Golar LNG Partners L.P.

August 23, 2012 10:41 ET

Golar LNG Partners LP - Interim Results For The Period Ended June 30, 2012

NORWAY--(Marketwire - Aug 23, 2012) -



Highlights

* Golar LNG Partners reports net income attributable to unit holders of
  $19.8 million and operating income of $33.0 million for the second
  quarter of 2012
* Generated distributable cash flow of $20.2 million for the second
  quarter of 2012
* Dividend increased to $0.44 per unit for the second quarter of 2012

Subsequent events

* Successfully completed first public follow-on equity offering
  raising total net proceeds of $223 million
* Completion of acquisition of interests in the companies that own
  and operate the floating storage and regasification unit ("FSRU")
  Nusantara Regas Satu.

Financial Results Overview

Golar LNG Partners L.P ("Golar Partners" or the "Partnership") reports net income attributable to unit holders of $19.8 million and operating income of $33.0 million for the second quarter of 2012, as compared to $18.2 million and $31.9 million, respectively for the second quarter of 2011[1].

Operating results for the second quarter of 2012 improved compared to the same period in 2011 due largely to lower operating costs offset in part by higher administrative expenses. All vessels operated well throughout the quarter with 100 per cent utilization.

Net interest expenses increased to $7.8 million for the second quarter of 2012 compared to $3.8 million for the same period in 2011. This is 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 decreased by $4.7 million to a loss of $2.5 million for the second quarter of 2012 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 second quarter of 2012 was $20.2 million as compared to $19.0 million in the first quarter of 2012. This improvement is mainly due to the reduction in operating costs in the second quarter of 2012 compared to the first quarter offset in part by higher administrative expenses. Operating costs were higher in the first quarter of 2012 partly as a result of annual scheduled maintenance work on the two FSRU vessels operating in Brazil.

Golar Partners declared an increased dividend for the second quarter of $0.44 per unit, representing a 2.3% increase from the first quarter of 2012. The dividend was paid on August 15, 2012.

Follow-on Equity Offering

In July 2012, the Partnership closed a follow on public offering (the "Offering") of 5,500,000 common units representing limited partner interests at a price of $30.95 per common unit. Additionally, the Underwriters exercised in full their option to purchase an additional 825,000 common units in the Offering. The total number of common units sold in the Offering was therefore 6,325,000 and the net public proceeds raised was $188 million. Golar GP LLC, the Partnership's general partner, contributed a further $4.6 million to the Partnership to maintain its 2.0% general partner interest in the Partnership. The Partnership also closed a private placement of 969,305 common units to Golar at a price of $30.95 per common unit.

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

In July 2012, the Partnership completed its acquisition of interests in the companies that own and operate the floating storage and regasification unit ("FSRU") Nusantara Regas Satu ("NR Satu") from Golar for a purchase price of $385 million. The vessel left the shipyard, following its FSRU retrofit, in April 2012 and was delivered to its charterers, Nusantara Regas, in early May 2012. Upon delivery, the NR Satu began operating under a charter with an initial term expiring at the end of 2022. Acceptance and delivery tests were successfully completed in July 2012. The FSRU is expected to contribute annual net cash from operations (before deduction of interest cost) of approximately $42m-$44m during the life of its charter.

The Partnership financed the acquisition of NR Satu with the $223 million in total net proceeds of its recent equity offering, cash on hand of $7 million and vendor financing from Golar in the amount of $155 million. The Partnership expects to refinance the loan from Golar with a bank financing during the third quarter of 2012.

Potential future growth opportunities

The Board believes that Golar Partners has significant further potential growth opportunities; in particular with regards to the possible acquisition of additional assets from Golar. Golar has two modern LNG carriers that are due for re-contracting within the next nine months and a fleet of eleven newbuild LNG carriers and two FSRU's with delivery dates commencing in 2013. Given the tight shipping market and strong market fundamentals Golar Partners is optimistic that further acquisition candidates will materialise within the next twelve months.

In addition there are positive developments in the FSRU market. On July 5, 2012 Golar announced that it had been awarded the Gas Atacama Mejillones Seaport's FSRU Project ("Gas Atacama"). The initial term of the contract, which is subject to certain Charterer conditions being met by the end of 2012, is for 15 or 20 years and is expected to generate an average annual earnings before interest, tax, depreciation and amortization of approximately US$47-US$48 million. On top of the initial term, Gas Atacama has three five-year contract extension options. Subject to the conditions being met, the FSRU is expected to be delivered to the project in the fourth quarter of 2015.

Financing and Liquidity

As of June 30, 2012 the Partnership had cash and cash equivalents of $47.1 million and undrawn revolving credit facilities of $40 million. Total debt and capital lease obligations net of restricted cash was $701 million as of June 30, 2012.

Based on the above debt amount and annualized[3] second quarter 2012 adjusted EBITDA[4] Golar Partners has a debt to adjusted EBITDA multiple of 4.3 times.

As of June 30, 2012, Golar Partners had interest rate swaps with a notional outstanding value of $454 million representing approximately 95% 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%.

Outlook

The acquisition of NR Satu represents the Partnership's second accretive acquisition. As a result of this acquisition, Golar Partners' management recommended to the Board an increase in distribution of 10.5% to $0.475 per unit effective for the quarter ended September 30, 2012. This would represent an increase in the Partnership's unit distribution of 23% since its initial public offering.

Following the acquisition, the Partnership's contracted revenue backlog stands at approximately $2.3 billion and its average contract term is approximately 9 years.

LNG production capacity is expected to grow by in excess of 6% a year through to 2017 and at a likely faster rate to the end of the decade. . This could mean a requirement for in excess of 180 new LNG carriers by 2020. There are currently 75 LNG carriers on order and 349 vessels in the existing fleet (excluding FSRU's). Of the existing fleet 46 vessels are more than 30 years old.

The Board is pleased with the development of Golar Partners and its two accretive acquisitions since its IPO in April 2011. During this time market fundamentals have strengthened and the fleet of potential dropdown candidates from Golar has increased with seven further vessel orders in addition to the fleet of seven existing operational vessels and six newbuildings. The Board is optimistic that Golar Partners can continue its high growth rate and thereby continue to increase distributions over the long-term.

August 23, 2012
Golar LNG Partners L.P.
Hamilton, Bermuda.

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

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[1] Following the acquisition of the Golar Freeze from Golar, the comparative results for the second quarter of 2011 assume that the Golar Freeze was wholly owned by the Partnership for the entire period that the vessel has been under the common control of Golar.

[2]Distributable cash flow is a non-GAAP financial measure used by investors to measure the performance of master limited partnerships. Please see Appendix A for a reconciliation to the most directly comparable GAAP financial measure.

[3] Annualized means the year-to-date figure divided by the number of quarters to date multiplied by 4.

[4] Adjusted EBITDA: Earnings before interest, other financial items, taxes, non-controlling interest, depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure used by investors to measure our performance. Please see Appendix A for a reconciliation to the most directly comparable GAAP financial measure.

Golar LNG Partners LP Results Q2 2012: http://hugin.info/147317/R/1635939/525611.pdf


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

[HUG#1635939]

Contact Information

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