HAMILTON, BERMUDA - Golar LNG (NASDAQ:GLNG) Ltd. and energy company bp have finalized a commercial reset for the FLNG (OL:FLNG) Gimi, settling past disputes and updating the payment schedule leading to the project's Commercial Operations Date (COD). The agreement, which was announced today, aims to streamline contractual cash flows and resolve ongoing arbitration by realigning both parties' interests toward achieving COD.
Under the new terms, Golar will receive daily payments with incremental step-ups tied to project milestones until COD is reached. These payments are backed by long stop dates to provide security. In addition, Golar is set to receive lump sum bonus payments contingent upon meeting specific project milestones. The pre-COD cash flows are anticipated to be deferred on Golar's balance sheet and will be amortized over the 20-year contract term starting from COD.
In an effort to expedite the project timeline, Golar and bp have also consented to commence the commissioning of the FLNG Gimi with an LNG cargo in advance of gas availability from the FPSO. This strategic move is designed to shorten the time to COD, a critical phase for the project's operation phase.
The Greater Tortue-Ahmeyim LNG Project, operated by bp, is a significant venture in the LNG sector, and the FLNG Gimi is poised to play a crucial role in its development. The resetting of commercial terms is a key step in ensuring the project moves forward without further contractual disputes.
In other recent news, Golar LNG Ltd . has seen significant advancements in its operations and financial performance. The company reported robust Q1 2024 financial results, with operating revenues of $65 million, net income of $66 million, and an adjusted EBITDA of $64 million. It also reinstated dividends and a share buyback program, demonstrating its commitment to shareholder returns.
Golar LNG has secured a 20-year contract with Pan American Energy (PAE) for the deployment of a Floating Liquefied Natural Gas (OTC:LNGLF) (FLNG) vessel in Argentina. This deal is set to tap into the Vaca Muerta shale formation, the second-largest shale gas reserve globally, significantly contributing to the company's operations.
Analyst firms B.Riley, BTIG, and Stifel have shown confidence in Golar LNG's future. B.Riley increased the price target for Golar LNG Ltd. to $44.50, BTIG raised its share price target to $45.00, and Stifel raised its price target to $55.00, all maintaining a Buy rating. These upgrades reflect the company's strategic advancements and the anticipation of securing multiple new contracts.
Golar LNG is also progressing with its FLNG operations. The company is in advanced negotiations for the Mark II FLNG project and plans to separate Macaw Energies into a standalone entity in 2024. 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
Amidst the strategic developments with bp, Golar LNG Ltd. (GLNG) has shown a robust financial performance that is worth noting. According to recent data from InvestingPro, Golar LNG's market capitalization stands at a solid $3.36 billion. This is a testament to the company's market presence and investor confidence. The company's Price to Earnings (P/E) ratio is currently at 30.53, indicating investor expectations of future earnings growth, particularly as the company is expected to grow its net income this year, one of the InvestingPro Tips that aligns with the positive outlook following the commercial reset with bp.
The revenue growth for Golar LNG over the last twelve months as of Q1 2024 was 7.68%, showing a healthy increase that reflects the company's ability to expand its operations. However, it's important to note that the company's EBITDA growth during the same period experienced a significant decrease of 53.64%, which could be a point of concern for potential investors. This could be related to the upfront investments and strategic moves necessary for the FLNG Gimi project, which might impact short-term financials while aiming for long-term gains.
InvestingPro Tips also highlight that Golar LNG has been trading at a high revenue valuation multiple, which could suggest that the market is pricing in the potential for higher revenue streams in the future, possibly from projects like the FLNG Gimi. Additionally, the company has been experiencing a strong return over the last three months, with a 30.81% price total return, reflecting investor optimism and the company's recent positive developments.
For those looking to delve deeper into Golar LNG's financial health and future prospects, there are additional InvestingPro Tips available at InvestingPro's dedicated page for Golar LNG, which provide further insights into the company’s share buybacks, debt levels, and profitability forecasts.
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