Sir Frank Chapman - Chairman Doug Arnell - CEO Brian Tienzo - CFO

Jonathan Chappell - Evercore Partners Fotis Giannakoulis - Morgan Stanley Michael Webber - Wells Fargo Securities, LLC Erik Stavseth - Arctic Securities ASA

Good day and welcome to the Golar LNG Limited Q3 2014 Earnings Conference Call. Today's conference is being recorded. At this time, I’d like to turn the conference over to Mr. Brian Tienzo. Please go ahead sir.

Thank you, moderator. Hello, everyone and welcome to Golar LNG's third quarter 2014 results presentation. As the moderator mentioned, my name is Brian Tienzo, and as usual I’ll be going through the 3Q highlights with you as well as guide you through our own financial results. Before we start off, my apologies to those people who were expecting our results published as of 2:30 PM London today, unfortunately due to technical glitch it was delayed a little bit, so apologies for that. I’m also joined by our CEO, Doug Arnell, today and who will take through -- you through the business update and summary and outlook section of the presentation. Finally, this is our first results announcement following a change in the Company’s Chairmanship. We are joined today Sir Frank Chapman, who will be with us through the presentation and the Q&A session also. So without further ado, let’s turn to Page 4, and I’ll take you through the Q3 highlights. As mentioned in our second quarter 2014 announcements, we were looking to take FID on specifically conversion of an LNG carrier to a floating liquefaction vessel and such as the end of -- the end of Q2 2014, there were key agreements that were executed to convert the LNG Hilli to an FLNGV. Subsequent to that, the Hilli sale to the Singapore and the conversion activities commenced where Black & Veatch is in-charge of the engineering and procurement and Keppel with the conversion of the vessel. Further to that, we also mentioned that Keppel Corporation or a subsidiary of Keppel Corporation were interested in a 10% stake of the Hilli and that was made effected also during the quarter. Towards the beginning of September we successfully closed a secondary offering of $32 million World Shipholding shares which changed materially the consistency of our shareholding. As mentioned just now, Sir Frank Chapman replaced John Fredriksen as Chairman of the Board during September. And also we took delivery of two new-build carriers, the Golar LNG carriers Penguin and Golar Bear towards the end of September. Turning to results, we’re very pleased to announce that Q3 vessel utilization increased materially from 47% in Q2 to 56% in Q3, thereby increasing revenues to $28.8 million. As a bonus to that, Q3 vessel operating expenses also fell by 5% to $11.2 million. The result of both of those factors means that EBITDA generated in the quarter rose by 269% to $5.9 million. And of course with the mark-to-market gains on interest rate swaps during the quarter as well, we report a net profit of $7.8 million during the quarter compared to Q2 net loss of $24.2 million. Now despite the good news in respect of operating results, we warn that there are some challenging charter higher markets ahead. Nevertheless the Board maintains a dividend of $0.45 per share for the quarter. Turning over to Page 5, subsequent to the quarter, we took delivery of two LNG carriers the Golar Frost and Golar Glacier. The Golar Viking commenced its 5-year dry-docking in November and is expected to come out of dry-dock during mid -- during the middle of December. We also sold a small minority stake in the Hilli to engineering procurement partners in respect of the conversion of the vessel to Black & Veatch International. Turning over to Page 6, to go through in a bit more detailed results for the quarter. So as you can see net operating revenue for the quarter is up to $22.7 million versus $17.8 million in Q2. There were some good news coming out of the utilization of the vessels Crystal, which were delivered in Q2, but it was mostly idle in Q2. In Q3, the vessel was achieved utilization of over 50%. More positive news came from Seal, where the vessel was utilized 65% in Q3 and a marginal utilization rate during Q2. Furthermore, we saw notable positive contributions for both Celsius and Viking versus their Q2 record. A slight negative impact to that is the delivery of both Seal -- both Bear and on Penguin towards the end of September where the vessels did not contribute to earnings, but we incurred certain amount of costs during the quarter. As a bonus to this, operating costs slight decreased from second quarter despite the full quarter of Crystal and two additional vessels at the end of September both on the Bear and the Penguin. Nevertheless, we didn’t see as much repairs in the quarter as we did in the second quarter where we saw Arctic and Viking incurring critical repairs, which were not repeated in the third quarter. Furthermore, we saw a full benefit of the Gimi being laid up in the quarter and as such the cost for that vessel also decreased. All of those factors resulted to an EBITDA of $5.9 million versus Q2 EBITDA of $1.1 million. Going down the table, you can see that net financial expenses and income during the quarter decreased materially from Q2, mainly as a result of positive mark-to-market movements during the quarter in interest rates and all of that has resulted to a net income for the quarter of $7.8 million versus a net loss of $24.2 million during the second quarter. You will see that in the bigger box with the bottom of the page there, the improvements in time charter equivalent from Q2 of 47% to 56% during the third quarter. And of course that has had a positive impact in terms of time charter equivalent which moved from $36,818 per day to $40,977 per day in Q3. Turning over to Page 7, and again we just like to highlight to the participants the importance of the corporate structure that’s in place and I think more importantly despite the challenging chartering environment, we see a steady growth in the partnership, which of course not only contributes lump sum cash injections by way of dropdowns, but also the growth in dividends received from the partnership allows us to maintain operating cash flows. The highlights there being that since IPO Golar LNG Partners quarterly dividends have grown by 42% and Golar LNG share of those dividends have increased by 83%. Majority of the disparity in the growth is obviously brought about by the fact that Golar LNG Limited owns the IDRs which have grown 600% since Q3 2012. That we foresee that the LNG Partners will exercise its right to buy assets from Golar LNG Limited. We expect assets that have got five-year charters are longer and as a soft target for that Golar Eskimo is likely to be the next dropdown for LNG Partners and we expect that dropdown to most likely trigger the 50% splits in the IDRs. You will see in the graph there that there was a reduction in terms of dividend income between Q4 2013 and Q1 2014 by virtue of Golar’s common unit holdings reduction as part of the transaction at the end of December. Nevertheless, that has leveled out following the Igloo dropdown and as of Q2 2014 the level of income has pretty much gone back to normality. Turning over to Page 8, to look at the balance sheet. So the top line there shows a very healthy cash balance from Q2 2014 to even now Q3 2014. That’s of course despite the continuing payments on Hilli conversion and taking on to delivery of two LNG carriers at the end of the quarter. Moving down to the middle of that page, you will see that there is material additions to vessels and equipments. Again, as a result of the Penguin and Bear being delivered during the quarter and the newbuildings have decreased, not because of the payments, not being made, but of course of the transfer of assets from newbuildings to vessels and equipments. Assets under development is the Hilli and you will see that there has been a $73 million payment during the quarter as part of the ongoing milestone payments. Long-term debt towards the end of the page, has increased from $657 million to $918 million as a result of drawing down on the 100 -- that the eight vessel facility that we entered into in the summer of last year. Going over the page to look at the Group cash flow, the main point of discussion there is mainly there in respect of the additions to new-builds and vessels and equipments which move from $263 million expenses during Q2 to $243 million in Q3. And you will see that there is materially a decrease from -- in respect of additions of assets under development, i.e. the Hilli conversion from $165 million in Q4 -- in Q2, which is making effective the conversion contracts at the time to ongoing milestone payments during the third quarter. In the middle of the page you will see the equity proceeds has a material drop from Q2 to Q3, mainly as a result of the equity offering that was done in Q2 not being repeated in the third quarter. Turning over to Page 10, so whilst fleet’s utilization shows improvement during the third quarter, you will have seen from our press release that we’ve given guidance in respect of a challenging chartering market ahead of us and expected to last through to mid of 2015. We also mentioned that G&A costs are likely to increase as Company brings in new recruits and as we intensify our project development to promote various assets. Nevertheless and despite this, Golar has built a solid foundation to ride through a variable trading times ahead of us. Of course, we need to make sure that we fully funded our new-build program, which is now done. And the fact that we do have a group structure that allows us to monetize long-term contracts instantaneously and grow through dividend received by way of shareholding in Golar LNG Partners and a 100% shareholding IDRs is very important to make sure that that foundation remains solid. We do have remaining capital expenditures ahead of us, particularly on the Hilli. We believe that we’ve sufficient strategies in place to be able to meet those, not least because we do have remaining cash from June equity offering. You will have seen that Keppel had made their own contribution to that by way of their investment into the subsidiary that owns the Hilli. And of course Black & Veatch has come in with a small minority stake as well. I think most importantly we’re in discussions with various lenders in respect of debt financing to fund the remaining conversion cost of the Hilli and we expect to be able to put that in place by the middle of next year. So we’re taking a very conservative approach and as a result we continue to put through extensive stress testing on our cash flow and despite the challenging chartering market ahead of us and the pretty heavy capital expenditures that we have in the Hilli, our cash position nevertheless demonstrates that we do have a pretty resilient liquidity status that will take us through to 2016. On that note, I hand now over the presentation to Doug, who will take you through the business update.

Thank you, Brian, and good morning and good afternoon to everybody. I’ll start my portion of the presentation on Slide 11, with a quick review of the overall Golar fleet. At the top of the slide, you will see the Golar LNG Partner vessels, nine vessels in total now, including five FSRUs and four carriers, all on long-term contracts. I’m also very -- I’m very happy to report on the operations of that fleet that effectively we’ve had zero unscheduled downtime through the quarter, which demonstrates Golar’s ever improving top tier operational status. Along with long-term contracts, that type of operating record creates the low risk environment that the unitholders and partners expect and that we believe that’s why the units on that Company have been trading very well. Down below Golar LNG Limited’s fleet, 17 vessels in all, including the three conversion candidates, two modern steam vessels and the balance being new-build carriers and FSRUs. We’ve -- we’re obviously well into the construction and delivery program for the new-build vessels. Of the three of the carriers have been delivered and are out on the water and also expecting two deliveries of FSRUs. The three remaining carriers, although there maybe some adjustments to the scheduled delivery time, nothing major, we’d expect the entire new-build carrier fleet to be operational on the water within the first quarter of 2015. Turning to Slide 12, just looking at the current state of the shipping market and a bit of an outlook. We are happy to report that through Q3 the shipping market showed a moderate improvement. Our fleet utilization and overall rates were increasing through the quarter, and that's what has led to the improved financial results. We anticipate the same market dynamic to continue on that trend through Q4 as well and we should see somewhat better results even in the fourth quarter. What's caused this improvement in the shipping demand, well, its normal seasonal effects as we come into this period of the year, we’d expect in relative terms the market to improve. We also had some good spot cargo activity and trading activity coming out of South America and as well a European reloads heading out to Asia and finally significant was the fairly significant LNG pricing contango that came about through August, which soaked up a fair amount of capacity and led to the improving market. Additionally, PNG LNG ramped up their volumes somewhat ahead of schedule with some early cargoes, utilizing vessel capacity as well. Looking into 2015, some of those factors will still be present and some won’t. The regular seasonal variation in the LNG market will likely see a drop off in activity in the first of 2015. So we expect the challenging market to continue. However, on a seasonally adjusted basis, our firm view is that the LNG carrier market has now started its recovery from the low point and we are -- should be into a long-term trend of growth, with the expectation for increased opportunities for longer term charters at better rates. As the newbuilding fleet gets merged into the overall LNG carrier fleet, we see more and more comfort with the vessels with the main industry players and more and more attraction to the high efficiency of the TFT carriers. The performance of those carriers has gone even beyond the promised fuel efficiency and boil operatings which make them very attractive to LNG charters and LNG buyers and sellers and we see those players moving towards chartering those vessels as a preference. As a result, we’ve had very good success of getting our vessels out of the yard and getting their maiden voyages done, so that they can trade on par with the rest of the fleet. In the meantime, as we’ve been saying for several quarters now, our focus is to control cost closely. We’ve demonstrated that this past quarter. We will continue to market the advantages of the high efficiency ships and our top tier operating record to industry players and focus on maximizing utilization of the fleet. Turning to Slide 13, to talk about FSRUs, I just want to take a moment to point you to the graphic at the top of Slide 13, which is focusing in on the revolution of the importing -- LNG importing countries globally. And you can see that in the time period from 2008 through 2012 we had a marked increase in the velocity or the frequency of new countries being additioned to the global LNG market set. What we can see is that most of that increase and the velocity of that increase was related to the advent and usage of FSRUs in the market. And so, we had a combination of factors. We had a growth in the number of LNG importing countries and a change in the mix of the LNG players. So the markets that these FSRUs were serving and the companies that were -- that are importing LNG through the FSRUs are not the large, fully integrated IOCs and NOCs that typically dominate the trade of LNG. This has caused a disaggregation of the downstream market away from the upstream and it has been a big contribution to the growth and efficiency of the LNG industry. This dynamic is very informative and fundamental to Golar’s drive to be a fully integrated LNG midstream player. The floating infrastructure has fundamentally altered the LNG market dynamics by being lower cost, lower risk and shorter lead-times to implement. And that’s why you see that increase in the number of importing countries take such a big step in those years. Of course, the next FSRU which will be -- will go into service will be the Golar Eskimo, which will deliver from the yard in December and be delivered into Jordan to begin operations in the first half of 2015. As Brian pointed out, it will be likely the next dropdown candidates for Golar -- the Golar MLP triggering the higher IDRs. This will be Golar’s sixth long-term FSRU contract and looking back up at the graphic above that since 2008, that six new importing countries that Golar has added to the industry in six years, which I believe would be an unprecedented statistic in the industry. Turning to Slide 14, of course we have the Golar Tundra delivering from the yard late next year and we are working various opportunities for her, but we’re primarily focused on the Ghana FSRU project. While it still has material hurdles to get to FID, we’re very pleased with the progress that the local developer Quantum Power has made. We are the exclusive provider of the FSRU to this project and we’re very optimistic that these guys may achieve their goal of reaching FID within the first half of next year. The driver for the FSRU and gas is gas shortages to power plants in the area, which is causing those companies to burn quite expensive light crude oil. The Phase 1 of that project is based on approximately 250 million cubic feet a day of power demand for gas in Tema. The FSRU Tundra has a base capacity of 500 million cubic feet per day and it can peak up to 750 million cubic feet per day. There is much more potential gas-fired power generation in Ghana and so the opportunity to utilize the extra capacity on the FSRU is real. The interesting dynamic is that as displayed by this project and others, West Africa has a dual potential as a supplier and demand for LNG. I think a lot of you already know and we’ll be discussing shortly how optimistic we’re about the West Africa region as a location for GoLNG projects. And with this opportunity to also have West Africa be a demand for LNG, it creates quite an ideal arbitrage for GoFLNG projects in the area. Turning to Slide 15, I discussed at length earlier the dynamics that were altering the shape of how the LNG industry works and, obviously we believe the same will be true heading upstream in the LNG production space. The GoFLNG value proposition promises lower unit cost and quite significantly not just because its floating infrastructure, but also because of Golar’s unique execution credentials with vessel conversions. We will show shorter lead times, quite significantly not just because we can be efficient at creating an asset in the shipyard, but also because of development times for permitting and licensing of such facilities given their offshore is typically much shorter and lower execution risk again quite significantly both from the standpoint of a controlled construction execution in the shipyard, but also just related to the inherent advantages of floating assets. This will lead to GoFLNG’s projects being attractive at levels in the area of $2 per MMBtu for delivered LNG price and that’s including longhaul transport of up to 10,000 nautical miles. We believe that the viability of this proposition is sustained in adverse energy pricing environments and certain -- certainly in today's pricing environments and most notably commercial flexibility, because of the inherent advantages that I've been speaking about, we are able to offer commercial structures with shorter terms based on lower volumes which will lead to a new type of player being able to take advantage of the LNG industry, either as a gas producer, as a gas intermediary trader or a gas -- or an LNG -- in fact, an LNG customer. You can see on the graphic to the right, there is a wide range of expected breakeven LNG prices required for projects globally, and we’re sitting at the bottom of it. The $10 per MMBtu GoFLNG delivered price is equivalent to $60 crude price at energy parity. So when looking at current long run crude levels of $90 we clearly have quite a bit of headspace to be competitive in this market. Spend the next couple of slides talking about our project development funnel, which we continue to be very happy with. The factors that I’ve just described and the value proposition for GoFLNG are playing very well in the market. Slide 16, starts with the Americas. North America will be key development region for this business. In many ways its form fit for our conversion vessel design, which works very well with pipeline quality gas that is abundantly available in North America and as well such gas given the state of the North American gas market is available at prices which feed into a very attractive LNG chain. Looking at a specific example, if you take those advantages of North America and you move into Canada, you get an even more attractive picture. A combination of huge reserves near the West Coast of Canada, a very supportive government and regulatory framework to permit energy facilities and to promote the export of LNG to global markets and the closer proximity of the West Coast of Canada to key markets in Asia make this very attractive. So we have been focused very hard on maintaining and developing our positive working relationship with the Haisla nation who have been promoting the Cedar LNG projects. The Cedar LNG project has filed for export permits in the range of 15 million tons per year. They have very attractive sites for projects, including for floating projects and their finalizing pipeline access agreements. Pending our finalization of agreements with the Haisla and their approval we envisage and we expect to be initiating permitting activities in the first quarter of 2015 for a first phase of two GoFLNG vessels with an aggregate capacity of 5.8 million tons per year. We expect the permitting timeline to be roughly in the range of two years and anticipate to take FID late in 2016 or early 2017. The legacy issues with regards to the original BC LNG project in the Douglas Channel are progressing well towards resolution. We expect that to result positively soon and the project I’ve been describing has no affiliation with that project -- this project. The Cedar LNG project uses different pipeline capacity and different size. Additionally, we’re pursuing other projects in our funnel. Most notably in the U.S Gulf Coast and -- but also in Latin America they’re somewhat less mature, but in a lot of ways equally attractive. And we hope to be updating on specific opportunities in the coming quarters. Moving on to Slide 17, our other key region for GoFLNG is West Africa. Historically very strict, very significant, but stranded gas reserve base, multiple players, multiple producers, and potential partners for us in many -- in specific countries. Good experience with LNG exports and as I've discussed earlier potential liquid fuel switching demand nearby. We've got several opportunities at various stages in the project funnel. Our most mature remains on track to execute heads of terms by the end of this year. We have made excellent progress with our producer partner and the host government on technical, commercial, and fiscal regulation matters and so we’d expect to have all the requisite approvals and licenses finalized by the first half of next year. To coincide with the delivery timing of the Golar Hilli, we're on track to be in production on that projects in -- on 2017. The initial committed reserves to the vessel will utilize roughly half of the capacity, but given the gas rich nature of this region we’re more than optimistic that a high utilization will be achieved over the life of the asset. Turning to Slide 18, just an update on the conversion project itself, Brian has described how the Hilli conversion contracts were made effective in July. The Hilli was delivered to the yard in September and the conversion works are underway specifically engineering and design and procurement activities with Black & Veatch and ship repairing conversion activities with Keppel at the yard in Singapore. All key long lead items, all major items have been ordered for the project and it remains on schedule and budget for delivery in the first quarter of 2017. I will also like to update you on the Gimi conversion contract which we expect to be our second pending a final decision, such decision regarding that conversion is expected shortly. So finishing up on Slide 19, just a quick summary and outlook, the shipping market has shown moderate improvement in the third quarter, trending the same way in the fourth quarter with the first half of 2015 continuing with a fairly challenging supply demand picture for ships. Seasonally adjusted, however, we feel that the market is now moving away from its low point and we expect a long-term growth trend to begin from the middle of next year. The Golar Eskimo FSRU nearing completion at the yard and will be delivered to Jordan on time for the start-up of their project into that 10-year charter. The Ghana FSRU project progressing well, several milestones to cross yet, but we remain cautiously optimistic about that project. The GoFLNG value proposition is playing very well in the market, our low cost, low risk proposition with the ability to offer flexible commercial structures is proving to be very attractive with counterparties and thus our project funnel is progressing nicely. Our West Africa project, we anticipate agreement -- key agreement on the heads of terms by the end of the year. Permitting kick off on Cedar LNG anticipated in Q1 of next year, and we’re optimistic that we’ll be updating you on more specific projects and more specific steps forward on other projects through next year. With that, I finished the presentation. As Brian -- and before we get into our Q&A, as Brian indicated earlier, we’re very pleased to have Sir Frank Chapman join us on the call. I’d like to have my own welcome to Sir Frank and Frank has asked that he could say a few words to the investors before we do the Q&A.

Yes, thank you, Doug. And let me say good day to you all and how delighted I’m to be on the call today. I thought by way of introduction I’d just give you a little summary, if I may, of my background. I’ve spent about 40 years in the oil and gas business. I’ve spent about half of that living and working in a variety of locations overseas and on a range of upstream, midstream and LNG businesses. I’ve worked for BP, I’ve worked for Shell, but I spend the last 17 years with BG Group and that period saw quite significant change. We saw growth in BG profits for example from about $50 million in 1996 to around $8 billion or more than $8 billion in 2012. Assets grew from about $5 billion to about $60 billion in the same period. And as part of this story of BG, we also grew from absolute scratch. An LNG business that delivered getting on for $3 billion of operating profit in 2012 and behind that success was the assembly of a set of LNG assets that we used in a way that fundamentally change the whole business, LNG business paradigm. Now turning to Golar, I have known Golar and its key players for about 15 years. I recall that when they acquired Osprey, we were the charter of four its ships at the time, its four ships at the time. And from my perspective as CEO of BG, I’ve watched Golar build one of the largest most modern and operationally most effective LNG fleets in the industry and I’ve also watched with interest as they’ve surprised actually some of the upstream principles by the way they’ve extended their shipping success downstream into floating storage and regasification, where we see them now once again as the market leader. Earlier this year, about six months ago, Tor Olav Trøim called me and ask me if I wanted to have to transition Golar from its current position into an integrated LNG midstream services provider, a new strategy and that’s how I’m here today on this call with you and from this position hoping once again to pick up the LNG story. Now I think that GoFLNG initiative has the real potential to drive another paradigm shift in the LNG industry, one that’s going to contribute further to this process as Doug mentioned of the disaggregation of the LNG value chain, that traditional value chain built around point-to-point integrated LNG trades. And of course disaggregation is a necessary and absolutely necessary step to achieving this fully fungible global liquid LNG market, the type of market in fact that we have today in crude oil. It will be a long process I believe to get there and -- but I do believe that the GoFLNG concept has a real and meaningful role to play in that transition. So it’s a pretty exciting time, I’d say to join Golar and I’m very pleased indeed to be here today. So let me just at that point stop because I’m quite keen to listen to your comments and your questions. Thank you.

Thank you, Sir Frank. Moderator, we’d like to go ahead with the Q&A part of the call now please.

Thank you. [Operator Instructions] We will take our first question from Jon Chappell of Evercore. Please go ahead. Your line is open.

Thank you. Good morning, guys.

Hey, Jon.

Doug let’s talk about first the timing on the second and potentially the third, so I guess we’d call to Gimi and Gandria. Are you waiting to have the final contract terms in place for the Hilli before moving forward on exercising those options? And also, would you look to do maybe two and three at the same time, given the opportunity that you spoke about regarding Cedar LNG?

Well, the first part of your question, I’d say no. The decision on Golar Gimi isn’t tied to any trigger on the first project to anything of this sort. We’ve got that conversion project and associated contracts teed up. We’re taking it through our usual kind of decision cycle which we expect to end soon. Of course the status of that project and others informs that decision, but there is no kind of -- once that happens the other goes kind of simplistic thinking. So that’s the first one. To answer your second question it’s unlikely we would trigger two at the same time. And that is because the timing on Cedar LNG although the FID could be got at quite quickly. The timing will be driven by when the pipeline capacity would be available to that project. I haven’t spoken about exact timing on that because the pipeline capacity discussions are ongoing, but the timing of that project is later out in the decade. So, as a goal of just meeting Cedar LNG we would not trigger a simultaneous third vessel along with Gimi.

Understood. Follow-up on the Hilli -- two follow-ups on the Hilli, and then I’ll turn it over for the sake of gravity. First on the utilization, you said you’re confidant on the 100%. Do you expect to have the 100% by the time the Hilli actually hits the water in early ’17, or do you expect just to run it at 50% and then over time develop that 100% fill up. And then the second question is not really related, but just how much of the Hilli have you pledged to Black & Veatch? How much of the rest of the partners, you mentioned in the press release that other partners are interested to get an ownership as well. And what impact might that ownership spread across the different partners have on a potential dropdown to the MLP?

Okay. The 50% question on utilization, we cannot guarantee that from day one we will have additional gas there to get the utilization rolling at a 100%. We of course are going to move as quickly as we can to do that. I expect to be talking to holders of gas reserve well in advance of that event. But in some ways, that will depend on the host country deciding that it’s happy to export further LNG incremental to the first tranche. I think that the reason we’re optimistic is because we’re optimistic about how our implementation is going to go, the gas can receive quite a healthy netback compared to its other alternatives obviously, and we believe that’s going to be quite attractive to the host government and we hope to have them complaining that there’s not enough capacity on the vessel and asking for a second.

Hey, its Frank Chapman here, if I just add. Of course we are dealing here with what is in the eyes of most customers, a new technology of course in point of fact it is the assembly of known, tried, tested, proven equipment in a different configuration. So it’s not surprising given the customers view that, they will express some caution. At the same time it’s quite convenient for Golar to initially in this first project commit 50%. It gives us a lot of mileage in the system, gives us confidence to start this project up with high levels of availability. And we anticipate therefore that even were we to manage to tie in some new customers as we go along and I believe they will come as they see the first unit committed being constructed and being contracted. I think we’ll still want to maintain a little bit of flexibility in the capacity of the unit to be sure that this first unit is an absolute success, that it has high levels of availability because that will be the best type of advertisement that we need for the subsequent project.

Jon, on the question regarding the shareholding, we obviously have a confidentiality agreement with Black & Veatch and it’s not something that’s been published. Suffice to say though that, it’s nowhere near as big as Keppel shareholding and to some extent as the costs increases, conversion cost increases that’s been incurred to the Golar Hilli then that shareholding decreases. On the other part of the question, we haven’t yet decided specifically who we will allow to participate in other investment opportunities in respect of the Hilli. Again, its suffice to say that, in all cases the interesting point here is that those people who are interested are involved into conversion of the vessel. They do have a material space of the vessel, and so it would be good to have them if nothing else to make sure that their interest in making sure the success of the full conversion of the vessel is alive with ours. But again in most of these cases there will be nowhere near as big as Keppel’s contribution.

All right. Understood. Okay. Thanks, Brian. Thanks, Doug, and thanks Sir Frank.

Thanks, Jon.

We will now take our next question from Fotis Giannakoulis of Morgan Stanley. Please go ahead.

Yes, hello and thank you. I want to ask you about your previous press release in the second quarter that you mentioned about a potential alliance with an E&P company and the acquisition of a stranded gas reserve. Can you elaborate where are these discussions standing and if .this is related to any of the project that you’re looking in West Africa?

I think the sense of the press release is that we were looking at potential strategic alliances at that time and we still are; some very specific ones. I can't update you any further on who or what. But they do by definition involve specific development projects for our vessels and in such projects we actually are looking through various data and technology aspects already. But we aren’t releasing any more information about any alliances today, but it’s something that we still believe in as a potential boost to the GoFLNG proposition and as and when a good opportunity comes up we will pursue it.

Yes, this is Frank Chapman here. I think it’s also worth just reiterating. It’s probably clear for everyone that in talking about alliances we are not taking about a single exclusive alliance. We’re talking about alliances with players where we can work together in order to release existing resources and potentially other stranded gas resources identified.

Thank you, Sir Chapman. I want to follow on and ask about Slide 14. I see that there is this connection between Nigeria and Ghana, and I’m wondering if there is any relation between the FSRU project in Ghana and potential FLNG project in Nigeria, or even in Cameroon, and if these projects are related or they can become related in the future?

The dotted lines on that map are a completely unrelated asset that’s partly built in with expansion plans called the West Africa gas pipeline. I guess, what I would say is that there is a real connection between potential GoFLNG developments including the low caliber expected first GoFLNG project and other markets in the area, mostly related to liquid power plants that are currently burning liquid fuels at very expensive prices. So we could get the dynamic where there is LNG produced in Country A and we go down the block to Country B and deliver it as gas into power plants which is quite an attractive proposition. The FSRU in Ghana could play a role in that. It’s not tied in formally with any of those kinds of discussions though, but it holds that potential.

Thank you, Doug. And one last question, you have mentioned a number of opportunities in West Africa, in North America, even Latin America, and at this point you only have three old LNG carriers and I noticed that the Cedar project if this is going to be developed is a 5.8 million tons of capacity. How are you thinking of meeting the requirements of a project which is much larger than two of the FLNGs of the size of the Hilli? Are you talking about new-building vessels, and how can this be built if I understand well, Keppel is not focusing so much on new-building FLNGs. Are you looking to team up with a different shipyard or Keppel can play some role there?

First of all in terms of conversion candidates, the view -- and its very firm view internally in Golar is that the availability of conversion candidate vessels will not be a constraint in our business, so you can see it -- its happening, and as the new TFT vessels get into the market and people see how they’re performing, the first generation vessels are going to be squeezed out of that market. Recent example, we don’t know what the results of it will be, but as part of FLNGs tender to charter in new vessels to replace their old they’re obviously looking to do something with those old vessels including selling them. So these kinds of vessels will be available at very low prices because the alternative is the scrap yard. It’s certainly the case, if you look out into for example a 15 million ton Cedar LNG project which would be something that if it happens, happens over quite a long time, the type of vessels that will come into the FLNG space will evolve just like FSRUs evolve. We started off with speculative conversion of carriers for FSRUs. We’re now primarily putting new-build FSRUs into service. We don’t believe today there is a new-build yard offering an FLNG proposition that’s viable and competitive with what we’re doing. But that will change over time, and we will move our technology to the best available at all times which certainly would expect some day “the new-build yards” will be an excellent choice for vessels, that’s not today.

Doug, can you clarify about this technology. I understand that you have the feed study and that belongs to you. How appropriate that is this feed study and the technology that you have, and are you thinking about that some point this can -- this technology can move to the hand of additional companies?

Well, certainly the technology we’re using is all existing in the market. We’re not using anything new, and as Sir Frank said, what we’re doing is assembling existing proven technology on this vessel to be used for LNG production. Nobody can directly use our feed, that’s a very specific document. But could other players do what we are doing with a carrier converted to an FLNG production vessel, yes. I would say the entry barrier for that activity converting a carrier into alternate LNG use is fairly high. We have done it in FSRUs. There is only one other example of an FSRU that was created as a conversion of a carrier, and we believe not quite as successfully as we were able to. So, while the idea of the technology and how it’s put together, that’s quite simple. Executing a project of this variety, you need deep experience in the type of conversion activities and assembling and integrating these facilities into a carrier and that’s where Golar’s expertise is above the rest.

Can I also add? I mean, I think you have understand that our customers are host government and upstream producers, and with respect to those players we see that the technology and approach that we are bringing can more than half the unit cost of LNG liquefaction. So we’re not going to be competing with the upstream producers. They are actually our customers. Now when it comes to putting a project together like this, this is not something that can be instantaneously delivered, and its not just about the technology per say, its about putting together a funnel of opportunities which are matured and developed over a very long period with a second stakeholder, and in our case taking a significant capital risk upfront in order to get the ball rolling. So, whereas ultimately these other players will enter the market, no player is able to continue in definitely without meeting some competition of course not. The important thing now for Golar is to move quickly such that we can over this next five years or so mature the relationships, mature the opportunities and get a significant number of project sanctioned and some of those in production before the competition gains the knowledge and the confidence to follow the lead that we’re taking.

Thank you very much for your answers.

We will now take our next question from Michael Webber of Wells Fargo. Please go ahead.

Hi, good afternoon guys. How are you?

Good Michael.

All right. Good. There is a lot to aim at still here. But before I ask about other projects, I want to come back to Cameroon and specifically on the timeline. And you guys referenced the project being on time because hitting expectations in terms of timing in the release, but just specifically the idea of a -- of a more formalized MOU sometime by the end of the year and a commercial agreement sometime by in H115 and I guess this is the timeline that I think the market expect, that’s still in place. That hasn’t been kicked back at all at this point correct?

Not at all. In fact we made a special point of highlighting the progress on not only commercial and technical matters, but fiscal regulatory matters in the release. That’s actually moving a little bit better than we thought. Anything can happen. But it’s certainly achievable timing that we’re talking about. The agreement that we will sign by the end of this year sets down all the key terms and locks them down for the project itself, so its quite a significant agreement. And yes, by the first half of next year we would expect to have all agreements, approvals and licenses necessary to move fully ahead with the project.

Great. Okay. That’s good enough. And along those lines of Cameroon, you guys talked about kind of moving the full utilization at some point, hopefully soon. Has there been any change on the ground in terms of how you -- or where you think those reserves would come from? Obviously GDF has reserves in the area, but Franco [ph] has additional reserves in the area, and if they were to be reserves from some other than GDF, how easy would they be to move to the project? Would there be significant investment required or is it relatively turnkey? And I guess, are there major hurdles from a physical standpoint in terms of bringing additional reserves to that asset?

Well, the answer to that last question is, we believe not. But in terms of who it is and where it’s coming from, that’s all to play for yet. We are pretty focused on getting this first tranche done. And that’s not a bad news having this first tranche.

No.

In order to -- because of our low cost and flexibility, being able to put together a project using a single producer with one or two specific fields to feed into the project greatly simplifies what the typical project attempts to do with three or four major upstream players, multiple different fields, huge commercial complexity to get all those guys together. So, we are quite happy with this first tranche because we know this is exactly the execution model that’s going to get us quickly to this project than others. The new reserves they will come, but we need to take care of first things first. So we’re going to close this first deal and make sure it delivers.

Got you. All right, that makes sense. I just wanted to shift on to some of the newer projects and you talked to Cedar already. It looked like that its taking a bit of a bigger focus in terms of kind of the attention I got within the deck. But obviously there’s been a lot of momentum around the U.S. particularly offshore where you got merit [ph] approval and as opposed to FERC, but maybe -- can you maybe help us in terms of rank ordering is kind of a touch kind of fray, but in terms of helping us prioritize, I guess, which of these different projects you think would -- where they would fall in behind Cameroon in terms of likelihood, and kind of help us kind of figure out which projects to aim at? Because it certainly seems like the opportunity set here is pretty wide and developing pretty quickly.

Well, I mean its kind of an obviously statement that projects that aren’t attractive don’t make it into the opportunity funnel, and they all have a life of their own and they all evolve down a certain path. The focus on Canada is related to the fact that the legacy issues look close to being solved. The discussions with the Haisla are progressing very well, such to the point we were comfortable indicating that we were going to be moving down a permitting path on the project. Obviously that’s -- as you know from us that’s a big step to talk about something like that. So that will, I guess speak to our confidence about that project that all is underpinned by the macro attractiveness of Canadian West-Coast Exports. I wouldn’t rank US Gulf Coast however behind that. That doesn’t mean it’s worse or better, it’s just different and it’s at a different stage. We’ve got some technical challenges there that we expect to solve, but we aren’t at a stage yet in that project where some of the others in Latin America for example where we’re comfortable giving more optimism about whether we kick off a progression or not. What I would say is that, if we formally enter into and start down a permitting path on project in any of these locations or start those kinds of discussions, that’s a major decision and they will be taken deliberately and post that when we start down the path we’ll be updating investors in more detail.

Okay. That makes sense. Along the lines of pursuing multiple projects, I know you guys have been staffing up and gearing up on the FLNG sites for quite a while, but Cedar is relatively a big project, some of the US Gulf projects are relatively big in terms of multiple FLNG assets. In terms of your bandwidth to pursue a number of these projects which are -- they are all on their own timelines, but where do you think your bandwidth really is in terms of either number of FLNG projects to work on concurrently. You probably have a number you’re working on right now, but in terms of really getting in the ways in developing documentation and agreements. Where do you think your bandwidth is or is it just too early to tell?

Well, it’s too difficult to kind of say ex-vessels per year, and keeping in mind that we’re doing conversion vessels with Keppel now. We had a discussion that earlier that as time moves on, the technology and approach to a floating LNG will progress and there’ll be other options for where to implement a floating LNG vessel. But having said that, depending on the overall market Keppel has tremendous capacity to do conversions, that shipyard -- this is a small -- the conversion they’re doing for us on Hilli is quite a small endeavor when compared with the totality operation that’s going on there. So, I wouldn’t say Keppel will ever be a constraint against the number of opportunities where we’re looking to develop. What we have to be careful with is that, implementing one of these projects as the owner takes a high degree of attention to make sure that all of our contractors are working together properly. All the integration issues are being taken care of that simply we are project managing very effectively. And I would say that’s where we’ve been focused most on over the last month is to -- that’s our key competency, but we just need more capacity in that area if we’re going to implement more projects and we’ve been building up that staff over the last month.

Got you. Okay, that’s helpful. One more for me, and I’ll turn it over. I would actually like to direct this one to Sir Frank, but I mean, you’re in -- you’re obviously -- you got a pretty unique position advantage point to kind of look at the evolution of the LNG space here in the energy markets and obviously we’re seeing a significant amount of volatility around those markets, around pricing. I’m just curious from your perspective whether you think we have or will see any change in appetite in terms of longer term off-take agreements for LNG. Whether maybe timeline get shifted around mid volatility or whether we see a makeshift in terms of Brent Index pricing to Henry Hub or how you -- generally your take on what we’re seeing right now within LNG markets and any sort of longer term impact?

Well, according the questions you asked, the key questions that everyone is interested in hearing the answer, none of us have the answer. The fact of the matter is that the underlying business context that we operate within is that, shale oil or none, we have about 50 years of reserves left of oil at current production rates. We have 250 years or more, and of course these are all at a particular pricing point, but 250 years or so of gas is inevitable. Since the gas even for distant markets can still arrive at that destination at a significant discount to all equivalents there is going to be more gas consumed globally. There will have to be significant new development of gas resources to replace the decline in existing production, and these two things together will represent a significant challenge for gas field development, but also for gas transportation both through local, regional, inter-regional pipelines as well as through LNG. So my view is that the scene is still fair for a prolonged and significant increase in the amount of gases consumed and a rising proportion from the 10% or so of the current gas market supplied by LNG by 2025 to be looking at something like 13% or 14% of that gas market being supplied by LNG. Now the big issue of course and this is what everyone would ask is the question, why the hell aren’t we growing LNG production more quickly than we are today if the imperatives are so great particularly in the light of quite firm oil prices that we’ve seen in recent times? And the answer to that, I think at least in part is due to the fact that there has been a structural shift post 2008 in the unit cost of -- the unit technical cost of developing upstream resources and in developing LNG facilities. If you look at the recent track record of majors and super majors there is actually quite a poor record of delivering LNG liquefaction facilities on cost and on budget. And actually in -- what I would regard in my experience as a successful and almost unprecedented series of actions by analysts and shareholders alike, capital budgets from the majors and super majors for these multi tens of billions of dollar gas chain projects, these budgets have come under pressure. The influence of shareholders and analysts as I say is unprecedented in this sense. And capital budgets have been curbed, that intern is knocked on to slowing down the sanction and coming on to stream therefore of still further new LNG project. So this whole dynamic in my view just increases the tension in terms of how tight the overall supply demand balance for LNG is going to be. Now its into that very, what I would regard for us Golar into that context that we’re applying a technology which fundamentally can change the unit cost of liquefaction, can come very quickly, can be deployed no longer in the -- if you like privileged domain of just major, super majors and those resource holders that had very large resources that can now be played out with a whole range of upstream players that [indiscernible] did not have access to the capital base or the technology. We can play it into host governments that have much smaller resource levels and therefore we can begin the process of enriching the current number of sources and destinations of LNG. And this of course as I mentioned in my preamble is also a part of this longer term disaggregation of the value chain. So I won't answer -- I won't attempt to answer all your questions, the subject is massive to say the least, but I think that the context is positive for what we’re doing. We have low cost, flexible short lead time, lower risk -- if you’re stick building something in a developing country its much higher risk than building a smaller unit known quantities in a shipyard which has all of the skills and capacities that you need. So lower risk, so that set of advantages is implicit within the GoFLNG concept, and I think that therefore we would expect and we are meeting a range of customers that want to hear about this new approach. And of course it doesn’t mean to say that this won't be attractive also to existing LNG producers. I mean the advantages are compelling and they too will want to hear more from us and more about how they can take advantage of this approach. So, I’m sorry I won't attempt the answer on what the pricing model will be? I suspect that there is a very well thought through longer answer there, but I’m going to stop because otherwise I won't stop. We can't go on like this. But let me get you on that next time.

No, that was great, and I appreciate the color. I will turn it over, but thank you guys for the time.

Thanks, Michael. Moderator, just we’re running a little short on time. So this will have to be our last question unfortunately.

Okay. Thank you. We will take our last question from Erik Stavseth of Arctic Securities. Please go ahead.

HI, guys, couple of quick ones for me. First one is on your LNG shipping side. I mean you’ve been -- rumored to be involved in Nigeria LNG tender. Firstly any color on the shipping tender for the five tri-fuels [ph] and also any update on the potential acquisition of some of the older vessels that they had, that are going to be faced out?

Right, I mean first of all that tender, whether or not we’re successful or our participation or we were just very glad to see it happening. It’s a major long-term LNG player figuring out that they could pay a good rate for these new vessels and effectively write-off the existing fleet and make it all work economically along with the potential of soaking up LNG carriers out of the market. So we decided it was a nice semi-public signal about the attractiveness of the carriers. I can confirm that we are in the mix on the tender. It’s still ongoing. I believe we’re still in the hunt, but obviously the results are not out there. So, we can't even the odds on our success or of the whole thing going ahead at a certain pace. The same I would say on the sell of the older carriers. Obviously there is some interest there given our business strategy, but again the results of that process are still unclear.

All right. Then I just wanted to have one thing on the -- is there any work done by the players in Cameroon who owns the gas in terms of developing the fields further. I mean are they spending any CapEx we saw or they will spend substantial amount of CapEx on the Equatorial Guinea project to find gas. Do you have any knowledge there?

Well, I don’t believe -- I guess, if you really look at what's happening in West Africa there is various land based and a couple of floating propositions going around. None of the land based projects as far as I know are currently moving at any pace. And so there are -- I don’t believe there’s any development capital going into gas reserves to supply those projects. And for our project in West Africa the development plan is being laid out and planned and ready for a commitment. But generally its still the case in West Africa, I believe. Sir Frank can probably, knows more about this than me. There’s not a lot of -- the LNG activity isn’t such that people are targeting specific gas wells, gas fields for exploration, its still very much a oil producing region that has the side benefit of related to that activity significant associated gas or straight gas fields have been discovered. So, I wouldn’t say there is a lot of development capital going in yet, because you need a firm outlet in order to bother spending that kind of money.

Okay. I’ll give you some time to prepare for the [indiscernible]. Thanks.

Okay. Thanks, Erik.

Moderator, I guess that ends the Q&A session for this webcast. On behalf of Sir Frank, Doug, and myself, I guess the last thing to say is Happy Thanksgiving to U.S. counterparts, and thank you for the participation, and we’ll speak to you again on next quarter. Thank you and good bye.

Thank you. That will conclude today's conference call. Thank you for your participation ladies and gentlemen. You may now disconnect.