Friday - B.Riley has increased the price target for Golar LNG Ltd . (NASDAQ:GLNG) to $44.50, up from the previous target of $35.50, while reaffirming a Buy rating on the stock. This adjustment comes as Golar LNG nears the previous target and reflects the anticipated benefits from a newly secured 20-year contract with Pan American Energy (PAE) for the deployment of a Floating Liquefied Natural Gas (OTC:LNGLF) (FLNG (OL:FLNG)) vessel in Argentina.
The FLNG project is set to process natural gas from the Vaca Muerta shale formation located in the Neuquina Basin, recognized as the second-largest shale gas reserve globally. The new agreement with PAE is expected to contribute significantly to Golar LNG's operations and financial performance.
According to B.Riley's assessment, the deployment of the company's existing Hilli FLNG to fulfill PAE's LNG production requirements, coupled with the potential redeployment of the new MKII vessel at comparable economics, justifies the uptick in the share value estimate by $9.00.
The analyst firm's continued endorsement of a Buy rating indicates a positive outlook on Golar LNG's stock, as the company leverages its strategic partnerships and assets to capitalize on the growing demand for natural gas.
The revised price target and sustained positive rating come at a time when energy companies are increasingly looking towards natural gas as a cleaner alternative to traditional fossil fuels, with FLNG technology playing a pivotal role in unlocking resources from remote offshore fields. Golar LNG's partnership with PAE and its FLNG capabilities are thus positioned as key drivers for the company's future growth.
In other recent news, Golar LNG's Q1 2024 financial results showed impressive figures, reporting operating revenues of $65 million, net income of $66 million, and an adjusted EBITDA of $64 million, demonstrating a strong financial stance.
The company also reinstated dividends and a share buyback program, highlighting its commitment to shareholder returns. Golar LNG's plans to expand its FLNG operations are also progressing, with advanced negotiations for the Mark II FLNG project and the planned separation of Macaw Energies into a standalone entity in 2024.
Analyst firms BTIG and Stifel have shown confidence in Golar LNG's future, with BTIG raising its share price target to $45.00 and maintaining a Buy rating, while Stifel raised its price target to $55.00. These upgrades come amid progress in Golar LNG's operations and optimism about the company securing multiple new contracts for projects such as Hilli and Mk II.
Golar LNG's strong liquidity position, with $700 million in cash and $550 million in net debt, supports these strategic initiatives. The company anticipates an additional $150 million EBITDA from the Gimi charter with BP (NYSE:BP).
InvestingPro Insights
As Golar LNG Ltd. (NASDAQ:GLNG) secures a promising 20-year contract with Pan American Energy, the company's strategic moves are reflected in its financial metrics and market performance. According to real-time data from InvestingPro, Golar LNG's market capitalization stands at a robust $3.53 billion, with a Price/Earnings (P/E) ratio of 32.11, indicating investors' high expectations of future earnings. The company's revenue has seen a growth of 7.68% over the last twelve months as of Q1 2024, demonstrating its ability to expand its financial base amidst a dynamic energy market.
Two InvestingPro Tips that are particularly relevant to the article are the management's aggressive share buybacks and the expected net income growth this year. Share buybacks can signal management's confidence in the company's future prospects, which aligns with B.Riley's price target increase. Moreover, the anticipated growth in net income could justify the analyst firm's positive outlook and the raised price target.
For those looking to delve deeper into Golar LNG's potential, InvestingPro offers additional insights and tips that can guide investment decisions. With a total of 16 InvestingPro Tips available for GLNG, investors can gain a more comprehensive understanding of the company's valuation, profitability, and market trends. To access these insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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