Golar LNG (NASDAQ:GLNG) Q4 2021 Earnings Call

0:00 Ladies and gentlemen, thank you for standing by and welcome to GOLAR LNG Limited Quarterly 2021 Resource Call. At this time, all participants are in list and holding mode. After the speaker presentation, there will be a question and answer session. To ask a question, you will need to press star 1 on your telephone. I would now like to end the conference. Our speaker today, Karl Staubo. Please go ahead, sir.

0:25 Thank you and welcome to Goal RLNG's Q4 earnings results presentation. Thank you for taking time to dial in. My name is Karl Fredrik Staubo, CEO of Goal RLNG. Before we get into the presentation, please note the forward-looking statements on slide two. I am accompanied today by Eduardo Maranhao, our CFO. Given that this is a Q4 presentation, we would like to start today's presentation by a review of the key events that occurred in 2021 as laid out on slide 4. The year started with the announced sale of Golars 2 subsidiaries, GMOP and Hygo Energy Transition to New Fortress Energy in January of last year.

1:15 The transaction closed in April, realizing $130 million in cash proceeds to Gola, as well as 18.6 million shares in New Fortress Energy, equivalent to an ownership in NFE of 8.9%. Following the sale of the two subsidiaries, in May-June, we then undertook a corporate reorganization, started off with changes to corporate management. I moved from being the CFO of Golar to the CEO of Golar, whilst Eduardo transitioned from being the CFO of Hygo to the CFO of Golar. Furthermore, we right-sized our shore-based organization to the renewed company structure, reducing run rate GNA by approximately $5 million, of which the effects will be effective into 2022.

2:13 due to redundancy packages for the majority of 2021. In July, we announced increased capacity utilization of the FLNG HILI of 1.2 million tons of incremental production effective from 1st of January this year. The increased production has a tariff linked to TTF gas prices. At current TTF prices, This announcement represents increased earnings for HILI for 2022 of approximately 80 million dollars at no incremental capex the goal are. In Q3 we announced the refinancing of 682 million dollars of new and refinancing debt facilities at improved terms from retiring facilities and also extending our debt maturities.

3:10 Lastly, in December, we announced the formation of Cool Company, a business separation of our eight LNG carriers. We then raised $275 million in external equity for that outfit, and $570 million of new bank debt for the shipping kit. In total, these activities involved the sale of assets and subsidiaries for a total enterprise value of approximately $6.2 billion and a refinancing of around $1 billion of debt. Together, these activities have simplified Golar, crystallized underlying value of our asset portfolio, and significantly strengthened our balance sheet.

4:00 Turning to slide five, Golar's new corporate structure consists of our two FLNGs, Hille, which is in production, Gimmi, which is 80% technically complete, and scheduled to start its 20-year contract for BP in the second half of 2023. We remain with two LNG midstream assets. The goal are Arctic, which is a steam carrier, and Golar Kundra, one of the most modern available FSRUs in the market today. She is currently operating as an LNG carrier. We have furthermore developed three different FLNG designs using the same liquefaction technology and design concept, but with differences in liquefaction and storage capacity to cater for different sized potential new FLNG projects.

4:58 As a result of the transactions undertaken during 2021, we have three sizeable holdings in publicly listed LNG infrastructure companies. As explained, we own about 9% of New Fortress Energy, around 31% of Cool Company, and around 24% of Avenir LNG. and combined these three investments have a total value of around 600 million dollars. On slide six we have highlighted some of the key balance sheet effects of the actions undertaken in 2021. We now have cash and marketable securities of more than 1.1 billion dollars.

5:47 We have contractual net debt of approximately half a billion. If you include the total remaining capex on the FLNG GIMI, the net debt plus remaining capex is just under one billion. And we expect EBITDA development from our existing FLNGs to quadruple over the next three years. On the right-hand side, You can see that we have rearranged all of our death facilities and we have no material death maturities until 2025, well after GIME's expected startup in 2023.

6:33 So turning to slide seven, we believe we're now uniquely positioned for FLNG growth. We have a proven FLNG design. We have a market-leading operational track record with a 100% commercial uptime since Healy started its contract in 2018. And we have now delivered 5 million tons of LNG, more than any other FLNG globally. To the bottom left, we have a market-leading carbon footprint and a market-leading capex per ton of liquefaction. Lastly, the gas price environment is supportive of upstream investments.

7:20 We are very encouraged by the progress made for new FLNG projects with existing and prospective new clients, and we expect to be awarded a new FLNG contract within 2022. Our FLNG technology is competitive down to a tolling fee in the region of $2 to $3 per MMBTU. This enables monetization of stranded and associated gas fields. As previously announced, we are exploring alternatives to obtain commodity upside exposure while maintaining a base tariff similar to the structure that we have in place for the FL&D Hille.

8:03 In the current commodity price environment, Hille is making a tariff in the region of $6 to $7 per MMBTU liquefied.

8:14 I'll now hand over to Eduardo to present our Q4 results.

8:20 Thanks, Karl, and good morning, everybody. I'm very pleased to provide an update on our group results for the fourth quarter of 2021. So turning to slide number nine, we see that this quarter has been very busy for us. We recorded total operating revenues of $115 million with an adjusted EBITDA of $94 million, up 21% year-on-year. On the FLNG side, Healy continues to operate with 100% commercial uptime. Based on encouraging market conditions, we have also managed to hedge 100% of our TTF-linked production for this year's Q2 and Q3 at around $25 per million BTU. GIME construction is 80% technically complete, and we'll provide further details on that in the next slides.

9:11 We're also making considerable progress on the commercial front. and as alluded by Karl, a new FLNG contract award is expected in 2022. Moving on to shipping, the announced formation of Cool Company followed by a successful private placement was completed in January and closing of the sale of the eight TFDs is in process with expected financial closing within the first quarter of 2022. Cool Company has also secured a debt facility of $570 million which will be used to refinance six out of the eight vessels. On the corporate front, in order to provide extra financial flexibility to us and to support further FLNG growth, we have entered into a new $250 million bilateral facility with a seven years duration.

10:03 We have also repaid our existing convertible bonds and have now no major debt maturities until 2025. The formation of Cool Company also reduces our contractual debt by $833 million and will improve our liquidity by a further $342 million. I will talk more about these in details in this presentation. So moving on to slide 10, I wanted to talk a bit more about our financial results. And we can see that the group had a very solid performance in the fourth quarter. Total operating revenues increased from $107 million in Q3 to $115 million in Q4. This represented an increase of 7% from the previous quarter. Operational performance was really strong, and adjusted EBITDA came in at $94 million this quarter, up 27% from the previous quarter, and also up 20% from the same quarter in 2020.

11:04 Adjusted EBITDA from shipping was $43 million this quarter, an increase of 43% when compared to the previous one. FLNG contributed with $56 million this quarter, also reflecting an important increase of 14% when compared to the previous one. The increase in total operating revenues can be attributed to increased revenues from our operating FLNG, the HILI, and robust performance from our shipping assets. TCE earnings across our shipping fleet increased to $57,300 per day in Q4. Total operating revenues from our FLNG HILI including base tolling fish were $57 million in Q4, an increase of 4% from the previous quarter.

11:50 This number was further enhanced when including the realized gains from Brent-linked revenues. And just to remind you all, this oil-linked component of the healing generates additional operating cash flows of approximately $3.1 million for every dollar increase in Brent crude prices above $60 per barrel. As a result of rising prices, $12.9 million realized gain was observed in the fourth quarter, up from the 8.9 realized in Q3. This quarter, we recorded a net income of $7 million. A decline in the NFE share price between the 1st of October and December 31st resulted in a non-cash mark-to-market loss of $51.6 million on our shareholding of 18.6 million NFE shares.

12:39 However, this impact was more than offset by realized and unrealized gains on our oil and gas and interest rate derivatives of approximately $55 million. As a result of the new finances that were put in place in the fourth quarter, which included the issuance of a $300 million Norwegian bond, the refinancing of our FSRIU Gold Earth Tundra, and the repayment of the existing $101 million revolving credit facility in November, We ended the year with a total cash position of $360 million. That shows how our financial position continues to strengthen, and I will talk more about that on the next slide with some key balance sheet developments. So moving on to slide number 11. We can see that the formation of Cool Company brings great benefits to us. First of all, it will immediately reduce our contractual net debt by $833 million.

13:35 Secondly, it brings cash proceeds of $217 million to be received during Q1 2022, whilst also adding $125 million of marketable securities through our shareholding of cool companies. As I mentioned before, we have also entered into a new corporate bilateral facility, which allows us to draw up to $250 million until the end of Q2. Once drawn, that will have a seven-year duration with a bullet repayment maturing in 2029. Subject to certain ratios, it will carry a cost ranging from LIBOR plus 450 to 500 basis points. So considering our existing cash position, net proceeds received from Coup Company, the new $250 million bilateral facility, as well as the existing $200 million revolving credit facility, We now have the right level of financial flexibility to support future growth. Our total cash and market securities position now stands at $1.1 billion, as you can see on the left side of the slide.

14:43 So based on that, our contractual net debt has also substantially improved. When we account for the new finances that were put in place and also adjusting for the debt associated with the cool company vessels, our contractual net debt stands at $523 million. Going further, if we take into account our pro rata share of the GIMIs remaining CAPEX, the contractual net debt attributable to GOLOR would be around $936 million. So I'll now turn the call back over to Karl.

15:18 Thank you, Eduardo. Turning to FLNG and slide 13. We are starting to see the effects of higher commodity prices on HILI earnings. HILI's adjusted EBITDA increased to 57 million for Q4 on the back of an increase in Brent-linked revenues and billing of 1.9 million of overproduction. We expect HILI earnings to continue to increase on the back of higher Brent-linked earnings, estimated at $17 million for Q1 2022, and the startup of the previously discussed TTF-linked production from Q1 this year onwards. The unit continues its strong 100% operational utilization and has alluded to have offloaded 68 cargoes since its startup in 2018.

16:14 Slide 14 elaborates on the embedded upside in the commodity exposure of Hillis Tariff. For the last 12 months, Golar's pro rata share of Hillis EBITDA was $99 million. This is expected to grow by around 2.6 times for 2022 on the back of these higher Brent-linked earnings, where Golar generates $2.7 million of EBITDA for every dollar Brent is above $60. This will add around $80 million in year-over-year earnings. Furthermore, the startup of our TTF Link production unlocks an additional $80 million of Golar's ProRalta Healy earnings.

17:00 As Eduardo explained, during the quarter, we hedged Q2 and Q3 TTF gas prices, as the summer months are normally the seasonally soft quarters, and we remain open for Q4 2022 TTF gas exposure. Perenco, the charterer of Hylli, has a one-time three-year option to declare up to 0.4 million tons of increased production from 2023 until end of the contract in July 26. The tariff on this volume is based on the same TTF link at the 0.2 million tons of 2022 additional capacity utilization.

17:46 The option is declarable within end of July this year, and Perenco is currently undergoing a drilling campaign to prove up more gas reserves with a target to increase the gas flow to Hylli. Even if forward curvers suggest a reduction in the TTF price from today's level, Hylli earnings are sustainable due to the offsetting effect of the higher utilization should Perenkel declare their option. Turning to slide 15 and a gimme construction update, the unit is now 80% technically complete with 16 million man hours worked to date on the conversion.

18:35 The reminder of the build is mainly around construction, installation, and testing of equipment, ahead of a 2023 SailAway and contract startup. The contract will unlock an annual EBITDA to GOLAR of $151 million per year, every year for its 20-year contract. On slide 16, natural gas market fundamentals continue to improve for new upstream and liquefaction projects. COVID-related effects have stalled new gas upstream infrastructure projects which have led to an anticipated shortage of LNG supply to meet the continued strong increase in LNG demand.

19:22 These developments together with weather effects and ongoing escalation of geopolitical landscape of large natural gas exporters have caused spot and forward gas prices to lift, improving economics for LNG upstream projects, and also an increasing desire to diversify gas supply sources. We will now turn the attention to shipping and focus on Cool Company, which comprise the majority of our shipping portfolio. On slide 18, we provide further granularity of the charter profile of our shipping fleet. The light blue color represents our spot market exposure where we're fully covered for Q1 this year, but with an increasing exposure to an anticipated strengthening of LNG freight rates from Q2 this quarter and onwards.

20:24 In slightly darker blue, we have our floating rate charters which fluctuate with quoted spot market rates within a band subject to floor and ceiling rates. The bottom two columns represent our fixed and chartless options fixtures that generate an average time chart equivalent of just over $60,000 a day, as you can see from the bottom table. Despite short-term headwinds for LNG spot rates, term rates continue at healthy levels, significantly above our 2021 achieved rates. Hence, we expect Cool Company earnings to significantly increase as the fleet re-contracts into higher charter parties.

21:16 On slide 19, we explain what this could mean in terms of the dividend potential from Cool Company. Who Company has a clear strategy to distribute quarterly dividends once listed in New York expected later this year. The dividend potential on average spot rates for 2021 of $91,000 a day will equate to a dividend yield of 15% for 2022 or 24% in 2023 as more of the fleet are exposed to higher re-contracting rates as we go further out in time.

22:03 On slide 20, the LNG freight market has grown by around 7% cumulative aggregate growth for the last 20 years. This is a trend that is expected to continue on the back of new liquefaction projects coming on stream and increasing transportation distances as most of this new capacity is coming on in the US and the fastest growing demand is in the Far East. US to Far East consumes about double the vessel demand compared to a US-Europe round trip. Looking at the supply side on slide 21 and as previously discussed on our previous earnings calls, New environmental regulations coming into effect from 1 January 2023 will likely make a large part of the fleet underwater non-economical for international long-haul trade.

23:03 In particular, steam-propelled vessels built before 2007 are at a heightened risk of exiting international trade, corresponding to about 30% of the fleet underwater. The order book, now standing at over 160 vessels, are mainly built against charters to service new liquefaction projects and only 21 of the 160 ships on order are currently uncommitted. Hence a market backdrop where we have a demand side growing by about 7% a year A supply side at the risk of seeing 30% of the fleet on the water be made obsolete by new environmental regulations and no ability to increase the supply side well into 2025 due to yard capacity restrictions bodes well for a tightening of LNG shipping freight rates.

24:04 We believe Cool Company is well positioned to benefit from this development with an increasing exposure to the stock market. Turning to corporate, Golar was awarded Best ESG Strategy for North America in 2021 by Capital Finance International. We have a history of being an LNG market entrepreneur at the forefront of some of the key technology advances in the LNG industry. including being the first mover into FSR use and later FLNGs. Repurposing of assets and innovation focused on energy efficiency makes financial sense for Golar and its customer and reduces the environmental footprint of LNG.

24:54 We're grateful to be recognized by CFI for our long-standing efforts in contributing to strengthening LNG's relative competitiveness in the Global Energy Market. Turning to slide 24, this is a slide familiar to most of you, as we have shown this in most of our previously quarter results, but it's now updated for the effects of the cool company transaction on both our earnings and balance sheet. Starting off with Hylli, as discussed, this unit has an embedded upside. which should see a 2.6 times increase in the earnings year over year on the back of the commodity exposure and the increased production.

25:45 Gola's share of net debt on Hille stands at $317 million at the end of Q4. Gimmi is currently under construction and as such does not yet generate earnings. She is expected to start her contract in late 2023 and will add 151 million of Golar's pro rata share of EBITDA. Q4 debt stands at $287 million, where Golar's share of remaining capex stands at approximately $410 million, where about half will be covered by existing debt facility and half by equity. Our two remaining shipping and FSU assets generated 24 million dollars of EBITDA during 2021 and we expect an increasing attraction of the FSRU Tundra for potential FSRU charters that can increase EBITDA generation and earnings visibility from this unit.

26:49 Net debt on our two assets combined stand at 187 at quarter end.

26:56 Lastly, G&A for 2021 came in at negative 18 million dollars

27:01 and cash and marketable securities of more than 1.1 billion. In sum, we expect earnings to quadruple within 24 from 2021 levels. Total net debt, including remaining capex, stands at less than 1 billion or about two times fully invested run rate EBITDA. With our current cash position and contract profile, we can fund new FLNG projects while starting a dividend following GIMI contract startup. So to round off on slide 25, through 2021, the group simplification is now executed. We expect a quadrupling of our FLNG earnings from our existing assets from 2024 versus 2021 levels.

27:56 We have a strong balance sheet position with cash and marketable securities of 1.1 billion and fully delivered net interest bearing debt of less than two times. We believe we're uniquely positioned for FOMG growth and we are confident that we will see a contract award within 22. That concludes our Q421 earnings presentation. Thank you all again for dialing into the call and would like to turn over to the operator for any questions. Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone. The first question is from Randy Givens from Jefferies. Please go ahead, your line is open.

28:43 Howdy gentlemen, how's it going?

28:45 Hey Randy. Hey Randy.

28:47 Okay, congrats on the cool company spin. That was a long time coming, I know, so nicely done there. I guess starting with FLNG, you keep mentioning kind of a possible project in 2022. I guess what gives you that confidence? Can you provide a little more details around that? Maybe timing and hurdles? And then staying on FLNG, any updates on the HILI expansion? I know it's kind of the same language you used a few months ago, but just seeing how likely is that additional option? What's Parenko doing? Any other call you can provide there? That'd be great.

29:26 Yeah, Randy. So when it comes to FLNG projects, again, most FLNG projects are large infrastructure projects that obviously require a gas resource and an FLNG, but they also require governmental approvals, environmental approvals, and several fairly lengthy processes that often is outside of our and sometimes outside of our charters' control. So even if both us and the prospective charter is ready to engage, there are still hurdles that we need to cross on timelines that we are less in control of. However, I'll say that we are extremely confident by the progress made through 2021, but also in particular this quarter, both with existing but also new prospective clients.

30:26 For some of the clients, we have a target timeline that should boast new or contract awards very well within this year. And that is basically what gives us the confidence to say that we will get the award within 2022. Let's turn to the second part of your question when it comes to Hidli. At this gas price, I think it's pretty much a no-brainer to increase production. The unit is there, and she's available to produce more, and economics of Upstream are pretty amazing at current gas prices. So I think the only hold-off, if any, is the results of the drilling campaign. Again, the option is declarable up until July, and we expect a decision to be made close to the end of that option window.

31:22 Got it. Yep, I agree. That's all fair. And then I guess second question, just looking at some of your other assets, you have the Golar Arctic, you know, kind of what's the status there, and then the Golar Tundra. It seems like there's some opportunity for an FSRU at the Bacarena project. Can you shed some light on those two assets?

31:45 I think Artic is our last shipping asset. She's a steamer, which we again think will be highly disadvantaged from 1 January 2023 due to the new regulations. We're looking at basically three alternatives for her. An outright sale, a charter as a ship, or a potential conversion to an FSRU. We believe we will conclude on one of those three well within this year, and we are in the different processes of all three of those alternatives. When it comes to Tundra, she's one of the most modern FSRUs available in the market today. And I think as the latest geopolitical events have alluded to, it could be advantaged to have a diversified source of natural gas, and we think her relative attractiveness has increased.

32:39 both for main projects like you referred to in Brazil, but also for other projects elsewhere.

32:48 Got it. All right. Well, hey, that's it for me. Congrats again. Thank you.

32:53 Thanks. Thank you for your question. The next question from Ken Hoekstra from Bank of America. Please go ahead.

33:03 Hey, great. Good morning. Karl, you mentioned three different potential fling styles. I guess, is this going back to your Mark III? Is there, I guess, a new development in kind of maybe a mid-size versus the large and small you've been talking about? Maybe just talk about, you know, it seems like you're progressing on sales. Maybe talk about the optionality there or the differentiation.

33:27 I think Mark I is basically what we have for Helium Gimme. It's plus minus two and a half million tons of liquefaction capacity. and it's based on a conversion of an existing ship. Mark II is a slightly more flexible solution that can range between two to three million tons. It's also based to a large extent on a conversion, but it's got shorter construction time and can be built at shipyards that provide attractive financing. Lastly, you have the Mark 3, which is a new build design, which would typically be built in a shipyard in Korea, and that can go up to 5 million tons. So it's for larger projects, and it's also got significantly larger storage capacity.

34:20 Think of it as small meets large. Yeah. And then does the sale of CoolCo, which kind of was like the embedded base of potential vessels that you could use for some of the conversion opportunities, I guess that doesn't really make an impact given you mentioned how many are going to be coming off of international trade going forward. Is that where you would look for some of the opportunities for conversion potential or is this more developing Mark III projects going forward?

34:52 For conversion, we will focus on most defined carriers. All of the ships that went into Cool Company are membrane type and not suited for FLNG conversion. So there's no impact in terms of conversion candidates of Cool Company on the FLNG side of the business.

35:14 And then I guess just switching to kind of our current events, maybe talk about the impact of Ukraine developments on Europe's increasing need for gas and what that could mean for potential opportunities or negotiations as you look forward into 2022-2023.

35:35 I think the most immediate there is obviously the potential increased production on Healy linked to TTF.

35:41 It makes sense for Perenco, it makes sense for us.

35:44 And a higher gas price makes it even more attractive. So I think that's the most immediate. I think somewhat longer term, the need for diversifying LNG sources I think is quite relevant for pretty much anyone in the market and should work well for the supportive actions for new F-LNG projects.

36:13 And then lastly for me, just I guess a more numbers question is I guess now Maybe talk about your outlook for, I guess, direct interest expense. You talked about the refinancings. Maybe can you talk about what your interest expense looks like going into 2023, given the refinancings?

36:36 Eduardo, you want to take it?

36:39 Yeah, sure. So, hi, Ken. So, coming into 2023, as we mentioned before, we have managed to... to issue the $300 million bonds in October. And that was mainly used to repay the convertible bonds in February of this year. So if we look further for 2023, our interest expense would be pretty much in line to what we had previously. I think the main effect of the different refinances that took place and the formation of Cool Company will really come with the deconsolidation of $833 million of debt, which at the time of closing of the cool company's acquisition of the eight vessels will take effect. So I think this is really like the most important impact to us.

37:35 Great. We'll follow up with Stuart on some of the other minor details, but thanks. Appreciate the time and congrats on the cool co-spin and good luck on the next FLNG project.

37:48 Thanks. Thank you for your question. The next question from Chris Tsun from Webber Research. Please go ahead.

37:59 Hey, good afternoon, Karl and Eduardo. How are you?

38:03 Well, thanks. How are you?

38:05 Good, good. Just following up on the potential options for the GOLAR Arctic. I know you said, you know, sale, charter, or conversion as an FSRU. If it's the latter, if it's a conversion of an SSRU, could it be something like what you've done with the Golar Viking and converted it for a customer and then sold it and then subsequently managed this?

38:34 That's an extremely simple yes is the answer.

38:40 Oh, is that on the table? Is that what you're looking at now or not?

38:44 That is a potential venue, and yes, there are projects that could suit that.

38:49 Okay, that was easy. Thanks. So speaking of the LNG Croatia, I know that Nikola is being paid about $2 million a year for managing this, and with the carrier spin down to KUKO, and along with the commercial and technical team. Does that two million still sit with Golar or is that split with Coolco or does it all go down to Coolco?

39:16 The absolute vast majority of that sits with Golar and stays with Golar.

39:23 Okay and just one last one on the Heli extension. I know there's an option for Franco July 2022 and There's no discussions on possible extensions until Franco, until Hilly is fully contracted, right? So is the BOGI like the full 2.4 million tons or is there somewhere just above where it's at now?

39:54 You're absolutely right that we have been very adamant in the past.

39:58 We were not there to talk about extension until they at least declared a 0.4.

40:02 and for any extensions we need to see that we're paid for the full capacity of the unit. We think it's unlikely that the unit will produce up to 2.4 million tons at its current location due to gas flow. So today, or last year we produced 1.2 million tons. This year we produced 1.4 million tons due to the TTF link. And next year it's potentially then up to 1.6 million tons. If that's declared, then the unit is making decent money until July 26. And beyond that, we would then look for a contract that would compensate the full 2.4 of capacity. And we need to see the 1.6 to be willing to have that discussion at all with Perenco.

40:50 I think another caveat is that there is some construction time for new SL&Ds. and very soon Healy is the fastest available FLNG in the world. She's got no construction risk and the best operational track record in the market. So we believe her relative attractiveness is only increasing the closer we get to end of contract than the opposite.

41:15 Right. No, that all makes sense. Thank you for the color. That's it for me. Thank you. Thank you. Thank you for your question. The next question from Chris Witherby from Citi. Hey guys, James on for Chris. Just wanted to touch on something you had said about a potential FLNG project on the horizon and getting a customer order around it. When we sort of think about assuming it's a Mach 3, essentially the economics around cost just generally given the inflationary environment and the potential delivery and So any sort of other aspect that we should really be thinking about relative to sort of the HILI or the other projects that you have online at the moment?

42:01 I think capex-wise, you're looking at pretty much around the sort of same rule of thumb of $500 million per ton of liquefaction capacity.

42:12 So if you talk about 5 million units, it's basically 2.5 billion, roughly.

42:18 Yes, there is some inflationary pressure at shipyard prices these days, but there are also some economies of scale of going from 2.5 million tons of production on one hull to 5 million tons of production on one hull. So the rule of thumb, I think, is still valid for that point, so call it around $500 million in CapExpert on MicroPipe. Got it. And what about a potential delivery time, just given if you put the order in now on the specifications? Just the tightness and order book across shipping generally, what would be sort of a potential delivery date if it was put in at sort of mid-year this year?

43:00 Plus minus four years from the start. Got it. And you also now have... Sorry, sorry, that's for a five million ton. That's for a five million ton. If you do the mark two, you can significantly shorten it two and a half to three years. Understood. Got it. And then you called up basically three sizable equity investments. Just wanted to understand sort of your plan for those over time. You mentioned that you viewed them as strategic, but now that sort of some of the broader refinancing and restructuring is done, how do you sort of think about those? Are those something that you essentially want to hold on to or potentially could sell down in order to finance sort of construction of another FLNG project? Just kind of wanted to understand how you thought about those strategically and sort of any long-term plans around them if you had any.

43:50 I think the key rationale as to why we ended up with them is important to understand before we discuss the next step. We think all of them are very attractive businesses, and we think all of them have very attractive risk-reward from the current share prices. Our rationale for ending up with significant shareholders was the fact that we've been focused on simplifying Golar to be a pure-play FL&D owner and operator. and to enable us to crystallize underlying value and strengthen our balance to take on new FLNG projects. So for now, we are holders of these names. We think that we will remain holders until the earlier of when these stocks better reflect the underlying value embedded in these companies or when we can recycle the capital for FLNG growth.

44:48 With the new financing facilities that Eduardo has explained during this call, we don't need to pretty much do anything if we're lifting one FLNG project. If we're lifting more, we need to start considering. Then one quick one, essentially on the $250 million delayed draw, any specific uses that have been earmarked for that? And then just, I guess, broadly, is there anything else that you sort of have on the horizon from sort of a debt financing side in terms of things that you want to address? And that's all from me.

45:26 I think on the 250, it's a fairly attractively priced corporate facility. It's got a bullet repayment seven-year duration. It enables us to do FLNG growth without having to tap into our and publicly listed stocks. So for us, it's an attractive risk reward in securing that facility, having flexible draw for the next six months, and hopefully time that with new FLNG projects. We have learned from experience that these are fairly capital intensive projects that we are undertaking, and it's good to have secured long-term attractive facilities before FIDs versus after. So you should see that that is really the key rationale. We have no other debt maternities whatsoever until 2025, and we have no near-term ambition to do any further debt optimizations.

46:27 We do think that there is a potential to significantly improve the debt facility on or around delivery, but there's no need or desire to do that at this point in time.

46:42 Thank you. Thank you for your question. The next question from Homar Nocta from Classroom Securities.

46:54 Thank you. Hey, Karl, Eduardo. Congratulations also on the official completion of the GOLAR simplification process. I just wanted to ask, I had a couple of questions, but first just on the FLNG contract award you're anticipating for this year. Could you maybe talk just about what kind of contract you think that would look like Is that one that would be similar to that 20-year BP contract on the GIMI, or do you kind of want to have a bit more skin in the game, as you've talked about in the past, something that maybe emulates the HILI contract?

47:30 I think on the balance, it's more of a long-term tolling fee-based contract, more similar to that of GIMI. But as we explained during the presentation, we are seeking to obtain some commodity exposure. and we're working to see if we can achieve that for the 2022 expected award as well.

47:53 Thanks, Karl. I guess just regarding the GIMI, you mentioned instituting a dividend after that starts up. Have you thought about what kind of dividend that would look like? Do you envision that being a regular quarterly payout or do you anticipate some sort of securitization of that $3 billion backlog? and doing maybe a special dividend or some kind of dividend recap.

48:20 I think if you talk about return to shareholders and capital allocation, we still have around $25 million of buyback that we can enable. Due to the bond we concluded last year, we are not allowed to pay dividends until GIME delivers, despite the fact that we can on the basis of HILI earnings alone. but the plan is to start a regular quarterly dividend following delivery of GIME. As we have this infrastructure like returns over time, we should create this to be a stable yield claim and then with this liquidity position we have, we can afford to pay that dividend while still funding FOMG growth projects out of our cash position.

49:10 Okay, thanks Karl. And then just on the GIMI project, given where LNG prices are and the forward curves over the next several years, any sort of updates that you're seeing from the Greater Tortue project about getting expanded and whether that could potentially lead to more business for Golar?

49:33 I think it's an extremely large gas discovery. There's a publicly announced plan to eventually get that to at least 10 million tons of production. and with GIMI, we get them a quarter of the way there. So on the balance, they are significantly closer to cash flow startup. I think the gas price is significantly higher than the base assumption that the DTA partners assumed for when they took FID. So on the balance, getting closer to cash flow, infrastructure in place and better economics than anticipated when taking FID.

50:10 should support growth in our view. Okay. All right. And, Karl, just one final one, and you may have addressed this in the past, but I just wanted to ask about the Brent-linked component of the HILI. The $3 million of incremental EBITDA for every dollar that you're above 60, it takes you up to a contractual ceiling. Have you disclosed what that ceiling is?

50:41 We did back in 2015. It's just over $100. Okay. Oh, thank you.

50:52 Got it. Thanks very much. Thanks, Omar. Thank you. There are no further questions at the moment.

51:05 Okay, then we would like to thank you all for dialing in to the call today, and we look forward to speaking to you again on our next quarter results, and please do reach out if you have any further follow-ups. Have a good day. And that concludes the conference for today. Thank you for participating. You may hold this connect.