Services Sector Stock Closed with Decrease: Golar LNG Limited (NASDAQ: GLNG)

On Thursday Golar LNG Limited (NASDAQ: GLNG) has shown downward move of -0.40% and ended the last trade at $25.19 . The trading volume was recorded to 619,426 shares as compared to average traded volume of 1,410,737 shares.

Golar reports recently 1Q 2018 operating income of $6.4M contrast to $2.8M in 4Q 2017. Further improvements in hire rates and round-trip economics contributed to a $3.6M increase in total operating revenue net of voyage, charterhire and commissioning expenses, from $38.1M in 4Q 2017 to $41.7M in 1Q 2018. Vessel operating expenses increased by $1.3M to $18.4M in 1Q 2018. Most of the increase is Because of additional crew, repairs and maintenance and logistics expenses in respect of the recently reactivated Golar Viking.

Administrative expenses are lower by $2.7M, from $16.8M in 4Q 2017 to $14.0M in 1Q 2018.

The derivative asset, representing the fair value of the estimated discounted cash flows of payments due in respect of FLNG Hilli Episeyo as a result of the Brent Crude price moving above $60.00 per barrel over the contract term, increased from $94.7M to $108.3M during the quarter. As a result, an unrealized fair value gain of $13.6M was recorded under other operating income.

In 1Q 2018, the Company generated a net loss of $21.0M. Notable contributors to the $24.8M decrease in 1Q 2018 are summarized as follows:

 

Interest expense increased by $7.8M to $14.0M, the 4Q 2017 expense having been reduced by higher capitalized interest on borrowing costs in respect of Hilli Episeyo.

Other financial items stated a 1Q 2018 loss of $1.2M. This non-cash loss was predominantly the result of a mark-to-market loss of $9.2M on the three Million Total Return Swap (“TRS”) shares following a $2.45 quarter-on-quarter decrease in the Company’s share price, partly offset by a gain of $7.3M in respect of mark-to-market valuations of interest rate swaps (“IRS”). This contrast to a mark-to-market gain of $20.5M in respect of the TRS and a mark-to-market gain of $5.6M on IRS’s in the previous quarter.

The $1.5M 1Q 2018 equity in net earnings (losses) of associates is primarily comprised of the following:

a $4.8M loss in respect of Golar’s 50% share in Golar Power Limited (“Golar Power”);

a $1.5M loss in respect of Golar’s 51% share in OneLNG S.A. (“OneLNG”); and

income of $4.8M in respect of Golar’s stake in Golar LNG Partners LP (“Golar Partners” or the “Joint Venture”). Cash distributions received from the Joint Venture are in line with previous quarters.

Financing Review

 

Golar’s unrestricted cash position as at March 31, 2018 was $172.4M. Equity contributions to Golar Power, predominantly represented by installments for the Sergipe project and FSRU Golar Nanook modification costs, resulted in a cash outflow of $40.0M during 1Q 2018. A further capital contribution payment of $15.0M was made to Golar Power in April which included the final equity installment for the Sergipe project.

The Hilli Episeyo conversion and commissioning remains within budget. As at March 31, 2018, $1,047.5M had been incurred ($1,212.8M including the original vessel and capitalized interest) and $640.0M had been drawn against the CSSCL pre-delivery facility. Vessel acceptance is the trigger that permits drawdown against the pre-agreed sale and leaseback facility. Upon satisfaction of this milestone, Golar expects to draw down a further $320M against the sale and leaseback facility during June. After all remaining Capex, including full contingency, the net cash inflow is predictable to be about $160M. Of the $175.0M restricted cash securing the Letter of Credit, about $32M and $97M, respectively, is predictable to be released to free cash 12 and 34 months after consumer acceptance of Hilli Episeyo.

 

Included within the $1,368.3M current portion of long-term debt is $699.7M relating to lessor-owned VIE subsidiaries that Golar is required to consolidate in connection with seven sale and leaseback financed vessels. Of the balance associated with VIE financings, two facilities amounting to $302.7M are due for refinancing by the end of 2018. Management have received confirmation from one of the facility lenders, representing about $160M, that they will, subject to documentation, extend until at least June 2019 and longer if a term charter is entered into in the meantime. The remaining current portion of long-term debt is predominantly comprised of the $640.0M Hilli Episeyo CSSCL pre-delivery facility. This is predictable to be replaced during June 2018 by the fully drawn long-term $960M CSSCL sale and leaseback facility.

The average true range of GLNG is recorded at 0.75 and the relative strength index of the stock stands 29.66. The stock price is going above to its 52 week low with 30.38% and lagging behind from its 52 week high with -29.12%. Analyst recommendation for this stock stands at 1.60. A look on the firm performance, its monthly performance is -12.99% and a quarterly performance of -24.22%. The stock price is trading downbeat from its 200 days moving average with -9.88% and down from 50 days moving average with -8.43%.

Andrew Carr

Andrew Carr covers the Business news across the all us market sectors for Streetobserver.com. He has over 5 years experience writing financial and business news. He is a graduate of the University of Florida graduating with an MBA. He focuses on adding value to investors' portfolios via thoroughly checked proprietary information and data sources. He has a very strong interest in stock trading, and other various investments. He currently lives in Fort Myers, FL with his wife Heidi.

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