase earnings and distributions significantly through additional vessel acquisitions. Currently the most likely acquisition candidate is the Nusantara Regas Satu and as noted above there are ongoing discussions with Golar about a potential purchase. The Board remains optimistic about Golar Partners ability to achieve a high level of growth and to increase distributions over the long-term.

May 22, 2012

Golar LNG Partners L.P.

Hamilton, Bermuda.

Golar LNG Partners LP results Q1 2012: http://hugin.info/147317/R/1613901/514058.pdf

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Source: Golar LNG Partners L.P. via Thomson Reuters ONE

[HUG#1613901]

Contact Information

  • Questions should be directed to:
    C/o Golar Management Ltd
    +44 207 063 7900
    Brian Tienzo or Graham Robjohns