Summary
Golar LNG Ltd (GLNG, Financial) has announced the acquisition of Seatrium's and Black & Veatch's minority ownership interests in the FLNG Hilli, effective from January 1, 2025. The transaction, valued at $90.2 million, includes 5.45% common units, 10.9% Series A shares, and 10.9% Series B shares, representing approximately 8% of the full FLNG capacity. This strategic move is expected to enhance Golar's cash flow and add approximately $0.5 billion to its Adjusted EBITDA backlog. The press release was issued on December 24, 2024.
Positive Aspects
- Golar LNG Ltd gains full ownership of FLNG Hilli, increasing its operational control and financial benefits.
- The acquisition is expected to provide immediate cash flow accretion and a significant boost to the company's Adjusted EBITDA backlog.
- FLNG Hilli has demonstrated strong operational performance, delivering 124 LNG cargoes and offloading over 8.5 million tons of LNG since 2018.
- Resolution of outstanding contractual arrangements with Seatrium, enhancing future collaboration opportunities.
Negative Aspects
- The Southern Energy contract in Argentina is subject to several conditions, including obtaining an export license and environmental assessment, which could delay operations.
- The acquisition involves a significant financial commitment, with $59.9 million in equity and $30.3 million in debt, which could impact Golar's financial flexibility.
Financial Analyst Perspective
From a financial standpoint, Golar LNG Ltd's acquisition of the remaining interests in FLNG Hilli is a strategic move to consolidate its assets and enhance its revenue streams. The expected addition of $0.5 billion to the Adjusted EBITDA backlog indicates a strong potential for future earnings. However, the financial commitment involved in the acquisition and the dependency on the successful execution of the Southern Energy contract in Argentina are factors that investors should monitor closely. The resolution of outstanding issues with Seatrium also positions Golar for smoother operations and potential future collaborations.
Market Research Analyst Perspective
In the context of the LNG market, Golar LNG Ltd's acquisition of full ownership of FLNG Hilli positions the company to capitalize on the growing demand for LNG globally. The operational success of FLNG Hilli, with its high uptime and significant LNG deliveries, enhances Golar's reputation as a reliable player in the industry. The planned relocation to Argentina for a 20-year contract with Southern Energy aligns with the strategic shift towards emerging markets with high growth potential. However, the dependency on regulatory approvals and environmental assessments in Argentina could pose challenges that need to be addressed to ensure seamless market entry.
FAQ
What did Golar LNG Ltd acquire?
Golar LNG Ltd acquired Seatrium's and Black & Veatch's minority ownership interests in the FLNG Hilli.
What is the value of the acquisition?
The total consideration for the acquisitions is $90.2 million.
When will the full economic interest of the increased ownership be effective?
The full economic interest will be effective from January 1, 2025.
What is the future plan for FLNG Hilli after the contract with Perenco expires?
FLNG Hilli is intended to relocate to Argentina to start a 20-year contract for Southern Energy.
What are the conditions for the Southern Energy contract?
The contract is subject to conditions such as obtaining an export license, environmental assessment, and a Final Investment Decision by Southern Energy.
Read the original press release here.
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